TIDM365
RNS Number : 2364A
365 Agile Group PLC
06 June 2016
365Agile Group plc
('365Agile', or the 'Company', together with its subsidiaries,
the 'Group')
Final Results for the year to 31 December 2015 and Notice of
Annual General Meeting
365 Agile is pleased to report its audited final results for the
year to 31 December 2015, representing a period of significant
change for the Group.
Highlights of the year:
-- Acquisition of 365 Agile Limited, a reverse takeover under
the AIM rules, and subsequent re-admission to trading on AIM and
change of name from Iafyds plc to 365 Agile Group plc
-- Acquisition of Easytherm Limited in November, expanding the Group's technology base
-- Revenue generated of GBP1.6 million, with adjusted EBITDA* of GBP0.1 million
-- Net assets at period end of GBP4.5 million
-- Post-year end licence deal with Castleton Technology plc in
social housing sector guaranteeing a minimum licence income of
GBP1.8 million, payable over the next three years.
* Adjusted EBITDA represents earnings for the year from
continuing operations before net finance costs, tax, depreciation,
amortisation, exceptional costs and share-based payment
charges.
Clive Carver, non-executive chairman said:
"This has been a year of change for the 365 Agile Group. The
Board is excited by the multiple prospects afforded by the Internet
of Things space and we continue to assess the options in front of
us, supported by the financial security brought by our revised
licencing agreement with Castleton Technology."
The Group's Annual Report and Accounts for the year ended 31
December 2015 is today being posted to shareholders, together with
the Notice of Annual General Meeting ("AGM"). A copy of each is
available from the Company's website www.365agile.com. The
Company's AGM will be held at the offices of DAC Beachcroft LLP at
100 Fetter Lane, London EC4A 1BN at 9.00 a.m. on 29 June 2016.
Contacts:
365 Agile Group plc +44 (0) 345 504 0365
Clive Carver, Non-executive Chairman
finnCap Limited +44 (0)20 7220 0500
Geoff Nash/Scott Mathieson
MXC Capital Markets LLP +44 (0)20 7965 8149
Charlotte Stranner/ Marc Young
Chairman's Statement
I am pleased to report the results of 365 Agile Group plc ('365
Agile' or the 'Company' and together with its subsidiaries, the
'Group') for the year ended 31 December 2015.
Background
This has been a year of significant change for the Group. In
August 2015, Iafyds plc completed the GBP9.5 million acquisition of
365 Agile Limited and changed its name to 365 Agile Group plc. The
acquisition was deemed a reverse takeover under the AIM Rules and,
following shareholder approval, the Group re-admitted to AIM on 21
August 2015.
At the time of the acquisition, 365 Agile's business consisted
principally of software to provide field based workers access to
traditional back office systems on smart phones or tablets. Using
the 365 Agile software remote workers can complete field based
tasks in real time with secure connections to the office without
the need for third party software. Sales activities were at the
time targeted exclusively towards the social housing market.
Additionally, through its Wireless Things Limited subsidiary the
Group had a start in the Internet of Things space.
Business overview and performance
365 Agile's subsidiary companies have contributed to the Group's
performance in the year from their dates of acquisition, as
detailed in the financial review section below, with all companies
focused on the development, integration and exploitation of the
Group's technology.
The initial sales focus has been on the social housing sector
and during the year the Group maintained a software product
development team with sales and installation in that sector being
outsourced on an exclusive basis to Castleton Technology plc
('Castleton').
While we have yet to complete a full year's trading following
the acquisition of 365 Agile Limited we quickly concluded that the
original business model was open to improvement and took action to
rectify the situation.
By the time of our announcement of 4 April 2016 it was clear to
the board that a better way to monetise 365 Agile's products in the
social housing sector was to have the software developers work more
closely with the installers and sales teams. Accordingly, certain
of the software development team transferred to our reseller
Castleton along with the Group and Castleton entering into a
revised licence agreement with a minimum licence fee of GBP1.8
million being payable to 365 Agile over the coming three years.
These changes have safeguarded the financial position of the
Group while preserving its ability to develop outside the social
housing sector. It has also created a firm base on which to develop
organically or by acquisition an attractive Internet of Things
business. The Group has developed a number of opportunities using
its technologies and, following the departure of the CEO in April,
the Board is assessing which options to pursue in the short term
and will report on these in due course.
Following the above management change, Jill Collighan was
appointed interim CEO whist a suitable replacement is sought.
Additionally, we have strengthened the board with the appointment
of Tony Weaver, as Non-executive Director. Tony is a founder of MXC
Capital Limited, a specialist merchant bank that invests and grows
value in companies in the TMT sector, and which is a substantial
shareholder in the Company. Tony is a business leader and investor
with proven sales, operations and management expertise. Tony has
served on a number of private and publically quoted company boards
over the last 28 years.
Financial review
Overview
This has been a transformational year for the Company with the
acquisition of its trading subsidiaries, effected by a reverse
takeover.
The Company was an Investment Company under the AIM rules
seeking to make a qualifying investment prior to 21 August 2015
when it acquired 365 Agile Limited and its subsidiary companies for
a total consideration of GBP9.5 million, satisfied by the issue of
12.6 million Ordinary Shares in the Company.
In the consolidated financial statements, the reverse
acquisition methodology has been applied as required by IFRS 3. The
legal subsidiary (365 Agile Limited) is deemed to be the acquirer
and the legal parent (365 Agile Group plc) is deemed to be a
subsidiary. The effect of this is that the Group's consolidated
accounts show 365 Agile Limited as if it is, and always has been,
the parent company of the Group. The comparative numbers have
therefore been restated to show the results of 365 Agile Limited
for the period from its incorporation in August 2014.
In accordance with the provisions of IFRS 2 a 'deemed
consideration' charge is required to be calculated to represent the
notional cost 365 Agile would have incurred had it listed on AIM
itself as opposed to being acquired by Iafyds plc by way of a
reverse acquisition. This notional, non-cash, cost is GBP0.8
million. In addition, the net liabilities of Iafyds plc at the
point of acquisition were GBP0.1 million. The combination of these
costs result in a non-cash share-based payment of GBP0.9 million
which has been charged to the income statement.
During the period, three other acquisitions were made by the
Group:
365 Agile Limited acquired South View Solutions Limited, a
specialist supplier of software and solutions to the social housing
sector, for a total consideration of GBP1.1 million on 27 February
2015. The consideration was satisfied by GBP0.75 million in cash
and loan notes of GBP0.35 million.
On 17 March 2015, 365 Agile Limited acquired Wireless Things
Limited, formerly Ciseco Limited for GBP0.5 million, satisfied by
the issue of shares.
Finally, on 23 November 2015, the Company acquired Easytherm
Limited for GBP2.1 million, satisfied by GBP0.2 million in cash,
GBP1.8 million of shares issued in 365 Agile and GBP0.1 million of
convertible loan notes.
These financial statements reflect the above transactions, with
each entity being included in the consolidated accounts as
follows:
2014: Financial statements restated to show 365 Agile Limited's
results only, from incorporation on 28 August 2014 to 31 December
2014. Trade in 365 Agile Limited commenced in November 2014.
2015: 365 Agile Limited, results included from 1 January 2015;
South View Solutions Limited, results included from 27 February
2015;
Wireless Things Limited, results included from 17 March
2015;
365 Agile Group plc (formerly Iafyds plc), results included from
21 August 2015; and
Easytherm Limited, results included from 23 November 2015.
Trading results
Revenue for the year was GBP1.6 million (2014: GBP2,000). As a
software and technology business gross margin is high at 88%,
generating a gross profit of GBP1.4 million (2014: GBP2,000).
The adjusted EBITDA* for the period, a profit of GBP0.1 million
(2014 loss of GBP0.1 million) reflects the normalised trade of the
Group in a year of significant change and was generated after
incurring administrative expenses relating to trading activities of
GBP1.3 million in the year (2014: GBP0.1 million).
Further non-trading and exceptional expenses (classified as
'administrative expenses') were incurred in respect of the deemed
reverse acquisition costs explained above (GBP0.9 million), the
actual costs in respect of professional fees for the reverse
acquisition and the other acquisitions in the year (GBP0.7
million), integration and restructuring costs (GBP0.2 million) and
the share-based payments charge (GBP0.1 million). No equivalent
costs were incurred in 2014. After accounting for depreciation and
amortisation charges resulting from the acquisitions (GBP0.4
million, 2014: GBPnil) a loss before taxation of GBP2.1 million
(2014: GBP0.1 million) was incurred.
The tax credit for the year was GBP0.1 million (2014: GBPnil)
leading to a loss after tax of GBP2.0 million (2014: GBP0.1
million).
GBP0.9 million of cash was utilised in the Group's operating
activities (2014: GBP20,000). GBP0.8 million (2014: GBPnil) was
paid to acquire subsidiary companies, net of the cash in those
subsidiaries on acquisition. A further GBP0.3 million (2014:
GBP23,000) was incurred in the development of the Group's
technology and the purchase of equipment. After costs, GBP2.7
million (2014: GBP0.3 million) was generated from financing
activities, predominantly an equity raise in August 2015. Cash
balances at the end of the year were GBP0.9 million (2014: GBP0.2
million).
The Group balance sheet includes an intangible asset of GBP4.0
million (2014: GBPnil). This asset, which arises on consolidation,
relates to customer lists, software and goodwill resulting from the
acquisitions in the year. See note 10 for further details. At the
end of the year net assets were GBP4.5 million (2014: GBP0.2
million).
* Adjusted EBITDA represents earnings for the year from
continuing operations before net finance costs, tax, depreciation,
amortisation, exceptional costs and share-based payment
charges.
Going concern
Based on the terms of the revised Castleton licence the Board is
confident that the Group will have sufficient funding for its
foreseeable future needs. Accordingly, the financial statements
have been prepared on a going concern basis.
Outlook
The Board remains confident of the Group's prospects in
continuing to develop opportunities around its core software
platform and Internet of Things technologies.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Year Year
ended ended
31 December 31 December
2015 2014
Note GBP000 GBP000
Continuing operations
--------------------------------------------------- ---- ------------ ---------------------
Revenue 1,591 2
Cost of sales (197) -
--------------------------------------------------- ---- ------------ ---------------------
Gross profit 1,394 2
Administrative expenses (3,561) (53)
Other operating income 31 -
------------ ---------------------
(51)
Adjusted EBITDA(1) 135 -------
Exceptional costs 2 (1,800) -
Depreciation (39) -
Amortisation (367) -
Charges for share-based payments (65) -
------------ ---------------------
Operating loss (2,136) (51)
Finance income 2 -
Finance costs (21) -
--------------------------------------------------- ---- ------------ ---------------------
Loss on ordinary activities before taxation (2,155) (51)
Income tax 130 -
--------------------------------------------------- ---- ------------ ---------------------
Loss and total comprehensive income for the
year attributable to owners of the parent company (2,025) (51)
--------------------------------------------------- ---- ------------ ---------------------
Loss per share 3
Basic loss per share from continuing activities (29.32p) (6.59p)
--------------------------------------------------- ---- ------------ ---------------------
Diluted loss per share from continuing activities (29.32p) (6.59p)
--------------------------------------------------- ---- ------------ ---------------------
(1) Total result for the year from continuing operations before
net finance costs, tax, depreciation, amortisation, exceptional
costs and share-based payment charges
Consolidated Balance Sheet
As at 31 December 2015
31 December 31 December
2015 2014
Note GBP000 GBP000
Assets
Non-current assets
Intangible assets 5 3,962 16
Property, plant and equipment 129 7
Trade and other receivables 64 -
4,155 23
------------------------------------------------ ---- ----------- -----------
Current assets
Inventories 106 -
Trade and other receivables 515 14
Cash and cash equivalents 856 207
------------------------------------------------ ---- ----------- -----------
1,477 221
------------------------------------------------ ---- ----------- -----------
Total assets 5,632 244
------------------------------------------------ ---- ----------- -----------
Equity and liabilities
Equity attributable to owners of the parent
Share capital 6 5,674 3,734
Share premium account 14,036 7,441
Capital redemption reserve 4,426 994
Reverse acquisition reserve (19,932) (13,069)
Merger relief reserve 2,310 1,150
Equity reserve 65 -
Accumulated loss (2,076) (51)
------------------------------------------------ ---- ----------- -----------
Total equity attributable to the owners of the
parent 4,503 199
------------------------------------------------ ---- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 746 45
Borrowings 329 -
1,075 45
------------------------------------------------ ---- ----------- -----------
Non-current liabilities
Borrowings 23 -
Deferred taxation liabilities 31 -
------------------------------------------------ ---- ----------- -----------
54 -
------------------------------------------------ ---- ----------- -----------
Total liabilities 1,129 45
------------------------------------------------ ---- ----------- -----------
Total equity and liabilities 5,632 244
------------------------------------------------ ---- ----------- -----------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Called Capital Reverse
up Share redemp-tion acquisi-tion Merger Accumu-lated
share premium reserve reserve relief Equity loss Total
capital account GBP000 GBP000 reserve reserve GBP000 equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January
2014 3,474 7,490 994 (13,069) 1,150 - - 39
Loss for the
year and total
comprehensive
income - - - - - - (51) (51)
Transactions
with owners:
Share issue 260 (49) - - - - - 211
At 31 December
2014 3,734 7,441 994 (13,069) 1,150 - (51) 199
Loss for the
year and total
comprehensive
income - - - - - - (2,025) (2,025)
----------------- --------- --------- ------------- -------------- --------- --------- -------------- --------
Transactions
with owners:
Share-based
payments -
staff
share scheme - - - - - 47 - 47
Share-based
payments -
warrants
issued - - - - - 18 - 18
Shares cancelled (3,432) - 3,432 - - - - -
Shares issued -
reverse
acquisition 3,780 5,670 - - - - - 9,450
Shares issued -
placing 920 1,380 - - - - - 2,300
Shares issued -
to acquire
subsidiary
company 670 - - - 1,160 - - 1,830
Shares issued -
to former
adviser 2 5 - - - - - 7
Cost of share
issues - (460) - - - - - (460)
Reverse
acquisition
adjustment - - - (6,863) - - - (6,863)
1,940 6,595 3,432 (6,863) 1,160 65 - 6,329
----------------- --------- --------- ------------- -------------- --------- --------- -------------- --------
At 31 December
2015 5,674 14,036 4,426 (19,932) 2,310 65 (2,076) 4,503
----------------- --------- --------- ------------- -------------- --------- --------- -------------- --------
Called up share capital
Called up share capital represents the nominal value of ordinary
shares in issue.
Share premium account
The share premium account represents the excess over nominal
value of the fair value of consideration for equity shares, net of
expenses of the share issue.
Capital redemption reserve
The capital redemption reserve includes amounts transferred to
this reserve when shares are purchased and cancelled
immediately.
Reverse acquisition reserve
The reverse acquisition reserve represents the difference
between the parent's capital and the acquired Group's capital.
Merger relief reserve
Merger relief reserve represents the premium arising on shares
issued as part or full consideration for acquisitions, where
advantage has been taken of the provisions of section 612 of the
Companies Act 2006.
Equity reserve
The equity reserve is a reserve to recognise those amounts in
equity in respect of share-based payments as follows:
Firstly, on 31 July 2015, in acknowledgement of professional
services provided as the Group's corporate finance adviser,
warrants over 5% of the Company's current and future issued share
capital were issued to MXC Capital Guernsey Limited ('MXC'). At 31
December 2015, MXC held 945,703 share warrants in the Company. The
fair value of the warrants is calculated using a two-tiered
Black-Scholes option pricing model together with an empirical
model, adjusted by a probability weighting to take the likely
achievement of performance criteria into account.
Secondly, in September 2015, an employee share scheme was
implemented for certain members of staff. The fair value of awards
under the scheme have been calculated using a two-tiered
Black-Scholes option pricing model together with an empirical
model, adjusted by a probability weighting to take the likely
achievement of performance criteria into account.
Accumulated loss
Accumulated loss represents losses incurred.
Consolidated Cash Flow Statement
For the year ended 31 December 2015
31 December 31 December
2015 2014
Note GBP000 GBP000
--------------------------------------------------- ---- ----------- -------------
Cash flows from operating activities
Cash used in operations 7 (881) (20)
Net finance charges paid (17) -
Income taxes paid (36) -
--------------------------------------------------- ---- ----------- -------------
Net cash flows used in operating activities (934) (20)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (782) -
Purchase of property, plant and equipment (71) (7)
Capitalisation of development costs (218) (16)
--------------------------------------------------- ---- ----------- -------------
Net cash flows used in investing activities (1,071) (23)
Cash flows from financing activities
Proceeds from issuance of shares 2,300 250
Costs of share issue (460) -
Borrowings received 950 -
Repayment of borrowings (136) -
--------------------------------------------------- ---- ----------- -------------
Net cash flows generated from financing activities 2,654 250
Net increase in cash and cash equivalents 649 207
Cash and cash equivalents at 1 January 207 -
--------------------------------------------------- ---- ----------- -------------
Cash and cash equivalents at 31 December 856 207
--------------------------------------------------- ---- ----------- -------------
Comprising:
Cash and cash equivalents 856 207
--------------------------------------------------- ---- ----------- -------------
Notes to the Preliminary Statement
For the year ended 31 December 2015
1 Accounting policies
1.1 Basis of preparation
The consolidated financial statements of 365 Agile have been
prepared on the going concern basis and in accordance with EU
adopted International Financial Reporting Standards (IFRSs), IFRIC
interpretations and in accordance with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS. The
consolidated financial statements have been prepared under the
historical cost convention.
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined by
section 434 and 435 of the Companies Act 2006. The financial
information for the year ended 31 December 2015 has been extracted
from the Group's consolidated financial statements upon which the
auditor's opinion is unmodified and does not include any statement
under section 498(2) or 498(3) of the Companies Act 2006. The
statutory accounts for the year ended 31 December 2015 will be
delivered to the Registrar of Companies following the Annual
General Meeting.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in Section 1.23 in the
accounting policies.
Comparative amounts are restated in respect of the reverse
acquisition of 365 Agile Limited. Further details are given in
Section 1.2 below.
New standards adopted in the year are discussed in Section
1.22.
The principal accounting policies, which have been applied
consistently in the preparation of the consolidated financial
statements throughout the year and by all subsidiary companies, are
set out below.
Going Concern
The directors have prepared detailed cash flow projections
including sensitivity analysis on key assumptions. Based on the
revised licence agreement with Castleton Technologies plc the
Group's forecasts and projections, taking account of reasonably
possible changes in trading performance and the timing of key
strategic events, show 365 Agile will be able to operate within the
level and conditions of available funding. The directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the Group continues to adopt the going concern
basis in preparing its consolidated financial statements.
1.2 Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to reflect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group.
The Group applies the acquisition method to account for business
combinations where the transaction meets the criteria specified
within IFRS 3. The consideration transferred for the acquisition of
a subsidiary is the total of the fair values of the assets
transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
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. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Inter-company transactions, balances and unrealised gains or
losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
In August 2015, 365 Agile Group plc acquired, via a share for
share exchange, the entire share capital of 365 Agile Limited. The
exchange did not meet the definition of a business combination
under IFRS 3. Although not a business combination, IFRS 3 requires
the preparation of consolidated financial statements using reverse
acquisition methodology.
Although the consolidated financial information has been issued
in the name of the legal parent, 365 Agile Group plc, it represents
in substance continuation of the financial information of the legal
subsidiary, 365 Agile Limited.
The assets and liabilities of the legal subsidiary, 365 Agile
Limited, are recognised and measured in the Group financial
statements at the pre-transaction carrying amounts, without
restatement of fair value. The retained earnings and other equity
balances of 365 Agile Group plc immediately before the transaction
and the results of the period from 1 January 2013 to the date of
the transaction are those of 365 Agile Limited. However, the equity
structure appearing in the Group financial statements reflects the
equity structure of the legal parent, 365 Agile Group plc,
including equity instruments issued in order to effect the
transaction. Comparative numbers presented in the financial
statements are the accounts of 365 Agile Limited for the period
ended 31 December 2014.
The aggregate deemed fair value of consideration paid, assets
and liabilities acquired and resulting charge to the income
statement in respect of the above acquisition is GBP939,792.
1.3 Intangible assets
Goodwill
Goodwill is initially measured as the excess of the aggregate of
the fair value of consideration transferred and the fair value of
any non-controlling interest over the fair value of the net
identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the
subsidiary acquired, the difference is immediately recognised in
profit or loss.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
The carrying amount of goodwill allocated to a cash generating
unit is taken into account when determining the gain or loss on
disposal of the unit, or of an operation within it. Goodwill
disposed of in this circumstance is measured on the basis of the
relative values of the operation disposed of and the portion of the
cash generating unit retained.
Development costs
Software costs are measured on initial recognition at cost
comprising of the purchase price and any directly attributable
costs. Internally developed costs are recognised as intangible
assets, during the development phase, provided that they meet the
following criteria:
-- the development costs can be measured reliably;
-- the project is technically feasible of reaching completion;
-- the Group has adequate technical, financial and other resources to complete the project;
-- the Group has the ability to use or sell the software;
-- there is an intention to complete the software and use it or sell it; and
-- the software will generate probable future economic benefits.
Those costs that do not meet this criteria are expensed as
incurred.
Amortisation is charged so as to allocate the cost of assets
less residual value over their estimated useful lives, using the
straight line method. Assets under the course of construction do
not have any amortisation and instead are reviewed annually for
impairment. The estimated useful lives of intangible assets
are:
Development & software costs - 20 per cent on cost per
annum
Other intangible assets
Intangible assets that meet the criteria to be separately
recognised as part of a business combination are carried at cost
(which is equal to their fair value at the date of acquisition)
less accumulated amortisation and impairment losses. An intangible
asset acquired as part of a business combination is recognised
outside goodwill if the asset is separable or arises from
contractual or other legal rights and its fair value can be
measured reliably. Intangible assets acquired in this manner
include software and customer contracts. They are amortised over
their estimated useful life as follows:
Software - 4 years
Customer contracts and related relationships - within 1 year
Impairment and amortisation charges are included within the
administrative expenses line in the profit or loss.
1.4 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment in value. The cost
includes the original price of the asset and the cost attributable
to bringing the asset to its current working condition for its
intended use.
Depreciation, down to residual value, is calculated over the
estimated useful life of the asset which is reviewed on an annual
basis, as follows:
Plant and machinery 25% reducing balance basis
Equipment, fixtures and fittings 2-3 years straight line and 30%
reducing balance
An item of property, plant and equipment is de-recognised upon
disposal or when no future economic benefits
are expected to arise from the continued use of the asset. 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 item) is included in the income statement in the year
the item is de-recognised.
1.5 Impairment of assets
Goodwill is not subject to amortisation and is reviewed for
impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. As
at the acquisition date any goodwill acquired is allocated to each
of the cash generating units expected to benefit from the business
combination's synergies. Impairment is determined by assessing the
recoverable amount of the cash generating unit to which the
goodwill relates. When the recoverable amount of the cash
generating unit is less than the carrying amount, including
goodwill, an impairment loss is recognised in profit or loss.
Other intangible assets and property, plant and equipment are
subject to amortisation and depreciation and are reviewed for
impairment whenever events or changes in circumstances indicate the
carrying values may not be recoverable. In addition, the carrying
value of capitalised development expenditure is reviewed for
impairment annually. If any such indication exists and where the
carrying values exceed the estimated recoverable amount, the assets
or cash generating units are written down to their recoverable
amount.
The recoverable amount of intangible assets and property, plant
and equipment is the greater of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the
recoverable amount is determined by the cash generating unit to
which the asset belongs. Fair value less costs to sell is, where
known, based on actual sales price net of costs incurred in
completing the disposal.
Non-financial assets (other than goodwill) that were impaired in
previous periods are reviewed annually to assess whether the
impairment is still relevant.
1.6 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction from proceeds.
Share warrants that are issued within the scope of IFRS 2 (as
detailed in 1.13) are measured at fair value at each reporting
period end. They are classified as equity instruments based on the
substance of the contractual arrangements entered into.
1.7 Leases
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases.
Operating lease payments are recognised as an expense in the
income statement on a straight-line basis over the lease term.
1.8 Current and deferred income tax
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively
enacted by the balance sheet date.
Deferred tax is calculated using rates and laws that have been
enacted or substantively enacted at the balance sheet date that are
expected to be in place when the temporary differences reverse.
Deferred tax is provided for on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes, with
the following exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination that at the time of the
transaction affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of
the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable
future; and
-- deferred tax assets are recognised only to the extent that it
is probable that taxable profits will be available against which
deductible temporary differences, carried forward tax credits or
tax losses can be utilised.
1.9 Trade and other receivables
Trade and other receivables are initially recognised and carried
at fair value and subsequently amortised cost under the effective
interest method. Provision is made where there is objective
evidence that the balances will not be recovered in full.
Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation, and
default or delinquency in payments are considered objective
evidence that the trade receivable is impaired. The amount of the
provision is the difference between the asset's carrying amount and
the present value of estimated future cash flows.
Amounts recoverable on contracts are stated at the net sales
value of the work done after provision for contingencies and
anticipated future losses on contracts, less amount received as
progress payments on account.
The Group's trade and other receivables are non-interest
bearing.
1.10 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
short-term deposits and are subject to insignificant risk of
changes in value and have maturities of three months or less from
inception.
1.11 Foreign currencies
The functional and presentation currency of 365 Agile is Pounds
Sterling (GBP) and the Group conducts the majority of its business
in Sterling.
Transactions in foreign currencies are initially recorded in the
functional currency by applying the rate of exchange ruling at the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the balance sheet
date. All differences are taken to the profit or loss.
1.12 Pensions
The Group operates a defined contribution scheme. Pension costs
are charged directly to the profit or loss in the period to which
they relate on an accruals basis. The Group has no further payment
obligations once contributions have been paid.
1.13 Share-based payment transactions
The cost of equity-settled transactions with employees or
suppliers is measured by reference to the fair value of the award
at the date at which they are granted and is recognised as an
expense over the vesting period, which ends on the date at which
the relevant employees or suppliers become fully entitled to the
award. Fair value is determined by an external valuer using an
appropriate pricing model for which the assumptions are approved by
the directors. In valuing equity-settled transactions, only vesting
conditions linked to the market price of the shares of the Company
are considered.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or
not the market condition is satisfied, provided that all other
performance conditions are satisfied.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions, number of equity
instruments that will ultimately vest or in the case of an
instrument subject to a market condition, be treated as vesting
described above. The movement in the cumulative expense since the
previous balance sheet date is recognised in the income statement,
with a corresponding entry in equity.
1.14 Financial assets
The Group classifies its financial assets as loans and
receivables.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments which are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date which are
classified as non-current assets. The Group's loans and receivables
comprise 'trade and other receivables' and 'cash and cash
equivalents' on the balance sheet.
Recognition
Financial assets are recognised in the consolidated balance
sheet when the Group becomes a party to the contractual provisions
of the instrument and are measured initially at fair value adjusted
by translation costs.
De-recognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
de-recognised when the rights to receive cash flows from the asset
have expired and the entity has transferred its rights to receive
cash flows from the asset or has assumed an obligation to pay the
received cash flows in full and either (a) the entity has
transferred substantially all the risks and rewards of the asset,
or (b) the entity has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
The Group assesses at each reporting date whether there is any
objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if there is objective evidence of
impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred 'loss
event') and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets
that can be reliably estimated.
1.15 Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value
less directly attributable transaction costs. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise
cancellation of liabilities are recognised in the finance cost line
in the profit or loss.
De-recognition
A financial liability is de-recognised when the obligation under
the liability is discharged or cancelled or expires.
1.16 Finance costs
Loans are carried at fair value on initial recognition, net of
unamortised issue costs of debt. These costs are amortised over the
loan term.
All other borrowing costs are recognised in the income statement
on an accruals basis, using the effective interest rate method.
1.17 Revenue
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Group's activities. Revenue is shown net of Value
Added Tax, returns, rebates and discounts and after eliminating
sales within the Group.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met
for each of the Group's activities as described below. The amount
is not considered to be reliably measurable until all contingencies
relating to the sale have been resolved. The Group bases its
estimates on historical results taking into account the type of
customer, the type of transaction and the specifics of each
arrangement.
Sale of software licences
The Group sells licences to use its software products either on
a perpetual royalty free basis or on a rental basis for a fixed
period of time. Revenue arising from the sale of perpetual licences
is recognised at the time of sale provided that all the Group's
obligations associated with the sale of the licence have been
fulfilled. Revenue from licences sold on a rental or subscription
basis is recognised over the period for which the Group has
obligations under the contract.
Sales of services
The Group sells consultancy, training, implementation and
project management services to customers either separately from or
in conjunction with the sale of licences. Revenue from the sale of
services is recognised as the services are provided. The licence
element is recognised as noted above.
Sales of goods
Sales of goods are recognised on delivery.
Annual contracts
The Group enters into contracts to provide support services on
an annual basis. Revenue from support agreements is recognised in
equal instalments over the period of the agreements.
1.18 Other income
Finance income
Income is recognised on an accrual basis using the effective
interest method.
Government grants
Grants received in respect of operational costs are recognised
as income in the income statement over the period necessary to
match it with the related operational costs, for which it is
intended to compensate.
Grants received in respect of capital expenditure is offset
against the corresponding fixed asset addition in the statement of
financial position.
1.19 Exceptional items
Items which are material either because of their size or their
nature, and which are non-recurring, are highlighted separately on
the face of the income statement. The separate reporting of
exceptional items helps provide a better picture of the Company's
underlying performance. Items which are included within the
exceptional category include:
the actual and deemed costs of listing arising from the reverse
acquisition in the year;
spend on the integration of significant acquisitions and other
major restructuring programmes; and
other particularly significant or unusual items.
Spend on integration is incurred by the Group, when integrating
one trading business into another. The types of costs include
employment related costs of staff made redundant as a consequence
of integration, due diligence costs, legal and third party advisor
fees and rebranding costs.
Exceptional items are excluded from the headline profit measures
used by the Group and are highlighted separately in the income
statement as management believe that they need to be considered
separately to gain an understanding of the underlying profitability
of the trading businesses. Details of the exceptional costs
incurred in the year are given in note 2.
1.20 Operating profit or loss
The operating profit or loss is identified in the income
statement and represents the profit or loss on continuing
activities before finance income and costs and taxation.
1.21 Segmental reporting
The Chief Operating Decision Maker has been identified as the
Executive Board. The Executive Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on these
reports.
The Executive Board assesses the performance of the operating
segments based on adjusted EBITDA. Information provided to the
Executive Board is measured in a manner consistent with that in the
financial statements.
1.22 Application of new IFRSs and interpretations
New standards and interpretations not yet adopted by the
Group
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2016, and have not been applied in preparing these
consolidated financial statements. None of these is expected to
have a significant effect on the consolidated financial statements
of the Group, except the following set out below:
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes
three primary measurement categories for financial assets:
amortised cost, fair value through OCI and fair value through
P&L. The basis of classification depends on the entity's
business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to
be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in
OCI not recycling. There is now a new expected credit losses model
that replaces the incurred loss impairment model used in IAS 39.
For financial liabilities there were no changes to classification
and measurement except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities designated at
fair value through profit or loss. The standard is effective for
accounting periods beginning on or after 1 January 2018. Early
adoption is permitted. The Group is yet to assess IFRS 9's full
impact.
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service.
The standard replaces IAS 18 'Revenue' and IAS 11 'Construction
contracts' and related interpretations. The standard is effective
for annual periods beginning on or after 1 January 2018 and earlier
application is permitted. The Group is assessing the impact of IFRS
15.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
1.23 Critical accounting estimates and assumptions
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related results. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are:
-- Estimated valuation of intangibles
On acquisition of a new business, the Group identifies the fair
value of net assets acquired. It also identifies intangible assets.
This calculation involves estimates about future revenues, costs,
cash flows and the cost of capital for the Group. It also involves
estimating the life of customer contracts and software. Such
estimates are derived from actual data and management experience.
See note 4 for further details.
-- Estimated impairment of goodwill and intangible assets with indefinite lives
The Group tests annually whether goodwill and intangible assets
with indefinite lives have suffered any impairment, in accordance
with the accounting policy stated in 1.5. The recoverable amounts
of cash generating units have been determined based on value-in-use
calculations. These calculations require the use of estimates based
on actual data and management experience. Further details of the
Group's goodwill are given in note 4.
-- Estimated valuation of financial instruments
Share warrants are valued based on the following definition of
Fair Value per IFRS 13 'Fair Value Measurement': 'the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date'. These calculations require the use of estimates
of inputs such as share price volatility, performance criteria,
dividend yield and warrant life. External experts have been engaged
for valuation purposes where appropriate. See note 6 for further
details.
-- Classification of convertible loan notes
The company has a contractual obligation to deliver cash on
maturity of its convertible loan notes for the amount of principal
and interest which the Company cannot avoid. Therefore, the loan
notes include a financial liability relating to the cash
obligation. Furthermore, the holders of the notes will receive the
same percentage of shares as a result of any possible adjusting
events as would have been the case before the adjusting event took
place. The fixed for fixed test in terms of IAS 32 is therefore not
passed and the loan notes are accounted for as a financial
liability as a whole.
-- Share based payments
The cost of equity-settled transactions with employees is
measured by reference to the fair value of the award at the date at
which they are granted and is recognised as an expense over the
vesting period, which ends on the date at which the relevant
employees become fully entitled to the award. Fair value is
determined by an external valuer using an appropriate pricing model
for which the assumptions regarding inputs such as share price
volatility, performance criteria, dividend yield and warrant life
are approved by the directors.
-- Estimated allocation of costs incurred on reverse acquisition
The Group has incurred professional fees in connection with the
reverse acquisition of 365 Agile Limited and the co-terminus equity
fundraise. The costs in relation to the reverse acquisition are
expensed in the profit or loss whilst the costs incurred relating
to the equity fundraise are deducted from equity. Services provided
by advisers comprise both elements of cost with no split between
the two components. The directors have exercised judgement when
classifying such costs between the income statement and equity and
have allocated GBP406,000 to the income statement and GBP460,000 to
equity.
-- Classification of Exceptional costs
The directors have exercised judgement when classifying certain
costs as integration and strategic costs. They believe that these
costs are all related to the costs described in note 1.19 and are
further detailed in note 2.
2 Exceptional costs
In accordance with the Group's policy in respect of exceptional
costs the following charges were incurred for the year:
2015 2014
GBP000 GBP000
------------------------------------------------- ------- -------
Deemed cost of listing on reverse (see note 1.2) 940 -
Reverse acquisition costs 406 -
Other acquisition costs 249 -
Integration and reorganisation costs 205 -
1,800 -
------------------------------------------------- ------- -------
3 Earnings/loss per share
Basic loss per share and diluted loss per share are calculated
using a weighted average number of shares of 6,907,375 and
6,957,395 respectively. (2014: weighted average number of shares of
773,499). Adjusted EBITDA* has been shown on the grounds that it is
a common metric used by the market in monitoring similar
businesses.
2015 2014
GBP000 GBP000
Loss for the year from continuing operations before
tax (2,155) (51)
Net finance expense 19 -
Depreciation 39 -
Amortisation 367 -
Share-based payment charges 65 -
Exceptional items included in administrative expenses 1,800 -
------------------------------------------------------- --------- ----------
Adjusted EBITDA* 135 (51)
------------------------------------------------------- --------- ----------
Basic adjusted EBITDA* per share 1.95p (6.59p)
Statutory EPS:
Basic loss per share from continuing activities (29.32p) (6.59p)
Diluted loss per share from continuing activities (29.32p) (6.59p)
------------------------------------------------------- -------- --------
The weighted number of shares and the loss for the year for the
purposes of calculating the fully diluted earnings per share are
the same as the basic loss per share calculation. This is because
the outstanding share options and warrants would have the effect of
reducing the loss per ordinary share and would, therefore, not be
dilutive under the terms of IAS 33.
* Total result for the year from continuing operations before
net finance costs, tax, depreciation, amortisation, exceptional
costs and share-based payment charges.
4 Business combinations
South View Solutions
On 27 February 2015, 365 Agile Limited acquired 100% of the
issued share capital of South View Solutions Limited ('SVS'), a
specialist supplier of software and solutions to the social housing
sector, for a total consideration of GBP1.1 million. The principal
reason for the acquisition was to strengthen the Group's existing
technology, as well as providing access to new customers.
The consideration was satisfied as to GBP0.75 million in cash
and loan notes of GBP0.35 million. The loan notes were fully
settled in July 2015 when they were converted into equity in 365
Agile Limited.
From the date of acquisition to 31 December 2015, the portion of
SVS held within continuing activities achieved revenue of GBP0.75
million and a profit before taxation of GBP0.4 million. The
reported revenue of SVS from the date of its last statutory
accounts of 31 July 2014 through to 31 December 2015 was GBP1.3
million and the profit for the period before taxation was GBP0.3
million.
Acquisition costs were GBP46,000.
The goodwill arising on this acquisition is attributable to new
cross-selling opportunities achieved from combining the acquired
customer bases and technology with the existing Group.
Wireless Things
On 17 March 2015, 365 Agile acquired the entire issued share
capital of Wireless Things Limited, formerly Ciseco Limited
('Wireless Things'), a provider of Internet of Things solutions for
GBP0.5 million, satisfied by the issue of shares in 365 Agile
Limited with a fair value of GBP0.5 million. The principal reason
for the acquisition was to strengthen the Group's technical
knowledge in the Internet of Things ('IoT') market to enable IoT
technologies to be embedded into the Group's existing product
portfolio.
From the date of acquisition to 31 December 2015, the portion of
Wireless Things held within continuing activities achieved revenue
of GBP0.2 million and a loss before taxation of GBP0.2 million. The
reported revenue of Wireless Things from the date of its last
statutory accounts of 31 July 2014 through to 31 December 2015 was
GBP0.4 million and the loss for the period before taxation was
GBP0.1 million.
Acquisition costs were GBP49,000.
Wireless Things does not generate positive cash flows or profits
as a stand-alone entity and is therefore not considered by the
Board to have any separable intangible assets. The entire excess of
consideration over net assets has therefore been allocated as
goodwill. This goodwill is attributable to the IoT knowledge
acquired to enable the Group to expand its product portfolio by the
integration of IoT capabilities with the Group's existing
technology.
365 Agile Limited
On 21 August 2015, 365 Agile Group plc acquired 365 Agile
Limited for a total consideration of GBP9.5 million satisfied by
the issue of 12,599,999 Ordinary Shares of GBP0.30 each at GBP0.75.
The principal reason for the acquisition was to give 365 Agile
Limited a stock market listing.
In the Group accounts the reverse acquisition methodology has
been applied as set out in IFRS 3. The legal subsidiary is
identified as the acquirer and the fair value of the deemed
consideration is GBP829,655. The legal parent is identified as a
subsidiary. The aggregate deemed fair value of the net liabilities
was GBP110,138. The excess of the deemed cost over the fair value
of assets and liabilities represents a share-based payment. The
resulting charge to the income statement in accordance with IFRS 2
in respect of the acquisition was GBP939,793. The fair value of the
net liabilities of the legal parent at the date of acquisition can
be analysed as follows:
GBP000
------------------ -------
Other debtors 7
Cash 17
Trade payables (18)
Other liabilities (116)
------------------- -------
Net liabilities (110)
------------------- -------
Easytherm
On 23 November 2015, 365 Agile acquired the entire share capital
of Easytherm Limited ('Easytherm'), a developer of Internet of
Things technology, for GBP2.1 million, satisfied by GBP0.2 million
in cash, GBP1.8 million at fair value of shares issued in 365 Agile
Group plc and GBP0.1 million of convertible loan notes. In
addition, the Company issued a further GBP0.2 million of
convertible loan notes in settlement of borrowings owed by
Easytherm Limited. The loan notes are repayable in 12 months, carry
5% coupon and are convertible into new ordinary shares of 30 pence
each in 365 Agile ('Ordinary Shares') at a price of 82 pence per
Ordinary Share. The fair value of loan notes at the date of issue
was GBP0.3 million. The principal reason for the acquisition was to
further strengthen the Group's technical knowledge in the IoT
market and to enable additional IoT technologies to be embedded
into the Group's existing product portfolio.
From the date of acquisition to 31 December 2015, the portion of
Easytherm held within continuing activities achieved revenue of
GBPnil and a profit before taxation of GBPnil. The reported revenue
of Easytherm from the date of its last statutory accounts of 30
April 2015 through to 31 December 2015 was GBP11,000 and the loss
for the period before taxation was GBP46,000.
Acquisition costs were GBP106,000.
Easytherm does not generate positive cash flows or profits as a
stand-alone entity and is therefore not considered by the Board to
have any separable intangible assets. The entire excess of
consideration over net assets has therefore been allocated as
goodwill. This goodwill is attributable to the IoT knowledge
acquired to enable the Group to expand its product
portfolio by the integration of further IoT capabilities with
the Group's existing technology and the development of new
products.
Goodwill
The total provisional goodwill arising from the acquisitions is
the difference between the fair value of consideration less the
provisional fair value of assets acquired:
Wireless Total
SVS Things Easytherm
GBP000 GBP000 GBP000 GBP000
Fair value of purchase consideration 1,100 456 2,142 3,698
Less fair value of assets acquired:
Property, plant and equipment (12) (78) - (90)
Inventories - (40) (25) (65)
(444) (19) - (463)
Trade receivables ))
Other debtors (4) (10) - (14)
Cash (176) (4) (1) (181)
Deferred tax asset (30) - - (30)
Trade payables 33 37 6 76
Corporation tax payable 36 - - 36
Borrowings - 63 342 405
Other liabilities 507 16 9 532
Software (795) - - (795)
Customer contracts and related assets (160) - - (160)
Deferred tax liability 191 - - 191
-------------------------------------- ------ --------- ----------- ------
Goodwill 246 421 2,473 3,140
-------------------------------------- ------ --------- ----------- ------
The consideration was satisfied as follows:
Wireless
SVS Things Easytherm Total
GBP000 GBP000 GBP000 GBP000
------------------------ ------------------ --------- ----------- -------
Cash 750 - 230 980
Equity issued - 456 1,760 2,216
Convertible loan notes:
- classified as debt - - 152 152
- classified as equity 350 - - 350
------------------------ ------------------ --------- ----------- -------
1,100 456 2,142 3,698
------------------------ ------------------ --------- ----------- -------
On acquisition of each business the directors assessed the
business acquired to identify any intangible assets. Customer
contracts and related relationships and software met the criteria
for recognition as intangible assets as they are separable from
each other and have a measurable fair value, being the amount for
which an asset would be exchanged between knowledgeable and willing
parties in an arm's length transaction. Where, in the opinion of
the directors, there were no separable assets on acquisition the
entire purchase consideration has been allocated to goodwill.
For the customer contracts the fair value of the intangible
assets was calculated by using the cash flows arising from the
existing customer contracts base. Due to the short term nature of
the contracts acquired, only those revenues relating to contracted
amounts or outstanding orders at the date of acquisition were
included in this category.
The fair value of software was calculated by using the
discounted cash flows expected to arise from the use of the
software by the directors.
A customer retention rate of 95% was applied with a discount
rate of 8.07%. The reasonable economic life of the customer
relationships and software was assumed to be between 0 and 4 years.
The identifiable intangible assets and related deferred tax
liability are as follows:
Wireless Total
SVS Things Easytherm
GBP000 GBP000 GBP000 GBP000
-------------------------------------- ------ --------- ----------- ------
Customer contracts and related assets 160 - - 160
Software 795 - - 795
Deferred tax liability (191) - - (191)
Goodwill 246 421 2,473 3,140
-------------------------------------- ------ --------- ----------- ------
1,010 421 2,473 3,904
-------------------------------------- ------ --------- ----------- ------
Impairment tests for goodwill
In the opinion of the Board, the Group has one cash generating
unit, the development and exploitation of technology. The goodwill
arising on acquisition represents the economic benefits the Group
is expecting to derive as detailed above, and is reviewed for
impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
The recoverable amount of the goodwill was based on a value in
use calculation using cash flow projections until December 2025
from forecast revenue streams. Forecast revenue and costs were
based on sensitised management expectations, with revenue based on
assumed penetration of 0.2%, 3%, 6%, 9% and 12% of certain target
sectors for each of the years ended 2016 to 2020 respectively, with
no growth thereafter. An increase in operating costs of 54% over
current levels has also been assumed. Cash flows were discounted at
a rate of 9.97% which reflects management's risk-adjusted estimate
of the weighted average cost of capital. Following the impairment
review of goodwill, the directors considered it unnecessary to
record a goodwill impairment charge in the year ended 31 December
2015. A reasonably possible adverse movement in any of the above
key assumptions made would not give rise to an impairment.
5 Intangible assets
Customer
contacts
and related Development
Goodwill Software relationships expenditure Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- -------- -------- -------------- ------------ -------
Cost
At 1 January 2013 - - - - -
Additions - - - 16 16
At 1 January 2014 - - - 16 16
Additions - - - 218 218
Business Combinations 3,140 795 160 - 4,095
At 31 December 2015 3,140 795 160 234 4,329
--------------------------- -------- -------- -------------- ------------ -------
Amortisation
At 1 January 2013 and 2014 - - - - -
Charge for the year - (200) (160) (7) (367)
--------------------------- -------- -------- -------------- ------------ -------
At 31 December 2015 - (200) (160) (7) (367)
Net carrying amount
31 December 2015 3,140 595 - 227 3,962
--------------------------- -------- -------- -------------- ------------ -------
31 December 2014 - - - 16 16
--------------------------- -------- -------- -------------- ------------ -------
Software relates to the Group's technology platform.
6 Called up share capital
2015 2014 2015 2014
Number Number GBP000 GBP000
-------------------------------------- ---------------- -------------- ------- -------
Allotted, called up and fully paid
share capital
Ordinary shares of 30p (2014: 0.003p,
2013: 25p)
1 January 10,056,423,466 1,389,756,860 302 42
Share consolidation (10,055,417,823) - - -
Share issues 17,908,430 8,666,666,606 5,372 260
31 December 18,914,073 10,056,423,466 5,674 302
-------------------------------------- ---------------- -------------- ------- -------
Allotted, called up and fully paid
share capital
Deferred shares of 0.247p
1 January 1,389,756,800 1,389,756,800 3,432 3,432
Shares repurchased and cancelled (1,389,756,800) - (3,432) -
-------------------------------------- ---------------- -------------- ------- -------
31 December - 1,389,756,800 - 3,432
-------------------------------------- ---------------- -------------- ------- -------
Total issued share capital 18,914,073 11,446,180,266 5,674 3,734
-------------------------------------- ---------------- -------------- ------- -------
Ordinary shareholders have the right to attend, vote and speak
at meetings, receive dividends, and receive a return on assets in
the case of a winding up.
The deferred shares are transferable only with the consent of
the Company and will not be admitted to trading on AIM (or any
other investment exchange). The holders of the deferred shares do
not, by virtue or in respect of their holdings of deferred shares,
have the right to receive notice of any general meeting of the
Company nor the right to attend, speak or vote at any such general
meeting. The deferred shares were repurchased and cancelled by the
Company on 20 August 2015 for a total consideration of 1 penny.
Share issue
During the year the following shares were issued:
2015 2014
Number Number
-------------------------------------------------- ---------- -------------
Placing with investors 3,066,667 8,666,666,606
Shares issued as consideration for fees 10,056 -
Shares issued as consideration for acquisition of
365 Agile Limited 12,599,999 -
Shares issued as consideration for acquisition of
Easytherm Limited 2,231,708 -
17,908,430 8,666,666,606
-------------------------------------------------- ---------- -------------
In order to provide sufficient working capital to allow the
Group to pursue its stated strategy and to fund further
acquisitions, on 21 August 2015, the Company raised GBP2.3 million
(before fees) by way of an equity placing 3,066,667 new Ordinary
Shares at a price of 75 pence per Ordinary Share. A further
12,610,055 new Ordinary Shares were issued on this date as a result
of the reverse acquisition of 365 Agile Limited and in settlement
of fees due to a former adviser of the Company.
On 23 November 2015, 2,231,708 new Ordinary Shares were issued
as consideration for the acquisition of Easytherm Limited at a
price of 82 pence per share. The share issue included GBP1,760,000
consideration and GBP70,000 in respect of loans settled.
On 31 July 2015 loans owed by 365 Agile Limited totalling
GBP950,000 were converted into shares in that company. The
GBP950,000 is reflected in the cash flow statement as 'borrowings
received'.
Warrants
During the year, in acknowledgement of professional services
provided as the Group's corporate finance adviser, warrants over 5%
of the Company's current and future issued share capital were
issued to MXC Capital Guernsey Limited ('MXC'). At 31 December
2015, MXC held 945,703 share warrants in the Company. 50% of the
warrants vest between one and three years from grant, the remaining
50% also vest between one and three years from grant if the shares
achieve a compound growth rate of 12% per annum from the placing
price of 75 pence at the point of exercise. The warrants must be
exercised within seven years of grant.
The fair value of the warrants has been calculated by an
external valuations expert using a two-tiered Black-Scholes option
pricing model together with an empirical model, adjusted by a
probability weighting to take the likely achievement of performance
criteria into account.
The weighted average fair value of the warrants issued during
the period determined by the option pricing model above was 8.56
pence per warrant. The significant inputs into the model were
weighted average share price of 75.8 pence per share at the grant
date, an exercise price of between 75 pence and 82 pence per share,
volatility of 48.72%, probability of achieving performance targets
of 15.44% and an expected warrant life of one to seven years.
The expense recognised for equity-settled share-based payments
in respect of warrants issued during the year to 31 December 2015
was GBP18,000 (2014: GBPnil).
7 Net cash flows from continuing operating activities
2015 2014
GBP000 GBP000
-------------------------------------------------- ----------- -----------
Loss on ordinary activities before taxation (2,155) (51)
Adjustments for:
Net finance costs 19 -
Depreciation of property, plant and equipment 39 -
Amortisation of intangibles 367 -
Equity-settled share-based payment charge 65 -
Deemed cost of listing on reverse acquisition 940 -
Movements in working capital:
Increase in trade and other receivables (83) (14)
(Decrease)/increase in trade and other payables (31) 45
Increase in inventory (42) -
Cash used in continuing operations (881) (20)
-------------------------------------------------- ----------- -----------
8 Subsequent events
On 4 April 2016, 365 Agile announced it had entered into a
revised licence agreement with Castleton Technology plc, the
Group's exclusive reseller within the social housing sector. The
revised licence guarantees 365 Agile a minimum licence fee income
of GBP1.8 million payable over the coming three years. In addition,
certain of the Group's staff were transferred to Castleton
Technology plc and a subcontractor agreement entered into with
them.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGURPQUPQGQW
(END) Dow Jones Newswires
June 06, 2016 02:00 ET (06:00 GMT)
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