LONDON (Alliance News) - Adept4 PLC on Friday said its loss quadrupled in its most recent financial year due to a warranty dispute with the vendors of a 2016 acquisition.
Shares in Adept4 were down 9.6% at 0.95 pence on Friday.
The IT service company acquired Adept4 Managed IT Ltd in May 2016 for a total of GBP7 million, including up to GBP1.5 million based on its 2017 performance targets. As these targets were not achieved, this GBP1.5 million was credited to the group's 2017 income statement.
In its financial 2018 year ended November 31, Adept4 bought a warranty claim against the vendors of the Adept4 Managed IT business and agreed a GBP1.6 million settlement.
Of this settlement, GBP600,000 was payable post year-end and remainder was settled by agreeing that Adept4 would not pay the GBP1.0 million deferred consideration for Adept4 Managed IT to vendors.
In light of these events, and having assessed its current budgets and forecasts, Adept4 has made a GBP2.6 million impairment charge.
Including this impairment, the warranty settlement, and another of other costs, Adept4's separately identifiable costs totalled GBP2.4 million.
Largely as a result of this, the company's pretax loss for its year to November end was GBP4.0 million, widened considerably from just GBP831,000 the year before.
Revenue was GBP10.2 million, a slight drop from GBP10.3 million.
Administrative expenses came to GBP5.6 million, flat year-on-year, and its amortization of intangible assets increased to GBP907,000 from GBP880,000.
"Despite it being a challenging year for the business, we have made progress against each of our key areas of strategic development including the strengthening of our senior operational management team and development of our technology partnerships. We have improved our levels of service delivery leading to high levels of customer satisfaction, though the investment made in the new sales team has not yet delivered the results we had hoped for. Maintaining our strong relationships with existing customers, together with protecting the group's cash balances and shareholder value are our key objectives while we explore the strategic options for the group," said Adept4 Chair Simon Duckworth.
