REG - Made Tech Group PLC - Audited Final Results
12/09/2022 07:00
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RNS Number : 0163Z Made Tech Group PLC 12 September 2022
12 September 2022
MADE TECH GROUP PLC
("Made Tech" or the "Group")
AUDITED FINAL RESULTS
Strong accelerating growth in FY22 with significant opportunities ahead
Made Tech Group plc, a leading provider of digital, data and technology
services to the UK public sector, announces its audited final results for the
year to 31 May 2022 ("FY22" or the "period"), which show significant growth in
revenue and profit.
FY22 was a period of exceptional and accelerating growth, delivered by a
dedicated and rapidly expanding team. Made Tech is well positioned to continue
to build on our success and structure the Group to meet the significant and
long-term market opportunity ahead.
Financial summary
FY22 FY21 Change
%
Revenue £29.3m £13.3m 120%
Gross Profit £11.3m £5.0m 125%
Gross Profit Margin 38.43% 37.6% 0.83%
Adjusted EBITDA(1) £2.6m (£0.5m) 618%
Adjusted EBITDA Margin 9% (4%) 13%
Adjusted Profit/(loss) before Tax(2) £2.3m (£0.8m) 387%
Sales Bookings(3) £51.1m £23.8m 115%
Contracted Backlog(4) £38.2m £16.4m 133%
Cash £12.3m £0.9m 1239%
(1) Adjusted EBITDA means operating profit before depreciation, amortisation,
exceptional items
and share based payment charge
(2) Adjusted profit before tax means profit before tax before amortisation of
intangible assets, share based payment charge and exceptional items
(3) Sales bookings represent the total value of sales contracts awarded in the
year, to be delivered in FY22-FY25
(4) Contracted Backlog is the value of contracted revenue that has yet to be
recognised
Highlights
● Accelerating 100% organic revenue growth: CAGR of 97% in four years to FY22 ,
compared to 89% in three years to FY21
● Increase in billable utilisation of 3% (improved from 78% to 81%) and average
billable day rates increased by 12%, delivered through the rollout of new
systems and operational processes across the business
● Gross margin strengthened by a favourable revenue mix, as Group capabilities
were expanded
● Continued investment in strategic initiatives to develop own IP to generate
greater financial future returns
● Strong balance sheet maintained - underpinned by strong profitable growth and
IPO fundraise of £13.5m in September 2021
● Accelerating recruitment, supported by The Academy, to enable the fulfilment
of Contracted Backlog - headcount of 478 (414 permanent employees and 64
contractors) at 31 May 2022 (31 May 2021: 235)
● Successful execution of client acquisition strategy: 12 new clients secured in
the year, and largest ever contract won with NHS Digital worth c.£19m to the
Group over a two year period
● Expanded product and service offering to include User Centred Design, Data,
Cyber Security, Managed Services and Transformation Advisory, supporting the
Group's growth ambitions
● Geographic expansion - first employees hired in Scotland, Newcastle and the
Midlands
● FY23 has started strongly with circa £13.3m new contracts secured and an
annualised revenue run rate at 31 August 2022 of circa £40m
● New contract wins, robust pipeline and record sales bookings underpin the
Board's confidence in the prospects for the business for FY23 and beyond
Rory MacDonald, CEO, commented:
"This has been a landmark year in the history of Made Tech and I am hugely
proud of everything that the business has achieved. We have made strong
operational and strategic progress, in our first year as a quoted company, and
taken significant steps forward in the delivery of our mission to improve
public services.
The digital transformation market is substantial and growing and Made Tech is
well positioned to capitalise on the opportunity. Over the last three years,
since focussing solely on the public sector, we have demonstrated our ability
to attract, secure and win new clients, new contracts and new talent. Our
strong FY22 financial performance and our successful IPO in September 2021
have strengthened the Group's balance sheet, which, together with our ongoing
cash generative operations, enables us to continue investing in the high
quality strategic opportunities, which will support the sustainable growth of
our business.
As a final point, I would like to thank our employees, partners and clients
personally for their contribution and ongoing support."
Enquiries:
Made Tech Group plc via Belvedere PR
Rory MacDonald, CEO
Deborah Lovegrove, CFO
Singer Capital Markets (Nominated Adviser & Broker) Tel: +44 20 7496 3000
Mark Taylor / Harry Gooden / Asha Chotai
Belvedere PR (Financial PR)
Cat Valentine Tel: +44 7715 769078
Keeley Clarke Tel: +44 7967 816525
Email: madetech@belvederepr.com (mailto:madetech@belvederepr.com)
About Made Tech
Made Tech is a high-growth provider of digital, data and technology services
to the UK public sector. Founded in 2008 and with a headcount of over 470
people across multiple UK locations, Made Tech provides services that enable
central government, healthcare and local government organisations to digitally
transform.
CHAIR'S REPORT
I am pleased to present the Group's first set of full year results as a quoted
company, which show a year of exceptional and accelerating growth, delivered
by a dedicated and rapidly expanding team, as we continue to build on our
success and structure the Group to meet the significant and long-term market
opportunity ahead.
We have increased revenues by 120% to £29.3m (FY21: £13.3m), doubled our
year-end headcount with high quality recruits to 478 (FY21: 235), secured 12
new clients (FY21: 11 new clients), increased sales bookings and contracted
backlog by 181% and 133% respectively. The Group has moved ahead significantly
during the period and is well set and in a strong position to continue to
deliver further growth.
Our stock market admission in 2021 was a key milestone for the Group, with our
quoted status and new capital structure enhancing our profile, incentivising
our people and enabling us to invest in our ambitious growth plans. The
management team remains well invested in the business' success, having
retained circa 51% of the Company's total issued share capital at IPO, and I
am confident that Made Tech will continue to grow rapidly and deliver value
for shareholders over the longer term.
Culture
Our people are central to the Group's success and to delivering on the Board's
growth ambitions. We have made significant investment to establish a structure
that supports an inclusive culture, based on wellbeing and fostering an
environment that is welcoming, social and supportive.
We have a dedicated People team, which conducts a quarterly "happiness survey"
to help us ensure we are meeting the needs of our people.
Decentralised community groups are encouraged and supported. These have been
particularly important following the changes to working practices resulting
from the pandemic. They develop organically, without interference, to best
benefit their communities. With no measures, expectations or targets, these
groups have led to the development of social spaces online, in-person events,
guest speaker events and Company-wide showcases.
Our people are encouraged to socialise, either remotely or in person. During
the pandemic, we initiated the use of an application to pair colleagues for a
catch-up. This is now being extended to introduce new colleagues to the wider
team, facilitating and accelerating integration, both of which are extremely
important during the rapid expansion of the business.
Made Tech believes that, in order to deliver its mission, to transform public
services and create a fairer, more equitable society, a diverse team is needed
and this is welcomed by our clients. We have established an ESG Committee with
enthusiastic representatives from across the organisation, to drive this
agenda in a meaningful way. Made Tech values transparency and has taken the
initiative to begin publishing gender and racial pay reports before reaching
the threshold for mandatory reporting. The Group produces a Diversity, Equity
and Inclusion report and, in our latest report published in June 2022, we have
successfully improved diversity and inclusivity throughout the business. Since
we last reported in 2021, we have increased ethnic diversity to 20.4%, which
is 7.6% higher than the UK population, and 14.3% of the team identifies as
LGBTQ+. We have increased the women in leadership positions from 28.6% to
38.6% and have increased the leadership representation of all ethnic groups
other than White from 10.7% to 12.3%.
Learning and mentoring are core values. Ongoing training to support career
development, and a knowledge-sharing and mentoring mindset helps to provide
continuous learning.
As the business grows, we will continue to resource our People team to support
the expanding Group.
Strategy and growth
On admission to AIM, the Group raised £13.5m net to provide growth capital
and repay a bank loan of £1.25m. Our strategy for growth is primarily focused
on driving organic growth in the multi-billion-pound digital transformation
market, specialising in the UK public sector as our unique selling point.
However, the Group will also consider relevant bolt-on acquisitions should
suitable opportunities arise to complement its organic expansion and to
accelerate overall growth.
Our organic growth is driven by four initiatives:
• maintaining our exclusive focus on government services, which we believe
delivers competitive advantage through our deep understanding of and close
alignment with our public sector clients' needs. This was endorsed in the year
as we won several significant contracts, including NHS Digital;
• expanding our UK regional coverage in line with the government's
levelling-up agenda - we recruited new employees in Scotland, the North East
and the Midlands during the year and increased our headcount from 235 to 478
in FY22;
• growing our market share within the health, local government and central
government sectors - we added 12 major new clients in the year; and
• extending our services and solutions in support of our clients' needs - we
expanded our capabilities in the period, to cover data engineering and data
science, cybersecurity, managed services, and research and development.
Environmental, social and governance
As an important partner of our UK public sector customers, we understand the
importance of not only working efficiently and collaboratively but also in a
manner which reduces our impact on the environment. With the UK being the
first major global economy to commit to carbon net zero by 2050, Made Tech is
also committed to being carbon net zero by that date.
While our direct impact on the environment is low, we take responsibility for
monitoring and reducing energy use and emissions. Within the current financial
year, the Group is progressing to achieve validated Carbon Neutral Company
status by 2050, as assessed by independent experts against ISO 14064 and the
GHG Protocol Emissions Standard. This important activity, which progressively
moves Made Tech closer to its carbon net zero ambition, is delivered in three
stages: calculate, offset and certify. Our ESG committee was formed in FY22,
and we will continue to deepen the measurement of, and action on all of our
emissions in the next financial year.
Board and governance
I was appointed to the Board as Chair on Admission to AIM in September 2021,
and I am joined by Helen Gilder and Phil Pavitt as Independent Non-Executive
Directors, who also joined at Admission. Together, the Board has extensive
experience in dealing with a broad range of market conditions and rapid
strategic growth. I am pleased to have such diverse knowledge and expertise
around the Board table.
As Chair, it is my responsibility to ensure that Made Tech has both sound
corporate governance and an effective Board. Since the Company was admitted to
AIM, we have chosen to adopt the Quoted Companies Alliance's Corporate
Governance Code for Small and Mid-Size Quoted Companies (the "QCA Code"), to
the extent it is appropriate, having regard to the Company's size, Board
structure, stage of development and resources.
To meet the requirements of the QCA Code, the Board has worked to introduce
new structures and processes to improve corporate governance across the Group.
We are committed to continuing to evolve and develop these in line with
corporate governance best practices.
Outlook
We are mindful of the recent changes within government and the potential
impact of this may have on our public sector clients. However, our high level
of order bookings, significant proportion of contracted revenues and the
embedded and long-term nature of our client relationships and contracts give
us confidence in our prospects for the coming year and beyond.
We will maintain our exclusive focus on government services and continue to
build on our competitive advantage as a purely public sector focused provider.
We see clear opportunities to grow our market share further within the health,
local government and central government sectors, as well as to extend into new
areas, as illustrated by our recent engagement by the Met Office. We have
expanded our UK regional coverage in line with the government's levelling-up
agenda, by recruitment in the North of England and Scotland. As the UK moves
to a new hybrid working model, we intend to support this investment by adding
regional hubs in Newcastle and Glasgow. We have also extended our capability
coverage and are developing new sought-after capabilities, including
cybersecurity and managed services.
It is our firm intention to achieve sustained revenue, profit and cash flow
growth, by delivering these initiatives though the current financial year and
into 2024. Made Tech works closely with its public sector clients to help them
provide a better experience and better outcomes for citizens. We see
government increasing digitisation spend and believe this is a major and
long-term trend. With the funds from the IPO, we have significantly invested
into our core operations and are now well positioned to support this ambition,
as we expand into new regions, industries and capabilities.
FY22 was a successful year for the Group, despite the challenges. On behalf of
the Board, I would like to thank everyone who has contributed to delivering
services and solutions to our clients and also those who have supported them.
Our aspiration is digital services that are user centric, data driven and free
from legacy technology. The market opportunity is huge and we look forward to
reporting on further progress over the coming year.
Joanne Lake
Non-Executive Chair
CHIEF EXECUTIVE OFFICER'S REPORT
Following our Admission to AIM in September 2021, I am pleased to report the
Group's full year results for the year ended 31 May 2022, demonstrating a
further year of strong growth.
Revenue for the period grew by 120% to £29.3m (FY21: £13.3m). Adjusted
EBITDA increased by 618% to £2.6m (FY21: loss of £0.5m). Sales bookings
during the year more than doubled to £51.1m (FY21: £23.8m), with the overall
contracted backlog increasing by 133% to £38.2m (FY21: £16.4m). We finished
the period with a cash balance of £12.3m (FY21: £0.9m).
Our stock market listing in 2021 was a key milestone for the Group, with the
new capital structure enhancing our profile, incentivising our people and
enabling us to invest in delivering our ambitious growth plans. The management
team remains invested in the business' success, having retained approximately
51% of the Company's total issued share capital at IPO.
The Group's client base and depth of client relationships continue to
strengthen. In the period to 31 May 2022, the Group acquired 12 new clients
and won new mandates with existing clients, including the DVLA, the Ministry
of Justice, HMRC, the Department for International Trade, the Department for
Education and the Department for Levelling Up, Housing and Communities. The
Group has 28 active clients, with nine of those being strategic client
accounts, contributing between £1m and £10m a year on an annualised run-rate
basis. Across our industry verticals, 63% of revenue is derived from central
government (FY21: 62%), 25% from local government (FY21: 20%) and 12% from
healthcare (FY21: 18%).
People
Made Tech has 478 people operating across the UK, which is an increase from
the 243 people we had at IPO. Our people are central to everything the Group
achieves and we value them highly. We are committed to building a culture of
positive engagement throughout the business, encouraging strong career
development opportunities and recognition of people's contribution to the
business. As well as raising the profile of the Group, the IPO provided a new
capital structure which we can now use to incentivise our people. We launched
our Group Restricted Share Plan on 30 September 2021 to provide the
opportunity for our teams to share in the value of the Group that they have
helped to create.
We are committed to promoting diversity in all its forms and to attracting,
developing and retaining the strongest talent to work in an environment in
which individual differences are embraced. We continually seek feedback from
employees across all areas and levels of the business and use it to drive
improvements in how our colleagues are rewarded, motivated and nurtured.
FY22 was a very challenging year to recruit and retain talent, with
well-reported wage inflation, the Great Resignation and a global shortage of
digital skills. Despite these challenges, we delivered exceptionally,
increasing our headcount by 243 (an increase of 103%) and achieving an
employee retention rate of 73% (FY21: 86%). The increase in billable staff
costs was offset through increased utilisation and a rise in our average
billable day rate. As a result, our gross margin for FY22 increased to 38.4%
(FY21: 37.6%).
Our academy, which has been set up to attract, recruit and train new entrants,
ran two academy programmes in FY22 and is planning to run three in FY23.
Broadening capability and geographic coverage is key to Made Tech's strategy
to diversify revenue and deliver further organic growth. To support its
growth, the Group expanded the academy's capabilities in May 2022 to include
user centred design, and we are planning to expand the programme further in
FY23 to include data and delivery.
Our people are our most important asset, and talent acquisition is essential
to the Group's future growth. We expect to increase our permanent headcount in
FY23 significantly and have built an in-house recruitment team (which now has
a proven track record of hiring at pace), so we are confident in our ability
to bring talent into the business as required.
Products and services
The Group has made significant progress in expanding its service offering,
which is a critical part of our strategy to provide a comprehensive and
integrated set of digital transformation services to government and public
service organisations.
Within the period, we enhanced our digital service offering and developed new
offerings around user centred design, data, cybersecurity, managed services
and transformation advisory. We also started to develop IP solutions tailored
to the industries we serve. We expect to continue investing in these new
service lines and for them to unlock new revenue streams from FY24 onwards.
Market
The Group operates within the digital transformation market, which has grown
steadily for 10 years and is expected to continue growing at 22% CAGR through
to 2030. The UK public sector, which is the Group's chosen market, increased
spending to £12.9bn in 2020, with central government spending at £5bn,
health spending at £2.1bn, local government spending at £2.13bn and defence
spending at £2.0bn.
In June 2022, the UK government launched a new Digital Strategy, setting out a
bold new vision and set of commitments on how the government will use digital,
data and technology to improve public services. The new strategy, increasing
digital transformation market, and UK public sector spending on digital,
highlight the significant opportunity ahead, both within the UK and in
international markets.
Board and governance
On Admission to AIM, the Group welcomed Joanne Lake as Chair, and Helen Gilder
and Phil Pavitt as Independent Non-Executive Directors. The Board has
extensive experience in dealing with a broad range of market conditions and
rapid strategic growth. I am very pleased to have such diverse knowledge and
expertise around the Board table.
Since becoming a listed company, we have worked with the Board to introduce
new structures and processes to improve our corporate governance. We have set
out the details later in our Annual Report 2022 and are committed to
continuing to evolve and develop these in line with corporate governance best
practices.
Outlook and current trading
The Group made substantial progress in FY22, delivering a strong set of
financial results, whilst enhancing the business fundamentals and investing in
new products and services which will drive future growth. Our profile within
the public sector market has enhanced, and we continue to be trusted as a key
partner to many public sector organisations, which has led to a significant
number of new contracts, a strong order backlog and a robust sales pipeline
for the months ahead.
The Group has had a strong start to FY23, signing £13.3m of new contracts,
and achieving an annualised revenue run-rate of £40m, in the first two months
of the year. Our balance sheet remains strong, and we're confident the Group's
exceptional organic growth is set to continue in FY23 and into FY24.
Whilst our outlook is strong, the macroeconomic climate has evolved and has
the potential to create headwinds later in the year. Although this is a risk,
we have a dynamic and motivated management team which is focused on the
delivery of our plans. We are confident in both the short-term and long-term
prospects for the Group.
As a final point, I would like to personally thank our employees, partners and
clients for their contribution and ongoing support.
Rory MacDonald
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
Overview
This is the first Annual Report and Accounts issued by Made Tech Group Plc
following its Admission to trading on AIM on 30 September 2021. The results
reflect another successful year for the Group with significant growth in the
scale of the business.
Adjusted Performance Measures
The Group uses adjusted measures as key performance indicators in addition to
those reported under IFRS, as they are more representative of the underlying
performance of the business and enable comparability between periods. These
adjusted measures exclude certain non-operational and exceptional items and
have been consistently applied in all years presented.
Revenue
Revenue for FY22 was £29.3m (FY21: £13.3m), growth of 120%. The organic
growth arose from a combination of strong growth from existing key clients and
winning contracts with new clients.
Key statistics FY22 FY21 Variance
£'000 £'000 £'000
Revenue 29,289 13,331 15,958
Gross profit 11,257 5,013 6,244
Gross profit margin 38.43% 37.60% 0.83%
Adjusted EBITDA 2,649 (511) 3,160
Adjusted EBITDA margin 9.04% (3.84%) 12.88%
Depreciation and amortisation (308) (265) (43)
Share based payment charge (2,376) - (2,376)
Exceptional items (224) - (224)
Operating loss (259) (776) 517
Net finance costs (29) (30) 1
Tax (20) 25 (45)
Loss for the year (308) (781) 473
Weighted average number of shares ('000) 135,729 109,630 26,099
Adjusted earnings/(loss) per share (pence) 1.64p (0.71p) 2.35p
Gross profit
Gross profit as a percentage of turnover increased during the year by 0.83ppt
from 37.6% to 38.4%. The increase is mainly due to an increase in utilisation,
which improved from 78% to 81%. The increase in margin is pleasing given the
impact of the well reported wage inflation pressures and an increased reliance
on contractors at higher rates than anticipated during this period. We have
now reached a scale where we can hire at pace through our expanded Talent
Acquisitions team and, as a result, we are anticipating a sustainable rate of
10% contractor usage for FY23 onwards.
Operating loss
The £0.3m operating loss for the year (FY21: £0.78m operating loss) includes
a £2.38m share-based payment charge (FY21: £nil) and exceptional items of
£0.2m (FY21: nil).
Total operating expenses were £11.5m (FY21: £5.8m). Operating expenses
excluding share-based payment charges increased by 54% to £8.9m (FY21:
£5.8m), which is in line with revenue growth
Share-based payment charge
The total charge for the period under IFRS 2 Share-based Payment was £2.4m
(FY21: £nil). This charge related to the 2022 awards made under the Long Term
Incentive Plan and the Group Restricted Share Plan ("RSP") launched in FY22.
Exceptional costs
Exceptional costs in the year were £224,000 (FY21: £nil). Costs in FY22
comprised £180,000 relating to the Group's Admission to AIM in September
2021. A further £45,000 related to severance payments.
Taxation
The total taxation charge was £19,760 (FY21: credit of £55,000) giving rise
to an effective tax charge of -7% (FY21: 3%). The charge is lower than the UK
standard rate of taxation due to the use of tax losses brought forward. In
future years, we would expect the Group's effective rate of tax to move closer
to the UK corporation tax rate.
Basic earnings per share
The earnings per share analysis above covers both adjusted earnings per share
(profit after tax before amortisation of intangibles, share-based payment
charge and exceptional items divided by the weighted average number of shares
in issue during the year), and statutory earnings per share (profit
attributable to equity holders divided by the weighted average number of
shares in issue during the year). Adjusted Profit after tax was £2.3m (FY21:
loss of £0.8m), an increase in adjusted basic earnings per share of 2.45
pence. Basic earnings per share was negative in both years due to the loss
position.
Cash flow
Cash at year end was £12.3m (FY21: £0.9m) following the receipt of the
proceeds of the IPO (net £13.5m) and the repayment of the coronavirus
business interruption loan (£1.25m). The Group's current cash reserves
provide sufficient capital to fund current planned product development and
working capital as the business continues to grow. Cash flow for the year is
set out below.
The combined underlying trade debtor and other receivables totalled £6.1m
(FY21: £2.4m). The increase of 167% is in line with expectations, given
revenue growth.
Cash flow FY22 FY21 Variance
£'000 £'000 £'000
Adjusted EBITDA 2,649 (511) 3,160
Movement in working capital (750) 821 (1,571)
Capital expenditure (2,336) (272) (2,064)
Adjusted operating cash flow (437) 38 475
Taxation - - -
Net finance cash flows 12,072 (112) 12,184
Exceptional items (224) - (224)
Profit/(loss) on disposal of fixed assets - 10 (10)
Net cash flow 11,411 (64) 11,475
Adjusted EBITDA to operating cash flow conversion (16.45%) (7.36%) (9.09%)
Adjusted operating cash flow
Operating cash flow before tax payments, net finance costs and payments in
respect of exceptional items reduced by £473k. This includes £2.3m of
capital expenditure investment, of which £1.9m related to ongoing investment
in IP to support future growth.
Balance sheet and shareholders' funds
Net assets increased in the year by £15.6m. The principal reason for this was
the Group's IPO, which resulted in the government Coronavirus Business
Interruption Loan being repaid, and a significant increase in cash balance to
fund ongoing investments. The balance sheet is summarised below.
Net assets FY22 FY21 Variance
£'000 £'000 £'000
Non-current assets 2,783 755 2,028
Working capital (9) (739) 730
Cash 12,333 922 11,411
Borrowings (320) (1,725) 1,405
Other net assets/(liabilities) - - -
Net assets/(liabilities) 14,787 (787) 15,574
Capitalised product development and IP solutions costs
The Group continues to invest in product development and IP solutions. Our IP
solutions act as business accelerators for the clients we serve. These include
business solutions encompassing commercial software embedded within our
end-to-end service, and digital enablers such as methodologies and frameworks
to drive change across business and IT processes. Where these investments are
expected to result in future revenue, costs incurred that meet the definition
of product development and IP solutions in accordance with IAS 38 Intangible
Assets are capitalised in the statement of financial position. During the year
the Group capitalised £1.9m in respect of product development (FY21: £nil).
Dividend policy
In line with the Group's dividend policy set out at IPO, the Directors do not
intend to declare a dividend in respect of FY22. The Group's intention in the
short to medium term is to invest in order to deliver capital growth for
shareholders. The Board will review the decision to pay a dividend in FY23,
and will provide an update in the Company's half year results, scheduled for
announcement in February 2023.
Alternative performance measures ("APMs")
Throughout the Annual Report and Accounts the Group has used a number of APMs.
These are used to provide additional clarity to the Group's financial
performance and are used internally by management to monitor business
performance, in its budgeting and forecasting and also for determination of
Directors' and senior management's remuneration. These APMs are not defined
under IFRS and, therefore, may not be directly comparable with adjusted
measures presented by other companies. The non-GAAP measures are not intended
to be a substitute for or superior to any IFRS measures of performance.
However, they are considered by management to be important measures used in
the business for assessing performance.
The following are key non-GAAP measures identified by the Group and used in
the Strategic Report and financial statements:
● Adjusted EBITDA; operating profit before depreciation, amortisation,
share-based payments charge and exceptional items.
● Adjusted operating profit; operating profit before amortisation of intangible
assets, share-based payments charge and exceptional items.
● Adjusted profit before tax; profit before tax, amortisation of intangible
assets, share-based payments charge and exceptional items.
● Adjusted earnings; profit after tax before amortisation of intangible assets,
share-based payments charge and exceptional items less net finance costs and
taxation.
● Adjusted earnings per share; adjusted earnings divided by a weighted average
number of shares in issue.
● Adjusted operating cash flow; adjusted EBITDA less movements in working
capital, capital expenditure and lease payments.
The adjusted profit measures can be reconciled to the reported statutory
numbers as follows:
Adjusted EBITDA FY22 FY21 Variance
£'000 £'000 £'000
Loss after tax (308) (781) 473
Interest payable 29 30 (1)
Taxation 20 (25) 45
Losses before interest and taxation (259) (776) 517
Depreciation 308 265 43
Share based payment charge 2,376 - 2,376
Exceptional items 224 - 224
Adjusted EBITDA 2,649 (511) 3,160
Adjusted profit/(loss) before tax FY22 FY21 Variance
£'000 £'000 £'000
Statutory loss before tax (288) (806) 518
Share based payment expense and related costs 2,376 - 2,376
Exceptional items 224 - 224
Adjusted profit/(loss) before tax 2,312 (806) 3,118
Adjusted profit/(loss) after tax FY22 FY21 Variance
£'000 £'000 £'000
Statutory loss before tax (308) (781) 473
Share based payment expense and related costs 2,376 - 2,376
Exceptional items 224 - 224
Adjusted profit/(loss) after tax 2,292 (781) 3,073
Deborah Lovegrove
Chief Financial Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Note FY22 FY21
£'000 £'000
Revenue 29,289 13,331
Cost of sales (18,032) (8,318)
Gross profit 11,257 5,013
Administrative expenses (8,608) (5,524)
Share-based payments 15 (2,376) -
Depreciation 11 (308) (265)
Exceptional items 7 (224) -
Operating loss 5 (259) (776)
Interest payable 6 (29) (30)
Loss before tax (288) (806)
Taxation (expense)/credit 8 (20) 25
Loss for the period (308) (781)
Total comprehensive loss attributable to the owners of the parent (308) (781)
Loss per share:
Loss per ordinary share 9 (0.22) (0.71)
Diluted loss per ordinary share 9 (0.22) (0.71)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note FY22 FY21
£'000 £'000
Assets
Non-current assets
Intangible assets 10 1,904 0
Property, plant and equipment 11 879 755
Total non-current assets 2,783 755
Current assets
Trade and other receivables 6,065 2,544
Cash and cash equivalents 12,333 922
Total current assets 18,398 3,466
Total assets 21,181 4,221
Current Liabilities
Trade and other payables 6,054 3,283
Loans and borrowings 13 180 328
Total current liabilities 6,234 3,611
Non-current Liabilities
Loans and borrowings 13 140 1,397
Deferred tax liability 14 20 -
Total non-current liabilities 160 1,397
Total Liabilities 6,394 5,008
Net assets/(liabilities) 14,787 (787)
EQUITY
Share capital 74 1
Share premium 13,421 0
Share-based payment reserve 15 2,376 0
Deferred share reserve 12 -
Retained earnings/(deficit) (1,096) (788)
Total equity 14,787 (787)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Share Premium Share-based payment reserve Deferred Share reserve Retained Earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Equity as at 1 June 2018 - - - - 842 842
Profit for the financial year - - - - 490 490
Transactions with equity owners: Dividends - - - - (253) (253)
Equity as at 31 May 2019 - - - - 1,079 1,079
Profit for the financial year - - - - 336 336
Transactions with equity owners: Dividends - - - - (244) (244)
Equity as at 31 May 2020 - - - - 1,171 1,171
Loss for the financial year - - - - (780) (780)
Transactions with equity owners: Issue of shares 1 - - - - 1
Transactions with equity owners: Dividends - - - - (1,178) (1,178)
Total Transactions with equity owners 1 - - - (1,178) (1,177)
Deficit as at 31 May 2021 1 - - - (788) (787)
Loss for the period - - - - (308) (233)
Shares issues 73 13,421 0 12 - 13,506
Share-based payments charge - - 2,376 - - 2,376
Total Transactions with equity owners 73 13,421 2,376 12 - 15,882
Balance at 31 May 2022 74 13,421 2,376 12 (1,096) 14,787
CONSOLIDATED CASH FLOW STATEMENT
Note 2022 2021
£'000 £'000
Cash flows from operating activities:
Loss before tax (308) (781)
Tax charge/(credit) 8 20 (25)
Net finance charge in the income statement 29 30
Loss on disposal of property, plant and equipment - 10
Depreciation of property, plant and equipment 11 308 265
Share-based payment expense 15 2,376 0
Cash flows from operating activities before changes in working capital 2,425 (501)
Increase in trade and other receivables (3,521) (1,032)
Decrease in trade and other payables 2,771 1,853
Net cash flows from operating activities 1,675 320
Cash flows from investing activities
Purchase of property, plant and equipment 11 (432) (272)
Addition of intangible assets 10 (1,904) -
Net cash used by investing activities (2,336) (272)
Financing activities
Issue of equity shares 13,506 1
Interest paid (12) (6)
Dividend paid - (1,178)
(Repayment) / drawdown of loans and borrowings (1,250) 1,250
Repayment of directors loan - (5)
Repayment of lease liability (155) (150)
Interest paid on lease liability (17) (24)
Net cash flows from/(used by) financing activities 12,072 (112)
Net increase/(decrease) in cash and cash equivalents 11,411 (64)
Cash and cash equivalents at beginning of year 922 986
Cash and cash equivalents at end of year 12,333 922
NOTES TO THE FINANCIAL STATEMENTS
1. Company information
The consolidated financial information represents the results of Made Tech
Group Plc (the "Company") and its subsidiary, together comprising the Group
("Made Tech Group Plc" or the "Group").
Made Tech Group Plc is a company incorporated and domiciled in England and
Wales, registration number 12204805. The address of its registered office is 4
O'Meara St, London, SE1 1TE.
Made Tech Group Plc is quoted on the London Stock Exchange.
The principal activity of Made Tech Group Plc (the "Company") is that of a
holding company. The main trading company of the Group is Made Tech Limited
(company number 06591591) and the principal activity of this company is a
provider of digital, data and technology services to the UK public sector.
Service offerings include digital service delivery, embedded capabilities,
data infrastructure and insights and legacy application transformation.
2. Accounting policies
Accounting convention
The financial information has been prepared using the historical cost
convention as modified to use a different measurement basis where necessary to
comply with IFRS. The principal accounting policies adopted in the preparation
of the consolidated financial statements are set out below. They have been
consistently applied to the periods presented. The financial statements are
presented in Sterling rounded to the nearest thousand (£'000) except where
specified.
Basis of preparation of the consolidated financial statements
The Group financial statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The Company financial statements have been prepared under FRS 102. Both
financial statements have been prepared on the historical cost basis with the
exception of certain items which are measured at fair value as disclosed in
the principal accounting policies set out below. These policies have been
consistently applied to all years presented unless otherwise stated.
The date of transition to IFRS is 1 June 2018. The prior year comparatives
were audited on admission to AIM. IFRS was first adopted when preparing
consolidated historical financial information for the AIM admission and was
applied for the periods ended 31 May 2019, 31 May 2020 and 31 May 2021.
Going concern
The Directors have considered the Group's cash flow forecasts and they have no
grounds for concern regarding the Group's ability to meet its obligations as
they fall due and continue to operate within the existing cash balance and
working capital facilities, thus requiring no additional funding to maintain
liquidity.
In reaching their decision to prepare the financial statements on a going
concern basis, the Directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in operational existence for
the foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the Annual Report and Accounts.
Standards and amendments to existing standards adopted in these accounts
In the current year, the Group has applied the following standards and
amendments for the first time for their annual reporting period commencing 1
June 2021:
• IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors (Amendment - Definition of
Material)
• Interest Rate Benchmark Reform - "Phase 2" (Amendments to IFRS 7)
• IFRS 3 Business Combinations (Amendment - Definition of Business)
• Revised Conceptual Framework for Financial Reporting
• COVID-19 Related Rent Concessions (Amendments to IFRS 16)
Their adoption has not had any material impact on the disclosures or on the
amounts reported in these financial statements.
Standards, amendments and interpretations to existing standards that are not
yet effective and have not been early adopted by the Company in the 31 May
2022 financial statements
At the date of authorisation of these financial statements, certain new
accounting standards and interpretations have been published that are not
mandatory for 31 May 2022 reporting periods and have not been early adopted by
the Group. The Directors continue to monitor developments in the accounting
standards they see as relevant, but do not expect that the adoption of these
standards will have a material impact on the financial statements of the Group
in the current or future reporting periods and on foreseeable future
transactions.
Basis of consolidation
The Group's financial statements consolidate those of the parent company and
all of its subsidiary drawn up to 31 May 2022. The parent controls a
subsidiary if it is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated on the date control ceases.
Inter-company transactions, balances and unrealised gains and losses (where
they do not provide evidence of impairment of the asset transferred) on
transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with policies adopted by the Group.
Revenue recognition
Revenue is the fair value of the total amount receivable by the Group for
supplies of services. VAT or similar local taxes and trade discounts are
excluded. The Group's only source of revenue is from the provision of digital,
data and technology services to the UK public sector, all of which are
recognised in the same manner.
Contracts for the provision of services are typically "time and materials"
contracts whereby the customer is contractually bound to pay for services for
each hour or day spent in delivering a contractually agreed services scope.
Materials are incidental expenses incurred whilst delivering the services.
These contracts typically have no payment milestones or bundling with other
services and have no variable element. Revenue is therefore recognised in line
with the chargeable "time and materials" which are allocated to the contracted
project.
The Group recognised revenue each month once as it provides these services for
the duration of the contract. At the balance sheet date, an asset is
recognised for unbilled amounts for services provided yet to be invoiced
Payment for the services is based on the agreed payment terms.
Revenue contract liability is recorded when cash payments are received in
advance of satisfying the performance obligation. Contract liabilities are
recognised in profit or loss in the period when the Company completes the
agreed services to the customers. In all other cases payments are due from
customers within 30-60 days (depending on the credit terms applicable) of the
service being agreed and invoiced.
Interest income and expenditure are reported on an accruals basis.
EBITDA and adjusted EBITDA
Earnings before interest, taxation, depreciation and amortisation ("EBITDA")
and adjusted EBITDA are non-GAAP measures used by management to assess the
operating performance of the Group. EBITDA is defined as operating profit
before depreciation and amortisation. Exceptional items and share-based
payment charge are excluded from EBITDA to calculate adjusted EBITDA.
The Directors primarily use the adjusted EBITDA measure when making decisions
about the Group's activities. As they are non-GAAP measures, EBITDA and
adjusted EBITDA measures used by other entities may not be calculated in the
same way and hence are not directly comparable.
Exceptional items
Exceptional items are disclosed separately in the financial statements where
it is necessary to do so to provide further understanding of the financial
performance of the Group. Costs incurred in the year which are classified as
exceptional are those which are material in nature and derive from events or
transactions that do not fall within the ordinary activities of the Group and
which are individually, or in aggregate, of such size or incidence to require
specific disclosure. This is consistent with the way financial performance is
measured by management and reported to the Board.
Intangible assets
Internally generated intellectual property
An internally generated intangible asset consisting of intellectual property
arising from development (or the development phase) of an internal project is
recognised if, and only if, all of the following have been demonstrated:
• the technical feasibility of completing the intangible asset so that it
will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset; and
• the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
The amount initially recognised for internally generated intangible assets is
the sum of the expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognised, development expenditure is
charged to profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are
reported at cost less accumulated amortisation and accumulated impairment
losses. Internally generated intangibles not yet in use are not amortised but
are subject to annual impairment testing.
As yet, no internally generated intangible assets are being amortised.
Internally generated intangible assets are expected to be amortised over 3-5
years.
Research expenditure is recognised as an expense in the period in which it is
incurred.
Tangible assets
Tangible assets are recorded at cost net of accumulated depreciation and any
provision for impairment. Depreciation is provided to write off the cost of
the asset less any residual value over its useful economic life in line with
below. The residual values of assets are reviewed annually and revised where
necessary. Assets' useful economic lives are as follows:
Furniture and fittings 25% reducing
balance
Office equipment 3 years straight line
Leasehold improvements 25% reducing balance
Right-of-use lease assets straight line over the lease term
Impairment
For the purposes of assessing impairment, assets are grouped at the lowest
level for which there are separately identifiable cash flows. As a result,
some assets are tested individually for impairment and some are tested at
cash-generating unit level.
Intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the carrying amount exceeds the recoverable amount of the
asset or cash-generating unit. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value in use based
on an internal discounted cash flow evaluation. The cash flow evaluations are
a result of the Directors' estimation of future sales and expenses based on
their past experience and the current market activity within the business.
With the exception of goodwill, which the Group does not currently have, all
assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist.
Any impairment charge arising from the review of the carrying value of assets,
where material, is disclosed separately on the face of the consolidated income
statement.
Financial assets
Financial assets and liabilities are recognised when the Group becomes party
to the contractual obligations of a financial instrument. They are measured
initially at fair value, net of transaction costs. The Group subsequently
classifies and measures its financial assets as either financial assets at
fair value through profit or loss, at amortised cost or fair value through
comprehensive income, as appropriate. The classification depends on the
purpose for which the financial assets were acquired. At the reporting year
end the financial assets of the Group were all classified as loans or
receivables held at amortised cost.
Trade receivables
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They arise principally
through the provision of goods and services to customers but also incorporate
other types of contractual monetary assets.
They are initially recognised at fair value and measured subsequent to initial
recognition at amortised cost using the effective interest method, less any
impairment loss.
The Group's financial assets comprise trade receivables, other receivables
(excluding prepayments) and cash and cash equivalents.
Trade and other receivables - impairment
The Group applies an expected credit loss model to calculate the impairment
losses on its trade receivables. The Group applies the simplified approach to
providing for expected credit losses prescribed by IFRS 9, which permits the
use of the lifetime expected loss provision for all trade receivables. Trade
receivables at the reporting date have been put into groups based on days past
the due date for payment and an expected loss percentage has been applied to
each group to generate the expected credit loss provision for each group and a
total expected credit loss provision has thus been calculated.
Financial liabilities
The Group's financial liabilities include trade and other payables and
borrowings which include lease liabilities.
Financial liabilities are recognised when the Group becomes a party to the
contractual agreements of the instrument. All interest-related charges are
recognised as an expense in the income statement.
Trade payables are recognised initially at their fair value, net of
transaction costs and subsequently measured at amortised cost less settlement
payments.
Leases
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is located, less
any lease incentive received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis as those of
property and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
At inception the Group assesses whether a contract contains a lease. This
assessment involved the exercise of judgement about whether the Group obtains
substantially all the economic benefits from the use of that asset and whether
the Group has the right to direct the use of the asset.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less
and leases of low-value assets which it defines as having a purchase cost of
£5,000 or less. The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
The lease liability is measured at amortised cost using the effective interest
method.
The Group presents right-of-use assets in 'property, plant and equipment' and
lease liabilities in 'borrowings' in the statement of financial position.
Taxation
Current tax
Current income tax assets and liabilities comprise those obligations to fiscal
authorities in the countries in which the Group carries out its operations.
They are calculated according to the tax rates and tax laws applicable to the
fiscal period and the country to which they relate. All changes to current tax
liabilities are recognised as a component of tax expense in the income
statement unless the tax relates to an item taken directly to equity, in which
case the tax is also taken directly to equity. Tax relating to items
recognised in other comprehensive income is recognised in other comprehensive
income.
Deferred tax
Deferred income taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities and their
tax bases.
A deferred tax asset is recognised for all deductible temporary differences to
the extent that it is probable that taxable profit will be available against
which the deductible temporary differences can be utilised. Deferred tax is
not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries is not provided
if reversal of these temporary differences can be controlled by the Group and
it is probable that reversal will not occur in the foreseeable future. In
addition, tax losses available to be carried forward as well as other income
tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets,
such as those resulting from assessing deferred tax on the expense of
share-based payments, are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised. Deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their respective period
of realisation, provided they are enacted or substantively enacted at the
balance sheet date.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when the present obligations arising from legal or
constructive commitment resulting from past events will probably lead to an
outflow of economic resources from the Group which can be estimated reliably.
Provisions are measured at the present value of the estimated expenditure
required to settle the present obligation, based on the most reliable evidence
available at the reporting date taking into account risks and uncertainties
surrounding the obligation.
All provisions are reviewed at each balance sheet date and adjusted to reflect
the current best estimates.
Employee benefits
The Group provides a range of benefits to employees, including annual bonus
arrangements, paid holiday arrangements and defined contribution pension
plans.
Short-term benefits, including holiday pay and other similar non-monetary
benefits, are recognised as an expense in the period in which the service is
received.
Termination benefits are recognised immediately as an expense when the Group
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
Defined contribution pension plan
The Company operates a defined contribution pension scheme. The assets are
held separately from those of the Company in an independently administered
fund. The pension cost charge represents contributions payable by the Company
to the fund and is further detailed at note 7. Other creditors include
£190,148 (2021: £79,323) in respect of pension contributions committed but
not yet paid at year end.
The cost of pensions in respect of the Group's defined contribution scheme is
charged to the income statement in the period in which the related employee
services were provided.
Share-based payments
The Group operates equity settled share-based compensation plans for the
remuneration of its employees.
All employee services received in exchange for the grant of any share-based
compensation are measured at their fair values. These are indirectly
determined by reference to the share options awarded. Their value is appraised
at the grant date and excludes the impact of any non-market vesting conditions
(e.g. profitability or sales growth targets).
All share-based compensation is ultimately recognised as an expense in the
income statement with a corresponding credit to the share-based payment
reserve, net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected
to vest. Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. Estimates are
subsequently revised if there is any indication that the number of share
options expected to vest differs from previous estimates. No adjustment to
expense recognised in prior periods is made if fewer share options ultimately
are exercised than originally estimated. The impact of the revision of the
original estimates, if any, is recognised in the Statement of Comprehensive
Income over the remaining vesting period, with a corresponding adjustment to
the Share Based Payment Reserve.
Upon exercise of share options, the proceeds received, net of any directly
attributable transaction costs, up to the nominal value of the shares issued
are reallocated to share capital with any excess being recorded as additional
share premium.
Where modifications are made to the vesting or lapse dates of options the
excess of the fair value of the revised options over the fair value of the
original options at the modification date is expensed over the remaining
vesting period.
Equity and reserves
Issued share capital
Ordinary shares are classified as equity. The nominal value of shares is
included in issued capital.
Share premium
The share premium account represents the excess over nominal value of the fair
value of consideration received for equity shares, net of the expenses of the
share issue.
Share-based payment reserve
The share-based payment reserve represents the total value expensed at the
balance sheet date in relation to the fair value of the share options at their
grant date expensed over the vesting period under the relevant share option
schemes.
Deferred shares
Ordinary deferred shares are classified as equity. The nominal value of shares
is included in deferred share capital.
Retained earnings
The retained earnings include all current and prior period results for the
Group and the results of the Group's subsidiaries as determined by the income
statement net of dividends paid.
Dividends
Final equity dividends to the shareholders of the Group are recognised in the
period that they are approved by shareholders. Interim equity dividends are
recognised in the period that they are paid. Dividends receivable are
recognised when the Group's right to receive payment is established.
3. Judgements in applying accounting policies and key sources of
estimation uncertainty
The preparation of financial statements requires management to make
judgements, estimations and assumptions that affect the amounts reported for
assets and liabilities as at the year-end date and the amounts reported for
revenues and expenses during the year. These judgements and estimates are
based on management's best knowledge of the relevant facts and circumstances,
their historical experience and other factors including expectations of future
events. Actual results may differ from the amounts included in the financial
statements. The estimates and assumptions that have a significant risk of
material adjustment to the carrying amount of assets and liabilities within
the next financial years are summarised below:
Research and development costs
Capitalisation of development costs in accordance with IAS 38 requires
analysis of the technical feasibility and commercial viability of the project
in the future. This in turn requires a long-term judgement to be made about
the development of the industry in which the development will be marketed.
Where the Directors consider that sufficient evidence exists surrounding the
technical feasibility and commercial viability of the project which indicates
that the costs incurred will be recovered they are capitalised within
intangible fixed assets. The amount of the capitalisation is based on
estimates to judge the percentage of the time relevant staff spend on
projects. Where insufficient evidence exists, the costs are expensed to the
income statement.
Valuation of share-based payments
The valuation of share-based payments is calculated by using valuation models.
The estimated fair value of the share-based payments was calculated by
applying a Black Scholes valuation model. The valuation of employee share
options is inherently subjective as it involves a number of inputs which are
not market observable. See further details in Note 25
Sources of estimation uncertainty
- Impairment of intangible assets Determining whether intangible assets are
impaired requires an estimation of the value in use of the cash-generating
unit to which the intangibles have been allocated. The value in use
calculations require an estimation of the future cash flows expected to arise
from the cash-generating units and a suitable discount rate to calculate the
present value.
4. Financial Instruments - risk management
The Board of Directors of Made Tech Group Plc has overall responsibility for
the determination of the Group's risk management objectives and policies. The
Group has in place a risk management programme that seeks to limit the adverse
effects on the financial performance of the Group. All funding requirements
and financial risks are managed based on policies and procedures adopted by
the Board.
The Group does not enter into derivative transactions or trade in financial
instruments and the Directors believe the Group is not materially exposed to
commodity price risk.
The Group is exposed to the following financial risks:
• credit risk;
• liquidity risk; and
• interest rate risk.
The Group is exposed to risks that arise from its use of financial
instruments. The principal financial instruments used by the Group, from which
financial instrument risk arises, are as follows:
• trade and other receivables;
• cash and cash equivalents; and
• trade and other payables.
To the extent financial instruments are not carried at fair value in the
consolidated statement of financial position, book value approximates to fair
value.
Trade and other receivables are measured at amortised cost. Book values and
expected cash flows are reviewed by the Board and any impairment charged to
the consolidated statement of comprehensive income in the relevant period.
Trade and other payables are measured at amortised cost.
Financial instruments by category
Financial assets At 31 May 2022 £'000 At 31 May 2021 £'000
Cash and cash equivalents 12,333 921
Trade receivables 4,400 2,098
Other receivables 1,665 446
Financial assets at amortised cost 18,398 3,465
Financial liabilities At 31 May 2022 £'000 At 31 May 2021 £'000
Current
Trade payables 2,705 747
Accruals 1,255 122
Social security and other taxes 1,891 1,612
Other payables 203 802
Trade and other payables 6,054 3,283
Non-current
Borrowings - CBIL - 1,077
Borrowings - lease liability 142 332
Current
Borrowings - CBIL - 172
Borrowings - lease liability 180 156
Loans and borrowings 322 1,725
Financial liabilities at amortised cost 6,376 5,008
The key risks to the Group and the policies and procedures put in place by
management to manage them are summarised below:
Interest rate risk
The Group is exposed to cash flow interest rate risk from bank borrowings at
variable rates. The Group's bank borrowings are disclosed in note 21. As at 31
May 2022 there are no loans outstanding (FY21: £1.25 million), therefore
there is no material exposure to interest rate risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. The
Group's net trade receivables for the two reported periods are disclosed in
the financial assets table above.
The Group considers that its exposure to credit risk is insignificant as it
carries out work for public sector entities without the risks attached to
normal commercial credit sales.
The Directors do not consider that there is any concentration of risk within
other receivables.
Credit risk on cash and cash equivalents is considered to be small as the
counterparties are substantial banks with high credit ratings. The maximum
exposure is the amount of the deposit. To date, the Group has not experienced
any losses on its cash and cash equivalent deposits.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
At 31 May 2022 Within 1 year £'000 2-5 years 5 + years £'000
£'000
Trade payable 2,705 - -
Accruals 1,225 - -
Other payables 203 - -
Bank loans - - -
Lease Liability 180 142 -
4,313 142 -
At 31 May 2021 Within 1 year £'000 2-5 years 5 + years £'000
£'000
Trade payable 747 - -
Accruals 122 - -
Other payables 802 - -
Bank loans 188 301 1,017
Lease Liability 172 190 142
2,031 491 1,159
Capital management
The Group's capital is made up as follows:
At At
31 May 2022 31 May 2021
£'000 £'000
Share capital - issued 74 1
Share capital - deferred 12 -
Share premium 13,421 -
Share based payment reserve 2,376 -
Retained deficit (1,096) (788)
14,787 (787)
The Group's objectives when maintaining capital are:
• to safeguard the entity's ability to continue as a going concern, so that
it can continue to provide returns for shareholders and benefits for other
stakeholders; and
• to provide an adequate return to shareholders by pricing services
commensurately with the level of risk.
The capital structure of the Group consists of shareholders' equity as set out
in the consolidated statement of changes in equity. All working capital
requirements are financed from existing cash resources, fundraising and
borrowings.
5. Operating profit/(loss)
The operating profit/(loss) has been arrived at after charging/(crediting):
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Fees paid to the Group's auditors (see below) 186 13
Other accountancy fees 26 -
Loss on disposal of property, plant and equipment - 10
Advertising expense 388 175
Depreciation of property, plant and equipment 308 265
Staff costs 21,355 8,914
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Analysis of the fees paid to the Group's auditors
Audit of the Group and Company's financial statement 47 13
Other services 139 -
Total fees paid to Groups auditor 186 13
Other services provided by the Groups' auditors relate to professional
services in connection with the Group's IPO in September 2021.
6. Finance expense
Finance expense Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Interest on bank loans and bank fees 12 6
Interest on lease liability 17 24
Total finance expense 29 30
7. Exceptional items
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Transaction and IPO-related costs 180 -
Termination costs 44 -
Total exceptional items 224 -
Exceptional items relate to the following:
• Transaction and IPO-related costs - incremental external one-off costs
relating to the IPO.
• Termination costs - relating to severance for three employees exited in
the year.
8. Taxation
The following tax was recognised in the income statement:
31 May 2022 31 May 2021
£'000 £'000
Corporation tax - -
Total current tax expense - -
Deferred tax
Origination and reversal of timing differences 20 (25)
Tax charge/(credit) for the year 20 (25)
The tax assessed for the year is different from the standard rate of
corporation tax as applied in the respective trading domains where the Company
operates.
The Group's tax charge can be reconciled to the profit/(loss) in the income
statement and effective tax rate as follows:
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Loss before tax (288) (806)
Tax credit at the UK corporation tax rate of 19% (FY21: 19%) (55) (153)
Effects of:
Capital allowance in excess of depreciation (53) 2
Initial recognition of leases not due to business combination - 7
Expenses not deductible for tax purposes 485 62
Utilisation of losses brought forward (32) -
Unused tax losses 17 -
IP capitalisation (362) -
Non-recognition of temporary difference - 57
Tax charge/(credit) for the year 20 (25)
Deferred tax Year to Year to
31 May 2022 31 May 2021
£'000 £'000
At 1 June - 25
Deferred tax recognised - -
Profit/(loss) 20 (25)
At 31 May 20 -
Current taxes comprise the income taxes of the Group companies which posted a
taxable profit for the year, while deferred taxes show changes in deferred tax
assets and liabilities which were recognised by the Group on the temporary
differences between the carrying amount of assets and liabilities and their
amount calculated for tax purposes, and on consolidation adjustments,
calculated using the rates that are expected to apply in the year these
differences will reverse.
Factors that may affect future tax charges
The government made a number of budget announcements on 3 March 2021. These
include confirming that the rate of corporation tax will increase to 25% from
1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred
taxes at the balance sheet date have been measured using these enacted tax
rates and reflected in these financial statements.
9. Loss per ordinary share
Loss per ordinary share FY22 FY21
£'000 £'000
Loss for the period (308) (781)
Weighted average number of ordinary share in issue for the year ('000) 135,729 109,630
Loss per ordinary share (pence)
Basic loss per share (0.22p) (0.71p)
Diluted loss per share (0.22p) (0.71p)
The weighted average number of ordinary shares for the prior year has been
restated for events in the current year including a bonus issue of shares,
share splits and reverse share splits (see note 21) in compliance with IAS 33.
Where a loss has been recorded the effect of options is not dilutive and
therefore the basic and diluted figure is the same.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. The Company has potentially dilutive ordinary shares arising from
share options granted to employees. Options are dilutive under the Group
Restricted Share Plan ("RSP"), where the exercise price, together with the
future IFRS 2 charge of the option, is less than the average market price of
the Company's ordinary shares during the year. Options under the LTIP schemes,
as defined by IFRS 2, are contingently issuable shares and are therefore only
included within the calculation of diluted EPS if the performance conditions,
as set out in note 25, are satisfied at the end of the reporting period,
irrespective of whether this is the end of the vesting period or not.
The Company currently has 12,184,554 non-redeemable deferred shares of £0.001
in issue with no voting, dividend or other distribution rights. The stated
intention from their creation upon Admission was that they would be purchased
in their entirety by the Company. As no rights of conversion nor pre-arranged
formula to convert deferred shares into ordinary shares were included in the
Articles of Association, they have never been considered "convertible
securities". Accordingly, deferred shares have not been included in the
calculation of diluted earnings per share.
The calculation of adjusted earnings per share is based on the after tax
adjusted operating loss after adding back certain costs as detailed in the
table below. Adjusted earnings per share figures are given to exclude the
effects of share-based payments and exceptional items, all net of taxation,
and are considered to show the underlying performance of the Group.
The Adjusted basic earnings per share is calculated by dividing the adjusted
profit/(loss) after tax for the year by the weighted average number of
ordinary shares in issue during the period.
FY22 FY21
£'000 £'000
Loss for the period (308) (781)
Share based payments (including associated taxes) 2,376 -
Exceptional items 224 -
Adjusted profit/(loss) after tax for the year 2,292 (781)
Weighted average number of ordinary share in issue for the year ('000) 135,729 109,630
Effect of dilutive potential ordinary shares from share options 3,962 -
Weighted average number of ordinary shares for the purposes of diluted 139,691 109,630
earnings per share ('000)
Adjusted Basic earnings/(loss) per share 1.69p (0.71p)
Adjusted diluted earnings/(loss) per share 1.64p (0.71p)
10. Intangible assets
Intellectual Total
property £'000
£'000
Cost
At 31 May 2020 - -
At 31 May 2021 - -
Additions 1,904 1,904
At 31 May 2022 1,904 1,904
Amortisation
At 31 May 2020 - -
At 31 May 2021 - -
Charge for period - -
At 31 May 2022 - -
Net book value
At 31 May 2021 - -
At 31 May 2022 1,904 1,904
During the year the Group has capitalised costs relating to intellectual
property. This is an internally generated intangible asset that is currently
still in the process of completion. Upon completion the intellectual property
is expected to be amortised over a useful life of 3-5 years. Personnel costs
of £1,809,293 (2021: £nil) have been capitalised as intangible assets.
11. Tangible assets
Furniture, fittings and equipment
Land and buildings £'000 Right-of-use assets
£'000 £'000 Total
£'000
Cost
At 31 May 2020 33 204 766 1,003
Additions - 272 - 272
Disposals - (23) - (23)
At 31 May 2021 33 453 766 1,252
Additions - 432 - 432
At 31 May 2022 33 885 766 1,684
Depreciation
At 31 May 2020 - 70 175 245
Charge for year 17 95 153 265
Disposals - (13) - (13)
At 31 May 2021 17 152 328 497
Charge for period 4 151 153 308
At 31 May 2022 21 303 481 805
Net book value
At 31 May 2021 16 301 438 755
At 31 May 2022 12 582 285 879
12. Leases
The Company leases office premises. Under IFRS 16 this lease has been
classified as a right-of-use asset. The lease liability is included within
Tangible assets on the statement of financial position. There are no other
long-term leased assets.
Right-of-use assets Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Balance as at 1 June 438 591
New leases - -
Depreciation charge for year (153) (153)
Balance at 31 May 2022 285 438
Lease liability
Maturity analysis - contractual discounted cash flows
Less than one year 180 156
One to five years 140 319
Total lease liabilities at 31 May 2022 320 475
Lease liabilities included in the statement of financial position:
Current 180 156
Non-current 140 319
Right-of-use assets are included within tangible assets in the consolidated
statement of financial position.
Amounts recognised in the Consolidated income statement
The Consolidated income statement shows the following amounts relating to
leases:
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Interest paid on lease liability 17 24
Any expense for short-term and low value leases is not material and has not
been presented.
13. Bank loans and borrowings
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Non-current
Bank loan facility - secured - 1,078
Current
Bank loan facility - secured - 172
Total loans and borrowings - 1,250
Bank loan facility - secured
On 8 August 2020 the Company entered into a COVID-19 Business Interruption
Loan ("CBIL") facility agreement with HSBC UK Bank Plc. The maximum loan
facility was £1,250,000 which was fully repayable on 17 August 2026. The
current interest rate that applies to the loan is 4.09% per annum. The loan
was covered by the bank's fixed and floating charge over all assets of the
Company. During the year the Company repaid the loan in full, on 12 October
2021.
Analysis of net debt
Lease liabilities
Cash Bank loans £'000 Total
£'000 £'000 £'000
At 31 May 2020 986 - (625) 361
Working capital movements (64) - - (64)
Drawdown of loans - (1,250) - (1,250)
Payment of lease liabilities - - 150 150
At 31 May 2021 922 (1,250) (475) (803)
Working capital movements (2,150) - - (2,150)
Income from share issue net of IPO costs 13,561 - - 13,561
Repayment of loans - 1,250 - 1,250
Payment of lease liabilities - - 155 155
At 31 May 2022 12,333 - (320) 12,013
14. Deferred tax
Deferred tax liabilities are analysed as follows.
Year to Year to
31 May 2022 31 May 2021
£'000 £'000
Accelerated capital allowances 167 -
Tax losses (147) -
Total deferred tax liability 20 -
Changes during each year are as follows:
Year to
31 May 2022
£'000
Balance at 1 June -
Tax charge in respect of current year 20
Balance at 31 May 20
15. Share-based payments
In the year ended 31 May 2022 the Group recognised total expenses of
£2,376,000 (2021: £nil) in respect of equity-settled share-based payment
awards under IFRS 2 Share-based Payment.
Executive Directors and selected Group employees were granted awards under the
Made Tech Group Plc Long Term Incentive Plan ("LTIP") on 30 September 2021
over 2,443,643 (2021: nil) shares which were structured as nominal cost
options. LTIP awards vest subject to continued employment and, in the most
part, Group-based performance conditions.
In addition, selected employees of the Company were granted Restricted Share
Awards ("RSAs") under the Restricted Share Plan ("RSP") on 30 September 2021,
21 December 2021 and 7 April 2022 over 4,262,866 (2021: nil) shares. Awards
were structured as nominal or nil cost options. RSAs vest over one, two and
three years based on continued employment but with no performance conditions.
Details of the maximum number of ordinary shares which may be issued in future
periods in respect of LTIP awards and RSAs outstanding at 31 May 2022 are
shown below:
LTIP RSAs
Number of shares Number
of shares
At 1 June 2021 - -
Granted in the year 2,433,643 4,262,866
Forfeited in the year - (745,524)
At 31 May 2022 2,433,643 3,517,342
The fair value at grant date of each respective award was independently
determined using an adjusted form of the Black-Scholes model which includes a
Stochastic simulation model that takes into account the following inputs.
LTIP RSAs RSAs RSAs
30 September 2021* 30 September 2021* 17 December 2021 7 April
2022
Awards 919,569 919,569 235,655 368,850 3,929,119 322,290 11,457
Vesting Relative TSR** Absolute TSR** Personal Recruitment awards Tranched Tranched Tranched
performance vesting vesting vesting
Share price at grant date (pence) 135 135 135 135 135 114 41
Exercise price (pence) 1 1 1 1 1 0 0
Expected volatility 40% 40% 40% 40% 40% n/a n/a
Expected life (years) 3 3 3 1, 2, 3 1, 2, 3 1, 2, 3 1, 2, 3
Expected dividend yield 0% 0% 0% 0% 0% 0% 0%
Risk-free interest rate 0.39% 0.39% 0.39% 0.15% (1yr) 0.28% (2yr) 0.39% (3yr) 0.15% (1yr) 0.28% (2yr) 0.39% (3yr) n/a n/a
Fair value (pence) - holding period 92.5 67.2 n/a n/a n/a n/a n/a
Fair value (pence) - no holding period 99.0 71.9 134.0 134.0 134.0 114.0 41.0
* While the deed of grant was dated 24 September 2021, as the grant was
contingent on the Admission of the Company, as per IFRS 2, the grant date did
not take place until Admission. As such, the Admission date of 30 September
2021 has been used as the grant date for the IFRS 2 statutory valuations.
** The vesting of these LTIP awards is subject to the Group achieving the
following performance targets:
Performance condition Weighting Performance targets
Absolute TSR performance 50% 0% of this part vests unless the Company's TSR performance equates to a CAGR
of 7.5%, for which 25% of this part vests, rising pro-rata to 100% of this
part vesting for the Company's TSR performance equating to a CAGR of 15% or
higher.
Relative TSR performance 50% 0% of this part vests unless the Company's relative TSR performance is median
ranking performance, for which 25% of this part vests, rising pro-rata to 100%
of this part vesting for the Company's relative TSR performance ranking upper
quartile or better.
16. Post balance sheet events
There are no significant events after the balance sheet date to report
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