REG - Totally PLC - Final Results

TotallyAnnouncement

24/07/2019 07:00

RNS Number : 4909G
Totally PLC
23 July 2019
 


Totally plc
 
("Totally", "the Company" or "the Group")
 
Results for the 12-month period ended 31 March 2019
 
The Board of Totally (AIM: TLY), the provider of a range of out-of-hospital services to the healthcare sector in the UK, is pleased to announce its audited results for the 12-month period ended 31 March 2019.
 
Operational highlights
·     Successful year which saw the Company deliver upon on a number of agreed operational targets
·     Secured new and renewed contracts across a number of regions nationwide, with a value in excess of £35m
·     Major improvements to Vocare service provision, evidenced by Care Quality Commission ratings with 18/20 of its registered services rated "Good"
·     In an almost unprecedented move, the CQC upgraded Vocare's Royal Stoke Urgent Care Centre service by two ratings within six months, from 'Inadequate' to 'Good'
·     Post-period end completed £9.7m fundraise and highly complementary acquisition of Greenbrook Healthcare
 
Financial highlights
 
·     Revenue up 83.5% to £78.0m (15 months to 31 March 2018: £42.5m)
·     Gross profit up 73% to £12.1m (15 months to 31 March 2018: £7.0m)
·     EBITDA* up 450% to £1.1m (15 months to 31 March 2018: £0.2m) 
·     Cash of £7.5m as at 31 March 2019 (2018: £10.2m)
 
*Earnings before interest, tax, depreciation and amortisation, before exceptional items of £0.1 million
 
Chairman's statement
 
I am pleased to report an excellent set of results for the 12 months ending 31 March 2019, with a turnover of £78.0m (2018: £42.5m) and pre-exceptional EBITDA of £1.1m (2018: £0.2m).
Cash was again well managed, with cash at year end of £7.5m. There are no further earn out payments due on any of the operating subsidiaries. 
The Vocare acquisition in October 2017 brought its challenges but I am delighted to confirm that the business is performing in line with the expectations we had when the business was acquired.
When we acquired Vocare the operational performance was less than Totally would find acceptable, I am therefore delighted that as at the year end 18 out of 20 registered services reviewed by the Care Quality Commission (CQC) were rated as Good.
 
About Health, our dermatology business, has progressed well and was successful in both growing the contract base and the range of services provided. The remaining businesses have continued their work with the NHS and other public sector bodies including expanding services across prison services in England.
 
All stakeholders will be aware of the buy and build strategy that the Group adopted some years ago. Since the year end the Group announced the acquisition of Greenbrook Healthcare, a leading provider of NHS urgent care centres in London.
 
I commend the employees led by Wendy Lawrence in driving the growth in both revenues and service provision.
 
Bob Holt
Chairman
 
24 July 2019
 
 
CEO's statement
 
2018/19 was another busy year for Totally, during which we set ourselves a range of operational targets across the business, which were delivered on all fronts.
 
Work has continued across all of our businesses to ensure that we provide the highest quality of service to the patients we see. During the year we have seen our quality ratings from the Care Quality Commission (CQC) improve significantly, resulting in 18 of Vocare's 20 registered services rated as Good. This is testament to the work undertaken by everyone to ensure systems and processes are robust and support front line clinical staff to deliver safe, effective, high quality care.
 
During the year we have been able to announce over £35m in new and renewed business across our portfolio of companies which, again, is testament to our staff and the relationships they build with the commissioners of our services. We continue to do our utmost to ensure that we are seen as a partner of choice for the NHS and other healthcare commissioners.
 
Since the year end we were thrilled to announce the completion of our acquisition of Greenbrook Healthcare, who are themselves a high-quality provider of urgent care centres across Greater London. Greenbrook's services are complementary to those of Vocare. We plan to expand our urgent care businesses utilising the national footprint and existing platforms already in Totally. Roles within Totally have been agreed with some senior people previously working in Greenbrook to ensure we are positioned to grow the business and respond to new opportunities. One of these is Michael Steel, CEO at Greenbrook Healthcare, who has joined the board of Totally plc.
 
Our dermatology business, About Health, had a number of successes in retaining existing contracts and growing both the contract base and range of services provided. We were further pleased with the performance of our physiotherapy businesses with the retention of contracts and the continued expansion of services across prison and occupational health, working in partnership with Care UK amongst others.
 
Outlook
Demand for planned and urgent care services continues to rise and therefore the demands we face for our services are always increasing. January 2019 saw the publication of the NHS Long Term Plan, which reconfirmed the importance of, and reliance placed upon, partners of the NHS, as demand for services continues to increase. Urgent Care is one of the key priorities within that plan which, again, emphasises the need for a smooth transition to seeing more Integrated Urgent Care Services across the country. This is also in line with the Integrated Urgent Care service specification published by the NHS during August 2017. Following the acquisitions of Vocare and more recently, Greenbrook, Totally is extremely well placed to benefit from this trend.
 
The pipeline of new opportunities continues to be strong across the Group, as do the opportunities to look at new business streams across the UK. Given the completion of the recent acquisition of Greenbrook Healthcare, the year ahead will see us focus on organic growth as well as integrating our subsidiaries and bringing together business streams, whilst at the same time further developing the culture of Totally to ensure we can attract and retain the very best staff.
 
I must thank everyone at Totally for their dedication and commitment to the business and to our investors for their continued support
 
Wendy Lawrence
CEO
 
24 July 2019
 
Financial Review
After a year of integration, improving performance and operational restructure, the Group ended the financial year with a stable monthly run rate. Solid focus on clinical operations during the year has stabilised the business and secured the foundation for our growth plans.
 
Implementing a more focused operational and financial structure coupled with clear accountability has delivered a more effective and sustainable platform for national scale. Whilst some investment was required to restructure and stabilise the Vocare business, the majority of cash consumption during the year to 31 March 2019 was driven by the rectification action plans required to improve many of the Vocare clinical services.
 
Since the year end Totally plc has completed the acquisition of Greenbrook Healthcare for a total consideration of £11.5 million. This acquisition occurred following a successful placing and open offer to raise £9.7m (before expenses) at 10p in June 2019. The acquisition completed on 20 June 2019.
 
The Group posted an EBITDA of £1.1m excluding exceptional costs.
 




 


12 months ended
31 Mar 2019


15 months ended
31 Mar 2018




Revenue


£78.0m


£42.5m




Gross profit


£12.1m


£7.0m




EBITDA


£1.1m


£0.2m




Depreciation


(£0.6m)


(£0.3m)




Amortisation


(£2.2m)


(£1.5m)




(LBT)/PBT


(£1.8m)


£2.1m




Net assets


£25.9m


£27.3m




Cash


£7.5m


£10.2m




 
The loss before tax of £1.8m is stated after an amortisation charge of £1.7m relating to the intangible value of contracts acquired.
 
The growth in revenue primarily reflects the full year effect of the Vocare acquisition which completed on 24 October 2017. Several contract extensions and retentions were announced during the 12 months to 31 March 2019 as were new contract wins in Vocare, Premier Physical Healthcare and About Health. The 'Other' business segment has organically grown revenues by £1.9m (27%) year on year. The Group's physiotherapy businesses showed 12.5% growth year on year while About Health generated 45% growth compared to the previous financial year. Vocare has maintained its revenues despite the mutual termination of Somerset GP OOH and 111 contracts during the year reflecting organic growth in the existing contract base and other new contract wins.
 
Exceptional items




 


£'000




Acquisition related costs


(465)




Gain on remeasurement of contingent consideration


2,668
 




Impairment of goodwill


(2,000)




Other exceptional costs


(77)




 


126




 
Acquisition costs
The acquisition costs comprise legal, professional and other related expenditure and amounted to £0.5m (2018: £1.2m).
 
Contingent consideration
The final earnout period for previous acquisitions expired at 31 March 2019.  No performance-related earnout payments were made during the year and no further payments are due.
 
The remaining balance of contingent consideration is payable in respect of the Vocare acquisition and relates to monies advanced to employees during the first month of employment. The balance is payable quarterly and reflects advances recovered from employees. 
 
As the earnout period has expired the balance of contingent consideration has been revalued to zero.
 




 


 


Premier Physical Healthcare


About Health


Vocare


Total 2019




 


 


£000


£000


£000


£000




At 1 April 2018


 


968


1,587


452


3,007




Paid in the period


 


-


-


(130)


(130)




Revaluation of contingent consideration


 


(1,011)


(1,657)


-


(2,668)




Discount unwind in the period


 


43


70


-


113




At 31 March 2019


 


-


-


322


322




 


 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 



 




 


 


 


 


 


31 March 2019


31 March 2018




 


 


 


 


 


£000


£000




Contingent consideration - current


 


 


 


 


322


452




Contingent consideration - non-current


 


 


 


 


-


2,555




 


 


 


 


 


322


3,007




 


 


 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 
 



 
Impairment
As at 31 March 2019 the Directors agreed to impair the carrying value of goodwill relating to acquisitions made during the year to 31 December 2016. The impairment loss of £2,000,000 has been recognised as an exceptional expense in the consolidated statement of comprehensive income.  
 
Acquisition of Greenbrook Healthcare
On 20 June 2019, the Company completed the acquisition of the entire share capital of Greenbrook Healthcare (Hounslow) Limited and the convertible loan note in Greenbrook Healthcare (Earl's Court) Limited for a consideration of £11.5m on a cash free and debt free basis with a normalised level of working capital.  The table below sets out the adjustments to the purchase price to reflect a normalised level of working capital which has resulted in an additional consideration payable of £4.8m.
 
Greenbrook is one of the leading providers of urgent care centres in London. The company was acquired as part of the Group's stated 'buy and build strategy' and to bring new and complementary routes to the existing healthcare services offered by the Group. Greenbrook's urgent care services provide synergies with Totally's existing subsidiary businesses, in particular Vocare, and complements its business model of providing preventative and responsive healthcare in out-of-hospital settings in order to improve people's health, reduce NHS healthcare reliance, re-admissions and emergency admissions to hospital. 
 
The provisional assets and liabilities as at 20 June 2019 arising from the acquisition were as follows:
 




 


 




 


 


 


Carrying amount


Fair value adjustment


Fair value
 




 


 


 


£000


£000


£000




Property, plant and equipment


 


 


296


-


296




Trade receivables and other debtors


 


 


4,695


-


4,695




Cash in hand


 


 


2,007


-


2,007




Trade and other payables


 


 


(7,759)


(1,341)


(9,100)




Deferred tax


 


 


(34)


-


(34)




Convertible loan notes


 


 


(50)


-


(50)




Net (liabilities) acquired


 


 


(845)


(1,341)


(2,186)




Goodwill


 


 


 


 


11,521




Value of contracts


 


 


 


 


6,975




Total consideration


 


 


 


 


16,310




 
Satisfied by:
Cash


 


 


 


 


 
13,810




Ordinary shares issued


 


 


 


 


2,500




 


 


 


 


 


16,310



 
 
 
 
 
 
 



 
 
The goodwill is attributable to the knowledge and expertise of the workforce, the expectation of future contracts and the operating synergies that arise from the Group's strengthened market position. Any impairment charges will not be deductible for tax purposes.
 
Included in the fair value of Greenbrook, are provisions for additional costs or potential costs that existed at the time of acquisition.
 
Lisa Barter
Finance Director
 
24 July 2019
 
 
For further information please contact:
 




Totally plc 


020 3866 3335




Wendy Lawrence, Chief Executive
Bob Holt, Chairman
 


 




Allenby Capital Limited (Nominated Adviser & Joint Corporate Broker)


020 3328 5656




Nick Athanas
Liz Kirchner
 


 




Canaccord Genuity Limited (Joint Corporate Broker)


020 7523 8000




Bobbie Hilliam
Alex Aylen
 


 




Yellow Jersey PR


020 3004 9512




Georgia Colkin
Joe Burgess


 




 
 
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 March 2019
 




 
 
 


12 months to
31 March 2019
£000
 


15 months to
31 March 2018
£000




Revenue                                                                                                                                                                            
Cost of sales


78,007
(65,939)


42,535
(35,510)




Gross profit
Administrative expenses


12,068
(10,962)


7,025
(6,842)




Profit before exceptional items
Exceptional items                                                                                                                                                            


1,106
126


183
4,508




Profit before interest, tax and depreciation
Depreciation and amortisation


1,232
(2,822)


4,691
(1,863)




Operating (loss)/profit                                                                                                                                          
Finance income                                                                                                                                                                 
Finance costs                                                                                                                                                                      


(1,590)
3
(228)


2,828
- (719)




(Loss)/profit before taxation
Income tax credit/(charge)                                                                                                                                       


(1,815)
313


2,109
(312)




(Loss)/profit for the year/period attributable to the equity
shareholders of the parent company


 
(1,502)


 
1,797




Other comprehensive income


-


-




Total comprehensive (loss)/profit for the year/period net of tax attributable to the equity shareholders of the parent company


 
(1,502)


 
1,797




 
 




(Loss)/earnings per share


 


12 months to
31 March 2019
£000
 


15 months to
31 March 2018
£000




From continuing operations:


 


 


 




Basic


 


(2.51)


3.64




Diluted


 


(2.51)


3.60




 
 
 
 
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
 




 


 


 


Share capital


Share premium account


Retained earnings


Equity shareholders' funds




At 1 January 2017


 


 


 2,002


 9


 3,112


 5,123




Total comprehensive profit for the period


 


 


 -


 -


 1,797


 1,797




Issue of share capital


 


 


 3,977


 16,399


 -


 20,376




Credit on issue of warrants and options


 


 


 -


 -


 42


 42




At 31 March 2018


 


 


 5,979


 16,408


 4,951


 27,338




Total comprehensive loss for the year


 


 


 -


 -


(1,502)


(1,502)




Credit on issue of warrants and options


 


 


 -


 -


 43


 43




At 31 March 2019


 


5,979


16,408


3,492


25,879




 
 
 
Consolidated Statement of Financial Position
As at 31 March 2019
 




 


 


31 March
2019
£000


31 March 2018
£000




Non-current assets


 


 


 




Intangible assets


 


28,824


31,262




Property, plant and equipment


 


599


980




Investments in subsidiaries


 


-


-




Deferred tax


 


158


646




 


29,581


32,888




Current assets


 


 




Inventories


 


68


78




Trade and other receivables


 


8,606


9,706




Cash and cash equivalents


 


7,520


10,224




 


16,194


20,008




Total assets


45,775


52,896




Current liabilities


 


 




Trade and other payables


 


(18,784)


(21,450)




Deferred acquisition consideration


 


(322)


(452)




Borrowings


 


(5)


(6)




 


(19,111)


(21,908)




Non-current liabilities


 


 




Trade and other payables


 


(768)


(1,087)




Deferred acquisition consideration


 


-


(2,555)




Borrowings


 


(3)


(8)




Deferred tax


 


(14)                                      -




 


(785)


(3,650)




Total liabilities


(19,896)


(25,558)




Net current (liabilities)/assets


(2,917)


(1,900)




Net assets


25,879


27,338




Shareholders' equity


 


 




Called up share capital


 


5,979


5,979




Share premium account


 


16,408


16,408




Retained earnings


 


3,492


4,951




Equity shareholders' funds


25,879


27,338




 
 
Consolidated Cash Flow Statement
For the year ended 31 March 2019
 




 


 
 


12 months ended
31 March 2019
£000


15 months ended
31 March 2018
£000




Cash flows from operating activities


 


 


 




(Loss)/profit for the year/period


 


(1,502)


1,797




Adjustments for:


 


 


 




- Options and warrants charge


 


43


42




- Depreciation and amortisation


 


2,822


1,863




- Impairment of goodwill


 


2,000


 




- Impairment of development costs


 


-


739




- Tax (income)/expense recognised in profit or loss


 


(313)


312




- Finance income


 


-


-




- Finance costs


 


112


718




- Revaluation of contingent consideration


 


(2,668)


(6,466)




Movements in working capital:


 


 


 




- Inventories


 


10


22




- Movement in trade and other receivables


 


1,100


1,092




- Movement in trade and other payables


 


(3,457)


(3,321)




Cash used for operations


(1,853)


(3,202)




- Income tax received/(paid)


39


(277)




Net cash flows from operating activities


(1,814)


(3,479)




Cash flow from investing activities


 


 


 




Purchase of property, plant and equipment


 


(265)


(193)




Additions of intangible assets


 


(491)


(427)




Acquisition of subsidiaries, net of cash acquired


 


-


(860)




Earn-out payment to subsidiaries


 


(130)


(2,378)




Accrued preference shares interest paid


 


-


(18)




Net cash flows from investing activities


(886)


(3,876)




Cash outflow before financing


(2,700)


(7,355)




Cash flow from financing activities


 


 




Issue of share capital, net


-


16,646




Borrowings/invoice discounting


-


(56)




Finance lease rental repayments


(4)


(9)




Net cash flows from financing activities


(4)


16,581




Net increase in cash and cash equivalents


(2,704)


9,226




Cash and cash equivalents at beginning of period


10,224


998




Cash and cash equivalents at the end of the period/year


7,520


10,224




 
 
 
Notes to the Financial Information
For the Year ended 31 March 2019
 
 
1.  General information
Totally plc is a public limited company ("Company") incorporated in the United Kingdom under the Companies act 2006 (registration number 3870101). The Company is domiciled in the United Kingdom and its registered address is Cardinal Square West, 10 Nottingham Road, Derby, DE1 3QT. The Company's Ordinary Shares are traded on the AlM market of the London Stock Exchange ("AIM").
The Group's principal activities are the provision of innovative and consolidatory solutions to the healthcare sector, which are provided by the Group's wholly owned subsidiaries.
The Company's principal activity is to provide management services to subsidiaries.
 
 
2.  Basis of preparation
The financial information set out in this announcement does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. It has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted for use in the European Union, including IFRIC interpretations issued by the International Accounting Standards Board, and in accordance with the AIM rules and is not therefore in full compliance with IFRS. The principal accounting policies applied in the preparation of the financial information are detailed in note 3.
The financial statements for the year ended 31 March 2019 are not authorised for issue however it is anticipated that audit reports will not be modified and will not draw attention to any matters by way of emphasis or contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The financial information has been prepared on the historical cost basis and are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.
The Group carefully manages financial resources, closely monitoring the working capital cycle. The Group has long term contracts with a number of customers and suppliers across different geographic areas within the United Kingdom and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The financial information is prepared on a going concern basis which the Directors believe to be appropriate for the above reasons.
 
3.   Summary of significant accounting policies
Basis of consolidation
The Group's financial information includes the results of the Company and its subsidiaries, all of which are prepared up to the same date as the parent company.
Subsidiaries
Subsidiaries are all entities over which the Company has the ability to exercise control and are accounted for as subsidiaries. The trading results of subsidiaries acquired or disposed of during the period end are included in the income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All intra-group transactions, balances, income and expenditure are eliminated on consolidation.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any non-controlling interest. The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the income statement. All acquisition expenses have been reported within the income statement immediately.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used in line with those used by other members of the Group.
Revenue recognition
Revenue is generated by providing clinical health coaching, supporting shared decision-making services and software solutions to the healthcare sector, physiotherapy, dermatology and urgent care services. Services are provided through short term and long-term contracts.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
 
Clinical health coaching, supporting shared decision-making services and software solutions to the healthcare sector
Revenue is recognised as services are provided. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured.
Physiotherapy and dermatology services
Revenue represents invoiced sales of services to regional Care Commissioning Groups of the National Health Service. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured. Revenue can be subject to clawback adjustments based on performance against criteria as detailed in the individual contracts.
 
Urgent care services
Revenue is recognised as services are provided. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured. Revenue can be subject to clawback adjustments based on performance against criteria as detailed in the individual contracts.
All revenue originates in the United Kingdom.
Finance income
Finance income comprises of income related to the fair value adjustment of the contingent consideration. This fair value adjustment relates to the net present value of the contingent consideration discounted at 10%.
Finance costs
Finance costs comprise the unwinding of the fair value adjustment of the contingent consideration. It also includes interest payable on bank overdrafts and bank charges and these are recognised on an accruals basis.
Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment in value. Cost comprises the aggregate amount paid to acquire assets and includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is calculated to write down the cost of the assets to their residual values by equal instalments over the estimated useful economic lives as follows:
Motor vehicles                                                    -    3 and 5 years
Computer equipment                                          -    2 and 5 years
Fixtures and fittings                                            -    2 to 10 years
Freehold property improvements                        -    3 to 10 years
The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate on an annual basis.
An asset is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the period that the asset is derecognised.
Inventories
Inventories are valued at the lower of cost and net realisable value. In general cost is determined on a first in first out basis and includes all direct expenditure based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition.
 
Goodwill
Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is considered to have an indefinite useful life. Goodwill is tested for impairment annually and again whenever indicators of impairment are detected and is carried at cost less any provision for impairment.
 
Impairment of non-current assets
For the purposes of impairment testing, goodwill and other non-current assets are allocated to each of the Group's cash-generating units (CGUs) or groups of CGUs that is expected to benefit from the synergies of the combination. These comprise urgent care and other segments and at 31 March 2019 the goodwill allocated to each amounted to £16,824,000 and £9,336,000 respectively.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
The value of the goodwill was tested for impairment during the current financial year by means of comparing the recoverable amount of each CGU or group of CGUs with the carrying value of its goodwill.
The calculation of the CGUs value in use is calculated on the cash flows expected to be generated using the latest budget and forecast data. Estimates of sales and costs are based on past experience and expectations of future changes in the market.
Board approved cash flow projections for five years are used and then extrapolated out assuming flat cash flows and discounted at a pre-tax rate of 10% (2018: 12% or 3.5%) over a five-year period and then into perpetuity.
Based on the operating performance of the CGUs, an impairment of goodwill of £2.0m was identified in the current financial year (2018: £nil).
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
 
Trade and other receivables
Trade receivables, which are generally received by the end of month following terms, are recognised and carried at the lower of their original invoiced value less provision for expected credit losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits with an original maturity of three months or less.
Trade and other payables
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are recognised at original cost.
Borrowings
Borrowings are initially recognised at fair value, being proceeds received less directly attributable transaction costs incurred. Borrowings are subsequently measured at amortised cost with any transaction costs amortised to the income statement over the period of the borrowings using the effective interest method.
 
Foreign currencies transactions
Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the period end are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.
Leased assets
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases.
The Company has a short lease on its premises. This is accounted for as an 'operating lease' and the rental charges are charged to the income statement on a straight-line basis over the life of the lease. Other operating leases are treated in the same manner.
Exceptional items
Exceptional items are those items that, in the Directors' view, are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance.
Income taxes
Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities based on tax rates and laws that are enacted or substantively enacted by the period end date. Deferred income tax is recognised using the balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities. Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled and the asset is realised, based on tax rates and laws enacted or substantively enacted at the period end date.
Deferred income tax liabilities are recognised for all temporary differences, except for an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred income tax assets and liabilities are offset against each other only when the Company has a legally enforceable right to do so.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.
Retirement benefits
The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the employer pays fixed contribution into a separate entity. Contributions payable to the plan are charged to the income statement in the period to which they relate. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
 
Standards adopted in the year
During the year, the Group adopted IFRS 9 - Financial Instruments and IFRS 15 - Revenue from contracts with customers which were effective for accounting periods commencing on 1 January 2018.
IFRS 15 is a prescriptive standard which requires a business to identify the performance obligations which are contracted with its customer base. The Directors have reviewed the requirements of IFRS 15 and updated the accounting policies as appropriate. The changes are narrative only and there has been no impact on reported results for the prior period or the current period.
IFRS 9 relates to Financial Instruments which contains the requirement for a) the classification and measurement of financial assets and financial liabilities, b) impairment methodology and c) general hedge accounting. Given the nature of the Group's financial assets and liabilities and the limited bad debt history, the adoption of IFRS 9 has had no material impact on the financial information above.
There have been no other standards adopted that have had a material impact on the financial information above and no standards adopted in advance of their implementation date.
 
Standards, amendments and interpretations not yet effective
IFRS 16 supersedes IAS 17 Leases and introduces a new single lessee accounting model which eliminates the current distinction between operating and finance leases for lessees. IFRS 16 will primarily affect the accounting for the group's operating leases and is effective for the next accounting period. As at the reporting date, the Group has non-cancellable operating lease commitments of £5,295,000. Under IFRS 16, the obligations to pay the future leases rentals over the expected lease term will be recognised as a lease liability (current and non-current) discounted at the incremental borrowing rate with a corresponding right of use asset also being recognised in the statement of financial position. Whilst there will be a material change in gross assets and liabilities, as a result of recognising the leases as right-of-use assets and liabilities, for the change in accounting policy, it is not anticipated that there will be a material impact on net assets. Additionally, whilst the depreciation on the right of use asset and the interest on the finance liability would be different to the present operating lease charge, it is not expected to have a material impact on the reported result in the statement.
There are no other standards issued not yet effective that will have a material effect on the financial information above.
 
4.                 (Loss)/Earnings per share




 


12 months to 31 March 2019


15 months to 31 March 2018




Earnings
£000


Basic earnings per share


Diluted earnings per share


Earnings
£000


Basic earnings per share


Diluted earnings per share




Loss before exceptional items


(1,224)


(2.05)p


(2.05)p


 


(2,711)


(5.49)p


(5.43)p




Effect of exceptional items


(278)


(0.46)p


(0.46)p


 


 4,508


 9.13p


 9.03p




Profit attributable to owners of the parent


(1,502)


(2.51)p


(2.51)p


 


 1,797


 3.64p


 3.60p




 


 


 


 


20


19


2018




 


 


 


 


£000


 


£000




Weighted average number of ordinary shares


 


 


 


 


 59,795


 


 49,356




Dilutive effect of shares from share options


 


 


 


 


 -


 


 592




Fully diluted weighted average number of ordinary shares


 


 


 


 59,795


 


 49,948



 
 
 
 
 
 
 
 
 



 
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period/year. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Dilutive potential ordinary shares are those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. There were no dilutive potential ordinary shares at 31 March 2019.
 




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