AIM: KBT
26 July 2021
K3 BUSINESS TECHNOLOGY GROUP PLC
("K3" or "the Group" or "the Company")
Provider of mission-critical software (owned and third-party) and cloud solutions
Half year results for the six months ended 31 May 2021
Highlights
Financial
· First half results from continuing operations in line with management expectations
· Revenue steady at £23.2m (2020: £23.1m)
- recurring or predictable income 2 accounted for 68.7% of total revenue (2020: 73.4%)
- own-IP revenue made up £8.4m (36%) of total revenue (2020: £8.5m (37%))
· Gross margin reduced to 56.2% (2020: 60.4%), mainly reflecting the effect of the coronavirus crisis on third-party products' customer base, which includes smaller retailers and distributors
· Adjusted EBITDA 1 of £0.9m (2020: £1.7m)
· Loss before tax from continuing operations of £4.3m (2020: loss of £1.4m)
· Adjusted loss per share of 11.9p (2020: loss of 3.5p). Reported earnings per share of 11.6p (2020: loss of 12.2p) includes profit from discontinued activities
· Sale of non-core unit, Starcom Technologies, in February for £14.7m
- generated net cash flow of £13.8m and a profit after tax of £10.8m
· Significantly strengthened balance sheet with net cash 5 of £4.4m (2020: net debt of £7.4m)
*2020 results have been restated following the classification of Starcom Technologies Limited and UK Dynamics as discontinued activities
Operational
· Appointment of Marco Vergani as CEO on 30 March 2021
- evaluation of operations and market strategy commenced - will underpin future strategy and allocation of resources. Expected to be substantially completed over the coming months
- management changes made, including appointment of Chief Commercial & Strategy Officer and Customer Success Officer in May and July 2021 respectively
· Own-IP generated £8.4m of revenue (2020: £8.5m) and gross profit of £6.2m (2020: £6.3m).
- Key strategic product, K3|fashion, secured four new customer contracts worth a total of £1.7m (2020: £1.0m)
- K3|imagine technology is market-leading and continues to offer exciting promise
· Global Accounts generated £9.2m of revenue (2020: £8.7m) and gross profit of £3.7m (2020: £3.8m), reflecting investment in service capability to support growth
· Third-party products generated £5.6m of revenue (2020: £5.9m) and gross profit of £3.2m (2020: £3.8m). The retail and distribution customer base was most disrupted by the coronavirus pandemic.
- SYSPRO customer base performed well with average deal size increasing
- H2 will benefit from strong cash inflow from SYSPRO software licence and support and maintenance contract renewals, typically at c.98%
Marco Vergani, CEO of K3 Business Technology Group plc, said:
"Half year results are in line with management expectations. The Group delivered a resilient performance despite certain parts of the customer base being significantly disrupted by the pandemic.
"Since joining K3 in late March, my priority has been a thorough evaluation of the Group's operations and market strategy. This process is expected to be substantially completed over the coming months. It will help to set a clear strategic course.
"K3 has an exciting product offering and talented teams. This gives us a firm basis from which to move forward as we continue to build own-IP sales, which will generate long-term, high-margin recurring income. We remain very confident that there is a significant market opportunity for the Group, particularly in the fashion, apparel & design market. We expect to make good strategic progress in the second half."
Enquiries:
K3 Business Technology Group plc |
Marco Vergani, CEO Rob Price, CFO
|
T: 0161 876 4498 |
finnCap Limited (NOMAD & Broker) |
Julian Blunt/ James Thompson (Corporate Finance) Richard Chambers, Sunila de Silva (Corporate Broking)
|
T: 020 7220 0500 |
KTZ Communications |
Katie Tzouliadis/ Dan Mahoney |
T: 020 3178 6378 |
CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
I am pleased to present the Group's interim results report, my first since having been appointed as Chief Executive Officer on 30 March 2021.
As detailed in the Group's Annual Report for the financial year ended 30 November 2020, K3 made a number of important strategic decisions last year and has established a firm foundation from which to move forward. In particular, the recent sale in February 2021 of the non-core managed services unit, Starcom Technologies Limited ("Starcom"), has tightened our focus on core activities and significantly strengthened the Group's balance sheet.
Among my first actions since joining the Group has been starting a thorough evaluation of operations and K3's market strategy. This process is still ongoing and is expected to be substantially completed over the coming months. It will help to set a clear strategic course, crystallise the allocation of resources, and confirm our commitment to those market segments that we believe offer attractive, long-term growth opportunities, in tune with our products, skill sets and domain strengths.
We have also recently made strategic management changes. These have included the appointment of a Chief Commercial & Strategy Officer in May, and a Customer Success Officer in July. Both these roles are new and both individuals bring significant experience and successful track records of achievement in retail software sales, SaaS, and customer engagement. We intend to supplement the existing strong team at K3 with further selective hires.
K3's focus on building own-IP sales will deliver high-quality, long-term recurring revenue streams and we remain confident about the opportunities ahead. Our products offer exciting growth potential, and our expertise in the Retail sector, particularly in fashion, apparel & design, online, and direct-to-consumer brands, is a significant strength. We believe that there is a substantial opportunity to leverage our knowledge and experience to assist retailers as they seek new technology solutions that will enable them to manage more effectively the fundamental changes in consumer purchasing behaviour and priorities.
The Group's performance over the first half was in line with management expectations. Revenue from continuing operations was steady at £23.2m (2020: £23.1m). Group gross margin decreased, largely as a result of the weaker contribution from third-party products. This segment saw greatest market softness in the face of the coronavirus. K3|fashion performed well with four contract wins with new customers, worth a total of £1.7m, which compares with £1.0m in the same period last year. Global Accounts continues to grow although its gross profit contribution was lower reflecting investment in increased resource in the period to support growth.
Financial Results
Results from continuing operations
Revenue from continuing operations in the six months ended 31 May 2021 was constant at £23.2m (2020: £23.1m) with recurring or predictable revenue2 accounting for 69% of the total (2020: 73%). The decrease in recurring revenue between the two periods mainly reflected pandemic pressures on certain customer segments, including visitor attraction and smaller retailers and distributors. Own IP products generated £8.4m of revenue (2020: £8.5m) accounting for 36% of total revenue (2020: 37%). Global Accounts (which supports Inter IKEA Systems B.V., the owner and franchisor of the IKEA concept, and the Inter IKEA Concept franchisees) generated £9.2m of revenue (2020: £8.7m), and accounted for 40% of total revenue (2020: 38%). Third-party products contributed £5.6m of revenue, which accounted for 24% of total revenue.
Gross profit for the period was £13.1m (2020: £13.9m), with 47% or £6.2m (2020: 45% or £6.3m) derived from own-IP products. Gross margin decreased to 56% (2020: 60%), which mainly reflected the weaker performance of third-party products, but also lower margin from Global Accounts during a period of investment in services resource.
Underlying support/administrative expenses7 remained in line with the same period last year, at £12.2m (2020: £12.2m). Reported administrative expenses increased to £16.7m (2020: £15.4m), mainly as a result of a £1.5m additional amortisation charge due to a change in accounting estimate in the own-IP segment. (See note 4 below). Adjusted EBITDA1 from continuing activities decreased to £0.9m (2020: £1.7m). This was largely driven by lower margin from third-party products.
Following depreciation, amortisation, reorganisation and other exceptional costs amounting to £4.5m, the loss before tax from continuing activities was £4.8m (2020: £1.4m).
The adjusted loss per share6 was 11.9p (2020: loss of 3.5p). This figure excludes amortisation of acquired intangibles of £0.3m (2020: £0.7m), exceptional reorganisation costs of £0.2m (2020: £0.2m), and share-based charges of £0.2m (2020: £nil), and is net of the related tax charge of £0.1m (2020: £0.1m). Reported earnings per share was 11.6p (2020: loss per share of 12.2p), which includes profit from discontinued activities, specifically from Starcom.
Discontinued activities
Discontinued activities relate to Starcom Technologies Limited ("Starcom"), which was sold on 26 February 2021 for £14.7m, and the UK Dynamics subsidiary, which was put into administration on 21 April 2020.
Starcom results for the six months to 31 May 2020 have been restated to present Starcom as a discontinued operation. The unit generated net cash flow of £13.8m and a profit after tax of £10.8m (2020: £0.5m) which includes a profit on disposal of £10.3m. UK Dynamics generated loss after tax of £nil (2020: £3.4m).
Balance sheet and cash flows
The Group balance sheet has been strengthened. Net cash5 at 31 May 2021 stood at £4.4m (31 May 2020: net debt of £7.4m and 30 November 2020: net debt of £1.9m) with the net proceeds from the sale of Starcom and the loan note conversion in March helping to underpin this result. The Group's cash flow over the financial year is seasonally weighted towards the second half, which benefits from a significant cash inflow from annual software licence and maintenance and support renewals. A large element of this is SYSPRO renewals, which typically have a renewal rate of c.98%.
Net cash used in operating activities was a £7.4m outflow (2020: £1.1m outflow), reflecting a £1.2m inflow from trading (2020: £1.1m outflow), offset by a £8.6m outflow in working capital (2020: £nil). The year-on-year change in working capital outflow is the result of a working capital adjustment of £5.1m for discontinued activities, and £3.5m repayment of tax deferrals in the UK and Netherlands.
Finance costs increased due to the interest paid on the shareholder loan raised in March 2020 and converted to equity in March 2021 and the additional lender re-finance fees. Amortisation increased to £3.2m (2020: £2.0m) following the shortening of the amortization policy of internal capitalised development to three years from five to seven years previously. (See note 4).
Development expenditure capitalised has been reduced to £1.3m (2020: £2.3m).
Operational Review
The Group's results for the six months ended 31 May 2021, together with comparatives for the same period in 2020, are summarised in the tables below. The segmental analysis provides further information on the key areas of activity; Own-IP, Global Accounts and Third-party products (including SYSPRO and Sage).
2020 comparatives have been restated following the classification of Starcom and UK Dynamics as discontinued activities.
(£m) |
Revenue |
Gross profit |
Gross margin |
|||
2021 |
2020 (restated) |
2021 |
2020 (restated) |
2021 |
2020 (restated) |
|
Own-IP |
8.4 |
8.5 |
6.2 |
6.3 |
74.0% |
74.4% |
Global Accounts |
9.2 |
8.7 |
3.7 |
3.8 |
40.1% |
43.9% |
Third-party products |
5.6 |
5.9 |
3.2 |
3.8 |
56.3% |
64.6% |
Total |
23.2 |
23.1 |
13.1 |
13.9 |
56.2% |
60.4% |
2021 |
2020 |
|
Recurring or predictable revenue2 |
68.7% |
73.4% |
Own-IP gross profit as a percentage of total gross profit4 |
47.4% |
45.1% |
Own-IP
K3's own-IP includes;
• IP embedded within third-party solutions to add extra functionality and produce a richer overall solution for K3's target markets. These solutions include K3|fashion and K3|pebblestone;
• K3|imagine, our cloud-native platform, which include a set of front end solutions, which can be seamlessly integrated in any technology environment through K3|Dataswitch, our real-time orchestration engine, and Application Programming Interfaces ("APIs"); and
• other stand-alone point solutions and apps including our legacy point-of-sale ("POS") products.
Revenue generated by own-IP was constant at £8.4m (2020: £8.5m), with gross profit similarly steady at £6.2m (2020: £6.3m). The mix of revenue included a greater contribution from two core strategic products, K3|fashion and K3|Pebblestone, and a lower contribution from POS products and hardware sales. Some market sectors for own-IP product, including visitor attractions, continued to be impacted by coronavirus restrictions and underperformed. Gross profit decreased by 2% to £6.2m (2020: £6.3m), and gross margin remained largely unchanged at 74.0% (2020: 74.4%).
The fashion, apparel & design sector is a key area of investment and growth for us. The structural shifts in the marketplace and changes in consumer buying behaviour underline the need for solutions that correctly address the new commercial challenges. We believe that we are well-placed to capture this growing demand. The focus of our work is on expanding more broadly our existing differentiating features to address the emerging needs and evolving our go-to-market strategy and sales infrastructure to become the recognised provider of choice for this sector.
K3|fashion performed well with four large deals signed with new customers via channel partners, worth a total of £1.7m (2020: £1.0m). These were with a major children's fashion brand, a global outdoor-wear brand, a major European fashion retailer and a global outdoor sports clothing & equipment brand. Microsoft's endorsement of K3|fashion as its recommended 'add-on' solution for the fashion and apparel sector globally underlines the strong credentials of this product.
We also remain very excited about the potential of the K3|imagine platform and its applications. These include self-serve, point-of-sale, and companion apps, and are predominantly provided on a Software-as-a-Service ("SaaS") basis. While sales currently remain modest, customers bought from across the suite of applications. We will be refocusing our sales resource in line with our new plans over the coming months.
Global Accounts
Revenue from Global Accounts continued to grow, increasing by 6% to £9.2m (2020: £8.7m) however, gross profit decrease by 3% to £3.7m (2020: £3.8m) and gross margin reduced by 3.8 percentage points to 40.1% (2020: 43.9%) as the Group invested in new competencies and resources to expand services capability.
The investment will support the ongoing expansion of the IKEA franchisee network into new geographies, including new store openings in South and Central America, and will also support further project work in the Consumer Experience area. This should also directly benefit software licence sales as well as services income. We anticipate further growth opportunities in Global Accounts and intend to strengthen our off-shoring capability to support this growth.
Third-party products
Third-party products include our SYSPRO and Sage products, which we resell in the UK. This area of activity was the most badly affected by the coronavirus crisis, with customers in distribution and retail sectors holding back from supply chain investment and services projects and some retrenching in response to the pandemic.
Revenue decreased by 4.7% to £5.6m (2020: £5.9m) and gross profit reduced by 17.0% to £3.2m (2020: £3.8m), with gross margin contracting by 8.3 percentage points to 56.3% (2020: 64.6%). The gross margin decline was driven in particular by our retail and distribution customer base, which was more disrupted by coronavirus-related restrictions. Some existing customers chose not to renew maintenance and support contracts and new business in this area remained soft.
By contrast our manufacturing customer base, which largely comprises SYSPRO customers, was more resilient. We closed an encouraging level of new SYSPRO business and average deal size increased, benefitting software licence, maintenance and support and services income streams.
A high level of software licence and maintenance and support contract renewals from the SYSPRO customer base take place in the second half of the financial year. We expect renewals to continue to be high, in the region of historic levels at around 98%.
Administrative expenses
Underlying support/administrative costs7 were in line with the same period last year at £12.2m (2020: £12.2m). Reported administrative expenses increased to £16.7m (2020: £15.4m) as a result of the £1.5m additional depreciation charge due to a change in accounting estimate in our own-IP segment (see note 4 below) offset by a lower amortisation charge as the intangible assets come to the end of their useful life.
Outlook
K3 has an exciting product offering, and we are very confident that there is a significant market opportunity to drive our existing strategy of building own-IP sales, which are higher margin and generate long-term recurring income streams. The fundamental shift that is under way in the retail sector, with customers changing the way that they shop, engage with brands, and judge brand values, is driving a requirement for new solutions, including in AI. K3 provides a channel to readily-adoptable, leading-edge solutions to these commercial issues, and is therefore well-positioned.
We are currently in the process of resetting our growth strategies for key strategic products and will be adding selectively to our existing strong teams to ensure that we have the appropriate blend of talents to support our growth plans.
We will also consider initiatives to improve cash conversion, enhance productivity and simplify the Group. We view prospects for K3 positively and look forward to providing a further update in due course.
Marco Vergani
Chief Executive Officer
Consolidated income statement
for the six months ended 31 May 2021
|
Notes |
Unaudited 6 months to 31 May 2021 |
Restated^ Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
||
|
|
£'000 |
£'000 |
£'000 |
||
|
|
|
|
|
||
Revenue |
|
23,246 |
23,080 |
48,819 |
||
Cost of sales |
|
(10,172) |
(9,142) |
(20,110) |
||
Gross profit |
|
13,074 |
13,938 |
28,709 |
||
|
|
|
|
|
||
Administrative expenses |
|
(16,571) |
(15,473) |
(48,402) |
||
Impairment (losses)/gains on financial assets |
|
(131) |
111 |
(122) |
||
|
|
|
|
|
||
Adjusted EBITDA |
|
864 |
1,734 |
3,965 |
||
Depreciation and amortisation |
4 |
(3,841) |
(2,265) |
(4,500) |
||
Amortisation of acquired intangibles |
|
(284) |
(678) |
(1,471) |
||
Exceptional Impairment |
|
- |
- |
(16,855) |
||
Exceptional reorganisation costs |
|
(182) |
(215) |
(934) |
||
Share-based payment charge |
|
(185) |
- |
(20) |
||
|
|
|
|
|
||
|
|
|
|
|
||
Loss from operations |
|
(3,628) |
(1,424) |
(19,815) |
||
|
|
|
|
|
||
Finance expense |
|
(1,169) |
(10) |
(1,124) |
||
Loss before taxation from continuing operations
|
|
(4,797) |
(1,434) |
(20,939) |
||
Tax expense
|
11 |
(951) |
(807) |
(7) |
||
Loss after taxation from continuing operations |
|
(5,748) |
(2,241) |
(20,946) |
||
|
|
|
|
|||
Profit/(loss) after taxation from discontinued operations |
6 |
10,787 |
(2,980) |
(184) |
||
|
|
|
|
|||
Profit/(loss) for the period/year |
5,039 |
(5,221) |
(21,130) |
|||
^ The results for the 6 month period ended 31 May 2020 have been restated to present UK Dynamics and Starcom Technologies Limited as discontinued operations.
All the loss for the year is attributable to equity shareholders of the parent.
|
Note |
Unaudited 6 months to 31 May 2021 |
Restated^ Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
Profit/(loss) per share |
|
|
|
|
Basic and diluted earnings/(loss) per share |
7 |
11.6p |
(12.2)p |
(49.3)p |
Basic and diluted loss per share from continuing operations |
7 |
(13.2)p |
(5.2)p |
(48.8)p |
Consolidated statement of comprehensive income
for the six months ended 31 May 2021
|
Notes |
Unaudited 6 months to 31 May 2021 |
Restated^ Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Profit/(loss) for the period/year |
|
5,039 |
(5,221) |
(21,130) |
Other comprehensive income |
|
|
|
|
Exchange differences on translation of foreign operations |
|
(842) |
1,127 |
1,065 |
Total comprehensive income/(expense) for the period/year |
|
4,197 |
(4,094) |
(20,065) |
All the total comprehensive income/(expense) is attributable to equity holders of the parent. All the other comprehensive income will be reclassified subsequently to profit or loss when specific conditions are met. None of the items within other comprehensive income/(expense) had a tax impact.
Consolidated statement of financial position as at 31 May 2021
|
Notes |
Unaudited as at 31 May 2021 |
Unaudited as at 31 May 2020 |
Audited as at 30 November 2020 |
|
|
£'000 |
£'000 |
£'000 |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
1,629 |
2,067 |
1,866 |
Right-of-use assets |
|
1,851 |
3,136 |
2,719 |
Goodwill |
|
25,733 |
41,429 |
26,132 |
Other intangible assets |
|
8,408 |
15,190 |
10,271 |
Deferred tax assets |
|
680 |
618 |
935 |
Total non-current assets |
|
38,301 |
62,440 |
41,923 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
11 |
12,045 |
16,908 |
12,195 |
Cash and cash equivalents |
|
6,295 |
12,403 |
9,306 |
Assets classified as held for sale |
|
- |
- |
6,899 |
Total current assets |
|
18,340 |
29,311 |
28,400 |
|
|
|
|
|
Total assets |
|
56,641 |
91,751 |
70,323 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current liabilities |
|
|
|
|
Lease liabilities |
|
926 |
1,959 |
1,735 |
Borrowings |
|
- |
3,000 |
- |
Provisions |
|
472 |
303 |
416 |
Deferred tax liabilities |
|
925 |
1,312 |
889 |
Total non-current liabilities |
|
2,323 |
6,574 |
3,040 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
10 |
12,478 |
20,437 |
19,145 |
Current tax liabilities |
|
1,577 |
1,514 |
1,274 |
Lease liabilities |
|
943 |
1,125 |
925 |
Borrowings |
8 |
1,901 |
16,788 |
12,443 |
Provisions |
|
122 |
150 |
9 |
Liabilities directly associated with assets classified as held for sale |
|
- |
- |
3,572 |
Total current liabilities |
|
17,021 |
40,014 |
37,368 |
|
|
|
|
|
Total liabilities |
|
19,344 |
46,588 |
40,408 |
EQUITY |
|
|
|
|
Share capital |
|
11,183 |
10,737 |
10,737 |
Share premium account |
|
31,451 |
28,897 |
28,897 |
Other reserves |
|
11,151 |
10,448 |
11,151 |
Translation reserve |
|
1,781 |
2,685 |
2,623 |
Retained earnings |
|
(18,269) |
(7,604) |
(23,493) |
Total equity attributable to equity holders of the parent |
|
37,297 |
45,163 |
29,915 |
|
|
|
|
|
Total equity and liabilities |
|
56,641 |
91,751 |
70,323 |
|
|
|
|
|
Consolidated Cash Flow Statement
for the six months ended 31 May 2021
|
Notes |
Unaudited 6 months to 31 May 2021 |
Restated^ Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
Profit/(loss) for the period |
|
5,039 |
(5,221) |
(21,130) |
Adjustments for: |
|
|
|
|
Finance expense |
|
1,160 |
467 |
1,137 |
Tax expense |
|
841 |
526 |
(284) |
Depreciation of property, plant and equipment |
|
268 |
359 |
730 |
Impairment loss on property, plant and equipment |
|
- |
6 |
- |
Depreciation of right-of-use assets |
|
869 |
864 |
1,727 |
Amortisation of intangible assets and development expenditure |
|
3,219 |
2,000 |
4,247 |
Gain on sale of subsidiary |
|
(10,314) |
- |
- |
Impairment of intangible assets |
|
- |
16 |
16,855 |
Loss on sale of property, plant and equipment |
|
- |
- |
254 |
Share-based payments charge |
|
185 |
- |
20 |
Loss on disposal of discontinued operations, net of tax |
|
- |
- |
957 |
Increase in provisions |
|
169 |
39 |
71 |
Decrease in trade and other receivables |
|
1,062 |
5,172 |
6,680 |
Decrease in trade and other payables |
|
(9,863) |
(5,243) |
(2,688) |
Cash (used in)/generated from operations |
|
(7,365) |
(1,015) |
8,596 |
Income taxes |
|
(38) |
(94) |
(364) |
Net cash (used in)/generated from operating activities |
|
(7,403) |
(1,109) |
8,232 |
Cash flows from investing activities |
|
|
|
|
Net cash flow arising on the sale of businesses |
|
13,795 |
- |
- |
Development expenditure capitalised |
|
(1,330) |
(2,290) |
(4,516) |
Purchase of property, plant and equipment |
|
- |
(255) |
(713) |
Net cash from/(used in) investing activities |
|
12,465 |
(2,545) |
(5,229) |
Cash flows from financing activities |
|
|
|
|
Proceeds from loans and borrowings |
|
- |
9,482 |
9,950 |
Issue of shares |
|
3,000 |
- |
- |
Repayment of loans and borrowings |
|
(9,254) |
- |
(6,468) |
Repayment of lease liabilities |
|
(791) |
(802) |
(1,841) |
Interest paid on lease liabilities |
|
(131) |
(168) |
(308) |
Finance expense paid |
|
(1,050) |
(444) |
(590) |
Dividends paid |
|
- |
- |
- |
Net cash (used in)/from financing activities |
|
(8,226) |
8,068 |
743 |
Net change in cash and cash equivalents |
|
(3,164) |
4,414 |
3,746 |
Cash and cash equivalents at start of period/year |
|
7,566 |
3,841 |
3,841 |
Exchange gains /(losses) on cash and cash equivalents |
|
(8) |
36 |
(21) |
Cash and cash equivalents at end of period/year |
|
4,394 |
8,291 |
7,566 |
|
|
|
|
|
Consolidated statement of Changes in Equity
for the period ended 31 May 2021
|
|
Share capital |
Share premium |
Other reserves |
Translation reserve |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
At 1 December 2019 |
|
10,737 |
28,897 |
10,448 |
1,558 |
(2,383) |
49,257 |
Changes in equity for the six months ended 31 May 2020 |
|
|
|
|
|
|
|
Loss for the period |
|
- |
- |
- |
- |
(5,221) |
(5,221) |
Other comprehensive income for the period |
|
- |
- |
- |
1,127 |
- |
1,127 |
Total comprehensive income/(expense) |
|
- |
- |
- |
1,127 |
(5,221) |
(4,094) |
At 31 May 2020 |
|
10,737 |
28,897 |
10,448 |
2,685 |
(7,604) |
45,163 |
Changes in equity for period ended 30 November 2020 |
|
|
|
|
|
|
|
Loss for the period |
|
- |
- |
- |
- |
(15,909) |
(15,909) |
Other comprehensive income for the period |
|
- |
- |
- |
(62) |
- |
(62) |
Total comprehensive income/(expense) |
|
- |
- |
- |
(62) |
(15,909) |
(15,971) |
Share-based payment expense |
|
- |
- |
- |
- |
20 |
20 |
Issue of warrants |
|
- |
- |
703 |
- |
- |
703 |
At 30 November 2020 |
|
10,737 |
28,897 |
11,151 |
2,623 |
(23,493) |
29,915 |
Changes in equity for period ended 31 May 2021 |
|
|
|
|
|
|
|
Gain for the year |
|
- |
- |
- |
- |
5,039 |
5,039 |
Other comprehensive income for the period |
|
- |
- |
- |
(842) |
- |
(842) |
Total comprehensive income/(expense) |
|
- |
- |
- |
(842) |
5,039 |
4,197 |
Share issue |
|
446 |
2,554 |
- |
- |
- |
3,000 |
Share-based payment expense |
|
- |
- |
- |
- |
185 |
185 |
At 31 May 2021 |
|
11,183 |
31,451 |
11,151 |
1,781 |
(18,269) |
37,297 |
1 Segment information
For the six months ended 31 May 2021
|
K3 Own IP |
Global Accounts |
3rd party products |
Central Costs |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Total segment revenue |
10,800 |
10,361 |
5,753 |
- |
26,914 |
Less Inter-segment revenue |
(2,423) |
(1,134) |
(111) |
- |
(3,668) |
Software licence revenue |
2,148 |
1,013 |
994 |
- |
4,155 |
Services revenue |
701 |
6,738 |
1,785 |
- |
9,224 |
Maintenance & support |
4,951 |
1,476 |
2,804 |
- |
9,231 |
Hardware and other revenue |
577 |
- |
59 |
- |
636 |
External revenue |
8,377 |
9,227 |
5,642 |
- |
23,246 |
Cost of sales |
(2,179) |
(5,526) |
(2,467) |
- |
(10,172) |
Gross profit |
6,198 |
3,701 |
3,175 |
- |
13,074 |
Gross margin |
74.0% |
40.1% |
56.3% |
|
56.2% |
Administrative expenses7 |
- |
- |
- |
(12,210) |
(12,210) |
Adjusted EBITDA1 from continuing operations |
6,198 |
3,701 |
3,175 |
(12,210) |
864 |
Depreciation and amortisation |
- |
- |
- |
(3,841) |
(3,841) |
Amortisation of acquired intangibles |
- |
- |
- |
(284) |
(284) |
Exceptional reorganisation costs |
- |
- |
- |
(182) |
(182) |
Share-based payment (charge)/credit |
- |
- |
- |
(185) |
(185) |
Loss from operations |
6,198 |
3,701 |
3,175 |
(16,702) |
(3,628) |
Finance expense |
- |
- |
- |
(1,169) |
(1,169) |
Loss before tax and discontinued operations |
6,198 |
3,701 |
3,175 |
(17,871) |
(4,797) |
Tax expense |
- |
- |
- |
(951) |
(951) |
Profit from discontinued operations |
- |
- |
- |
10,787 |
10,787 |
Profit for the year |
6,198 |
3,701 |
3,175 |
(8,035) |
5,039 |
|
|
|
|
|
|
For the six months ended 31 May 2020
|
K3 Own IP |
Global Accounts |
3rd party products |
Central Costs |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Total segment revenue |
12,406 |
10,922 |
6,658 |
458 |
30,444 |
Less Inter-segment revenue |
(3,951) |
(2,220) |
(735) |
(458) |
(7,364) |
Software licence revenue |
1,988 |
319 |
656 |
- |
2,963 |
Services revenue |
551 |
6,947 |
1,788 |
- |
9,286 |
Maintenance & support |
5,088 |
1,436 |
3,473 |
- |
9,997 |
Hardware and other revenue |
828 |
- |
6 |
- |
834 |
External revenue |
8,455 |
8,702 |
5,923 |
- |
23,080 |
Cost of sales |
(2,163) |
(4,884) |
(2,095) |
- |
(9,142) |
Gross profit |
6,292 |
3,818 |
3,828 |
- |
13,937 |
Gross margin |
74.4% |
43.9% |
64.6% |
|
60.4% |
Administrative expenses7 |
- |
- |
- |
(12,204) |
(12,204) |
Adjusted EBITDA1 from continuing operations |
6,292 |
3,818 |
3,828 |
(12,204) |
1,734 |
Depreciation and amortisation |
- |
- |
- |
(2,265) |
(2,265) |
Amortisation of acquired intangibles |
- |
- |
- |
(678) |
(678) |
Exceptional reorganisation costs |
- |
- |
- |
(215) |
(215) |
Loss from operations |
6,292 |
3,818 |
3,828 |
(15,362) |
(1,424) |
Finance expense |
- |
- |
- |
(10) |
(10) |
Loss before tax and discontinued operations |
6,292 |
3,818 |
3,828 |
(15,372) |
(1,434) |
Tax expense |
- |
- |
- |
(807) |
(807) |
Loss from discontinued operations |
- |
- |
- |
(2,980) |
(2,980) |
Loss for the year |
6,292 |
3,818 |
3,828 |
(19,159) |
(5,221) |
|
|
|
|
|
|
For the twelve months ended 30 November 2020
|
K3 Own IP |
Global Accounts |
3rd party products |
Central Costs |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Total segment revenue |
20,100 |
19,479 |
16,146 |
458 |
56,183 |
Less Inter-segment revenue |
(3,951) |
(2,220) |
(735) |
(458) |
(7,364) |
Software licence revenue |
3,248 |
718 |
1,798 |
- |
5,764 |
Services revenue |
1,169 |
13,472 |
3,180 |
- |
17,821 |
Maintenance & support |
10,308 |
3,045 |
10,362 |
- |
23,715 |
Hardware and other revenue |
1,424 |
24 |
71 |
- |
1,519 |
External revenue |
16,149 |
17,259 |
15,411 |
- |
48,819 |
Cost of sales |
(3,909) |
(9,845) |
(6,356) |
- |
(20,110) |
Gross profit |
12,240 |
7,414 |
9,055 |
- |
28,709 |
Gross margin |
75.8% |
43.0% |
58.8% |
- |
58.8% |
Administrative expenses7 |
- |
- |
- |
(24,744) |
(24,744) |
Adjusted EBITDA1 from continuing operations |
12,240 |
7,414 |
9,055 |
(24,744) |
3,965 |
Depreciation and amortisation |
- |
- |
- |
(4,500) |
(4,500) |
Amortisation of acquired intangibles |
- |
- |
- |
(1,471) |
(1,471) |
Exceptional impairment |
- |
- |
- |
(16,855) |
(16,855) |
Exceptional reorganisation costs |
- |
- |
- |
(934) |
(934) |
Exceptional customer settlement provision |
- |
- |
- |
- |
- |
Share-based payment (charge)/credit |
- |
- |
- |
(20) |
(20) |
Loss from operations |
12,240 |
7,414 |
9,055 |
(48,524) |
(19,815) |
Finance expense |
- |
- |
- |
(1,124) |
(1,124) |
Loss before tax and discontinued operations |
12,240 |
7,414 |
9,055 |
(49,648) |
(20,939) |
Tax expense |
- |
- |
- |
(7) |
(7) |
Loss from discontinued operations |
- |
- |
- |
(184) |
(184) |
Loss for the year |
12,240 |
7,414 |
9,055 |
(49,839) |
(21,130) |
|
|
|
|
|
|
2 General information
K3 Business Technology Group Plc is incorporated in England and Wales under the Companies Act (listed on AIM, a market operated by the London Stock Exchange Plc) with the registered number 2641001. The address of the registered office is Baltimore House, 50 Kansas Avenue, Manchester M50 2GL.
The interim condensed consolidated financial statements comprise the company and its subsidiaries, "the Group".
3 Basis of preparation and Going Concern
The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 November 2020, prepared in accordance with the international accounting standards in conformity with the requirements of the Companies Act 2006, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS") and on the same basis and using the same accounting policies as used in the financial statements for the year ended 30 November 2020, subject to the introduction of any new accounting standards applicable in the period and with the exception of the change in accounting estimate as detailed in Note 4 below.
The financial information has not been prepared (and is not required to be prepared) in accordance with IAS 34. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this financial information.
The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.
Although there still exists some uncertainty due to the ongoing disruption arising from COVID ‐ 19 the Directors have concluded this is not material. Following the sale of the Starcom subsidiary on 26 February 2021, for net proceeds of £13.8m, the Group also successfully agreed an extension to its Revolving Credit Facility with Barclays with a facility of £3.5m to March 2022 with a further option to extend to March 2023. As a result of these actions, at 31 May 2021 the Group had net cash of £4.4m compared to net debt of £1.9m at 30 November 2020 and net debt of £7.4m at 31 May 2020.
The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing this financial information.
4 Critical accounting estimates, judgements and sources of estimation uncertainty
For the accounting period beginning 1 December 2020 the Group has reviewed the depreciation method of assets in line with the requirements of IAS 38 Intangible Assets. The Group has identified that the pattern of consumption of benefits relating to the capitalised development costs for our own IP assets in our Irish subsidiary had changed. As a result the depreciation method has been changed from straight line 5-7 years to straight line 3 years.
This change has been applied prospectively from 1 December 2020 as it constitutes a change in estimate under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. This change in accounting policy has resulted in the following adjustment to the depreciation charge:
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
Depreciation and amortisation - previous accounting policy |
2,315 |
2,265 |
4,500 |
Adjustment |
1,526 |
- |
- |
Depreciation and amortisation - new accounting policy |
3,841 |
2,265 |
4,500 |
With the exception of the above there have been no further material revisions to the nature and amount of changes in estimates of amounts reported in the financial statements for the year ended 30 November 2020.
5 Significant events
On 30 March 2021 the Group reached agreement with two of its major shareholders, Kestrel Partners LLP (represented by Non-executive Director Oliver Scott) and Johan Claesson (also Non ‐ executive Director) via his associated company, CA Fastigheter AB to convert the full principal amount of the £3.0m shareholder loans into ordinary shares of 25p each in the Company at a conversion price of £1.68 per Ordinary Share (being the prevailing bid-price on 26 March 2021).
On 26 February 2021 the Group announced the sale of the Starcom business (see note 6).
The Group successfully agreed an extension to its Revolving Credit Facility with Barclays with a facility of £3.5m to March 2022 with a further option to extend to March 2023.
6 Discontinued operations
On 26 February 2021 the Group announced the sale of the Starcom business for consideration of £14.7m. As a major line of business the results of Starcom for the 6 months to 31 May 2021 have been presented as discontinued operations. The results for the six months ended 31 May 2020 have been restated to present Starcom as discontinued operations. At 30 November 2020 Starcom was classified as a disposal group held for sale as the discontinued operation represented a major line of business of the Group.
The results of the Starcom business for the periods presented were:
|
|
Unaudited 6 months to 31 May 2021 |
Restated^ Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
External revenue |
|
2,309 |
4,470 |
9,519 |
|
|
Cost of sales |
|
(845) |
(1,639) |
(3,966) |
|
|
Gross profit |
|
1,464 |
2,831 |
5,553 |
|
|
|
|
|
|
|
|
|
Administrative expenses |
|
(1,011) |
(2,126) |
(4,320) |
|
|
Impairment losses on financial assets |
|
- |
(73) |
(25) |
|
|
Amortisation of acquired intangibles |
|
(99) |
(161) |
(322) |
|
|
Profit from operations |
|
354 |
471 |
886 |
|
|
|
|
|
|
|
|
|
Finance income/(expense) |
|
9 |
(26) |
(73) |
|
|
|
|
|
|
|
|
|
Profit after taxation from discontinued operations |
|
363 |
445 |
813 |
|
|
Tax credit/(expense)
|
|
110 |
11 |
22 |
|
|
Profit for the year from discontinued operations after tax |
473 |
456 |
835 |
|
||
Gain on sale of subsidiary after income tax (see below) |
10,314 |
- |
- |
- |
||
Profit for the year from discontinued operations |
10,787 |
456 |
835 |
|
||
|
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
£'000 |
|
£'000 |
|
|
|
|
|
Basic and diluted profit per share from discontinued operations |
|
24.8 |
1.1 |
1.9 |
The major classes of assets and liabilities of the Starcom business classified as held for sale as at 30 November 2020 are as follows:
|
2020 |
|
£'000 |
Property, plant, and equipment |
237 |
Right-of-use assets |
332 |
Goodwill |
2,373 |
Other intangible assets |
690 |
Deferred tax assets |
136 |
Trade and other receivables |
1,871 |
Cash and cash equivalents |
1,260 |
Assets classified as held for sale |
6,899 |
Trade and other payables |
(3,196) |
Provisions |
(60) |
Lease liabilities |
(316) |
Liabilities directly associated with assets classified as held for sale |
(3,572) |
Net Assets directly associated with disposal group |
3,327 |
The net cashflows incurred by Starcom are as follows:
|
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Operating |
|
379 |
(232) |
1,096 |
Investing |
|
- |
(121) |
(155) |
Financing |
|
12,835 |
(27) |
(133) |
Net cash inflow/(outflow) |
|
13,214 |
(380) |
808 |
Gain on sale
|
Unaudited 6 months to 31 May 2021 £'000 |
Consideration received: |
|
Cash |
14,747 |
Final consideration |
14,747 |
Carrying amount of net assets sold |
(3,878) |
Gain on sale before costs and income tax |
10,869 |
Costs incurred in connection with the agreed disposal of the Starcom business |
(555) |
Income tax expense on gain |
- |
Gain on sale after income tax |
10,314 |
Net cash flow arising on the sale of Starcom
|
Unaudited 6 months to 31 May 2021 £'000 |
Cash consideration |
14,747 |
Cash at date of disposal |
(415) |
Disposal costs paid |
(537) |
Net cash inflow |
13,795 |
On 21 April 2020, the UK Dynamics subsidiary was put into administration and has been classified as a discontinued operation as it represented a major line of business for the Group. No assets or liabilities relating to UK Dynamics were held by the Group at 30 November 2020.
The results of the UK Dynamics business for the year up to its administration are presented below.
|
|
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
|
|
|
|
Revenue |
|
3,789 |
3,789 |
|
Cost of sales |
|
(3,533) |
(3,533) |
|
Gross profit |
|
256 |
256 |
|
|
|
|
|
|
Administrative expenses |
|
(1,375) |
(1,375) |
|
Impairment losses on financial assets |
|
- |
- |
|
Loss from operations |
|
(1,119) |
(1,119) |
|
|
|
|
|
|
Finance income/(expense) |
|
60 |
60 |
|
Loss before taxation from discontinued operations before group costs |
|
(1,059) |
(1,059) |
|
|
|
|
|
|
Impairment of UK Dynamics Goodwill |
|
- |
- |
|
Cost incurred with the disposal of UK Dynamics |
|
(2,645) |
(229) |
|
|
|
|
|
|
Loss before taxation from discontinued operations |
|
(3,703) |
(1,288) |
|
Tax credit/(expense)
|
|
269 |
269 |
|
Loss for the year from discontinued operations |
(3,434) |
(1,019) |
|
|
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
|
£'000 |
|
|
|
|
Basic and diluted loss per share from discontinued operations |
|
(8.0) |
(2.4) |
The net cashflows incurred by UK Dynamics are as follows:
|
|
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|
£'000 |
£'000 |
|
|
|
|
Operating |
|
(1,063) |
(1,063) |
Investing |
|
- |
- |
Financing |
|
(15) |
(15) |
Net cash inflow/(outflow) |
|
(1,618) |
(1,618) |
7 Earnings/(loss) per share
The calculations of (loss)/earnings per share (EPS) are based on the profit/(loss) for the year and the following numbers of shares:
|
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
Denominator |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Weighted average number of shares used in basic and diluted EPS |
|
43,602,052 |
42,871,000 |
42,899,598 |
Certain employee options and warrants have not been included in the calculation of diluted EPS because their exercise is contingent on the satisfaction of certain criteria that had not been met at the end of the period/year.
|
Unaudited 6 months to 31 May 2021 |
Restated Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Loss after tax from continuing operations |
(5,748) |
(2,241) |
(20,946) |
Profit/(loss) after tax from discontinued operations |
10,787 |
(2,980) |
(184) |
Profit/(loss) attributable to ordinary equity holders of the parent for basic and diluted earnings per share |
5,039 |
(5,221) |
(21,130) |
The alternative earnings per share calculations have been computed because the directors consider that they are useful to shareholders and investors. These are based on the following profits/(losses) and the above number of shares.
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
|||
|
£'000 |
£'000 |
£'000 |
|
|||
|
|
|
|
|
|||
Loss after tax from continuing operations |
(5,748) |
(2,241) |
(20,946) |
|
|||
Add back Other Items |
|
|
|
|
|||
Amortisation of acquired intangibles |
284 |
678 |
1,471 |
|
|||
Exceptional reorganisation costs |
182 |
215 |
934 |
|
|||
Exceptional impairment costs |
- |
- |
16,855 |
|
|||
Shared-based payment charge |
185 |
- |
20 |
|
|||
Tax charge related to Other Items |
(78) |
(146) |
(405) |
|
|||
Loss attributable to ordinary equity holders of the parent for basic and diluted earnings per share from continuing operations before other items |
(5,175) |
(1,495) |
(2,071) |
||||
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
Profit/(loss) per share |
|
|
|
Basic and diluted earnings/(loss) per share |
11.6p |
(12.2)p |
(49.3)p |
Basic and diluted loss per share from continuing operations |
(13.2)p |
(5.2)p |
(48.8)p |
Adjusted loss per share |
|
|
|
Basic and diluted loss per share from continuing operations before other items |
(11.9)p |
(3.5)p |
(4.8)p |
8 Loans and borrowings
|
Unaudited as at 31 May 2021 |
Unaudited as at 31 May 2020 |
Audited as at 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
Non-current |
|
|
|
Bank loans (secured) |
- |
- |
- |
Shareholder loans (unsecured) |
- |
3,000 |
- |
|
- |
3,000 |
- |
Current |
|
|
|
Bank overdrafts (secured) |
1,901 |
4,112 |
3,000 |
Bank loans (secured) |
- |
12,676 |
6,771 |
Shareholder loans (unsecured) |
- |
- |
2,672 |
|
1,901 |
16,788 |
12,443 |
|
1,901 |
19,788 |
12,443 |
9 Net debt
|
Unaudited as at 31 May 2021 |
Unaudited as at 31 May 2020 |
Audited as at 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
Loans and borrowings |
(1,901) |
(19,788) |
(12,443) |
Cash |
6,295 |
12,403 |
9,306 |
Cash - held for sale |
- |
- |
1,260 |
Net cash/(debt) |
4,394 |
(7,385) |
(1,877) |
10 Trade and other payables
|
Unaudited as at 31 May 2021 |
Unaudited as at 31 May 2020 |
Audited as at 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Trade payables |
2,144 |
2,621 |
2,376 |
Other payables |
1,100 |
3,209 |
1,222 |
Accruals |
2,391 |
2,726 |
4,269 |
Total financial Liabilities, excluding loans and borrowings, classified as financial liabilities measures at amortised cost |
5,635 |
8,556 |
7,867 |
Other tax and social security tax |
2,163 |
4,912 |
4,782 |
Contract liabilities |
4,680 |
6,969 |
6,496 |
|
12,478 |
20,437 |
19,145 |
11 Trade and other receivables
|
Unaudited as at 31 May 2021 |
Unaudited as at 31 May 2020 |
Audited as at 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Trade receivables |
8,309 |
12,104 |
8,268 |
Loss allowance |
(1,089) |
(1,325) |
(1,329) |
Trade receivables - net |
7,220 |
10,779 |
6,939 |
Other receivables |
128 |
507 |
177 |
Contract assets |
3,009 |
3,109 |
3,220 |
Prepayments and stock |
1,688 |
2,513 |
1,859 |
|
12,045 |
16,908 |
12,195 |
12 Tax
|
Unaudited 6 months to 31 May 2021 |
Unaudited 6 months to 31 May 2020 |
Audited 12 months to 30 November 2020 |
|
£'000 |
£'000 |
£'000 |
Current tax expense |
|
|
|
Income tax of overseas operations on profits/(losses) for the period/year |
662 |
532 |
397 |
Adjustment in respect of prior periods |
- |
(86) |
(59) |
Total current tax expense |
662 |
446 |
338 |
|
|
|
|
Deferred tax expense/(income) |
|
|
|
Origination and reversal of temporary differences |
(272) |
32 |
(622) |
Adjustment in respect of prior periods |
451 |
48 |
- |
Total deferred tax expense/(income) |
179 |
80 |
(622) |
|
|
|
|
Total tax expense/(credit) |
841 |
526 |
(284) |
|
|
|
|
Income tax expense attributable to continuing operations |
951 |
806 |
7 |
Income tax credit attributable to discontinued operations |
(110) |
(280) |
(291) |
|
841 |
526 |
(284) |
13 Non-statutory information
The Group uses a variety of alternative performance measures, which are non-IFRS, to assess the performance of its operations. The Group considers these performance measures to provide useful historical financial information to help investors evaluate the underlying performance of the business.
These measures, as described below, are used to improve the comparability of information between reporting periods and geographical units, to adjust for exceptional items or to adjust for businesses identified as discontinued to provide information on the ongoing activities of the Group. This also reflects how the business is managed and measured on a day-to-day basis.
1 Adjusted EBITDA - is the loss from continuing activities adjusted to exclude depreciation and amortisation of development costs £3.8m (May 2020: £2.3m, Nov 2020 £4.5m), amortisation of acquired intangibles £0.3m (May 2020: £0.7m, Nov 2020 £1.5m), exceptional impairment costs £nil (May 2020 £nil, Nov 2020 £16.9m) exceptional reorganisation costs £0.2m (May 2020: £0.2m, Nov 2020 £0.9m), and share-based charges £0.2m (May 2020: £nil, Nov 2020 £0.1m).
2 Recurring or predictable revenue - Contracted support, maintenance and services revenues with a framework agreement of 2 years or more, as a percentage of total revenue
3 Own IP revenue as a percentage of total revenue - Own IP revenue (which includes initial and annual software licences), £8.4m (May 2020 £8.5m Nov 2020 £16.1m), as a percentage of total Group revenue, £23.2m (May 2020 £23.1m, Nov 2020 £48.8m).
4 Own IP gross profit as a percentage of total gross profit - Own IP gross profit, £6.2m (May 2020 £6.3m Nov 2020 £12.2m), as a percentage of total Group gross profit, £13.1m (May 2020 £13.9m, Nov 2020 £28.7m).
5 Net cash/debt comprises Bank Loans, Shareholder Loans and Overdrafts less Cash and cash equivalents, including Cash and cash equivalents held for sale.
6 Adjusted loss/earnings per share - basic loss per share from continuing operations adjusted to exclude amortisation of acquired intangibles £0.3m (May 2020: £0.7m, Nov 2020 £1.5m), exceptional impairment costs £nil (May 2020 £nil, Nov 2020 £16.9m) exceptional reorganisation costs £0.2m (May 2020: £0.2m, Nov 2020 £0.9m), and share-based charges £0.2m (May 2020: £nil, Nov 2020 £0.1).net of the related tax charge £0.1m (May 2020 £0.1m, Nov 2020 £0.4m).
7 Underlying support/admin costs - administrative expenses adjusted to exclude depreciation and amortisation of development costs £3.8m (May 2020 £2.3m Nov 2020 £4.5m), amortisation of acquired intangibles £0.3m (May 2020 £0.7m, Nov 2020 £1.5m), exceptional impairment costs £nil (May 2020 £nil, Nov 2020 £16.9m), exceptional reorganisation costs £0.2m (May 2020 £0.2m, No 2020 £0.9m) and share-based charges £0.2m (May 2020 £nil, Nov 2020 £0.1m).