("
Preliminary results for the year ended
Financial:
· Underlying* business revenues increase to
· Underlying* EBITDA loss of
· Group operating loss of
· Total loss after tax
· Group net assets of
· Group cash and term deposits at
· Continued reduction in Group complexity through closure of the majority of loss making, cash consumptive businesses
· Successful resolution of a number of legacy tax matters and other obligations resulting in the release of provisions of
Current trading (unaudited):
· Underlying* central costs reduced by over 40% in Q1 2018 compared to Q1 2017
· As at
· Cash outflows since
o typical settlement of outstanding 2017 invoices, staff bonuses and settlement of non-underlying liabilities
o
· Unaudited total underlying Group revenue for Q1 2018 is down vs. Q1 2017 (partly due to adverse Canadian $ to £ currency exchange rate movements)
· Healthcare Services:
o continued emphasis on clinic optimisation in ptHealth and on InnoCare sales
o Q1 2018 unaudited CDN$ revenue is ahead of Q1 2017
· ingenie continues to experience difficult market conditions:
o taking measures to address recent insurer pricing changes
o retail market and pricing volatility has led to continued lower revenue in Q1 2018 vs Q1 2017 and Q4 2017
* Underlying comprises Healthcare Services, ingenie and Central. See Note 2 for details on Underlying and Non-Underlying classification.
** Cash excludes escrow monies of
The Annual Report and Accounts for the year ended
The 2018 AGM will be held at
For further information:
|
Tel: 03333 448048 |
|
Tel: 020 7418 8900 |
Notes to editors:
About
The sectors in which the Group operates are within healthcare in
· Healthcare Services
o ptHealth is a national healthcare company that owns and operates physical rehabilitation clinics across
o InnoCare is a proprietary clinic management software platform and call centre and customer service operation alongside ptHealth. InnoCare uses its established industry expertise to enable third-party clinic owners to transform their patients' experience and operate more efficient and productive practices in the growing North American healthcare market.
· ingenie
is an insurance broker focused on helping young drivers use the road safely and affordably. Using telematics technology, ingenie gives its community discounts, feedback and bespoke advice via its Driver Behaviour Unit to help them improve their driving skills whilst staying safe. It provides its telematics technology to certain third parties as a technology solutions provider.
Chairman's Report
2017 was another year of change for the Group but much has been achieved and we entered 2018 with a clear direction of travel in respect of the outstanding legacy issues and our two remaining operating businesses.
During 2017, we substantially completed the work to simplify and rationalise the Group involving the closure or disposal of loss making businesses and significantly reducing the size and cost of the central overhead. The succession to
We remain on track with the execution of our plan to prepare our businesses for future disposals. These potential divestments will be determined with a view to maximising shareholder value taking all factors into consideration.
With the focus of strengthened management teams in ingenie and ptHealth including a new CEO in ingenie, new Chairmen in both and other senior hires, the businesses will be given the time to develop and grow.
ptHealth and ingenie remain profitable with further opportunities for profit improvement from organic growth and margin enhancement.
We will continue to address the legal and regulatory matters that face the Group with focus and determination. In 2017, and to date in 2018, we have resolved multiple matters but the largest of our litigation and threatened litigation remain outstanding.
There is still much work to be done, both at the Group level and within our businesses, and I would like to thank our colleagues for their commitment. On behalf of the whole Board, I would also like to thank each of the directors who left the Board in 2017 for their contributions and commitment over the last few years in the challenging and complex situation faced by the Group.
I would also like to thank our shareholders who have been patient and maintained support for the Company as the intense work to deliver the best value from all our assets has continued. The Board remains confident that we will go on to reward that support.
Non-executive Chairman
Group Chief Executive's Update
I am pleased to present my first update as Group Chief Executive Officer and to lead the Group in this next phase. Our focus remains on resolving all of our legacy matters as efficiently as possible and generating as much value as we can from our remaining businesses, ingenie and ptHealth.
Each business has a clear strategy as well as high quality and ambitious management teams and we are confident that in time they will reward our shareholders' patience.
The Group losses are now stemmed and the central team efficiently run. Until we resolve the Slater & Gordon litigation we will not be able to distribute capital to shareholders but that remains our ultimate aim. We are determined to fight off what we consider an unmeritorious claim. Further, we remain in active dialogue with Slater & Gordon regarding any deferred consideration due from Noise Induced Hearing Loss ("NIHL") cases.
For the year ended
Business Review:
Taking each of the operating businesses in turn:
1. Healthcare Services
Our Healthcare Services activities consist of our ptHealth clinics business as well as InnoCare, which sells software and services to independent clinics in
Healthcare Services in 2017 at a glance
· In 2017, ptHealth and InnoCare treated an average of 3,095 patients a day with over 750,000 visits for the year
· Of the 4,588 patients surveyed (up from 2,958 from 2016) 97% said they would recommend us (up by 1% vs 2016)
· Over 1,300 practitioners use InnoCare software, an increase of 8% over 2016
2. ingenie
Whilst revenue for the year increased to
In
The ingenie Board has also been strengthened by
ingenie in 2017 at a glance
· Driving and safety improvements achieved by the combination of technology and psychology:
o 99% ingenie drivers activate their feedback account
o ingenie drivers engages 9x per month via feedback app
o 12% reduction in highly dangerous driving messages generated by customers from 2016 to 2017
o 92% drivers proven to improve after ingenie coaching on driving speed
· Facebook and Twitter followers exceed 50,000
· ingenie B2B managed over 170,000 policies in 2017
· ingenie B2B revenue growth of 107%
Update on legacy matters
Whilst we successfully resolved a number of historic matters in the year (and since the year-end), the Slater & Gordon claim is ongoing, and we filed our defence in
The SFO investigation continues and we are cooperating fully. It remains the only regulatory inquiry to which the Group is subject.
There have been no further developments at this stage on the threatened (but not commenced) class action litigation first announced in
2018 outlook
The Group enters 2018 a far simpler business and we expect this year will be a period of re-focus and development for ptHealth and ingenie. Both will be encouraged to invest ambitiously but prudently.
ptHealth continues to make good progress in operational improvements generating more appointments and treatments from its existing clinics. In addition, more third party clinics are using our services to meet patient needs.
ingenie's current volumes are being addressed in partnership with its underwriting panel and by the development of new product offerings that will launch during 2018.
Central costs will be carefully managed at greatly reduced levels consistent with the unresolved legacy matters and the needs of the organisation.
Group Chief Executive Officer
Consolidated Income Statement
for the year ended
|
|
2017 |
2017 |
2017 |
2016 |
2016 |
2016 |
|
|
Underlying |
Non-underlying* |
Total |
Underlying |
Non-underlying* |
Total* |
|
|
|
|
|
|
|
|
Revenue |
|
44,880 |
- |
44,880 |
42,684 |
961 |
43,645 |
Cost of sales |
|
(24,582) |
- |
(24,582) |
(23,096) |
(981) |
(24,077) |
|
|
|
|
|
|
|
|
Gross profit |
|
20,298 |
- |
20,298 |
19,588 |
(20) |
19,568 |
Administrative expenses |
|
(24,979) |
(2,737) |
(27,716) |
(25,632) |
1,591 |
(24,041) |
|
|
|
|
|
( |
|
|
Group operating (loss)/profit |
|
(4,681) |
(2,737) |
(7,418) |
(6,044) |
1,571 |
(4,473) |
Finance income |
|
270 |
- |
270 |
508 |
833 |
1,341 |
Finance expense |
|
(22) |
2,220 |
2,198 |
(271) |
- |
(271) |
|
|
|
|
|
|
|
|
(Loss)/profit before taxation |
|
(4,433) |
(517) |
(4,950) |
(5,807) |
2,404 |
(3,403) |
Taxation |
|
754 |
- |
754 |
(753) |
165 |
(588) |
|
|
|
|
|
|
|
|
(Loss)/profit after taxation for the year from continuing operations |
|
(3,679) |
(517) |
(4,196) |
(6,560) |
2,569 |
(3,991) |
Provision against escrow receivable |
|
- |
- |
- |
- |
(50,120) |
(50,120) |
Net gain on disposal of discontinued operations |
|
- |
4,930 |
4,930 |
- |
323 |
323 |
Loss for the year from discontinued operations, net of taxation |
|
- |
(3,378) |
(3,378) |
- |
(15,282) |
(15,282) |
|
|
|
|
|
|
|
|
(Loss)/profit after taxation for the year |
|
(3,679) |
1,035 |
(2,644) |
(6,560) |
(62,510) |
(69,070) |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the parent |
|
(3,679) |
1,047 |
(2,632) |
(6,560) |
(62,502) |
(69,062) |
Non-controlling interests |
|
- |
(12) |
(12) |
- |
(8) |
(8) |
|
|
|
|
|
|
|
|
|
|
(3,679) |
1,035 |
(2,644) |
(6,560) |
(62,510) |
(69,070) |
Loss per share (pence): |
|
|
|
|
|
|
|
Basic |
|
(8.0) |
|
(5.7) |
(7.4) |
|
(150.0) |
Diluted |
|
(8.0) |
|
(5.7) |
(7.4) |
|
(150.0) |
Loss per share from continuing operations (pence): |
|
|
|
|
|
|
|
Basic |
|
|
|
(9.1) |
|
|
(8.7) |
Diluted |
|
|
|
(9.1) |
|
|
(8.7) |
*Non-underlying results have been presented separately to give a better guide to underlying business performance. Where items have become non-underlying in 2017 the comparable amounts in 2016 have been revised to also be classified on the same basis. This does not impact the total 2016 results. 2016 Revenue and Cost of Sales have been revised to reflect amounts that should have been presented gross rather than net. This has no impact upon gross margin.
Consolidated Statement of Comprehensive Income
for the year ended
|
2017 |
2016 |
|
£'000 |
£'000 |
|
|
|
Loss after taxation |
(2,644) |
(69,070) |
|
|
|
Items that may be reclassified in the Consolidated Income Statement |
|
|
Exchange differences on translation of foreign operations |
136 |
50 |
|
|
|
Total comprehensive loss for the year |
(2,508) |
(69,020) |
Attributable to: |
|
|
Equity holders of the parent |
(2,481) |
(69,012) |
Non-controlling interest |
(27) |
(8) |
|
|
|
|
(2,508) |
(69,020) |
Consolidated Statement of Financial Position
as at
|
|
2017 |
2016 |
|
|
£'000 |
£'000 |
Non-current assets |
|
|
|
|
|
17,443 |
23,221 |
Other intangible assets |
|
4,825 |
6,259 |
Property, plant and equipment |
|
3,819 |
6,293 |
Other receivables |
|
759 |
- |
|
|
|
|
|
|
26,846 |
35,773 |
|
|
|
|
Current assets |
|
|
|
Inventories |
|
1,283 |
941 |
Trade and other receivables |
|
6,144 |
10,228 |
Corporation tax assets |
|
- |
355 |
Term deposits |
|
40,000 |
37,500 |
Cash |
|
22,808 |
43,714 |
|
|
|
|
|
|
70,235 |
92,738 |
Assets of disposal group classified as held for sale |
|
833 |
1,300 |
|
|
|
|
Total current assets |
|
71,068 |
94,038 |
|
|
|
|
Total assets |
|
97,914 |
129,811 |
|
|
|
|
Current liabilities |
|
|
|
Cumulative redeemable preference shares |
|
(2,203) |
- |
Other secured and unsecured loans |
|
- |
(163) |
Trade and other payables |
|
(11,710) |
(25,895) |
Obligations under finance leases |
|
(4) |
(102) |
Provisions |
|
(13,024) |
(27,816) |
|
|
|
|
|
|
(26,941) |
(53,976) |
Liabilities of disposal group classified as held for sale |
|
(851) |
- |
|
|
|
|
Total current liabilities |
|
(27,792) |
(53,976) |
|
|
|
|
Non-current liabilities |
|
|
|
Cumulative redeemable preference shares |
|
(3,795) |
(6,131) |
Provisions |
|
(87) |
(425) |
Deferred tax liabilities |
|
(167) |
(741) |
|
|
|
|
|
|
(4,049) |
(7,297) |
|
|
|
|
Total liabilities |
|
(31,841) |
(61,273) |
|
|
|
|
Net assets |
|
66,073 |
68,538 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
4,604 |
4,604 |
Other reserves |
|
136,618 |
143,179 |
Retained earnings |
|
(76,095) |
(80,218) |
|
|
|
|
Equity attributable to equity holders of the parent |
|
65,127 |
67,565 |
Non-controlling interests |
|
946 |
973 |
|
|
|
|
Total equity |
|
66,073 |
68,538 |
Consolidated Cash Flow Statement
for the year ended
|
|
2017 |
2016 |
|
|
£'000 |
£'000 |
Cash flows from operating activities |
|
|
|
Cash used in operations before exceptional costs, net finance expense and tax |
|
(11,289) |
(16,411) |
Non underlying cash out flows excluding discontinued operations |
|
(5,266) |
(10,422) |
|
|
|
|
Cash used in operations before net finance expense and tax |
|
(16,555) |
(26,833) |
|
|
|
6 |
Corporation tax received |
|
622 |
6,990 |
|
|
|
|
Net cash used by operating activities |
|
(15,933) |
(19,843) |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment |
|
(4,417) |
(5,469) |
Purchase of intangible fixed assets |
|
(1,816) |
(1,400) |
Proceeds on disposal of property, plant and equipment |
|
1,260 |
- |
Disposal of subsidiaries net of cash foregone |
|
2,560 |
4,013 |
Investment in term deposits |
|
(70,000) |
(82,500) |
Maturity of term deposits |
|
67,500 |
45,000 |
Interest income |
|
178 |
97 |
Disposal of associated undertakings |
|
- |
86 |
Repayment of financing loan |
|
- |
(1,255) |
|
|
|
|
Net cash used in investing activities |
|
(4,735) |
(41,428) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Issue of share capital |
|
- |
8 |
Finance expense paid |
|
(20) |
(932) |
Finance income received |
|
- |
1,609 |
Finance lease repayments |
|
(94) |
(103) |
|
|
|
|
Net cash (used in)/generated by financing activities |
|
(114) |
582 |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(20,782) |
(60,689) |
Cash and cash equivalents at the beginning of the year |
|
43,714 |
103,839 |
Exchange gains on cash and cash equivalents |
|
(124) |
564 |
|
|
|
|
Cash and cash equivalents at the end of the year |
|
22,808 |
43,714 |
Cash and cash equivalents |
|
|
|
Cash |
|
22,808 |
43,714 |
|
|
|
|
|
|
22,808 |
43,714 |
The above Consolidated Cash Flow Statement includes cash flows from both continuing and discontinued operations.
As at
Notes:
1. Results announcement
The Financial Statements for the year ended
2. Consolidated Income Statement presentation
The Income Statement is presented in three columns. This presentation is intended to give a better guide to underlying business performance by separately identifying adjustments to Group results which are considered to either be exceptional in size, nature or incidence, relate to businesses which do not form part of the continuing business of the Group, or have potential significant variability year on year in non-cash items which might mask underlying trading performance. The columns extend down the Income Statement to allow the tax and earnings per share impacts of these transactions to be disclosed. Equivalent elements of the Group results arising in different years, including increases in or reversals of items recorded, are disclosed in a consistent manner.
3. Business segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker and represent two divisions supported by a Group cost centre (denoted as Central below). The principal activities of the two segments are as follows:
- ingenie: Telematics based insurance broking and technology solutions provider; and
- Healthcare Services: Comprising ptHealth and InnoCare. ptHealth is a national healthcare company that owns and operates physical rehabilitation clinics across
During 2017,
Segment information about these businesses is presented below.
In previous years, an allocation of central costs to the businesses within the Group has been applied. During 2017, the direction of the Group changed such that the individual businesses move towards operating on an increasingly stand-alone basis. As a consequence of this change an allocation has not been applied within the segmental reporting.
|
ingenie |
Healthcare Services |
Central |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
Year ended |
|
|
|
|
Underlying revenue |
14,429 |
30,451 |
- |
44,880 |
Underlying cost of sales |
(7,983) |
(16,599) |
- |
(24,582) |
|
|
|
|
|
Underlying gross profit |
6,446 |
13,852 |
- |
20,298 |
Underlying administrative expenses excluding depreciation and amortisation* |
(5,130) |
(13,145) |
(5,633) |
(23,908) |
|
|
|
|
|
Underlying EBITDA |
1,316 |
707 |
(5,633) |
(3,610) |
Depreciation and amortisation* |
|
|
|
(1,071) |
|
|
|
|
|
|
|
|
|
(4,681) |
Net finance income |
|
|
|
248 |
|
|
|
|
|
|
|
|
|
(4,433) |
Non-underlying adjustments |
|
|
|
(517) |
|
|
|
|
|
|
|
|
|
(4,950) |
|
||||
|
|
|
|
|
|
ingenie |
Healthcare Services |
Central |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
Year ended |
|
|
|
|
Underlying revenue (restated) |
13,927 |
28,757 |
- |
42,684 |
Underlying cost of sales (restated) |
(7,565) |
(15,531) |
- |
(23,096) |
|
|
|
|
|
Underlying gross profit |
6,362 |
13,226 |
- |
19,588 |
Administrative expenses excluding depreciation and amortisation* |
(4,949) |
(12,067) |
(7,474) |
(24,490) |
|
|
|
|
|
Underlying EBITDA |
1,413 |
1,159 |
(7,474) |
(4,902) |
Depreciation and amortisation* |
|
|
|
(1,142) |
|
|
|
|
|
|
|
|
|
(6,044) |
Net finance income |
|
|
|
237 |
|
|
|
|
|
|
|
|
|
(5,807) |
Non-underlying adjustments |
|
|
|
2,404 |
|
|
|
|
|
|
|
|
|
(3,403) |
|
|
|
|
|
* Depreciation added back above when calculating Underlying EBITDA from continuing operations excludes depreciation on telematics devices of
In the preparation of the Financial Statements, certain contracts were identified within the Healthcare Services segment which should have been presented gross, rather than as an agent for the year ended
4. Non-underlying results
The non-underlying results of the business include the income and expenses of businesses classified as non-underlying by virtue of these not forming part of the long term plans for the Group and as such are being wound down or disposed of. This includes Maine Finance and ingenie
Items which are considered to be exceptional in size, nature or incidence, or have potential significant variability year on year in non-cash items which might mask underlying trading performance are also included within non-underlying. In 2017, this primarily relates to movements in provisions for legal fees and historic tax matters along with an impairment charge on goodwill. In 2016, this included providing for the Warranty Escrow receivable which was included alongside the discontinued operations to which it relates. The classification of provision releases as underlying or non-underlying are consistent with their initial establishment.
Non-underlying administrative expenses are analysed as follows:
Year ended 31 December |
2017 |
2016 |
|
£'000 |
£'000 |
|
|
|
Exceptional items: |
|
|
- Legal and regulatory |
3,517 |
(1,107) |
- Tax related matters (credit) |
(9,036) |
(5,795) |
- Impairments of non-cash assets |
5,633 |
- |
- Restructuring |
67 |
(247) |
|
|
|
Total exceptional items |
181 |
(7,149) |
Other adjustments: |
|
|
- Share based payments |
43 |
145 |
- Amortisation of acquired intangibles |
1,434 |
1,684 |
- Other non-underlying administrative expenses |
1,079 |
3,729 |
Total other adjustments |
2,556 |
5,558 |
|
|
|
Total non-underlying administrative expenses |
2,737 |
(1,591) |
2016 has been restated to remove exceptional items and other adjustments that relate to businesses which are now classified as discontinued.
Other adjustments are not exceptional in size, nature or incidence, however they do not relate to the ongoing future trade of the Group and can vary significantly from year to year. Amortisation represents a non-cash charge relating to acquisition accounting and is not taken into account by management when reviewing operational performance of the Group. Other non-underlying administrative expenses primarily comprises legal fees incurred and do not relate to the underlying, continuing businesses of the Group.
Other non-underlying administrative expenses relate principally to the costs of businesses classified as non-underlying and central costs associated with the same. These are specifically identifiable external costs and do not include allocations of internal amounts.
The legal and regulatory expense includes
Within the tax related matters credit of
The restructuring expense of
Impairments of non-cash assets above relates to:
Year ended 31 December |
2017 |
2016 |
|
£'000 |
£'000 |
|
|
|
|
5,593 |
6,814 |
Other intangible assets |
- |
179 |
Tangible fixed assets |
40 |
- |
|
|
|
|
5,633 |
6,993 |
5.
The movement in goodwill is as follows:
|
|
|
£'000 |
Cost |
|
At |
185,916 |
Exchange differences |
7,978 |
|
|
At |
193,894 |
Disposals |
(96,071) |
Exchange differences |
(834) |
|
|
At |
96,989 |
|
|
Impairment |
|
At |
157,539 |
Charge |
6,814 |
Exchange differences |
6,320 |
|
|
At |
170,673 |
Disposals |
(96,071) |
Charge |
5,593 |
Exchange differences |
(649) |
|
|
At |
79,546 |
|
|
Net book value |
|
|
|
|
17,443 |
|
|
|
23,221 |
Impairments recognised during 2016 resulted in only two CGUs retaining goodwill at
|
2017 |
2016 |
|
£'000 |
£'000 |
|
|
|
ingenie |
9,081 |
14,674 |
Healthcare Services |
8,362 |
8,547 |
|
|
|
|
17,443 |
23,221 |
Basis of valuation and key assumptions for impairment testing of goodwill and intangible assets
The recoverable amount of goodwill for businesses at the year-end is determined on the basis of Value in Use, using a discounted cash flow ("DCF") appraisal based on explicit forecast periods of 3 to 4 years (2016: 2 to 3 years) to reflect the maturity of the businesses and/or markets they operate in. External market data has been used where possible and the Group has also drawn upon data used in its annual planning cycle, with reference to other market participants. In particular changes in revenues and pre-tax discount rate are key assumptions.
For each of the CGUs with significant amount of goodwill, the key assumptions used in the Value-in-Use calculations and recoverable amounts of goodwill are stated below.
2017 |
ingenie |
Healthcare Services |
Long term growth rate |
2% |
2% |
DCF appraisal period |
4 years |
3 years |
Annualised revenue growth over DCF appraisal period |
3% |
4% |
Pre-tax discount rate |
13% |
11% |
2016 |
Hubio Fleet |
Hubio |
ingenie |
Healthcare Services |
BAS |
Long term growth rate |
2% |
2% |
2% |
2% |
2% |
DCF appraisal period |
4 years |
3 years |
3 years |
3 years |
3 years |
Annualised revenue growth over DCF appraisal period |
11% |
7% |
8% |
5% |
5% |
Pre-tax discount rate |
19% |
13% |
13% |
15% |
11% |
Annualised revenue growth rates vary by operating division depending on the current development to maturity of the CGU. In determining the applicable discount rate, management has applied judgement in respect of several factors, including, inter alia, assessing the risk attached to future cash flows. Pre-tax discount rates have been assessed for each CGU.
Movement in goodwill by CGU
The movement in goodwill by CGU is as follows:
|
2016 |
Foreign exchange movements |
Impairment |
2017 |
|
£'000 |
£'000 |
£'000 |
£'000 |
ingenie |
14,674 |
- |
(5,593) |
9,081 |
Healthcare Services |
8,547 |
(185) |
- |
8,362 |
|
|
|
|
|
Total |
23,221 |
(185) |
(5,593) |
17,443 |
For ingenie, if there was an increase in the pre-tax discount rate of 1 percentage point there would be an additional impairment of £1m to the amounts above. Similarly, if there was a decrease of 1 percentage point in the long term growth rate there would be an additional impairment of £0.8m.
No reasonably possible changes to assumptions would lead to an impairment of the goodwill for the Healthcare Services CGU.
6. Provisions
|
Tax related matters |
Legal disputes |
Onerous contracts |
Other |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
At 1 January 2016 |
23,543 |
6,400 |
3,643 |
3,424 |
37,010 |
Additional provisions |
3,231 |
1,814 |
525 |
3,315 |
8,885 |
Unused amounts released |
(9,181) |
(1,300) |
(100) |
(144) |
(10,725) |
Used during the year |
(2,500) |
(800) |
(1,349) |
(2,313) |
(6,962) |
Exchange movements |
- |
- |
- |
33 |
33 |
|
|
|
|
|
|
At 1 January 2017 |
15,093 |
6,114 |
2,719 |
4,315 |
28,241 |
Additional provisions |
- |
2,927 |
126 |
936 |
3,989 |
Unused amounts released |
(9,086) |
(46) |
(227) |
(973) |
(10,332) |
Used during the year |
(2,814) |
(1,553) |
(2,092) |
(2,282) |
(8,741) |
Exchange movements |
- |
- |
(34) |
(12) |
(46) |
|
|
|
|
|
|
At 31 December 2017 |
3,193 |
7,442 |
492 |
1,984 |
13,111 |
|
|
|
|
|
|
Split:
Non-current |
- |
- |
87 |
- |
87 |
Current |
3,193 |
7,442 |
405 |
1,984 |
13,024 |
|
|
|
|
|
|
Tax related matters
A provision for tax-related matters had been established in previous years with respect to judgemental tax positions primarily in relation to historic PAYE and VAT issues. During the year ended 31 December 2017, the majority of the outstanding PAYE issues were resolved and settled for £2,814,000 with £7,586,000 of unused provision being released to the income statement as the settlement was less than management's estimate at the time of preparation of the 31 December 2016 Financial Statements. Of the remaining amounts, £4,000,000 of the provision at 31 December 2016 related to a disputed and judgemental tax issue. Based upon the latest information available to management, this has been reduced to £2,500,000 at 31 December 2017. Key judgements exist around the classification of certain transactions and therefore the related tax treatment. The amount provided represents the Directors' estimate of the likely outcome based upon the information available; however the ultimate settlement may be different. The Group continues to take steps to resolve these outstanding items and believe the majority will be settled within twelve months from the balance sheet date.
Legal disputes and regulatory matters
In legal cases where the Group is (or would be) the defendant, defence costs are provided as the Group is committed to defending the actions. Such costs are provided for at the mid-range of possible eventualities given the uncertainty of the outcome. If the Group is successful in defending such actions, then the final costs may be lower than the total provision recognised above. Additional provisions in the table above relate to expected legal costs to defend these actions. No amounts have been provided for the costs of any settlement, fine or award of damages.
Amounts used during the year represent legal costs incurred to date as a result of the above items. The provisions will be utilised further as the matters progress.
In legal cases where the Group is the claimant (or counter claimant), costs are not provided as there is no obligation to proceed and the Group is not contractually committed to incur costs.
Onerous contracts
Where contracted income is expected to be less than the related expected expenditure the difference is provided in full. The timing and amount of these items can be reasonably determined. The majority of the amount provided at 31 December 2016 related to three onerous property leases. Two of these onerous leases have been settled in the year at amounts less than management's estimate at 31 December 2016 and therefore unused amounts of £227,000 have been released. The settlement and costs incurred during the period relate to the £2,282,000 utilised during the year. To date it has not been possible to sublet or otherwise resolve the remaining property lease and therefore an additional amount of £126,000 has been provided representing the maximum exposure to this onerous lease. The majority of the provision at 31 December 2017 now relates to non-property obligations.
Other
Provisions have been established for expected costs where a commitment has been made at the balance sheet date and for which no future benefit is anticipated. These primarily relate to three areas, commission clawback relating to non-underlying businesses, warranties provided by the Group and outstanding restructuring payments. With the exception of the latter, the exact timing and quantum of the amounts is uncertain, and the provision is based upon historic trends in these businesses. £703,000 of the additional provision in the year relates to the normal ongoing business activities of the Group. The amounts of the restructuring provision can be reasonably estimated and are time bound within an upper limit of one year. The commission clawback element of the provision totals £562,000 (2016: £967,000) of which £1,108,000 was used in the year and £703,000 was newly created.
7. Post balance sheet events
Settlements with former management and former vendors
In January and March 2018, the Company agreed settlements with former management. The 31 December 2016 Financial Statements referred to an investigation by the Group into expense claims submitted by Mr
On 9 November 2016, Court proceedings were commenced in the High Court of Justice by the Group against the vendors of the
Disposal of businesses
In January 2018, the Group disposed of the non-telematics assets of its Canadian subsidiary and in February 2018 the Group disposed of its Hubio Fleet business.
This information is provided by RNS