Consolidated Financial
Statements
Gamma Telecom Holdings
Limited
For the year ended 31 December 2013
Company No. 4287779
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
2
Company information
Company registration number
4287779
Registered office
Directors
Secretary
Bankers
Solicitors
Auditor
5 Fleet Place
LONDON
EC4M 7RD
S J Burton
R M Falconer
K E Kuok
G Sreeves
A J Stone
C R H Stone
M J C Stone
K C Tse
L P Wu
G Sreeves
HSBC Bank Plc
60 Queen Victoria Street
LONDON
EC4N 4TR
Charles Russell
5 Fleet Place
LONDON
EC4M 7RD
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
3140 Rowan Place
John Smith Drive
Oxford Business Park South
OXFORD
OX4 2WB
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
3
Index to the consolidated financial statements
Chief Executive's statement
Strategic Report
Report of the directors
Report of the independent auditor
Principal accounting policies
Group profit and loss account
Group balance sheet
Company balance sheet
Group cash flow statement
4 - 5
6 - 8
9 - 10
11 - 12
13 - 16
17
18
19
20
Notes to the consolidated financial statements
21 - 35
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
4
Chief Executive’s statement
The board is very pleased with the continued progress of the Gamma Group in 2013. Overall revenue
grew from £137.2m in 2012 to £148.7m (+8.4%) and gross profit improved from £44.9m to £53.9m
(+20.0%). Adjusted EBITDA (earnings before interest, taxation, depreciation, amortisation and share
based payments) grew by 19.6% from £14.4m to £17.2m, while profit before tax increased to £11.2m, up
20.2% from £9.3m in 2012.
The net cash inflow before acquisitions and financing was £8.1m up 23.6% from 2012 (2012: £6.6m).
The business has now demonstrated consistent cash generation growth for six years - despite the poor
economic climate over this period - and is now firmly positioned as a leading provider of next generation
communications services to the business market.
We have been particularly encouraged by the rapid growth of our software and internet technology
derived products. In particular SIP, an alternative to traditional ISDN for business connectivity, has
grown by over 50%. This is a displacement market, where we are seen as market leader and the
investment we have made in automation and resilience is clearly bearing fruit. Similarly, our Horizon
product, which provides a cloud based alternative to a traditional PBX, and in which we have invested
substantially, has exceeded our expectations with over 18,000 new seats added during 2013.
Significant growth has also been evident in our Inbound product (a cloud based incoming call
management service), mobile services (through our MVNA* agreement with Vodafone), ethernet and
business grade broadband.
This growth has more than compensated for the expected decline in both the volume and the price of
traditional fixed calls through mobile substitution, intense competition and regulated reductions in fixed
to mobile rates. Traditional wholesale calls and lines now only represents one third of our overall gross
profit.
Our indirect sales through channel partners, which is the majority of our revenue, have shown significant
growth with c650 partners now regularly placing business with Gamma.
The Gamma Retail business has grown its revenue to £29.7m (2012: £25.9m) and gross profit to £11.3m
(2012: £9.5m). There have been significant wins with Care UK, Pret a Manger, Philips Electronics,
Oxford and Newcastle NHS Trusts and CGI to name just some of the successes.
The business is also preparing for opportunities to provide services to national government (Gamma
already supplies many organisations in local government). The Group is therefore pleased to have
achieved accreditation in both ISO27001 and ISO22301 standards for security and business continuity
respectively, and was accepted on to the new government Public Services (PSN) framework.
I’m also pleased to say that our new venture in Manchester (branded “The Loop”), whilst still modest, is
now making a positive operating contribution to the Gamma Group just over a year from its formation;
this is ahead of plan and follows some major long-term contract wins. This venture exploits Gamma’s
historic extensive fibre and ducting around Manchester to connect up major users of data
communications, particularly in the media and datacentre industries.
Overall the strong sales growth has justified an increase in capital investment in the business and
investment is being made in a new (MPLS) data network to support larger multi-sited customers whilst
contract successes with ‘The Loop’ generally require a local ‘dig’ to the customers’ premises in return for a
longer term revenue stream. More generally the network infrastructure is being expanded to both extend
its reach and to position the business for future services and growth.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
5
Chief Executive’s statement (continued)
The business also continues to invest heavily in product development, with close to 20% of the staff
resources allocated to this function. With a broad product portfolio, much of the focus has been on
enhancing the current product set. One interesting development this year was a collaborative development
with Semafone (a specialist in electronic credit card payments) to create a SIP connectivity product that
ensured that the customers’ card details never reached the merchant, thereby removing the need for the
merchant to comply with ever stricter rules imposed by the Financial Services Authority. This will have
immediate appeal to the many organisations that take sales over the phone. We have also launched a voice
Business Continuity product enabling a business to immediately redirect all its incoming calls to a pre-
prepared plan in the event of difficulty.
There remains a very strong emphasis on the quality of the operational service, the elimination of risk and
improvements in security. The business has been certified in both ISO27001 and ISO22301 in security
and business continuity. Surveys of customer satisfaction have provided very positive results with a Net
Promoter score of +29 and we were very pleased to have won the Comms Business Network Operator of
the Year award for the fourth consecutive year in 2013. The main cause of customer dissatisfaction
remains BT Openreach whom we, and our competitors, rely upon for the local connectivity. We are very
active in seeking enforceable commitments on service.
In the regulatory sphere, Ofcom finally deliberated on the Margin Squeeze complaint that Gamma (and
Thus plc) made against BT Wholesale in 2008**. Although recognising that BT had operated a margin
squeeze on wholesale calls, it was not fined as, in Ofcom’s view, there was insufficient evidence of anti-
competitive effects. We were very disappointed by both the time taken by Ofcom (5 years) and the lack of
any punitive action given the findings.
More positively however we were pleased with the recent news of the successful appeal in the Supreme
Court in the case between BT and the four mobile network operators about termination charges for calls
to non-geographic numbers in which Gamma was an intervener***.
The average number of people in the Gamma Group increased over the year from 369 to 431, largely to
support the product volume growth. It is an inevitable fact that the shift to higher gross profit products
requires increased support and development resources. We were particularly pleased to be once again
ranked by the Sunday Times as one of the “100 Best Companies to Work For”.
Bob Falconer
Chief Executive
* mobile virtual network aggregator
** see more at: http://www.gamma.co.uk/news-and-events/news/gamma-responds-to-ofcom-ruling-as-
bt-wholesale-found-guilty-of-margin-squeeze#sthash.Ub9Yoxml.dpuf
*** see more at: http://supremecourt.uk/decided-cases/docs/UKSC_2012_0204_PressSummary.pdf
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
6
Strategic Report
Principal activities and business review
The group is principally engaged in the provision of communications and software services for business,
the public sector and not for profit organisations.
Strategy
Gamma’s strategy is to continue to grow both its market share and profitability by developing new
innovative communications products for business and the public sector. These new products combine
Gamma’s IP network technology with its own software services platform, using software written by
Gamma’s in house development team.
Gamma Telecom Limited sells indirectly through third party resellers which include several major
corporations including systems integrators and tier one telecommunications operators. The group also
sells directly to business and the public sector through Gamma Network Solutions Limited and through
Gamma Business Communications Limited via a network of independent sales agents.
Key performance indicators
Turnover
Gross profit
Gross profit percentage
Earnings before interest, taxation, depreciation, amortisation and
share based payments
Profit before taxation
Cash expenditure on capital equipment
Cash inflow before acquisitions and financing
Average headcount
2013
2012
Change
£148.7m
£53.9m
36.2%
£137.2m
£44.9m
32.7%
8.4%
20.0%
3.5%
£17.2m
£11.2m
£5.9m
£8.1m
431
19.6%
20.2%
£3.2m
23.6%
62
============= ============= =============
£14.4m
£9.3m
£2.7m
£6.6m
369
Financial overview
Despite the continued difficult economic conditions in 2013, Gamma recorded a fourth successive year of
profit growth. Turnover increased by 8.4% to £148.7m (2012: £137.2m), gross profit was up 20.0% to
£53.9m (2012: £44.9m). The directors attribute this increase to the continuing growth in the proportion
of overall sales coming from the higher margin IP and software based products. Profit before tax
increased by 20.2% to £11.2m (2012: £9.3m).
The directors are pleased with the strong performance during the year and believe Gamma is well placed
to continue this growth.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
7
Strategic Report (continued)
Operating costs
Gamma’s operating costs excluding depreciation and amortisation was higher in 2013 than in the previous
year at £37.6m (2012: £30.7m). During the year the average number of staff employed grew by 62 to 431
(2012: 369) and the payroll cost increased by £2.2m to £21.0m (2012: £18.8m). The majority of the
headcount increases were in operations (including engineering) and they reflect the continued growth of
the business and the investment required to develop and support Gamma’s Next Generation products.
Capital expenditure
The total cash expenditure on fixed assets in 2013 was £5.9m (2012: £2.7m) as Gamma continued to
invest in its network and to develop products on its IP and software services platform. This included
£0.8m (2012: £0.9m) in relation to intellectual property created by Gamma’s in house software
development team.
Cash flow
Net cash inflow from operating activities was £16.3m in 2013 (2012: £10.4m). After interest payments,
taxation and capital expenditure the cash inflow before acquisitions and financing was £8.1m (2012:
£6.6m). This continues a consistent trend of strong cash generation over the last six years.
Principal risks and uncertainties
The directors set out the principal risks facing the business as follows:
Regulation
The UK telecoms market is subject to significant regulation through Ofcom, the industry regulator. A
major part of Gamma’s expenditure relates to regulated products that it buys from BT in markets where
BT has significant market power. Decisions by the regulator can therefore have a significant effect on the
group’s performance. Gamma seeks to engage with Ofcom and relevant industry bodies on a regular basis
to ensure that Gamma’s views on current and future regulation are well represented.
Competition
The UK fixed line telecoms market is highly competitive despite a reduction in the number of network
operators in recent years. Gamma’s strategy is to continually work to develop new products, including by
making significant investments in research and development, which allow it to differentiate itself from its
competitors.
Technological Advances
Gamma’s new product strategy is based on the transition from traditional telephony products to Next
Generation IP based technology and services. As with any technological change this brings some
uncertainty and risk, including the uncertainty about the speed with which the market will adopt the new
technology. However, Gamma has significant expertise and experience of such technological changes
which help it to mitigate these risks.
Financial risk management objectives and polices
The group is exposed to a variety of financial risks which result from both its operating and investing
activities. The board is responsible for coordinating the group's risk management and focuses on actively
securing the group's short to medium term cash flows.
The group does not actively engage in the trading of financial assets and has no financial derivatives.
Credit risk
The group's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance
sheet are net of any allowance for doubtful debtors, estimated by the directors.
The group operates a strict credit vetting policy, basing its credit terms on a customer’s payment history,
financial performance and externally available credit data.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
8
Strategic Report (continued)
Cash flow risks
The Group seek to manage risks to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably.
The company prepares an annual budget which is used to assess funding adequacy for at least a 12-month
period and then monitors actual performance against budget. The Group is continually reviewing the
credit risk associated with holding money on deposit in banks and seek to mitigate this risk by holding
deposits with banks with high credit status.
Environmental policy
The group's environmental policy is focussed on five areas:
• Gamma's commitment to reducing carbon emissions began in 2006 with the early adoption of IP
based soft-switching in our core network, marking the first major initiative of its kind in the UK.
Soft-switching has allowed Gamma to move from a power-hungry hardware infrastructure to a
more software driven environment which uses far less power. In 2013 the group consumed
3.9m kwhr (2012: 4.3m kwhr), a decrease year on year.
• Gamma is a Certified CarbonNeutral company and is one of the few network operator in the UK
to have a net zero carbon footprint. The group has been independently assessed for its carbon
output, taking into account all utility usage, business travel and waste across each site, as well as
the electricity consumed by the network. The total carbon output has been offset through
investment in renewable energy projects through the CarbonNeutral Company Ltd, so that
Gamma is a net zero carbon contributor to the environment.
• Providing products that can help end customers reduce their carbon footprint, for example, by
enabling more efficient home working.
• Good housekeeping and encouraging flexi-working to reduce travel.
• The group continues to support The Woodland Trust via corporate membership.
Employees
Gamma recognises the essential importance of employees to the success of the business and ensures that
they are fully informed of events that directly affect them and their working conditions. Information on
matters of concern to employees is given in briefings that seek to provide a common awareness on the
part of all employees of the financial and economic factors affecting the group's performance.
During both the year and the prior year Gamma undertook the Best Companies Limited employee
engagement survey and achieved a 2-star accreditation. The results from this survey attracted a listing in
the Sunday Times Best 100 Companies to Work For and Gamma was placed in the top fifty companies in
the UK.
Disabled employees
Applications for employment by disabled persons are given full and fair consideration for all vacancies in
accordance with their particular aptitudes and abilities. It is the policy of the company that training and
promotion opportunities should be available to all employees.
This report was approved by the board on 24 July 2014 and signed on its behalf.
R Falconer
Director
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
9
Report of the directors
The directors present their report and the consolidated financial statements of the group for the year
ended 31 December 2013.
Directors
The directors who served the company during the year were as follows:
S J Burton
R M Falconer
O R Jonathan (resigned 26 May 2014)
K E Kuok
G Sreeves
A J Stone
C R H Stone
M J C Stone
K C Tse
L P Wu
Future developments
The continuing development of IP technology is radically changing the communications industry, and
over the last few years Gamma has significantly increased the proportion of its business coming from IP
products and services. Now, with continued investment in network technology and software, Gamma is
well positioned to maintain its role as a leading provider of Next Generation IP communication services
for the business market.
Research and development
The group is continuing its policy of developing the existing product range and researching new products
that will contribute further to the expansion of the business.
Matters covered in the Strategic Report
Details of the principal risks and uncertainties facing the company and its financial risk management
objectives and policies are given in the strategic report.
Dividend
The directors are not recommending the payment of a dividend.
Directors' and Officers' liability insurance
The company has, as permitted by s234 and 235 of the Companies Act 2006, maintained insurance cover
on behalf of the Directors and Company Secretary indemnifying them against certain liabilities which may
be incurred by them in relation to the company.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
10
Report of the directors (continued)
Directors' responsibilities statement
The directors are responsible for preparing the Strategic report, Report of the directors and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have elected to prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law, the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit or loss of the company and group for that
period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
-
-
state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the group's transactions and disclose with reasonable accuracy at any time the financial position of
the group and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
In so far as each of the directors is aware:
-
-
there is no relevant audit information of which the group's auditor is unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the group's website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Auditor
Grant Thornton UK LLP are deemed to be re-appointed under section 487(2) of the Companies Act
2006.
ON BEHALF OF THE BOARD
G Sreeves
Director
24 July 2014
11
Report of the independent auditor to the members of
Gamma Telecom Holdings Limited
We have audited the financial statements of Gamma Telecom Holdings Limited for the year ended
31 December 2013 which comprise the principal accounting policies, the group profit and loss account,
the group balance sheet, the parent company balance sheet, the group cash flow statement and the related
notes. The financial reporting framework that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Director' responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and form an opinion the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the group's and the parent company's affairs as at
31 December 2013 and of the group's profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Report of the directors for the financial
year for which the financial statements are prepared is consistent with the financial statements.
12
Report of the independent auditor to the members of
Gamma Telecom Holdings Limited (continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns;
or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Nicholas Watson
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
24 July 2014
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
13
Principal accounting policies
Basis of accounting
The consolidated financial statements have been prepared in accordance with applicable accounting
standards and under the historical cost convention.
The principal accounting policies remain unchanged from the prior year and are set out below.
The accounts are prepared on the going concern basis. In assessing whether the going concern
assumption is appropriate, the directors have taken into account all relevant available information about
the future trading including profit and cash forecasts and available facilities and funding. The business has
a track record of profitable growth and is cash generative and this is expected to continue. It is therefore
considered appropriate to adopt the going concern basis of accounting in the preparation of the annual
financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and all group
undertakings. These are adjusted, where appropriate, to conform to group accounting policies.
Acquisitions are accounted for under the acquisition method and the results of companies acquired or
disposed of are included in the profit and loss account after or up to the date that control passes
respectively.
As a consolidated profit and loss account is published, a separate profit and loss account for the parent
company is omitted from the group financial statements by virtue of section 408 of the Companies Act
2006.
Investments
Investments are recorded at cost less amounts written off.
The cost of acquisition is the amount of cash or cash equivalents paid and the fair value of other purchase
consideration given by the acquirer, together with the expenses of the acquisition. Where the payment of
consideration for an acquisition is to be made after the date of acquisition, reasonable estimates of the
amounts expected to be paid are included in the cost of acquisition at their present values.
The cost of acquisition is adjusted when revised estimates are made, with consequential corresponding
adjustments continuing to be made to the cost of the investment, and therefore goodwill, until the
ultimate amount is known.
Employee Benefit Trust (EBT)
The group records assets and liabilities of the Trust as its own, in accordance with UTIF 38. Shares held
are deducted in arriving at shareholder’s funds and included in reserves until such time as the shares have
unconditionally vested to the employees.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
14
Principal accounting policies (continued)
Turnover
Turnover represents the amounts (excluding VAT) derived from the provisions of goods and services to
customers during the year. Call revenue is recognised in the month in which calls are made. Revenue for
fixed charges such as line rentals, hosted services and broadband are recognised in the period to which it
relates. Revenue from installation services is recognised upon acceptance by the customer.
Goodwill
Positive purchased goodwill arising on acquisitions and goodwill arising on consolidation representing the
excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired,
is capitalised and amortised on a straight line basis over its estimated useful economic life as follows:
Goodwill on consolidation
Purchased goodwill
-
-
5% - 33% straight line
33% straight line
Intangible assets – research and development
Research expenditure is written off as incurred. Development expenditure is also written off, except
where the directors are satisfied as to the technical, commercial and financial viability of individual
projects. In such cases, the identifiable expenditure is deferred and amortised over the period during
which the group is expected to benefit. This period is four years. Provision is made for any impairment.
Capitalisation of internal costs
Employee time costs in respect of specific projects are capitalised to the extent that they are directly
attributable to those projects and create an asset for on-going use within the business. These assets are
then depreciated in accordance with the depreciation policy stated.
Fixed assets and depreciation
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the
useful economic life of that asset as follows:
Network assets
Motor vehicles
Fixtures & fittings
Computer equipment
-
-
-
-
7% - 33% straight line
25% straight line
20% - 25% straight line
25% - 50% straight line
All fixed assets are initially recorded at cost.
Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete
and slow moving items. Work in progress comprises installation costs incurred which are underway and
have yet to be accepted by the customer.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain
with the lessor are charged against profits on a straight line basis over the period of the lease.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
15
Principal accounting policies (continued)
Pension costs
The group operates a defined contribution pension scheme for employees. The assets of the scheme are
held separately from those of the group. The annual contributions payable are charged to the profit and
loss account.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the group
an obligation to pay more tax in the future, or right to pay less tax in the future, have occurred by the
balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be
recovered. Deferred tax is measured on an undiscounted basis using rates of tax that have been enacted or
substantively enacted by the balance sheet date.
Foreign currencies
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of
the transaction. Monetary assets and liabilities in foreign currencies are translated into sterling at the rates
of exchange ruling at the balance sheet date. Exchange differences are taken into account in arriving at the
operating profit.
The financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance
sheet date. The exchange differences arising from the retranslation of the opening net investment in
subsidiaries are taken directly to reserves. All other exchange differences are dealt with through the profit
and loss account.
Share options
In accordance with FRS 20 'Share based payments', the fair value of equity-settled share-based payments
to employees is determined at the date of grant and is recognised on a straight line basis over the vesting
period based on the company's estimate of options that will eventually vest. The fair value is measured by
use of the binomial pricing model. Further details are set out in notes 19 and 20.
Cash settled share-based payments
Cash settled share-based payments are measured at fair value at the date of grant using an appropriate
valuation model. Until the liability is settled, the fair value of the liability is re-measured at each reporting
date, with any change in fair value being recognised in profit or loss for the period.
Where the company receiving the services is a subsidiary of the entity that will settle the obligation, a
capital contribution is recognised in the subsidiary with a corresponding charge to the profit and loss
account. The parent entity that will settle the obligation recognises an increase in the investment in group
undertakings and a corresponding liability.
Provisions
Provisions are created for dilapidations in respect of property leases where the building (which is the
subject of the lease) has to be returned to the landlord in a defined condition. The total cost of
rectification is estimated once the stage of the lease has been reached at which a reliable estimate of costs
can be made and a provision is built up over the remaining length of the lease.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
16
Principal accounting policies (continued)
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the entity after deducting all of its financial liabilities.
Dividends and distributions relating to equity instruments are debited direct to equity.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
17
Group profit and loss account
Group turnover
Cost of sales
Gross profit
Operating expenses
Selling and administrative expenses
Share based payment expense
Depreciation and amortisation
Operating profit
Interest receivable
Interest payable and similar charges
Profit on ordinary activities before taxation
Tax on profit on ordinary activities
Profit for the financial year
Note
2013
£'000
2012
£'000
1
2
2
2
2
3
6
7
21
148,714
137,218
(94,848)
-------------------------------------------
53,866
(92,329)
------------------------------------------
44,889
(23,080)
(13,608)
(917)
(5,074)
(42,679)
---------------------------------------
11,187
42
–
(17,394)
(13,132)
(206)
(4,793)
(35,525)
---------------------------------------
9,364
22
(46)
------------------------------------
11,229
------------------------------------
9,340
(2,222)
--------------------------------
9,007
================================
(2,026)
-------------------------------
7,314
=================================
All of the activities of the group are classed as continuing.
The group has no recognised gains or losses other than the results for the year as set out above.
The company has taken advantage of section 408 of the Companies Act 2006 not to publish its own profit
and loss account.
The accompanying accounting policies and notes form part of these Consolidated financial
statements.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
18
Group balance sheet
Fixed assets
Intangible assets
Tangible assets
Current assets
Stocks
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities
Capital and reserves
Called-up equity share capital
Share premium account
Capital redemption reserve
Share option reserve
Foreign exchange reserve
Profit and loss account
Shareholders' funds
Note
2013
£'000
2012
£'000
9
10
12
13
15
16
17
19
21
21
21
21
21
22
9,716
12,796
-------------------------------------
22,512
-------------------------------------
541
26,970
14,642
-----------------------------------
42,153
(26,530)
----------------------------------
15,623
----------------------------------
38,135
(1,439)
----------------------------------
36,696
(939)
----------------------------------
35,757
==================================
223
2,294
28
1,053
14
32,145
-----------------------------------
35,757
==================================
10,243
18,153
---------------------------------------
28,396
---------------------------------
326
28,667
7,183
---------------------------------------
36,176
(28,723)
---------------------------------------
7,453
---------------------------------------
35,849
(8,028)
---------------------------------------
27,821
(885)
---------------------------------------
26,936
=================================
207
2,263
27
687
3
23,749
---------------------------------------
26,936
==================================
These consolidated financial statements were approved by the directors and authorised for issue on
24 July 2014 and are signed on their behalf by:
R M Falconer
Director
Company number: 4287779
G Sreeves
Director
The accompanying accounting policies and notes form part of these Consolidated financial
statements.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
19
Company balance sheet
Fixed assets
Intangible assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Note
2013
£'000
2012
£'000
9
10
11
13
15
1,856
12,258
11,895
--------------------------------
26,009
---------------------------------
751
1,002
-----------------------------
1,753
1,711
17,861
10,973
---------------------------------------
30,545
--------------------------------
1,581
500
---------------------------------------
2,081
(11,875)
-------------------------------------
(10,122)
-----------------------------------
(15,994)
---------------------------------------
(13,913)
---------------------------------------
15,887
16,632
–
----------------------------------
15,887
=================================
(6,924)
---------------------------------------
9,708
=================================
Creditors: amounts falling due after more than one year
16
Capital and reserves
Called-up equity share capital
Share premium account
Capital redemption reserve
Share option reserve
Profit and loss account
Shareholders' funds
19
21
21
21
21
22
223
2,294
28
446
12,896
----------------------------------------
15,887
=========================================
207
2,263
27
–
7,211
---------------------------------------
9,708
====================================
These consolidated financial statements were approved by the directors and authorised for issue on
24 July 2014 and are signed on their behalf by:
R M Falconer
Director
Company number: 4287779
G Sreeves
Director
The accompanying accounting policies and notes form part of these Consolidated financial
statements.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
20
Group cash flow statement
Net cash inflow from operating activities
Returns on investments and servicing of finance
Taxation
Capital expenditure and financial investment
Acquisitions and disposals
Cash inflow before financing
Financing
Increase /(Decrease) in cash
Note
2013
£'000
2012
£'000
23
23
23
23
23
23
23
16,331
10,421
42
(24)
(2,363)
(1,177)
(5,907)
(2,662)
–
(893)
----------------------------------
8,103
--------------------------------
5,665
(644)
(10,601)
---------------------------------
7,459
==================================
------------------------------
(4,936)
==============================
The accompanying accounting policies and notes form part of these Consolidated financial
statements.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
21
Notes to the consolidated financial statements
1
Turnover
The turnover and profit before tax are attributable to the one principal activity of the group.
An analysis of turnover is given below:
United Kingdom
2
Other operating charges
Operating expenses
Selling and administrative expenses
Share based payment expense
Depreciation and amortisation
3
Operating profit
Operating profit is stated after charging:
Amortisation:
Goodwill
Other intangible fixed assets
Depreciation:
Tangible fixed assets, owned
Fees payable to the company's auditor for the audit of the company
accounts
Fees payable to the company's auditor for other services:
The audit of the company's subsidiaries
Operating lease costs:
Land and buildings
Plant and equipment
2013
£'000
2012
£'000
148,714
=========================================
137,218
=======================================
2013
£'000
23,080
13,608
917
5,074
---------------------------------
42,679
===================================
2012
£'000
17,394
13,132
206
4,793
----------------------------------
35,525
===================================
2013
£'000
2012
£'000
672
699
647
512
3,703
3,634
18
62
1,078
62
===========================
18
61
976
50
=============================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
22
4
Particulars of employees and directors
The average number of staff employed by the group during the financial year amounted to:
Operational
Selling, administration and distribution
The aggregate payroll costs of the above were:
Wages and salaries
Social security costs
Other pension costs
5
Directors
Remuneration in respect of directors was as follows:
Emoluments receivable
Value of company pension contributions to money purchase schemes
Emoluments of highest paid director:
Total emoluments (excluding pension contributions)
Value of company pension contributions to money purchase schemes
2013
No
214
217
----------------------
431
=======================
2013
£'000
17,755
2,089
1,180
----------------------------------
21,024
=================================
2013
£'000
350
206
-----------------------
556
=====================
2013
£'000
243
86
----------------------
329
====================
2012
No
168
201
-----------------------
369
======================
2012
£'000
15,848
1,989
1,005
----------------------------------
18,842
================================
2012
£'000
303
474
------------------------
777
======================
2012
£'000
187
248
------------------------
435
=======================
839,132 B1 shares were issued to the highest paid director in the year under a long term incentive scheme.
The number of directors who accrued benefits under company pension schemes was as follows:
Money purchase schemes
2013
No
2
===============
2012
No
2
===============
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
23
6
Interest payable and similar charges
Other interest payable
7
Taxation on ordinary activities
(a)
Taxation
2013
£'000
–
============================
2012
£'000
46
=========================
Current tax:
UK Corporation tax based on the results for the year at 22.25% (2012:
24.5%)
Adjustment in respect of prior year
Total current tax
Deferred tax:
Origination and reversal of timing differences (note 14)
Tax on profit on ordinary activities
(b)
Factors affecting current tax charge
2013
£'000
2,871
(507)
-----------------------
2,364
(142)
------------------------------
2,222
==============================
The tax assessed on the profit on ordinary activities for the year is lower than the standard rate of
corporation tax in the UK of 22.25% (2012: 24.5%).
Profit on ordinary activities before taxation
Profit on ordinary activities multiplied by standard rate of corporation tax
in the UK of 22.25% (2012: 24.5%)
Fixed asset differences
Expenses not deductible for tax purposes
Income not chargeable for tax purposes
Adjustments to brought forward values
Additional deduction for R&D expenditure
Capital allowances in excess of depreciation
Depreciation in excess of capital allowances
Other timing differences
Utilisation of tax losses
Unrelieved tax losses
Marginal Relief
Goodwill amortisation
Adjustment in respect of prior year
Total current tax
2013
£'000
11,229
================================
2,498
1
182
(6)
2
(358)
–
96
202
–
103
(7)
158
(507)
-------------------------------
2,364
==============================
2012
£'000
2,103
(308)
-----------------------
1,795
231
------------------------
2,026
==============================
2012
£'000
9,340
=============================
2,288
1
211
(218)
(38)
(344)
(35)
47
47
(15)
–
–
159
(308)
------------------------------
1,795
=============================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
24
8
Profit attributable to members of the parent company
The parent company's profit for the year was £6,296,000 (2012: £5,313,000).
9
Intangible fixed assets
The group
Goodwill on
consolidation
£'000
Purchased
Goodwill
£'000
Software
Development
assets
£'000
Cost
At 1 January 2013
Additions
At 31 December 2013
Amortisation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
The company
Cost
At 1 January 2013
Additions
At 31 December 2013
Amortisation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
14,239
–
--------------------------------
14,239
================================
5,707
672
--------------------------------
6,379
================================
7,860
================================
8,532
================================
1,618
–
--------------------------------
1,618
================================
1,618
–
--------------------------------
1,618
================================
–
=================================
–
================================
Total
£'000
18,403
844
-------------------------------
19,247
===============================
8,160
1,371
-------------------------------
9,531
===============================
2,546
844
------------------------------
3,390
===============================
835
699
------------------------------
1,534
===============================
1,856
===============================
1,711
===============================
9,716
===============================
10,243
===============================
Software
Development
assets
£'000
Total
£'000
2,546
844
--------------------------------
3,390
=================================
2,546
844
--------------------------------
3,390
=================================
835
699
--------------------------------
1,534
==================================
835
699
--------------------------------
1,534
==================================
1,856
======================================
1,711
=====================================
1,856
======================================
1,711
=====================================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
25
9
Intangible fixed assets (continued)
The goodwill on consolidation relates to the acquisition of Gamma Network Solutions Limited, Gamma
Business Communications Limited, Go Worldwide Communications Limited, Blue Spot Technologies
Limited and Peach Amber Kft and represents the excess of the consideration over the fair value of the
assets acquired.
The purchased goodwill represents the cost of acquiring the customer bases of three smaller re-sellers.
10
Tangible fixed assets
The group
Network
assets
£'000
Computer
equipment
£'000
Fixtures
and fittings
£'000
Motor
vehicles
£'000
Cost
At 1 January 2013
Additions
Disposals
At 31 December 2013
Depreciation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
37,239
3,361
(6,717)
---------------------------------
33,883
=================================
21,584
2,441
--------------------------------
24,025
==================================
9,858
===================================
15,655
====================================
9,855
1,683
–
-----------------------------
11,538
==============================
7,546
1,179
-----------------------------
8,725
=============================
2,813
=============================
2,309
============================
1,059
19
–
--------------------
1,078
====================
870
83
--------------------
953
====================
125
====================
189
====================
Total
£'000
48,190
5,063
(6,717)
---------------------------------
46,536
=================================
30,037
3,703
---------------------------------
33,740
================================
37
–
–
----------------
37
==============
37
–
------------------
37
================
–
========
–
=========
12,796
==================================
18,153
===================================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
26
10
Tangible fixed assets (continued)
Network
assets
£'000
Computer
equipment
£'000
Fixtures &
fittings
£'000
Motor
vehicles
£'000
The company
Cost
At 1 January 2013
Additions
Disposals
At 31 December 2013
Depreciation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
11
Investments
The company
Cost
At 1 January 2013
Capital Contribution
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
37,151
3,320
(6,717)
---------------------------------
33,754
===================================
21,558
2,417
--------------------------------
23,975
=================================
9,779
====================================
15,593
=====================================
8,501
1,325
–
------------------------------
9,826
===============================
6,350
1,076
------------------------------
7,426
===============================
2,400
===============================
2,151
==============================
636
13
–
--------------------
649
==================
519
51
--------------------
570
==================
79
==================
117
==================
Total
£'000
46,325
4,658
(6,717)
--------------------------------
44,266
=================================
28,464
3,544
--------------------------------
32,008
==================================
37
–
–
--------------------
37
=====================
37
–
-----------------
37
==================
–
============
–
============
12,258
======================================
17,861
=====================================
Shares in group
undertakings
£'000
10,973
922
--------------------------------
11,895
=================================
11,895
=================
10,973
=================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
27
11
Investments (continued)
At 31 December 2013 the company held share capital of the following subsidiaries, all of which are
registered in England and Wales with the exception of Peach Amber Kft which is registered in Hungary:
Class of share
capital
Proportion held by
the parent
company Nature of business
Gamma Telecom Limited
Gamma Metronet Limited
Gamma Business Communications
Limited
Peach Amber Kft
Ordinary
Ordinary
Ordinary
Ordinary
100%
Telephony services
100%
100%
Dormant
Retail telephony
services
100%
Software services
At 31 December 2013 Gamma Telecom Limited was a member of the following company which is
registered in England and Wales:
NP4UK Limited
Class of share
capital
Proportion held by
the parent
company Nature of business
Limited by
Guarantee
n/a
Dormant
At 31 December 2013, Gamma Business Communications Limited held share capital of the following
subsidiaries, all of which are registered in England and Wales:
Class of
share capital
Proportion held by
the parent
company Nature of business
Gamma Network Solutions Limited
Uniworld Bureau Services Limited
Ordinary
Ordinary
Go Worldwide Communications Limited
Ordinary
Blue Spot Technologies Limited
Ordinary
Data and
communications
networks
Dormant
Dormant
Dormant
100%
100%
100%
100%
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
28
12
Stocks
Consumables
Work in progress
13
Debtors
Trade debtors
Amounts owed from group undertakings
Other debtors
Prepayments and accrued income
Deferred tax asset (note 14)
2013
£'000
541
–
-------------------
541
=================
The group
2012
£'000
The company
2012
£'000
2013
£'000
280
46
-------------------
326
================
–
–
-----------------
–
===============
–
–
------------------
–
================
2013
£'000
The group
2012
£'000
The company
2012
£'000
2013
£'000
15,006
–
613
10,763
588
---------------------------------
26,970
==================================
19,213
–
1,215
7,895
344
---------------------------------
28,667
================================
–
637
114
–
–
---------------------------------
751
=======================
–
1,215
114
252
–
------------------------
1,581
=================================
14
Deferred taxation
The group's movement in the deferred taxation provision during the year was:
Net (liability)/asset brought forward
Profit and loss account movement arising
during the period (note 7)
Acquisition of subsidiary undertaking
Net (liability) carried forward (note 13/15)
2013
£'000
(232)
142
–
-----------------------------
(90)
===============================
The group
2012
£'000
The company
2012
£'000
2013
£'000
9
(573)
(106)
(231)
(10)
------------------------------
(232)
=============================
(58)
–
-----------------------------
(631)
=======================
(467)
–
------------------------
(573)
============================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
29
14
Deferred taxation (continued)
The deferred taxation liability consists of the tax effect of timing differences in respect of:
Excess of depreciation over taxation
allowances of fixed assets
Excess of taxation allowances over
depreciation of fixed assets
Other timing differences
2013
£'000
The group
2012
£'000
The company
2012
£'000
2013
£'000
124
63
–
–
(678)
464
-----------------------------
(90)
===============================
(576)
281
------------------------------
(232)
==============================
(631)
–
-----------------------------
(631)
=======================
(573)
–
------------------------
(573)
=======================
In the current year there were no unrecognised deferred tax assets or liabilities in the Company or
Group. In 2012 there was an unrecognised deferred tax asset of £128,000 in the Group and £81,000 in
the Company.
15
Creditors: amounts falling due within one year
Trade creditors
Corporation tax
Taxation and social security
Other creditors
Accruals and deferred income
Amounts owed to group undertakings
Deferred tax liability
2013
£'000
The group
2012
£'000
The company
2012
£'000
2013
£'000
6,268
1,103
1,432
1,559
15,490
–
678
-----------------------------------
26,530
=================================
5,601
1,101
1,927
1,387
18,131
–
576
---------------------------------
28,723
=================================
763
270
1,338
–
5,205
3,668
631
-----------------------------------
11,875
==================================
1,102
–
1,135
–
4,768
8,416
573
-----------------------------------
15,994
==================================
16
Creditors: amounts falling due after more than one year
Other creditors
2013
£'000
The group
2012
£'000
The company
2012
£'000
2013
£'000
1,439
===============================
8,028
==========================
–
===============================
6,924
==============================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
30
17
Provisions for liabilities and charges
Balance at 1 January
Profit and loss charge in the year
Balance at 31 December
2013
£'000
885
54
------------------------------
939
===============================
The group
2012
£'000
The company
2012
£'000
2013
£'000
913
(28)
------------------------------
885
==========================
–
–
------------------------------
–
===============================
–
–
------------------------------
–
==============================
Provisions are created for dilapidations in respect of property leases where the building (which is the
subject of the lease) has to be returned to the landlord in a defined condition. Once the stage of the lease
has been reached at which a reliable estimate of costs can be made, a provision is built up over the
remaining length of the lease.
18
Commitments under operating leases
At 31 December 2013 the group had annual commitments under non-cancellable operating leases as set
out below.
2013
Land and
buildings
£'000
209
245
446
--------------------
900
======================
Other
£'000
–
78
–
--------------------
78
====================
2012
Land and
Buildings
£'000
143
290
238
---------------------
671
======================
2013
£'000
500
1
17
========================
In one year or less
Between one and five years
In five years or more
19
Share capital
Authorised share capital:
50,000,000 Ordinary shares of 1p each
1,410,083 A1 Shares of 0.1p each
1,700,083 B1 shares of 1p each
Allotted, called up and fully paid:
Ordinary shares of 1p each
B1 shares of 1p each
20,590,196
1,700,083
==================================================
206
17
=========================
20,731,862
–
===============================================
2013
No
£'000
2012
No
Other
£'000
–
23
–
---------------------
23
====================
2012
£'000
500
–
–
=======================
£'000
207
–
=======================
In June 2013 the company bought back 141,666 ordinary shares, representing 0.7% of the called up
ordinary share capital, with a nominal value of 1p each. A cash consideration of £480,428 was paid with
the purpose of returning funds to shareholders. During 2013 1,700,083 B1 shares were issued for a cash
consideration of £46,141.
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
31
19
Share capital (continued)
The group has granted the following options:
Date of grant
29 August 2003
6 September 2005
8 July 2009
2 September 2009
10 March 2010
7 July 2010
24 June 2013
24 June 2013
24 June 2013
Start of year/
Granted in year
Cancelled/
lapsed
End of year
Exercise
Price
Notes
5,122
12,000
1,076,027
37,500
131,351
25,000
910,000
4,425
495,658
(5,122)
–
(972,500)
–
(23,000)
(8,333)
–
–
–
–
12,000
103,527
37,500
108,351
16,667
910,000
4,425
495,658
£2.50
£2.50
£1.00
£1.00
£1.00
£1.00
£0.99
£0.001
£0.001
(a)
(a)
(a)
(a)
(a)
(a)
(b)
(b)
(c)
All options lapse ten years after the date on which they were issued.
Notes:
(a)
(b)
(c)
Options over £0.01 Ordinary shares; vesting period starts on date of issue
Options over £0.001 A1 Shares; vesting period starts on date of issue
Options over £0.001 A1 Shares; vesting period of two years
20
Share-based payments
Share options subject to equity-settled share-based payments are set out within note 19.
Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based
vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed over the vesting period, based on the group's estimate of shares that
will eventually vest and adjusted for the effect of non-market based vesting conditions.
Application of the fair value measurement results in a charge to operating expenses for the year ended
31 December 2013 of £917k (2012: £206k) within the subsidiary company, Gamma Telecom Limited.
The charge has been made to the profit and loss account of the subsidiary as the employees' services are
provided in that company.
Fair value is measured using the binomial pricing model and includes the information set out in the table
below. The expected life used in the model assumes that vesting conditions will be met and all options
will be exercised at the earliest opportunity.
Share price at grant date (pence)
Exercise price (pence)
Expected volatility
Risk free rate
Expected dividend yield
2013
2012
243-339
0-100
25%
0.823%
0%
===================================================
n/a
n/a
n/a
n/a
n/a
===================================================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
32
21
Reserves
The group
At 1 January 2013
Profit for the year
Loss on retranslation of foreign subsidiary
Share buybacks and cancellations
Share issues
At 31 December 2013
The company
At 1 January 2013
Profit for the year
Share buybacks and cancellations
Share issues
At 31 December 2013
Share
premium
account
£'000
Capital
Redemption
Reserve
£'000
Share
option
reserve
£'000
Foreign
exchange
reserve
£'000
Profit and
loss
account
£'000
2,263
–
–
–
31
––––----------------------------
2,294
=================================
27
–
–
1
–
------------------------------
28
=================================
687
–
–
(80)
446
---------------------
1,053
======================
3
–
11
–
–
-----------------
14
===============
23,749
9,007
–
(610)
(1)
-------------------------------------
32,145
==================================
Share premium
account
£'000
Capital
Redemption
Reserve
£'000
Share option
reserve
£'000
Profit and loss
account
£'000
2,263
–
–
31
---------------------------------
2,294
================================
27
–
1
–
---------------------------------
28
================================
–
–
–
446
-------------------------------
446
================================
7,211
6,296
(610)
(1)
--------------------------------------
12,896
=====================================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
33
22
Reconciliation of shareholders' funds and movements on reserves
The group
Profit for the financial year
New shares issued
Foreign exchange movement
Share buybacks and cancellations
Net increase in shareholders' equity funds
Opening shareholders' funds
Closing shareholders' funds
The company
Profit for the financial year
New shares issued
Share buybacks and cancellations
Net increase /(decrease) in shareholders' equity funds
Opening shareholders' funds
Closing shareholders' funds
23
Notes to the statement of cash flows
2013
£'000
9,007
493
11
(690)
------------------------------
8,821
26,936
------------------------------
35,757
================================
2013
£'000
6,296
493
(610)
------------------------------
6,179
9,708
------------------------------
15,887
================================
Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Depreciation and amortisation
Profit on sale of tangible fixed assets
(Increase) in stocks
Decrease/(increase) in debtors
(Decrease)/increase in creditors
Increase/(decrease) in provisions
Gain on retranslation of foreign subsidiary
FRS 20 charge on share options issued/cancellations
Net cash inflow from operating activities
2013
£'000
11,187
5,074
–
(215)
1,946
(2,172)
54
11
446
------------------------------
16,331
===============================
2012
£'000
7,314
–
–
(6,601)
------------------------------
713
26,223
--------------------------------
26,936
================================
2012
£'000
5,313
–
(6,551)
------------------------------
(1,238)
10,946
--------------------------------
9,708
================================
2012
£'000
9,364
4,793
1
(121)
(3,877)
319
(58)
–
–
-------------------------------
10,421
===============================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
34
23
Notes to the statement of cash flows (continued)
Returns on investments and servicing of finance
Interest received
Interest paid
Net cash outflow from returns on investments and servicing of finance
Taxation
Taxation
Capital expenditure and financial investment
Payments to acquire tangible fixed assets
Payments to acquire intangible fixed assets
Net cash outflow for capital expenditure and financial investment
Acquisitions and disposals
Purchase of subsidiary undertaking
Net overdraft acquired with subsidiary
Net cash outflow for acquisitions and disposals
Financing
Loans repaid in the year
Share buybacks and cancellations
Share issues
Net cash outflow from financing
2013
£'000
42
–
---------------------------------
42
==================================
2012
£'000
22
(46)
--------------------------------
(24)
=================================
2013
£'000
2012
£'000
(2,363)
================================
(1,177)
===============================
2013
£'000
(5,063)
(844)
------------------------------
(5,907)
=================================
2013
£'000
–
–
------------------------------
–
===============================
2013
£'000
–
(690)
46
---------------------------------
(644)
===================================
2012
£'000
(1,787)
(875)
---------------------------------
(2,662)
=================================
2012
£'000
(802)
(91)
---------------------------------
(893)
==================================
2012
£'000
(4,000)
(6,601)
–
-------------------------------------
(10,601)
===================================
Gamma Telecom Holdings Limited
Consolidated financial statements for the year ended 31 December 2013
35
23
Notes to the statement of cash flows (continued)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash in the year
Cash outflow from decrease in debt
Change in net funds from cash flows
Net funds at 1 January
Net funds at 31 December
Analysis of changes in net funds
2013
£'000
7,459
–
-----------------------------------
7,459
7,183
----------------------------------
14,642
==================================
2012
£'000
(4,936)
4,000
------------------------------------
(936)
8,119
---------------------------------
7,183
==================================
Net
At
Cash flows
£'000
31 Dec 2013
£'000
1 Jan 2013
£'000
At
Net cash:
Cash in hand and at bank
24
Contingent liabilities
7,183
==================================
7,459
==================================
14,642
==================================
Neither the group nor the company had any contingent liabilities at 31 December 2013 or at
31 December 2012.
25
Capital commitments
Neither the group nor the company had any capital commitments at 31 December 2013 or at
31 December 2012.
26
Pension costs
The group operates a defined contribution pension scheme for the benefit of its employees. The assets of
the scheme are administered by trustees in a fund independent from those of the group. The pension
costs charged in the year amounted to £1,180,000 (2012: £1,005,000).
27
Related Party Transactions
The group has taken advantage of the FRS 8 ‘Related Party Transaction’ exemption from disclosure of
intra group transactions between the parent and a wholly owned subsidiary.
28
Post Balance Sheet Events
On 12 May 2014 the entire share capital of Gamma Telecom Holdings Limited was acquired by Gamma
Communications Limited by way of a share for share exchange and is now the parent company.
On 9 July 2014 we learned of a successful appeal in the Supreme Court in a case in which Gamma was an
intervener. It is not clear at this stage what quantifiable benefit might arise to Gamma as a result of this
process. More information can be found in the Chief Executive’s Statement.