TIDMSBIZ
RNS Number : 3384A
SimplyBiz Group PLC (The)
11 September 2018
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
11 September 2018
The SimplyBiz Group plc
("SimplyBiz", the "Company" or the "Group")
Half-year results for the six months ended 30 June 2018
Maiden results in line with expectations, with strong period of
organic growth and inaugural interim dividend announced.
SimplyBiz (AIM: SBIZ), the leading independent provider of
compliance and business services to financial advisers and
financial institutions in the UK, today announces its unaudited
results for the six months ended 30 June 2018.
Financial highlights:
-- Group Revenue up 13.7% to GBP24.2m (H1 2017: GBP21.3m)
-- Adjusted EBITDA* up 22.0% to GBP5.4m (H1 2017: GBP4.4m)
-- Adjusted EBITDA* margin increased to 22.2% from 20.7%
-- Operating profit of GBP1.2m (H1 2017: GBP3.9m) after
inclusion of IPO related costs of GBP3.6m
-- Adjusted profit before tax* increased 60.8% to GBP4.5m
-- Adjusted profit after tax* increased 61.7% to GBP3.6m
-- Adjusted earnings per share (EPS)* increased by 61.7% to 4.68p
-- Net debt reduced from GBP1.6m at date of listing to net cash
of GBP1.2m at 30 June 2018 (30 June 2017: net debt of GBP24.7m, 31
December 2017: net debt of GBP23.0m)
-- Maiden interim dividend of 0.98p per share, in respect of the
nine months trading to 31 December, post IPO, as per the stated
intention in the admission document
Operational highlights:
-- Completion of IPO on London's Alternative Investment Market
(AIM), raising GBP30m for the Group
-- Acquisition and integration of Landmark Surveyors Limited
(acquired in January 2018), and subsequent achievement of cost
synergies in line with expectation
-- Member Firms increased by 5.7% to 3,628 (31 December 2017: 3,433, 30 June 2017: 3,367)
-- Assets under management (AUM) increased by 5.6% to GBP615m (31 December 2017: GBP582m)
-- Significant Distribution Channels division contract wins with
new providers Guardian Financial Services and Vitality Invest
-- Launch of Centra, our end to end financial planning system,
which has received high levels of interest; 1,635 users signed
since its launch in March 2018
-- Remains the UK's largest support services compliance provider
for intermediaries (by revenue)
-- Winner of Best Support Services for Advisers at 2018 Professional Advisers Awards
Ken Davy, Chairman, commented:
"We are delighted to announce our first results as a public
company, following our successful AIM flotation in April. Our
performance in the first half of 2018 has maintained our trading
momentum, delivering strong top line organic and acquisition growth
of over 13% and increasing our adjusted EBITDA margins to 22%.
"Our IPO in April 2018 has been very well received by our
members and partners, and we have already witnessed positive
commercial and reputational benefit. We continue to increase the
number of members and channel partners that we serve, as well as
look to pursue selective acquisitions.
"I would like to thank everyone in the SimplyBiz team for their
dedication in delivering a successful first half of 2018."
* Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation, operating exceptional costs and share
based payment charges. Adjusted profit before and profit after tax
exclude operating exceptional costs, exceptional finance charges,
amortisation and share based payment charges. A reconciliation of
these metrics to GAAP measures is provided in note 5. Adjusted
earnings per share is calculated based on adjusted profit after
tax, as shown in note 9.
For further information please contact:
SimplyBiz via Instinctif Partners
Matt Timmins (Joint Chief Executive
Officer)
Neil Stevens (Joint Chief Executive
Officer)
Gareth Hague (Group Finance Director)
Zeus Capital (Nominated Adviser
and Broker) +44 (0) 20 3829 5000
Martin Green
Andrew Jones
Pippa Underwood
Instinctif Partners +44 (0)20 7457 2831 /
SimplyBiz@instinctif.com
Giles Stewart
Rachel Cashmore
Rui Videira
Ambrose Fullalove
Notes to editors
With over 3,600 member firms in the UK, SimplyBiz is a leading
independent provider of compliance and business services to
financial advisers, including directly authorised IFAs, directly
authorised mortgage advisers, workplace consultants and directly
authorised consumer credit brokers. It also provides marketing and
promotion, product panelling and co-manufacturing services to more
than 135 financial institutions, through access to its
membership.
On 4 April 2018, the Group was admitted to the Alternative
Investment Market (AIM) of the London Stock Exchange, raising
GBP30.0m of primary proceeds in an institutional placing.
For more information, please visit:
www.simplybizgroup.co.uk/
Analyst presentation
An analyst briefing is being held at 9am on 11 September at the
offices of Instinctif Partners, 65 Gresham Street, London, EC2V
7NQ. To register your attendance please contact
SimplyBiz@instinctif.com
JOINT CHIEF EXECUTIVES' STATEMENT
Overview
The first six months of 2018 saw the Group continue to deliver
strong operational and financial performance, alongside the
acquisition and integration of Landmark Surveyors Limited, and
successful listing on AIM.
Revenue growth of 13.7% to GBP24.2m reflects continued organic
growth and a GBP1.8m (8.6%) revenue contribution from the
acquisition of Landmark Surveyors (from 23 January 2018). Adjusted
EBITDA growth of 22.0% to GBP5.4m reflects a sound cost discipline
and the ability of the business to generate operational leverage
from its platform. Adjusted EBITDA margin trended positively to
22.2% from 20.7% in the prior year period.
Divisional Performance
The Intermediary Services Division provides compliance and
business services to over 3,600 individual intermediary firms
through a comprehensive membership model. Our members, that include
Financial advisers, mortgage advisers, and consumer credit broker
firms, conduct regulated activities that require that they are
authorised and regulated by the FCA.
Member firms numbers increased by 5.7% to 3,628 (3,433 at 31
December 2017 and 3,367 at 30 June 2017) and we continue to benefit
from the shift in the industry from advisers working as appointed
representatives of network firms, to being directly authorised with
the FCA. As advisers move away from costly, restrictive network
firm structures, to the independence of being directly authorised,
SimplyBiz is strategically well placed to support and guide them
through their FCA registration process and assist them in a
constantly evolving and increasingly complex regulatory
environment.
Increased regulation is a tailwind for our business. The
introduction of the Markets in Financial Instruments Directive 2018
("MiFID II") and the General Data Protection Regulation ("GDPR"),
and the impending Senior Managers & Certification Regime
("SM&CR") and Insurance Distribution Directive ("IDD")
regulations have created opportunities for the Group to engage and
support its members through additional service offerings.
Additional services income increased by 12.1% to GBP2.3m (H1 2017:
GBP2.0m), as the Group benefitted from ongoing regulatory
change.
Given its scale, the Group is able to provide its members with a
customised version of the sector's leading 3(rd) party specialist
practice management and CRM applications at attractive rates.
Software licence users increased from 3,095 at H1 2017 (FY 2017:
3,274) to 3,504, resulting in an 18.4% increase in software licence
income from H1 2017.
In March 2018, the Group launched 'Centra', an end-to-end
financial planning system in partnership with Defaqto that brings
together a number of existing advisor software tools into one
integrated service. Centra offers our members financial planning
tools, product research, suitability reports and a centralised
investment process. Interest in Centra has been significant, with
over 1,600 users signed up since its launch, and the Group
providing additional face-to-face training workshops to meet the
level of demand.
Zest Technologies, the Group's employee benefits software
solution, performed in line with management expectations during the
period with revenue reducing from GBP3.3m in H1 2017 to GBP2.5m in
H1 2018, as customers move away from the legacy application. The
re-design of the Zest platform was completed in H1 2018 and the new
product has received positive feedback since its launch. The Group
is currently in the final stages of a number of tenders on the new
software and we look forward to updating shareholders with our
progress in due course.
The Distribution Channels Division continues to provide a highly
effective, efficient distribution channel for c.135 financial
institutions to reach an otherwise fragmented independent
intermediary sector. The Group generates revenue from product
providers when it successfully engages Members to participate in
the channels offered.
The Group's extensive events programme has been developed to
cater for the needs of Members, and allows product providers the
opportunity to deliver engaging information that will enhance
advisers' knowledge and continue to improve customer outcomes. As
well as delivering a significant number of events and seminars in
the period, we also provided a broad range of electronic and
printed materials to deliver product provider brand and product
communications to its members. Income in the period from these
marketing service agreements increased by 20.9% to GBP3.0m, from
GBP2.5m in H1 2017, although part of the increase was due to the
timing of deliverables being weighted more in H1 during 2018, as
compared to 2017.
Building on our existing strong industry relationships, in
August 2018, the Group announced a multi-year partnership deal with
Guardian Financial Services, one of the oldest brands in the UK
financial services market. The partnership will see the two
companies collaborate to deliver relevant marketing messages,
training and educational opportunities to the IFA and wealth
management firms who subscribed to the SimplyBiz services.
SimplyBiz Mortgages is the UK's third largest mortgage club,
with over 1,600 members benefitting from access to a dedicated
support service and preferred products from key lenders. Mortgage
Services revenues increased by 18.6% to GBP3.1m (H1 2017: GBP2.6m),
as a result of increased Member penetration and greater lending in
the market.
In January 2018, the Group strengthened its capabilities in
providing home valuations with the acquisition of Landmark
Surveyors Ltd, a business highly aligned and complementary to Sonas
Surveyors, an existing Group company. Through these companies, the
Group is appointed to the majority of major bank and building
society panels, providing vertical integration with our other
mortgage related activities.
During the period, assets under management within the Group's
packaged investment service Verbatim, increased from GBP582m at 31
December 2017, to GBP615m at 30 June 2018, generating revenues of
GBP1.0m - a 21.3% increase from H1 2017.
Strategy
The Group's growth strategy focuses on both organic growth and
growth by acquisition. Organic growth is expected to be driven by
growth in the Group's membership base, in its service offering and
its average revenue per customer. Growth in its core membership
will in turn be accretive to the distribution division, enhancing
the Group's position as an enabler of more effective financial
service provision.
Building on its proven ability to execute and integrate
acquisitions, management will also continue to pursue selective
acquisitions to enhance the scale of the Group and breadth of
services offered.
FINANCIAL REVIEW
Six months ended June 2018 June 2017
GBP'000 GBP'000
------------------------------------------ ---------- ----------
Group Revenue 24,207 21,288
Operating Expenses (18,839) (16,888)
Adjusted EBITDA 5,368 4,400
Adjusted EBITDA margin % 22.2% 20.7%
Operating costs of an exceptional nature (3,790) (161)
EBITDA 1,578 4,239
Depreciation (129) (109)
Impairment of goodwill - (181)
Amortisation of other intangible assets (62) -
Share option charges (132) -
Net finance costs (2,410) (1,515)
(Loss) / profit before tax (1,155) 2,434
Taxation (570) (560)
(Loss) / profit after tax (1,725) 1,874
Adjusted EPS 4.68p 2.90p
Revenue growth (%) 13.7%
Adjusted EBITDA growth (%) 22.0%
Revenue
Revenues grew by 13.7% to GBP24.2m, reflecting GBP1.8m
contribution from the acquisition of Landmark Surveyors (from 23
January 2018) and GBP1.1m (5.1%) of organic growth.
The Distribution Channels Division contributed 54% of revenue in
the period, compared to 50% in H1 2017, as a result of the Landmark
Surveyors acquisition.
Adjusted EBITDA and Adjusted EBITDA margin
Underlying operating expenses, which exclude costs of an
exceptional nature, increased by GBP2.0m (11.6%) to GBP18.8m, as
compared to H1 2017. Landmark Surveyors contributed to GBP1.6m of
the increase, with organic growth in operating expenses of only
2.0%, well below our organic revenue growth rate.
Adjusted EBITDA is used by management as a key measure of
financial performance allowing better understanding of the
underlying performance of the Group. Adjusted EBITDA growth of
GBP1.0m (22.0%) included GBP0.8m (17.7%) of organic growth, with
the group able to benefit from its operational leverage to increase
adjusted EBITDA margin in the period to 22.2% from 20.7% in H1
2017.
Operating costs of an exceptional nature
Operating costs of an exceptional nature include GBP3.6m of
professional fees incurred on admission to AIM, as well as GBP0.1m
of professional fees on the acquisition of Landmark Surveyors
Limited.
Share based payments
Share based payment charges of GBP0.1m have been recognised in
respect of the options issued on IPO.
Financial income and expense
Finance expense in H1 2018 included GBP0.7m interest paid in
relation to the debt that was repaid on IPO. The current year
expense also includes one off charges totalling GBP1.6m on early
settlement of the retired debt and share warrant.
Taxation
The tax charge for the period has been accrued using the tax
rate that would be applicable to the total earnings chargeable to
tax.
Adjusted earnings per share (EPS)
Adjusted EPS has been calculated based on the post-IPO weighted
average number of shares, for both periods, for comparable
purposes.
Dividend
At the time of the IPO the Directors stated an intention to
implement a progressive dividend policy to seek to maximise
shareholder value and reflect the Group's strong earnings potential
and cash flow. The Board declares an interim dividend of 0.98p per
share in respect of the trading for the 9 month period to 31
December 2018, post IPO. The dividend will be paid on 23 October
2018, to shareholders on the register on 21 September 2018.
Cash flow and Closing Net Cash
At 30 June 2018, the Group had net cash of GBP1.2m, compared to
net debt at the date of listing of GBP1.6m and net debt of GBP23.0m
as at 31 December 2017. Operating cash flow of GBP3.5m (H1 2017:
GBP3.7m) represented cash conversion of 65% (H1 2017: 84%) of
adjusted EBITDA. The reduction in cash conversion is due to higher
than average working capital balances at the end of FY 2016, which
reversed in H1 2017. Management expect cash conversion rates to
increase in H2 2018, in line with historic trends of greater than
75%.
Funds raised in the IPO were used to repay the previous GBP35m
borrowings, with a new GBP15m Revolving Credit Facility implemented
at IPO at a significantly lower interest rate.
OUTLOOK
Since the end of the period, trading has continued in line with
the Board's expectations, and we remain on track to deliver on
market expectations for the full year.
Matt Timmins and Neil Stevens (Joint Chief Executive
Officers)
Consolidated statement of profit or loss and other comprehensive
income
for the six months ended 30 June 2018
Note 6 months 6 months
ended ended
30 June 2018 30 June
2017
GBP000 GBP000
Revenue 6 24,207 21,288
Operating expenses 7 (22,890) (17,339)
Amortisation of other intangible
assets 10 (62) -
Operating profit 1,255 3,949
Finance income 8 41 32
Finance costs 8 (2,451) (1,547)
(Loss) / profit before
taxation (1,155) 2,434
Taxation (570) (560)
(Loss) / profit for the
financial period (1,725) 1,874
Earnings per share - basic 9 (2.26p) 3.47p
Earnings per share - diluted 9 (2.26p) 3.47p
There are no items to be included in other comprehensive income
in the current or preceding period.
Consolidated statement of financial position
As at 30 June 2018
Audited
Unaudited Unaudited 31 December
Note 30 June 2018 30 June 2017 2017
GBP000 GBP000 GBP000
Assets
Non-current assets
Property, plant & equipment 439 386 384
Intangible assets 10 23,111 17,835 18,205
Total non-current assets 23,550 18,221 18,589
Current assets
Trade and other receivables 9,065 8,664 7,505
Deferred tax asset 34 57 25
Cash and cash equivalents
-unrestricted 10,691 8,211 10,998
Cash and cash equivalents
- restricted 545 545 545
Total current assets 20,335 17,477 19,073
Total assets 43,885 35,698 37,662
Equity and liabilities
Equity attributable
to the owners of the
Company
Share capital 12 765 10 10
Share premium account 12 36,809 50,852 52,544
Other reserves 13 (61,255) (63,147) (61,387)
Retained earnings 46,257 4,082 2,982
Total equity 22,576 (8,203) (5,851)
Liabilities
Current liabilities
Trade and other payables 9,112 8,283 8,161
Financial liabilities
- borrowings 11 10,010 - -
Income tax liabilities 446 614 16
Total current liabilities 19,568 8,897 8,177
Non-current liabilities
Financial liabilities
- borrowings 11 - 33,459 33,665
Trade and other payables 1,125 598 400
Financial derivatives - 690 848
Deferred tax liabilities 616 257 423
Total non-current liabilities 1,741 35,004 35,336
Total liabilities 21,309 43,901 43,513
Total equity and liabilities 43,885 35,698 37,662
Consolidated statement of changes in equity
Share Share Other Retained Total
capital premium reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2017 10 50,852 (63,147) 3,008 (9,277)
Total comprehensive income for
period - - - 1,874 1,874
Transactions with owners, recorded
directly in equity
Dividends - - - (800) (800)
Total contributions by and distribution
to owners - - - (800) (800)
Balance at 30 June 2017 10 50,852 (63,147) 4,082 (8,203)
Total comprehensive income for
period - - - 2,913 2,913
Transactions with owners, recorded
directly in equity
Issue of shares - 1,692 - - 1,692
Purchase of minority interest - - - (2,248) (2,248)
Transfer to retained earnings - - 1,760 (1,760) -
Dividends - - - (5) (5)
Total contributions by and distribution
to owners - 1,692 1,760 (4,013) (561)
Balance at 31 December 2017 10 52,544 (61,387) 2,982 (5,851)
Total comprehensive income for
period - - - (1,725) (1,725)
Transactions with owners, recorded
directly in equity
Issue of share capital 176 29,844 - - 30,020
Bonus issue of shares 579 (579) - - -
Transfer to retained earnings - (45,000) - 45,000 -
Share option charge - - 132 - 132
Total contributions by and distribution
to owners 755 (15,735) 132 45,000 30,152
Balance at 30 June 2018 765 36,809 (61,255) 46,257 22,576
Consolidated statement of cash flows
for the 6 months ended 30 June 2018
6 months 6 months
ended ended
30 June 30 June
2018 2017
GBP000 GBP000
Net cash (used in) / generated from operating
activities (note 15) (530) 4,980
Cash flows from investing activities
Finance income 41 30
Purchase of property, plant and equipment (46) (65)
Development expenditure (437) (404)
Net cash used in investing activities (442) (439)
Cash flows from financing activities
Finance costs (922) (1,450)
Loan repayments made (36,193) (77)
Drawdown of loans 10,093 -
Purchase of shares in subsidiaries - (1,099)
Acquisitions, net of cash received (2,333) -
Issue of share capital 30,020 -
Dividends paid - (800)
Net cash generated from / (used in) financing
activities 665 (3,426)
Net (decrease) / increase in cash and
cash equivalents (307) 1,115
Cash and cash equivalents at start of
period 11,543 7,641
Cash and cash equivalents at end of period 11,236 8,756
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. General information and basis of preparation
The consolidated interim financial information has been prepared
in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively IFRSs), as adopted by the European Union and AIM
rules. The accounts have been prepared in accordance with
accounting policies that are consistent with the Group's Annual
Report and Accounts for the period ended 31 December 2017 and that
are expected to be applied in the Group's Annual Report and
Accounts for the period ended 31 December 2018. The financial
information set out in these interim financial statements for the
six months ended 30 June 2018 and the comparative figures for the
six months ended 30 June 2017 are unaudited.
The comparative financial information for the period ended 31
December 2017 in this interim report does not constitute statutory
accounts for that period under 435 of the Companies Act 2006. The
interim financial information do not contain all the information
required for statutory financial statements and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 31 December 2017, which have been prepared in
accordance with IFRS as adopted by the European Union.
Statutory accounts for the period ended 31 December 2017 have
been delivered to the Registrar of Companies. The auditors' report
on the accounts for 31 December 2017 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The interim financial statements comprise the financial
statements of the Group and its subsidiaries at 30 June 2018.
Subsidiaries are consolidated from the date of acquisition, being
the date on which the Group obtained control, and continue to be
consolidated until the date when such control ceases.
The interim financial statements incorporate the results of
business combinations using the acquisition method. In the
consolidated balance sheet, the acquiree's identifiable assets,
liabilities and contingent liabilities are initially recognised at
their fair values at the acquisition date.
The following recently adopted IFRSs have been applied by the
Group for the first time in these financial statements:
-- IFRS 9 Financial Instruments - adoption of IFRS 9 had no
material impact on the financial statements.
-- IFRS 15 Revenue from Contracts with Customers - The effect of
adopting the new revenue standard has been to recognise revenue on
bundled contracts based on the performance of the individual
deliverables. Adoption of the new standard has no material effect
on the opening balance sheet at 1 January 2018. The revenue streams
and policies of the Group remain consistent with those described in
the 2017 accounts.
The following adopted IFRSs have been issued but have not been
applied by the Group in these financial statements:
-- IFRS 16 Leases introduces a single, on-balance sheet
accounting model for lessees, which has an effective date of 1
January 2019. The Group is in the process of quantifying the
potential impact of this standard. It is expected that the Group
will adopt IFRS 16 on 1 January 2019.
2. Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Joint Chief Executives' statement.
The Directors have considered these factors, the likely
performance of the business and possible alternative outcomes and
the financing activities available to the Group. Having taken all
of these factors into consideration, including the impact on
covenants relating to the external borrowing facility, the
Directors confirm that forecasts and projections indicate that the
Group and its Parent Company have adequate resources for the
foreseeable future and at least for the period of 12 months from
the date of signing the half year report. Accordingly, the
financial information has been prepared on the going concern
basis.
3. Accounting policies
The accounting policies adopted are consistent with those used
in preparing the consolidated financial statements for the
financial year ended 31 December 2017.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total earnings.
Amortisation of intangible assets is charged to the profit and
loss account on a straight line basis over the useful lives of the
asset. Intangible assets are amortised from the date they are
available for use. The estimated useful lives are as follows:
-- Brands 10 years
-- Customer relationships 8 years
The basis for choosing these useful lives is with reference to
the period over which they can continue to generate value for the
group.
4. Estimates
The preparation of interim financial information requires
management to make certain judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
amounts may differ from these estimates.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for
the year ended 31 December 2017.
5. Reconciliation of GAAP to Non-GAAP measures
The Group uses a number of 'Non-GAAP' figures as comparable key
performance measures, as they exclude the impact of one off items
that are not considered part of on-going trade.
Adjusted EBITDA is calculated as follows:
6 months 6 months
ended 30 ended 30
June 2018 June 2017
GBP000 GBP000
Operating profit 1,255 3,949
add back:
Depreciation 129 109
Impairment of goodwill (note 10) - 181
Amortisation of other intangible assets
(note 10) 62 -
Operating costs of exceptional nature
(note 7) 3,790 161
Share option charges 132 -
Adjusted EBITDA 5,368 4,400
Adjusted profit before tax is calculated as follows:
6 months 6 months
ended 30 ended 30
June 2018 June 2017
GBP000 GBP000
(Loss) / profit before tax (1,155) 2,434
add back:
Operating costs of exceptional nature
(note 7) 3,790 161
Finance costs of exceptional nature
(note 8) 1,635 -
Impairment of goodwill (note 10) - 181
Amortisation of other intangible assets
(note 10) 62 -
Share option charges 132 -
Adjusted profit before tax 4,464 2,776
Finance costs of an exceptional nature represent the one-off
costs incurred on settlement of the previous loan facility and
associated share warrant, including the accelerated release of
capitalised arrangement fees.
Adjusted profit after tax is calculated as follows:
6 months 6 months
ended 30 ended 30
June 2018 June 2017
GBP000 GBP000
(Loss) / profit after tax (1,725) 1,874
add back:
Operating costs of exceptional nature
(note 7) 3,790 161
Finance costs of exceptional nature,
net of tax (note 8) 1,324 -
Impairment of goodwill (note 10) - 181
Amortisation of other intangible assets
(note 10) 62 -
Share option charges 132 -
Adjusted profit after tax 3,583 2,216
6. Segmental Information
In the period covered by this financial information, the Company
was domiciled in the UK and as such all revenue is derived from
external customers in the United Kingdom.
During the period under review, the information reported to the
Company's joint Chief Executive Officers, who are considered to be
the chief operating decision makers, was predominately based on the
consolidated Group, with disaggregation where appropriate. The
consolidated information is shown in the statement of profit or
loss.
From 1 January 2017, the Group has established two operating
segments, which are considered reportable segments under IFRS. The
two reportable segments are:
-- Intermediary Services
-- Distribution Channels
Intermediary Services provides compliance and regulation
services to individual financial intermediary Member Firms,
including directly authorised IFAs, directly authorised mortgage
advisers, workplace consultants and directly authorised consumer
credit brokers.
Distribution Channels provides marketing and promotion, product
panelling and co-manufacturing services to financial institutions.
This division of the Group also undertakes survey panelling and
surveying work for Mortgage Lenders.
The reportable segments are strategic business units that offer
different products and services. Operating segments are reported in
a manner consistent with the internal reporting produced to the
chief operating decision-makers.
The tables below present the segmental information for the
periods ended 30 June 2018 and 2017.
6 months 6 months
ended 30 ended 30
June June
2018 2017
GBP000 GBP000
Intermediary Services
Revenue 11,185 11,065
Operating expenses, before amortisation and
depreciation (8,834) (8,947)
Intermediary Services EBITDA 2,350 2,118
Operating costs of exceptional nature (1,751) (84)
Intermediary Services EBITDA 599 2,034
Distribution Channels
Revenue 13,022 10,223
Operating expenses, before amortisation and
depreciation (10,004) (7,941)
Distribution Channels EBITDA 3,018 2,282
Operating costs of exceptional nature (2,039) (77)
Distribution Channels EBITDA 979 2,205
Total EBITDA 1,578 4,239
Impairment of goodwill - (181)
Amortisation of other intangible assets (62) -
Depreciation (129) (109)
Share option charges (132) -
Operating profit 1,255 3,949
In determining the trading performance of the operating segments
central costs are allocated based on the divisional contribution of
revenue to the Group.
The statement of financial position is not analysed between
reporting segments for management and the chief decision-makers
consider the Group statement of financial position as a whole.
No customer has generated more than 10% of total revenue during
the period covered by the financial information.
7. Operating Profit
Operating profit for the period has been arrived at after
charging:
6 months ended 6 months ended
30 June 2018 30 June 2017
GBP000 GBP000
Depreciation of tangible assets 129 109
Operating costs of exceptional nature:
Costs in relation to corporate restructuring
and refinancing - 191
Restructuring costs 65 10
Write off of Director's loan - 89
Professional fees for acquisitions 120 -
Release of deferred consideration - (129)
Fees in relation to IPO process 3,605 -
3,790 161
8. Finance Expense and Income
6 months ended 6 months ended
30 June 2018 30 June 2017
GBP000 GBP000
Finance Expense
Bank interest payable (816) (1,547)
Fair value loss on financial instruments (345) -
Accelerated arrangement fees on settlement
of previous loan (775) -
Accelerated implied interest charge on settlement
of previous loan (515) -
(2,451) (1,547)
Finance Income
Bank interest receivable 41 32
41 32
Net finance expense (2,410) (1,515)
9. Earnings per share
Basic Earnings Per Share 6 months 6 months
ended ended
30 June 2018 30 June 2017
GBP000 GBP000
(Loss) / profit attributable to equity shareholders
of the parent (1,725) 1,874
Weighted average number of shares
in issue 76,470,588 53,971,492
Basic (loss) / profit per share (pence) (2.26p) 3.47p
Diluted Earnings Per Share 6 months 6 months
ended ended
30 June 2018 30 June 2017
GBP000 GBP000
(Loss) / profit attributable to equity shareholders
of the parent (1,725) 1,874
Weighted average number of shares
in issue 76,470,588 53,971,492
Diluted weighted average number of shares and
options for the period 444,406 -
76,914,994 53,971,492
Diluted (loss) / profit per share
(pence) (see below) (2.26p) 3.47p
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted loss per share for the current year is identical to
those used for the basic loss per share. This is because the
exercise of share options would have the effect of reducing the
loss per share and is, therefore, not a dilution under the terms of
IAS 33.
An adjusted EPS has been calculated below based on the adjusted
profit after tax, which removes one of items not considered to be
part of underlying trading. For comparable purposes the weighted
average number of shares in issue has been treated as those in
issue post IPO for both the current and prior year.
Adjusted basic Earnings Per Share 6 months 6 months
ended ended
30 June 2018 30 June 2017
GBP000 GBP000
Adjusted profit after tax (note 5) 3,583 2,216
Weighted average number of shares
in issue 76,470,588 76,470,588
Adjusted earnings per share (pence) 4.68p 2.90p
10. Intangible assets
Goodwill Intangible Development Total
assets expenditure
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2017 16,250 - 1,361 17,611
Additions - - 402 402
At 30 June 2017 16,250 - 1,763 18,013
Additions - - 370 370
At 31 December 2017 16,250 - 2,133 18,383
Additions 3,520 1,012 436 4,968
At 30 June 2018 19,770 1,012 2,569 23,351
Amortisation and impairment
At 1 January 2017 - - - -
Charge in the period 178 - - 178
At 30 June 2017 178 - - 178
Charge in the period - - - -
At 31 December 2017 178 - - 178
Charge in the period - 62 - 62
At 30 June 2018 178 62 - 240
Net book value
At 30 June 2018 19,592 950 2,569 23,111
At 31 December 2017 16,072 - 2,133 18,205
At 30 June 2017 16,072 - 1,763 17,835
11. Borrowings
30 June 2018 30 June 2017
GBP000 GBP000
Secured bank loan:
Current 10,093 -
Non-current - 34,372
Less loan arrangement fees (83) (913)
10,010 33,459
On 5 April 2018, the Group repaid its previous loan in full and
drew down GBP10.1m from a new GBP15.0m Revolving Credit Facility
('RCF') provided by Yorkshire Bank.
The previous loan was due to be settled in June 2022. On
settlement of the loan, GBP776k of capitalised loan arrangement
fees were accelerated into the profit and loss account, along with
GBP515k of implied interest (due to the discounting of the amount
repayable to the present date). GBP90k of loan arrangement fees
were incurred on the new RCF, which have been capitalised and
amortised over 3 years.
12. Share Capital & Share Premium
Share capital
Ordinary Ordinary Ordinary Ordinary Ordinary
A shares B shares C shares D shares Shares Total
Number of fully
paid shares:
At 1 January 2017 8,349,148 50,852 1,331,112 256,974 - 9,988,086
Issue of share - - - - - -
capital
At 30 June 2017 8,349,148 50,582 1,331,112 256,974 - 9,988,086
Issue of share
capital - 281,380 - - - 281,380
Repurchase of
shares and cancellation - - - (26,075) - (26,075)
At 31 December
2017 8,349,148 332,232 1,331,112 230,899 - 10,243,391
Repurchase of
shares and cancellation - - - (1,093) - (1,093)
Bonus issue of
shares 75,142,332 2,990,088 11,980,008 2,068,254 - 92,180,682
Share consolidation (75,142,332) (2,990,088) (11,980,008) (2,068,254) - (92,180,682)
Bonus issue of
shares 45,295,619 1,802,410 1,275,069 208,043 - 48,581,141
Share conversion (53,644,767) (2,134,642) (2,606,181) (437,849) 58,823,439 -
Issue of share
capital - - - - 17,647,149 17,649,149
At 30 June 2018 - - - - 76,470,588 76,470,588
During 2017 the Company bought back and cancelled 26,075 D
ordinary shares. On 5 December 2017, the company issued 281,380 B
ordinary shares.
During 2018, prior to the IPO listing, the Company bought back
and cancelled 1,093 D ordinary shares.
As part of the IPO process, the following share restructuring
took place on 4 April 2018:
-- An initial bonus issue of shares in the ratio of 9 new shares
to 1 existing share was issued across all share categories.
-- A share consolidation across all share categories, at a rate of 10 shares to 1.
-- A second bonus issue of shares across all share categories at differing share ratios.
-- A conversion of all categories of shares, in a ratio of 1 to
1, into a new category of Ordinary shares.
In addition to the above, an issue of 17,647,149 new ordinary
shares was made on 4 April 2018, and the Company undertook a
reduction of its share capital by cancelling GBP45,000,000 of its
share premium account.
Share Premium
Share
Premium
GBP'000
At 1 January 2017 and
30 June 2017 50,852
Issue of share capital 1,692
At 31 December 2017 52,544
Issue of share capital 29,844
Transfer to retained
earnings (45,000)
Bonus issue (579)
At 30 June 2018 36,809
13. Other reserves
Merger Capital Put and Share Total
Reserve redemption Call Option Option Other
reserve reserve Reserve Reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2017 and
30 June 2017 (61,395) 8 (1,760) - (63,147)
Transfer to retained
earnings - - 1,760 - 1,760
At 31 December 2017 (61,395) 8 - - (61,387)
Share option charge - - - 132 132
At 30 June 2018 (61,395) 8 - 132 (61,255)
14. Share-based payment arrangements
At 30 June 2018, the Group had the following share-based payment
arrangements.
Company Share Option Plan ("CSOP")
On 4 April 2018, the Group established the Company Share Option
Plan ("CSOP"), which granted share options to certain key
management personnel. The CSOP consists of two parts, and all
options are to be settled by physical delivery of shares. The terms
and conditions of the share option schemes granted during the six
months ended 30 June 2018 are as follows:
Scheme Grant Date Number of Vesting conditions Contractual
awards life of options
---------------- ------------- ---------- ------------------- -----------------
Approved Scheme 4 April 2018 400,000 3 years' service 3 to 10 years
from grant
date
Unapproved 4 April 2018 425,000 3 years' service 3 years
Scheme from grant
date
---------------- ------------- ---------- ------------------- -----------------
Management Incentive Plan ("MIP")
On 4 April 2018, the Group established the Management Incentive
Plan ("MIP") which invited eligible employees to subscribe for A
Shares in the Company's subsidiary SimplyBiz Limited. Participants
have a put option to sell the A shares to the Company in exchange
for ordinary shares of the Company at any point between 3 years and
10 years after the date of grant, provided that they are still
employed and an equity hurdle is met. The terms and conditions of
the MIP are as follows:
Grant Date Number of awards Vesting conditions Contractual life
of options
------------- ----------------- ------------------- -----------------
4 April 2018 2,250 3 years' service 3 to 10 years
from grant date,
subject to an
equity hurdle
of 40% above
the IPO price.
------------- ----------------- ------------------- -----------------
The fair value of services received in return for share options
granted is based on the fair value of the share options granted.
The fair value has been measured using the Black-Scholes model for
the unapproved CSOP scheme, and the Monte Carlo model for the MIP
and approved CSOP scheme.
The following inputs were used in the measurement of the fair
values at grant date of the share based payment plans.
Approved Unapproved Management
CSOP CSOP incentive
plan
-------------------------------- --------- ----------- -----------
Fair value at grant date GBP0.64 GBP1.59 GBP290.22
Share price at grant date GBP1.70 GBP1.70 GBP1.70
Exercise price GBP1.70 GBP0.01 GBP1.785
Expected volatility 40% 40% 40%
Option life (expected weighted
average life) 3 3 3
Expected dividends 2% 2% 2%
Risk-free interest rate (based
on government bonds) 1.2% 1.2% 1.2%
-------------------------------- --------- ----------- -----------
15. Notes to the cash flow statement
6 months 6 months ended
ended 30 30 June 2017
June 2018
GBP000 GBP000
Cash flow from operating activities
(Loss) / profit after taxation (1,725) 1,874
Add back / (deduct):
Finance income (41) (32)
Finance cost 2,451 1,547
Taxation 570 560
1,255 3,949
Adjustments for:
Impairment of goodwill - 181
Depreciation of property, plant and equipment 129 109
Amortisation of other intangible assets 62 -
Share option charge 132 -
Operating cash flow before movements in
working capital 1,578 4,239
Increase in receivables (1,301) (1,499)
(Decrease) / increase in trade and other
payables (581) 736
Cash (used in) / generated from operations (304) 3,476
Income taxes (paid) / received (226) 1,504
Net cash (used in) / generated from operating
activities (530) 4,980
16. Acquisitions
On 23 January 2018 the Group purchased 100% of the share capital
of Landmark Surveyors Limited for GBP4,834,000. The principal
activity of the company is residential surveying and the purchase
price includes GBP1,450,000 of deferred consideration, which is
payable in two equal tranches on the 1st and 2nd anniversary of the
acquisition.
The acquisition of Landmark Surveyors strengthens the Group's
capabilities in providing home valuations, with the business highly
aligned and complementary to Sonas Surveyors, an existing Group
company. In the period to 30 June 2018, Landmark Surveyors
contributed revenue of GBP1.8m and adjusted EBITDA of GBP0.2m. If
the acquisition had occurred on 1 January 2018, management
estimates that revenue would have been GBP2.0m and adjusted EBITDA
would have been GBP0.1m.
The Group incurred acquisition related costs of GBP0.1m relating
to external legal and professional fees. These costs have been
included in 'operating expenses' in the consolidated statement of
profit or loss and other comprehensive income.
The following fair values have been determined on a provisional
basis:
Provisional Fair
Value
GBP000
Net assets acquired
Property, plant & equipment 138
Trade and other receivables 296
Cash and cash equivalents 1,052
Trade and other payables (924)
Income tax liabilities (68)
Intangible assets - Brands 115
Intangible assets - Customer relationships 897
Deferred tax liability (192)
1,314
Consideration paid
Initial cash price paid 3,384
Deferred consideration 1,450
4,834
Goodwill 3,520
Goodwill acquired on the acquisition relates to the assembled
workforce and the synergies expected to be achieved from
integrating the company into the Group's existing business.
17. Subsequent Events
No material subsequent events have arisen since the balance
sheet date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAENEFLNPEAF
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September 11, 2018 02:01 ET (06:01 GMT)
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