REG - Accumuli PLC - Interim Results <Origin Href="QuoteRef">ACM.L</Origin> <Origin Href="QuoteRef">QED.L</Origin> <Origin Href="QuoteRef">TPT.L</Origin> - Part 1

Topps TilesAnnouncement

25/11/2014 08:51

RNS Number : 8684X
Accumuli PLC
25 November 2014
25 November 2014
Accumuli Plc
("Accumuli" or the "Group")
Interim Results for the six months ended 30 September 2014
Accumuli plc (AIM:ACM), the independent specialist in IT security and risk management, is pleased to announce its interim results for the six months ended 30 September 2014.
Highlights
 Revenue up 34% at 10.3m (H1 2013: 7.7m)
 Gross profit up 18% at 5.3m (H1 2013: 4.5m)
 64% of gross profit from recurring revenue streams (H1 2013: 62%)
 Trading group EBITDA up 36% at 1.9m (H1 2013: 1.4m)
 Group EBITDA up 36% at 1.5m (H1 2013: 1.1m)
 Cash of 3.6m at period end (30 September 2013: 3.6m)
 Acquisition of ArmstrongAdams Limited, a leading information risk management specialist and reseller for Imperva and Skybox, for initial net cash consideration of 0.1m in June 2014 and contingent cash consideration payable of up to 1.5m dependent upon performance
 Full time headcount now exceeds 100 employees (30 September 2013: 65) 
 "Customer Intimacy" strategy gaining traction with more than 20% of the group's customers now taking more than one service (H1 2013: 15%)
 Continued development of the group's IP, resulting in the sale of our DDAM technology to the US and UK operations of a global professional services organisation 
 Strong pipeline going into the second half of the year with a number of significant contract wins post period end
1 Revenues derived from managed services, software support and maintenance contracts where the group has an obligation to provide an ongoing service over a contractual period.
2 Trading group EBITDA = earnings before interest, tax, depreciation and amortisation, share-based payments, separately identifiable costs and income (acquisition costs andone-off costs/income) and plc costs of 0.4m (H1 2013: 0.3m).
3 Group EBITDA = earnings before interest, tax, depreciation and amortisation, sharebased payments, separately identifiable costs and income (acquisition costs and one-off costs/income).
4 Accumuli's proprietary software providing DNS, DHCP activity monitoring, archiving, reporting and analysis.
Nick Kingsbury, Chairman of Accumuli, commented:
"We are very pleased with the growth and progress achieved in the period and trading in the first half of the year is comfortably in line with management expectations. The success of our Customer Intimacy programme initiated a year ago is generating results, with increased levels of cross-selling across the Group's customer base and a 10% growth in recurring revenues, providing the Group with enhanced financial visibility. 
"There is strong momentum going in to our traditionally stronger second half and this, combined with a growing market, leaves the Board optimistic for a successful outcome for the year as a whole."
For further information, please contact:
Accumuli plc Tel: +44 (0)1256 303 700
Gavin Lyons, CEO
Ian Winn, Finance Director
finnCap Tel: +44 (0)20 7220 0500
Charlotte Stranner/Christopher Raggett (Corporate Finance)
Victoria Bates (Corporate Broking)
MXC Capital Advisory LLP Tel: +44 (0)20 7801 9596
Marc Young
Charles Vivian
Newgate Threadneedle Tel: +44 (0)20 7653 9850
Hilary Buchanan
Jasper Randall
Adam Lloyd
About Accumuli
Accumuli is a leading, rapidly growing, UK based independent specialist in IT security and risk management. We provide industry leading solutions and services underpinned by rare skills and capabilities. Our objective is to enable organisations to manage the ever increasing IT risk landscape and leverage their IT assets for business value. 
Managing risk created from significant IT Trends (such as cybercrime, consumerisation of IT, Big Data) or business objectives (such as saving money or doing more with less) is the perennial balancing act for any IT department. The ideal outcome is to have an IT infrastructure that is available, performing and visible whilst always being compliant, resourced and secure. 
The Accumuli approach is to assist our customers in identifying both the risk and potential of their IT infrastructure and address any gaps with leading solutions and expert services. Accumuli has a culture that is focused entirely on helping our customers and working as one team to deliver tangible results - we can help with a very specific need or a holistic end-to-end solution. 
Accumuli is a public company quoted on the AIM market of the London Stock Exchange with offices in Basingstoke, Cambridge and Leeds. Accumuli's global customer base consists of companies of all sizes across an expanding range of industry sectors including financial services, utilities, telecommunications, manufacturing and government. 
Accumuli Security
Managing IT Risk | Leveraging IT Assets 
Chairman's statement
Overview
I am very pleased to report a strong set of interim results for the six months ended 30 September 2014, in line with management expectations. The latter months of this period were particularly buoyant and it bodes well for the second half of our financial year, which traditionally outperforms the first half.
The strong momentum of the first half has been maintained after the period end with a number of significant contract wins in the financial services sector worth approximately 0.9m of gross profit, a substantial proportion of which will be recognised in the current full year.
Revenues were up 34% at 10.3m (H1 2013: 7.7m), gross profit was 18% higher at 5.3m (H1 2013: 4.5m) and group EBITDA was 36% higher at 1.5m (H1 2013: 1.1m). 
We remain focused on the proportion of total gross profit generated from recurring revenues, represented by managed services or support contracts that have a typical term of twelve months or more, a low rate of attrition and are billed in advance, and this increased to 64% in the period (H1 2013: 62%). Group loss before tax was 0.5m (H1 2013: 0.2m); however, these numbers reflect the costs associated with a "buy and build" strategy and reflect an amortisation charge on intangibles arising from acquisitions of 1.4m (H1 2013: 0.8m) and acquisition and re-organisation costs of 0.2m (H1 2013: 0.2m).
Our Customer Intimacy programme focuses on two main sales targets: growing recurring revenues and increasing the amount of cross selling across the portfolio. We have made solid progress in these objectives with an increase in recurring revenues year on year of 10%, and over 20% of our customers now take more than one product or service from us (H1 2013: 15%).
We have also continued to invest time and resources into the further development of our own proprietary solutions and middleware - this ensures the "stickiness" of our customers, which in turn underpins our managed services offering. Investment has been focused on DDAM, where we secured product sales worth 0.1m with a global professional services organisation, and enhancements to our hosted Managed 2FA service. During the period our headcount passed 100 for the first time, marking a particular landmark for our business. We have been actively recruiting in all customer-facing areas of the business, with particular emphasis on our own 24/7 Security Operations Centre.
Cash balances at the end of September were 3.6m (30 September 2013: 3.6m). We continue to generate strong operational cash flow before expenditure on M&A activity and development costs on DDAM and the Managed Two-Factor Authentication service, although this period was impacted by the timing of invoicing and the reversal of a temporary working capital benefit of 0.4m which was flagged in our annual results statement forthe year ended 31 March 2014.
The integration of ArmstrongAdams Limited ("ArmstrongAdams") into the group has been seamless and we are already beginning to benefit from leveraging the common customer relationships as well as our complementary product sets.
Outlook
The second half of the year is traditionally stronger in terms of revenue and margin performance and we envisage that this will be the same for the current financial year.
Fundamental growth prospects remain strong in the IT security market and we will strive to ensure that we continue to benefit from this growth.
We remain on the lookout for further accretive acquisitions that will complement our existing expertise and capabilities. Given our cash position, we have the resources and flexibility to move quickly where necessary.
Our employees remain our biggest, and growing, asset in what is essentially a service-led technology business and we continue to value the contribution that each and every one of them makes to our success.
I look forward to providing further updates on our progress in the coming months.
Nick Kingsbury
Non-executive chairman
25 November 2014
Business review
Overview
I am pleased to report that we have again delivered a strong set of interim results in line with management expectations and which demonstrate our continuing ability to deliver on our stated strategy. 
We are pleased to report on a number of key operational achievements in the period: 
Highlights
 We were delighted to win, on 20 November 2014, the Deloitte Dynamic Business of the Year Award for the Thames Valley. The award is now in its ninth year and focuses on businesses that have a clear vision for the development of their staff, systems, products and services. The award recognises not just financial performance but management's ambition to develop talent and to take advantage of newfunding, M&A, technological or commercial opportunities.
 We have invested in additional resources, systems and processes for our 24/7 Security Operations Centre in Leeds ("SOC"). We want to continually improve the end to end customer experience and ensure that all services are managed from the UK. We have already seen pleasing results from these investments in the areas of customer satisfaction surveys, response and resolution times. 
 Accumuli is now part of the cyber-security information sharing partnership ("CISP") programme which is run by the cabinet office. This will provide our analysts in the SOC with access to the Government Computer Emergency Response Team's ("CERT") analysis of threats and vulnerabilities, and will also enable them to share information from other members on current trends and attack activity.
 Ben Wheeler was appointed as Director of Business Partnerships in July to ensure we continue to work closely with our key partners including technology vendors, service providers and distribution partners. As our business grows we need to ensure that we continue to have close and effective partnerships. 
 Salesforce.com is now at the heart of the business enabling us to manage sales cycles, close plans, forecasts and customer data much more effectively. As we continue to focus on customer intimacy and cross selling, having this data in a central place is important to our planning and future success. 
 Our culture and values are as strong as they ever have been - the organisational structure consists of four core disciplines and four centres of excellence and is well understood within the business. The level of teamwork is exceptional and in the first half of the year we received the highest internal culture survey results in our history. 
 Ian Winn (finance director) was promoted at the end of the period and will now perform a combined role of chief operating officer and finance director for the second half of the year and beyond. The management team and day to day business operations have developed substantially over the last two years and are now at the point that I can concentrate the majority of my efforts on outward facing activities including acquisitions, customer interaction, marketing, partners and vendors.
Market and customers
The market for IT security and risk management continues to grow due to the increasing and complex threat landscape. Motivations behind attacks can be categorised into four areas: cybercrime, hacktivism, cyber-warfare and cyber espionage. Cybercrime continues to be the largest category and in a recent report published by the Ponomon Institute on the cost of cybercrime for the UK there werethree key points: 
 cybercrimes continue to be costly. Ponomon found that the average annualised cost of cybercrime for the 36 organisations in their study was 3.0m per year, with a range of 0.4m to 17m;
 cyber-attacks have become common occurrences. The companies in the study experienced 48 successful attacks per week in total and 1.3 successful attacks per company per week. This represents an increase of 16% from the previous year's successful attack experience; and
 the most costly cybercrimes are those caused by malicious insiders, denial of service and web-based attacks. Mitigation of such attacks requires enabling technologies such as SIEM, intrusion prevention systems, application security testing and enterprise governance, risk management and compliance ("GRC") solutions.
Organisations are, however, becoming more threat aware. Gartner recently said that worldwide information security spending will grow almost 8% in 2014. Budget is one element of the required response but the most significant issue is access to skilled resources, processes and systems. Infonetics Research says the requirement for managed security services will continue to grow and recently forecasted that the global market will increase by 45% over the next five years due to the volume and complexity of threats.
Governments are also responding by publishing cyber security frameworks so that businesses can understand the problem and follow certain steps to protect themselves. In the US there is the NIST framework and in the UK there is the guide to cyber essentials and ten steps to cyber security. Both of these outline how a company can protect itself by following steps such as "Prepare, Protect, Detect and Respond". Whilst these are very good frameworks and go a long way to help businesses, the challenge lies in a company's ability to determine what an acceptable level of risk for their business is. Once this has been evaluated, then the organisation also needs access to expert resources to design, deploy, configure, manage and monitor chosen policies, systems and processes. 
Organisations are increasingly looking to a "Capability Partner" to help them with all of the activities listed above and that is where Accumuli can add significant value - we help organisations manage IT risk and leverage IT assets for business value. 
Solutions and services
We continue to evolve our solutions and services framework - we currently have four centres of excellence with deep technical expertise but we always have to evaluate the technology horizon. Specific trends that we are seeing include: 
 an emerging concept of the next generation security platform which combines machine readable threat intelligence, reputation threat intelligence and internal security intelligence;
 developing interest from large organisations to take a managed service for DDI, technologies that provide the core foundations of every network and are critical to a reliable and robust infrastructure; and 
 continued interest in Accumuli developing small amounts of IP to enable customer technologies to talk to one another. We have seen progressive growth in our DDAM solutions and are now being asked to develop similar solutions for rogue device detection.
We believe we are well placed to take advantage of all of these trends.
People
For the first time in our history we surpassed the milestone of over 100 employees and we will continue to grow the staff base. We remain a people-led business and in the first half of the year we implemented several projects aimed at helping with employee development and retention. Culture and values continue to be key to our business - recruiting and retaining the right individuals truly differentiates us. The teamwork, commitment to our customers and general level of professionalism have been pleasing to observe in the first half of the year.
Acquisitions 
ArmstrongAdams has been successfully integrated and has been a good acquisition for us. We shared several customers and theacquisition has enabled us to penetrate those customers further with multiple solutions and start talking about a more strategic relationship. The solutions that ArmstrongAdams are proficient in also complement our "defence in depth" centre of excellence, enabling us to align resources.
It has been over two years since we acquired EdgeSeven and approaching one year since we acquired Eqalis. All key employees remain in the business, which is a credit to our ability to truly integrate a company and ensure critical members of staff are in roles that are rewarding. 
We continue to seek acquisition opportunities and are confident in our structure to enable us to integrate businesses efficiently and effectively.
Financial
The financial results for the six months ended 30 September 2014 include a three month contribution from the ArmstrongAdams acquisition. In this period ArmstrongAdams generated revenues of 1.0m and gross profit of 0.2m.
Revenues in the traditionally quieter first half were 10.3m (H1 2013: 7.7m), an increase of 34%. 
Revenues from Support and Managed Services were 10% higher than the comparative period on a like for like basis, which, after adjusting for customer attrition and renewals at lower margins, equates to gross growth in excess of 10%. Whilst revenues from Technology Solutions were lower than the comparative period on a like for like basis (in line with internal budgets), they are heavily influenced by timing of large projects and, given the order intake at the end of September (which was fulfilled in October), we expect to show growth for the full year. Our revenues from this source also include 0.1m of sales from our own proprietary DDAM technology. Revenues from Professional Services were 1.1m (H1 2013: 0.9m), which, on a like for like basis, meant that revenues were flat. This was primarily due to delays in the recruitment of consultants and order intake in the firstquarter of the year. In the second quarter we were able to fulfil our recruiting requirements for consultants and we closed a number of significant orders which provide for long term consulting contracts with, amongst others, a large financial services business and a professional services organisation, both of which call upon our undoubted expertise in ArcSight's SIEM technology. Since the period end we have continued to invest in our consulting resource and we expect the third quarter of this financial year to be the best performing quarter for Professional Services in our relatively short history.
Gross profit for the period was 5.3m (H1 2013: 4.5m). On a like for like basis Support and Managed Services gross profit grew by 8% whilst Professional Services gross profit was flat for the reasons referred to above. If we had been able to fulfil the order intake for Technology Solutions in the financial period (rather than the second half), we would have reported gross profit growth of over 30% on a like for like basis, thus demonstrating the continued sensitivity of this revenue type to large one-off contracts. 
The overall gross margin of 52% (H12013: 58%) remains firmly in our targeted range with the small decrease from last year being down to the slightly lower margins on Technology Solutions and Professional Services, where, in order to satisfy demand, we have made more use of external consultants to deliver orders. More importantly the proportion of gross profit originating from recurring revenues increased during the period to reach 64% (H1 2013: 62%).
Trading group EBITDA was 1.9m (H1 2013: 1.4m). Trading overheads of 3.4m (H1 2013: 3.1m) increased as a result of the full period effect of the Eqalis and Signify acquisitions made last year. Whilst investment has been made in people it is worth highlighting that the recruitment of Professional Service consultants is in line with growth, and fully funded, and the investment in the 24/7 SOC replaced anexistingthird party supplier cost on a cost break-even basis.
Group EBITDA was 1.5m (H1 2013: 1.1m), a 36% increase on the comparative period.
Loss after tax for the period was 0.4m (H1 2013: 0.1m). As an acquisitive business this result is after non-cash costs including amortisation of intangible assets recognised on acquisition of 1.4m and share-based payment costs of 0.3m (including 0.2m (H1 2013: nil) which relates to the charge for the group's Executive LTIP) as well as direct cash costs of acquisition and re-organisation of 0.2m.
We view our key earnings per share measure as that from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income and LTIP costs, as we believe this more accurately reflects the trading performance of the business and ignores the one-off costs incurred as part of our investment strategy. On this measure we generated diluted earnings per share of 0.67p (H1 2013: 0.55p), which represents a 22% increase.
Cash balances at 30 September 2014 were 3.6m (30 September 2013: 3.6m). Cash generated from trading operations was 1.1m (H1 2013: 1.8m). This continues to demonstrate the capacity for our business model to generate cash; however, the rate of cash generation in this period has been suppressed by the reversal of a temporary working capital benefit of 0.4m (which was flagged in our annual results statement for the year to 31 March 2014) and the substantial build up in working capital at the period end caused by our invoicing being weighted towards the second quarter.
Post period end, we paid the final dividend (0.7m) for 2014 on 15 October 2014 and we will also make the first of three annual deferred consideration payments of 0.4m to the sellers of Eqalis at the end of November and the first of four half-yearly deferred consideration payments of 0.2m (subject to performance) to the sellers of ArmstrongAdams in February 2015.
Outlook
We continue to be confident in our market, strategy, growth plan and ability to execute. Our solutions and services proposition is helping our customers manage their IT risk and leverage their IT assets for business value. We remain intensely focused on penetrating our customers with that message so that we increase our share of wallet and take the business to the next level. 
Recruiting and retaining our staff, maintaining our culture and building on solid foundations are all elements that continue to drive our business forward. 
I am proud of the business we have built so far; we have a great team of people at Accumuli and I would like to thank each and every one of them for their contribution. I look forward to delivering further and continued success in the current year. 
Gavin Lyons
Chief executive officer
25 November 2014
Financial statements
Consolidated statement of comprehensive income
for the six months ended 30 September 2014

Notes
Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Revenue

10,283
7,699
16,624
Cost of sales

4,946
3,219
6,687
Gross profit

5,337
4,480
9,937
Other operating expenses

3,886
3,419
7,078
Operating profit from continuing operations before amortisation, depreciation and share-based payment costs

1,451
1,061
2,859
Amortisation
4
1,387
836
1,930
Depreciation

120
118
251
Share-based payment costs 

300
111
208
Operating (loss)/profit from continuing operations before separately identifiable costs

(356)
(4)
470
Separately identifiable costs:




- acquisition and M&A costs

106
164
643
- net adjustments to consideration

-
76
-
- fair value adjustment on EdgeSeven share consideration

-
-
423
- re-organisation costs

61
-
333
- other non-recurring income 

-
-
(12)
Operating loss from continuing operations

(523)
(244)
(917)
Finance income

79
41
30
Finance costs

(39)
(10)
(56)
Loss before taxation from continuing operations

(483)
(213)
(943)
Income tax credit
2
100
126
188
Loss for the period from continuing operations 

(383)
(87)
(755)
Other comprehensive income




Items that will be reclassified subsequently to profit or loss:




- exchange differences on translating foreign operations

-
-
(40)
Other comprehensive losses for the year, net of tax

-
-
(40)
Total comprehensive expenditure for the period attributable to owners of the parent 

(383)
(87)
(795)
Loss per share from continuing operations




- basic and diluted (p)
3
(0.24)
(0.06)
(0.50)
Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income and LTIP costs




- basic (p)
3
0.68
0.55
1.36
- diluted (p)
3
0.67
0.55
1.35
Consolidated statement of financial position
as at 30 September 2014

Notes
As at
30 September
2014
Unaudited 
'000
As at
30 September
2013
Unaudited
'000
As at
31 March
2014
Audited
'000
Assets




Non-current assets




Property, plant and equipment

508
474
429
Investment property

284
284
284
Goodwill
4
9,802
8,339
9,041
Intangible assets
4
8,177
7,516
8,370
Deferred tax
5
125
176
125
Other investments

301
301
301


19,197
17,090
18,550
Current assets




Inventories

13
25
25
Trade and other receivables

8,641
6,031
7,106
Cash and cash equivalents

3,601
3,625
3,629


12,255
9,681
10,760
Total assets

31,452
26,771
29,310
Equity and liabilities




Equity attributable to equity holders of the parent




Share capital

398
372
395
Share premium reserve

9,885
9,361
9,885
Merger relief reserve

4,253
2,671
4,034
Share-based payment reserve

228
292
286
Purchase of own shares

-
(11)
- 
EBT reserve

(299)
-
(299)
Translation reserve

(40)
-
(40)
Available for sale reserve

216
216
216
Retained earnings

277
1,157
592
Total equity shareholders' funds

14,918
14,058
15,069
Non-current liabilities




Deferred tax
5
1,500
1,573
1,565
Long term borrowings

63
31
-
Trade and other payables

1,500 
- 
810


3,063
1,604
2,375
Current liabilities




Short term borrowings

77
40
28
Trade and other payables

12,752
10,598
11,375
Provisions

-
70
-
Current tax liabilities

642
401
463


13,471
11,109
11,866
Total equity and liabilities

31,452
26,771
29,310
Consolidated statement of changes in equity
for the six months ended 30 September 2014

Share
capital
'000
Share
premium
reserve
'000
Merger
relief
reserve
'000
Share-
based
payment
reserve
'000
Purchase
of own
shares
'000
Available
for sale
reserve
'000
EBT
reserve
'000
Translation
Reserve
'000
Retained 
earnings/
(losses)
'000
Total
'000
Balance at 1 April 2013
372
9,361
2,671
181
(11)
216
-
-
1,838
14,628
Loss and other comprehensive income for the period
-
-
-
-
-
-
-
-
(87) 
(87)
Transactions with owners intheircapacity as owners










Dividend payment
-
-
-
-
-
-
-
-
(594)
(594)
Share-based payment
-
-
-
111
-
-
-
-
-
111
Total transactions with owners intheir capacity as owners
-
-
-
111
-
-
-
-
(594)
(483)
Balance at 30 September 2013
372
9,361
2,671
292
(11)
216
-
-
1,157
14,058
Loss and other comprehensive income for the period
-
-
-
-
-
-
-
(40)
(668)
(708)
Transactions with owners in their capacity as owners










Issue of shares (net of expenses)
17
-
1,363
-
-
-
-
-
-
1,380
Share-based payments
-
-
-
97
-
-
-
-
-
97
Transfer of shares to EBT
-
-
-
-
11
-
(11)
-
-
-
Exercise of share options
6
524
-
(103)
-
-
(288)
-
103
242
Total transactions with owners in their capacity as owners
23
524
1,363
(6)
11
-
(299)
-
103
1,719
Balance at 31 March 2014
395
9,885
4,034
286
-
216
(299)
(40)
592
15,069
Loss and other comprehensive income for the period
-
-
-
-
-
-
-
-
(383) 
(383)
Transactions with owners in their capacity as owners










Fair value of share options grantedon acquisition
-
-
-
219
-
-
-
-
-
219
Exercise of share options
3
-
219
(287)
-
-
-
-
68
3
Share-based payment
-
-
-
10
-
-
-
-
-
10
Total transactions with owners in their capacity as owners
3
-
219
(58)
-
-
-
-
68
232
Balance at 30 September 2014
398
9,885
4,253
228
-
216
(299)
(40)
277
14,918
Consolidated statement of cash flows
for the six months ended 30 September 2014

Notes
Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Cash flow from operating activities




Cash generated by operations
7
410
1,199
1,900
Income tax paid

(61)
(213)
(394)
Finance costs

(39)
(10)
(56)
Net cash generated by operating activities 

310
976
1,450
Cash flow from investing activities




Acquisition of subsidiaries, net of cash acquired
6
(122)
(2,661)
(3,347)
Additional purchase consideration paid

- 
(1,250)
(1,688)
Purchase of property, plant and equipment

(75)
(102)
(184)
Purchases of intangible assets

(211)
-
(111)
Net proceeds from sale of intellectual property

-
-
669
Finance income

79
41
30
Net cash used in investing activities

(329)
(3,972)
(4,631)
Cash flow from financing activities




Proceeds from the exercise of share options

3
-
232
Dividend payments

-
(594)
(594)
Repayment of long term borrowings

(12)
(13)
(56)
Net cash used in financing activities

(9)
(607)
(418)
Net decrease in cash and cash equivalents

(28)
(3,603)
(3,599)
Cash and cash equivalents at beginning of the period

3,629
7,228
7,228
Cash and cash equivalents at end of the period

3,601
3,625
3,629
Financial statements
Notes to the interim report
for the six months ended 30 September 2014
1. Basis of preparation
These unaudited consolidated interim financial statements are for the six months ended 30 September 2014. They have notbeen prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the groupfor the year ended 31 March 2014.
The financial information set out in these unaudited consolidated interim financial statements does not constitute statutory accounts asdefined in section 434 of the Companies Act 2006. The consolidated statement of financial position as at 31 March 2014 andtheconsolidated statement of comprehensive income, consolidated statement of cash flows, consolidated statement of changesin equity and associated notes for the period then ended have been extracted from the group's financial statements asat31March 2014. Those financial statements have received an unmodified report from the auditors, Grant Thornton UK LLP, andhave been delivered to the Registrar of Companies. The 2014 statutory accounts contained no statement under section498(2) or section 498(3) of the Companies Act 2006. 
The consolidated interim financial statements for the period ended 30 September 2014 have not been audited but reviewed in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board.
Significant accounting policies
The accounting policies used in the preparation of the financial information for the six months ended 30 September 2014 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") asadopted by the European Union and are consistent with those which were adopted in the annual statutory financial statements for the year ended 31 March 2014 and those which will be adopted in the financial statements for the year ending 31 March 2015 except for the adoption of International Financial Reporting Standards effective for the period ending 30 September 2014 as described below:
 IFRS 10 "Consolidated financial statements" builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. It also provides additional guidance to assist in the determination of control where this is difficult to assess. Theapplication of IFRS 10 has not had a material impact of the Group.
 IFRS 11 "Joint Arrangements" gives a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are now only two types of joint arrangements: joint operations and joint ventures. The application of IFRS 11 has not had a material impact on the Group.
 IFRS 12 "Disclosures of interests in other entities" includes the disclosure requirements for all forms of interests inotherentities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.The application of IFRS 12 has not had a material impact on the Group.
 All other amendments to International Financial Reporting Standards effective for the period ending 30 September 2014 have not had a material impact on the interim consolidated financial information of the Group.
The board of directors approved the interim report on 25 November 2014.
Going concern
The directors have considered the nature of the results for the period just ended, anticipated future cash flows of a material nature and the opportunities available to the group in the future from the current trading businesses. The group's financial projections show that it can operate adequately within the level of the cash resources currently available to it. The directors consider that, should the trading performance of any trading subsidiary deteriorate, then the group has sufficient flexibility tomanage its cost base accordingly. Therefore the directors consider it appropriate to prepare financial statements on agoing concern basis.
2. Taxation on ordinary activities 

Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Current tax



UK corporation tax based on the results for the period at 21% (31 March 2014: 23%)
258
192
518
Over provision on earlier periods
(110)
(181)
(291)

148
11
227
Deferred tax



Deferred tax on intangible assets
(248)
(166)
(444)
Deferred tax on property, plant and equipment
-
13
-
Deferred tax on tax losses 
-
16
83
Change in tax rate and finalisation of previous year tax loss
- 
- 
(54)
Tax on profit on ordinary activities
(100)
(126)
(188)
3. (Loss)/earnings per share 

Six months
ended
30 September
2014
Unaudited 
Six months
ended
30 September
2013
Unaudited
Year
ended
31 March
2014
Audited
(Loss) per share from continuing operations



- basic and diluted (p)
(0.24)
(0.06)
(0.50)
Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income and LTIP costs



- basic (p)
0.68
0.55
1.36
- diluted (p)
0.67
0.55
1.35
The calculation of diluted loss per ordinary share for the periods ended 30 September 2013 and 2014 and the year ended 31 March 2014 is identical to that used for the basic loss per ordinary share for the periods ended 30 September 2013 and2014 and the year ended 31 March 2014 respectively. This is because the exercise of the options would have theeffect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33. 
(Loss)/earnings and the number of shares used in the calculations of (loss)/earnings per share are set out below:

Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Earnings for the period from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income
1,073
823
2,064
Loss for the period from continuing operations
(383)
(87)
(755)
Weighted average number of shares used in the calculations of (loss)/earnings per share are set out below:

Six months
ended
30 September
2014
Unaudited
Number
Six months
ended
30 September
2013
Unaudited
Number
Year
Ended
31 March
2014
Audited
Number
For basic (loss)/earnings per share 
158,217,590
148,595,089
152,038,445
For diluted (loss)/earnings per share
160,211,946
149,619,299
153,040,492
4. Intangible assets

Development
costs
'000
Customer
contracts
'000
Software
'000
Total
'000
Goodwill
'000
Cost





At 1 October 2013
104
11,175
42
11,321
8,339
Acquisitions through business combinations 
-
1,840
-
1,840
702
Additions
108
-
-
108
-
At 31 March 2014
212
13,015
42
13,269
9,041
Acquisitions through business combinations 
-
983
-
983
761
Additions
211
-
-
211
-
At 30 September 2014
423
13,998
42
14,463
9,802
Amortisation





At 1 October 2013
47
3,737
21
3,805
-
Charge for the period
22
1,065
7
1,094
-
At 31 March 2014
69
4,802
28
4,899
-
Charge for the period
42
1,338
7
1,387
-
At 30 September 2014
111
6,140
35
6,286
-
Net book value





At 30 September 2014
312
7,858
7
8,177
9,802
At 31 March 2014
143
8,213
14
8,370
9,041
At 1 October 2013
57
7,438
21
7,516
8,339
5. Deferred tax
The movement in deferred taxation during the period was:

Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Provision brought forward
1,440
892
892
Credits to income for the period
- 
(137)
- 
Trading losses
-
-
83
(Debits)/credits arising from business combinations
(65)
642
465
Provision carried forward
1,375
1,397
1,440
Analysed as follows:



- deferred tax asset
(125)
(176)
(125)
- deferred tax liability
1,500
1,573
1,565

1,375
1,397
1,440
6. Acquisitions
ArmstrongAdams 
On 20 June 2014, the group acquired the whole of the issued share capital of ArmstrongAdams Limited ("ArmstrongAdams") for initial cash consideration of 1.5m, the assumption of a loan due from the seller to ArmstrongAdams for 0.7m and deferred contingent cash consideration up to a maximum of 1.5m, payable over two years and dependent upon the performance ofArmstrongAdams up to 30 June 2016 (the end of the earn-out period). Additionally, share options were granted to the seller, who became an Accumuli employee.
The provisional fair values and calculation of goodwill in relation to the acquisition of ArmstrongAdams are detailed below:

Book 
value
'000
Fair value
adjustment
'000
Fair 
value
'000
Provisional net assets acquired



Intangible assets
-
983
983
Trade and other receivables
1,915
(1,100)
815
Cash and cash equivalents
1,336
-
1,336
Total assets
3,251
(117)
3,134
Trade and other payables
1,644
(1,251)
393
Current tax liabilities
92
-
92
Deferred tax liability
-
183
183
Total liabilities
1,736
(1,068)
668
Fair value of identifiable assets and liabilities
1,515
951
2,466
Goodwill


761
Total consideration (excluding direct costs)


3,227
Satisfied by:



- initial cash consideration paid


1,458
- assumption of loan due by the seller to Armstrong


750
- fair value of share options granted


219
- fair value of contingent cash consideration payable in February 2015, August2015, February 2016 and August 2016


800
Total consideration (excluding direct costs)


3,227
Net cash outflow arising from business combinations 



- cash consideration paid


1,458
- cash and cash equivalents acquired


(1,336)
Net cash outflow 


122
The goodwill arising on this acquisition is attributable to cross selling opportunities that are expected to be achieved from selling the rest of the group's product offerings into ArmstrongAdams' customer base.
Direct acquisition costs amounting to 107,000 have been written off to the consolidated statement of comprehensive income.
Eqalis Limited
Deferred cash consideration of 1,215,000 is payable on this acquisition. Equal payments of 405,000 will be paid on29November 2014, 29 November 2015 and 29 November 2016.
7. Reconciliation of loss to net cash generated by operating activities

Six months
ended
30 September
2014
Unaudited 
'000
Six months
ended
30 September
2013
Unaudited
'000
Year
ended
31 March
2014
Audited
'000
Loss before taxation from continuing operations
(483)
(213)
(943)
Adjustments for:



- depreciation and amortisation
1,507
954
2,181
- share-based payment costs
300
111
208
- net adjustments to consideration on acquisitions
-
76
-
- fair value adjustment on EdgeSeven share consideration
-
-
423
- finance income
(79)
(41)
(30)
- finance costs
39
10
56
Operating cash flows before changes in working capital and provisions from continuing operations
1,284
897
1,895
Adjustments for:



- increase in inventories
12
-
1
- (increase)/decrease in receivables
(1,470)
1,828
464
- increase/ (decrease) in payables
584
(1,496)
(360)
- decrease in provision
- 
(30)
(100)
Net cash generated from operating activities from continuing operations
410
1,199
1,900
Financial statements
Independent review report to Accumuli plc
Introduction
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 September 2014 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report which comprises only the highlights, chairman's statement and business review and considered whether it contains any apparent misstatements or material inconsistencies withthe information in the condensed set of financial statements. 
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, "ReviewofInterim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and forno other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities 
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the LondonStock Exchange require that the accounting policies and presentation applied to the financial information in thehalf-yearly financial report are consistent with those which will be adopted in the annual accounts having regard totheaccounting standards applicable for such accounts.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted bythe European Union. The financial information in the half-yearly financial report has been prepared in accordance withthebasis of preparation in note 1.
Our responsibility 
Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review. 
Scope of review 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review ofInterim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for useinthe United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope thanan audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enableus to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion. 
Conclusion 
Based on our review, nothing has come to our attention that causes us to believe that the financial information in thehalfyearly financial report for the six months ended 30 September 2014 is not prepared, in all material respects, inaccordance with the basis of accounting described in note 1. 
Grant Thornton UK LLP
Chartered accountants 
Manchester
25 November 2014

This information is provided by RNS
The company news service from the London Stock Exchange
  END
IR GMMZMRDKGDZM