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About Castleton Technology plc

Castleton Technology plc is a leading supplier of complementary software and managed services to the public and not-for-profit sectors. The acquisitions of Montal, Documotive, Opus, Keylogic, Brixx, Impact Applications and Kypera bring together an exceptional suite of solutions, providing the foundation for this platform. Castleton works in partnership with its customers and resellers to help drive efficiencies whilst improving controls and customer service. www.castletonplc.com 

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Chairman's Statement

Dear Shareholder

I am pleased to be able to report on another year of solid progress for Castleton. Following the acquisitive growth of FY2015 and FY2016, FY2017 has been a year of consolidation as we put in place firm foundations for the Group to build on its position as a successful niche player in software and IT managed services within the public sector market place. The acquisition of seven small companies brings great rewards but also significant integration efforts. Despite early teething issues previously noted, I'm delighted to say that the business has now dealt with these and as we enter our fourth year, we fully expect the company to demonstrate its growth potential.  

With respect to the year under review, I am encouraged that we have demonstrated our ability to improve the mix of sales as the Company has successfully transitioned to targeting multiyear SaaS software revenues whilst continuing to grow our overall sales. A key success in the year has been clearly demonstrating the highly cash generative nature of our business model which facilitated a reduction in our net debt.

The Board

There have been changes at Board level as the Group puts in place our foundations for future growth.

Dean Dickinson joined the Board as CEO on 31 October 2016, replacing Ian Smith who became Executive Deputy Chairman. Dean was previously Managing Director of Advanced Business Solutions, part of Advanced Computer Software Group Limited (previously Advanced Computer Software plc ("ACS")), where he led the impressive growth of the Public Sector and Enterprise division following the acquisition of COA Solutions in 2010. Dean was part of the senior management team that sold ACS to Vista Private Equity for £725 million in March 2015.

Caro Bell resigned from the Board as Operations Director on 30 August 2016 having joined in November 2015 and Davinder Sanghera resigned from the Board as Chief Operations Officer on 16th January 2017 having joined when Documotive was acquired by Castleton in November 2014. Davinder was appointed as Chief Operations Officer on 9 April 2015. I would like to thank them both for the hard work they have put in to help make Castleton the company it is today.

Opportunity / Outlook

The year has primarily been one of consolidation and we continue to see enormous potential to become the go-to supplier for software and IT services in the social housing market. There remain significant cross-selling opportunities within the customer base in order to provide our customers with the technology and services that they require. The low penetration of our comprehensive product and service set across our customer base combined with a healthy pipeline of new business gives me confidence for the year ahead.

With the team currently in place, a broad customer base, a wide range of products and services and solid cash flows enabling repayment of debt, I am confident of our future success and I expect that the Group will show further growth when it next reports.

Chief Executive's Review

Overview

I am pleased to report the significant progress the Group has made during the financial year to 31 March 2017. I arrived at the end of October 2016 with the Company having made multiple acquisitions in prior years and the start of the financial year saw Castleton improve the terms of its existing exclusive reseller agreement with 365 Agile Group plc ("Agile") granting us an exclusive licence for Agile's suite of mobile working software solutions in relation to the social housing sector. Each of the acquisitions has brought best in class software solutions and managed services capability, so the foundations for a successful and scalable business were already in place.

The focus during the year has also been on integrating the businesses acquired, and since my arrival in October 2016, I have made further changes to the structure and organisation which strengthened our platform and which will allow the Group to grow and maximise the opportunities available in our chosen market.

Our Market and What We Do

The markets in which we operate are focused around public sector and not-for-profit social housing but also include the contractors who provide repairs services to the social housing providers. Castleton has six offices in the UK and a growing operation in Australia, demonstrating our ability to grow and scale our business in a new geography.

The Group remains aligned along two divisions; Software Solutions and Managed Services, with each focusing on their separate yet complementary offerings.

Our Software Solutions division provides all key business processes to social landlords covering everything from tenant engagement, rent collection, financial planning and control, document managing and repairs management. All key processes are available to be utilised on a mobile platform via apps or digital engagement. The range of solutions provides customers with significant improvements in service, performance and insight.

Our Managed Services division offers a wide range of IT Infrastructure solutions which support an organisation's business objectives, including helping to drive efficiencies, manage legacy architectures or providing customers and staff with the latest social, mobile and cloud technologies.

Trading Results

Revenue for the year showed an increase of 13% to £20.3 million (2016: £18 million) with in excess of 60% of revenue being recurring in nature (2016: 58%). Adjusted EBITDA* showed a stronger performance, improving by 22% to £4.4 million (2016: £3.6 million), reflecting the Company's operational gearing and ability to scale profitably.

The underlying metrics of the business were particularly encouraging. The Managed Services division's trading EBITDA** grew 31% year on year as we look to transition to more profitable deals. The Software Solutions division's trading EBITDA** grew 15%.

Cash conversion was outstanding at 105% of adjusted EBITDA* pre exceptional costs and 86% of adjusted EBITDA* post exceptional costs, enabling a reduction in net debt*** and, pleasingly, earnings per share at a basic level were 0.59p, following a loss in the previous year of 1.56p per share.

*earnings for the year from continuing operations before net finance costs, tax, depreciation, amortisation, exceptional costs and share based payment charges.

** adjusted EBITDA before Group costs (i.e. the cost of the plc Board and its advisors)

*** net cash less borrowings, deferred and contingent consideration and convertible loan notes

Operational Review

Much of the focus this year has been on completing the integration of the companies acquired since June 2014, which I am pleased to say is largely done, and building a platform and infrastructure to enable continued profitable growth and take full advantage of the market opportunity. We have made improvements to the quality of the business processes, people, structure and control. The organic growth of the business is building on the back of the acquisitive growth. Our contracted backlog of revenue has grown by over 40%, which gives us good forward visibility of revenue.

The increase in revenues was driven by the addition of new customers and through cross-selling of products and / or services into the Group's existing base. Castleton now supports over 750 customers and during the year the number of those who have two or more of our products increased to 35%. Not only does this show traction in our intention to cross-sell and our customers' confidence in our product suite, but also means that 65% of our customer base still uses just one product, providing a very strong opportunity for further organic growth.

As referred to above, the start of the year, in April 2016, saw Castleton improve the terms of its existing exclusive reseller agreement with Agile by entering into a new perpetual licence agreement with the company whereby we were granted an exclusive licence for their suite of mobile working software solutions in relation to the social housing sector.

New contracts signed during the year include a landmark agreement with Wentworth Community Housing in Australia, signed in November 2016, for the provision of Kypera's housing system and three other products including Agile's mobile working solutions. This followed on from the installation of a local management team and is evidence of the opportunity available in the Australian market and the relevance of Castleton's product suite in that country.

In January this year, two new contracts were announced, namely a ten-year agreement with Clúid Housing Association ("Clúid") in Ireland and a five-year contract with Arcon Housing Association ("Arcon") in Manchester. Both agreements were for multiple products and / or services, with Clúid being the first customer to take the complete suite of software products, validating the Group's intention of becoming a "one stop shop" serving the social housing sector and showing the Group's ability to cross-sell and upsell the product suite. Our success in winning these new contracts demonstrates the unique proposition that Castleton can bring to the market and we continue to seek to expand on this success by increasing the number of customers who take multiple products, which is a major focus going forwards.

At the end of the year, the Company had further success in signing two multi-year agreements, extending both the contract base and the level of recurring revenue. The first is a seven year contract with North Hertfordshire Homes and the second a three year contract with a community regeneration and housebuilding company.

Post year end, a new operational structure has been put in place with clearly aligned objectives and sales teams have been tasked with defined territories and targets. The initial feedback has been positive, both internally and from customers.

Outlook

Castleton is well positioned to provide an eco-system of integrated modular solutions supported by scalable infrastructure platforms, helping organisations to operate more effectively and achieve their goals, whilst bringing visible recurring annuity revenues to the Group. The Group brings together trusted brands with a pedigree of delivering solutions that meet customer needs whilst offering a refreshing change of culture and approach, focusing on customer collaboration using modern technology. We see the public and not-for-profit sectors as attractive markets due to their niche requirements and we believe a significant opportunity exists to capitalise on the ability to address historic under-investment in IT infrastructure in those sectors.

I am confident that the business is now in a position to maximise the opportunities that we see in our chosen markets by offering our customers an integrated suite of products, either on an installed or cloud delivery basis, in turn allowing them to increase efficiencies and lower their costs of operating. Post year-end we have had a number of successes selling our software products on a cloud basis. Combined with the general long term nature of the contracts entered into, selling our products on a hosted basis gives greater recurring revenue and greater visibility of earnings and cash flow as we move forward.

The new financial year has started well and in line with expectations. The Company has good visibility of revenues, a strong and improving product suite combined with a defined roadmap for further development, and an improved structure to enable us to execute our strategy. The existing customer base provides a significant opportunity for cross-selling opportunities, adding further organic growth along with new customers. The Board continues to view the future with confidence.

Financial Review

I am pleased to present this report as Chief Financial Officer.

Principal events and overview

Other than the new licence agreement with Agile, further details of which can be found below, the period since the last report has been one of consolidation compared to the previous two years of considerable acquisitive activity.

As with the prior years, there has been a considerable amount of integration activity, partly contributing to the £0.7 million exceptional charge within the Income Statement. Agile's suite of solutions have been merged into Castleton Software Solutions Ltd, which, along with Castleton Managed Services Ltd, form the two divisions in the Group. Also during the year, we merged the offices acquired along with the acquisition of Impact Applications Limited into our Software Solutions headquarters in Sutton Coldfield. With the exception of Kypera, all acquired entities are on a common accounting platform across the Group, which brings a greater degree of process and visibility to our back office operations. We plan to bring Kypera onto our common accounting platform during the current year.

Agile

On 4 April 2016, the Group improved its existing exclusive reseller agreement with Agile and entered into a new perpetual licence agreement whereby Castleton was granted an exclusive licence for Agile's suite of mobile working software solutions in relation to the social housing sector (the "Agile Licence").

Agile's software solutions are complementary to Castleton's range of solutions which have been designed to enable social housing organisations to work more efficiently and effectively. Agile's software solutions allow field based/ customer facing teams to securely access any system, data and/ or document from any global location, allowing users to complete tasks in real time.

To continue to support and develop the product, a number of staff members transferred from Agile to the Group, and as a result, the grant of the licence and the transfer of staff collectively meet the definition of a business combination under IFRS3 and consequently are recorded as a business combination in these accounts.

Under the terms of the Agile Licence, Castleton will pay Agile £600,000 per year over a three year period with the potential for a further payment of at least £300,000 in the year to 31 March 2019 dependent on total sales during the first three years of the agreement.

The Board of Castleton believes that the Agile Licence and staff transfer are strategically important as they secure the Group's use of Agile's software solutions going forward, whilst enhancing the margin, with an estimated payback period of two years.

Goodwill

A fair value reassessment of £0.9 million was performed on Kypera, the majority of which relates to claims in relation to onerous contracts that were in place prior to acquisition together with the associated rectification costs. Discussions are currently ongoing, however, the resolution of such claims remains uncertain.

Trading results

The trading results for the year comprise a full year of trading for all entities acquired in the prior years and, from 4 April 2016, a full year of trading from the updated Agile Licence

Revenue and gross profit

Revenue amounted to £ 20.3 million (2016: £18.0 million), of which £10.8 million was generated by the Software Solutions division (2016: £8.3 million) and £9.4 million (2016: £9.7 million) was generated by the Managed Services division. Recurring revenue is in excess of 60% of total revenues (2016: 58%). Gross profit amounted to £14.3 million (2016: £11.3 million), representing a gross margin of 70% (2016: 63%). The increase in overall gross margin is partly due to a full year of trading from the Kypera business which was acquired in the previous year (and sits in the Software Solutions division) and has a higher gross margin and also as a result of the new Agile Licence where there is no longer a 70% commission included in cost of sales. Gross margin for the Software Solutions division increased from 80% to 84% and for the Managed Services division it increased from 40% to 45%.

Administrative expenses including exceptional items

The administrative expenses from continuing activities were incurred in the running of the acquired entities, and include the cost of the Board and its advisors, including the cost of occupancy, back office support services, and the fees associated with maintaining the AIM listing as well as amortisation and exceptional items. Exceptional items of £0.7 million (2016: £2.2 million) include costs relating restructuring activities undertaken in the year.

Adjusted EBITDA*

The adjusted EBITDA for the year amounts to £4.4 million (2016: £3.6 million).

The cost in the year for the plc Board and its advisors was £1.3 million (2016: £1.2 million), and we continue to maintain tight controls on expenditure.

Trading EBITDA was therefore £5.7 million (2016: £4.6 million).

*Earnings for the year from continuing operations before net finance costs, tax, depreciation, amortisation, exceptional costs and share based payment charges.

Finance income and costs

Finance income represent the interest earned on deferred income from the sale of the consulting business sold in 2015, and finance costs comprise interest payable on bank borrowings and the interest and unwind of discount on the convertible loan notes issued in January 2016 to part fund the acquisition of Kypera ("Loan Notes"). Finance income and costs amounted to £0.02 million (2016: £0.3 million) and £0.7 million (2016: £0.7 million) respectively.

Profit for the year attributable to the owners of the parent company

The Group profit for the year to 31 March 2017 was £0.5 million (2016: Loss of £1.1 million). This comprises the loss before tax of £0.5 million (2016: loss of £1.9 million), which includes the finance income of £0.02 million (2016: £0.3 million) and a tax credit of £1.0 million (2016: £0.8 million) arising from R&D tax credits, unwind of deferred tax on intangible assets and prior year adjustments.

Cash flow

Cash generated from operations during the year was £4.6 million (2016: £0.6 million) reflecting a decrease in working capital of approximately £0.1 million (2016: increase of £3.0 million).

Net of cash acquired, £1.0 million of cash was used for the acquisition of subsidiaries (£0.5 million for Brixx and £0.5 million for Agile) which was funded through cash generated by the business.

This resulted in an overall increase in funds of £0.6 million, giving a net positive cash position at the balance sheet date of £0.3 million (2016: net negative cash position of £0.3 million).

Deferred income

Deferred income arises where revenue is invoiced ahead of delivery of performance obligations and therefore recognition of revenue. This is common in software maintenance, hosting, managed services and software subscription agreements. Invoicing is largely quarterly, half yearly or annually and therefore deferred income levels fluctuate throughout the year. At 31 March 2017 deferred revenue of £8.4 million is £0.7 million higher than at the end of March 2016 due to growth in the above contracts.

Funding and Debt Repayment

During the year, the Group repaid £1.0 million of the Barclays term loan in line with the facility agreement. As at the balance sheet date, £4.3 million of term loan was outstanding.

In addition, in March 2017, the Group repaid £0.5 million of the £3.5 million Loan Notes issued to part fund the acquisition of Kypera. A further £0.5 million of the Loan Notes were repaid in April 2017. The Loan Notes are capable of being converted into new ordinary shares at a price of 85.6 pence per ordinary share, which represented a 5% premium to the mid closing price on 28 January 2016, the day immediately prior to completion of the acquisition of Kypera. Conversion is at the option of the holder at any time during the 5-year term.

On 29 May 2016, the final £0.5 million of deferred consideration for the acquisition of Brixx was paid and also during the year, £0.5 million of the £1.8 million due under the terms of the Agile Licence was paid.

During the year, £0.15 million of the £0.45 million of convertible loan notes that were issued as part of the acquisition of Opus (the "Opus Loan Notes") were converted into shares. Post year-end, the remaining £0.3 million of the Opus Loan Notes were cancelled in agreement with the holders.

Going Concern

The Directors have prepared detailed cash flow projections including sensitivity analysis on key assumptions. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance and the timing of key strategic events, show the Group will be able to operate within the level and conditions of available funding. Based on the funding available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.

Note

Yearended31 March2017£000

Yearended31 March2016£000

Revenue

20,269

17,987

Cost of sales

(5,980)

(6,721)

Gross Profit

14,289

11,266

Administrative expenses

(14,100)

(12,759)

Adjusted EBITDA*

4,383

3,601

Exceptional costs

3

(741)

(2,184)

Depreciation

(225)

(168)

Amortisation

(2,997)

(2,542)

Charges for share-based payments

(231)

(200)

Operating profit / (loss)

189

(1,493)

Finance income

5

21

321

Finance costs

5

(749)

(728)

Loss on ordinary activities before taxation

(539)

(1,900)

Income tax

6

1,002

773

Profit/(loss) for the year attributable to owners of the parent company

463

(1,127)

Earnings /(loss) per share

Total basic profit / (loss) per share

7

0.59p

(1.56p)

Total diluted profit / (loss) per share

7

0.54p

(1.56p)

Note

31 March

2017

£000

31 March

2016

£000

Assets

Non-current assets

Intangible assets

8

33,605

32,674

Property, plant and equipment

9

781

680

Trade and other receivables

10

261

418

34,647

33,772

Current assets

Inventories

50

187

Trade and other receivables

10

5,050

6,552

Current income tax asset

6

145

-

Cash and cash equivalents

11

586

823

5,831

7,562

Total assets

40,478

41,334

Equity and liabilities

Equity attributable to owners of the parent

Share capital

1,625

1,612

Share premium account

16,995

16,758

Equity reserve

2,919

2,919

Other reserves

7,966

7,966

Accumulated loss

(13,996)

(14,690)

Total equity attributable to the owners of the parent

15,509

14,565

Liabilities

Current liabilities

Trade and other payables

12

8,836

8,880

Current income tax liabilities

6

-

340

Finance leases

46

24

Borrowings

13

1,324

2,194

Convertible loan notes

14

140

443

Deferred consideration

15

838

500

Provisions

751

332

11,934

12,713

Note

31 March

2017

£000

31 March

2016

£000

Non-current liabilities

Trade and other payables

12

11,893

2,443

Borrowings

13

3,352

4,360

Convertible loan notes

14

2,957

3,277

Deferred consideration

15

707

-

Contingent consideration

15

748

-

Provisions

-

224

Deferred taxation liabilities

6

3,377

3,762

13,034

14,056

Total liabilities

24,968

26,769

Total equity and liabilities

40,478

41,334

Attributable to the owners of the Parent Company

Called up share capital

Share premium account

Equity reserve (a)

Merger reserve (b)

Accumulated

Loss

Total equity

£000

£000

£000

£000

£000

£000

At 1 April 2015

1,206

10,689

1,423

7,966

(13,763)

7,521

Loss for the period

-

-

-

-

(1,127)

(1,127)

Transactions with owners in their capacity as owners:

Share based payments

-

-

-

-

200

200

Convertible loan notes issued

-

-

600

-

-

600

Conversion of financial instruments

206

3,187

(40)

-

-

3,353

Exercise of options

16

119

-

-

-

135

Exercise of warrants

12

116

-

-

-

128

Issue of replacement options

-

(936)

936

-

-

-

Share Issue

172

3,583

-

-

-

3,755

At 31 March 2016

1,612

16,758

2,919

7,966

(14,690)

14,565

Profit for the period

-

-

-

-

463

463

Transactions with owners in their capacity as owners:

Share based payments

-

-

-

-

231

231

Conversion of loan notes (c)

13

237

-

-

-

250

At 31 March 2017

1,625

16,995

2,919

7,966

(13,996)

15,510

Note

31 March

2017

£000

31 March

2016

£000

Cash flows from operating activities

Cash generated from operations

16

4,581

589

Exceptional costs

(797)

(1,499)

Finance charges paid

(256)

(611)

Income taxes refunded / (paid)

133

(170)

Net cash flows generated from/ (used in) operating activities

3,661

(1,691)

Cash flows from investing activities

Receipt of deferred consideration from sale of businesses

53

48

Acquisition of businesses net of cash acquired

(450)

-

Acquisition of subsidiaries net of cash acquired

-

(11,660)

Purchase of property, plant and equipment

(297)

(167)

Purchase of intangible assets

(309)

(42)

Net cash flows used in investing activities

(1,003)

(11,821)

Cash flows from financing activities

Proceeds from issuance of shares

-

2,200

Cost of share Issue

-

(111)

Borrowings

-

11,000

Exercise of share options

-

135

Exercise of share warrants

-

220

Settlement of deferred consideration

(500)

-

Repayment of borrowings

(1,558)

(788)

Net cash flows (used in)/generated from financing activities

(2,058)

12,656

Net increase/(decrease) in cash and cash equivalents from activities

 600

(856)

Cash and cash equivalents at 1 April

(330)

526

Cash and cash equivalents at 31 March

270

(330)

Comprising:

Cash and cash equivalents

11

586

823

Overdraft

13

(316)

(1,153)

270

(330)

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Revenue

9,437

10,832

-

20,269

Operating profit/(loss) before amortisation of intangible assets and management charge

2,750

2,127

(1,691)

3,186

Amortisation of acquired intangibles

(969)

(2,028)

-

(2,997)

Management charge

(1,063)

(368)

1,431

-

Operating profit /(loss)

718

(269)

(260)

189

Finance income

20

-

1

21

Finance costs

-

(189)

(560)

(749)

Profit/(loss) before tax

738

(458)

(819)

(539)

Adjusted EBITDA*

3,012

2,668

(1,297)

4,383

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Segment Assets

11,454

31,757

(2,733)

40,478

Segment Liabilities

(3,070)

(13,535)

(8,363)

(24,968)

Net assets/ (liabilities)

8,384

18,222

(11,096)

15,510

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Capital Expenditure:

Property, plant and equipment

186

114

26

326

Intangibles

25

284

-

309

Depreciation

(125)

(99)

(1)

(225)

Amortisation of intangibles

(969)

(2,028)

-

(2,997)

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Revenue

9,665

8,322

-

17,987

Operating profit/(loss) before amortisation of intangible assets and management charge

2,208

638

(1,797)

1,049

Amortisation of acquired intangibles

(945)

(1,597)

-

(2,542)

Management charge

(963)

(575)

1,538

-

Operating profit /(loss)

300

(1,534)

(259)

 (1,493)

Finance income

25

-

296

321

Finance costs

(3)

(7)

(718) 

(728)

Profit/(loss) before tax

322

(1,541)

(681) 

(1,900)

Adjusted EBITDA*

2,301

2,318

(1,018)

3,601

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Segment Assets:

12,778

28,354

202

41,334

Segment Liabilities

(4,268)

(10,019)

(12,482)

(26,769)

Net assets/ (liabilities)

8,510

18,335

(12,280)

14,565

Managed Services£000

Software Solutions£000

Central

£000

Total

£000

Capital Expenditure:

Property, plant and equipment

121

39

7

167 

Intangibles

42

-

-

42

Depreciation

(95)

(71)

(2)

(168)

Amortisation of intangibles

(945)

(1,597)

-

(2,542)

2017£000

2016£000

Integration and strategic costs

295

488 

Acquisition and reorganisation costs

431

812

Opus- settlement of contingent consideration

-

734

Creation of restructuring provision (see note 17)

15

65

Other reorganisation

-

85

741

2,184

Total

Agile

Kypera

Impact

Total

£000

£000

£000

£000

Deferred consideration

1,795

-

-

1,795

Contingent consideration

619

-

-

619

Fair value of purchase consideration

2,414

-

-

2,414

Less fair value of assets acquired:

Software

(2,189)

-

-

(2,189)

Fair value adjustment

-

912

43

955

Goodwill

225

912

43

1,180

2017£000

2016£000

Fair value gain on interest rate swap

-

298

Other finance income

21

23

21

321

2017£000

2016£000

Interest payable on bank loans and overdrafts

278

581

Interest expense in respect of:

Convertible loan notes and deferred consideration unwind

471

146

Finance lease obligations

-

1

749

728

Total

2017£000

2016£000

Corporation Tax

Adjustments in respect of prior periods

(617)

-

Deferred tax

Origination and reversal of timing differences

(385)

(773)

Total tax (credit)

(1,002)

(773)

2017

£000

2016

£000

Loss from operations before taxation

(539)

(1,900)

Accounting loss multiplied by the UK standard rate of corporation tax of 20% (2016: 20%)

(108)

(380)

Net items not deductible for tax purposes

154

185

Unrelieved losses

-

(50)

Adjustment to tax charge in respect of previous year

(617)

-

Movement in unprovided deferred tax and the effect of the change of tax rate

(431)

(508)

Total income tax credit on operations

(1,002)

(773)

(d) Deferred tax liability

£000

At 31 March 2015

2,478

Business combinations

2,063

On acquisitions

(6)

Credit to income statement

(773)

At 31 March 2016

3,762

Credit to income statement

(1,002)

Adjustment to tax charge in respect of previous year

617

At 31 March 2017

3,377

2017£000

2016£000

Statutory EPS:

Total basic profit / (loss) per share

0.59p

(1.56p)

Total diluted profit / (loss) per share

0.54p

(1.56p)

Goodwill£000

Software£000

Customer contracts and related relationships£000

Development Expenditure£000

Total£000

Cost

At 1 April 2015

5,209

618

12,622

94

18,543

Additions

-

-

-

42

42

Business Combinations

5,827

2,844

8,604

-

17,275

At 31 March 2016

11,036

3,462

21,226

136

35,860

Additions

-

-

250

309

559

Business Combinations

1,180

2,189

-

-

3,369

At 31 March 2017

12,216

5,651

21,476

445

39,788

Amortisation

At 1 April 2015

-

(50)

(568)

(26)

(644)

Charge for the year

-

(349)

(2,155)

(38)

(2,542)

At 31 March 2016

-

(399)

(2,723)

(64)

(3,186)

Charge for the year

-

(498)

(2,435)

(64)

(2,997)

At 31 March 2017

-

(897)

(5,158)

(128)

(6,183)

Net carrying amount

31 March 2017

12,216

4,754

16,318

317

33,605

31 March 2016

11,036

3,063

18,503

72

32,674

31 March 2015

5,209

568

12,054

68

17,899

Leasehold property£000

Network infrastructureand equipment£000

Equipment,fixtures and fittings£000

Total£000

Cost

At 1 April 2015

222

401

95

718

Additions

7

69

91

167

Business Combinations

23

39

93

155

At 31 March 2016

252

509

279

1,040

Additions

51

204

71

326

At 31 March 2017

303

713

350

1,366

Accumulated depreciation

At 1 April 2015

24

160

8

192

Charge for the year

7

112

49

168

At 31 March 2016

31

272

57

360

Charge for the year

13

20

192

225

At 31 March 2017

44

292

249

585

Net book amount

31 March 2017

259

421

101

781

31 March 2016

221

237

222

680

31 March 2015

198

242

87

527

2017£000

2016£000

Trade receivables

3,929

5,281

Less: provision for impairment of trade receivables

(220)

(344)

Trade receivables - net

3,709

4,937

Other receivables

435

625

Prepayments

906

990

Amounts due with 12 months

5,050

6,552

Prepayments due after more than 12 months

261

418

Total receivables

 5,311

6,970

Days outstanding

2017£000

2016£000

31-60 days

1,038

1,412

61-90 days

448

697

91-180 days

379

749

1,865

2,858

£000

At 31 March 2015

83

Fair Value on Business Combinations

108

Utilised in year

(84)

Created in year

237

At 31 March 2016

344

Utilised in year

(324)

Created in year

200

At 31 March 2017

220

2017

£000

2016£000

Cash at bank and in hand (excluding overdrafts)

586

823

Credit rating

2017

£000

2016£000

A

586

823

2017£000

2016£000

Trade payables

297

1,645

Other payables

67

90

Taxation and social security

646

675

Accruals

1,180

1,257

Deferred income

6,645

5,213

8,835

8,880

2017£000

2016£000

Deferred income

1,718

2,433

Other payables

175

-

1,893

2,433

2017

£000

2016

£000

Mortgage

8

8

Bank loan

1,000

1,033

Overdraft

316

1,153

1,324

2,194

Non-current

2017

£000

2016£000

Bank Loan

3,250

4,250

Mortgage

102

110

3,352

4,360

Opus£000

Kypera£000

Total£000

At 1 April 2015

-

-

-

Additions

443

3,500

3,943

Interest unwound

-

28

28

Fair value adjustment

-

(251)

(251)

At 31 March 2016

443

3,277

3,720

Interest unwound

22

280

302

Interest due to be paid

(175)

(175)

Conversion

(250)

-

(250)

Repayments

-

(500)

(500)

At 31 March 2017

215

2,882

3,097

Within one year

140

-

140

Over one year

75

2,882

2,957

215

2,882

3,097

2017

£000

2016

£000

Deferred consideration

838

500

838

500

Non-current

2017

£000

2016£000

Deferred Consideration

707

-

Contingent consideration

748

-

1,455

-

2017£000

2016£000

Loss on ordinary activities before taxation

(539)

(1,900)

Adjustments for:

Exceptional items

797

1,499

Net finance costs

727

407

Non-cash contingent consideration through income statement

-

695

Depreciation of property, plant and equipment

225

168

Amortisation of intangibles

2,997

2,542

Equity-settled share-based payment charge

231

200

Movements in working capital:

Decrease/ (increase) in trade and other receivables

1,514

(1,907)

Decrease in trade and other payables

(950)

(509)

Decrease in provisions

(558)

(461)

Decrease/ (increase) in inventories

137

(145)

Cash generated from operations

4,581

589