TIDMXAF
RNS Number : 6345Y
Xafinity PLC
07 December 2017
7 December 2017
Xafinity plc
Interim results for the six months ended 30 September 2017
Continued profitable growth and innovation in technology
Xafinity plc ("Xafinity" or "the Company"), the pensions
actuarial, consulting and administration business, is pleased to
announce its interim results for the six months ended 30 September
2017.
Financial Highlights:
H1 2018 H1 2017 % change
----------------- ---------- --------- ---------
Revenue GBP 26.6m GBP26.0m 2
----------------- ---------- --------- ---------
Adjusted EBITDA GBP 8.7m GBP8.5m 2
----------------- ---------- --------- ---------
Pre-tax profit GBP 4.9m GBP1.7m 188
----------------- ---------- --------- ---------
Basic earnings
per share 2.9p 1.0p 190
----------------- ---------- --------- ---------
-- Revenue for HY18 of GBP26.6m, a 2% increase when compared
with the prior year (HY17: GBP26.0m)
-- Adjusted EBITDA grew by 2% to GBP8.7m (HY17: GBP8.5m), representing a margin of 32.7%
-- Pre-tax profit increased by an impressive 188% to GBP4.9m (HY17: GBP1.7m)
-- Strong cash conversion in H1 2018 of 75%
-- Basic earnings per share of 2.9p (HY17: 1.0p) following IPO share reorganisation
-- Interim dividend of 2.1p per share declared by the Board
Operational Highlights:
-- The Company has added 5 more annuity client wins in the six months ended 30 September 2017
-- Introduction of Radar technology to 40 clients since beginning of financial year
-- Xafinity fully supports the CMA investigation into the
investment consultancy sector, and is looking forward to assisting
the regulator as the investigation progresses
-- Performance since 30 September 2017 has remained in line with
the Board's expectations and the revenue associated with recent
contract wins is expected to feed through over the remainder of
this financial year
Proposed Acquisition of Punter Southall divisions
Xafinity today announces a proposed acquisition of Punter
Southall Holdings Limited, the holding company of the actuarial
consulting, pensions administration and investment consulting
businesses of Punter Southall Group Limited ("PS Group"), for up to
approximately GBP153 million. The deal would combine the three
target businesses with Xafinity's existing businesses, whilst
Xafinity's HR Trustees business would be sold to PS Group. The
addition of these complementary divisions to the Xafinity group is
anticipated to enable the enlarged group to become the largest
"pure play" pensions consulting firm in the UK outside of the
global consultancies.
Ben Bramhall, co-CEO of Xafinity plc, commented:
"The Company's performance since 31 March 2017 has been
pleasing, and I would like to thank all of our employees for their
hard work as the business continues to build momentum as a publicly
listed company. We remain committed to investing in people and
technology, as seen by the roll-out this year of our market leading
product, "Radar", which has been positively received both by our
new and retained clients."
"The investment consultancy industry is currently undergoing a
period of increasing scrutiny from the CMA, and we fully support
the regulators decision to explore ways in which the industry can
work more effectively. We believe this investigation will be hugely
beneficial to pension schemes and trustees, and we look forward to
sharing our recommendations with the CMA on how the industry can
improve."
Paul Cuff, co-CEO of Xafinity plc, commented:
"The announcement today regarding the transaction with Punter
Southall is very exciting news for everyone at Xafinity, and it
follows a successful period for the Company built on the back of a
series of impressive client wins. We have a very clear strategy to
build market share in the pensions advisory space, and the merger
of these three divisions from PS Group with Xafinity will enable us
to achieve our aim of becoming the clear alternative to the Big
Three in the pensions consultancy sector. The trading environment
for Xafinity remains strong, while the pipeline of new business
continues to offer real growth opportunities, and we look forward
to the rest of the year with confidence."
Media enquiries
Camarco
Ed Gascoigne-Pees Tel: 020 3757
4994
Nick Hennis Tel: 020 3781
8330
Notes to Editors
Xafinity is a UK specialist in pensions actuarial, consulting
and administration, providing a wide range of services to over 550
pension scheme clients. The Company combines expertise, insight and
technology to address the needs of both pension trustees and
sponsoring companies. The Xafinity Group has more than 400
employees, of which approximately 90 per cent are client facing,
with offices in Reading, Leeds, Stirling, Belfast, London and
Manchester providing it with access to staff, expertise and clients
in geographic locations across the UK.
CHAIRMAN'S STATEMENT
By focusing on our strategic objectives, Xafinity has delivered
a consistent first half performance despite prevailing
macroeconomic uncertainties. The Company's core markets remain
healthy and offer exciting opportunities for growth as the
challenges facing defined benefit schemes continue to drive demand
for de-risking advice.
The Group's performance since March 31, 2017 has been in line
with the Board's expectations. During the first six months of the
financial year 2018 ("H1 2018 or HY18"), revenues were up 2% at
GBP26.6m (HY17: GBP26.0m) while adjusted EBITDA increased 2% to
GBP8.7m (HY17: GBP8.5m), and pre-tax profit was up 188% at GBP4.9m
(HY17: GBP1.7m). Cash conversion during H1 2018 was an impressive
75%.
The Company has maintained a strong balance sheet with net
assets of GBP32.1m as at 30 September 2017, compared to net assets
of GBP28.9m as at 31 March 2017. The increase reflects continued
profitable growth of the group. Net debt decreased during the
period to GBP23.1m (HY17: GBP79.8m).
Progress on strategic objectives
Management has continued to implement the strategy for organic
growth outlined at the IPO in February 2017, resulting in 5 new
annuity client wins in the last six months and one annuity client
loss. The period has also seen the Company start to realise an
increasing number of H2 2017 annuity contract wins.
H1 2018 New Business Wins
------------------------------------------------------------
Type of business Month Scheme size
----------------------- --------------- ------------------
Full services May 2017 GBP100m - GBP250m
----------------------- --------------- ------------------
Pension administration May 2017 GBP250m - GBP500m
----------------------- --------------- ------------------
Corporate pensions June 2017 GBP100m - GBP250m
advisory
----------------------- --------------- ------------------
Scheme actuary August 2017 Sub GBP100m
----------------------- --------------- ------------------
Actuarial September 2017 GBP250m - GBP500m
----------------------- --------------- ------------------
The demand for de-risking advice has continued into the first
half of the year, with significant progress being made in Trivial
Commutation. Elsewhere, while industry adoption of MasterTrusts
remains slow, National Pensions Trust has achieved solid growth
through H1 2018 and continues to gain acclaim in the market with
GBP292m of assets under management ("AUM") as at 30 September 2017.
Post period, this growth has continued and AUM now stands in excess
of GBP320m.
We have maintained our investment in people during the period
and are continuously developing and expanding our offering to
clients through improved technology and new products. We have been
delighted with the reaction to Radar, our new technology offering,
that empowers clients with the information necessary to create a
truly collaborative and beneficial relationship with Xafinity.
The proposed acquisition of the actuarial consulting, pensions
administration and investment consulting businesses of PS Group is
a very exciting step for the Company, and is one that we believe
has a compelling strategic rationale for Xafinity. Ben Bramhall and
Paul Cuff, co-CEOs, have a longstanding professional and personal
history with Punter Southall, having been given their first jobs by
Jonathan Punter as trainee actuaries. We believe that a successful
combination of these two premier mid-tier providers would create
the pre-eminent mid-tier firm in the pensions consultancy market,
with significantly stronger growth prospects than each business
would possess individually.
Regulation
The CMA investigation into the investment consultancy sector is
an initiative that has our full support. All industry participants
must shape its future, rather than a handful that already dominate
the market. We look forward to the outcome of the CMA investigation
and are confident that it will be beneficial to pension schemes.
Our approach and our actions demonstrate that we continually focus
on the interests of schemes and members, and have offered our
assistance to the regulator in setting out high standards in this
important area.
Dividend
The Board is pleased to declare an interim dividend of 2.1p per
share. The interim dividend will be paid on 8 February 2018 to
those shareholders on the Company's register as of 29 December
2017.
Outlook
The trading environment for Xafinity remains strong, with our
new business performance during the period having undoubtedly been
supported by our post-IPO profile. The Company expects strong
growth in H2 2018, as the revenues gained from recent contract wins
starts to feed through into the business and the pipeline of
opportunities strengthens. Xafinity continues to gain momentum in
the market, with the proposed combination of the actuarial,
consulting and pensions administration divisions of Punter Southall
establishing the Company as the clear alternative to the Big Three
in the pensions consultancy sector.
We are entering an exciting time for the Company as it continues
to grow both organically and via acquisition. The core pensions
market that Xafinity operates in continues to be driven by the need
for de-risking advice and other services, and the Board is
confident about the future prospects of the Company.
Tom Cross Brown
Chairman
Interim Management Report
Revenue compared to the same period in the previous year (i.e.
the 6 months to 30 September 2016) was up 2.2% to GBP26.6m (2016:
GBP26.0m) with a positive underlying trend. Pensions Advisory and
Administration and SSAS / SIPP continue to win new clients and grow
revenue. Revenue growth was strongest in NPT at 27%. Profit before
taxation increased by 183.7% to GBP4.9m (2016: GBP1.7m). The most
notable difference being the interest charge of GBP0.4m compared to
2016: GBP3.8m. This is a result of the lower level of borrowing in
the group of GBP28.6m compared to a year ago GBP83.6m. The proceeds
of the IPO in February 2017 were used to pay down the Company's
pre-IPO debt. As a result of the IPO the Group has strengthened its
balance sheet with net assets of GBP32.1m as at 30 September 2017
(30 September 2016: net liabilities GBP20.4m). Group headcount now
stands at 427 (30 September 2016: 415).
Revenue in the Pensions Advisory and Administration division
(80% of group revenue) increased by 2% to GBP21.5m (2016:
GBP21.2m). Growth has accelerated through the period due to the
impact of new client wins in the last quarter of the previous year
which have started to come on-stream. Given the lag between winning
new business and generating revenue, which can be 6 months or more
for certain types of contracts, the first half of the year does not
reflect the full value of the contracts won in the previous year.
Furthermore, it is pleasing to note that client wins have continued
during this period - both for full-service recurring business as
well as corporate advisory appointments which should start to come
on-steam during the remainder of the financial year.
Within the Pensions Advisory business, the investment practice
continues to perform strongly. In addition, toward the end of the
period, the roll-out of our proprietary pensions modelling software
"Radar" commenced. This brings our clients better insight into what
is happening and why, and so helping them make informed and
efficient decisions about how to improve their pension schemes
through highly tech-enabled actuarial and investment advice (giving
rise to project work). The Group believes this will lead to an
increase in the volume of de-risking projects.
NPT revenue (2% of group revenue) increased by 27% to GBP0.4m
(2016: GBP0.3m) The NPT product continues to grow and by the end of
the period had GBP292m of assets under management, which belong to
26,000+ members from 102 sponsoring employers.
Other revenue (18% of group revenue) increased by 3% to GBP4.7m
(2016: GBP4.5m) driven in particular by the HR Trustees,
Independent Trustee business which grew by 12% driven by previous
new wins and winning three new appointments in the period.
Cash flow The Group maintained a strong cash position of GBP5.7m
as at 30 September 2017 (30 September 2016: GBP6.2m). Working
capital in the period has decreased by GBP1.1m and notable cash
outflows included repayment of loans GBP4.3m, a dividend of GBP1m,
capital expenditure of GBP0.9m and GBP0.6m of tax payment.
EPS The Company's EPS for 30 September 2017 was 2.9p (2016:
1.0p).
Dividend An interim dividend of 2.1p per share (2016: nil) will
be paid on 8 February 2018 to those shareholders on the Company's
register as at 29 December 2017.
Principal risks and uncertainties affecting the business The
principal risks and uncertainties affecting the Group's business
activities remain those detailed within the Principal Risks and
Uncertainties section of the Annual Report and Accounts for the
year ended 31 March 2017, namely Staff Retention, Reputation, Data
loss/security breach, Errors, Competition/Client retention, and
crime/external events/market, economic, political.
Outlook Current trading since 30 September 2017 has remained in
line with the Board's expectations, with a number of new client
wins built on robust trading momentum and delivery of the Company's
strategy to build market share in the pensions advisory sphere. The
revenues from these new client wins are expected to have a positive
incremental effect on the Company through the remainder of the
current financial year. Trading conditions remain strong and, with
a strong pipeline of visible new opportunities, the Board looks
forward to the rest of the financial year with confidence.
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 September 2017
Period ended Period ended Year ended
30 September 30 September 31 March
Unaudited Audited Audited
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------------------- ----- -------------- ------------- -----------
Revenue 4 26,592 26,017 52,038
Administrative expenses (21,288) (20,568) (56,556)
------------------------------------------------------------------- ----- -------------- ------------- -----------
Profit/(loss) from operating activities 5,304 5,449 (4,518)
Finance income 21 77 475
Finance costs (418) (3,797) (9,121)
------------------------------------------------------------------- ----- -------------- ------------- -----------
Profit/(loss) before tax 4,907 1,729 (13,164)
------------------------------------------------------------------- ----- -------------- ------------- -----------
Income tax (expense)/credit 5 (1,056) (775) 373
------------------------------------------------------------------- ----- -------------- ------------- -----------
Profit/(loss) and total comprehensive (loss)/income for the
period/year 3,851 954 (12,791)
------------------------------------------------------------------- ----- -------------- ------------- -----------
Pence Pence Pence
------------------------------------------------------------------- ----- -------------- ------------- -----------
Earnings/(loss) per share attributable to the ordinary equity
holders of the Company:
Basic earnings/(loss) per share 8 2.9 1.0 (12.5)
Diluted earnings/(loss) per share 8 2.8 1.0 (12.5)
Adjusted basic earnings per share 8 4.6 3.0 8.1
Adjusted diluted earnings per share 8 4.5 3.0 8.0
------------------------------------------------------------------- ----- -------------- ------------- -----------
Condensed Consolidated Statement of Financial Position
as at 30 September 2017
30 September 30 September 31 March
Unaudited Audited Audited
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- ------------ ------------ --------
Assets
Non-current assets
Property, plant and equipment 1,173 1,314 1,342
Intangible assets 57,439 60,130 58,595
Deferred tax assets 112 36 36
--------------------------------------------- ---- ------------ ------------ --------
58,724 61,480 59,973
--------------------------------------------- ---- ------------ ------------ --------
Current assets
Trade and other receivables 12,287 12,454 12,320
Current income tax asset - - 597
Cash and cash equivalents 5,666 6,164 4,880
--------------------------------------------- ---- ------------ ------------ --------
17,953 18,618 17,797
--------------------------------------------- ---- ------------ ------------ --------
Total assets 76,677 80,098 77,770
--------------------------------------------- ---- ------------ ------------ --------
Equity and liabilities
Equity attributable to owners of the parent
Share capital 68 40 68
Share premium 49,958 - 49,958
Investment in own shares held in trust (465) (2,717) (465)
Accumulated deficit (17,420) (17,715) (20,612)
--------------------------------------------- ---- ------------ ------------ --------
Total equity/(deficit) 32,141 (20,392) 28,949
--------------------------------------------- ---- ------------ ------------ --------
Liabilities
Non-current liabilities
Loans and borrowings 6 28,592 83,623 32,829
Derivative financial liabilities - 422 -
Deferred income tax liabilities 6,245 6,895 6,542
--------------------------------------------- ---- ------------ ------------ --------
34,837 90,940 39,371
--------------------------------------------- ---- ------------ ------------ --------
Current liabilities
Loans and borrowings 6 24 19 22
Provisions for other liabilities and charges 1,130 1,038 1,069
Trade and other payables 7 7,127 7,173 8,359
Current income tax liabilities 1,418 928 -
Derivative financial liabilities - 392 -
--------------------------------------------- ---- ------------ ------------ --------
9,699 9,550 9,450
--------------------------------------------- ---- ------------ ------------ --------
Total liabilities 44,536 100,490 48,821
--------------------------------------------- ---- ------------ ------------ --------
Total equity and liabilities 76,677 80,098 77,770
--------------------------------------------- ---- ------------ ------------ --------
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 September 2017
Total equity/
Share capital Share premium Investment in own shares Accumulated deficit (deficit)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Balance at 1 April 2016 40 - (2,717) (18,669) (21,346)
Comprehensive profit and
total comprehensive
income for the period - - - 954 954
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Audited balance at 30
September 2016 40 - (2,717) (17,715) (20,392)
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Comprehensive loss and
total comprehensive loss
for the period - - - (13,745) (13,745)
Contributions by and
distributions to owners
Bonus issue of shares 10 - - (10) -
Share capital issued 18 51,267 - - 51,285
Share issue costs - (1,309) - - (1,309)
Shares sold by Employee
Benefit Trust for cash - - 86 519 605
Share-based payment
expense - equity settled
from Employee Benefit
Trust - - 2,166 10,310 12,476
Share-based payment
expense - IFRS2 charge in
respect of long-term
incentives - - - 29 29
Total contributions by and
distributions to owners 28 49,958 2,252 10,848 63,086
Audited balance at 31
March 2017 68 49,958 (465) (20,612) 28,949
Balance at 1 April 2017 68 49,958 (465) (20,612) 28,949
Comprehensive profit and
total comprehensive
profit for the period - - - 3,851 3,851
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Dividends paid - - - (986) (986)
Share-based payment
expense - IFRS2 charge in
respect of long-term
incentives - - - 321 321
Tax recognised directly in
equity - - - 6 6
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Total contributions by and
distributions to owners - - - (659) (659)
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Unaudited balance at 30
September 2017 68 49,958 (465) (17,420) 32,141
-------------------------- ------------- ------------- ------------------------ ------------------- -------------
Condensed Consolidated Statement of Cash Flows
for the period ended 30 September 2017
Period ended Period ended Year ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------------- ------------- ----------
Cash flows from operating activities
Profit/(loss) for the period/year 3,851 954 (12,791)
Adjustments for:
Depreciation 288 341 631
Amortisation 1,916 2,030 4,077
Finance income (21) (77) (475)
Finance costs 418 3,797 9,121
Share-based payment expense 321 - 12,505
Income tax expense/(credit) 1,056 775 (373)
------------------------------------------------------- ------------- ------------- ----------
7,829 7,820 12,695
------------------------------------------------------ ------------- ------------- ----------
Decrease/(increase) in trade and other receivables 27 56 (458)
Decrease in trade and other payables (1,156) (1,473) (189)
Increase in provisions 61 647 678
------------------------------------------------------- ------------- ------------- ----------
6,761 7,050 12,726
------------------------------------------------------ ------------- ------------- ----------
Income tax received/(paid) 596 (596) (1,327)
------------------------------------------------------- ------------- ------------- ----------
Net cash inflow from operating activities 7,357 6,454 11,399
------------------------------------------------------- ------------- ------------- ----------
Cash flows from investing activities
Finance income received 21 14 11
Purchases of property, plant and equipment (118) (126) (444)
Purchases of software (761) (220) (732)
------------------------------------------------------- ------------- ------------- ----------
Net cash outflow from investing activities (858) (332) (1,165)
------------------------------------------------------- ------------- ------------- ----------
Cash flows from financing activities
Proceeds from the issue of share capital - - 49,976
Repayment of financial derivative - - (504)
Repayment of loans (4,250) - (53,261)
Repurchase of own shares - - 605
Interest paid (467) (2,689) (4,876)
Payment of finance lease liabilities (10) (9) (34)
Dividends paid (986) - -
------------------------------------------------------- ------------- ------------- ----------
Net cash outflow from financing activities (5,713) (2,698) (8,094)
------------------------------------------------------- ------------- ------------- ----------
Net increase in cash and cash equivalents 786 3,424 2,140
Cash and cash equivalents at start of the period/year 4,880 2,740 2,740
------------------------------------------------------- ------------- ------------- ----------
Cash and cash equivalents at end of period/year 5,666 6,164 4,880
------------------------------------------------------- ------------- ------------- ----------
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 September 2017
1 Accounting policies
Xafinity plc (the "Company") is a public limited company
incorporated in the UK. The principal activity of the Group is
employee benefit consultancy and related business services. The
registered office is Phoenix House, 1 Station Hill, Reading RG1
1NB. The Condensed Group Financial Statements consolidate those of
the Company and its subsidiaries (together referred to as the
"Group").
Basis of preparation and statement of compliance with IFRS
The annual financial statements are prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRSs as adopted by the EU), IFRS - IC
Interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. These financial statements have been prepared
in accordance with International Accounting Standard 34 'Interim
Financial Reporting', as adopted by the European Union.
After making enquiries, the Directors have formed a judgement,
at the time of approving the half-yearly financial results, that
there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future, a period of not less than 12 months. For this reason the
Directors continue to adopt the going concern basis in preparing
the condensed set of financial statements.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 March
2017.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
Functional and presentation currency
The Financial Statements are presented in British Pounds which
is the Group's functional currency. Figures are rounded to the
nearest thousand.
New standards and interpretations not yet adopted
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments that replaces IAS 39 Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9.
IFRS 9 brings together all three aspects of the accounting for
financial instruments project: classification and measurement,
impairment and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018, with early
application permitted.
IFRS 9 requires the Company to record expected credit losses on
all of its debt securities, loans and trade receivables, either on
a 12-month or lifetime basis. The Company expects to apply the
simplified approach and record lifetime expected losses on all
trade receivables.
The Company plans to adopt the new standard on the required
effective date. The Company is still assessing the impact on its
balance sheet or equity on applying the classification and
measurement requirements of IFRS 9 although it does not expect it
to have a significant impact.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a five-step model
to account for revenue arising from contracts with customers. Under
IFRS 15, revenue is recognized at an amount that reflects the
consideration to which an entity expects to be entitled in exchange
for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue
recognition requirements under IFRS. Either a full retrospective
application or a modified retrospective application is required for
annual periods beginning on or after January 1, 2018. The Company
plans to adopt the new standard on the required effective date. The
Company has started a review of the impact of IFRS 15 with the help
of a third party. Once the analysis is completed, the transition
method will be chosen. Based on the current sales contracts, both
methods are feasible from an implementation perspective.
Furthermore, the Company is considering the clarifications issued
by the IASB in April 2016 and will monitor any further
developments.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17
Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. IFRS
16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model
similar to the accounting for finance leases under IAS 17. The
standard includes two recognition exemptions for lessees - leases
of 'low-value' assets (e.g., personal computers) and short-term
leases (i.e., leases with a lease term of 12 months or less). At
the commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and an
asset representing the right to use the underlying asset during the
lease term (i.e., the right-of-use asset). Lessees will be required
to separately recognise the interest expense on the lease liability
and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability
upon the occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a change in
an index or rate used to determine those payments). The lessee will
generally recognise the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
IFRS 16 is effective for annual periods beginning on or after
January 1, 2019, subject to endorsement by the European Union.
Early application is permitted, but not before an entity applies
IFRS 15. A lessee can choose to apply the standard using either a
full retrospective or a modified retrospective approach. The
standard's transition provisions permit certain reliefs.
The Group has entered into a number of long term leases in
respect of land and buildings. The Group has assessed the leases
under IFRS 16 and expects a significant impact as the right of use
assets and lease liabilities will come onto the consolidated
statement of financial position for the first time in respect of
its current operating leases. IFRS 16 will therefore have an impact
on the financial statements of the Group, however the Group are
still assessing the quantum. To see the volume of operating leases
please see Note 29 to the Group's consolidated financial statements
for the year ended March 31, 2017 for more information.
Xafinity is currently reviewing the impact of the
above-mentioned Standards and Interpretations and is yet to
conclude on whether any such standards will have a significant
impact on the financial statements of the Group in the year of
initial application other than in respect of IFRS16 as noted
above.
The other standards, interpretations and amendments issued by
the IASB (of which some still subject to endorsement by the
European Union), but not yet effective are not expected to have a
material impact on the Group's consolidated financial
statements.
2 Financial information
The financial information in this report was formally approved
by the Board of Directors on 7 December 2017. The financial
information set out in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006.
Statutory accounts prepared under IFRSs for the year ended 31
March 2017 for Xafinity plc have been delivered to the Registrar of
Companies. The auditor's report on these accounts was not
qualified, did not draw attention to any matters by way of emphasis
and did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
The financial information in respect of the period ended 30
September 2017 is unaudited but has been reviewed by the Group's
auditor. Their report is included at the end of this document. The
financial information in respect of the period ended 30 September
2016 was audited for the purpose of the Group's admission to the
London Stock Exchange and was contained within the Group's
Prospectus dated 13 February 2017. The Accountant's Report on the
30 September 2016 financial information was not qualified, did not
draw attention to any matters by way of emphasis and did not
contain any statements under section 498(2) or (3) of the Companies
Act 2006.
3 Adjusted EBITDA and adjusted profit after tax
Period ended Period ended Year ended
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
--------------------------------------------------------------------------- ------------ ------------ ----------
Profit/(loss) from operating activities 5,304 5,449 (4,518)
---------------------------------------------------------------------------- ------------ ------------ ----------
Adjustments to administrative expenses
Exceptional costs 425 639 2,959
Share-based payment cost 367 36 14,314
Bonuses to be equity settled by EBT 353 - -
Amortisation of acquired intangible assets 1,680 1,857 3,716
Depreciation of tangible assets 288 341 631
Amortisation of software 236 173 361
---------------------------------------------------------------------------- ------------ ------------ ----------
3,349 3,046 21,981
--------------------------------------------------------------------------- ------------ ------------ ----------
Adjusted EBITDA - Earnings before interest, tax, depreciation and
amortisation, share-based
payment costs, exceptional costs and bonuses to be equity settled 8,653 8,495 17,463
---------------------------------------------------------------------------- ------------ ------------ ----------
Adjustments to administrative expenses
Depreciation of tangible assets (288) (341) (631)
Amortisation of software (236) (173) (361)
Finance income 21 77 475
Finance costs (418) (3,797) (9,121)
Add back unamortised loan arrangement fees written-off as part of
re-financing exercises - - 2,892
---------------------------------------------------------------------------- ------------ ------------ ----------
Adjusted profit before tax, amortisation of acquired intangible assets,
share-based payment
costs and exceptional costs 7,732 4,261 10,717
---------------------------------------------------------------------------- ------------ ------------ ----------
Tax (1,056) (775) 373
Adjustments to tax
Tax on exceptional costs - (128) (204)
Tax on share-based payment costs equity settled from EBT (106) - (2,863)
Tax on written-off loan arrangement fees - - (579)
Less deferred tax not recognised - - 1,477
Deferred tax related to acquired intangibles (309) (324) (648)
---------------------------------------------------------------------------- ------------ ------------ ----------
Adjusted profit after tax 6,261 3,034 8,273
---------------------------------------------------------------------------- ------------ ------------ ----------
4 Operating segments
In accordance with IFRS 8 'Operating Segments', an operating
segment is defined as a business activity whose operating results
are reviewed by the chief operating decision maker ('CODM') and for
which discrete information is available. The Group's CODM is the
Board of Directors.
The Group has several operating segments based on geographical
location and revenue streams, but one reporting segment due to the
nature of services provided across the whole business being the
same pension and employee benefit solutions. The Group's revenues,
costs, assets, liabilities and cash flows are therefore totally
attributable to this reporting segment.
Operating segments
Period ended Period ended Year ended
30 September 30 September 31 March
2017 2016 2017
Revenue from external customers GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ----------
Pensions Advisory and Administration 21,479 21,151 42,808
National Pension Trust 431 340 682
SSAS and SIPP 2,568 2,491 4,967
HR Trustees 1,338 1,199 2,548
Healthcare 776 836 1,033
------------------------------------- ------------ ------------ ----------
Total 26,592 26,017 52,038
------------------------------------- ------------ ------------ ----------
5 Taxation
Period ended Period ended Year ended
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ------------ ----------
Current tax 1,420 1,099 304
Deferred tax (364) (324) (677)
Total tax expense/(credit) for the period 1,056 775 (373)
------------------------------------------ ------------ ------------ ----------
6 Loans and borrowings
On 17 February 2017, as part of the IPO related re-financing
exercise, the Group repaid its existing GBP86.0m bank loan and
replaced it with new senior debt of GBP15.0m and a drawn revolving
credit facility of GBP18.0m. Total debt was GBP28.6m at 30
September 2017 (30 September 2016: GBP83.6m). During the period the
Group repaid GBP4.25m of its revolving credit facility. At 30
September 2017, GBP13.7m (31 March 2017: GBP18.0m) was drawn down
under this facility.
7 Trade and other payables
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ------------ ------------ --------
Trade payables 420 257 1,821
Accrued expenses 2,875 3,046 3,294
Interest payable - 199 80
-------------------------------------------------------------------------------- ------------ ------------ --------
Total financial liabilities excluding loans and borrowings, classified as
financial liabilities
at amortised cost 3,295 3,502 5,195
Other payables - tax and social security payments 662 662 636
Other payables - VAT 1,519 1,407 1,072
Deferred income 1,373 1,362 1,207
Other payables 278 240 249
-------------------------------------------------------------------------------- ------------ ------------ --------
Total Trade and other payables 7,127 7,173 8,359
-------------------------------------------------------------------------------- ------------ ------------ --------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates to
fair value.
8 Earnings per share
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ------------ --------
Profit/(loss) for the period/year 3,851 954 (12,791)
------------------------------------------ ------------ ------------ --------
Weighted average number of shares: '000 '000 '000
------------------------------------------ ------------ ------------ --------
For basic earnings/(loss) per share 135,059 96,615 102,510
Outstanding share options 3,031 - 896
------------------------------------------ ------------ ------------ --------
For diluted earnings/(loss) per share 138,090 96,615 103,406
------------------------------------------ ------------ ------------ --------
Basic earnings/(loss) per share (pence) 2.9 1.0 (12.5)
Diluted earnings/(loss) per share (pence) 2.8 1.0 (12.5)
------------------------------------------ ------------ ------------ --------
A further 729,000 share options are in issue which are not
currently dilutive.
The calculation of basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period. In
accordance with IAS 33 the weighted average number of shares in
issue during the prior period has been retrospectively adjusted for
the proportionate change in the number of the shares outstanding as
a result of the bonus issue and share sub-division, as if the event
had occurred at the beginning of the earliest period presented.
Adjusted earnings per share
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ------------ --------
Adjusted profit after tax (note 3) 6,261 3,034 8,273
-------------------------------------------- ------------ ------------ --------
Adjusted earnings per share (pence) 4.6 3.0 8.1
Diluted adjusted earnings per share (pence) 4.5 3.0 8.0
-------------------------------------------- ------------ ------------ --------
9 Dividends
Amounts recognised as distributions to equity holders of the
parent in the period
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ------------ ------------ --------
Final dividend for 2016/17 of 0.73p (2015/16: Nil) per ordinary share was paid
during the
period 986 - -
-------------------------------------------------------------------------------- ------------ ------------ --------
Proposed interim dividend for 2017/18 of 2.1p (2016/17: Nil) 2,875 - -
-------------------------------------------------------------------------------- ------------ ------------ --------
The final dividend for 2016/17 was paid on 29 September 2017.
The final dividend has been reflected in the Statement of Changes
in Equity.
The proposed interim dividend was approved by the Board on 6
December 2017 and has not been included as a liability at 30
September 2017
10 Related party transactions
There have been no related party transactions during the first
six months of the financial year. In the period ending 30 September
2016 there were GBP69,000 in respect of fees for non-executive
directors.
11 Post balance sheet events
On 7 December 2017 Xafinity entered into a conditional agreement
with, among others, Punter Southall to acquire three significant
divisions from Punter Southall for a total consideration of up to
approximately GBP153 million. The consideration for the acquisition
will be satisfied through a payment of approximately GBP92.5
million in cash and the issue of shares. In addition, Xafinity will
transfer to Punter Southall the entire issued share capital of HR
Trustees Limited at an agreed value, such amount being set off
against the aggregate consideration payable. The cash element of
the consideration and associated transaction fees will be financed
through the net proceeds of a firm placing and placing and open
offer (the "Capital Raising") of GBP70 million and drawdown on new
debt facilities which comprise two RCFs totalling GBP80 million and
which will also replace existing indebtedness of the Group.
The acquisition is conditional upon, among other things,
Xafinity shareholder approval, receipt of proceeds from the Capital
Raising, and is expected to complete in Q1 2018.
Responsibility Statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
b) The interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of the important
events during the first six months and description of principal
risks and uncertainties for the remaining six months of the year);
and
c) The interim management report and note 10 includes a fair
review of the information required by DTR 4.2.8R (disclosure of
related parties' transactions and changes therein).
On behalf of the Board,
Mike Ainslie
Chief Financial Officer
Independent Review Report to Xafinity plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2017 which comprises the Condensed
Consolidated Income Statement, the Condensed Consolidated Balance
Sheet, the Condensed Consolidated Cash Flow Statement, the
Condensed Consolidated Statement of Changes In Equity, and related
notes 1 to 11.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority and for no other purpose. No person is entitled
to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms
of engagement or has been expressly authorised to do so by our
prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2017 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, as adopted by
the European Union, and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
BDO LLP
Chartered Accountants
Reading
United Kingdom
Date: 7 December 2017
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ZMMGZMNMGNZG
(END) Dow Jones Newswires
December 07, 2017 02:00 ET (07:00 GMT)
Xafinity (LSE:XAF)
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