T
h
e
P
a
n
o
p
l
y
|
A
n
n
u
a
l
R
e
p
o
r
t
&
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
Annual Report & Financial Statements
3
The Panoply Annual Report & Accounts 2019
Contents
Strategic Review
Financial Highlights
Overview
Our Services
Our Business
Chairman’s statement
CEO’s statement
Financial Review
Our Purpose
Risk and Risk Management
Corporate Governance
Board of Directors
Corporate Governance Report
Remuneration Report
The Audit, Risk and AIM Rules
Compliance Committee
Directors’ Report
Statement of Directors’
Responsibilities
Financial Statements
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of Cash Flow
Company Statement of Financial
Position
Company Statement of Changes
in Equity
Company Statement of Cash Flow
Notes to the Consolidated
Financial Statements
Directors, Secretary and Advisers
1
2
8
10
12
14
18
24
30
34
36
40
42
44
45
48
53
54
55
56
57
58
59
60
99
Empowering positive,
sustainable digital
transformation.
We are a digital transformation company, helping
forward-looking organisations unlock the opportunities
of tomorrow. With specialist experts spanning the
public sector, health, not for profits, education and the
commercial sector, we activate and accelerate positive
change – consciously, and at scale.
Our values
The Panoply is a values-driven business, and we focus on ‘doing the
right thing’ over bureaucracy.
Our values are the glue that bonds us together; a shared outlook on
the world that underpins our culture, our principles, and everything
we do.
Entrepreneurial
We set out to create a culture of entrepreneurialism where
everyone’s voice is equal. New ideas can (and do) come from anyone
within the group, and we provide the tools to make them happen.
It’s an approach that keeps us constantly innovating, and delivering
transformative work for our clients.
Creative
We’re tireless in our pursuit of new ways to look at old problems (and
old ways to look at new ones). We explore new paths, look around
corners, and delight in finding elegant, simple solutions to complex
problems – always asking, “is there a better way”?
Ego-Free
Egos are needed, and let us take pride in our work. But they have
their place, and that usually means leaving them at the door. Our
success comes from doing the right thing – collectively as a group,
and as individuals. Which also means admitting when we’re wrong,
and learning from the experience.
Conscious
We don’t jump to conclusions or see the world in black and white.
We’re socially conscious and do the right thing wherever possible.
This means decision-making is driven by the collective needs of
stakeholders: fair, measured and mindful, but with conviction and
purpose.
Financial Highlights
1
Revenue up 42% to
£22.1m
(FY2018: £15.6m)
Adjusted EBITDA2 up 30%,
ahead of market expectations, to
£3.5m
(FY2018: £2.7m) representing an Adjusted
EBITDA margin of 16% (FY2018: 17%)
38% organic
growth
(based on the original four companies
acquired at IPO)
4% growth as a result of acquisitions
made post-IPO
Adjusted EBITDA2 excluding
central costs up 37% to
£4.4m
(FY2018: £3.0m), representing an
Adjusted EBITDA excluding central costs
margin of 20% (FY2018: 19%)
Operational Highlights
• 191 customers billed in the year (162 customers billed in the 12 months to 31 March 2018)3
• Growing number of long-term customer relationships, providing increased visibility for the Group
with 45% of customers billed in the year to 31 March 2017 and 68% of customers billed in 2018
also billed in 20193
• Particularly strong growth in the public sector, which accounted for 33% of total revenue in the
period, and following the post-period acquisition of FutureGov is expected to rise further.
1. All figures are reported proforma and on a similar basis as in The Panoply’s recent Admission Document on the assumption that
Manifesto Digital Limited, Not Binary Limited, Questers Global Group Limited and Bene Agere Norden AS were owned for the full
period and Deeson Group Holdings Limited, iDisrupted Limited and Greenshoot Labs from the date of acquisition. The information
was prepared in this way in order to provide investors with a clearer picture of the performance of the entities on a combined basis.
2. Adjusted EBITDA is a non-IFRS measure that the Company uses to measure its performance and is defined as earnings before
interest, taxation, depreciation and amortisation and after add back of exceptional items related to the IPO and acquisitions made
by the Group, share based payments and fair value movements.
3. Based on all companies acquired during the year.
1
1
Overview
Neal Gandhi, Chief Executive Officer, commented:
‘I am very pleased to be reporting our first year end results as
a public company, delivered ahead of our expectation at the
time of our IPO in December 2018. Since we joined the market,
our existing businesses have experienced strong continued
growth and in the period we successfully completed a further
three acquisitions, bringing two leading companies in key
technologies, and D/SRUPTION into the Group. We also launched
human+, enabling The Panoply Group to deliver robotic process
automation to our clients.
Post-period, we completed our eighth and largest acquisition to date
with the purchase of FutureGov. The Panoply now operates as a very
strong disrupter to the large IT services incumbents in the public and
health sectors, and we are excited to be driving forward the Group’s
development in this field.
We are very excited by the opportunity ahead, particularly as we
begin to combine our offerings into specific vertical markets. We
are beginning to reach critical mass in the public sector, health
and not for profit sectors and at the same time are beginning
to win substantially larger commercial sector clients. All of this
bodes well for continued organic growth across the Group. We
continue to focus on M&A that strengthens our business. As a
result of both strategies running in parallel, we are confident that
the Group will be able to sustain momentum over the year and
achieve market expectations for FY2020.’
2
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Vision
To help people
and organisations
to successfully
navigate the
fourth industrial
revolution.
Mission
To become the purpose
driven alternative to the
20th century monolithic
providers in digital
transformation.
The Panoply Annual Report & Financial Statements 2019
3
Overview
Panoply at a Glance
Incorporated
December 2016
4 fully binding
share purchase
agreements signed
3 additional heads
of terms signed
December
2016
May
2018
November
2018
June
2017
June
2018
First external
funding secured
June 2017
Brokers and
auditors appointed
Admission
to AIM
4
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Acquisition of
Deeson
Acquisition of
D/SRUPTION
Acquisition of
FutureGov*
December
2018
January
2019
June
2019
December
2018
December
2018
February
2019
Admission
to AIM
Interim results
announced
Launch of human+
and acquisition of
Greenshoot Labs
The Panoply Annual Report & Financial Statements 2019
5
* post-period acquisition
Overview
Panoply at a Glance continued
Geographical
Footprint
We’re an expanding global organisation, assembled from the very
best businesses in their field.
Our strategy is to build regional clusters of complementary companies which together offer the full
suite of digital transformation services, and to help those companies achieve accelerated organic
growth by creating integrated vertical market offerings.
We currently have businesses based in the UK, Bulgaria and Norway.
6
The Panoply Annual Report & Financial Statements 2019 Market Overview
Digital transformation
Digital transformation has become a synonym
for organisational transformation and business
strategy. It is both about leveraging technology
to make a business more efficient as well as
changing the culture and working approaches
of an organisation so as to enable innovation
that ultimately seeks to lead to new products,
services and business models.
Digital transformation is about maintaining a
competitive advantage, leveraging data and
managing the threat of disruption.
In our view, digital transformation is effected via
five levers:
Digital data – including capturing, processing
and analysing digital data to improve
predictions and support the decision-making
process;
Automation – combining traditional
technologies with artificial intelligence to create
systems that work autonomously and organise
themselves;
Connectivity – connecting the value chain to
high-bandwidth telecom networks to synchronise
supply chains, and reduce both production lead
times and the length of innovation cycles;
Digital consumer access – providing new ways
of reaching consumers through the internet; and
Education – providing coaching, skills and
change management to help organisations and
their workforces to think and operate differently.
The Directors believe that organisations that
fail to transform themselves digitally risk losing
their competitive edge or becoming inefficient
compared with their peers. This move to digital
transformation is in turn creating a dramatic
shift in the way organisations procure IT
services. IDC forecast that the market for digital
transformation services in EMEA (Europe, Middle
East, Asia) will increase from $45 billion in 2017
to $82 billion in 20211.
The IT outsourcing services
Between 2000 and 2014, the value of global IT
outsourcing deals grew from $46 billion to $105
billion2. This trend enabled the rise of large IT
services companies. A recent Statista report
showed that the value of global IT outsourcing
deals dropped to $77 billion in 2016, the second
consecutive annual drop3.
The Directors believe the reason for this is
that traditional outsourcing deals lead client
organisations to lose their internal technology
capability and reduce agility.
Another major structural change is occurring in
deal size. The most recent ISG Sourcing Index
for Q2 2018 shows that the number of EMEA
(Europe, Middle East, Asia) contract awards in
the €4 million to €8 million range rose to 61
per cent of all contracts, up from 43 per cent
a decade earlier4. In the same time period, the
number of contracts valued between €8 million
and €32 million dropped from 44 per cent to 32
per cent and the number of those valued greater
than €32 million dropped from 12.8 per cent to
7 per cent5.
The Directors believe that these structural
changes in the IT services landscape towards
insourcing, combined with the move to smaller
contract values, create an opportunity for a new
kind of services company that is able to win and
deliver smaller contracts.
The Panoply operates as a services company
that is culturally aligned with clients to work
alongside them rather than for them, at the fast
pace that clients now require.
1.
IDC Futurescapes: ‘Worldwide Digital Transformation
Professional Services Forecast, 2017-2021’
2. Statista (2016) – https://www.statista.com/
statistics/189788/global-outsourcing-market-size/
3.
ibid
4. 63rd Quarterly ISG Index
5.
ibid
7
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Our Services
Business and Revenue Model
We offer ambitious, forward-thinking clients an alternative to
the cumbersome and out-moded corporate consultancy model.
Our agile approach lets us outmanoeuvre the traditional large suppliers by
providing end-to-end collaboration that delivers transformative thinking,
rapid innovation and fast, best-in-class delivery
Experience
XaaS
Intelligence
Using customer-centered
insight in the design and
creation of digital products
and services, we help
organisations plan and
improve the experience of their
customers, and initiate the
projects and programmes to
transform this at scale.
We provide access to
the talent, platforms and
methodologies that allow
organisations to scale
innovation and realise
efficiency, repeatability
and reliability in their core
operations.
This is underpinned by key
technology capabilities such
as Amazon Web Services,
Microsoft Azure, Google Cloud
Platform and Acquia.
We enable intelligent business
through helping organisations
make decisions through
gathering, analysing and
interpreting their data. From
straightforward business
intelligence and management
information through to
machine learning, artificial
intelligence and predictive and
prescriptive analysis.
8
The Panoply Annual Report & Financial Statements 2019
The Panoply Annual Report & Financial Statements 2019 Strategic Review
Corporate Governance
Financial Statements
Transformation
Automation
Partnering with organisations
to help them increase their
digital maturity and become
truly digital businesses, we help
them replace legacy platforms,
introduce new working
methodologies and completely
reinvent products, services and
business models.
We enable business growth
and drive efficiency through
automation. Marketing
automation technology
is used to interpret large
volumes of data, create
customer segments based
on previous interactions,
and deliver highly-targeted
communications across
multiple channels. Using
Robotic Process Automation
(RPA) technology, existing
business processes can be
automated using a digital
workforce, freeing staff from
highly-repetitive tasks.
Our revenue model
The majority of services are provided
on a ‘time and materials’ basis, where
clients are billed monthly for the time
spent on a project, at a day rate plus
additional expenses incurred. A limited
number of projects have been charged
on a fixed price or ‘milestone’ basis, as
certain defined deliverables are provided.
Charges for milestones are agreed in
advance and are based on estimates of
the amount of work required to deliver
them.
We also provide certain services where
we charge our clients an initial fee and
then a monthly fee for ongoing services.
These fees are normally paid in advance.
The Panoply Annual Report & Financial Statements 2019
9
The Panoply Annual Report & Financial Statements 2019 Our Business
Our key strengths
Under The Panoply’s ‘murmuration of
starlings’ model, companies are left to operate
autonomously. They retain their creativity and
entrepreneurialism yet are highly focused on
collaborating to secure bigger deals from larger
clients. Clients enjoy the speed and agility that
comes from working with entrepreneurial teams
yet gain comfort from the combined scale and
listed status of the group.
Decentralised operating model
Giving our group companies the freedom to
operate autonomously allows for considerable
agility while minimising business administration
overhead. Governance, guidance and oversight
is provided by a non-executive director
appointed to the board of each group company.
The organisational strategy is supported by
a matching information strategy: central
systems are kept lightweight, easy to adapt
and standards based. They should be easy
to use and easy for a business to integrate
with their platforms of choice - negating the
need for complex and expensive group-wide
implementation of software.
The benefits are better outcomes, faster
execution and lower cost for higher quality work.
Significant market opportunity
Independent research house, International Data
Corporation (IDC), estimates that the market for
digital transformation services in EMEA will rise
from $45 billion in 2017 to $82 billion by 2021.
Group platform
We provide a platform for group companies
to accelerate their organic growth through
collaborative cross-selling and by leveraging
The Panoply brand, network, listed status and
balance sheet.
Alignment of interests
Our Acquisition Formula involves a significant
proportion of the consideration for an
acquisition being issued in Ordinary Shares,
which ensures alignment of interests with
existing shareholders.
Profitable and cash-generative
We are profitable, cash-generative and we only
intend to make accretive acquisitions going-
forward.
Focused growth strategy
Our Acquisition Formula is designed to attract
ambitious companies, confident in their ability
to grow profitably. It rewards cross-selling
and collaboration. Our management has an
extensive network which helps identify, attract
and execute future acquisitions.
Experienced Management and Board
with proven track record
We are managed by highly experienced
executive and non-executive directors. They
combine strong sector, public company and
international mergers and acquisitions expertise
with a successful track record of building,
growing and exiting services companies.
10
The Panoply Annual Report & Financial Statements 2019 Strategic Review
Corporate Governance
Financial Statements
A murmuration
Our operating model aims to replicate the
same agility as a murmuration of starlings:
independent companies in a tight formation,
acting as one, moving in together in real
time, unencumbered by slow, bureaucratic
command-and-control structures.
The Panoply Annual Report & Financial Statements 2019
11
Chairman’s statement
I am delighted to be reporting on an eventful
and successful year for The Panoply, with the
team having reached a number of milestones
in just twelve short months. Most seminal of
those was our successful IPO in December 2018,
which saw The Panoply take shape, and our
four initial Group companies acquired.
Following the IPO, strong momentum has been
maintained with four further key events taking
place in the period, including the acquisition
of a leading digital agency and an artificial
intelligence business, the launch of human+,
an early stage investment into the high growth
area of robotic process automation, and the
acquisition of D/SRUPTION. Post-period a
further, transformational deal was completed
with the purchase of FutureGov, which opens
up additional opportunities for all of our Group
companies and means that The Panoply now
offers an end-to-end solution to public sector
and health clients as an alternative to the big
systems integrators.
Alongside the growth of the UK cluster, The
Panoply’s central offering has been significantly
developed over the period, with the M&A team
strengthened and our Group marketing platform
created through the acquisition and progression
of D/SRUPTION.
It has been a particularly exciting period for
those of us who have been with The Panoply
since inception, seeing the team grow from a
group of just three individuals with an ambitious
vision to change the digital service consultancy
model, to a Group which, as at 30 June 2019,
now employs over 300 people and is at work
delivering value for end clients every day.
Corporate governance
Despite having been incorporated less than
three years ago, The Panoply Board has
committed to a corporate governance approach
commensurate with more mature businesses
and has applied the principles set out in the
QCA code to the Group.
Alongside our central governance function, a
non-executive director is appointed by the Board
to the board of each Panoply Group Company
to provide governance support. All new
acquisitions go through a 100 day integration
plan which covers areas such as back office
finance functions and KPI reporting. This is
designed to provide the central Group with the
ability to impose robust standards on all Group
companies.
As an early-stage business, it is a priority to keep
all our shareholders up-to-date and engaged.
The IPO attracted investment from both private
and institutional investors. We appreciate that
they share our longer-term ambition and we are
committed to transparency in all our corporate
communications.
People
The different companies’ teams working under
The Panoply umbrella are connected by shared
values; they strive to be entrepreneurial,
creative, ego-free and conscious in all that they
do. Alongside this we have a management
team who have clearly shown their dedication,
ambition and skill in their execution of these
encouraging results.
12
The Panoply Annual Report & Financial Statements 2019 The current year has started well, and we are
confident in meeting our full year ambitions.
With the investments made in new service areas
not expected to deliver returns until later in the
year and taking into consideration the enlarged
central cost base of the Company following IPO,
we would expect profitability for the year to be
largely second half weighted.
We continue to have a strong pipeline of
potential acquisitions and as our success builds,
believe we will become an increasingly attractive
home for well run, entrepreneurial businesses
keen to displace the incumbent model in
the market.
Mark Smith
Non-Executive Chairman
30 August 2019
Purpose
Since inception, we have made it clear that The
Panoply is a purpose driven Group that wants to
leave the world a better place than it found it.
This represents a key differentiating factor for
our staff, and the businesses which choose to
work with us. Over the last few months our focus
has been on identifying exactly how we can
make the maximum positive impact possible, in
a way which benefits all our stakeholders and
the wider community.
We are in the business of innovation, but we
understand that change is not always good
for everyone. Therefore, we are committed to
building sustainable futures. By collaborating
with clients, colleagues and communities to
drive positive change, we help them to thrive
tomorrow and beyond.
The Group has standalone impact strategies,
which focus on People, Planet and Communities.
We will be publishing targets in each of these
areas and progress against those targets each
year in the annual report.
Outlook
The Group has made huge strides in a very
short space of time to create a business that
can address the evolving needs of its customers,
whilst serving a clear purpose and delivering
tangible benefits to all stakeholders.
13
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019
Chief Executive Officer’s statement
I am very pleased to be reporting our
first full year results, delivered ahead
of our expectations set at the time of
our IPO in December 2018.
Having listed with just under four months
remaining in our financial year, it was at
this point that we could begin in earnest the
execution of our growth strategy through the
pursuit of complementary acquisitions and
cultivation of collaboration between Group
companies. We made considerable progress
in both these areas, with seven acquisitions
successfully completed, including the initial four
on IPO, and multiple collaborations seen across
Group companies.
At an operational level, we have begun the
bedding in of our differentiated, 21st Century
operating model and building a central team
capable of overseeing further growth.
The level of market demand for The Panoply’s
services is continuing to grow at pace as we
extend the capabilities and reach of the Group.
The opportunities available are larger in scale
than expected at inception and we will be
focused on delivering against this growing
opportunity in the year ahead.
Admission to AIM
Our IPO led to the formation of The Panoply and
gives us the financial strength and stability to
grow our business. This stability gives clients the
confidence to trust us with ever more strategic
and high value engagements. It provides us with
the necessary working capital to invest in each of
our business units, as well as providing an equity
base to achieve our acquisition ambitions.
Growth strategy
The Panoply Group’s strategy comprises of
two primary elements: to acquire best-in-class
technology service businesses in order to build
regional clusters of complementary companies
which together offer the full suite of digital
transformation services; and to help those
acquired companies to achieve accelerated
organic growth through cross selling, upselling
and creating joint propositions, as well as
investing in new growth opportunities where
there is a clear demand.
The Group is targeting the acquisition of
companies providing certain services in key
emerging technologies. It aims to acquire
businesses that buy into the values of the Group
and provide one or more of the below:
•
•
•
additional capability
entry to new sectors
scale
The Group also invests into new teams, new
practices, and supports either internal or external
start-ups where there is clear demand. At the
heart of our strategy is the Group’s acquisition
formula, which is designed to attract ambitious
companies, confident in their ability to grow
profitably.
We support acquired companies to achieve
enhanced long-term organic growth through
access to listed status, cross-selling opportunities,
enhanced marketing and an improved ability to
attract talent.
14
The Panoply Annual Report & Financial Statements 2019
Overview of performance
The year to March 2019 relates to a time period
both before and after we became a public
company. On a pro forma basis the Group
has delivered combined revenue growth for
the year of £22.1m, an increase of 42% over
the corresponding period last year. Pro forma
adjusted EBITDA also saw strong growth,
increasing 30%.
This growth was driven by an increase in
customer numbers across our constituent
companies, up 18% to 191 again on a pro
forma basis. Notable customers include DVLA,
Ministry for Housing, Communities and Local
Government, News UK and the National Trust.
The Group saw particularly strong growth from
the not-for-profit, health and public sectors.
This increase was mostly organic, driven by the
strong presence Group companies have in these
markets. Following The Panoply’s post-period
acquisition of FutureGov, we expect circa 45% of
Group revenue, on a proforma basis, to originate
from the health and public sectors. With Public
suggesting the UK GovTech market could
be worth £20 billion by 2025 (Unlocking the
Potential of Start-ups to solve public problems,
Public.io report 2017). The Group is excited
about its ability to offer a truly differentiated
proposition to the incumbent larger systems
integrators in this industry and grow
market share.
As a breakdown of services, the greatest
proportion of Group revenue currently originates
from the provision of Experience, XaaS and
Transformationservices (26%, 27% and 36%
respectively). Intelligence and Automation, whilst
currently a smaller proportion of the Group’s
business, are significant potential growth areas
with large client opportunities in the pipeline.
In the period we launched human+, a robotic
process automation business that believes
success is achieved through enabling and
re-training the people central to its adoption.
Human+ has worked closely with Blue Prism and
Thoughtonomy (which was recently acquired
by Blue Prism). The primary focus for human+ is
the public and health sectors with post-period
contract wins including UCL and NHS Wales.
Performance against growth strategy:
Acquisitions
Following Admission to trading on AIM on 4
December 2018 and the resulting completion of
our target acquisitions, alongside the completion
of three subsequent acquisitions during the
year, the launch of human+ as a subsidiary of
Notbinary, and the post-period acquisition of
FutureGov, the Group now comprises:
•
Bene Agere: an Oslo-based strategy and
management consultancy;
• Manifesto Digital: an award-winning
London-based digital experience agency;
• Deeson: A leading digital agency based in
Canterbury and London;
15
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Chief Executive Officer’s statement continued
• Notbinary: an award-winning London-
based IT consultancy focused on digital
transformation;
•
human+: a specialist robotic process
automation business and subsidiary of
Notbinary;
• Questers: an award-winning provider of
onshore and nearshore agile software
development services, headquartered in
Sofia, Bulgaria;
• Greenshoot Labs: a provider of enterprise
digital solutions using applied AI and
conversational interfaces, based in London;
and
•
FutureGov: a leader in digital service design
for the public sector and health sector,
based in London.
All acquisitions were completed in line with
the Group’s strategy and have added either
entry into new sectors with growing market
opportunity, such as conversational interfaces,
or additional scale. All management teams
have demonstrated their commitment to The
Panoply’s values and ethos. All are subject to the
acquisition formula.
Also acquired in the period was D/SRUPTION,
a digital transformation community, focused
around a magazine, newsletter, research papers
and events, in order to provide a marketing
platform for The Panoply’s Group companies.
The D/SRUPTION’s flagship event, the European
summit, is scheduled for September 2019 and
will see The Panoply leading a dedicated track
focused on the public sector and health as
well as a workshop targeted at not for profits.
Combined with whitepapers, round table dinners
and advertisements, D/SRUPTION has already
demonstrated that it has the capacity to provide
a more powerful marketing umbrella for our
Group companies than they would be able to
create for themselves.
Our Group company, Greenshoot Labs,
has released OpenDialog, an open source
conversational management framework focused
particularly on regulated industries in public
sector, health, not for profits and the commercial
sector, particularly financial services. Post period
contract wins for Greenshoot Labs include the
Defence Science and Technology Laboratory and
global audit firm BDO.
We are particularly excited about the post
period acquisition of FutureGov. Over more
than a decade FutureGov has built an enviable
reputation for the delivery of scaled digital
transformation and organisational change
across government organisations, saving money
and improving outcomes for citizens at local
and national level across health and public
services. Digital transformation in the public
sector follows a defined process from Discovery,
where the suitability and need for a new service
is assessed, through to Alpha where a proof
of concept is created, then to Beta where a
scaled full version is delivered and then to Live.
Historically, FutureGov has had a reputation for
Discovery and Alpha phases, typically ending
their engagements there or partnering with third
16
The Panoply Annual Report & Financial Statements 2019 party organisations for the Beta and Live phases.
On the other hand, NotBinary has typically
succeeded in winning engagements from the
Alpha phase onwards. By combining the sales
efforts of the two, we now have an end to end
proposition that is a credible alternative to the
large systems integrators, and we will look to
further develop this into single holistic offering
where appropriate this deal is a game changer
that cements our public sector and health and
we are hopeful that it leads to considerable
future success.
Performance against growth strategy:
The Panoply multiplier effect
Whilst the businesses under The Panoply
umbrella have been working in tandem and with
the ethos of The Panoply for a limited period,
and for some only a number of weeks, we are
already beginning to see signs of success from
their collaborative efforts.
Since IPO the Group has won numerous new
collaborative projects, including work with Food
Standards Agency, Cancer Research UK and
Young Epilepsy along with Norway based
BBL Digital.
Outlook
The board and I are delighted with the progress
the team has made since listing and believe
these maiden results have begun to demonstrate
the success of our model, philosophy and the
strength of the market opportunity.
Based on these strong results and the
opportunities we see ahead of us, we made the
decision to invest further in our new service lines,
particularly in the fast-growing areas of robotic
process automation, applied artificial intelligence
and conversational interfaces, with an emphasis
on regulated industries.
These investments, together with the cost of
now being a listed company, will impact the
Group’s EBITDA in the first half of the year,
leaving it lower than the pro forma interim
results announced in December 2018. However,
the strong ongoing performance of the Group
businesses, contracts won post period end and
the growing pipeline of opportunity underpins
the Board’s confidence in achieving market
expectations for the year as a whole. In line
with the Board’s confidence for the second half
FY20, the Company makes no changes to its full
year guidance and in line with our Admission
Document reiterate our intention to pay a
dividend following the conclusion of the results
for the financial year ended 31 March 2020.
We are excited about the year ahead and to
continue delivering on our vision to build a
21st Century provider to solve our clients’ 21st
Century problems. The digital transformation
journey for many organisations remains at the
earliest stages and we are increasingly well
placed to help clients on those journeys, and as
a result deliver over the year and continue to
create value for all our stakeholders.
Neal Gandhi
Chief Executive Officer
30 August 2019
17
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Financial Review
In our Admission Document we reported
financial information on a pro forma basis.
This showed the results of the Group as if The
Panoply had owned Manifesto Digital Limited,
Not Binary Limited, Questers Global Group
Limited and Bene Agere Norden AS throughout
the reported periods. The information was
prepared in this way in order to provide investors
with a clearer picture of the performance of the
entities on a combined basis.
These maiden full year results have been
prepared on a statutory basis. As such they
only reflect the revenue and profits of the
entities above since the date of acquisition on
4 December 2018 as well as including the results
of Deeson Group Holdings Limited, iDisrupted
Limited and Greenshoot Labs Limited from the
date of acquisition.
In order to compare the results of the Group
with the Admission Document and our interim
results, we have also prepared certain pro
forma information for the year to 31 March
2019 which is set out on page 21. The pro
forma numbers are prepared on a similar basis
to those numbers included in the Admission
Document, on the assumption that Manifesto
Digital Limited, Not Binary Limited, Questers
Global Group Limited and Bene Agere Norden
AS were owned for the full period and Deeson
Group Holdings Limited, iDisrupted Limited
and Greenshoot Labs Limited from the date of
acquisition.
Statutory results
Statutory revenue for the year was £8.2m (2018:
£Nil) reflecting the initial acquisitions completing
on 4 December 2018 and the three subsequent
acquisitions completing prior to 31 March 2019.
Adjusted EBITDA prior to exceptional items
was £0.4m (2018: loss £0.3m), operating loss of
£1.7m (2018: loss £0.5m) and the loss after tax
was £1.7m (2018: loss £0.5m).
Negative operating cash flows of £1.2m are a
reflection of the exceptional costs relating to
the acquisitions and the IPO totalling £1.4m.
There were other significant cash movements
during the period including the £5m placing
completed in December 2018, £7.0m taken over
from subsidiaries acquired in the year as well as
£5.6m cash paid out as part of the acquisitions
to vendors.
The acquisitions have resulted in the recognition
of £20.6m of goodwill and £5.2m of intangible
assets on the Consolidated Statement of
Financial Position.
The Group’s cash position was strong at the
end of the period with £5.7m (2018: £0.1m) on
the statement of financial position reflecting
the oversubscribed placing at the IPO which
raised gross proceeds of £5m. Post year-end we
completed the acquisition of FutureGov which
included the payment of consideration including
cash and ordinary shares. In order to help fund
the acquisition The Panoply entered into a three
year £5m revolving credit facility with HSBC (the
18
The Panoply Annual Report & Financial Statements 2019 ‘RCF Facility’) pursuant to which £3.55m was
drawn down to pay a proportion of the cash
consideration. The undrawn facility is available
to use for further acquisitions or working capital.
As at 31 May 2019, assuming all payments in
connection with the acquisition of FutureGov
had been made as at that date, the Group
retained cash reserves of approximately £4.75m.
Key financials and non-financial
indicators
There is no data for 2018 to take into
consideration for meaningful comparison as a
result of the acquisitions and the formation of the
Group only taking place on 4 December 2018.
(i) Key financial indicators
The main key financial indicators are revenue
growth, gross profit growth, Adjusted EBITDA,
debtor’s day current ratio, cash balance and
earnings per share.
Revenue is at £8.2m (2018: £Nil), Gross profit
£3.3m (2018: £nil), Adjusted EBITDA £0.4m
(2018: loss £0.3m),
Current ratio is healthy at 2.4 (2018:2.0), Cash
£5.7m (2018: £0.1m) and loss per share is 9.2
pence (2018: loss 4.2 pence).
Adjusted EBITDA is one of the alternative
performance measures used in the day-to-day
management of the business to aid comparisons
with peer group companies, manage banking
covenants (from June 2019) and provide a
reference point for assessing our operational
cash generation. It eliminates items arising from
portfolio investment and divestment decisions,
and from changes to capital structure. Such
items arise from events which are non-recurring
or intermittent, and while they may generate
substantial income statement amounts, do not
relate to the ongoing operational performance
that underpins long-term value generation.
Another alternative performance measure
that the management monitor, is the quarterly
management report for revenue by type
of services.
The following are the definitions for the
different types of services:
Revenue by type of service
1. Experience – using customer-centred insight
in the design and creation of digital products
and services centred on the needs of the people
that use them. Helping organisations plan and
improve the experience of their customers and
initiating the projects and programmes that will
transform this at scale.
2. XaaS – providing access to the talent,
platforms and methodologies that allow
organisations to scale innovation and realise
efficiency, repeatability and reliability in their
core operations. This is underpinned by key
technology capabilities such as Amazon Web
Services, Microsoft Azure, Google Cloud Platform
and Acquia.
19
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019
Financial Review continued
(RPA) existing business processes can be
automated using a digital workforce freeing up
staff from highly repetitive tasks.
Further information on how much revenue was
generated for each service can be found in
note 3.
(ii) Non-financial key indicators
During the year, the main non-financial key
indicators are number of collaborations within
the Group, brand awareness measured by
website visit and brand awareness from social
media via Twitter and LinkedIn (Measured by
referral from social media to Group website).
Number of collaborations within the Group for
the year in 2019 is 8 (2018: Nil), website visits
6,508 (2018: 967) and brand awareness from
social media a total of 658 (2018: 110).
3. Intelligence – enabling intelligent business
through helping organisations to gather,
analyse, interpret and make decisions based
on their data. From straightforward business
intelligence and management information
through to machine learning, artificial
intelligence and predictive and prescriptive
analysis.
4. Transformation – partnering with
organisations to help them increase their digital
maturity and become truly digital businesses.
This can involve the replacement of legacy
platforms, the introduction of new working
methodologies and the complete reinvention of
products services and business models.
5. Automation – The Enlarged Group’s
automation services seek to enable business
growth through the use of data in marketing
to enable automated decision-making for
communications and to drive efficiency through
the mapping and automating of existing
processes. In marketing, automation technology
is used to interpret large volumes of data and
deliver highly targeted communications across
multiple channels, mapping data to customer
segments based on previous interactions.
Complex multi-faceted journeys can be
managed through mapping the customer
experience and linking this to these automated
journeys. Using Robotic Process Automation
20
The Panoply Annual Report & Financial Statements 2019 Pro forma results
The following table shows the results of the
Group on a pro forma basis and reconciliation
back to the statutory numbers.
Pro forma financial information
Mar-19
April-18 to Nov-18
Unaudited
Statutory
accounts
£’000
8,152
(4,811)
3,341
Revenue
Cost of sales
Gross profit
Administrative expenses
(1,989)
Central costs
Other income
Adjusted EBITDA
(974)
24
402
Pre-acquisition
results*
£’000
13,910
(8,169)
5,741
(2,852)
-
173
3,062
Mar-19
pro forma
FY12m
£’000
22,062**
(12,980)
9,082
(4,841)
(974)
197
3,464**
Mar-18
pro forma
FY12m
£’000
15,564
(9,955)
5,609
(2,731)
(273)
93
2,698
* This shows the unaudited results for the four subsidiaries acquired at IPO from 1 April 2018 to 4 December 2018.
** Revenue of £621,000 and an Adjusted EBITDA loss of £89,000 relate to Deeson Group Holdings Limited, iDisrupted Limited
and Greenshoot Labs Limited. This reflects the results of these businesses between acquisition and 31 March 2019.
21
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Financial Review continued
On a pro forma basis the Group has seen
significant growth in both revenue and
Adjusted EBITDA during the year. Revenue has
increased by 42% from £15.6m to £22.1m. 4%
of this growth related to the three acquisitions
completed after the IPO with the remaining 38%
being organic growth. Adjusted EBITDA has
increased from £2.7m to £3.5m.
This growth has been driven largely by our
established businesses operating across the
Experience, and Transformation service lines. We
have made investment into the Automation and
Intelligence service lines with the incorporation
of human+ and through the acquisition of
Greenshoot Labs in the latter part of the
financial period. As a result, we expect these
lines to grow in the coming year.
We also monitor revenue across Commercial,
NGO and Government and we have seen
significant growth in our government sector
business, which accounted for 33% (2018: 13%)
of pro forma revenue in the year. We expect this
to increase further following the acquisition of
FutureGov in June 2019.
Whilst we have seen a rise in Adjusted EBITDA
margins (excluding central costs) from 19% to
20% in the current year, including central costs
the Adjusted EBITDA margin has fallen from
17% to 16%. Central costs were £0.97m in the
period. In FY2020 the Group will see this rise
with the impact of a full year of an enlarged
cost base, a reflection of the key recruitment
completed after IPO, as well as the associated
costs of being an AIM quoted company. Going
forward, it is not anticipated that significant
increases to the cost base are needed in order
to scale.
We expect to see a reduction in Adjusted
EBITDA margin in the first half of the current
year as a result of the additional central costs
and investments made into new service lines as
set out above.
Because of the 15 month period reported in
the Admission Document, this year it has been
difficult to show certain information on a like
for like basis. In following periods, we intend to
show full details of revenue split by services
and sector.
22
The Panoply Annual Report & Financial Statements 2019 Additional consideration
As a result of the strong trading during
the period and growth in three of the four
businesses acquired at IPO, a total of £10.9m is
payable as earn out consideration in ordinary
shares in the Group. These shares are to be
issued at the higher of 74p (being our price at
IPO) and the prevailing share price at the time
of issue. The maximum total number of shares
to be issued therefore in respect of results
during the period is 14,665,516 which reduces
to 11,423,665 based on the closing share price
as at 28 August 2019. The ordinary share
consideration is payable over the next twenty-
four months subject to certain performance
targets being met. At present these targets have
not been met and as a result the consideration
payments have not yet been made.
The earn out period on the initial four
acquisitions runs until the results to
31 March 2020 and we therefore expect further
adjustments subject to performance during the
current year.
Oliver Rigby
Chief Financial Officer
30 August 2019
23
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Our Purpose
Communities
• Empower vulnerable
•
communities through tech
Invest in a pipeline of
diverse talent
• Tackle educational
inequality and provide
access to the tech
industry
m u nities w ith future pro of skills
People
• Promote emotional,
physical and
financial wellbeing
• Ensure equality
of opportunity
throughout the
group
E q uip pin g o ur co m
I
n
v
e
s
ti
n
g
i
n
t
h
e
w
e
ll
b
e
i
n
g
o
f
o
u
r
w
o
r
k
f
o
r
c
e
Planet
• Measure and
minimise our
footprint
Advocate for green
internet services
•
• Operate as a
carbon neutral
business
B uildin g a sustain a ble tech in d ustry
24
The Panoply Annual Report & Financial Statements 2019
We’re in an era of unprecedented change where the very fabric of
society is being challenged. From climate change to social mobility,
to mass automation, we want to do the right thing for our people,
our communities and our environment.
We want to leave the world a better place than how we found it. That means we are putting in
place ambitious strategies and targets to ensure that we are operating consciously with purpose at
the heart of every decision we make. We understand that there is a lot of work to do, but we have
built a diverse team of socially conscious individuals who all believe that doing good should not
come as an afterthought to doing well.
Equipping our communities
with future-proof skills
At The Panoply, we are assembled for
innovation. Our businesses are ambitious,
brave and, through technology, are changing
the working landscape. We are conscious of
the impact that technology is having on the
communities we work with and understand that
innovation is not always good for everyone. That
is why we are dedicated to safeguarding the
future for people who may become displaced by
technology.
We will invest in the future workforce to give
them skills they will need to thrive in a changing
workplace. Our focus areas for our community
investment work will be to empower vulnerable
communities through technology and to provide
access to opportunity and employment for
diverse talent.
Giving 1% of profits
In 2018/19 we pledged £50k to seed-fund our
community investment programmes. Each year
going forward, we will donate 1% of our pre-
tax profits to invest in future-proof skills in the
communities in which our employees live and
work. Leveraging the success of the business to
achieve social good, we will donate a portion
of our profits to charitable projects which are
aligned to our purpose. This pledge will help
to ensure that the Group’s philanthropic giving
keeps pace with the growth of the business.
We will distribute strategic grants to fund
programmes in areas and locations where we
can add additional value through our core
business functions, namely; products & services
and time & expertise. The remainder of the
community investment budget will be dedicated
to supporting our employees with their
philanthropic passions and ambitions.
Giving 1% of time
At The Panoply, we believe in the power of
people to transform their communities. We want
to inspire our workforce to engage with, and
improve their communities in whichever way
that makes the most sense for them; using their
skills, experience and time to make a significant
positive impact.
Our employee efforts will reflect the Group’s
commitment to future-proof skills, by applying
their skills and knowledge to create change and
deliver impact where it’s needed most.
We encourage our staff to donate 1% of their
time to purpose driven activities. That means
that our employee volunteer programmes gives
full-time staff an annual benefit of at least
16 paid hours for community engagement.
To help people use their hours we organise a
Community Action Day each year, assembling
the entire global workforce to do something
amazing.
The Panoply Annual Report & Financial Statements 2019
25
Strategic ReviewCorporate GovernanceFinancial Statements Our Purpose continued
Gender split
60%
40+
Female Male
40%
Data taken from 2019
Baseline Survey
Gender split based on seniority
Investing in the wellbeing
of our workforce
Equality of opportunity
We recognise the enormous value in a diverse
workforce and are working hard to ensure that
we remain inclusive of people from different
backgrounds with varying perspectives, skills
and experiences. We will proactively seek to
create diverse teams through explicit and visible
inclusivity commitments and by actively pursuing
under-represented talent.
We will regularly assess how we are doing in
terms of diversity and inclusion and report
annually on our company make-up. We will use
the findings to make meaningful, data-informed
action which supports a workforce that is
inclusive of talent from all backgrounds.
26
Female Male
2019 Baseline Diversity Report
Following our baseline survey we have
committed to the following targets for the next
twelve months:
•
•
•
•
To increase representation of people from
BME backgrounds to 20%
To increase female representation in
senior roles to 37% and increase female
representation of board directors to 30%
To increase representation of those from
less privileged class backgrounds to 24%
To increase representation of those with a
disability to 5%
In order to help us achieve our targets we have
made the following commitments for the year
ahead:
•
•
•
•
•
To deliver unconscious bias training for all
hiring managers
To ensure that the interview process is
consistent and objective
To build diversity training into the
onboarding process
To create networking opportunities for
under-represented Groups within the
business
To invest in a pipeline of diverse talent
through partnerships and volunteering
We will, by design, remove unfairness, inequality
and biases from the business.
The Panoply Annual Report & Financial Statements 201960
+
A
Strategic Review
Corporate Governance
Financial Statements
Socio-economic class background
1%
8%
10%
38%
38+
43%
Upper Middle Class
Middle Class
Lower Middle &
Skilled Working Class
Working Class
Not Working
Ethnic background (UK only)
1%
4%
8%
2%
2%
83+
83%
White
Mixed Ethnic Group
Hispanic or Latino
Black
Asian
Other
Employee wellbeing
At The Panoply we understand that creating a
healthy, happy and satisfied workforce is key to
our success and we are working hard to ensure
the financial, physical and mental wellbeing of
our teams.
Each office within the Group pays above the
living wage to every employee and delivers a
programme of culturally relevant wellbeing
initiatives. We are investing in dedicated mental
health first aid provision across the Group and
promote genuine flexible working policies.
We will be tracking the impact of our work in
this area by measuring churn and distributing
employee satisfaction surveys throughout
the year.
2020 Targets
Increase female representation
for senior roles to
37%
To increase representation of those
from less privileged backgrounds** to
24%
Increase representation of people
from BME backgrounds* to
20%
To increase representation of
people with a disability
5%
* UK only
** working and non-working class backgrounds
according to the NS-SEC
The Panoply Annual Report & Financial Statements 2019
27
8
+
2
+
1
+
4
+
2
+
A
43
+
8
+
10
+
1
+
A
Our Purpose continued
Building a sustainable tech industry
Carbon Neutrality
As a service driven technology business The Panoply is a low energy user. In this first year of our operation we have
collected our Scope 1 and 2 emissions covering electricity, gas and district heating across the Group. The data shows that
we are a very low user with a carbon intensity of just 0.089 tCO2e for the year.
Regardless of this, we are determined to minimise our impact on the environment as much as possible. We will
retrospectively offset our carbon emissions, adding an extra 5% onto our footprint to allow for any inaccuracies or
unreported data.
Over the next year we will be switching our energy suppliers to renewable energy and working to encourage our clients
and suppliers to seek low carbon options also. We will expand the coverage of our carbon reporting to cover business
travel and look to further develop this Scope 3 reporting over time.
Carbon Emissions (tCO2e)
Group
Group
UK
UK
Norway
Norway
Bulgaria
Bulgaria
Remote
Remote
Actual
Pro
Forma
Actual
Pro
Forma
Actual
Pro
Forma
Actual
Pro
Forma
Actual Pro Forma
Scope 1
Gas
Total fuel cost (£)
Scope 2 (location-based)
Purchased district heating gross
(location-based)
Purchased electricity
(location-based)
Total electricity and heating
cost (£)
Total (Scope 1 and Scope 2
location-based) CO2e (tCO2e)
Total (Scope 1 and Scope 2
location-based) cost (£)
Carbon Intensity (tCO2e)
2.97
573
6.64
5,088
2.97
573
6.64
5,088
0
0
0
0
0
0
2.33
6.98
0
0
2.33
6.98
0.00
0
0
0
0
0
0
0
0
0
15.48
40.69
5.92
12.94
5.13
15.38
2.22
7.54
2.21
4.83
10,397
27,330
3,003
7,960
1,758
5,274
4,516
10,891
1,120
3,205
20.77
54.31
8.89
19.58
7.46
22.37
2.22
7.54
2.21
4.83
10,970
32,418
3,576
13,048
1,758
5,274
4,516
10,891
1,120
3,205
Per employee (FTE)
0.27
0.23
Notes
Defra 2018 data used alongside GHG Protocol, on an organisational boundary basis
1 Currency conversion rates August 2018
Bulgaria - 2.187
Norway - 10.808
https://www.xe.com/currencytables/?from=EUR&date=2018-08-12
2 Norwary (Bene Agere) - we occupy 2.2% of an office block and our charges and electricity relate to this proportion
3 Our UK remote workers are based in various locations either at home or in shared office space. We have applied our average UK CO2e/FTE figure to this calculation
4 For carbon offsetting we add an extra 5% to the total to account for any omissions in the data
5 Carbon intensity figure is based on our tCO2e/FTE basis for the whole year
6 Actual figures represent the period post-acquisition of each business. Pro forma amounts represent the full-year consumption.
28
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
The Panoply Annual Report & Financial Statements 2019
29
Risk and Risk Management
Principal risks and uncertainties
The Group is affected by a number of risks
and uncertainties, not all of which are wholly
within its control as they relate to the wider
macroeconomic and legislative environment
within which the Group operates. In addition,
we have seen caution evident in some of
our target markets due to the uncertainty
surrounding Brexit.
The Board has overall responsibility for the
Group’s system of internal control and for
reviewing its effectiveness. Responsibility for
implementing sound and effective systems of
internal control has been delegated by the
Board to senior management. The purpose of
the system of internal control is to manage and
mitigate rather than eliminate the risk of failure
to achieve business objectives and can only
provide reasonable, but not absolute, assurance
against material misstatement or loss.
The Directors have established an organisational
structure with clear operating procedures, lines
of responsibility and delegated authority. There
are clear procedures for capital investment
appraisal and approval, contract risk appraisal
and financial reporting within a comprehensive
financial planning and accounting framework.
The Group’s risk register is reviewed on a
quarterly basis for additions, changes and
mitigation strategies. This review is overseen
by the Company Secretary, who ensures the
appropriate level of action and reports by
exception to the Board every six months.
Given the size of the Group it is not considered
necessary to establish an internal audit function.
The key financial risks of the Group are detailed
in Note 24 in Notes to the Consolidated
Financial Statements. The key non-financial risks
that the Group faces are listed below.
Non-financial risks
The key operational risk the Group faces is
the general economic outlook. The Group has
chosen to invest in a sector that has shown
resilience through the economic cycle; however,
there is no guarantee that this can continue and,
should there be a reduction in demand in this
sector, then revenues, margin, profitability and
cash flow could all be affected adversely.
This following list highlights the key risks and
uncertainties that the Group can seek to
mitigate by a choice of appropriate strategies;
however, this list is not intended to be
exhaustive.
Dilution risk from acquisitions
The Group has made a number of acquisitions
which could result in the issue and allotment of
new Ordinary Shares to the selling shareholders.
Any such future issue and allotment of new
Ordinary Shares will have a dilutive effect on
the shareholding of investors. The Group is
transparent about the dilution and updates
shareholders as soon as possible with regards to
the further issue of shares.
Future Acquisitions
The Enlarged Group’s strategy envisages that
the Company will make acquisitions of other
companies (domestically and internationally).
There can be no guarantee that the Company
will successfully identify any companies or
businesses nor that will be able to complete
an acquisition where an opportunity has been
identified and, as a result, resources may
be expended on investigative work and due
diligence which does not result in the completion
of the acquisition.
In addition, although it is the Company’s
intention, where appropriate, to issue Ordinary
Shares as consideration for the acquisition of
businesses after Admission, sellers of businesses
may not be prepared to accept this form of
consideration.
The consideration payable to the sellers of
companies that the Company acquires going
forward is likely to include the issue and
allotment of new Ordinary Shares. Any such
issue and allotment of new Ordinary Shares will
be dilutive to the shareholders.
The Directors will only pursue acquisition
opportunities that it believes will be earnings
enhancing to shareholders.
Technology risk
The market in which the Group operates has the
potential for significant technological change.
The Enlarged Group’s business is dependent
on the ability to pick appropriate technology
partners to help deliver outcomes and solutions
to clients. A failure to maintain relationships with
and identify appropriate technology partners
could affect both the potential profitability and
saleability of the Enlarged Group’s product
and services offering. The management team
keep up to date with changes in the technology
landscape and continually assess the threats or
opportunities provided by these changes.
30
The Panoply Annual Report & Financial Statements 2019 Legacy liabilities
As part of the acquisition process of any
business, the Group ensures significant due
diligence is undertaken on the target. This
process includes both internal due diligence
and due diligence carried out by external
experts. There can be no guarantee that the
due diligence performed will identify all issues
existing within a target company at the point
of acquisition. To mitigate this risk, the Board
ensures that suitable warranties are given by
vendors of the acquired businesses. There can
be no guarantee, however, that such warranties
will be sufficient to provide full recompense for
any losses suffered by the Company as a result
of such issues.
Malicious activity and data protection
The Group operates in the technology sector
and as a result has information assets that could
be compromised, disrupted or lost as a result of
malicious activity.
The Group operates protective equipment to
defend against malicious attacks and has staff
policies in place to enforce good practice on
data security.
Key resources
The Enlarged Group places substantial reliance
upon the efforts and the abilities of the
Directors, its senior management and executive
management teams. While the Enlarged Group
has entered into contractual arrangements
with each of these individuals with the aim of
securing their services, the retention of their
services cannot be guaranteed. The loss of the
services of any of these individuals could have a
material adverse effect on the Enlarged Group’s
business, operations, revenues and prospects.
The Group continues to seek to mitigate these
risks through the continued strengthening of
middle management in the key areas of finance,
operations and technology and through the use
of bonuses and employee options to incentivise
and reward key staff.
Contractual liabilities
In instances where the Group’s services or
products fail to meet agreed timescales or
standards there is a risk that the Group will be
exposed to claims for contractual liabilities as a
result of failure.
The Group seeks to mitigate these risks through
the following methods:
•
contractual reviews prior to execution by
legal advisers where the contract is material
and differs from the Group’s standard terms
and conditions;
• where products or services are being resold,
the Group seeks to take no additional
risk by simply seeking to back terms and
conditions from its suppliers; and
•
only accepting a level of contractual liability
which is commensurate with insurance
policies and the value of the contract.
•
risks and risk management.
31
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Corporate
Governance
Board of Directors
Corporate Governance Report
Remuneration Report
The Audit, Risk and AIM Rules
Compliance Committee
Directors’ Report
Statement of Directors’
Responsibilities
34
36
40
42
44
45
3232
The Panoply Annual Report & Financial Statements 2019 3333
The Panoply Annual Report & Financial Statements 2019 Board of Directors
Mark William Smith, aged 64,
Non-Executive Chairman
Neal Narendra Gandhi, aged 51,
Co-Founder and Chief Executive Officer
Mark has held several senior roles in creative and
innovative communication businesses. He began his career
as a chartered accountant at Touche Ross & Co. (Deloitte).
He then spent 30 years at Chime Communications, which
was acquired by Providence Private Equity in 2015.
Mark is currently chairman of Holiday Extras, a market
leader in the provision of online ancillary travel services,
a position which he has held for 15 years. He is also
a non-executive director at The Dods Group, an AIM
listed intelligence, media, training and events company,
operating in over 50 countries.
Neal is a serial tech entrepreneur having co-founded
four companies that exited successfully with a combined
value of £117m. He co-founded his first company at the
age of 21 and, under the brand name of Jungle.com, that
company went on to be sold to GUS for £37m. In 1996 he
co-founded Xplora and sold it to Nasdaq-listed USWeb
in 1998.
Neal then co-founded Attenda, a managed services
consultancy which went on to be sold for £72m; one part
to Telecity Plc and the other to Darwin Private Equity. In
2006 he founded QuickStart Global, an off-shore IT service
provider, which grew rapidly, and in 2010 was listed in the
Sunday Times Tech-Track 100 at number 3, his second
company in that list with Attenda having been listed at
number 2 in 2001.
Oliver James Rigby, aged 38,
Co-Founder and Chief Financial Officer
Oliver qualified as an accountant with MRI Moores
Rowland LLP in 2006 before spending six years as an
adviser in corporate finance with Daniel Stewart and
Deloitte. Oliver acted as a Nominated Adviser to the AIM
Market of the London Stock Exchange and was one of
their youngest Qualified Executives.
Prior to co-founding The Panoply, Oliver set up Growth
Company FD Limited in 2012 to provide part time CFO
and corporate finance support to growing businesses.
He has worked with clients across a range of sectors
and sizes including AIM listed Magnolia Petroleum Plc
and privately owned Uplands Retail Limited which has a
turnover of over £60m.
34
The Panoply Annual Report & Financial Statements 2019 Christopher Paul Sweetland, aged 64,
Non-Executive Director
Isabel Jane Kelly, aged 53,
Non-Executive Director
Chris qualified as a chartered accountant with KPMG
before spending 9 years overseas in a variety of financial
roles with PepsiCo Inc. In 1989, when he was CFO for the
Central Europe Beverages Division, he was recruited by
WPP to be part of their small central team.
Chris retired from his role as WPP Deputy Group Finance
Director in 2016 having spent 27 years helping build
the company and having been involved in all aspects of
operations, investor relations and the many acquisitions
that built that Group. Chris also represented WPP on the
boards of a number of companies both in the UK and
overseas.
Isabel is the founder of Profit with Purpose, a social
purpose consultancy working with companies and
nonprofits. She is also a ‘Resident Expert’ at the Skoll
Centre, Said Business School, Oxford University, where
she is researching the organisational structures used by
businesses to deliver social impact.
In 2002 Marc Benioff, CEO of Salesforce.com, hired Isabel
to establish the Salesforce Foundation internationally
(now Salesforce.org). For 12 years she grew and led an
international team delivering technology, grants and
programmes in 110 countries, as well as generating
revenue of $12m to fund the work. Isabel worked at Oxfam
and Amnesty International for 12 years prior to joining
Salesforce.
35
Strategic ReviewCorporate GovernanceFinancial StatementsThe Panoply Annual Report & Financial Statements 2019 Corporate Governance Report
Key Strengths
The Directors believe that the Enlarged Group’s key strengths
include:
•
•
•
•
Significant market opportunity – independent research
house, International Data Corporation (IDC), estimates that the
market for digital transformation services in EMEA will rise from
$45 billion in 2017 to $82 billion by 2021.
Group platform – The Panoply provides a platform for
companies which join the Enlarged Group to accelerate their
organic growth through cross-selling, leveraging The Panoply
brand, network, listed status and balance sheet.
Alignment of interests – The Panoply’s Acquisition Formula
involves a significant proportion of the consideration for an
acquisition being issued in Ordinary Shares thereby ensuring
alignment of interests with existing shareholders.
Decentralised operating model – The Panoply’s operating
model allows companies within The Panoply Group to continue
to remain entrepreneurial and creative, unstifled by
bureaucracy;
–
–
Central control is provided by a non-executive director
appointed by the Board to the board of each Panoply
Group Company to provide governance as well as
guidance and oversight on growth strategy and
collaboration with other Panoply Group Companies;
The benefits of this model to clients are better outcomes,
faster execution and lower cost for higher quality work.
•
Profitable and cash-generative – the Enlarged Group is
profitable, cash generative and only intends to make accretive
acquisitions going-forward.
•
Focused growth strategy
–
–
The Panoply’s Acquisition Formula is designed to attract
ambitious companies, confident in their ability to grow
profitably and rewards cross-selling and collaboration;
The Panoply’s management has an extensive network to
help identify, attract and execute future acquisitions.
•
Experienced Management and Board with proven
track record – The Panoply is managed by highly
experienced executive and non-executive directors combining
strong sector, public company and international mergers and
acquisitions expertise with a track record of building, growing
and exiting services companies.
The Panoply Holdings plc is committed to operating proper
standards of good corporate governance and has established a
corporate governance model based on the key principles of the
Quoted Companies Alliance Corporate Governance Code (“QCA
Code”). The following outlines how the Company addresses the ten
broad governing principles defined in the QCA Code. The Non-
Executive Chairman is responsible for corporate governance and the
overall leadership of the Board and ensuring its effectiveness.
The Panoply Holdings plc operates a business model and growth
strategy that promotes the generation of shareholder value through
the growth and retention of recurring revenue streams. The
company promotes professionalism, openness, honesty and
integrity between its customers, staff, shareholders and suppliers.
Principle 1 – Establish a strategy and business
model which promote long-term value for
shareholders.
The Panoply is a digitally native technology services company
designed for the “fourth industrial revolution”, where technological
disruption has become widespread across all sectors.
The Panoply was founded in 2016 with the aim of identifying and
acquiring best-of-breed specialist information technology and
innovation consulting businesses across Europe to form regional
clusters of group companies positioned to deliver services that help
clients digitally transform their businesses for the automation age.
In the last two and half years, The Panoply has identified and met
numerous potential target companies and has completed eight
acquisitions.
Unlike many buy and build models that have preceded The Panoply,
the Directors are focused on creating an agile, decentralised group
where employees join a culture of autonomy, purpose, collaboration
and innovation. The Directors believe that this decentralised model
with shared values will allow Group Companies to collaborate,
providing clients with innovation and rapid delivery of services.
The Panoply has developed an efficient, formulaic approach for
acquiring companies. With an extensive acquisition pipeline, the
Directors intend to continue to supplement the organic growth of
existing Enlarged Group Companies through the addition of
complementary companies in each regional cluster. It is the
Directors’ intention to acquire between five and seven companies
per regional cluster, in order to achieve a capability set across
complementary key emerging technologies including:
•
•
•
•
•
•
•
•
Digital Strategy;
Service Design/Customer Experience;
User Experience Design/User Interface/Interaction Design;
Software Development;
Systems Integration;
Cybersecurity;
Cloud Transformation;
Data Analytics/Science; and
• Managed Services.
36
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Principle 2 – Seek to understand and meet
shareholder needs and expectations.
The Panoply proactively engages with its shareholders and
potential shareholders alike. This is through a series of mechanisms:
If you would like to know more about The Panoply as a shareholder,
or potential shareholder, please contact us through our investors
email address and we will put you in touch with one of our
Executive Directors.
Formal announcements – as a London Stock Exchange
(LSE) AIM listed company, we make all statutory
announcements through the LSE’s regulatory news service
(RNS). A feed is maintained on our investor area (see below).
The Panoply reports formally to shareholders by the publication
of its annual and half-yearly financial statements.
Analyst and investor presentations – the Executive
Directors present the half-yearly and annual results to
institutional investors, analysts and the media. The
presentations are available on the investor section of
the website.
AGM – Notification of the date of the AGM is sent to
shareholders at least 21 working days in advance of the
meeting. Details are set out in the Notice of Meeting. The
Directors (and the external auditor) are available at the AGM to
answer questions, both during the course of the meeting, and
informally afterwards. All details, can be found on the Investor
Announcements and the Investor Documents pages.
News releases – in addition to statutory announcements, we
use RNS Reach to present regular business news and updates
to shareholders. We also have a full news service available on
The Panoply website.
Interactive sessions – The Panoply’s Executive Directors
arrange regular (six monthly) face to face sessions with any
interested shareholders or potential shareholders, and are also
available for updates at any point in the year. See contact
details below.
Investor focused micro-site – we maintain a full section on
the main Panoply website for investors. This includes the
Financial Calendar and real-time RNS announcements ; the
latest Investor Documents, presentations and reports; share
information and share dealing interactive feeds; this corporate
governance statement; a full list of investor related contacts.
Principle 3 – Take into account wider
stakeholder and social responsibilities and
their implications for long-term success.
Please see further details in the Purpose Section of our Annual
Report & Financial Statements (page 24).
Principle 4 – Embed effective risk management,
considering both opportunities and threats,
throughout the organisation.
Risk management activity is overseen by the Chief Executive Officer
and Chief Financial Officer, with the support of the Executive
Management Team.
Our framework enables us to remain vigilant to all known and
emerging risks and opportunities. Effective risk management
supports informed decision making; enables us to minimise impact
from unforeseen internal or external events; and allows us to fully
exploit emerging opportunities. Our objectives for risk management
are to:
•
•
•
•
Identify, measure, control and report on business risk that may
undermine the achievement of objectives, both strategically
and operationally, through appropriate analysis and
assessment criteria
Effectively allocate effort and resources for the management of
key and emerging risks
Build an accurate picture at the highest level of the key risks
facing our business, and use this information to drive business
improvements in a considered and coordinated way
Support and develop our reputation as a well governed and
trusted organisation
• Minimise costs and drive efficiencies in the way that pervasive
risk is controlled across the business
LSE Profile – we also maintain a profile on the London Stock
Exchange Issuer services website.
•
Identify weaknesses in, and opportunities to improve, our
business processes
Investor Email – we also manage an investor email account
for any direct queries – investors@thepanoply.com.
Contact with major shareholders is principally maintained by the
Executive Directors, who ensure that their views are communicated
to the Board as a whole. The Chair is also available to discuss
governance and other matters directly with major shareholders. At
every Board meeting, the Board is provided with the latest brokers’
reports and a summary of the contents of any meetings with
shareholders. The Board considers that the provision of these
documents is a practical and efficient way for both the Chair and
Senior Independent Director to be informed of major shareholders’
opinions on governance and strategy and to understand any
shareholder issues and concerns.
Risk Registers
At the Operational level, a risk register is maintained within every
business of the Group. Risks are recorded and managed within as
required and are reviewed regularly by the management of each
business.
At a central level, there is a single central risk register for Group
Significant risks, which records the top risks to the business.
Risk registers are reviewed on a quarterly basis which supports the
escalation of any risks with a high residual impact, or potentially
pervasive risks, to a higher level risk register as appropriate.
•
•
•
•
•
•
•
•
The Panoply Annual Report & Financial Statements 2019
37
Corporate Governance Report
continued
Risk Appetite
The Board determines the amount and type of risk that The Panoply
is willing to take on in pursuit of its strategic objectives. The Board’s
appetite for risk is influenced by various key factors including (but
not limited to) the overall economic, regulatory and operational
landscape in which we operate.
The Executive Management Team advise the Board of these key
influences which enables the Board to adjust the amount of risk that
The Panoply takes on. Risk tolerance may, by business choice, differ
in different parts of the company.
The Audit, Risk and AIM Rules Compliance Committee is chaired by
Chris Sweetland and has primary responsibility for monitoring the
quality of internal controls, ensuring that the financial performance
of the Company is properly measured and reported on and
reviewing reports from the Company’s auditors relating to the
Enlarged Group’s accounting and internal controls, in all cases
having due regard to the interests of Shareholders. The Audit, Risk
and AIM Rules Compliance Committee meets at least twice a year.
Mark Smith is the other member of the Audit, Risk and AIM Rules
Compliance Committee . Oliver Rigby, CFO, attends Audit, Risk and
AIM Rules Compliance Committee meetings by invitation.
Review and Assurance
Risk registers are updated as and when required. A full review is
undertaken quarterly. The highest rated risks are presented to the
Board every quarter by the CEO. Every six months the Board is
presented with the detailed risk registers for each line of business.
Principle 5 – Maintain the Board as a well-
functioning, balanced team led by the Chair.
The PLC Board (“the Board”) is responsible for the Company’s
corporate governance systems and processes that support good
decision making.
The Non-Executive Directors, Mark Smith (Chair), Isabel Kelly and
Chris Sweetland are considered independent of management and
free from any business or other relationships that could materially
interfere with the exercise of their independent judgement. Both
Mark Smith and Chris Sweetland own shares in The Panoply and all
three Non-Executive Directors hold options, however this is not
considered to alter their independent status.
Director’s Commitment to The Panoply
The Directors acknowledge the importance of the principles set out
in the QCA Code.
Our Non-executive Directors have committed in their letters of
appointment to attend all reasonable board and committee
meetings in addition to being reasonably available at other times for
The Panoply business. Our Executive Directors have entered into
employment contracts which require them to attend all board and
committee (of which they are a member) meetings.
The Non-Executive Directors meet at least once a year without the
Executive Directors present. All Directors submit to re-election each
year at the Annual General Meeting (“AGM”) of the Company.
The Board meets at least four times each year with additional
meetings when circumstances and urgent business dictate. At each
meeting the Board reviews a schedule of reserved matters including
trading performance, financial strength, strategy (including
investment and acquisition opportunities), risk management,
controls, compliance, reports to shareholders and succession
management.
The Directors have established two committees of its Board, namely
the Audit, Risk and AIM Rules Compliance Committee and the
Remuneration Committee.
The Remuneration Committee is chaired by Isabel Kelly, and reviews
the performance of the Executive Directors and determines their
terms and conditions of service, including their remuneration and the
grant of options, having due regard to the interests of Shareholders.
The Remuneration Committee meet at least once a year. Mark
Smith is the other member of the Remuneration Committee.
The Remuneration Committee also considers Board policy in relation
to the remuneration of the Chairman of the Board. Non-Executive
Director remuneration is a matter for the Chairman and the
executive members of the Board. No Director is involved in any
decisions as to their own remuneration or benefits.
Principle 6 – Ensure that between them the
Directors have the necessary up-to-date
experience, skills and capabilities.
The Board members and their relevant experience and skills are
detailed on pages 34 to 35. The Non-Executive Chairman believes
that, as a whole, the Board has a suitable mix of skills and
competencies covering all essential disciplines bringing a balanced
perspective that is beneficial both strategically and operationally
and will enable the Company to deliver its strategy. The Board
consists of two executive director and three non-executive directors,
all of whom are independent. The nature of the Company’s business
requires the Directors to keep their skillset up to date. Updates to the
Board on regulatory matters are given by Company’s professional
advisers when appropriate.
In addition to the support provided by the Company’s retained
professional advisers (Nominated Advisor, lawyers, auditor and
M&A advisor), external consultants have been engaged to advise on
a number of matters including tax planning and market research.
External advisers attend Board meetings or committee meetings as
invited by the Non-Executive Chairman to report and/or discuss
specific matters relevant to the Company.
Principle 7 – Evaluate Board performance
based on clear and relevant objectives, seeking
continuous improvement.
Board performance effectiveness process
The Chairman is responsible for the regular evaluation of the
Board’s performance and that of its committees and individual
Directors.
38
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Historical annual reports and notices of general meetings can be
found in the Financial Reports section of the Group’s website.
The Board discloses the results of Annual General Meetings and
these can be found in the Regulatory News section of the website.
The Audit Committee meets at least twice a year, although the
Company’s Auditors or any member of the Audit Committee may
request a meeting at any time, should they consider that one is
necessary. The role of the Audit Committee is to make
recommendations to the directors and shareholders, in relation to
the appointment, re-appointment and removal of the Company’s
External Auditors and to approve their remuneration and terms of
engagement. Prior to the commencement of each annual or interim
audit, the Audit Committee will discuss and agree the nature and
scope of the audit with the External Auditors and in discussion with
them, will monitor the integrity of the financial statements of the
Group and approve any formal announcements relating to the
Company’s financial performance.
The Audit Committee develops and implements policies on the
engagement of the External Auditors to supply non-audit services
and will report to the Directors, identifying any matters where the
Audit Committee considers that action or improvement is needed,
making recommendations as to the steps to be taken.
The Audit Committee is authorised by the Board to investigate any
activity within its terms of reference and may seek information it
requires from any employee of the Company. The Audit Committee
may seek outside professional advice at the cost of the Company, in
order to secure any relevant experience or expertise it considers
necessary to fulfil its duties.
The terms of reference of the Remuneration Committee and its
report can be found in Remuneration Report.
Succession planning and Board appointments
The Remuneration Committee meet as and when necessary to
consider the appointment of new executive and non-executive
directors, although the Board as a whole take responsibility for
succession planning. Board members all have appropriate notice
periods so that if a Board member indicates his/her intention to step
down, there would be sufficient time to appoint a replacement,
whether internal or external.
The Company’s Articles of Association require that one-third of the
Directors must stand for re-election by shareholders annually in
rotation and that any new Directors appointed by the Board during
the relevant year must stand for election at the annual general
meeting immediately following their appointment. Any Directors
who are not employed by the Company or holding executive office
who have served on the Board for at least nine years will be subject
to annual re-election.
Board appointments are made after consultation with advisers
including the Nominated Advisor who undertakes due diligence on
all new potential Board candidates.
Principle 8 – Promote a corporate culture that
is based on ethical values and behaviours.
The Board recognises that core values provide a framework which
influences every level of the Group. One of the Group’s four key
values is “conscious”. This means treating all our stakeholders in
equal balance.
See further details on our behaviours in the Purpose section.
Principle 9 – Maintain governance structures
and processes that are fit for purpose and
support good decision-making by the Board.
On behalf of the Board, the Managing Director of the trading
business of subsidiaries has overall responsibility for managing the
day to day operations of that entity and the Board as a whole is
responsible for monitoring performance against the Company’s
goals and objectives. The individual Board members’ specific
responsibilities, contributions and skills are set out on pages 34
to 35.
The Board has established two standing Committees, the Audit,
Risk and AIM Rules and Compliance Committee (Audit Committee)
and the Remuneration Committee. Membership of both the Audit
Committee and the Remuneration Committee during the year under
review was exclusively Non-Executive.
Principle 10 – Communicate how the Company
is governed and is performing by maintaining
a dialogue with shareholders and other
relevant stakeholders.
The Company maintains a regular dialogue with key stakeholders
including shareholders to enable interested parties to make
informed decisions about the Group and its performance.
The Panoply Annual Report & Financial Statements 2019
39
Remuneration Report
Remuneration Committee
The Remuneration Committee determines, on behalf of the Board, the Group’s policy for executive remuneration and the individual
remuneration packages for the Executive Directors. In setting the Group’s remuneration policy, the Remuneration Committee considers a
number of factors, including the following:
•
•
•
salaries and benefits available to Executive Directors of comparable companies;
the need to attract and retain Executives of an appropriate calibre; and
the need to ensure continued commitment of Executives to the Group’s success through appropriate incentive schemes.
The Committee meets at least once a year.
Remuneration of Executive Directors
The remuneration packages comprise the following components:
•
•
•
Base salary
The Remuneration Committee sets the base salary by reference to responsibilities and the skills, knowledge and experience of the
individual.
Bonus scheme and other benefits
There is no annual bonus scheme or other benefits in place currently.
Share Incentive Schemes
An EMI and unapproved option scheme were implemented in the reported period and options were awarded to each of the Executive
Directors.
• Other benefits
Private medical and life cover for employees including the directors will be provided in the following financial year.
Remuneration of Non-Executive Directors
The fees paid to the Non-Executive Directors are determined by the Board. They are not entitled to receive any bonus or other benefits but
did receive unapproved share options at the time of their appointment. Non-Executive Directors’ letters of appointment are on a three-month
rolling basis.
Directors’ remuneration
Details of individual Directors’ emoluments for the year (excluding employer’s National Insurance contributions) are as follows:
Salary and fees paid
or receivable
£’000
Pension
£’000
Share Option
£’000
2019 total
£’000
2018 total
£’000
Non-Executive
Mark Smith (appointed 18 October 2018)
Christopher Sweetland (appointed 18 October 2018)
Isabel Kelly (appointed 18 October 2018)
Executive
Neal Gandhi (appointed 20 December 2016)
Oliver Rigby (appointed 20 December 2016)
Total
17
12
10
128
129
296
–
–
–
4
5
9
4
2
2
16
16
40
21
14
12
148
150
345
–
–
–
45
99
144
40
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Directors’ interests in shares
The interests of the Directors in the Ordinary Shares of the Company at 31 March 2019.
Name of Director
Christopher Paul Sweetland
Isabel Kelly
Mark William Smith
Neal Gandhi
Oliver Rigby
31-Mar
2019
Number
30,000
–
122,000
9,786,884
5,124,930
15,063,814
31-Mar
2018
Number
–
–
–
3,000
3,000
6,000
Directors’ interests in share options
The directors have been granted options over the shares of the Company as follows:
Granted
in the
year
Lapsed
during
the year
01-Apr-18
Type
31-Mar-19
Exercise
price
Date when
Exercisable
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20,300
20,300
20,302
20,300
20,300
20,302
33,834
33,834
33,836
135,338
135,338
135,340
135,338
135,338
135,340
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
Unapproved scheme
20,300
20,300
20,302
20,300
20,300
20,302
33,834
33,834
33,836
EMI scheme
135,338
EMI scheme
135,338
EMI scheme
135,340
EMI scheme
135,338
EMI scheme
135,338
EMI scheme
135,340
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
74p
31/03/21
31/03/22
31/03/23
31/03/21
31/03/22
31/03/23
31/03/21
31/03/22
31/03/23
31/03/21
31/03/22
31/03/23
31/03/21
31/03/22
31/03/23
Christopher Paul Sweetland
Christopher Paul Sweetland
Christopher Paul Sweetland
Isabel Jane Kelly
Isabel Jane Kelly
Isabel Jane Kelly
Mark William Smith
Mark William Smith
Mark William Smith
Neal Gandhi
Neal Gandhi
Neal Gandhi
Oliver Rigby
Oliver Rigby
Oliver Rigby
By order of the Board
Isabel Kelly
Chairman, Remuneration Committee
30 August 2019
The Panoply Annual Report & Financial Statements 2019
41
The Audit, Risk and AIM Rules
Compliance Committee
During the year The Audit, Risk and AIM Rules Compliance
Committee (“the Committee”) comprised Christopher Sweetland and
Mark Smith. Both members are independent Non-Executive
Directors and details of their skills, experience and qualifications set
out on pages 34 to 35. The Chief Financial Officer and the Group
Financial Controller attend the meetings. The Committee will also
invite divisional leaders and specialists relevant and external
auditors to the Committee’s agenda if appropriate.
Main responsibilities
The terms of reference for the Committee are based on the
Guidance on Audit Committees issued by the Financial Reporting
Council. The main responsibilities of the Committee are summarised
below:
•
•
review the integrity of the financial statements of the Group
and any formal announcements relating to the Group’s
financial performance
review the Group’s internal controls established to identify,
assess, manage and monitor risks, and receive reports from
management on the effectiveness of the systems it has
established, and the conclusions of any testing performed by
internal audit and the external auditor
• make recommendations to the Board in relation to the
appointment of the external auditor and approve the
remuneration and terms of engagement of the external auditor
•
•
assess the independence, objectivity and effectiveness of the
external auditor and develop and implement policy on the
engagement of the external auditor to supply non-audit
services
review the integrity of the statement in the Annual Report on
being fair, balanced and understandable, as required under the
Companies Act 2006
Summary of activities in 2019
In 2019, the Committee’s core work programme focused on a
number of significant issues and other accounting judgements
where the Committee believed the highest level of judgement was
required and with the highest potential impact on the Group’s
financial statements. There were two meetings held, from the date
of inception of the Committee (December 2018) to March 2019.
Financial reporting
The Committee reviewed and evaluated the appropriateness of the
interim and annual financial statements (including the
announcements thereof to the London Stock Exchange) with both
management and the external auditor, including:
•
at the Board’s request, whether the Annual Report and
Financial Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy
•
•
•
the clarity of disclosures and compliance with financial
reporting standards and relevant financial and governance
discussing the critical accounting policies and use of
assumptions and estimates, as noted on pages 61 to 67 of this
Annual Report and Financial Statements, and concluding that
the estimates, judgements and assumptions used were
reasonable based on the information available and had been
used appropriately in applying the Group’s accounting policies
reviewing the going concern and viability of the Group over the
longer term as part of its assessment of the Group’s risks
The Committee is able to question management at both Group and
business unit levels to gain further insight into the issues addressed
in these reports. The key significant financial reporting issues and
other accounting judgements are set below and further explained
on pages 66 to 67 under section critical accounting judgements
and key sources of estimation uncertainty.
Significant accounting judgements
•
•
•
•
Revenue and margin recognition
The Committee from time to time discuss about revenue
recognition within the Group whether they are aligning to IFRS
15. This includes finding out any challenges subsidiaries may
have in implementing IFRS 15 in their finance framework
and accounts.
Carrying value of goodwill and other intangibles
The judgement largely relates to the assumptions underlying
the value in use of the cash-generating units, primarily the
macroeconomic assumptions (such as discount rates)
underpinning the valuation process. The Committee received
reports from external advisers who prepared reports setting
out the allocation of the purchase price between goodwill and
other intangibles. The Committee also received reports from
management outlining the impairment model and the
assumptions used; in addition, the external auditor provided
detailed written reports in this area.
Going concern
In order to satisfy itself that the Group has adequate resources
to continue in operation for the foreseeable future and that
there are no material uncertainties that could lead to significant
doubt as to the Group’s ability to continue as a going concern,
the Committee considered the Group’s budgets and forecasts,
cash position (both existing and projected), bank facilities and
covenants.
Deferred tax assets
The Committee reviewed the Group’s considerations on future
profitability to evaluate the judgement that it is probable the
deferred tax assets are recoverable.
42
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
External auditor independence and
effectiveness
The Committee will carry out a formal review each year, from 2019
onwards to assess the independence and effectiveness of the
external auditor, Nexia Smith and Williamson (NSW). The
Committee has satisfied itself as to NSW’s independence.
Christopher Sweetland
Chairman of the Audit, Risk and AIM Rules and Compliance
Committee
30 August 2019
The Panoply Annual Report & Financial Statements 2019
43
Directors’ Report
The Directors present their Annual Report on the affairs of the
Group, together with the Financial Statements and Auditor’s report,
for the year ended 31 March 2019.
Principal activities
The principal activity of the Group is the provision of digitally native
technology services to clients within the commercial, government
and non-government organisations (NGO) sectors. Further
information can be found in the Strategic Report on pages 1 to 31.
General information
The Panoply Holdings Plc is a public limited company listed on the
AIM market of the London Stock Exchange on 4 December 2018
and is incorporated and domiciled in the UK. The Company’s
registered number is 10533096.
Corporate governance
The statement on corporate governance on pages 36 to 39 is
included in the Directors’ Report by way of reference.
Results and dividends
The Group’s loss on ordinary activities after taxation was £1.7m
(2018: loss £0.5m). The audited financial statements of the Group
are set out on pages 53 to 98. The Directors do not propose a
dividend for the year ended 31 March 2019 (2018: £Nil).
Strategic review
The information satisfying the strategic review requirements is set
out in this report on pages 1 to 31.
Going concern
The Group had cash balances of £5.7m at 31 March 2019.
In December 2018, the Group was listed on AIM, raised funds of
£5m and acquired 4 profitable companies. These 4 companies are
generating healthy cashflows and this has been further supported
by further acquisitions in the year and after the year end. The Group
has entered 2020 with a strong order book on the back of
consistently positive trading throughout 2019.
After reviewing the budgets and cash projections for the next twelve
months and beyond the Directors believe that the Group and the
Company have adequate resources to continue operations for the
foreseeable future and for this reason they continue to adopt the
going concern basis in preparing the financial statements.
The names and biographical details of the current Directors of the
Company are given on pages 34 to 35. During the year under
review, all Non-Executive Directors were independent of
management and any business or other relationships which could
interfere with the exercise of their independent judgement.
Details of Directors’ interests in the Company’s shares, service
contracts and remuneration are set out in the Directors’
Remuneration Report on pages 40 to 41.
Post-balance sheet events
Details of post-balance sheet events are given in Note 25.
Political donation
The Group has not made any political donations during the year.
Financial risk management and objectives
Details of financial risk management and objectives are contained in
Note 24 to the Consolidated Financial Statements.
Awareness of relevant audit information
Each of the Directors who held office at the date of approval of this
Directors’ Report confirms that, so far as they are aware:
•
•
there is no relevant audit information of which the Auditor is
unaware; and
the Directors have taken all the steps 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.
Annual General Meeting
The Annual General Meeting will be held in London on
30 September 2019 at 11:00am. Notice of the Annual General
Meeting will be sent to shareholders on 5 September 2019.
Independent Auditor
Nexia Smith & Williamson was appointed as Auditor to the Group
on 12 September 2018. There are no contractual obligations in
place that restrict our choice of statutory Auditor.
By order of the Board
Directors
The present membership of the Board is as follows:
Oliver Rigby
Company Secretary
30 August 2019
Mark Smith, Non-Executive Chairman
Chris Sweetland, Non-Executive Director
Isabel Kelly, Non-Executive Director
Oliver Rigby, Chief Financial Officer
Neal Gandhi, Chief Executive Officer
44
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report 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 Group and Company financial statements in
accordance with applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union
and, as regards the Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006. 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 of the Company and of the Group and of
the profit or loss of the 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 accounting estimates that are
reasonable and prudent;
•
•
state whether applicable IFRSs and UK accounting standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
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, 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 Group and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for ensuring that the Directors’ Report
and the Strategic Report, in addition to any other information
included in the Annual Report and Financial Statements, is prepared
in accordance with United Kingdom company law. They are also
responsible for ensuring that the Annual Report & Financial
Statements include information required by the AIM Rules.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements and other information
included in annual reports may differ from legislation in other
jurisdictions.
The Panoply Annual Report & Financial Statements 2019
45
Financial
Statements
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flow
Company Statement of Financial
Position
Company Statement of Changes
in Equity
Company Statement of Cash Flow
Notes to the Consolidated
Financial Statements
Directors, Secretary and Advisers
48
53
54
55
56
57
58
59
60
99
46
44
The Panoply Annual Report & Accounts 2019
The Panoply Annual Report & Accounts 2019
4547
Independent Auditor’s Report to the members of
The Panoply Holdings Plc
Opinion
We have audited the financial statements of The Panoply Holdings plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended
31 March 2019 which comprise the Consolidated Income Statement, the Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cashflows and the notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
–
–
–
–
the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2019 and of
the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We
are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to SME listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
–
–
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about
the Group’s or the Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for issue.
48
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Key audit matters
We identified the key audit matters described below as those which were most significant in the audit of the financial statements of the
current period. Key audit matters include the most significant assessed risks of material misstatement, including those risks that had the
greatest effect on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures below which were designed to address the matters in the context of the
financial statements as a whole and in forming our opinion thereon. Consequently, we do not provide a separate opinion on these individual
matters.
Key audit matter
Description of risk
How the matter was addressed in the audit and key
observations arising with respect to that risk
Business combinations
accounting – Group
The Group has a business model based
on acquiring businesses and during the
period, seven acquisitions have
taken place.
We focused on this area due to the high level of judgements
and estimates necessary to perform valuations of separately
identifiable intangible assets arising from the acquisition of
a business.
There is a risk that the values and
allocations of intangible assets and
goodwill recognised are not in
accordance with International Financial
Reporting Standard (IFRS) 3 ‘Business
combinations’.
As part of our procedures we:
• Obtained the business combination calculations for each
acquisition and checked the mathematical accuracy of these.
We confirmed the basis of support for judgements used by
management.
• Used our internal valuations team to assess the valuation
models prepared in respect of each acquisition, including the
basis and methodology adopted for identifying separate
intangibles distinct from goodwill and the fair value of
contingent consideration recognised.
• Checked the appropriateness of discount factors applied.
• Considered the overall valuation of intangible assets
identified relative to similar companies in the industry.
• Agreed the calculation of residual goodwill based on the
consideration payable and identifiable assets and liabilities.
• Reviewed acquisition costs to ensure these have been
expensed within the Income Statement in line with IFRS 3.
• Considered the appropriateness of the of the useful lives
applied to the intangible assets identified.
The Panoply Annual Report & Financial Statements 2019
49
Independent Auditor’s Report to the members of
The Panoply Holdings Plc continued
Key audit matter
Description of risk
Fair Value of contingent
consideration – Group
and Company
The Share Purchase Agreements (SPAs)
contain clauses for contingent
consideration and clawback provisions
based on the acquired entities
performance over the first two to four
years of acquisition.
Management are required to apply
judgement to determine the fair value of
the consideration payable, in accordance
with IFRS 3.
How the matter was addressed in the audit and key
observations arising with respect to that risk
We challenged the inputs and assumptions used to determine
the fair value of the contingent consideration payable at
acquisition and subsequently at the reporting date.
As part of our procedures we:
• Reviewed the Share Purchase Agreements (‘SPAs’) to obtain
an understanding of consideration payable.
• Reviewed and challenged management’s forecasts of future
results which underpins how the contingent consideration is
calculated.
• Compared historical forecasts against actual results and
corroborated management’s assertions where reasonably
practicable.
• Checked the appropriateness of discount factors applied.
• Assessed if any of the contingent consideration should be
treated as employee benefits given that some of the vendors
have been retained in the business.
Revenue – Group
The Group’s activities include the
provision of business IT management,
design, implementation and support
services. These services have multiple
deliverables and can be a fixed or
variable price. A number of contracts are
expected to span the year end and
acquisition dates.
Judgement will be involved in
determining the levels of revenue to be
recognised in line with IFRS 15 ‘Revenue
recognition’, particularly for contracts
which span the year end and acquisition
dates.
As part of our procedures we:
• Gained an understanding of the design and implementation
of controls over revenue recognition which have been
designed by the Group to prevent and detect fraud and
errors in revenue recognition.
• Performed tests of detail on the different revenue streams
starting tests from invoice and separately from contracts.
• Reviewed terms of major contracts and assessed the
accounting for each revenue stream for compliance with
IFRS 15.
• Perform cut off testing around the subsidiary acquisition
dates and the year end to determine if revenue is recognised
in the correct period.
Materiality
The materiality for the Group financial statements as a whole was set at £160,000. This has been determined with reference to the
benchmark of the Group’s revenue, which we consider to be one of the principal considerations for members of the Company in assessing
the performance of the Group. Materiality represents 2% of revenue as presented on the face of the Consolidated Income Statement.
The materiality for the Company financial statements as a whole was set at £104,000. This has been determined with reference to the
benchmark of the Company’s assets, which we consider to be an appropriate measure as the Company exists only as a holding company for
the Group and carries on no trade in its own right. Materiality represents 0.3% of total assets as presented on the face of the Company’s
Statement of Financial Position.
An overview of the scope of our audit
Of the Group’s thirteen reporting components, seven were subject to audit for group reporting purposes. The seven components covered:
99% of group revenue, 90% of group loss before tax and 100% of group net assets.
For the remaining components, we performed analysis at a group level to re-examine our assessment that there were no significant risks of
material misstatement within these.
50
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
One of the seven components subject to audit for group reporting purposes is based in Norway and its audit was carried out by a
component auditor in Norway. We held a telephone meeting with the component auditor in Norway as part of planning and discussed the
component auditor’s risk assessments and directed their planned audit approach. In addition to this meeting, we sent detailed instructions to
the component audit teams and reviewed their key audit working papers.
Other information
The other information comprises the information included in the Annual Report and Financial Statements, other than the financial statements
and our auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
–
–
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit,
we have not identified material misstatements in the Strategic Report or the Directors’ report.
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 Company, or returns adequate for our audit have not been received from
branches not visited by us; or
the 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.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 45, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal controls as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
The Panoply Annual Report & Financial Statements 2019
51
Independent Auditor’s Report to the members of
The Panoply Holdings Plc continued
Use of our report
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.
Stephen Drew
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
2 September 2019
52
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Consolidated Income Statement
for the year ended 31 March 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating (loss)
Adjusted EBITDA
Amortisation of intangible assets
Depreciation
Loss on fair value movement contingent consideration
Share-based payments
Exceptional items – costs directly attributable to the business combination and listing
Operating (loss)
Finance income
Finance costs
Net finance expense
Loss before taxation
Taxation
Loss for the period
Other comprehensive income
Exchange differences on translation of foreign operations
Total comprehensive loss for the period
Loss per share
Basic and fully diluted
Note
3
2019
£’000
8,152
(4,811)
3,341
(4,992)
24
4
(1,627)
10
12
19
5
4
6
402
(339)
(45)
(54)
(239)
(1,352)
(1,627)
5
(14)
(9)
(1,636)
(41)
(1,677)
(38)
(1,715)
2018
£’000
–
–
–
(480)
–
(480)
(273)
–
–
–
–
(207)
(480)
–
–
–
(480)
–
(480)
–
(480)
7
(9.22)p
(4.17)p
The accompanying accounting policies and notes on pages 60 to 98 are an integral part of these Consolidated Financial Statements.
The Panoply Annual Report & Financial Statements 2019
53
Consolidated Statement of Financial Position
as at 31 March 2019
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Trade and other receivables
Contract asset
Other taxes and social security costs
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Other taxes and social security costs
Deferred and contingent consideration
Contract liability
Total current liabilities
Non-current liabilities
Deferred tax liability
Deferred and contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Other reserves
Retained earnings
Total equity
31 March
2019
£’000
31 March
2018
£’000
Note
9
10
12
21
14
17
18
15
16
18
19
17
21
19
20
20
20
20
20,585
5,214
280
14
26,093
3,918
232
–
5,650
9,800
35,893
(2,210)
(1,539)
(3,270)
(406)
(7,425)
(925)
(8,292)
(9,217)
(16,642)
19,251
423
20,779
5
201
(2,157)
19,251
–
–
–
–
–
7
–
34
126
167
167
(154)
(3)
–
–
(157)
–
–
–
(157)
10
–
490
–
–
(480)
10
These financial statements were approved and authorised for issue by the Board of Directors on 30 August 2019. Signed on behalf of the
Board of Directors by:
Oliver Rigby
Director
Neal Gandhi
Director
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
54
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31 March 2019
At 1 April 2017
Loss and total comprehensive loss
for the period
Transactions with owners
Shares issued
Share issue costs
Equity at 31 March 2018
At 1 April 2018
Loss for the period
Exchange differences on translation of
foreign operations
Transactions with owners
Shares cancellation
Shares issued
Share issue costs
Share-based payments
Equity at 31 March 2019
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Foreign
Exchange
reserve
£’000
Share
option
reserve
£’000
–
–
500
(10)
490
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Share
Capital
premium Redemption
£’000
£’000
–
–
–
–
–
Share
capital
£’000
–
–
–
(5)
428
–
–
490
–
–
–
20,543
(254)
–
423
20,779
Foreign
exchange
reserve
£’000
Share
Option
Reserve
£’000
–
–
(38)
–
–
–
–
(38)
–
–
–
–
–
–
239
239
–
–
–
5
–
–
–
5
Retained
earnings
£’000
–
Total
£’000
–
(480)
(480)
–
–
(480)
Retained
earnings
£’000
(480)
500
(10)
10
Total
£’000
10
(1,677)
(1,677)
–
–
–
–
–
(38)
–
20,971
(254)
239
(2,157)
19,251
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
The Panoply Annual Report & Financial Statements 2019
55
Consolidated Statement of Cash Flow
for the year ended 31 March 2019
Cash flows from operating activities
Loss before taxation
Adjustments for:
Depreciation
Amortisation
Share-based payments
Loss on disposal of property, plant and equipment
Foreign exchange losses
Net finance expense
Movement in fair value contingent consideration
Working capital adjustments:
Decrease in trade and other receivables
Decrease in trade payables, accruals and contract liability
Cash (consumed by) operations
Tax received/(paid)
Cash flows from investing activities
Acquisition of subsidiaries (paid)
Acquisition of subsidiary cash inherited from acquisition
Purchase of property, plant and equipment
Interest received
Net cash generated from investing activities
Cash flows from financing activities
Issue of ordinary share capital
Cost relating to the issue of shares
Repayment of borrowings
Finance costs
Net cash generated from financing activities
Net increase in cash
Cash at bank and in hand at beginning of period
Cash at bank and in hand at end of period
Comprising:
Cash at bank and in hand
Note
2019
£’000
2018
£’000
(1,636)
(480)
12
10
5
8
8
12
15
15
45
339
239
2
7
9
54
(941)
384
(650)
(1,207)
27
(5,613)
6,978
(33)
5
1,337
5,659
(254)
(24)
(14)
5,367
5,524
126
5,650
5,650
–
–
–
–
–
–
–
(480)
(41)
157
(364)
–
–
–
–
–
–
500
(10)
–
–
490
126
0
126
126
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
56
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Company Statement of Financial Position
for the year ended 31 March 2019
Non-current assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Other taxes and social security costs
Amounts owed by Group undertakings
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Other taxes and social security costs
Deferred and contingent consideration
Total current liabilities
Non-current liabilities
Deferred and contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Other reserves
Retained earnings
Total equity
31 March
2019
£’000
31 March
2018
£’000
Note
11
14
18
22
15
16
18
19
19
20
20
20
20
32,499
32,499
21
137
628
2,762
3,548
36,047
(310)
(19)
(3,270)
(3,599)
(8,292)
(8,292)
(11,891)
24,156
423
20,779
5
239
2,710
24,156
–
–
7
34
–
126
167
167
(154)
(3)
–
(157)
–
–
(157)
10
–
490
–
–
(480)
10
The Panoply Holdings Plc has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the company
profit and loss account.
The company’s profit for the year ended 31 March 2019 was £3.2m.
The financial statements were approved by the Board of Directors on 30 August 2019 and were signed on its behalf by:
Oliver Rigby
Director
Neal Gandhi
Director
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
The Panoply Annual Report & Financial Statements 2019
57
Company Statement of Changes in Equity
for the year ended 31 March 2019
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Share
option
reserve
£’000
Retained
earnings
£’000
At 1 April 2017
Loss and total comprehensive loss for the period
Transactions with owners
Shares issued
Share issue costs
Equity at 31 March 2018
At 1 April 2018
Profit and total comprehensive income for the period
Transactions with owners
Share cancellation
Shares issued
Share issue costs
Share-based payments
Equity at 31 March 2019
–
–
–
–
–
–
–
500
(10)
490
–
–
–
–
–
–
–
–
–
–
Share
capital
£’000
–
–
(5)
428
–
–
Share
premium
£’000
490
–
–
20,543
(254)
–
423
20,779
Capital
redemption
reserve
£’000
Share
option
reserve
£’000
–
–
5
–
–
–
5
–
–
–
–
–
239
239
–
(480)
–
–
(480)
Retained
earnings
£’000
(480)
3,190
–
–
–
–
Total
£’000
–
(480)
500
(10)
10
Total
£’000
10
3,190
–
20,971
(254)
239
2,710
24,156
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
58
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Company Statement of Cash Flow
for the year ended 31 March 2019
Cash flows from operating activities
Profit/(loss) before taxation
Adjustments for:
Dividends received
Share-based payments
Net finance expense
Movement in fair value contingent consideration
Working capital adjustments:
(Decrease) in trade and other receivables
Increase in trade payables, accruals and contract liability
Cash (consumed by) operations
Tax received/(paid)
Cash flows from investing activities
Acquisition of subsidiaries (paid)
Dividends received
Net cash used in investing activities
Cash flows from financing activities
Issue of ordinary share capital
Cost relating to the issue of shares
Finance costs
Net cash generated from financing activities
Net increase in cash
Cash at bank and in hand at beginning of period
Cash at bank and in hand at end of period
Comprising:
Cash at bank and in hand
Note
2019
£’000
2018
£’000
5.5
19
8
15
3,190
(480)
(5,438)
173
3
54
–
–
–
–
(2,018)
(480)
(745)
172
(2,591)
–
(5,613)
5,438
(175)
5,659
(254)
(3)
5,402
2,636
126
2,762
(41)
157
(364)
–
–
–
–
500
(10)
–
490
126
0
126
2,762
126
The accompanying accounting policies and notes on pages 60 to 98 form an integral part of these financial statements.
The Panoply Annual Report & Financial Statements 2019
59
Notes to the Consolidated
Financial Statements
1. General information
The Panoply Holdings plc is a public limited company incorporated in England and Wales under the Companies Act 2006 with registered
number 10533096. The Company’s shares are publicly traded on the AIM Market of the London Stock Exchange.
The address of the registered office is 141-143 Shoreditch High Street, London, E1 6JE. The principal activity of the Group is the provision of
digitally native technology services to clients within the commercial, government and non-government organisation (NGO) sectors.
1.1 Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with applicable International Financial Reporting Standards
(IFRSs) as adopted by the EU and in accordance with the Companies Act 2006 and the AIM rules for Companies. The measurement bases
and principal accounting policies of the Group are set out below. These policies have been consistently applied to all years presented unless
otherwise stated. These are the Group’s first financial statements prepared in accordance with IFRS (see note 26 for explanation of the
transition to IFRS).
As detailed further in the Directors’ Report, after reviewing the budgets and cash projections for the next twelve months and beyond, the
Directors believe that the Group and the Company have adequate resources to continue operations for the foreseeable future and for this
reason they have adopted a going concern basis in preparing these financial statements.
The financial statements include the financial results of the following subsidiaries (incorporated in the UK unless otherwise stated) from the
date of acquisition:
•
Bene Agere Norden AS (incorporated in Norway) – acquired on 4 December 2018.
• Manifesto Digital Limited – acquired on 4 December 2018.
•
•
•
•
•
Not Binary Limited – acquired on 4 December 2018.
Questers Global Group Limited – acquired on 4 December 2018.
Deeson Group Limited – acquired on 17 December 2018.
iDisrupted Limited – acquired on 11 January 2019.
Greenshoot Labs Limited – acquired on 11 February 2019.
Further details of the above acquisitions can be found in Note 8 – Business Combination.
1.2 New IFRS accounting standards adopted in the year
The following standards, amendments and interpretations are new and effective for the year ended 31 March 2019 and have been adopted.
None of the pronouncements had a material impact on the Group’s consolidated results, assets or liabilities.
•
•
IFRS 9 Financial Instruments (effective 1 January 2018)
The Group has adopted IFRS 9 retrospectively from 1 April 2017.
IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)
The Group has adopted IFRS 15 retrospectively from 1 April 2017, utilising the following practical expedients:
•
•
The Group has elected to not restate contracts that begin and end within the same annual accounting period. The standard has
not had a material impact on the Group or Company. In applying this practical expedient, there are no issues in relating to the
disclosure of consideration from contracts with customers where consideration is not included in the transaction price.
The Group will not disclose information about the aggregate amount of the transaction price allocated to the performance
obligations that are unsatisfied, when either of the following conditions are met:
–
–
–
The original expected duration of the underlying contract is one year or less.
The entity recognises revenue from the satisfaction of the performance obligation in accordance with paragraph B16 of IFRS.
Consequently, no disclosure is necessary.
For time and material contracts, the Group has a right to consideration from a customer in an amount that corresponds directly
with the value of the entity’s performance completed to date. The Group will recognise revenue at the amount to which the
entity has a right to invoice.
60
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
1.3 New standards and interpretations of existing standards that are not yet effective and have not been
adopted early by the Group
The following standards and interpretations, which are endorsed by the EU, have not been early adopted by the Group and will be adopted
in future accounting periods:
•
IFRS 16 Leases (effective 1 February 2019).
IFRS 16, covering the accounting of leases, will replace IAS 17 and associated interpretations. It introduces a standard accounting model for
lessees. As a result, lessees are obliged to recognise assets and liabilities for all leases unless the term is less than twelve months, or the
underlying asset has a low value. The lessee recognises an asset reflecting its right to use the underlying leased object. It also recognises a
lease liability reflecting its obligation to make lease payment. The impact of IFRS 16 on The Panoply is currently still under review and not yet
finalised. The main impact is most likely to be around property leases, of which the Group currently has two.
The ongoing assessment indicates that the current rental charge will be replaced with a combination of depreciation from the asset and an
interest charge from the liability. This is likely to result in a material change to the Consolidated Statement of Financial Position and a material
change to the presentation of amounts within the Consolidated Statement of Comprehensive Income.
Management currently anticipates that IFRS 16 will be adopted in the Group’s accounting policies in accordance with the standard’s
effective date.
2. Principal accounting policies
a) Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 31 March 2019.
Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its
activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Group and its subsidiaries or associates are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with using the purchase method. The purchase method involves the recognition at fair value of all
identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they
were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the
subsidiary are included in the Consolidated Statement of Financial Position at their fair values, which are also used as the cost bases for
subsequent measurement in accordance with the Group accounting policies.
Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of consideration payable over the fair
value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
b) Goodwill
The Group measures goodwill at the acquisition date as:
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus, if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree; less
the net recognised amount of the identifiable assets acquired, and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Costs related to acquisition, other than those associated with the issue of debt or equity securities that the Group incurs in connection with
a business combination, are expensed as incurred.
If the contingent consideration is classified as equity, it is not remeasured, and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. Goodwill is carried at cost less
accumulated impairment losses.
Impairment review is carried out annually. If there is an impairment, the cost is reduced by the accumulated impairment amount.
The Panoply Annual Report & Financial Statements 2019
61
Notes to the Consolidated
Financial Statements continued
c) Revenue and revenue recognition
Revenue consists of the value of work delivered to clients during the year exclusive of VAT and is recognised as performance obligations are
met in accordance with the terms of the contract which are primarily on a time and materials basis. Revenue is wholly attributable to the
principal activities of the Group. The Group adopt IFRS 15 principles in recognising the revenue. Revenue recognised in excess of invoices
raised is included within contract asset. Where amounts have been invoiced in excess of revenue recognised, the excess is included within
contract liability.
The majority of the services are provided on a time and material basis where clients are billed monthly for the time spent on a project which
corresponds directly with the value to the customer of the entity’s performance completed to date and accordingly revenue is recognised at
the amount billed. For fixed-price contracts where criteria to recognise performance obligations over time have been met, revenue is
recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is
determined by actual labour hours and cost incurred relative to the total expected labour hours and cost. The use of labour hours and costs is
a faithful depiction of the transfer of services as it directly relates to the effort required to satisfy the performance obligation. Only inputs
relating directly to the performance in transferring the services are included when measuring progress to date. Due to changing
circumstances, extent of progress and completion may be revised which may affect revenue and costs. Any resulting increases or decreases
in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become
known by management.
Majority of the contracts are on single performance obligation. However, some contracts include multiple deliverables. In most cases, the
deliverable is separately identifiable from other promises in the contract; therefore, it is accounted for as a separate performance obligation. In
this case, the transaction price will be allocated to each performance obligation based on stand-alone selling prices.
Standard terms of payment within 30 or 60 days are typically adopted. There is therefore no financing component.
Revenue is recognised when the Group satisfies the performance obligations, the timing of which is set out in Note 3.2. For the majority,
contracts are for performance obligations that are satisfied over time. However, within services such as XaaS and Intelligence and small
percentage of performance within Experience, there are some contracts which contain performance obligations that are only satisfied at a
point in time. The revenue for these contracts is recognised when the performance obligation has been satisfied, for project development
work this occurs when the customer accepts the final output.
When the customer has a right to return the product within a given period, the entity is obliged to refund the purchase price. For instance,
with services within XaaS, if potential candidates put forward are considered unsuitable by the client and no one is recruited. The contract
stipulates reimbursement of 50% – 100% of the fee, under the agreed terms of contract. Under IFRS 15, revenue is only recognised to the
extent it is highly probable there will not be a significant reversal of revenue in a future period and is usually therefore recognised only when a
successful candidate is recruited.
d) Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The Consolidated Financial Statements are presented in pounds sterling,
which is the Company’s functional and presentation currency and the Group’s presentation currency.
Transactions and balances
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in
foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position date. All exchange differences are
recognised in the Consolidated Income Statement.
As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into pounds Sterling at the rate of exchange
applicable at the reporting date and their Income Statements are translated at the average exchange rates for the period. The exchange
differences arising from the retranslation of foreign operations are taken directly to foreign exchange reserve.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation
differences on goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the rates of exchange at the reporting date. Currency translation differences arising are transferred to the
Group’s foreign exchange reserve and are recognised in the income statement on disposal of the underlying investment.
62
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
e) Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment.
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount
of the asset and is recognised in the Consolidated Income Statement.
Depreciation is calculated on a straight-line basis 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:
Leasehold improvements
Fixtures and fittings
Computer equipment
3 – 10 years (depending on the length of the lease)
4 – 5 years
3 – 5 years
Useful economic lives and estimated residual values are reviewed annually and adjusted as appropriate.
f) Intangible assets acquired as part of a business combination and amortisation
In accordance with IFRS 3 “Business Combinations”, an intangible asset acquired in a business combination is recognised at fair value at the
acquisition date. A fair value calculation is carried out based on evaluating the net recurring income stream from each type of intangible
asset. Intangibles are initially recognised at fair value, and are subsequently carried at this fair value, less accumulated amortisation and
impairment. The following items were identified as part of the acquisitions of entities by the Group and were still owned at 31 March 2019:
•
•
•
•
brand amortised over two to five years;
customer lists amortised over three to six years;
database over five years; and
Intellectual property over ten years.
The allocation of fair values to the tangible assets and the identification and valuation of intangible assets affect the calculation of goodwill
recognised in respect of an acquisition and as such represent a key source of estimation uncertainty.
g) Other intangible assets
Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are
directly attributable to the design and testing of identifiable software products controlled by the Group are recognised as intangible assets
when the following criteria are met:
•
It is technically feasible to complete the software product so that it will be available for use;
• Management intends to complete the software product and use or sell it;
•
•
•
•
There is an ability to use or sell the software product;
It can be demonstrated how the software product will generate probable future economic benefits;
Adequate technical, financial and other resources to complete the development and to use or sell the software product is available; and
The expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an
appropriate portion or relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent periods.
Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed 3 years.
h) Impairment testing of goodwill
Impairment reviews are tested at cash generating unit (“CGU”) level. Goodwill is allocated to those CGUs that are expected to benefit from
synergies of the related business combination. During the year, the each acquired entity is equivalent to one CGU.
Impairment reviews are carried out using multi-year cash flow projections from the approved budgets of the Group. These are discounted
using a weighted average cost of capital (WACC) specific to each CGU. The internal rate of return for each CGU reflects the time value of
money and the nature and risks of the CGU. Cash flows are estimated over a maximum of five years and a terminal value.
An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation.
Impairment losses are credited to the carrying amount of the relevant goodwill.
The Panoply Annual Report & Financial Statements 2019
63
Notes to the Consolidated
Financial Statements continued
i) Investment in subsidiaries and impairment
Subsidiaries are entities that are directly or indirectly controlled by the Company. Control exists where the Company has the power to govern
the financial and operating policies of the entity so as to obtain benefits from its activities. The investment in the Company’s subsidiaries is
recorded at cost less provisions for impairment. Carrying values are reviewed for impairment annually to determine if there is any indication
that any of the investments might be impaired. The Company uses forecast cash flow information and estimates of future growth to assess
whether investments are impaired.
If the results of operations in a future period are adverse to the estimates used for impairment testing, an impairment may be triggered at
that point.
j) Taxation
Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and
their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability
unless the related transaction is a business combination or affects tax or accounting profit.
In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as
deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences will be able to be offset against future taxable profit. Current and deferred tax
assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted
or substantively enacted at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Consolidated Income Statement, except
where they relate to items that are charged or credited directly to equity, in which case the related deferred tax is also charged or credited
directly to equity.
k) Financial instruments
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
The Group classifies its financial assets as follows:
Amortised cost
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types
of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are
solely payments of principal and interest. They are initially recognised at the transaction price that is directly attributable to their acquisition or
issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions for trade receivables and contract assets are recognised based on the simplified approach within IFRS 9 using the
lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables and contract assets is
assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit
loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with
the loss being recognised within administration expenses in the Consolidated Income Statement. On confirmation that the trade receivable
and contract assets will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology
used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition
of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve
month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly,
lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired,
lifetime expected credit losses along with interest income on a net basis are recognised.
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term highly liquid investments with original
maturities of three months or less.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual
arrangements entered and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences
64
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the company are recorded at the
proceeds received, net of direct issue costs.
Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any
interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Consolidated Statement of
Financial Position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on
redemption, as well as any interest or coupon payable while the liability is outstanding.
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised
cost using the effective interest method.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and allocating interest income
or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial asset or liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Fair value on contingent consideration
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value, with changes in fair value recognised through profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit
or loss.
l) Employee benefits
Share-based payments – equity-settled
All material share-based payment arrangements are recognised in the financial statements. All goods and services received in exchange for
the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are indirectly determined by
reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of non-market
vesting conditions (for example, profitability and sales growth targets).
All share-based remuneration is ultimately recognised as an expense in the Consolidated Income Statement with a corresponding credit to
“share option reserve”. If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based
on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication
that the number of share options expected to vest differs from previous estimates.
Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options, the proceeds received, net of attributable transaction costs, are credited to share capital and share premium.
The fair value for the share-based payment is measured using the Black Scholes model.
m) Pensions
Contributions to defined contribution schemes are charged to the Consolidated Income Statement as they become payable in accordance
with the rules of the scheme. Differences between contributions payable in the year and contributions actually paid are shown as either
accruals or prepayments in the Consolidated Statement of Financial Position.
n) Presentation of results
In some instances, Alternative Performance Measures (APMs) such as adjusted EBITDA (refer to finance review section) are used by the
Group to provide ‘adjusted’ results. This is because Management are of the view that these APMs provide a more meaningful basis on which
to analyse business performance and is consistent with the way that financial performance is measured by Management and reported to
the Board.
Adjusted EBITDA is a non-IFRS measure, defined as the Group’s operating profit before expensing depreciation of tangible fixed assets,
amortisation, exceptional items, impairment, gain or loss on fair value movement contingent consideration and share-based payments.
o) Leases
Operating lease payments are recognised as an expense in the Consolidated Income Statement on a straight-line basis over the lease term.
The benefit of any lease incentives is recognised as a reduction in rental expense on a straight-line basis over the life of the lease.
The Panoply Annual Report & Financial Statements 2019
65
Notes to the Consolidated
Financial Statements continued
p) Grant income
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them
and that the grants will be received.
Government grants are generally recognised in the Consolidated Income Statement on a systematic basis over the periods in which the
Group recognises as expenses the related costs for which the grants are intended to compensate. Judgement is applied in assessing when
there is reasonable assurance the grant conditions have been complied with and that the grant money will be received.
q) Research and development
Research and development expenditure is recognised in the Consolidated Income Statement as an expense until it can be demonstrated that
the conditions for capitalisation under IAS 38 ‘Intangible Assets’ apply. The criteria for capitalisation include demonstration that the project is
technically and commercially feasible, the Group has sufficient resources to complete development and the asset will generate probable
future economic benefit.
During the year, research and development costs are within Administrative expenses and are not identifiable with its own subheading. The
allocation of the administrative costs that relates to research and development for the Group is carried out annually at the point of assessing
for R&D tax credit relief as part of the tax work.
The Group is benefiting from small, medium enterprises for R&D tax credits, since it has less than 500 employees, and as an investor in R&D,
will derive benefit from this scheme.
r) Critical accounting judgements and key sources of estimation uncertainty
Critical judgements:
1. Revenue recognition
The main judgements are:
•
•
•
Deciding what are the performance obligations in a contract
Deciding whether the contract should be measured over time or at a point in time
The cost to complete contracts to determine the percentage completion
Under IFRS 15, measurement and recognition of revenue required the Group to make judgements and estimates. In particular, there are a
large number of contracts within the business which may require significant contract interpretation to determine the appropriate accounts
such as whether promised goods and services specified in an arrangement are distinct performance obligations and based on the contract
terms, whether the performance obligation should be recognised at a point in time or over time (refer to Note 3.2).
2. Cash generating units (CGU)s
IFRS 3 Business combination requires the management to assess the CGU as part of purchase price allocation process. The board uses their
judgement in deciding the number of CGU per entity acquired during the year. CGU is defined as the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The board determines the
number of CGU by ascertaining the number of main income stream generating from an entity. Each entity acquired during the year, was
deemed as one CGU. There are a total of 7 GCUs as a result from the business combination in 2019. (2018: Nil).
3. Intangible assets from acquisition
Acquiring a business entity would include purchasing its intangible assets even when there were no intangible assets on its Statement of
Financial Position. The board uses judgement in identifying the types of intangible assets as a result of business combination. During the year
the board identified several intangibles such as customer list, brand, client database and software. Details of intangible assets identified on
acquisitions are in notes 8 and 10.
Key source of estimation uncertainty:
1. Valuation of intangible assets
Intangible assets (2019: £5,214k, 2018: £Nil) are non-physical assets which have been obtained as part of an acquisition and which have an
identifiable future economic benefit to the Group at the point of acquisition. Each intangible asset is valued at acquisition by measuring the
future discounted cash flows over a range of two to ten-year period from the date of acquisition, depending on class. For example, ‘customer
list’ uses assumptions such as using the average retention rate, revenue growth over the prior three to five-year period. All future cash flows
are discounted using a WACC, based on the internal rate of return for each asset, calculated over its useful economic life.
66
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
2. Impairment of goodwill
Impairment of goodwill requires an estimate of whether there is an impairment indicator. The key estimate for the carrying value of CGU is
the cash flows associated with the CGU and the WACC. Each of the CGU held by the Group is measured regularly to ensure that they
generate discounted positive cash flows.
The Group determines CGUs are impaired on at least an annual basis. This requires an estimation of the ‘value in use’ of the cash-generating
units to which the intangible value is allocated. Estimating a value in use amount requires management to make an estimate of the expected
future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those
cash flows. Where there is indication of impairment, the goodwill is impaired by a charge to the consolidated income statement. The key area
of uncertainty is the revenue growth. Management perform sensitivity analysis to ascertain the level of growth rate that will start to impair
the goodwill on a yearly basis. Further explanation is included in Note 9 – Goodwill and impairment.
3. Measuring the fair value of contingent consideration
The fair value of contingent deferred consideration is determined by reference to the future EBITDA of the acquired business and applying
the contingent deferred consideration formula as specified in the asset or share purchase agreement and discounting the net present value
of the future cash flows. The total fair value of consideration for the businesses acquired during the year was £32m and the goodwill was
calculated as £21m. The range of contingent consideration in the current period was £Nil to £12m; further details are included in Note 8.
3. Segment reporting
The Board of Directors has been identified as the chief operating decisions-maker. With the acquisitions and the formation of the Group
which only taking place from 4 December 2018, the Board of Directors consider that the operating segments are currently still under review
and as a result the Group has not presented all of the disclosures required under IFRS 8 “Operating Segments”. In future once the Board has
determined the operating segments, the appropriate accounting policy will be implemented in line with IFRS 8.
Currently the Board of Directors monitors revenue by service, sectors and geographical market.
3.1.1 Revenue by service
Included in revenues arising from ‘Transformation’ service are revenues of £1.3m (2018: £Nil) which arose from the Group’s largest customer.
Included in revenues arising from the ‘Automation’ service are revenues of £1.1m (2018: £Nil) which arose from the Group’s largest customer
in this segment. They represent revenues from one customer of the Group which contributed 10% or more of the Group’s revenues.
Experience
XaaS
Transformation
Automation
Intelligence
Total Revenue
3.1.2 Revenue customers by geographical market
United Kingdom
EU
Norway
Switzerland
USA
Other
Total Revenue
The Panoply Annual Report & Financial Statements 2019
2019
£’000
2,324
1,697
2,870
1,162
99
8,152
2019
£’000
6,511
28
769
552
291
1
8,152
2018
£’000
–
–
–
–
–
–
2018
£’000
–
–
–
–
–
–
–
67
Notes to the Consolidated
Financial Statements continued
3.1.3 Revenue by sectors
Commercial
Government
NGO
Total Revenue
2019
£’000
2,871
3,050
2,231
8,152
3.2 Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following service line:
Year ended 31 March 2019
External revenue
Inter-segment revenue
Total revenues
Recognised at a point in time
Recognised over time
Total revenue
Experience
£’000
2,324
12
2,336
59
2,277
2,336
XaaS
£’000
1,697
21
1,718
1,690
28
1,718
Trans-
Adjust-
ments(1) &
formation Automation Intelligence Eliminations
£’000
£’000
£’000
£’000
2,870
1,162
27
–
2,897
1,162
–
2,897
2,897
–
1,162
1,162
99
–
99
19
80
99
–
(60)
(60)
–
(60)
(60)
(1) Inter-segment revenues are eliminated on consolidation and reflected in the adjustments and eliminations column.
4. Operating loss
Operating loss is stated after charging:
Depreciation of property, plant & equipment
Amortisation of intangible assets
Employee costs – (see note 5.2)
Exceptional items: costs directly attributable to the business combination and listing (see note 4.1)
Disposal of fixed assets
Loss on fair value movement contingent consideration
Share-based payments – (see note 5.5)
Operating lease rentals
2019
£’000
45
339
4,346
1,352
2
54
239
245
4.1 Exceptional items: costs directly attributable to the business combination and listing/IPO:
Acquisition costs business combination
Listing costs
2019
£’000
473
879
1,352
2018
£’000
–
–
–
–
Total
£’000
8,152
–
8,152
1,768
6,384
8,152
2018
£’000
–
–
69
207
–
–
–
–
2018
£’000
–
207
207
68
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
4.2 Auditor’s remuneration
Fees payable to the company’s auditors and its associates for the audit of parent company and
consolidated financial statements
Fees payable to Company’s auditors and its associates for the audit of company’s subsidiaries
Fees payable to Company’s auditors and its associates for other services:
Audit-related assurance services
Other assurance services
Tax compliance and other tax advisory services
5. Employee costs
5.1 Directors and employees
The average number of staff employed by the Group during the financial year is 77 (2018: 2) as follows:
Consultant*
Administrative staff**
Management
Total
* Consultant are consultants employed by Questers solely for clients’ projects.
** Administrative role also participate in income generating activities, sales and marketing.
Employee numbers are stated including Directors.
5.2 Employee remuneration
Wages and salaries
Pension contributions
Share-based payments
Social security costs
Other benefits
Total
5.3 Key management personnel
Number of key personnel for the parent company.
Total
2019
£’000
2018
£’000
106
16
29
335
23
509
8
–
–
–
–
8
2019
2018
37
34
6
77
2019
£’000
3,807
87
133
281
38
4,346
2019
5
–
–
2
2
2018
£’000
65
–
–
4
–
69
2018
2
Note: the total number for the Group key personnel is 18 (2018:2) comprising Directors of the parent company and the Directors of the
principal operating companies.
The Panoply Annual Report & Financial Statements 2019
69
Notes to the Consolidated
Financial Statements continued
5.4 Key management emolument
Emolument for the key management personnel for the parent company.
Wages and salaries
Pension contributions
Share-based payments
Social security costs
Total
The total emolument for the Group key personnel for the year:
Wages and salaries
Pension contributions
Share-based payments
Social security costs
Total
2019
£’000
296
9
40
28
373
2019
£’000
757
41
77
56
931
2018
£’000
145
–
–
7
152
2018
£’000
145
–
–
7
152
The aggregate of remuneration of the highest paid director (including Employer NI) of the Company was £164k (2018: £101k). The highest
pension defined benefit received by a director during the year was £5k (2018: £Nil). The full breakdown of other benefits including the
defined benefit pension schemes are further detailed in remuneration report.
Details of individual Directors’ emoluments for the year (including employer’s National Insurance (“NI”) contributions) are as follows:
Fees and salaries
Employer’s NI
Other benefits (refer to
remuneration report)
Total
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
12
17
10
128
129
296
–
–
–
45
99
144
1
2
1
16
8
28
–
–
–
5
2
7
2
4
2
20
21
49
–
–
–
–
–
–
15
23
13
164
158
373
–
–
–
50
101
151
Non-Executive
Chris Sweetland
Mark Smith
Isabel Kelly
Executive
Neal Gandhi
Oliver Rigby
Total
70
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
5.5 Share-based payments
(i) Share option plans for employees
The Company has an HMRC-approved EMI share option scheme for certain staff and senior management. There is also an unapproved
share option scheme in place which is used where the individuals do not fall under the rules of the approved scheme.
Outstanding at 1 April
Granted
Forfeited
Exercised
Outstanding at 31 March
2019
Number of
options
–
3,680,119
–
–
3,680,119
2019
Weighted
average
exercise price
2018
Number of
options
2018
Weighted
average
exercise price
–
74p
–
–
74p
–
–
–
–
–
–
–
–
–
Weighted average remaining contractual useful life
9.35 years
(ii) Non-employee share options
The total non-employee share options are:
Outstanding at 1 April
Granted
Forfeited
Exercised
Outstanding at 31 March
2019
Number of
options
–
247,669
–
–
247,669
2019
Weighted
average
exercise price
2018
Number of
options
2018
Weighted
average
exercise price
–
74p
–
–
74p
–
–
–
–
–
–
–
–
–
–
The estimated fair value of the share options was calculated by applying a Black Scholes valuation model. The model inputs for the options
granted in 2019 were as follows:
Exercise price
Share price at grant date
Risk-free interest rate
Expected volatility1
Dividend yield
Contractual life of option (years)
The total share-based payments expense included in the consolidated income statement is:
Share options to employees
Share options to non-employees
Total
£0.74
£0.74
0.87%
48.80%
0.00%
10
2018
£’000
–
–
–
2019
£’000
133
106
239
1 The expected price volatility is based on the historical volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility
due to publicly available information.
The Panoply Annual Report & Financial Statements 2019
71
Notes to the Consolidated
Financial Statements continued
The total share-based payments expense relating to Directors of the Company:
Share options
Total
The total share-based payments expense relating to key personnel of the Group:
Share options
Total
6. Taxation
Current tax
UK corporation tax for the period at 19% (2018: 19%)
Overseas current tax charge on income for the year
Total current tax
Deferred tax
Current year
Total deferred tax
Total tax charge
2019
£’000
40
40
2019
£’000
77
77
2019
£’000
(121)
(1)
(122)
81
81
(41)
2018
£’000
–
–
2018
£’000
–
–
2018
£’000
–
–
–
–
–
–
During 2019 a deferred tax credit of £64k (2018: £Nil) was attributable to deferred tax on intangible assets acquired as part of business
combination and £17k due to accelerated timing differences from fixed asset acquired from business combination. For further deferred tax
information – see Note 21.
The relationship between expected tax expense based on the effective tax rate of the Group of 3% (2018: Nil%) and the tax expense
recognised in the Consolidated Income Statement can be reconciled as follows:
Loss for the year before tax:
Tax rate
Expected tax credit
Principal differences due to:
Fixed asset differences
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Difference in tax rates
Movement in deferred tax rates
Deferred tax asset not recognised
Deferred tax credit on intangible assets arising on business combinations
2019
£’000
(1,636)
19%
311
(14)
(376)
98
(8)
(13)
(103)
64
(41)
2018
£’000
(480)
19%
91
–
(22)
–
–
–
(69)
–
–
72
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
7. Earnings per share
Loss attributable to ordinary shareholders
Weighted average number of Ordinary Shares in issue, basic
Basic and diluted loss per share
2019
£’000
(1,677)
2018
£’000
(480)
Number
Number
18,186,006
11,506,280
(9.22)p
(4.17)p
Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the year.
There is no difference between basic loss per share and diluted loss per share as the share options are anti-dilutive.
The Group have a number of share-based payments (see note 5) and share purchase agreements (see note 8) where the terms and
conditions could affect the measurement of basic and diluted earnings per share. A number of shares that were issued during the period are
contingent on certain conditions being met and therefore these have been excluded from the calculation of the weighted average number of
Ordinary Shares in issue.
8. Business combinations
During the year the Company completed seven acquisitions. The summary of the acquisitions are shown below.
Summary
Business combination summary
as at 31 March 2019
Note
Agere Manifesto Notbinary
£’000
£’000
£’000
Questers
£’000
Bene
Green
Deeson iDisrupted shoot Labs
£’000
£’000
£’000
Total
£’000
Date of acquisition
11
04-Dec-18
04-Dec-18
04-Dec-18
04-Dec-18
17-Dec-18
11-Jan-19
11-Feb-19
Consideration payable
% acquired
Acquisition related costs
11
4
Intangible assets acquired on acquisition
10
Net assets
Total identifiable net assets
acquired at fair value
8 (iv)
Cash
Cash (deferred consideration)
Shares (including contingent
deferred consideration)
Total fair value consideration
Goodwill
Cash flow
Acquisition of business
(net of cash acquired)
Cash &
Shares
100%
67
273
627
900
–
690
Cash &
Shares
100%
64
1,579
2,949
4,528
1,843
–
Cash &
Shares
100%
47
2,073
1,278
3,351
1,813
–
2,055
2,745
1,845
8,777
9,825
10,620
11,638
6,092
8,287
8 (iv)
8 (iv)
Acquisition of business
(net of cash acquired) during the year
Acquisition of business
(net of cash acquired) post March 19
8 (iii)
1,418
(135)
8 (iii)
(690)
728
(135)
(73)
(73)
(75)
(75)
Cash &
Shares
100%
70
819
Cash &
Shares
100%
68
455
(232)
1,860
Shares
100%
74
240
(190)
Cash &
Shares
100%
74
114
3
464
5,553
6,295
587
175
–
3,404
3,579
2,992
2,315
1,782
–
1,772
3,554
1,239
237
237
50
–
–
50
50
–
(11)
(11)
117
11,848
–
23
224
247
130
5,613
713
26,107
32,433
20,585
(19)
652
4
1,365
(23)
(713)
The Panoply Annual Report & Financial Statements 2019
73
Notes to the Consolidated
Financial Statements continued
(i) Revenue and profit/(loss) if acquired from 1 April 2018
The consolidated pro-forma revenue and profit/(loss) for the year ended 31 March 2019, had the acquisitions occurred on 1 April 2018 are
shown below. These amounts have been calculated using the subsidiary’s results adjusted for:
•
•
differences in the accounting policies between the Group and the subsidiary; and
the additional depreciation and amortisation that would have been charged, assuming the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 April 2018, together with the consequential tax effects.
Revenue
Bene Agere
Not Binary
Questers
Manifesto Digital
Deeson
iDisrupted
Greenshoot Labs
Profit/(loss) before tax
Bene Agere
Not Binary
Questers
Manifesto Digital
Deeson
iDisrupted
Greenshoot Labs
Acquisition to
31.03.19
£000
(from
1 April 2018)
FY 12m
£000
769
3,117
1,689
1,956
567
19
35
2,222
7,614
5,900
5,704
1,830
176
179
8,152
23,625
Acquisition to
31.03.19
£000
(from
1 April 2018)
FY 12m
£000
97
1,023
34
131
155
(118)
(31)
1,291
509
2,183
339
1,176
164
(202)
(143)
4,026
(ii) Cashflows from investing activities – acquisition of subsidiaries
The cash paid for acquiring the companies and the cash inherited are summarised as follows:
Paid during the year
Entity
Bene Agere
Not Binary
Questers
Manifesto Digital
Deeson
iDisrupted
Greenshoot Labs
Total
Cash paid for acquisition of subsidiaries £’000
Cash inherited from acquisition £’000
Paid post year end (see below)
1,813
175
1,843
1,782
–
Paid post year end (see below)
5,613
1,418
1,740
100
1,708
2,019
(11)
4
6,978
74
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Paid post year end:
Entity
Bene Agere
Greenshoot Labs
Total
Cash paid for acquisition of subsidiaries £’000
690
23
713
(iii) Business combination explained by entity
a. Bene Agere
On 4 December 2018 the Company acquired the entire issued share capital of Bene Agere for an initial consideration of £2.8m being £1.9m
shares plus the value of the net current asset of Bene Agere at completion date (approximately £0.7m), payable in cash. Further contingent
deferred consideration may be payable, in shares, dependent upon the performance of Bene Agere post-acquisition. Similarly, there may be
a partial or full clawback of the initial share consideration in the event of underperformance of Bene Agere post acquisition. The contingent
deferred consideration or clawback will be determined by reference to the forecast EBITDA for financial year end 2019 and 2020 of the
acquired business and applying the contingent deferred consideration formula as specified in the share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £2.8m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt 5.2% for
calculating cash consideration and completion shares using WACC of 12.3%. The fair value of the total consideration is calculated to
be £2.7m.
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2020 are assessed to be higher than the
total EBITDA forecast calculated at completion date. The estimated total consideration was calculated at £2.8m, a debit of £56k has been
recognised in the statement of total comprehensive income in respect of the movement on the deferred contingent consideration liability.
Bene Agere, incorporated in 2012, is a Norwegian boutique strategy and management consultancy with a focus on digital transformation.
The Company has been working in digital transformation for many years, starting with early digitalised industries like retail banking and
telecoms, and more recently expanding into a wide range of companies and other industries. All members of the senior management team,
responsible for strategic direction, technical development and day-to-day operations of Bene Agere, have been retained within the business
post-acquisition.
The reason for the acquisition was to increase and provide the Group with an initial foothold in the Scandinavian market and as a
management consultancy business it complements the other subsidiaries within the Group.
Bene Agere
Intangibles
Brand
Customer lists
Tangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
–
354
1,418
(1,084)
–
688
80
193
–
–
–
–
(61)
212
80
193
–
354
1,418
(1,084)
(61)
900
The Panoply Annual Report & Financial Statements 2019
75
Notes to the Consolidated
Financial Statements continued
Bene Agere
Cash (paid in April 2019)
Share issued (Contingent to performance until FY2020)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
690
1,932
123
2,745
1,845
Acquisition-related costs of £67k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables are all considered recoverable. The goodwill is related to assemble workforce and the high profitability of the
acquired business. It will not be deductible for tax purposes.
b. Not binary
On 4 December 2018 the Company acquired the entire issued share capital of Not binary for an initial consideration of £14m being £3.3m
shares plus the value of the net current asset of Not binary at completion date (approximately £1.8m), payable in cash and estimated
deferred contingent consideration. Further deferred contingent consideration may be payable, in shares, dependent upon the performance of
Not binary post-acquisition. Similarly, there may be a partial or full clawback of the initial share consideration in the event of
underperformance of Not binary post acquisition. The deferred contingent consideration or clawback will be determined by reference to the
forecast EBITDA for financial year end 2019 and March 2020 of the acquired business and applying the deferred contingent consideration
formula as specified in the share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £14m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt of 5.2% for
calculating cash consideration and WACC of 20% for calculating completion shares. The fair value of the total consideration is calculated to
be £11.6m.
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2020 are assessed to be lower than the total
EBITDA forecast calculated at completion date. The estimated total consideration was calculated at £10.8m, a credit of £0.8m has been
recognised in the Consolidated Income Statement in respect of the movement on the deferred contingent consideration liability.
Not binary, founded in 2017, based in UK is a digital services company working with clients to turn organisations into modern digital
businesses. Not Binary is trusted by the government, academics and clients in the financial and industrial sectors to design and implement
digital change based on modern cloud platforms. Not Binary serves organisations that are typically looking to exploit the efficiencies and
opportunities of cloud technology, digital business models and agile methodologies. Alongside cloud technology, Not binary uses automation,
data and AI to enable digital change. All members of the senior management team responsible for the strategic direction, technical
development and day-to-day operations of Not binary, have been retained within the business post-acquisition.
The reason for the acquisition was to increase the Group’s market share within the digital change and transformation sectors as well as
being a complementary business to the other subsidiaries within the Group.
76
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Notbinary
Intangibles
Brand
Customer lists
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Cash
Share issued (Contingent to performance until FY2020)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
275
1,798
1,020
1,740
(1,127)
–
1,633
–
–
–
(355)
1,718
275
1,798
1,020
1,740
(1,127)
(355)
3,351
1,813
3,330
6,495
11,638
8,287
Acquisition-related costs of £47k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables are all considered recoverable. The goodwill is related to assemble workforce and the high profitability of the
acquired business. It will not be deductible for tax purposes.
c. Questers
On 4 December 2018 the Company acquired the entire issued share capital of Questers for an initial total consideration of £4m being £3.2m
shares plus a fixed cash payment of £0.18m, payable in cash and an estimated deferred contingent consideration. Further contingent
deferred consideration may be payable, in shares, dependent upon the performance of Questers post-acquisition. Similarly, there may be a
partial or full clawback of the initial share consideration in the event of underperformance of Questers post acquisition. The contingent
deferred consideration or clawback will be determined by reference to the forecast EBITDA for financial year end 2019 and March 2020 of
the acquired business and applying the contingent deferred consideration formula as specified in the share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £4m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt 5.2% for
calculating cash consideration and WACC of 14.6% for completion shares. The fair value of the total consideration is calculated to be £3.6m.
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2020 are assessed to be higher than the
total EBITDA forecast calculated at completion date. The estimated consideration was £4.1m, a debit of £0.52m has been recognised in the
Consolidated Statement of Income in respect of the movement on the deferred consideration liability. Questers, founded in 2012, provides
dedicated highly skilled IT teams from its technology campus in Sofia, Bulgaria, a leading European talent pool, to businesses located in
Europe and the United States. The Questers business model is simple and transparent while adding value to client technical capability by
providing infrastructure and office facilities, recruitment and talent acquisition capacity, human resources and performance management of
remote teams. This enables clients to access a high-quality technical talent pool without a detailed understanding of the local talent market.
All members of the senior management team responsible for the strategic direction, technical development and day-to-day operations of
Questers, have been retained within the business post-acquisition.
The reason for the acquisition was to increase the Group’s resourcing capability, allowing other Group companies to access a high-quality
talent pool.
The Panoply Annual Report & Financial Statements 2019
77
Notes to the Consolidated
Financial Statements continued
Questers
Intangibles
Brand
Customer lists
Software applications
Tangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Cash
Share issued (Contingent to performance until FY2020)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
18
16
3
831
100
(1,030)
–
(62)
248
571
(18)
–
–
(9)
–
–
(143)
649
248
571
–
16
3
822
100
(1,030)
(143)
587
175
3,168
236
3,579
2,992
Acquisition-related costs of £70k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables were assessed that £9k was unrecoverable at the completion date. The goodwill is related to assemble
workforce and the high profitability of the acquired business. It will not be deductible for tax purposes.
d. Manifesto
On 4 December 2018 the Company acquired the entire issued share capital of Manifesto for an initial total consideration of £11.7m being
£4.3m shares plus the value of net current assets of Manifesto at completion date and estimated deferred contingent consideration. The
value of the net current assets was payable in cash totalling £1.8m and non-contingent shares of £1.2m. Further deferred contingent
consideration may be payable, in shares, dependent upon the performance of Manifesto post-acquisition. Similarly, there may be a partial or
full clawback of the initial share consideration in the event of underperformance of Manifesto post acquisition. The deferred contingent
consideration or clawback will be determined by reference to the forecast EBITDA for financial year end 2019 and March 2020 of Manifesto
and also Deeson (refer to 8e) and applying the deferred contingent consideration formula as specified in the share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £11.7m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt 5.2% for
calculating cash consideration and WACC of 12.3% for completion shares. The fair value of the total consideration was calculated to
be £10.6m.
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2020 are assessed to be higher than the
total EBITDA forecast calculated at completion date. The estimated consideration is £10.9m, a debit of £0.3m has been recognised in the
statement of total comprehensive income in respect of the movement on the deferred contingent consideration liability.
Manifesto, founded in 2011, is a multi-award-winning, top 100 UK digital experience agency based in London. It provides user-centred
services focused on creative design, as well as on the technical build and integration of digital products and services, particularly in terms of
78
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
content management and marketing automation. All members of the senior management team responsible for the strategic direction,
technical development and day-to-day operations of Manifesto, have been retained within the business post-acquisition.
The reason for the acquisition was to increase the Group’s creative design and digital experience offering and it complements the other
subsidiaries within the Group.
Manifesto
Intangibles
Brand
Customer lists
Software applications
Tangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Cash
Non contingent equity
Share issued (Contingent to performance until FY2020)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
2
248
1,880
1,708
(612)
–
3,226
202
1,375
–
–
–
–
–
(275)
1,302
202
1,375
2
248
1,880
1,708
(612)
(275)
4,528
1,843
1,200
4,281
3,296
10,620
6,092
Acquisition-related costs of £64k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables are all considered recoverable. The goodwill is related to assemble workforce and the high profitability of the
acquired business. It will not be deductible for tax purposes.
e. Deeson
On 17 December 2018 the Company acquired the entire issued share capital of Deeson for an initial total consideration of £3.6m being
£1.3m shares plus the value of the net current asset of Deeson at completion date and estimated deferred contingent consideration. The
value of the net current assets was payable in cash totalling £1.8m and non-contingent shares of £0.15m. Further deferred contingent
consideration of between clawback of initial shares and £0.6m may be payable, in shares, dependent upon the performance of Deeson post-
acquisition. Similarly, there may be a partial or full clawback of the initial share consideration (excluding £150,000) in the event of
underperformance of Deeson post acquisition. The deferred contingent consideration or clawback will be determined by reference to the
forecast EBITDA for the 12 months ending 30 September 2019 and 31 September 2020 of the acquired business and applying the
contingent deferred consideration formula as specified in the share purchase agreement. The total consideration is capped at £3.6m.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £3.6m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt 5.2% for
calculating cash consideration and WACC of 14.8% for completion shares. The fair value of the total consideration was calculated to
be £3.5m.
The Panoply Annual Report & Financial Statements 2019
79
Notes to the Consolidated
Financial Statements continued
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for September 2020 are assessed to be lower than the
total EBITDA forecast calculated at completion date. The estimated consideration is £3.5m, a credit of £38k has been recognised in the
Consolidated Statement of Income in respect of the movement on the deferred contingent consideration liability.
Deeson, based in UK is a digital agency specialising in high profile content-managed websites and digital products. The Acquisition will be
integrated into Manifesto, an existing Group company, adding scale and providing a strong foothold in complementary verticals. Deeson has
built a strong position in the media and culture industries, with clients including ITV, Robbie Williams, Royal Collection Trust and the Imperial
War Museums. All members of the senior management team responsible for the strategic direction, technical development and day-to-day
operations of Deeson, have been retained within the business post-acquisition.
The reason for the acquisition was to increase the Group’s creative design and digital experience offering and complements the other
subsidiaries within the Group.
Deeson
Intangibles
Brand
Customer lists
Tangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Cash
Non contingent equity
Share issued (Contingent to performance until September 2020)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
29
291
2,019
(394)
(5)
1,940
60
395
–
–
–
–
(80)
375
60
395
29
291
2,019
(394)
(85)
2,315
1,782
150
1,200
422
3,554
1,239
Acquisition-related costs of £68k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables are all considered recoverable. The goodwill is related to assemble workforce and the high profitability of the
acquired business. It will not be deductible for tax purposes.
f. iDisrupted
On 11 January 2019 the Company acquired the entire issued share capital of iDisrupted for an initial total consideration of £50k shares.
Further deferred contingent consideration may be payable, in shares, dependent upon the performance of iDisrupted post-acquisition.
Similarly, there may be a partial or full clawback of the initial share consideration in the event of underperformance of iDisrupted post
acquisition. The deferred contingent consideration or clawback will be determined by reference to the forecast EBITDA for the financial year
ending 31 March 2020, 2021, 2022 and 2023 of the acquired business and applying the contingent deferred consideration formula as
specified in the share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration of £50k of shares were issued on day one of the
transaction day and as such there is no discounting to net present value to be considered.
80
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2021. The estimated consideration was
£50k, with no movement on the deferred contingent consideration liability.
iDisrupted, founded in 2015, based in UK, publishes content on websites/magazines in the technology industry and provide collaborative
membership in technology space through activities like events, talks and seminars. The Panoply Holdings has acquired iDisrupted with the
intention for it to become a key marketing platform for its Group companies. Going forward, Group companies will be able to leverage
content, sponsorship and advertising opportunities at limited or no cost. In order to preserve integrity and to maintain the high level of quality
content it currently creates, iDisrupted will retain editorial independence.
iDisrupted
Intangibles
Customer lists
Brand
Database
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Loan
Deferred tax
Net assets
Shares issued (Contingent to performance until 2023)
Fair value of total consideration
Goodwill
The trade and other receivables are all considered recoverable.
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
–
72
–
(195)
(24)
–
(147)
4
186
50
–
–
–
–
(43)
197
4
186
50
72
–
(195)
(24)
(43)
50
50
50
–
Acquisition-related costs of £74k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
g. Greenshoot Labs
On 11 February 2019 the Company acquired the entire issued share capital of Greenshoot Labs for an initial total consideration of £0.4m
being the value of the net current asset of Greenshoot Labs at completion date (approximately £23k), payable in cash and estimated
deferred contingent consideration. Further deferred contingent consideration may be payable, in shares, dependent upon the performance of
Greenshoot Labs post-acquisition. The deferred contingent consideration will be determined by reference to the forecast EBITDA for financial
year end 2019 and March 2020 of the acquired business and applying the contingent deferred consideration formula as specified in the
share purchase agreement.
IFRS 3 requires that consideration to be measured at fair value. The total consideration (before calculating its fair value) of £0.4m is further
analysed based on the timing of the consideration payments and an estimation of the contingent consideration likely payable as at the
transaction date to work out the fair value (net present value) of the consideration as at the transaction date using cost of debt 5.2% for
calculating cash consideration and WACC of 20% for completion shares. The fair value of the total consideration is calculated to be £0.2m.
At 31 March 2019, the actual EBITDA for the year and the fair value forecast EBITDA for March 2021. The estimated consideration is
calculated at £0.2m, a debit of £7k has been recognised in the Consolidated Statement of Income in respect of the movement on the
deferred contingent consideration liability.
Greenshoot Labs founded in 2017 based in UK is a provider of enterprise digital solutions using applied Artificial Intelligence (“AI”) and
conversational interfaces. Greenshoot Labs is the creator of OpenDialog, an open source framework for building enterprise automation
services using applied AI and conversational interfaces. All members of the senior management team responsible for the strategic direction,
technical development and day-to-day operations of Greenshoot Labs, have been retained within the business post-acquisition.
The Panoply Annual Report & Financial Statements 2019
81
Notes to the Consolidated
Financial Statements continued
The reason for the acquisition was to provide the Group with capability in the AI and conversational interfaces sector.
Greenshoot Labs
Intangibles
Brand
Customer lists
Software (own IP)
Tangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other liabilities
Non-current liabilities
Deferred tax
Net assets
Cash (paid in April 2019)
Contingent consideration (Equity)
Fair value of total consideration
Goodwill
Book cost
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
–
1
34
4
(14)
–
25
–
64
50
–
–
–
–
(22)
92
–
64
50
1
34
4
(14)
(22)
117
23
224
247
130
Acquisition-related costs of £74k that were not directly attributable to the issue of shares are included in exceptional expenses in
Consolidated Income Statement and in operating cash flows in the Statement of Cash Flows.
The trade and other receivables are all considered recoverable. The goodwill is attributable to the high profitability of the acquired business. It
will not be deductible for tax purposes.
8.1 Acquisitions post year end
The Panoply Holdings Plc acquired the entire issued share capital of FutureGov, a leader in digital service design for the public sector and
health sector on the 11 June 2019. The initial consideration for the Acquisition was £11.8m, satisfied though the payment of circa £6m cash
and the issue of 6,612,397 new ordinary shares in The Panoply. In addition, The Panoply also procured, on Completion, the repayment of
loan notes issued by FutureGov to certain shareholders with a principal amount totalling £500,000 by FutureGov (the “Loan Notes”).
Subject to the future EBITDA performance of FutureGov (based on EBITDA) during the 15 month period 1 January 2019 to 31 March 2020
(annualised) and 12 month period from 1 April 2020 to 31 March 2021, in addition to the Initial Consideration, the shareholders of FutureGov
will be entitled to receive deferred earn-out consideration, of which 96% will be payable by the allotment and issue of shares in The Panoply
(“Panoply Shares”) and 4% in cash following the agreement of the relevant EBITDA calculations at the end of each of those financial
periods. The number of Panoply Shares to be allotted and issued shall be calculated by dividing the earn-out price payable by a price per
share in The Panoply which is the greater of 83.125 pence and the volume-weighted average mid-market price over the 30 business days
prior to the issue of the relevant Panoply Shares. Any Panoply Shares allotted and issued by way of deferred consideration will be allotted
and issued as follows:
•
•
in four equal tranches over a 24-month period following the determination of the accounts in respect of the financial year ending
31 March 2019 and the publication of the Group’s results for the same period; and
in four equal tranches over a 24-month period following the determination of the accounts in respect of the financial year ending
31 March 2020 and the publication of the Group’s results for the same period.
The total consideration payable by The Panoply in respect of the Acquisition is capped at a maximum of £21m.
82
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
All Panoply Shares allotted and issued under the SPA (including the shares issued as part of the Initial Consideration) are subject to
customary lock-in arrangements and subject to claw-back by The Panoply if FutureGov’s EBITDA decreases over the 2 year earn-out period.
The acquisition will significantly increase the Group revenue originating from the health and public sectors. The combination of FutureGov’s
wealth of experience and The Panoply’s extended capabilities creates a very strong disrupter in these sectors, challenging the status-quo of
larger organisations. The Group is now able to offer public sector clients an end-to-end service from discovery through to live digital
transformation programmes, which is entirely tailored to the needs of the industry.
Acquisition-related costs of £9k that were not directly attributable to the issue of shares are included in exceptional expenses in Consolidated
Income Statement and in operating cash flows in the Statement of Cash Flows.
The Group is currently performing a fair value review of FutureGovs’s assets and liabilities and will report these within its next published
financial statements.
FutureGov Limited, company registration number 06472420 is incorporated in England and Wales. Its registered office is 20 St Thomas
Street, Runway East (Second Floor), London, United Kingdom, SE1 9RG.
9. Goodwill and impairment
As at 1 April 2018
On acquisitions
As at 31 March 2019
Accumulated
impairment
losses
£’000
–
–
–
Cost
£’000
–
20,585
20,585
Carrying
amount
£’000
–
20,585
20,585
When acquiring the entities during the year, the management concluded that there were seven cash generating units (CGU). One CGU for
each entity.
Impairment tests for goodwill
The value of CGUs is assessed according to the projected performance of the business. This is done by using discounted cash flow model
5 year and a terminal value, and reasonable growth rates and discount factors to determine the net present value of the investment.
Each year, management compares the resulting cash flow projections by CGU to the carrying value of goodwill. Any material variance in this
calculation results in an impairment charge to the Consolidated Income Statement. The following table sets out the key assumptions for
those CGUs that have significant goodwill allocated to them. Based on the impairment review carried out at the end of 31 March 2019, the
management believe that the projection of cash flow from the CGUs exceeded the carrying value of the goodwill.
Revenue (% annual growth rate)
Pre-tax discount rate (%)
Terminal multiplier
Bene Agere
Not Binary
Questers
Manifesto
Deeson
15%
17.5%
7
10%
17.5%
7
10%
17.5%
7
10%
17.5%
7
5%
17.5%
7
Sensitivity analysis:
Management concluded that the key factor for sensitivity analysis is the growth rate (revenue). The discount factor is assumed to be easily
determined by way of the known risk of the market and the cost of debt which is based on the credit facility from HSBC at 2.5% plus LIBOR.
If the existing annual revenue for each entity fall or increase by the following growth rate shown in the table below, a CGU goodwill
impairment is considered:
Bene Agere
Not Binary
Questers
Manifesto
Deeson
Revenue (% annual growth rate)
(8%)
(1%)
5%
1%
(10%)
The Panoply Annual Report & Financial Statements 2019
83
Notes to the Consolidated
Financial Statements continued
10. Intangible assets
Intangible assets are non-physical assets which have been obtained as part of an acquisition or research and development activities, such
as innovations, introduction and improvement of products and procedures to improve existing or new products. All intangible assets have an
identifiable future economic benefit to the Group at the point the costs are incurred. Customer lists and brands are amortised over a
maximum period of six years from the date of acquisition.
Intangible assets
Cost
At 20 December 2016 and 1 April 2018
Additions
Acquired on acquisition
At 31 March 2019
Accumulated amortisation
At 20 December 2016 and 1 April 2018
Charge for the year
At 31 March 2019
Impairment
At 20 December 2016 and 1 April 2018
At 31 March 2019
Carrying amount
At 31 March 2019
At 31 March 2018
Brand
£’000
–
–
1,051
1,051
–
73
73
–
–
978
–
Customer
Lists
£’000
Data base
£’000
Software (IP)
£’000
Software
£’000
–
–
4,400
4,400
–
263
263
–
–
4,137
–
–
–
50
50
–
2
2
–
–
48
–
–
–
50
50
–
1
1
–
–
49
–
–
–
2
2
–
–
–
–
–
2
–
Total
£’000
–
–
5,553
5,553
–
339
339
–
–
5,214
–
84
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Included within the Group’s intangible assets is:
Useful life
March 2019
£’000
March 2018
£’000
Bene Agere – Brand
Bene Agere – Customer list
Not binary Ltd – Brand
Not binary Ltd – Customer list
Questers Resource Ltd – Brand
Questers Resource Ltd – Customer list
Manifesto Ltd – Brand
Manifesto Ltd – Customer list
Manifesto Ltd – software (domain)
Deeson Ltd – Brand
Deeson Ltd – Customer list
iDisrupted Ltd – Brand
iDisrupted Ltd – Customer list
iDisrupted Ltd – Database
Greenshoot Labs Ltd – Customer list
Greenshoot Labs Ltd – Software (Tech IP)
11. Investment in subsidiaries
Cost
At 20 December 2016 and 1 April 2018
Additions
Disposals
At 31 March 2019
Amounts written off
At 20 December 2016 and 1 April 2018
Written off during the year
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
5 years
3 years
5 years
5 years
5 years
5 years
5 years
6 years
3 years
5 years
6 years
2 years
5 years
5 years
5 years
10 years
80
193
275
1,798
248
571
202
1,375
2
60
395
186
4
50
64
50
5,553
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£’000
–
32,499
–
32,499
–
–
–
32,499
–
The Panoply Annual Report & Financial Statements 2019
85
Notes to the Consolidated
Financial Statements continued
At 31 March 2019, the Company had the following subsidiaries:
Companies
Country of
incorporation
Bene Agere Norden AS
Norway
Registered address
Principal activity
% shareholding
Postboks 573
Sentrum O105 Oslo
Strategic and management consultancy
with a focus on digital transformation
Not Binary Limited
Manifesto Digital Limited
England & Wales 141-143 Shoreditch
High Street, London,
E1 6JE
Digital service consultancy mainly in
transformation, software development,
data and automation
England & Wales 141-143 Shoreditch
High Street, London,
E1 6JE
Digital experience agency
Manifesto Digital Pty Limited
Australia
Manifesto Australia
7 Winton Street
Warrawee NSW 2074
Digital experience agency
Questers Global Group Limited
Questers Resourcing Limited
England & Wales 141-143 Shoreditch
High Street, London,
E1 6JE
England & Wales 141-143 Shoreditch
High Street, London,
E1 6JE
Holding company
Provides dedicated highly skilled IT teams from
its technology centre in Sofia, Bulgaria, a leading
European talent pool, to businesses located in
Europe and worldwide
Questers Bulgaria EOOD
Bulgaria
Sofia, 17 H. Ibsen Str.,
fl.5 BG175406553
Bulgaria, a leading European talent pool, to
businesses located in Europe and worldwide
Questers Techpark RS Limited
Serbia
Beograd-Zemun
Živka petrovića 52
11080 Beograd-Zemun
Dormant
Deeson Group Holdings Limited England & Wales 27 Castle Street,
Canterbury, Kent,
CT1 2PX
Holding company
Deeson Group Limited
iDisrupted Limited
Greenshoot Labs Limited
Human Plus Limited
England & Wales 27 Castle Street,
Canterbury, Kent,
CT1 2PX
England & Wales Platform, New Station
Street, Leeds, LS1 4JB
England & Wales 27 Castle Street,
Canterbury, Kent,
CT1 2PX
England & Wales 141-143 Shoreditch
High Street, London,
England, E1 6JE
Digital experience agency
Publish content on websites/magazines in the
technology industry and provide collaborative
membership in technology space
IT development mainly in conversational
interfaces and AI
IT focus in Robotic Process automation
(RPA).
100%
100%
100%
100%1
100%2
100%
100%
100%
100%
100%
100%
100%
100%3
1 Manifesto Digital UK owns 100% Manifesto Australia
2 Questers Global Group Limited fully own Questers Resourcing Limited, Questers Techpark and Questers Bulgaria
3 Started trading from 1 April 2019
86
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
12. Property, plant and equipment
IT equipment
£’000
Fixtures &
Fittings
£’000
Leasehold
Improvements
£’000
Total
£’000
Cost of assets
At 20 December 2016 and 1 April 2018
Acquisition of subsidiaries
Additions
Disposals
At 31 March 2019
Depreciation
At 20 December 2016 and 1 April 2018
Charge for the year
Disposal
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
13. Leases
–
67
25
(46)
46
–
14
(44)
(30)
76
–
–
43
8
(1)
50
–
8
–
8
42
–
–
185
–
–
185
–
23
–
23
162
–
13.1 Operating leases
The Group’s minimum non-cancellable lease payments relate to properties as follows:
Properties
At 31 March 2019
At 31 March 2018
14. Trade and other receivables
Group
Trade receivables
Prepayments
Other receivables
Trade and other receivables
Due within
1 year
£’000
Due between
1 and 5 years
£’000
564
–
1,007
–
Due after
more than
5 years
£’000
–
–
2019
£’000
3,426
176
316
3,918
Trade receivables at the reporting date comprise amounts receivable from the provision of the Group’s products and services.
The average credit period taken on the provision of these services is 56 days (2018: Nil days).
At 31 March 2019 trade receivables amounting to £3.4m (2018: £Nil) net of the provision of bad debt.
The breakdown of the trade receivables by currency is explained under financial instrument section.
–
295
33
(47)
281
–
45
(44)
1
280
–
Total
£’000
1,571
–
2018
£’000
7
–
–
7
The Panoply Annual Report & Financial Statements 2019
87
Notes to the Consolidated
Financial Statements continued
Trade receivables are non-interest bearing and generally have a 30-day payment term. The age of trade receivables before impairment is as
follows:
Not yet due
Past due 1-30 days
Past due 31–60 days
Past due 61–90 days
Past due 91–120 days
Past due 121+ days
Trade receivables before impairment
Provision for bad debt
Trade receivables as at March
2019
£’000
2,310
718
242
10
246
–
3,526
(100)
3,426
2018
£’000
–
–
–
–
–
–
–
–
–
Loss rates are calculated based on actual credit losses over the past three years and adjusted to reflect differences between the historical
credit losses and the Group’s view of the economic conditions over the expected lives of the receivables. The Group’s provision for the loss
allowance is £100k (2018: £Nil).
Company
Trade receivables
Other receivables
Trade and other receivables
15. Cash and cash equivalents
Group
Cash at bank and in hand
Cash balances are held with a small number of counterparties, with high credit rating. There were no borrowing facilities in place at
31 March 2019.
Company
Cash at bank and in hand
2019
£’000
2,762
The directors consider that the carrying amount of these assets is a reasonable approximation of their fair value. The credit risk on liquid
funds is limited because the counterparty is a bank with a high credit rating.
16. Trade and other payables
16.1 Current
Group
Trade payables
Accruals and other payables
Total
2019
£’000
1,061
1,149
2,210
2018
£’000
121
33
154
88
The Panoply Annual Report & Financial Statements 2019
£’000
£’000
–
21
21
2019
£’000
5,650
6
1
7
2018
£’000
126
2018
£’000
126
Strategic Review
Corporate Governance
Financial Statements
Company
Trade payables
Accruals and other payables
Total current liabilities
16.2 Non-current
Group
Deferred and contingent consideration on acquisition of subsidiaries (Note 19)
Deferred tax (Note 21)
Total non-current liabilities
Company
Deferred consideration on acquisition of subsidiaries (Note 19)
Total non-current liabilities
2019
£’000
57
253
310
2019
£’000
8,292
925
9,217
2019
£’000
8,292
8,292
2018
£’000
121
33
154
2018
£’000
–
–
–
2018
£’000
–
–
17. Assets and liabilities related to contracts with customers
All revenue relates to contracts with customers. The Group have a number of contracts where it receives payments from customers based on
a billing schedule. Revenue recognised in excess of invoices raised is included within contract asset. Where amounts have been invoiced in
excess of revenue recognised, the excess is included within contract liability.
Group
Opening balance
Current contract asset
Loss allowance
Total contract asset
Group
Opening balance
Contract liability
Total contract liability
2019
£’000
2018
£’000
–
232
–
232
–
406
406
–
–
–
–
–
All contract assets and contract liabilities movements are from business combinations in the year.
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities
and how much relates to performance obligations that were satisfied in a prior year:
Group
Revenue recognised that was included in the contract liability taken over on acquisition
Revenue recognised from performance obligations satisfied in previous periods
Unsatisfied long-term contracts
2019
£’000
126
–
2018
£’000
–
–
The majority customer contracts for the Group as at 31 March 2019 are 12 months or less. Long term contracts with unsatisfied performance
obligations as at 31 March 2019 is £486k (2018: £Nil). Management expects that 92 % (£450k) of transaction price allocated to long-term
contract as of 31 March 2019 will be recognised as revenue in the financial year 2020.
The Panoply Annual Report & Financial Statements 2019
89
Notes to the Consolidated
Financial Statements continued
18. Other taxes and social security costs
Group
Current Liability
Corporation tax
VAT
Other taxes and social security costs
Total
Current Asset
VAT
Total
Company
During the year the Company has current tax liability and current tax asset as shown below:
Current Liability
Other taxes and social security costs
Total
Company
Current Asset
VAT
Total
2019
£’000
609
573
357
1,539
2019
£’000
–
–
2019
£’000
19
19
2019
£’000
137
137
2018
£’000
–
–
3
3
2018
£’000
34
34
2018
£’000
3
3
2018
£’000
34
34
19. Gain/loss on the fair value movement of deferred and contingent consideration
The consideration payment of the acquired businesses includes deferred consideration, in the form of equity payment, contingent upon
certain results being achieved over relevant periods.
Initial fair value on acquisition for deferred contingent consideration
Movement on fair value contingent consideration
Fair value at 31 March
Deferred consideration measured at amortised cost
Total
Deferred and contingent consideration as at 31 March:
Deferred and contingent consideration due more than one year
Deferred and contingent consideration due more than one year
As at 31 March
2019
£’000
10,795
54
10,849
713
11,562
3,270
8,292
11,562
2018
£’000
–
–
–
–
–
–
–
–
The fair value movement resulted from the fair value of the actual EBITDA to what was initially forecasted as part of the consideration. This
is further explained in Note 8 (iii). The contingent consideration more than one year has a range of years due from 31 March 2021 to
31 March 2023.
90
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
20. Share capital and reserves
Share capital and reserves comprise of the following categories:
•
•
•
•
•
•
Share capital: The nominal value of shares in issue.
Share premium: The excess of the value received for shares issued over their nominal value less transaction costs and amounts used to
fund bonus issues.
Capital redemption reserve: The nominal value of shares cancelled.
Foreign exchange reserve: Cumulative gains or losses recognised on retranslation of overseas operations.
Share option reserve: The cumulative charge recognised under international financial reporting standards less amounts exercised.
Retained earnings: Cumulative gains or losses not recognised elsewhere.
Shares issued and fully paid
Beginning of year
Issued during year
Shares issued and fully paid
Share capital allotted, called up and fully paid
Ordinary shares of £0.01p each
At 31 March
Movement in ordinary shares
Opening balance 1 April 2018
Share issue during the year (between May 18 to November 18)
Bonus shares (October 18 and November 18)
Share cancellation (October 18)
Shares at placing (IPO) (December 18)
Acquisition of subsidiaries (between December 18 to January 2019)
Less transaction costs arising on share issues
As at 31 March 2019
2019
£’000
–
423
423
2018
£’000
–
–
–
2019
2018
42,295,147
10,500
Number of shares
thousands
Par value Share premium
£000
£’000
10.5
13.8
15,502
(481)
6,757
20,493
42,295
–
–
155
(5)
68
205
–
423
490
660
(155)
–
4,932
15,106
(254)
20,779
21,202
Total
£000
490
660
–
(5)
5,000
15,311
(254)
Bonus shares were issued twice during the year. The first bonus shares were issued on the 16 October 2018 (480:1) totalling 5,472, and on
the 23 November 2018 (2:1) totalling 10,030. Share price at placing was at 74 pence. The share price with reference to acquisition of
subsidiaries ranging from 74 pence to 87.5 pence.
The Panoply Annual Report & Financial Statements 2019
91
Notes to the Consolidated
Financial Statements continued
21. Deferred tax
Deferred tax liability
Accelerated capital allowances and intangible assets arising from acquisition of subsidiaries:
As at 1 April
Deferred tax arising from acquisition of subsidiaries
Movement in income statement for the year
As at 31 March
Deferred tax is recognised at 17% (2018: 17%).
Deferred tax asset
Accelerated capital allowances:
As at 1 April
Deferred tax arising on acquisition of subsidiaries
Movement in income statement for the year
As at 31 March
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit available for offset against future profits in the jurisdiction in which the loss arises.
2019
£’000
–
989
(64)
925
2018
£’000
–
–
–
–
2019
£’000
2018
£’000
–
(3)
17
14
2019
£’000
1,500
533
–
–
–
–
2018
£’000
304
109
22. Ultimate controlling party and related party transactions
In the opinion of the Directors there is no ultimate controlling party. All other transactions and balances with related parties, which are
presented for the Group and the Company, are detailed below.
Transactions with subsidiaries
(i) Transaction Company (to and from) subsidiaries:
Transactions with subsidiaries comprise sale and purchase of services in the ordinary course of business at normal commercial terms. Total
income accrued in the Company as a result of management fee was £365k (2018: £Nil). During the year the Company received £5m
dividends from its subsidiaries (refer to Company statement of cash flow). There was also purchases totalling £2k (2018: £Nil). Intercompany
loan to subsidiaries for the year was £263k (2018: £Nil).
Balances outstanding at 31 March 2019 and 2018 in respect of the transactions between Company and its subsidiaries are shown below:
Outstanding balances between Company and subsidiaries
Other receivables from Group companies
Intercompany loans*
Total
2019
£’000
365
263
628
2018
£’000
–
–
–
* Intercompany loans were for subsidiaries towards the end of March 2019. These are repayable on demand. The Board will assess the
repayable terms such as interest, and event of default requirement in the next financial year.
In addition the Company owed £8k (2019: £Nil) to a subsidiary which is included within trade payables.
(ii) Transaction amongst subsidiaries:
Transactions with subsidiaries comprise sale and purchase of services in the ordinary course of business at normal commercial terms. Total
intercompany sales excluding to parent Company were £58k (2018: £Nil).
92
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
Transactions with Directors
Details of Directors’ interests in the Company’s shares, service contracts and remuneration are set out in the report of the Board to the
members on Remuneration report on pages 40 and 41.
During the year ending 31 March 2019 the Group paid Growth Company FD Limited (a company controlled by Oliver Rigby) consulting fees
totalling £62,664 (2018: £79,000) which have been included within directors’ remuneration. Neal Gandhi received a director’s loan for £50k
from its subsidiary, Questers Resourcing Limited which was outstanding as at 31 March 2019.
During the period the Group acquired Not Binary Limited. Neal Gandhi and Oliver Rigby owned shares in Not Binary Limited totalling 5 per
cent and 1 per cent respectively. The fair value of deferred contingent consideration shares due to the directors is valued at £342k (£143k
being deferred consideration less than one year and £199k due from 31 March 2021 to 31 March 2022). During the period the Group
acquired Questers Global Group Limited. Neal Gandhi owned shares in Questers Global Group Limited totalling 46.2 per cent. The fair value
of deferred contingent consideration shares due to the him is valued at £350k (£350k being deferred consideration due from 31 March 2021
to 31 March 2023).
23. Financial instruments
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the
Group’s objectives, policies and processes for managing those risks and the methods used to measure them. The significant accounting
policies regarding financial instruments are disclosed in Note 2.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
•
•
•
Trade and other receivables
Cash and cash equivalents
Trade and other payables
The book values of the financial instruments (excluding equity shares) used by the Group, from which financial risk arises, are as follows:
Group
Financial assets at amortised cost*
Trade receivables
Prepayments and other receivables
Contract asset
Cash and cash equivalent
As at 31 March
Financial assets at amortised cost include the following debt investments:
Loans to related parties
Loans to key management personnel
As at 31 March
2019
£’000
3,426
492
232
5,650
9,800
2019
£’000
50
–
50
2018
£’000
6
1
–
126
133
2018
£’000
–
–
–
*The fair value of financial assets carried at amortised cost approximates to the carrying amounts because of the short maturity of these
instruments.
Financial liabilities at amortised cost less than one year
Trade payables
Other payables
Accruals
Deferred consideration
As at 31 March
The Panoply Annual Report & Financial Statements 2019
2019
£’000
1,061
660
489
713
2,923
2018
£’000
121
1
32
–
154
93
Notes to the Consolidated
Financial Statements continued
Company
Financial liabilities at amortised cost due on demand or within 1 year
Trade payables
Accruals and other payables
Deferred consideration
As at 31 March
2019
£’000
57
253
713
1,023
2018
£’000
121
33
–
154
Fair value measurement
Financial instruments in the category “fair value through profit or loss” are measured in the Consolidated Statement of Financial Position at
fair value. Fair values of financial instruments are recognised and measured of measurements are disclosed by level of the following fair
value measurement hierarchy:
•
•
•
Level 1 – Quoted prices (unadjusted) in an active market for identical assets or liabilities
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for assets or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices)
Level 3 – Inputs for asset or liability that are not based on observable market data (that is unobservable inputs)
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 March 2019:
Level 1
£’000
–
Level 2
£’000
2019
Level 3
£’000
–
10,849
Level 1
£’000
–
Contingent consideration (See below)
Reconciliation for level 3 is shown below:
Opening balance
Additions
Fair value movement deferred contingent consideration (reflect in Consolidated Statement of Income)
Deferred contingent consideration (See Note 19)
24. Risk management
Level 2
£’000
–
2019
£’000
–
10,795
54
10,849
2018
Level 3
£’000
–
2018
£’000
–
–
–
–
The Group finances its activities through equity and bank financing. No speculative treasury transactions are undertaken, and no derivative
contracts were entered into. Financial assets and liabilities include those assets and liabilities of a financial nature, namely cash and
borrowings. The Group is exposed to a variety of financial risks arising from its operating activities, which are monitored by the Directors and
are reported in the principal risks and uncertainties contained within the Strategic Report on pages 30 and 31.
94
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
24.1 Cash and liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets
safely and profitably. The Group policy throughout the year has been to ensure continuity of funding by a combination available bank facility
and the issue of equity. The following table shows the contractual maturities of financial liabilities measured at amortised cost.
Contractual maturities of financial liabilities at 31 March 2019:
Trade and other payables
Deferred consideration (Note 19)
6 months
or less
£’000
2,152
713
2,865
Contractual maturities of financial liabilities at 31 March 2018:
Trade and other payables
6 months
or less
£’000
154
Group
Total
contractual
cash flows
£’000
2,210
713
2,923
Group
Total
contractual
cash flows
£’000
6 to 12
months
£’000
58
–
58
6 to 12
months
£’000
6 months
or less
£’000
6 to 12
months
£’000
255
713
968
55
–
55
6 months
or less
£’000
6 to 12
months
£’000
Company
Total
contractual
cash flows
£’000
310
713
1,023
Company
Total
contractual
cash flows
£’000
–
154
154
–
154
24.2 Capital risk management
The Group’s policy on capital structure is to maintain a level of gross cash available, which the Board considers to be adequate to fund a
range of potential EBITDA movements, taken from a series of business projections and scenarios. Based on these business projections, the
Board believes it has sufficient cash resources at its disposal to pursue its chosen strategy of maximising shareholder returns from its
customer base.
The Group manages its capital to ensure that trading entities in the Group will be able to continue as going concerns, while maximising the
returns to shareholders through the organisation of cash and equity balances. The capital structure of the Group consists of cash at bank and
in hand and equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed
in the Consolidated Statement of Changes in Equity on page 55.
The Directors seek to promote recurring revenues to a wide range of business customers, to reduce the risks associated with fluctuations in
the UK economy and to increase the long-term value to customers and shareholders.
The declaration and payment by the Group of any future dividends on the Ordinary Shares and the amount will depend on the results of the
Group’s operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to
be relevant at the time.
In line with the Board’s confidence for the second half of March 2020 and in line with the Admission Document, the Directors envisage that
the Group will pay dividends following the conclusion of the results for the financial year ended 31 March 2020.
The Board will regularly review the appropriateness of its dividend policy.
In order to maintain or adjust the capital structure, the Group may adjust the amount of any pay-outs to the shareholders, return capital to
the shareholders, issue new shares and make borrowings or sell assets to reduce debt.
24.3 Credit risk
The Group’s policy is to monitor trade and other receivables and avoid significant concentrations of credit risk. The principal credit risk arises
from trade receivables. Aged receivables reports are reviewed monthly as a minimum. The credit control function follows a policy of sending
reminder letters that start once an invoice is over 30 days overdue. These culminate in a legal letter with the threat of legal action. In a limited
number of cases, legal action has been pursued. An aged analysis of receivables is shown in Note 14 to the financial statements.
The Panoply Annual Report & Financial Statements 2019
95
Notes to the Consolidated
Financial Statements continued
To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the
reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking
information. Especially the following indicators are incorporated:
•
•
•
•
•
internal credit rating
external credit rating (as far as available) for example using local Trade register
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant
change to the trade debtors’ ability to meet its obligations
any significant changes in the trade debtors’ parent company and its ultimate control party
significant changes in the expected performance and behaviour of the trade debtors, including changes in the payment status of trade
debtors in the group and changes in their operating results
In line with IFRS 9, the Group assesses the credit risk balances at each reporting date, to assess whether the credit risk on a financial
instrument has increased significantly since initial recognition. The simplified approach has been applied to measure the loss allowance at an
amount equal to the lifetime expected credit loss (ECL) at initial recognition and throughout its life. The credit risk is assessed by reviewing the
contract income amount compared to the amount subsequently recovered. The Group does not identify specific concentrations of credit risk
with regards to trade and other receivables, as the amounts recognised represent a large number of receivables from various customers,
including some government authorities. Assessment of the average expected credit loss across the group is deemed to be nil over a period of
36 months to 31 March 2019 with the exception of Questers. The bad debt provision as at 31 March 2019 was assessed to be £0.1m. Trade
receivables are stated net of an impairment for estimated irrecoverable amounts of £3.4m (2018: £Nil). This impairment has been determined
by reference to known issues. Write-offs are made when the irrecoverable amount becomes certain. During the year £0.2m of bad debt was
written off against the provision which relates to pre-acquisition of Questers. The Group’s main risk relates to trade receivables which are
stated net of the provisions above. No collateral is held as security against these debtors and the carrying value represents the fair value.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 March 2018 and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward- looking information
on macroeconomic factors affecting the ability of the customers to settle the receivables. The group has identified that the GDP and the
unemployment rate of the countries in which it sells its goods and services are the most relevant factors, and accordingly adjusts the
historical loss rates based on expected changes in these factors.
24.4 Foreign currency risk
The Group’s main foreign currency risk is the short-term risk associated with accounts receivable and payable denominated in currencies that
are not the subsidiaries functional currency. The risk arises on the difference in the exchange rate between the time invoices are
raised/received and the time invoices are settled/paid. For sales denominated in foreign currencies the Group will try to ensure that the
purchases associated with the sale will be in the same currency. Most monetary assets and liabilities of the Group were denominated in
pound sterling except for the following currency in the table below, and which are included in the financial statements at the sterling value
based on the exchange rate ruling at the Statement of Financial Position date.
Sensitivity analysis in foreign exchange rates show an increase or decrease by 10% with all other variables held constant, the net assets
attributable to shareholders would increase or decrease by approximately £208k (2018: £Nil).
The maximum exposure to foreign currency risk for the Group trade receivables at the reporting date was:
Norwegian Krone (NOK)
European Union currency (EUR)
Australian Dollar (AUD)
As at 31 March
2019
£’000
230
–
–
230
2018
£’000
–
–
–
–
96
The Panoply Annual Report & Financial Statements 2019
Strategic Review
Corporate Governance
Financial Statements
The maximum exposure to foreign currency risk for Group cash and cash equivalent at the reporting date by was:
European Union currency (EUR)
Norwegian Krone (NOK)
Australian Dollar (AUD)
Bulgarian Lev (BGN)
Serbian Dinar (RSD)
United States of America Dollar (USD)
As at 31 March
The maximum exposure to foreign currency risk for the Group trade and other payables at the reporting date was:
NOK
AUD
RSD
BGN
As at 31 March
2019
£’000
15
1,064
56
38
1
21
1,195
2019
£’000
336
3
1
310
650
2018
£’000
–
–
–
–
–
–
–
2018
£’000
–
–
–
–
–
25. Post-balance sheet events
Human Plus Limited, a subsidiary of Notbinary, started trading from 1 April 2019. The company specialises in robotic process automation
(RPA).
The Panoply Holdings Plc acquired FutureGov on the 11 June 2019 and further details are disclosed in note 8.1.
The Panoply has entered into a three year £5m revolving credit facility with HSBC (the “RCF Facility”) pursuant to which £3.55m has already
been drawn down now to pay a proportion of the cash consideration payable pursuant to the FutureGov acquisition. HSBC has taken
security over The Panoply and all of the Group’s material subsidiaries and their assets in connection with the RCF Facility. The interest rate is
LIBOR + margin 2.5%.
26. First-time adoption of IFRS
These are the Group’s first Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards
(IFRS). The date of transition to IFRS is 1 April 2018.
The Group’s IFRS accounting policies presented in note 1 have been applied in preparing the financial statements for the year ended
31 March 2019, the comparative information and the opening statement of financial position at the date of transition.
The Group has applied IFRS 1 First-time Adoption of International Financial Reporting Standards in preparing these first IFRS consolidated
financial statements. At the point of transition, The Panoply Holdings Plc was a single trading entity with no subsidiaries, reporting under FRS
102. Therefore, the effects of the transition to IFRS presented in this section relates to the parent company only. There is no impact on equity,
total comprehensive income and reported cash flows at the point of transition to IFRS.
26.1 First-time adoption exemptions applied
Upon transition, IFRS 1 permits certain exemptions from full retrospective application. The exemptions adopted by the Group are set out
below:
•
The Group has used estimates under IFRS that are consistent with those applied under previous GAAP unless there is objective
evidence those estimates were in error.
The Panoply Annual Report & Financial Statements 2019
97
Notes to the Consolidated
Financial Statements continued
26.2 Presentation differences
Certain presentation differences between previous GAAP and IFRS have no impact on reported profit or total equity.
Some line items are described differently (renamed) under IFRS compared to previous GAAP, although the assets and liabilities included in
these line items are unaffected. These line items are as follows (with previous GAAP descriptions in brackets):
•
•
•
•
Trade and other receivables (‘Other debtors’)
Other taxes (‘VAT receivable’)
Trade and other payables (‘Trade creditors’ and ‘Other creditors’) *
Other taxes and social security costs (‘Other creditors’) *
* Under previous GAAP, the Group did not present the line item ‘Trade and Other Payables’. ‘Trade and other payables’ were presented as
‘Trade creditors’ and ‘Other creditors’ which included other taxes and social security costs. Under IFRS, the other taxes and social security
costs are included in a separate line item, ‘Other taxes and social security costs’.
27. Non-cash investing & financing activities
Non-cash investing & financing activities disclosed are:
•
•
Partial settlement of a business combination through the issue of shares – refer to Business combination note 8
Deferred settlement of a business combination through the issue of shares – refer to Business combination note 8
98
The Panoply Annual Report & Financial Statements 2019
Directors, Secretary and Advisers
Registered Auditor
Nexia Smith & Williamson
25 Moorgate,
London EC2R 6AY
Bankers
HSBC UK Bank plc
4th Floor,
3 Temple Quay,
Bristol BS1 6DZ
Handelsbanken
Staines Upon Thames Branch,
Staines upon Thames TW18 3BA
Registrars
Neville Registrars
Neville House,
Steelpark Road,
Halesowen B62 8HD
Directors
Mark Smith
Non-Executive Chairman
Chris Sweetland
Non-Executive Director
Isabel Kelly
Non-Executive Director
Neal Gandhi
Chief Executive Officer
Oliver Rigby
Chief Financial Officer
Secretary
Oliver Rigby
Company number
10533096
Registered office
141-143 Shoreditch High Street,
London E1 6JE
Nominated adviser and broker
Stifel Nicolaus Europe Ltd
150 Cheapside,
7th Floor,
London EC2V 6ET
Solicitors
Harbottle & Lewis LLP
14 Hanover Square,
London W1S 1HP
The Panoply Annual Report & Financial Statements 2019
99
Designed and Printed by Sterling
www.sterlingfp.com
172774
First Floor,
141-143 Shoreditch High St,
London E1 6JE
www.thepanoply.com
1
T
h
e
P
a
n
o
p
l
y
|
A
n
n
u
a
l
R
e
p
o
r
t
&
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
The Panoply Annual Report & Accounts 2019