TIDMTPX
RNS Number : 0884E
Panoply Holdings PLC (The)
05 July 2021
This announcement contains inside information
5 July 2021
The Panoply Holdings PLC
("The Panoply", or the "Group")
Unaudited preliminary results for the year ended 31 March
2021
A year of strong financial growth; post-period trading
significantly ahead of expectations
The Panoply (AIM: TPX), the digitally-enabled technology
services group focused on digital transformation, announces its
unaudited results for the year ended 31 March 2021.
Financial highlights
-- Revenue up 62% to GBP51.1m (FY2020: GBP31.5m).
Organic like-for-like(1) revenue growth of 19%
-- Statutory EBITDA of GBP1.8m (FY2020: GBP0.6m loss)
-- Adjusted EBITDA(2) increased 87% to GBP7.1m (FY2020:
GBP3.8m). Organic like-for-like(2) adjusted EBITDA
growth of 31%.
-- Statutory Loss after tax of GBP2.2m (FY2020: GBP3.0m
loss)
-- Adjusted profit after tax(3) of GBP5.0m (FY2020:
GBP2.7m)
-- Earnings per share of 3.5p loss (FY2020: 6.3p
loss)
-- Adjusted diluted earnings per share(4) of 6.1p
(FY2020: 3.6p)
-- Cash conversion of 106% and cash at bank of GBP5.7m
as at 31 March 2021 (net debt: GBP7.3m)
-- Sales Backlog(5) as at 1 April 2021 of GBP39.0m
to 31 March 2022 (31 March 2020: GBP15m)
-- Final Dividend(6) of 0.4p per share (FY2020: nil).
This follows the maiden interim dividend of 0.2
pence per share in January 2021
Operational highlights
-- 71% of revenue from public services in the period
(FY2020: 64%), with Local Government representing
24%, Central Government 20%, Healthcare 9%, Education
4% and the remaining 14% coming from other public
services including Housing and Not-for-Profits
-- Secured a number of high profile, multi-disciplinary
contracts through brand consolidation, including
with NHS Business Services Authority (BSA), Planning
Inspectorate and HM Land Registry
-- Commercial sector revenues grew in line with overall
Group growth to reach GBP14.7m (FY2020: GBP11.5m)
or 29% (FY2020: 36%) of Group revenue
-- Acquisitions of Arthurly, Difrent and Keep IT
Simple completed in June 2020, September 2020
and March 2021 respectively
-- Appointment of Rachel Neaman to the Board as a
non-executive director in October 2020
-- HSBC RCF facility extended from GBP5m to GBP20m,
with GBP7m remaining undrawn at the year end
-- Maintained net debt to EBITDA below 1x on proforma
basis
Impact highlights
-- Community action hours increased by 82.9% to 1,654
(FY2020: 904)
-- Carbon intensity per GBP1m Revenue 37.32 TCO2e (FY2020:
48.61 TCO2e)
-- Made progress in closing 72% of our Diversity and
Inclusion (D&I) gaps (From 18 key representation,
inclusion and pay gaps)
Other KPIs
-- Four contracts signed over GBP3m (FY2020: Nil) and
11 customers billed over GBP1m (FY2020: 6)
-- Average contract spend increased to GBP176k (FY2020:
GBP119k)
-- Continued growth of customer base, 290 billed in
FY2021 (FY2020: 265)
-- 67% of customers billed in FY2021 were also billed
in FY2018, FY2019 or FY2020 ( 70% of customers billed
in FY2020 were also billed in FY2019 )
-- Top ten clients generating 30% of revenue (FY2020:
31%), reducing concentration risk
Neal Gandhi, Chief Executive Officer, commented:
"We have had an excellent year, under extraordinary
circumstances and I would like to again thank all The Panoply team
for the incredibly hard work they have put in to get us to this
position. Highlights include having welcomed three quality
businesses into the Group, delivering 19% organic revenue growth,
very strong cash conversion and having made substantial progress
against our ESG targets.
Our trading momentum has accelerated further into the current
year, and we are delighted to have signed approximately GBP18.6m in
new contracts in Q1 FY2022. This is a record quarter for the Group
and this performance, together with the existing sales backlog we
had built in FY2021, means we now expect revenue and EBITDA for
FY2022 to be significantly ahead of current market expectations and
to deliver analysts' expectations for FY2023 a full year early.
Over the reported period we have seen the benefit of brand
amalgamation, and are excited to now embark on the next step of our
growth journey; bringing the Group together under a single brand.
In line with our 2025 vision, we believe this will support enhanced
growth and cement our position as one of the very best digital
transformation suppliers to the public sector."
A video overview of the results is available to watch here:
https://bit.ly/TPX_FY21_overview
Neal Gandhi, CEO, and Oliver Rigby, CFO, will be hosting a live
webinar for analysts and retail investors today, Monday 5 July, at
09.30am and 12:00 noon, respectively.
If you would like to register for the analyst webinar, please
contact panoply@almapr.co.uk.
Retail investors interested in attending are asked to register
using the following link: http://bit.ly/TPX_FY_investor_webinar
(1) . Like-for-like is a non-GAAP/IFRS measure that presents the
prior year being restated to show the unaudited numbers of the
existing and acquired businesses consolidated for the same months
as in FY2021. For FY2020, this incorporates the like-for-like
pre-acquisition results for Arthurly, Difrent and Keep IT Simple as
if they has been included in the Group for the same period as in
FY2021 .
(2) Adjusted EBITDA is a non-IFRS measure that the Company uses
to measure its performance and is defined as earnings before
interest, taxation, depreciation and amortisation and after add
back of costs related to acquisitions, restructuring and other one
off costs made by the Group, fair value adjustments and share based
payment charge..
(3) Adjusted profit after tax is calculated as a non-IFRS
measure. To arrive at adjusted profit after tax, adjustments made
include the add back of acquisition, restructuring and other one
off costs, amortisation related to acquired intangibles,
share-based payments, the impact of fair value adjustments and the
tax impact of these adjustments.
(4) Adjusted diluted earnings per share is calculated based on
adjusted profit before tax as defined above. An adjusted diluted
share count is calculated by taking the weighted average basic
shares and including the maximum shares to be issued in respect of
contingent consideration to be paid based on performance measures
met in the period, together with the maximum share options
outstanding.
(5) The value of contracted revenue that has yet to be
recognised.
(6) Subject to approval at the AGM and on publication of the
FY2021 Group statutory accounts demonstrating sufficient
distributable reserves.
The person responsible for this announcement is Oliver Rigby,
CFO.
Enquiries:
The Panoply Holdings
Neal Gandhi (CEO) Via Alma PR
Oliver Rigby (CFO)
Stifel Nicolaus Europe +44 (0)207 710 7600
Limited
(Nomad and Joint Broker)
Alex Price
Fred Walsh
Dowgate Capital Limited +44 (0)203 903 7715
(Joint Broker)
James Serjeant
David Poutney
Alma PR panoply@almapr.co.uk
(Financial PR) +44(0)203 405 0209
Susie Hudson
Kieran Breheny
Matthew Young
About The Panoply
The Panoply is a digitally-native technology services company,
built to service clients' digital transformation needs. Founded in
2016, with the aim of identifying and acquiring best-of-breed
specialist information technology, design and innovation consulting
businesses, the Group collaborates with its clients to deliver the
technology outcomes they're looking for at the pace that they
expect and demand.
The Group is being increasingly recognised as a leading
alternative digital transformation provider to the UK public
services sector, with 71% of its client base representing public
services and 29% representing the commercial sector.
More information is available at www.thepanoply.com
Chairman's statement
In last year's Annual Report, we discussed how we had cemented
our position in the public sector, consolidated our existing
businesses into two full service go-to-market brands and continued
to grow our business through winning large scale, high-profile
engagements. Now, 12 months on, I am extremely proud to report that
although there was a statutory loss in the year, after the add-back
of non-cash fair value adjustments relating to historical
acquisitions, our underlying profitability has been strong,
reflecting another successful period in which the Group has
delivered an outstanding financial performance accompanied by
strong operational progress . Across the board, our teams have
responded excellently to the opportunity available to us,
delivering innovative projects which meet - and exceed - the needs
of our clients.
Alongside strong organic growth, we've scaled the business
through targeted acquisitions. During the period, we acquired
purpose-driven digital transformation businesses Difrent, Arthurly
and Keep IT Simple . These acquisitions have added immediate value
to the Group, significantly expanding our capabilities and
bolstering us as a key player in delivering these services to
organisations of scale. As a result, we have increased our position
in the public sector and, notably, grown our foothold in
healthcare, a key target market for the Group.
The pandemic prompted an unprecedented acceleration of digital
transformation during the period, but we do not expect to see a
slowdown in activity as life returns to normal. Quite the opposite,
we expect digital transformation will only become more important in
the years ahead - as part of a future where organisations will
continually look to refresh and update their existing capabilities
in order to meet the ever-changing needs of customers and service
users.
Our purpose
Across the Group, The Panoply is driven by its sense of purpose
and core focus on delivering sustainable, positive change for the
people and communities our work impacts. In a year which has seen
many areas of the public sector under significant pressure, our
projects have enabled these organisations to continue providing
their necessary services to people across the country. Projects of
note include working in partnership with Camden Council to help
Camden and local public service partners match vulnerable residents
with relevant support during the Covid -19 crisis, as well as NHS
Home Testing. As part of this large numbers of key workers, up to
40% of staff in some organisations, were self-isolating with Covid
-like symptoms. This threatened the effectiveness of some key
front-line organisations and we were proud to be able to deliver an
end-to-end service on gov.uk enabling citizens to request tests
which were dispatched from a distribution centre overnight. In the
first 12 weeks our service had distributed over 1 million test kits
to UK citizens.
Environmental, social and governance (ESG) issues are
increasingly moving up the agenda and I am proud to say our
excellence and long-standing commitment to this field continues to
be a key differentiator from many of our peers.
From Board level down, we are unified by this commitment to
change. Reflecting this, The Panoply has set up a Board-level ESG
committee to ensure our ESG practices and the quality of our
reporting continues to be of an excellent standard. Additionally, a
further measure taken during the year is to make our Group CEOs
accountable for ESG metrics, dedicating an equal space and
weighting in monthly board meetings to discussing progress against
non-financial KPIs.
This year we consolidated our Sustainable Futures work into
three key areas: People; Planet; and Community. I'm extremely
pleased with our performance across all our Sustainable Futures
areas and further detail on our progress can be found in the Chief
Executive's Statement further below and will be included in full in
our FY21 Annual Report.
In a year that has further brought to light the significant
inequalities and imbalances in the UK and globally, I'm proud to
see the Group has only become more emboldened in our mission to
tackle these issues head-on where we can. We have invested in
ensuring our Diversity and Inclusion practices are of the highest
standard, even breaking new ground by exploring the ethnicity pay
gaps within our business. This is a topic close to our hearts and
one which we will not let drop out of focus.
Over the next year, we aim to introduce even more transparent
and detailed reporting, in line with our commitment to lead the way
in ESG reporting.
Corporate governance
The Group's risk management is up-to-date and appropriate. The
Board continues to assess and monitor the principal risks to the
Group and remains cognisant of the ongoing impact of Covid-19 to
our end markets and stakeholders.
This year the Board established the Environmental, Social and
Governance Committee (ESG Committee) which is chaired by Isabel
Kelly, and has the primary responsibility to assist Executive
Management in setting the Company's general strategy with respect
to ESG matters, and to consider and recommend policies, practices,
reporting and disclosures that conform with the strategy.
The Panoply's Board is committed to operating proper standards
of good corporate governance and has applied the principles set out
in the QCA code to the Group. Post period end we have completed a
board effectiveness review which whilst receiving positive results
provides us with areas of further focus as we move forward.
We highly value our shareholders, for whom we are ultimately
seeking to deliver value which has been achieved with purpose. As a
result, we recognise the importance of keeping all shareholders
up-to-date and engaged, and we remain committed to transparency in
all our corporate communications.
People
I would like to sincerely thank all our team members for their
dedication and hard work throughout an unprecedented year. It has
been an exceptionally testing timefor all, and our staff have truly
gone above and beyond to deliver exceptional work for our clients,
stepping up to the many challenges posed by the pandemic. I would
also like to extend a warm welcome to all new team members from
Difrent, Arthurly, Keep IT Simple and Nudge Digital.
Outlook
While we are beginning to see the light at the end of the tunnel
for the pandemic, the changes to working practices are here to
stay. For an increasing number of organisations across the public
and private sector, digital transformation is no longer an abstract
term but an essential and ongoing service. In this context, The
Panoply stands apart from its monolithic competitors as an agile
player that can deliver a growing range of digital projects at
great speed and with first-class technical expertise.
We continue to strengthen our offering year-on-year through key
hires and strategic acquisitions. With our strong management team,
best-in-class businesses and a substantial market opportunity, I
remain highly confident in our ability to fulfill all our
commercial objectives, in tandem with delivering positive,
sustainable change.
Chief Executive's review
While many of us have now become strangely used to Covid-19's
everyday presence in our lives, it is only through recalling the
colossal impact the pandemic has had that we can fully appreciate
the great lengths our staff have gone to across the year. Their
efforts have produced a financial performance that we are very
proud of, with adjusted EBITDA growing more than 85% in the
period.
Our teams have been resilient, determined and innovative in
their work, despite facing often-difficult working environments and
an unprecedented scale and urgency of demand from our public sector
clients at the coal face of the crisis. In this way we have proven
beyond doubt our value proposition - that small, multi-disciplinary
teams working in an agile way, can deliver incredible projects that
solve real problems and meet real needs. We are proud to have
driven positive, sustainable change across many public sector
organisations which have, in turn, supported those across the UK in
dire need of their services.
This year saw us grow substantially in scale, with our headcount
growing to 504 at year end (FY2020: 381). We are proud to have not
furloughed any staff and provided full pay throughout the year. We
have been mindful of the greater presence work has played in many
people's lives in this unprecedented time and have therefore
significantly increased our activities around mental health support
and diversity and inclusion, going above and beyond to support our
people's wellbeing.
Collaboration across the Group has become even closer, with
several of our brands having merged into a smaller number of core,
customer-facing brands. This strategy has proven successful,
allowing our teams across the Group to work together on larger and
more impactful projects which points towards further brand
consolidation in the future as we plan to move towards a single
brand, simplifying and strengthening our offer to customers.
Alongside our organic growth, we welcomed three new companies
into the Group in the period (Arthurly, Difrent and Keep IT
Simple), all of which have so far brought significant value to The
Panoply. Post-period end, we also acquired Nudge Digital, extending
our footprint in healthcare.
We are proud to have raised our financial expectations during
the year and to have now met these new expectations. So far, we
have also delivered against the Commercial Vision set out last
year, further details of which appear below. We therefore take this
opportunity to detail additional, further-reaching ambitions below.
The Panoply has an exciting road ahead and we are committed to
moving forwards at speed to capitalise on the opportunity.
Financial overview
We are very proud of the outstanding financial performance we
have achieved; they are a testament to the dedication of our teams
and the power of innovative thinking. We have delivered strong
revenue growth, up 62% and adjusted EBITDA up 87%. This was driven
by the full year impact of FY2020 acquisitions and the three
acquisitions made in the year, alongside strong organic revenue
growth of 19%. The statutory loss after tax was GBP2.2m (FY2020:
GBP3.0m). The adjusted profit after tax, which we believe enables
readers to better understand the underlying performance of the
Group, as it shows the operational performance excluding one-off
non-recurring items and fair value adjustments, showed the full
extent of our growth up 85% to GBP5.0m (FY2020: GBP2.7m). A full
reconciliation of adjusted profit before tax is shown in the
Financial Review section. Adjusted diluted EPS was up 69% to
6.1p.
Net cash generated from operations before tax and including
lease payments was GBP5.1m, delivering a cash conversion ratio of
106%. Over the period, the Group continued to closely monitor and
manage its costs in a prudent fashion. As at 31 March 2021 the
Group's financial position showed retained cash reserves of
approximately GBP5.7m and a net debt position of GBP7.3m (below 1x
pro forma EBITDA - being the EBITDA had all the companies acquired
in FY2021 been in the Group for the full year). Cash generation is
expected to remain strong and the Group has a GBP20m revolving
credit facility in place with HSBC of which GBP7m was unutilised as
at 31 March 2021.
Growth strategy
From inception, the vision of the Group has been to bring
together a panoply of companies and skills in order to provide an
entrepreneurial, full service capability, delivering outcomes to
large clients at a fraction of the cost and time of their
traditional suppliers. We have also sought to give our Group
companies the combined balance sheet that enabled them to win
substantially larger contracts than they would have won had they
remained small, independent companies. With four contracts worth
more than GBP3m won during FY21, versus three in the entire multi
decade collective histories of the acquired companies, this
strategy has proven successful.
Whilst FY2021 has been a tremendously successful year, with
like-for-like organic growth at 19%, we believe that we can
continue to simplify our offer to clients by further consolidating
our business and embracing a single brand, which we will execute
upon during FY2022. This new single brand will focus on our key
vertical markets of central government, local government,
healthcare, not for profits, and commercial sectors, and will offer
those sectors a modern, full service alternative for their digital
transformation needs. This significant change programme within the
Group is already underway and has the full support of the
management teams of all current brands within the Group. We are
excited about the opportunities for further organic growth that
this next phase in the Group's strategy will bring as we take an
integrated change, experience and technology offer to market.
This change will see us move to a single P&L structure with
a single sales, account management and back office structure in the
UK. It will also allow us to further leverage our Eastern European
development facility in Bulgaria.
In line with this plan, we have changed our acquisition model,
predominantly removing earn outs in order to facilitate faster
integration and encourage better leverage of the Group's wider
resources. This new model was usedfor the recently announced
acquisition of Nudge Digital on 30 June 2021. To further support
our growth, we will continue to acquire companies that either add
capabilities or additional vertical markets to the Group. Future
acquisitions will be on a part cash, part shares basis to align
management's interests with the long-term success of the Group.
Those acquisitions will come from the UK and, over time, from other
countries, as we scale. As before, acquisitions will be earnings
enhancing and we will continue to focus on profitable, cash
generative companies that we believe will benefit from the scale
benefits that the Group brings, particularly around their ability
to win larger contracts and leverage existing Group case
studies.
Finally, the acquisition of Keep IT Simple, 'KITS', has seen us
launch a recurring managed services offering into central
Government, running live services. This offering significantly
increases our backlog coming into each financial year, giving us a
stronger platform for growth than ever before. This is in addition
to our existing recurring revenues driven by our commercial sector
clients.
Overall we are positioned well to drive double digit
like-for-like organic growth alongside further acquisitive growth
in the years to come.
FY2021 Progress against Commercial Vision
Last year, we laid out our six-step Commercial Vision, which we
wanted to achieve over the three years to FY2023. Below is a
summary of our performance against these goals.
Ambition FY2021 Progress
-------- ----------------------------------------- -------------------------------------------------------------
1. Produce 10% to 15% organic revenue
growth per annum * 19% organic revenue growth
----------------------------------------- -------------------------------------------------------------
2. c.70% of operating profit to
drop through into positive cash * 106% OP to cash flow
flow to generate significant
cash reserves
* GBP5.1m cash generated from operations incl lease
payments
----------------------------------------- -------------------------------------------------------------
3. To use this cash to set up a
progressive dividend policy for * Aggregate Dividends of 0.6p
shareholders at approximately
15%-20% of net income (adjusted
profit after tax) * 9.4% of net income (adjusted profit after tax)
----------------------------------------- -------------------------------------------------------------
4. We aim to use a mixture of positive
cash flow and our listed shares * Made three acquisitions, cumulatively adding GBP16.1m
to make further earnings enhancing of run-rate revenue
acquisitions to add more than
GBP35m of revenue
----------------------------------------- -------------------------------------------------------------
5. Given our size and scale we believe
that liquidity is important and * Pro Forma Leverage of less than 1x Pro Forma EBITDA
will therefore aim to keep leverage
low at below 1x Pro Forma* EBITDA
----------------------------------------- -------------------------------------------------------------
6. On this basis we aim to achieve
a run rate revenue of GBP100m * Consensus analyst revenue expectations for FY22 of
by March 2023 and deliver GBP12m-GBP14m GBP64m
EBITDA
* Consensus analyst EBITDA expectations of GBP9.7m
* Both as at 4 July
----------------------------------------- -------------------------------------------------------------
* Pro Forma EBITDA relates to the adjusted EBITDA if all
acquisitions acquired in the year had been in the Group for the
full financial year on a like-for-like basis..
FY2021 Performance against Impact vision
Alongside our Commercial Vision, we have also publicly stated an
Impact Vision, to achieve by FY2023. This reflects the equal
weighting we give to financial and ESG progress.
Ambition FY21 Progress
-------------------- ------------------------------------- -------------------------
People Close the gaps that exist in Made progress in closing
our business and wider industry. 72% of gaps*
Decreasing pay gaps, representation
SDG*** 8.5 gaps and gaps in inclusivity.
Decent, equal
work opportunities
for all
------------------------------------- -------------------------
Planet Leave no Trace. Measuring and Invested in software
offsetting our historic footprint to collect data and
SDG*** 8.4 entirely measure emissions and
Decoupling offset 1,915 tCO2e
economic growth
from environmental
degradation
------------------------------------- -------------------------
Communities Equip our communities with 602 careers kick-started
futureproof skills. Kick-starting to date**
SDG*** 8.6 1000 digital careers
Youth education
and training
------------------------------------- -------------------------
*Based on YoY progress against 18 gaps across representation,
pay an inclusivity
** 1 career kickstarted = 1 unique beneficiary from our
community action or community investment programmes who has
benefitted from at least 1 hour of skills development training.
*** United Nations Sustainable Development Goals (SDGs)
New goals
On the basis of the progress made to date and with our continued
strong organic growth alongside our pipeline of acquisition
opportunities, we reiterate our confidence in reaching our stated
March 2023 goals. Therefore, we take this opportunity to introduce
longer term goals to March 2025.
Commercial Vision for FY2025
1. To achieve a run rate revenue of GBP200m (GBP150m public
sector, GBP50m commercial sector) by March 2025
2. To deliver 10-15% organic revenue growth per annum
3. To make further earnings enhancing acquisitions to strengthen
our offer, achieve greater scale and support our overall
vision
4. To become a top 20 public sector supplier by March 2025
on run rate basis
5. To deliver 70% of operating profit through to positive
cash flow
6. To deliver progressive dividend policy at 15%-20% of net
income
7. To deliver improving EBITDA margins
Impact Vision for FY25
1. Halve the 21 gaps that we have identified across representation
, pay and inclusion for employees from underrepresented
backgrounds .
2. To achieve net zero status
3. To kick-start 5,000 digital careers, reaching 5,000 unique
beneficiaries through our community action and community
investment programmes
We believe that our growth strategy, as described above, will
drive us towards these longer-term goals.
Strategic Review of the Period
From an impressive collection to an impressive company. The next
step on our journey.
Collaboration has always been key to The Panoply and we embraced
this further during the period through the continued deployment of
Foundry4, FutureGov and Manifesto as our core 'full service'
brands. This is part of an ongoing journey towards structuring the
Group in the best possible way to leverage our strengths, simplify
our offer, and make the biggest difference to clients.
By bringing our expertise together under these names we have
simplified our value proposition for clients and allowed The
Panoply to win increasingly larger and more impactful projects. In
FY2021 the Group secured 4 contracts of a value over GBP3m,
compared with none in FY2020. It is important to note that these
contracts were at scale and multi-disciplinary and could only have
been won under these amalgamated brand propositions.
In addition, we began to centralise some HR and finance systems
& functions to increase efficiencies and unlock synergies
across the Group.
Continuing to grow the Group by acquisition
We completed three major acquisitions in the period, all
predominantly in the public sector:
-- Arthurly, a technology services business with particular
strength in the Microsoft Technology Stack
-- Difrent, a digital transformation consultancy focused on
the healthcare sector
-- Keep IT Simple, a provider of high value IT support and
transformation services, predominantly to public sector
clients
Thanks to the highly complementary nature of these acquisitions
they have integrated well into the Group and all have generated
significant revenue. For example, two recently won contracts were
only possible to win because of the capabilities added to the Group
via the acquisition of KITS. Furthermore, the acquisition of
Difrent has given us a strong foothold in the growing healthcare
sector with healthcare revenues now representing 9% of total
revenue.
We are now in a position to offer an even more comprehensive
end-to-end offering to our clients, ranging from consulting and
solutions through to ongoing operations.
Acquisition remains a key tenet of our strategy and we have a
number of potential opportunities in the pipeline.
Proving our value position for the public sector
Across the year we have continued to build our public services
base with 71% of revenue in the year from this sector (FY20: 64%).
This was generated from a wide range of projects ranging from
hyperscale cloud migration programmes through to high level
organisational change initiatives. New client wins in the year
include NHS Business Services Authority, NHSX, Planning
Inspectorate and HM Land Registry.
In addition, we have further built our capability in its
sub-sectors, building a book of reference case studies and a
burgeoning reputation across Central Government, Local Government
and healthcare.
We have proven the value of our proposition by working on
significant projects with public services clients, showing them
that small groups of experts can deliver results.
Example projects include:
-- Supporting the NHS Business Services Authority to deliver
its digital transformation agenda and digital health delivery
overseas
-- Assisting the Planning Inspectorate to deliver its planning
appeals service into Beta
-- Working with HM Land Registry as partners in its digital
transformation programme and digital service development
-- Enabling local authorities across England to access the
GBP3.6bn 'levelling up' Towns Fund alongside the Ministry
of Housing, Communities and Local Government
Robust, recurring performance in commercial sector
29% of revenue came from the commercial sector in the period and
it continues to be a very important sector to the Group. Of that
approximately two-thirds is recurring revenue from clients such as
News UK, Funding Circle, Cargill and Dow Jones. The roster of
recurring revenue clients is mainly made up of large-scale
corporates.
One example of our commercial work is a project undertaken for
Dow Jones. The successful set-up of the team of News UK, another
company of the News Corp Group and current client of the Group,
supported the choice of The Panoply as a strategic partner for the
planned growth of Dow Jones. Through the collaboration, The Panoply
helped build a high-performing tech unit that acts as an extension
of Dow Jones' core technology team, supporting this team in the
development of distinguished web and mobile applications, APIs and
data feeds.
Digital transformation market
The past year has shown organisations of all types and sizes
that it is possible to implement digital transformation rapidly and
at a reasonable price. Beyond this, it has shown exactly how much
of an impact implementing these kinds of programmes can have.
Last year we stated our belief that the impact of the pandemic
will be to accelerate widespread understanding and demand for our
services. We have now seen this borne out. It is becoming
increasingly broadly recognised that a small, but skilled,
multidisciplinary team can be trusted to deliver. This can be done
across even the most complex projects.
The Software and IT Services 'SITS' market in the UK is worth
GBP51.8bn, of which the public sector is GBP12bn. The public sector
SITS market has previously revolved around the drag of large legacy
deals provided by heritage suppliers. However, this balance is
changing in favour of new, agile suppliers that have the people and
resources to deliver Agile at Scale. Agile now represents GBP3.7bn
of the total GBP12bn value, up 18.6% year on year. With digital
transformation being a continuous process and will require ongoing
investment this represents an exciting opportunity for The Panoply,
which we believe is one of the only truly digitally native and also
full-service players.
Current trading and outlook
The Group has had an extremely strong start to FY2022, and has
already completed another acquisition, which we believe reflects
the growing reputation we are building within our target markets.
In Q1, we signed approximately GBP18.6m in new contracts, a record
quarter. A number of wins have been made possible by the Group
being able to leverage the capabilities brought to us by the
acquisition of KITS in March 2021.
Coming into the current financial year, the Group had a
confirmed backlog deliverable in the year, including annualised
recurring revenue, of approximately GBP39m. Q1 bookings have added
approximately GBP16.5m in further recognisable revenue in FY2022,
taking the total revenue plus backlog to GBP55.5m, with three
quarters left to go. Q1 trading continues to deliver revenue growth
at above our targets of 10%-15%.
As a result, the Group expects revenue and EBITDA for FY2022 to
be significantly ahead of current market expectations and for us to
deliver analysts' expectations for FY2023 in FY2022.
This year we will continue to focus on delivering against our
Commercial and Impact Vision, through our strategy of consolidation
to a single brand and a single P&L driving further organic
growth and continued earnings enhancing acquisitions.
-- Against our 2023 commercial vision of 10% to 15% Organic
revenue growth per year, we gained 19% in FY2021, we will continue
to target this growth and profit as clients recognise our value
through delivery .
-- Since IPO the Group has acquired 12 businesses with the
latest post period acquisition of Nudge Digital Limited increasing
this to 13. These acquisitions have provided the Group the ability
to grow at a substantial pace, whilst providing the access to
growing markets and incredible talent.
Looking ahead, it is clear the demand for digital transformation
services continues at full pace. As our reputation grows and our
capabilities continue to strengthen and diversity, I am confident
we are well-positioned to take advantage of the significant
opportunities ahead across our target markets.
Neal Gandhi
Chief Executive Officer
Financial Review
The year to 31 March 2021 saw a significant step forward in the
scale of the business despite the challenges presented as a result
of Covid-19. The Panoply reported revenue of GBP51.1m (FY2020:
GBP31.5m) representing an increase of 62%. The revenue increase was
driven by like-for-like organic growth of 19% as well as the the
full year impact of FY2020 acquisitions and the acquisitions of
Arthurly in June 2020, Difrent in September 2020 and Keep IT Simple
in February 2021. The business extended its focus into public
services with 71% of revenue now coming from that sector (FY2020:
64%) and we delivered a strong increase in healthcare revenues from
3% in FY2021 to 9% in FY2020.
We continued to see a large amount of repeat business from
customers, with 67% of customers billed in FY2021 also billed in
FY2020. Most excitingly we have seen an increase in the scale of
the contracts we are now winning as a result of the combined
services of the Group including four deals over GBP3m up from just
three in the combined multi decade history of the individual
companies prior to acquisition.
Gross Margins were at 32% against 38% in the prior year. The
reduction was driven by a change in the makeup of the services that
the Group provides, with growth in our managed services and
recurring business. This has seen us add significantly to our
backlog for FY2022 which stood at GBP39.0m (FY2020: GBP15.0m).
Gross margin has also been impacted by some Covid-19 recruitment
scaling challenges, exacerbated by our top line growth, which meant
that we had an increased reliance on contractors at higher rates
than full time employees. The Group has now reached a scale where
we can address this through our newly centralised HR function and
greater hiring of FTEs. As a result, we anticipate an improvement
in gross margin moving forwards.
Adjusted EBITDA was GBP7.1m up from GBP3.8m in FY2020
representing an increase of 87%. Statutory EBITDA was GBP1.8m, up
from a loss of GBP0.6m in FY2020 representing an increase of 400%.
Adjusted EBITDA margin was 14% up from 12% in the prior year. The
increase in margin is mainly driven by Plc costs remaining largely
flat as we continue to scale. In addition, we have seen a reduction
in certain overheads as a result of Covid-19.
The statutory loss after tax decreased by 27% to GBP2.2m
(FY2020: GBP3.0m). The Directors believe that an 'adjusted profit
before tax' measure is more representative of the underlying
performance of the Group. To arrive at adjusted results,
adjustments made include acquisition expenses, amortisation related
to acquired intangibles and share-based payments and the impact of
fair value adjustments along with the corresponding tax impact of
the adjustments.
The fair value adjustment reflects stronger than forecast
performance of the Group companies and amortisation is a charge
that does not reflect the underlying performance or prospects of
the Group.
The following table summarises the adjustments:
2021 2020
GBP'000s GBP'000s
Statutory loss before
tax (1,845) (3,140)
---------- ----------
Amortisation of intangible
assets relating to
acquisitions 2,458 1,558
---------- ----------
Loss from fair value
movement in contingent
consideration 4,260 3,764
---------- ----------
Share-based Payments 294 129
---------- ----------
Costs relating to
acquisition and restructuring 746 591
---------- ----------
Adjusted profit before
tax 5,913 2,902
---------- ----------
Tax (including impact
of amortisation and
costs relating to
acquisition and restructuring
adjustments) (898) (230)
---------- ----------
Adjusted profit after
tax 5,015 2,672
---------- ----------
As a result of the acquisitive nature of the Group and its use
of shares as consideration, the Directors believe that an adjusted
share count for the purposes of calculating earnings per share is
required. As such the Directors calculate an adjusted diluted share
number by taking the weighted average basic shares and including
the maximum shares to be issued in respect of contingent
consideration to be paid based on performance measures met in the
period, together with the maximum share options outstanding. The
following table summarises the adjustments:
2021 2020
000s 000s
Weighted average
basic shares 63,784 48,162
------- -------
Shares relating to
future contingent
consideration 13,728 22,774
------- -------
Shares relating to
share-based payments 4,436 3,885
------- -------
81,948 74,821
------- -------
Adjusted diluted
earnings per share
(pence) 6.1 3.6
------- -------
Based on these alternative non-GAAP measures the Group achieved
adjusted profit after tax of GBP5.0m (FY2020: GBP2.7m) resulting in
adjusted diluted earnings per share of 6.1p (FY2020: 3.6p). The
statutory loss per share for the period was 3.5p (FY2020: 6.3p
loss).
Cash Flow and cash conversion
Net cash generated from operations before tax and including
lease payments was GBP5.1m. Cash conversion, calculated by
reference to the adjusted profit before tax but after deducting
costs relating to acquisition and restructuring was 106%.
In total, cash increased in the year from GBP4.6m to GBP5.7m but
net debt increased from GBP0.4m to GBP7.3m as a result of payments
made for acquisitions completed in the period. The cash
consideration for the acquisitions was GBP16.5m, with GBP2.6m being
funded from the Group's cash reserves, GBP5.9m funded from cash
acquired and GBP8.0m funded through an extended revolving credit
facility put in place during the year with HSBC. The net debt
position at the year end was significantly below 1x Pro Forma
EBITDA.
HSBC have extended their revolving credit facility with the
Group to GBP20m. GBP13m has been drawn down in total for
acquisitions in FY2020 and FY2021 leaving the Group at the year end
with a further GBP7m to draw down for further acquisitions. This
together with cash flow generated from operations provides a strong
basis to continue our acquisitive growth into FY2022.
Balance Sheet
Intangible assets have increased significantly in the year as a
result of the acquisitions completed.
Total deferred consideration at 31 March 2021 was GBP12.2m, of
which GBP10.9m relates to deferred consideration where performance
obligations were met in the period (further details set out below).
We continue to note that this is a liability that will be satisfied
through the issue of shares and not through cash. Once this is
removed, the Group's current ratio at the year end was 1.6 (FY2020:
1.7) providing solid liquidity.
Dividend
Following initiation of the Group's first interim dividend the
Board are pleased to announce a final dividend of 0.4p per share
subject to approval at the AGM. The proposed final dividend, if
approved by shareholders, will be payable on 1 October 2021 to all
shareholders on the Register of Members on 24 September 2021. This
will take the total dividend paid to shareholders in respect of
FY2021 to 0.6p per share.
Additional consideration
As a result of the strong performance of Group companies during
the current and prior period, further consideration is payable and
will be satisfied through the issue of new ordinary shares. As at
31 March 2021, the total value of consideration that is payable
based on FY2021 accounts is GBP10.9m, resulting in maximum further
shares to be issued totalling 13.7m which reduces to 3.8m based on
the closing share price as at 2 July 2021.
Value GBP'000 Minimum share price Max shares to be
issued '000
5,939 0.740 8,026
-------------------- -----------------
1,306 0.820 1,593
-------------------- -----------------
838 0.825 1,015
-------------------- -----------------
1,987 0.831 2,390
-------------------- -----------------
290 1.000 290
-------------------- -----------------
507 1.225 414
-------------------- -----------------
10,867 13,728
-------------------- -----------------
Oliver Rigby
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 March 2021
Unaudited Audited
2021 2020
Note GBP'000 GBP'000
Revenue 51,097 31,533
Cost of Sales (34,968) (19,526)
Gross Profit 16,129 12,007
Administrative expenses (18,085) (15,149)
Other income 413 184
Operating loss (1,543) (2,958)
Adjusted EBITDA 7,101 3,846
Amortisation of intangible assets (2,509) (1,583)
Depreciation (835) (737)
Loss from fair value movement in contingent consideration (4,260) (3,764)
Share-based payments (294) (129)
Costs directly attributable to business combinations (496) (436)
Costs relating to business restructuring (250) (155)
Operating loss (1,543) (2,958)
----- ----------
Finance income 1 7
Finance costs (303) (189)
----------------------------------------------------------- ----- ---------- ---------
Net Finance Expenses (302) (182)
Loss before taxation (1,845) (3,140)
Taxation (384) 96
----------------------------------------------------------- ----- ---------- ---------
Loss for the Period (2,229) (3,044)
Other Comprehensive income
Exchange difference on translation of foreign operations 68 104
Total comprehensive loss for the period (2,161) (2,940)
Loss per share
Basic and fully diluted 4 (3.5) (6.3)
Consolidated Statement of Financial Position
For the year ended 31 March 2021
Unaudited Audited
Restated
2021 2020
GBP'000 GBP'000
Non-current assets
Goodwill 53,323 35,672
Intangible assets 29,370 8,591
Property, plant and equipment 292 290
Right of use assets 445 1,045
Deferred tax assets 15 0
Total non-current assets 83,445 45,598
Current assets
Trade and other receivables 14,014 8,590
Contract assets 1,144 1,413
Other taxes and social security costs 137 206
Cash and cash equivalents 5,734 4,614
Total current assets 21,029 14,823
Total assets 104,474 60,421
Current liabilities
Trade and other payables (5,681) (4,343)
Contract liabilities (1,941) (1,454)
Other taxes and social security costs (5,326) (3,001)
Deferred and contingent consideration (8,478) (10,685)
Lease liabilities (336) (609)
Borrowings (55) (29)
Total current liabilities (21,817) (20,121)
Non-current liabilities
Deferred tax liabilities (5,133) (1,623)
Deferred and contingent consideration (3,741) (5,998)
Borrowings (13,000) (5,000)
Provisions - dilapidations (76) (23)
Lease liabilities (53) (390)
Total non-current liabilities (22,003) (13,034)
Total liabilities (43,820) (33,155)
Net assets 60,654 27,266
EQUITY
Share capital 804 551
Share premium 5,691 5,673
Merger reserve 60,926 25,804
Capital redemption reserve 5 5
Other reserves 796 434
Retained earnings (7,568) (5,201)
Total equity 60,654 27,266
---------------------------------------- ------------ ----------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
Foreign Share
Share Share Merger Capital exchange Option Retained
Restated capital premium reserve Redemption reserve Reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------ ------------ ------------ ----------- ----------- ----------- ----------- --------
At 1 April
2019
(Audited) 423 20,779 - 5 (38) 239 (2,157) 19,251
Adjustment
(note 3) - (15,106) 15,106 - - - - -
At 1 April
2019
(Restated)) 423 5,673 15,106 5 (38) 239 (2,157) 19,251
Loss for the
period - - - - - - (3,044) (3,044)
Exchange
differences
on
translation
of foreign
operations - - - - 104 - - 104
Transactions
with owners
Shares issued 128 - 10,698 - - - - 10,826
Share - based
payments - - - - - 129 - 129
-------------- ------------ ------------ ------------ ----------- ----------- ----------- ----------- --------
Equity at 31
March 2020
(Restated) 551 5,673 25,804 5 66 368 (5,201) 27,266
-------------- ------------ ------------ ------------ ----------- ----------- ----------- ----------- --------
Share Share Merger Capital Foreign Share Retained Total
capital premium reserve Redemption exchange Option earnings
reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2020
(Restated) 551 5,673 25,804 5 66 368 (5,201) 27,266
Loss for the
period - - - - - - (2,229) (2,229)
Exchange differences
on translation
of foreign operations - - - - 68 - - 68
Transactions
with owners
Shares issued 253 18 35,122 - - - - 35,393
Dividends paid - - - - - - (138) (138)
Share - based
payments - - - - - 294 - 294
Equity at 31
March 2021 (Unaudited) 804 5,691 60,926 5 134 662 (7,568) 60,654
Consolidated Statement of Cash Flows
for the year ended 31 March 2021
Unaudited Audited
2021 2020
GBP'000 GBP'000
Cash flows from operating activities:
Loss before taxation (1,845) (3,140)
Adjustments for:
Depreciation 835 737
Amortisation 2,509 1,583
Share-based payments 294 129
Foreign exchange (gains)/losses (5) 104
Finance expense 303 189
Finance income (1) (7)
Movement in fair value of contingent consideration 4,260 3,764
Working capital adjustments:
Increase in trade and other receivables (1,032) (2,586)
Increase in trade and other payables 483 1,978
Net cash generated from operations 5,801 2,751
Tax paid (159) (44)
Net cash generated from operating activities 5,642 2,707
Cash flows from investing activities:
Net cash paid on acquisition of subsidiaries (10,813) (5,876)
Deferred consideration payment (259) (1,088)
Purchase of property, plant and equipment (137) (131)
Additions to intangibles (321) (196)
Interest received 1 8
Net cash used in investing activities (11,529) (7,283)
Cash flows from financing activities:
New borrowings 8,000 5,000
Cost relating to the issue of new borrowings - (148)
Repayment of borrowings - (507)
Payment of lease liabilities (610) (629)
Finance costs (331) (176)
Dividends paid (138) -
Net cash (used in)/generated from financing activities 6,921 3,540
Net (decrease)/increase in cash and cash equivalents 1,034 (1,036)
Cash and cash equivalents at beginning of the period 4,614 5,650
Effect of exchange rate fluctuations on cash held 86 -
Cash and cash equivalents at end of the period 5,734 4,614
Comprising:
Cash at bank and in hand 5,734 4,614
Notes to the Consolidated Financial Statements
1. General information
The Panoply Holdings plc is a public limited company
incorporated in England and Wales under the Companies Act 2006 with
registered number 10533096. The Company's shares are publicly
traded on the AIM Market of the London Stock Exchange.
The address of the registered office is 7 Savoy Court, London,
England, WC2R 0EX. The principal activity of the Group is the
provision of digitally native technology services to clients within
the commercial, government and non-government organisation (NGO)
sectors.
The financial information set out in this announcement does not
comprise the Group's statutory accounts as defined in section 434
of the Companies Act 2006 for the year ended 31 March 2021.
The statutory accounts for the year ended 31 March 2021 have not
yet been delivered to the Registrar of Companies, nor have the
auditors yet reported on them. The preliminary announcement does
not constitute statutory accounts under Section 435 of the
companies Act 2006.
2. Basis of preparation
The Consolidated Financial Statements have been prepared in
accordance with applicable International Financial Reporting
Standards (IFRS) in conformity with the Companies Act 2006 and the
AIM rules for Companies. The measurement bases and principal
accounting policies of the Group are set out below. These policies
have been consistently applied to all years presented unless
otherwise stated.
After reviewing the budgets and cash projections for the next
twelve months and beyond, the Directors believe that the Group and
the Company have adequate resources to continue operations for the
foreseeable future and for this reason they have adopted a going
concern basis in preparing these financial statements.
In considering the business activities for the forthcoming 12
months, the directors have assessed the impact of principal risks
and uncertainties through scenario modelling. This includes an
assessment of the ongoing impact of Covid-19 and inflation by
assessing the impact on our services, sector, customers and through
looking at trends in the digital transformation sector. The Group
has agreed a rolling credit facility with HSBC of GBP20m of which
GBP13m has been drawn down. Of the GBP20m, GBP5m is available as a
working capital facility. This facility with HSBC, together with
strong cash reserves within the Group provide comfort over the
viability of the Group to prepare the financial statements on a
going concern basis. Furthermore, trading for the 3 months to 30
June 2021 has been strong with a cash balance of GBP4.8m as at the
30 June 2021.
After performing all the above assessments and through modelling
scenarios, it is concluded that we would maintain sufficient
undrawn capacity and satisfy all borrowing facility covenants in
the next 12 months.
The financial statements include the financial results of the
subsidiaries listed below for the full year except for the
acquisitions in the year which have been incorporated from the date
of acquisition. All subsidiaries are incorporated in the UK unless
otherwise stated:
-- Bene Agere Norden AS (incorporated in Norway)
-- Manifesto Digital Limited
-- Manifesto Digital Pty Limited (ceased trading in the year)
-- Foundry4 Limited
-- Human Plus Limited
-- Questers Global Group Limited
-- Questers Resourcing Limited
-- Questers Bulgaria EOOD
-- Deeson Group Holdings Limited
-- Deeson Group Limited
-- iDisrupted Limited
-- Greenshoot Labs Limited
-- FutureGov Limited
-- FutureGov Australia Pty Limited
-- US Creates Limited
-- Ameo Professional Services Limited
-- Arthurly Limited - acquired on 9 June 2020
-- Difrent Limited - acquired on 7 September 2020
-- Keep IT Simple Limited - acquired on 26 February 2021
3. Principal accounting policies
a) Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 31 March 2021.
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain
benefits from its activities. The Group obtains and exercises
control through voting rights.
Unrealised gains on transactions between the Group and its
subsidiaries or associates are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Amounts reported in the
financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies
adopted by the Group.
Acquisitions of subsidiaries are dealt with using the purchase
method. The purchase method involves the recognition at fair value
of all identifiable assets and liabilities, including contingent
liabilities of the subsidiary, at the acquisition date, regardless
of whether or not they were recorded in the financial statements of
the subsidiary prior to acquisition. On initial recognition, the
assets and liabilities of the subsidiary are included in the
Consolidated Statement of Financial Position at their fair values,
which are also used as the cost bases for subsequent measurement in
accordance with the Group accounting policies.
The consideration transferred in the acquisition is measured at
fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on
a bargain purchase is recognised in the profit or loss immediately.
Transaction costs are expensed as incurred, except if related to
the issue of debt or equity securities. The consideration
transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts, to the extent that they
exceed the settlement amounts, are generally recognised in the
profit or loss. Any deferred contingent consideration payable is
measured at fair value at the acquisition date. If an obligation to
pay contingent consideration that meets the definition of a
financial instrument is classified as equity, then it is not
remeasured, and settlement is accounted for within equity.
Otherwise, other contingent consideration is remeasured at fair
value at each reporting date and subsequent changes in the fair
value of the contingent consideration are recognised in profit or
loss.
Goodwill is stated after separating out identifiable intangible
assets. Goodwill represents the excess of consideration payable
over the fair value of the Group's share of the identifiable net
assets of the acquired subsidiary at the date of acquisition.
Under section 612 of the Companies Act 2006, where a company
issues equity shares in consideration for shares in another company
and secures at least 90% equity holding in another company, then
the excess consideration over the nominal value of the shares
issued should be recorded as a merger relief reserve. The Group has
previously recognised the excess consideration arising on the
consideration (cash and shares) within the share premium
reserve.
The Consolidated Statement of Financial Position and
Consolidated Statement of Changes in Equity have been restated to
reclassify the excess consideration to the merger relief reserve
from the share premium reserve. This reclassification has no impact
on the Consolidated Income Statement or retained earnings in the
current or previous years.
b) Goodwill
The Group measures goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the
acquiree; plus, if the business combination is achieved in stages,
the fair value of the existing equity interest in the acquiree;
less
-- the net recognised amount of the identifiable assets
acquired, and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss.
Costs related to acquisition, other than those associated with
the issue of debt or equity securities that the Group incurs in
connection with a business combination, are expensed as
incurred.
If the contingent consideration is classified as equity, it is
not remeasured, and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in profit or loss. Goodwill is carried
at cost less accumulated impairment losses.
Impairment review is carried out annually. If there is an
impairment, the cost is reduced by the accumulated impairment
amount.
c) Revenue and revenue recognition
Revenue consists of the value of work delivered to clients
during the year exclusive of VAT and is recognised as performance
obligations are met in accordance with the terms of the contract
which are primarily on a time and materials basis. Revenue is
wholly attributable to the principal activities of the Group. The
Group adopt IFRS 15 principles in recognising the revenue. Revenue
recognised in excess of invoices raised is included within contract
assets. Where amounts have been invoiced in excess of revenue
recognised, the excess is included within contract liability.
The majority of the services are provided on a time and material
basis where clients are billed monthly for the time spent on a
project which corresponds directly with the value to the customer
of the entity's performance completed to date and accordingly
revenue is recognised at the amount billed. For fixed-price
contracts where criteria to recognise performance obligations over
time have been met, revenue is recognised based on the actual
service provided to the end of the reporting period as a proportion
of the total services to be provided. This is determined by actual
labour hours and cost incurred relative to the total expected
labour hours and cost. The use of labour hours and costs is a
faithful depiction of the transfer of services as it directly
relates to the effort required to satisfy the performance
obligation. Only inputs relating directly to the performance in
transferring the services are included when measuring progress to
date. Due to changing circumstances, extent of progress and
completion may be revised which may affect revenue and costs. Any
resulting increases or decreases in estimated revenues or costs are
reflected in profit or loss in the period in which the
circumstances that give rise to the revision become known by
management.
Majority of the contracts are on single performance obligations.
However, some contracts include multiple deliverables. In most
cases, the deliverable is separately identifiable from other
promises in the contract; therefore, it is accounted for as a
separate performance obligation. In this case, the transaction
price will be allocated to each performance obligation based on the
stand-alone selling prices.
Standard terms of payment within 30 or 60 days are typically
adopted. There is therefore no financing component.
Revenue is recognised when the Group satisfies the performance
obligations. For the majority, contracts are for performance
obligations that are satisfied over time. However, there are some
contracts which contain performance obligations that are only
satisfied at a point in time. The revenue for these contracts is
recognised when the performance obligation has been satisfied, for
project development work this occurs when the customer accepts the
final output.
When the customer has a right to return the product within a
given period, the entity is obliged to refund the purchase price.
For instance, if potential candidates put forward are considered
unsuitable by the client and no one is recruited. The contract
stipulates reimbursement of 50% - 100% of the fee, under the agreed
terms of contract. Under IFRS15, revenue is only recognised to the
extent it is highly probable there will not be a significant
reversal of revenue in a future period and is usually therefore
recognised only when a successful candidate is recruited.
A small number of contracts have variable consideration
associated with it, whereby a bonus is paid if certain cost savings
are made by the client. These are recognised using the 'most likely
amount method' once it has been identified that a significant
reversal in the amount of cumulative revenue will not occur.
d) Intangible assets acquired as part of a business combination
and amortisation
In accordance with IFRS 3 "Business Combinations", an intangible
asset acquired in a business combination is recognised at fair
value at the acquisition date. A fair value calculation is carried
out based on evaluating the net recurring income stream from each
type of intangible asset. Intangibles are initially recognised at
fair value, and are subsequently carried at this fair value, less
accumulated amortisation and impairment. The following items were
identified as part of the acquisitions of entities by the Group and
were still owned at 31 March 2021:
-- brand amortised over two to five years;
-- customer lists amortised over three to eight years;
-- database over five years;
-- Intellectual property over ten years and
-- Software over three years
The allocation of fair values to the tangible assets and the
identification and valuation of intangible assets affect the
calculation of goodwill recognised in respect of an acquisition and
as such represent a key source of estimation uncertainty.
4. Earnings per share
Unaudited Audited
2021 2020
GBP'000 GBP'000
Loss attributable to ordinary shareholders (2,229) (3,044)
------------ ------------
2021 2021
Number Number
------------ ------------
Weighted average number of Ordinary Shares in issue, basic 63,783,475 48,162,078
------------ ------------
Basic and diluted loss per share (3.5)p (6.3)p
------------ ------------
Earnings per ordinary share has been calculated using the
weighted average number of shares in issue during the year.
There is no difference between basic loss per share and diluted
loss per share as the share options are anti-dilutive.
The Group has a number of share-based payments and share
purchase agreements where the terms and conditions could affect the
measurement of basic and diluted earnings per share.
A number of shares that were issued during the period are
contingent on certain conditions being met. These are included
within the calculation of the basic weighted average number of
ordinary shares from the date that all necessary conditions are
satisfied. Where conditions are not satisfied, they are included
within the diluted weighted average number of ordinary shares
calculation.
5. Post balance sheet events
On 30 June 2021, The Panoply Holdings plc acquired the entire
issued share capital of Nudge Digital Limited, a digital services
agency which delivers strategy-led services primarily to the
pharmaceutical industry, health sector and, more recently, to local
authorities, with a particular focus around care pathways. Nudge
Digital Limited, company registration number 05805455 is
incorporated in England and Wales. Its registered office is 8
Garden Close, Watford, England, WD17 3DP
The consideration for the acquisition was GBP5.0m, satisfied
through the payment of circa GBP1.75m cash and the issue of
1,090,476 new ordinary shares in The Panoply.
The Group is currently performing a fair value review of Nudge
Digital Limited's assets and liabilities and will report these
within its next published financial statements.
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FR EAEXLEAKFEAA
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July 05, 2021 02:00 ET (06:00 GMT)
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