Accumuli plc - Annual report and accounts 2014

Accumuli plcAnnual report and accounts 2014

IT Risk. Managed. Leveraged.

Accum

uli plc A

nnual repo

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unts 2014

In this reportOverview01 Highlights for the year

02 Accumuli at a glance

04 Chairman’s statement

Strategic report06 Strategic report (incorporating the CEO’s strategic

and operational review)

11 Finance director’s financial review

14 Risks and risk management

Governance16 The board

18 Corporate governance

19 Remuneration report

22 Directors’ report

24 Statement of directors’ responsibilities

Financial statements25 Independent auditors’ report

26 Consolidated statement of comprehensive income

27 Consolidated statement of financial position

28 Consolidated statement of changes in equity

29 Consolidated statement of cash flows

30 Consolidated accounting policies

35 Notes to the consolidated financial statements

53 Company balance sheet

54 Company accounting policies

56 Notes to the company financial statements

60 Notice of annual general meeting

64 Corporate information

Accumuli is a leading, rapidly growing, UK-based independent specialist in IT security and risk management. We provide industry leading solutions and services underpinned by rare skills and capabilities. Our objective is to enable organisations to manage the ever increasing IT risk landscape and leverage their IT assets for business value.

The Accumuli approach is to assist our customers in identifying both the risk and potential of their IT infrastructure and address any gaps with leading solutions and expert services. Accumuli has a culture that is focused entirely on helping our customers and working as one team to deliver tangible results – we can help with a very specific need or a holistic end to end solution.

IT Risk. Managed. Leveraged.

Overview

www.accumuli.com Accumuli plc Annual report and accounts 2014 01

Highlights for the year

Financial � Revenue up 18% to £16.6m (2013: £14.1m)

� Gross profit up 32% to £9.9m (2013: £7.5m) with gross profit margin of 60% (2013: 53%)

� Gross profit generated from recurring revenues¹ 61% (2013: 51%)

� Trading group EBITDA² up 29% to £3.6m (2013: £2.8m)

� Group EBITDA³ up 32% to £2.9m (2013: £2.2m)

� Group net profit4 17% (2013: 15%)

� Cash generated from operations5 up 50% to £3.6m (2013: £2.4m)

� Cash at bank at 31 March 2014 £3.6m (2013: £7.2m)

� Final dividend proposed 0.46p per share (2013: 0.40p), an increase of 15%

Operational � Successful acquisition and integration of Signify Solutions Limited and Eqalis Limited, adding to the customer base and broadening the group’s solution set

� Customer base now stands at over 700 (around 300 at same time last year), 85% of customers currently taking only one product from the portfolio

� Re-organisation of enlarged group completed in October 2013 to ensure right platform in place for future organic and acquisitive growth

� Settlement of EdgeSeven earn-out and integration of its management team into senior roles within the company

� Receipt of US$1m previously held in escrow from sale of Webscreen to Juniper

� Over 80 people in three offices – 60% of whom are employed in a technical capacity

¹ Revenues derived from managed services, software support and maintenance contracts where the group has an obligation to provide an ongoing service over a contractual period.

² Earnings from continuing operations before interest, tax, depreciation, share-based payments, separately identifiable costs and income (acquisition/disposal costs, re-organisation costs and one off costs/income) and plc costs.

³ Earnings from continuing operations before interest, tax, depreciation, share-based payments and separately identifiable costs and income (acquisition/disposal costs, re-organisation costs and one off costs/income).

4 Group EBITDA divided by revenue.

5 Net cash generated from operating activities from continuing operations before separately identifiable costs and income (acquisition/disposal costs, re-organisation costs and one off costs/income) and plc costs.

Group revenue

£16.6m+18% 16.614.112.1

12 13 14

Group EBITDA

£2.9m+32.0% 2.9

2.22.1

12 13 14

Visit our website at www.accumuli.com for the latest investor news and announcements.

02 Accumuli plc Annual report and accounts 2014

Overview

Accumuli at a glance

Accumuli is a UK-based independent specialist in IT security and risk management – our objective is to enable organisations to manage the ever increasing IT risk landscape and leverage their IT assets for business value. We provide industry leading solutions and services which are underpinned by rare skills and capabilities.

The customer problemAssessing the risk and maximising the value from significant IT trends (such as cybercrime, consumerisation of IT, Big Data) or business objectives (such as saving money or doing more with less) is the perennial challenge for any IT department. The Accumuli approach is to assist our customers with key security and risk projects and be the chosen capability partner to ensure successful delivery and tangible results – we identify both the risk and potential of their IT infrastructure and address any gaps with our leading solutions and expert services.

SIGNIFICANT BUSINESS TRENDS

SIGNIFICANT IT TRENDS

Big Data

Consumerisation

Cloud computing

Cybercrime

Internal threats

Internet of things

IPv6

Social technology integration

Wireless reliance

Reduce costs

Do more with less

Be compliant

Innovation and improvement programmes

Enhanced customer experience

Deliver growth

IT risks

Optimise resources and ensure rapid investigation and

response

Appropriate expertise and

number of FTEs

Assurances on protection and

compliance

Keep systems and network services up and running

Provide real business insight

Ensure adequate controls and

evidence collection

Keep bad things out and

important things in

In

-hou

se re

sour

ces

Supply chain

Availability

Visibility and performance

Com

pliance and governance

Security

Extract

valu

e fro

m d

ata

RISK AND VALUE ASSESSMENT

CAPABILITY AND DELIVERY

IT INFRASTRUCTURE

IT INFRASTRUCTURE

Overview


Our solutions and services frameworkAccumuli has three core pillars that make up our framework which means that we can either provide a niche solution or service for a specific need or offer a true end to end solution.

Corporate activity in the last twelve months Accumuli has a buy, build and partner strategy – we have now completed a total of seven acquisitions and one disposal. During the last twelve months we have successfully completed an early settlement of the EdgeSeven earn-out and acquired two further companies in Signify and Eqalis.

PROFESSIONAL AND TRAINING SERVICES

MAY 2013

TECHNOLOGY SOLUTIONS

JUNE 2013

MANAGED, HOSTED AND SUPPORT SERVICES

DECEMBER 2013

24×7×365 Security Operations Centre

Big Data platforms and performance analysis

20 consultants

BPSS, SC and DV cleared personnel

Accredited training centre for Alcatel-Lucent, ArcSight, Splunk

and Infoblox

Bespoke software developments for customer interfaces and translation tools

Project management

Security analytics and threat intelligence

Defence in Depth – CESG model

Core network services and network automation

24×7×365 Technical support centre

ITIL service framework

ISO 27001 Accredited

All UK-based operations centres

IL2 Standards and IL3 Accredited

� Early settlement of earn-out for EdgeSeven

� £2.5m

� Experts in SIEM

� Six staff

� 30 customers

� £2.6m net consideration

� 20 staff

� 300+ customers

� Experts in 2FA managed services

� £1.9m net consideration

� Seven staff

� 150+ customers

� Experts in Big Data platforms and performance analysis

MANAGING IT RISK AND LEVERAGING IT ASSETS FOR BUSINESS VALUE


Overview

Chairman’s statement

IntroductionAccumuli produced another excellent performance in the year to 31 March 2014 during a period of continued acquisitive growth and re-organisation of the business to allow and accommodate future growth.

In June 2013 we acquired Signify Solutions Limited (“Signify”) for net cash consideration of £2.6m. Signify provides hosted, managed service two-factor authentication utilising both RSA technology (public key cryptography algorithm) and its own Passcode OnDemand software to enable secure remote access to an organisation’s network and information.

In May and November 2013 we settled the deferred consideration in relation to the acquisition of EdgeSeven, paying £1.7m in cash and issuing 6.8 million shares to the owner employees of EdgeSeven, who since acquisition have taken key roles within the group.

In December 2013 we acquired Eqalis Limited (“Eqalis”), Splunk’s (the NASDAQ listed provider of software to analyse and search machine data) leading partner in the UK, which significantly enhanced our capability in Big Data monitoring and analytics for net cash consideration of £1.9m.

In February 2014 the escrow balance relating to the sale of the Webscreen business to Juniper was released and the group received US$1m.

ResultsRevenue for the year grew by 18% to £16.6m (2013: £14.1m), driven by acquisitions and growth in services revenue.

Gross profit increased by 32% to £9.9m (2013: £7.5m), with a corresponding gross profit margin of 60% (2013: 53%). This increase was a result of both the contributions from our targeted acquisitions and through implementation of our strategy to focus on higher margin services revenues rather than technology solution sales. Our success in this is also highlighted in the fact that 61% of our gross profit is now generated from recurring revenues¹ (2013: 51%).

Group EBITDA² grew by 32% to £2.9m (2013: £2.2m), producing a net profit margin³ of 17% (2013: 15%).

Group loss before tax from continuing operations was £0.9m (2013: £0.3m profit) which reflects the costs associated with a “buy and build strategy”. Amortisation of intangibles, which is a non-cash expense, and relates almost entirely to acquisition activity, was £1.9m (2013: £1.4m) and separately identifiable costs were £1.4m (2013: £0.2m), of which £0.4m were non-cash (2013: £0.3m).

Cash flow remained strong with cash generated from operations4 increasing by 50% to £3.6m (2013: £2.4m), demonstrating the strength of our business model.

We finished the year with £3.6m of cash in hand (2013: £7.2m), which was after funding the acquisitions referred to above and payment of our maiden final dividend.

The fundamental outlook and growth prospects for the IT Security market remain strong and in place.

The key to success for Accumuli to date has been its ability to execute and integrate the six acquisitions it has made.”

Highlights in 2014

� Revenue for the year grew by 18% to £16.6m (2013: £14.1m)

� Group EBITDA² grew by 32% to £2.9m (2013: £2.2m)

� Cash generated from operations4 increasing by 50% to £3.6m (2013: £2.4m)

� Acquisition of Eqalis and Signify

� Recommended dividend of 0.46p per share

¹ Revenues derived from managed services, software support and maintenance contracts where the group has an obligation to provide an ongoing service over a contractual period.

² Earnings from continuing operations before interest, tax, depreciation, share-based payments and separately identifiable costs and income (acquisition/disposal costs, re-organisation costs and one off costs/income).

³ Group EBITDA divided by revenue.

4 Net cash generated from operating activities from continuing operations before separately identifiable costs and income (acquisition/disposal costs, re-organisation costs and one off costs/income) and plc costs.

Overview


DividendWe announced and paid our maiden dividend last year of 0.4p per share and indicated that it was our intention to distribute up to 30% of group EBITDA in the form of dividend annually. This reflected our confidence in our cash generative business model. We retain this confidence and are pleased to recommend a final dividend in respect of the year ended 31 March 2014 of 0.46p per share, which represents an increase of 15% on last year’s dividend. Subject to shareholder approval at the annual general meeting, the dividend will be payable on 15 October 2014 to shareholders on the register on 3 October 2014.

PeopleOver 80% of our gross profit derives from services, which is directly linked to the abilities and expertise of our staff. We believe we have some of the best people in the industry and each and every one of them is instrumental in Accumuli’s success. The board acknowledges that any growing business, particularly one characterised by acquisition, will provide challenges, disruption and distractions to its people. However the results delivered provide evidence of our employees’ ability to manage change and the board would like to thank all employees for their enthusiasm, diligence and hard work.

StrategyIn a rapidly moving market it is important that as a business we are cognisant of market trends and changes as we strive to obtain first mover advantage.

Accumuli’s strategic aim has been to be a leading UK-based independent specialist in IT Security. With a proliferation in the tools and techniques available to analyse machine data (the so called “Big Data” trend) and the convergence of IT Security and Operations to now work jointly together, we are seeing market analysts, vendors and market

participants all moving towards a wider description (and product set) of “IT Security and Risk Management”. Accumuli, with its current capabilities, very much sees itself as being able to operate and succeed in this wider market – the acquisition of Eqalis having provided a significant impetus to the overall level of the group’s capability.

A further key strategic objective of the board has been to improve and increase the visibility of earnings and reduce the reliance upon lower margin, volume dependent product sales. This has been manifested in the disposal of Webscreen (a product sales business which required continued and significant investment to prosper), the acquisition of Signify, a managed service business, and the continuing investment in, and recruitment of staff in, consulting and managed services.

The board has publicly stated that it aims to generate more than 60% of gross profit from recurring business, an objective which the group has met in 2014 – and to ensure that its overhead base at the start of a financial year is covered by the gross profit from recurring business, an objective which we continue to work towards.

Finally, the key to success for Accumuli to date has been its ability to execute and integrate the six acquisitions it has made. Making more acquisitions, executing and integrating them remains a crucial part of the group’s strategy and we spend a lot of time and effort searching for businesses that meet our investment criteria. Effective integration only works if the existing business structure is robust and scalable enough to accommodate new business lines and products. A re-organisation of the business was undertaken and completed during the last financial year which we believe creates the necessary platform for future growth – both via further acquisition and organic growth.

OutlookThe fundamental outlook and growth prospects for the IT Security market remain strong and in place.

We continue to see an increasing number of potential sales opportunities driven by our customers who require assistance in managing their IT risk, whether that be availability, performance, visibility, compliance, in-house expertise or security. We now need to convert these opportunities, which we expect to increase the recurring revenue base of the business, albeit only with a partial in-year impact.

We expect the share of gross profit being generated from legacy product sales to continue to decline; however we expect that revenues from product and services associated with Splunk should increase this year as the trend for Big Data continues to accelerate.

We remain cautious on operational investment in the overhead base; however we do remain open to taking advantage of opportunities that arise to invest in sales and technical capability in key areas which we believe will add shareholder value.

As stated before we also remain on the lookout for acquisitions which meet our stringent investing criteria.

I look forward to another successful financial year for Accumuli and to providing further updates on our progress in the coming months.

Nick KingsburyNon-executive chairman23 June 2014


Strategic report

Strategic report (incorporating the CEO’s strategic and operational review)

Business overviewCompanies are more dependent than ever on IT to run their businesses and as a result their IT infrastructures are exposed to an unprecedented level of risk. IT risk is typically introduced through significant IT trends (external factors) or when delivering against specific business objectives or projects (internal factors).

Examples of external IT trends include cybercrime, consumerisation, cloud computing, social media technology integration and the “internet of things”. Examples of specific internal business objectives or projects include reducing costs, doing more with less, adhering to compliance and enhancing customer experience.

The most widely reported external IT trend tends to be cybercrime because it presents a significant risk and has affected a number of high profile organisations. Recently reported industry figures (source: hackmageddon.com and Deloitte) show that:

� cybercrime continues to grow at an unprecedented level with a 118% increase in the number of new malware samples created in 2013;

� 62% of attacks on organisations were motivated by cybercrime;

� the UK consistently appears in the top five countries receiving cyber attacks;

� in a survey of specific UK companies, 93% were attacked and had on average 62 attacks per annum; and

� the annualised cost of cybercrime to the companies surveyed in 2013 was just under £3m and ranged from £378k to £17m – an increase of 42% on 2012.

Whether IT risk is introduced via an external or internal factor the issues that need to be managed can be broken down into six broad categories:

� availability – ensuring core systems and network services are always up and running;

� performance and visibility – ensuring resources are optimised and centralised platforms are in place for rapid response and investigation in the event of a problem;

� security – ensuring that bad things are kept out and important things are kept in;

� compliance and governance – ensuring adequate controls and evidence collection are in place for auditors and internal risk registers;

� in-house expertise – ensuring that there is access to knowledgeable and rare resources; and

� supply chain – assurances that the company supply chains have an appropriate level of protection and compliance in place.

Our results reiterate the strength of our business, strategy and the market we operate in.

Accumuli is no ordinary company – we are real experts at what we do with highly skilled people and premium services.”

Highlights in 2014

� Record sales in Big Data Platforms and Performance Analytics (Eqalis acquisition) in the final quarter of the year which reflects the strong market opportunity

� Six figure managed service contract win for SIEM with a leading bank, replacing one of our key competitors

� Named as one of the UK’s 1,000 most exciting and inspirational companies in research compiled on behalf of the London Stock Exchange


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How do we help?It is becoming increasingly difficult for organisations to manage IT risks due to volume and variety – consequently organisations are increasingly turning to an independent specialist, such as Accumuli, to help them understand, design and implement the right levels of protection and management.

Accumuli is a leading, UK-based independent specialist in IT Security and risk management – we help organisations manage IT risk by ensuring their IT infrastructure is available, performing and visible whilst always being compliant, resourced and secure. Accumuli delivers this outcome through a portfolio of premium solutions and services and a culture that is focused on our customers and teamwork.

Accumuli is no ordinary company – we are real experts at what we do with highly skilled people and premium services. We offer true end to end solutions for our customers who are looking for a technically and commercially advanced partner that will truly help them – our value add is reflected in our high levels of gross profit, recurring revenues and customer renewals.

Our portfolio The “Accumuli Security Framework” explains our approach to working with our customers. In simple terms it can be broken down into three parts: Support and Managed Services, Professional Services and Technology Solutions.

1 Support and Managed Services We provide value added vendor support and a managed service platform that enables companies to outsource the management of their security technologies. In the areas of managed and hosted services the acquisition of Signify significantly enhanced our capability. Additionally the steps we have been taking to adopt best practice through the ITIL framework and the recruitment of Andrew Cooke as director of operations continued to demonstrate our commitment to the importance of this part of the business. Andrew Cooke was appointed as director of operations in October 2013

and has a background of over 20 years in operational IT management with particular focus on service delivery of managed services. Andrew recently fulfilled the same role for a managed security services business in the UK and has had an immediate impact since joining us.

2 Professional ServicesTo ensure that technologies are implemented correctly our customers require assistance with the scoping, design, implementation and training of technology solutions. Our customers call upon the skills, knowledge and expertise of the Accumuli team valuing the professionalism and insight we provide. Whilst the smallest, but with growing revenues, of our three segments this is the most important in terms of our credibility as a business.

3 Technology Solutions We currently represent 27 leading technology vendors which means that we can provide truly independent advice to our customers and recommend the most appropriate technologies to meet their risk and budget objectives. The technology vendors are split into strategic, tactical and emerging partners with the majority of our revenue coming from those in the strategic vendor category.

From a customer perspective, our solutions are split into four areas (“Centres of Excellence”):

� core network services and network automation;

� Big Data platforms and performance analytics;

� defence in depth; and

� security analytics and threat intelligence.

In each of these areas we are focused on ensuring we retain thought leadership on the technologies and business drivers. With each of the acquisitions we have made in the last four years, the acquired business was very clearly the expert in its niche. We continue to aim to identify the “right” third party technologies for our clients, whilst also supplementing them with some of our own.

The market and competitive landscapeWe continue to operate in a market with good growth prospects and significant historical spend. Gartner report that the worldwide IT Security market is worth in excess of $62bn per year with the UK valued at $3.6bn a year. However, the sector is highly fragmented in terms of products and services so we look at the growth projections (compound actual and future annual growth rates) of the areas that are relevant to our offerings – quite often the projections are global rather than just the UK:

� General IT Security services 7% and products

� Managed and hosted IT 13% Security services

� Core network services 15% and network control

� Big Data platform and 20% performance analytics

The growth of Big Data is unsurprising given the ability to now access and analyse large quantities of data in real time across an organisation’s entire IT assets. This level of intelligence and visibility enables companies to proactively monitor and manage threats to their business and leverage value from machine data.

The competitive landscape is typically made up of three types of companies:

� small/niche specialists that specialise in one particular solution or service but with limited scope to expand due to cash flow or people;

� mid-range independents who differentiate based on breadth of portfolio, capability and customer base; and

� large system integrators and service providers (typically an operating division or a large outsourcer) that tend to be generalists by nature and focus on servicing needs of large multi-national customers – they quite often require a sub-contractor to obtain specific expertise.


Strategic report

Strategic report continued(incorporating the CEO’s strategic and operational review)

The market and competitive landscape continuedThere was, and remains, a market opportunity for a specialist to become the sub-contractor of choice to large systems integrators and service providers and be the strategic supplier of choice to organisations with more than 3,000 employees, something that is certainly part of our goal.

Our strategyOur strategy is made up of three key components:

1 identify, acquire and integrate acquisitions that add both strategic and financial value;

2 achieve organic growth through selling existing solutions and services to existing customers; and

3 partner with strategic alliances for mutual benefit.

1 Acquisitions A further two acquisitions were made in the year taking the total to six acquisitions and one disposal since the group’s inception. The acquisitions made during the year contributed 23% of group revenues and 29% of gross profit reflecting the service-rich mix of revenues in the acquisitions we made.

� Signify was acquired in June 2013. The business was attractive to us due to its high levels of recurring revenues and customer retention, a customer base of 282 organisations, a highly skilled team of people and a proposition that added value to our overall solutions and services framework.

Given the growing mobility of today’s workforce, it is becoming increasingly important for all organisations to offer employees secure remote access to systems and information. Therefore, adding two-factor authentication to our managed services offering represented the next logical step in our value proposition to help customers secure their business and reduce operating costs.

� Eqalis was acquired in December 2013. The business was attractive to us as its portfolio complemented our security and incident management (SIEM) solutions; it is Splunk’s leading partner having won the UK, Africa and Ireland partner of the year award for the last two years; and it is the only Splunk authorised training provider in the UK with a customer base of over 150 well-known brands.

Big Data analytics is now intrinsically linked with security and operational excellence and Eqalis has been addressing these challenges and delivering great results to its customers for the last six years. The key to successfully mitigating IT Security threats, detecting incidents and responding to breaches is the ability to access and analyse large quantities of data in real time across an organisation’s entire IT assets. This level of intelligence and visibility enables companies to prioritise actions, respond to incidents, improve processes and enhance controls.

Since the year end we have completed a small, bolt-on, tactical acquisition of a specialised reseller of IT security, ArmstrongAdams Limited, which was done to enhance our product offering in this area. The net initial cash consideration for this deal was nil and there is contingent consideration payable over two years based on the trading performance of the business. The vendor will remain with the business and we anticipate that we will pay £0.8m of contingent consideration in total which will be payable half yearly.

Acquisition integrationAccumuli is one company with one strategy and one team. In order to ensure that acquisitions are integrated properly and that there is no duplication of activities, the entire company has been organised around four key disciplines which enables us to align resources, systems and processes. The core disciplines are:

� customer intimacy;

� product and thought leadership;

� operational excellence; and

� financial power.

There is one executive responsible for each core discipline and together they make up the management team, namely Rick Wilkinson (customer intimacy), Jon Inns (product and thought leadership), Andrew Cooke (operational excellence) and Ian Winn (financial power).

In addition to the core disciplines there is great importance placed on the Accumuli culture and values during and after an acquisition. Having a strong sense of identity and being able to assess whether a company will fit into that environment is a critical factor for ensuring ongoing performance.

Experience has taught us that driving the right company culture can have a dramatic effect on our experience as employees, customer satisfaction and business performance. It is important for Accumuli to understand (and state) the type of culture that we want to have so that we can recruit and retain the right individuals and establish an appropriate balance between delivering company growth and looking after our employees.

Values underpin any culture and they are a promise to each other (and our customers) as to how we will work together as a team – the interaction between all parties is crucial to a constructive environment. Having clear values also helps us to recruit and retain the right individuals.

The Accumuli culture and values are openly stated and assessed every six months.

Three core pillars of our business: Technology Solutions, Professional Services and Managed Services.


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2 Organic growth strategyAccumuli focuses its sales and technical resources on selling existing solutions and services to existing customers. Accumuli currently has 704 customers of all sizes which span a range of industry sectors including financial services, utilities, telecommunications, manufacturing and government. At present 85% of customers take only one product from Accumuli, indicating the potential to “retain and penetrate” the existing customer base.

Our primary focus on selling to the existing customer base is supported by research which indicates:

� it costs five times more to acquire new customers than it does to keep current ones;

� reducing churn by 5% can increase profits by between 25 and 125% over four years;

� 80% of future revenue will come from just 20% of customers; and

� the probability of selling to an existing customer is 60–70% versus 5–20% for a new prospect.

There are currently 19 people focused on retaining and penetrating customers which represents 23% of the employee base.

3 Strategic alliancesThere are three types of strategic partners that Accumuli works collaboratively with:

� value added resellers that promote and sell the Signify hosted two-factor authentication solution for which they receive a margin in return;

� system integrators that sub-contract professional services work to Accumuli due to our expert resources; and

� service providers that sub-contract managed services to Accumuli so that they can utilise our 24x7 Security Operation Centre.

Accumuli currently has 36 strategic alliances with partners and we are seeing more demand in this area due to our levels of expertise and reputation in the market.

Accumuli acquired Signify Solutions Limited, a managed service provider of secure authentication in June 2013.

Signify fits closely with Accumuli’s existing portfolio of helping customers secure their business through a combination of technology, professional services and managed services whilst adding 2FA capability. This synergy will allow Accumuli to promote and cross-sell Signify’s authentication services to its wider client base and vice versa.

Accumuli acquired Splunk’s leading UK partner Eqalis in December 2013 to complement the company’s security incident and event management (SIEM) solutions and strengthen its Big Data monitoring and analytics capabilities.

Eqalis provides solutions that enable organisations to gain visibility of data across the complete IT estate, including monitoring, managing and delivering actionable intelligence on security and operational risks. The company is the UK’s leading Splunk partner, having won the UK, Africa and Ireland partner of the year award twice, and the only Splunk authorised training provider in the UK. In addition, Eqalis is a leading partner for Prelert, Puppet Labs and App Dynamics, which assist enterprises with anomaly detection, system change, application and infrastructure performance management.

Both acquisitions are in line with Accumuli’s strategy of acquiring organisations that complement the group’s existing expertise and capabilities.

Signify and Eqalis acquisitions


Strategic report

Strategic report continued(incorporating the CEO’s strategic and operational review)

Operational performanceIn reporting on the year it is useful to consider not just the quantitative analysis, which is detailed elsewhere within this report, but to look at some of the operational highlights during the year.

Operational highlights � Strong sales in Core Network Services,

including two deals worth in excess of £1m, one with a leading mobile service provider and one with a leading gaming business

� Large managed service contract win with a major high street bank for Core Network Services

� Record sales in Big Data Platforms and Performance Analytics (Eqalis acquisition) in the final quarter of the year which reflects the strong market opportunity

� Largest quarter in a 13 year history in Q4 for the two-factor hosted authentication platform for Signify

� Substantial cross-sell achieved into a leading gaming business which means they now take solutions and services from all of our centres of excellence, demonstrating the potential for cross-selling

� Six figure managed service contract win for SIEM with a leading bank, replacing one of our key competitors

� Largest number of professional services days sold in the company’s history with our bank of days now sitting at 1,000 versus 600 at this time last year

� Continued investment in and development of our technical staff with over 35% of the workforce securing a professional accreditation or qualification in the year

� Continued levels of high customer retention

� ISO27001 audits successfully passed across all offices in Basingstoke, Cambridge and Leeds

Public recognitionFinally, in reflecting on the financial year, Accumuli received and was nominated for several awards including:

� named as one of the finalists in the Best Managed Security Service category for SC awards Europe;

� named as one of the UK’s 1,000 most exciting and inspirational companies in research compiled on behalf of the London Stock Exchange;

� shortlisted for Tech Achievement of the Year at the UK tech awards;

� shortlisted for Specialist Reseller of the Year at the CRN channel awards;

� nominated and deemed eligible for the Deloitte UK Fast 50 programme;

� winner of the Best Remote Access Security Solution at the SC Magazine awards Europe; and

� CEO named in the CRN A-list of top industry executives.

It is always flattering to receive any nomination or award and is further affirmation that the business continues to move in the right direction.

SummaryAs with last year, our challenge is to continue to develop and accelerate at the pace we have achieved for the first 40 months of our existence as Accumuli Security.

We are in a growth market with a growing reputation and a premium value proposition that continues to meet our customers’ needs. Our success will be down to our ability to execute against our strategy and to scale, recruit and retain our staff and maintain our culture.

We have a truly great team at Accumuli and I am proud of the company we have built so far. I look forward to building on our solid foundations and delivering continued success in the current year.

Gavin LyonsChief executive officer23 June 2014

The Strategic report set out on pages 6 to 15, has been prepared by the board of directors and signed on their behalf by Gavin Lyons.

Our challenge is to continue to develop and accelerate at the pace we have achieved for the first 40 months of our existence as Accumuli Security.


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Finance director’s financial review

Financial performanceSummaryFinancial performance, as measured by our key performance indicators (detailed below), was strong in 2014 assisted by two acquisitions and growth in services revenues.

Cash conversion remains strong with 100% (2013: 81%) of group EBITDA being converted into cash which demonstrates the strength of our business model.

Operating results The operating results for the period, as with last year, continue to reflect a business subject to significant change both as a result of re-organisation and acquisitions made, and reflect the following factors (on a chronological basis):

� the EdgeSeven earn-out was determined early in May 2013; as a consequence, the management team of that business were promoted into group roles and their remuneration was increased to reflect their revised status as employees of Accumuli and not owner managers of EdgeSeven;

� Signify was acquired in June 2013 and our group results include ten months’ contribution from this business;

� maiden final dividend of £0.6m paid in September 2013;

� a re-organisation of the business was undertaken in early October 2013 to integrate the Signify acquisition and provide a business structure and platform suitable for integrating future acquisitions; and

� Eqalis was acquired at the end of November 2013 and our group results include four months’ contribution from this business.

Revenue and gross marginGroup revenue was £16.6m (2013: £14.1m) which is 18% higher than last year, and group gross profit of £9.9m (2013: £7.5m) was 32% higher than last year.

It remains the case that the business is primarily focused on gross profit and therefore whilst revenue is a “performance indicator” it is not viewed by the group as a “key performance indicator”.

Due to the shift in mix towards service-led revenues, the group gross margin increased to 60% (2013: 53%) and the proportion of gross profit generated by recurring revenues increased to 61% (2013: 51%), a 20% improvement.

The acquisitions made during the year contributed 23% of group revenues and 29% of gross profit, reflecting the service-rich mix of revenues in these businesses.

Cash conversion remains strong with 100% of group EBITDA converted into cash.

Highlights in 2014

� Group gross profit of £9.9m (2013: £7.5m) was 32% higher than last year

� Gross margin increased to 60% (2013: 53%)

� Year end cash balances £3.6m (2013: £7.2m) after impact of acquisitions and dividends

The proportion of gross profit generated by recurring revenues increased to 61% (2013: 51%).”


Strategic report

The following identifies the key trends and features of the operating performance of each sector:

Professional ServicesGross profit was £2.1m (2013: £1.6m) which represented an increase of 32%. Excluding the impact of acquisitions, gross profit grew by 7%. On a year on year basis for the businesses that now comprise the group’s Professional Services division, the growth in gross profit was over 10%. The key contributors to this growth were a large hardware replacement project in Core Network Services and Network Automation for a large financial institution, significant Splunk training income, a large security project for a UK university and the managing of resources to drive utilisation rates over 60%.

Managed and Support ServicesGross profit was £6.1m (2013: £3.9m) which represented an increase of 56%. Excluding the impact of acquisitions, gross profit grew by 3%. The underlying growth was more modest than we would have expected; however it was affected by a reduction in margin on Webscreen support (the technology we sold to Juniper), some margin pressure and a longer sales cycle than expected in selling managed service contracts. On a year on year basis for the businesses that now comprise the group’s Managed and Support Services division, the growth in gross profit was 9% driven by 14% growth in the managed two-factor authentication (2FA) service.

Technology Sales Gross profit was £1.8m (2013: £2.1m) representing a reduction of 13%. Underlying gross profit growth in the two businesses acquired, on a full year comparison, was running at over 20%. The deterioration in the gross profit was attributed to a shift in focus

by the business towards more margin-rich services, significantly reduced Webscreen sales following the sale of the Webscreen IP to Juniper and a reflection of the natural technology lifecycle of some of the more legacy products we resell.

Operating results – costs and EBITDAOverheads for the trading group were £6.4m (2013: £4.7m), an increase of 36%. Headcount and operating expenditure in the underlying business were kept under tight control and the increase in overheads is almost all entirely down to the acquisitions made.

We carried a trading overhead rate into the year of £5.1m per annum and, based on the pre-acquisition performance of Signify and Eqalis, they would have added £1.4m and £0.2m of trading overheads to the group for the period. As indicated earlier we carried out a re-organisation of the business in October 2013 which had the effect of saving £0.3m of salary costs in the period (£0.6m annualised) – the costs associated with this re-organisation have been included in separately identifiable costs and income.

Going into the current year our run rate trading overhead base is £7.5m. This incorporates some investment in sales and professional service delivery; however we continue to review further operating expenditure.

One of our stated aims has been to break even based on the gross profit from recurring revenues and trading overheads. Last year the shortfall was £0.8m; this year we have narrowed that to £0.3m and we expect this trend to continue.

Trading group EBITDA was £3.6m (2013: £2.8m), representing a 29% increase.

Group EBITDA was £2.9m (2013: £2.2m), representing a 32% increase.

Separately identifiable costsWe have always sought to separate from the usual costs and incomes associated with the trading business any items of expenditure which should be considered as non-recurring or form part of the wider strategy of the group in acquiring and disposing of businesses.

Acquisition and disposal costs of £0.6m (2013: £0.1m) incurred during the year related to legal, financial, insurance, corporate finance and deal origination costs for the acquisitions of Signify and Eqalis and on the disposal of the Webscreen IP assets to Juniper Networks.

A non-cash, fair value adjustment of £0.4m (2013: £nil) was recognised upon the issue of shares to the employee shareholders of EdgeSeven, representing the difference between the share price used to price the share consideration element of deferred consideration and the share price at issue of the shares.

Re-organisation costs of £0.3m (2013: £nil) were incurred on redundancy payments, notice periods and settlement agreements relating to the re-organisation of the business in October 2013.

Last year we benefited from net recoveries of £0.4m from third parties related to anomalies identified in the accounts of Boxing Orange Limited at acquisition. This year recoveries were minimal and we expect no further recoveries in the future from these anomalies.

Finance director’s financial review continued


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(Loss)/profit for the year and EPSAdjusted earnings per share for the year from continuing operations excluding amortisation of intangibles, separately identifiable costs and income and deferred tax credits on intangibles, on a basic and diluted basis, was 1.36p (2013: 0.93p), a 46% increase.

Loss for the year before tax was £0.9m (2013: £0.3m profit) which was after charging separately identifiable costs of £1.4m (2013: £0.2m), detailed above, and amortisation of intangibles of £1.9m (2013: £1.4m).

Loss after tax for the year from continuing operations was £0.8m (2013: £0.3m profit) after a tax credit of £0.2m (2013: £nil). The tax credit includes a credit for deferred tax related to intangible assets of £0.5m (2013: £0.5m).

This equates to a basic and diluted loss per share of 0.50p (2013: basic and diluted earnings per share of 0.18p).

DividendWe paid a final dividend in September 2013 of 0.4p per share. We propose, subject to shareholder approval at the annual general meeting, to pay a final dividend for 2014 of 0.46p per share to all shareholders on the register at 3 October 2014. The corresponding ex-dividend date is 1 October 2014 and it is expected that payment will occur on or around 15 October 2014.

Statement of financial position and cash positionOn 13 May 2013 the company announced that it had reached agreement with the vendors of EdgeSeven for early settlement of the contingent consideration payable. Following a Deed of Variation entered into on that date, £1.25m was paid in cash during May 2013 and £1.25m was settled on 1 November 2013 by the issue of new ordinary shares at a price of 12p, representing 6,770,833 ordinary shares, and £0.44m in cash.

On 13 June 2013 the company acquired the entire share capital of Signify for £4.2m cash consideration (£2.6m net of cash in the business at completion). The fair value of net assets acquired was £3.3m, including £3.1m of intangible assets recognised as a fair value adjustment. This lead to the recognition of goodwill of £0.9m.

On 2 December 2013 the company acquired the entire share capital of Eqalis for initial consideration of £1.0m (£0.7m net of cash in the business at completion) and deferred consideration of £1.22m payable in three equal instalments on 29 November 2014, 2015 and 2016. The provisional fair value of net assets acquired was £1.5m, including £1.8m of intangible assets recognised as a fair value adjustment. This resulted in the recognition of goodwill of £0.7m.

On 6 February 2014 Accumuli BV received US$1m representing release of the escrow balance following the anniversary of the disposal of the Webscreen IP assets to Juniper Networks.

During the year 2.65 million share options were exercised, at exercise prices ranging from 7.1p to 12.5p per share, and 5.1 million share options were granted. At 31 March 2014 we had 7.81 million shares (2013: 5.41 million) under option in both approved and unapproved schemes.

Corporation tax paid during the period was £0.4m (2013: £0.4m).

At the year end we held £3.6m in cash and cash equivalents (2013: £7.2m), reflecting the acquisitions made during the year (for cash), settlement of EdgeSeven deferred consideration for cash and payment of the maiden dividend.

Net cash generated from trading activities was £3.6m (2013: £2.4m); this benefited from a temporary working capital movement of £0.4m.

Ian WinnFinance director23 June 2014


Strategic report

Risks and risk management

Principal risks and uncertaintiesThe 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.

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 entirely 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.

A committee of key employees and management meets once a month to review the group’s risk register for additions, changes and mitigation strategies. This is overseen by the company’s director of operations who ensures the appropriate level of action and reports by exception to the chief executive, who in turn feeds back into the board.

Given the size of the group it is not considered necessary to establish an internal audit function. However as part of the group’s accreditation for ISO27001 audits are performed on a rotational basis of key areas for IT Security, the findings reviewed and actions taken where necessary.

RisksThe key operational risk the group faces is the general economic outlook. The group has chosen to invest in a sector that has shown growth through the economic cycle; however, there is no guarantee that this can continue and, should this be the case, 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 choice of appropriate strategies; however, this list is not intended to be exhaustive.

Risk description Mitigation

Reputational risk

The nature of the group’s business is such that an IT Security breach could seriously impact its reputation in the marketplace.

The group seeks to ensure its staff are fully security aware and through the use of its ISO27001 accreditation seeks to ensure that best practice in IT Security is operated throughout the business. ISO27001 accreditation has been in place since March 2013.

Integration risk

The group is focused on a buy and build strategy, which could be disruptive as new businesses are integrated, both on the operational performance of existing business and new business.

In making an acquisition the board makes full use of professional advisors to assist it in the process of legal, financial and commercial due diligence. Post acquisition, the process of integration and performance of acquisitions is implemented by a team with experience in this area and monitored closely by the board.

Commercial risk

We seek to mitigate commercial and operational risks through operating policies, credit control procedures and strong relationships with customers and suppliers built on mutual trust.

The group does have reliance on a number of suppliers for specific IT technologies; however, in such cases it seeks, where possible, to have alternative resellers open to it to purchase from and it also seeks to add value through its development capability which should reduce the risk of supplier loss.


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Risk description Mitigation

Technology risk

The market in which the group operates has the potential for significant technological change which could undermine the group’s delivery capabilities.

The group monitors technology developments through close links with suppliers and through a team with significant experience and expertise in this sector. This is augmented with the addition of product specialists, who are responsible for a narrower aspect of our technology footprint and so able to more readily identify new trends, products developments, etc. in their sphere of excellence, where deemed necessary.

Key resources

Commensurate with an organisation of the group’s size is the dependence placed upon certain key personnel, including executive and senior management, who have significant experience within the group and IT Security sector and who would be difficult to replace.

The group continues to seek to mitigate these risks through continued strengthening of middle management in key areas of finance, operations and technology and through the use of bonuses and employee options to incentivise and reward key staff.

Currency and treasury risk

The group sources hardware from the US and mainland Europe, paying in dollars and euros. Whilst it has some revenues in these currencies its predominant billing currency is sterling.

The group is therefore exposed to currency risk, which is mitigated through matching revenues and cost in each currency as far as possible, and where this does not provide a natural hedge it will consider other strategies.

The group has so far financed its acquisitions from a mix of internal resources, equity fundraising and short term overdraft funding (linked to base rate) which has meant that it has not been significantly exposed to any interest rate or funding risk. The board will continue to ensure that any future acquisitions are funded in a manner and at a rate (if applicable) that mitigates any funding or interest rate risk within tolerable limits.

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 advisors where the contract is material or onerous;

� where products or services are being resold the group takes no additional risk by simply seeking to back to back terms and conditions from its suppliers – this is particularly relevant with product resale; and

� only accept a level of contractual liability which is commensurate with insurance policies and the value of the contract.

Taxation risk

The group complies with all applicable tax laws, rules, regulations and disclosure requirements in every territory in which it operates.

The group manages its tax affairs with a view to enhancing shareholder value and wider reputation of the group. The group only undertakes tax planning which has genuine commercial rationale.


Governance

The board

1Nick Kingsbury BScNon-executive chairman

Nick is an experienced international software entrepreneur and venture capitalist.

ExperienceHe started his career with one of the leading UK software houses before setting up his own company in the mid-1980s which he sold in 1996 to Staffware plc, shortly after which the combined entity floated on AIM. He then spent many years at the venture capitalist 3i as sector head for software and internet investments.

Other appointmentsHe now serves as non-executive director for a number of early stage technology companies and also for Objective Corporation, an Australian quoted information management software company. He is also active with a number of cyber security industry bodies and conferences as an advisor and speaker.

Nick chairs the board of Accumuli plc.

2Gavin Lyons MBAChief executive officer

Gavin is responsible for the overall management of the group, including the planning, setting and execution of the company’s strategy.

ExperienceGavin joined Accumuli from SAP, the global market and technology leader in business management software, where he worked as divisional head for telecoms and utilities sectors – one of the largest and most successful vertical markets for SAP.

Prior to SAP, Gavin had considerable executive-level experience in the security sector derived from his role as vice president of sales and alliances with Identum and three subsequent director positions with Trend Micro. Identum was a venture capitalist backed email encryption business that was successfully sold to IT security giant Trend Micro in 2008 for a multimillion dollar sum.

Gavin played a pivotal role in building Identum’s business and following the acquisition, he took a number of senior leadership positions at Trend Micro, gaining three promotions in four years due to his performance levels. Gavin worked in leadership positions across all aspects of the customer-facing business including service providers, system integrators, sales and channel.

3Ian Winn ACA Finance director

Ian is responsible for all financial and company secretarial matters for the company and its subsidiaries.

ExperienceIan is a chartered accountant with over 17 years’ experience at an executive level in a number of service orientated businesses operating within finance and technology sectors.

Ian qualified as an accountant with KPMG prior to his move into industry. From 1996 to 2000 Ian held a number of senior roles with Euro Sales Finance plc culminating in operations director and company secretary, during a time of significant growth. He then took several senior positions across Enterprise plc, Ceridian Centrefile and Corporate Audio Visual plc.

Ian joined NetServices plc in November 2005 and through leading a series of divestments and acquisitions he was instrumental in the branding and launch of Accumuli plc. His vision and ability to focus on core business areas have led to over £30m of divestment and subsequent acquisition resulting in Accumuli plc’s strength in IT Security solutions across technology, professional services and managed services.

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4Graham Norfolk ACANon-executive director

Graham is a founder and director of Acorn Capital Partners, a private equity and corporate finance business. He is a chartered accountant and was previously a partner of BDO LLP.

Other appointmentsHe is a non-executive director of a number of businesses including Kinaxia, an investor in the transport sector, Fire and Air Services, a facilities management business, and Once Upon a Time London, a marketing services business.

Graham chairs the audit committee.

5Simon Duckworth OBE, DLNon-executive director

A Cambridge University graduate with nearly 15 years’ experience in the security sector, Simon was a member of the Home Office’s national crime agency programme board and its steering group; he currently serves as the senior non-executive director of the SFO (Serious Fraud Office) as well as chairing the City of London’s economic crime board.

Other appointmentsSimon chaired the National Olympics Security Oversight Group in Whitehall from 2009 to 2012 and is a former chairman of the City of London Police Authority. He served for ten years as a non-executive director of Fidelity European Values plc, and is now chairman of the Barings Targeted Return Fund, and a director of the Association of Police and Crime Commissioners, for whom he was the initial national chairman. Simon holds a number of appointments in the private and public sectors and is one of HM’s Lieutenants for the City of London, a deputy lieutenant for Greater London, and an hon. Colonel in the Royal Military Police.

Simon chairs the remuneration committee and is a member of the audit and nominations committees.

Audit committee

Remuneration committee

Nominations committee

Committee chairman

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Governance

Corporate governance

Principles of corporate governanceThe directors recognise the importance of sound corporate governance. The directors seek to reconcile the need for good corporate governance with an appropriate board structure that is suitable for the group in its current state.

The boardThe company is managed by the board of directors. The function of the chairman is to supervise the board and to ensure that the board has control of the business and the role of the executive directors is to manage the group on the board’s behalf.

The group is committed to maintaining a balance of executive and non-executive directors. The board currently consists of five members, two executive and three non-executive directors. The board believes that given its size it is not appropriate to specify a senior independent director.

The company secretary together with the chairman ensures that accurate, timely and clear information is provided to the board in order for informed decisions and discussions to take place. The company secretary, together with external advisors, where appropriate, is responsible for advising the board on governance matters and regulatory requirements. All directors have access to the company secretary and to independent professional advice at the company’s expense as required.

The company purchases and maintains directors’ and officers’ liability insurance in respect of the group, the company and its directors throughout each financial year.

Details of the directors, their roles and backgrounds can be found on pages 16 and 17. One third of directors are re-elected each year.

Role of the boardThe company aims to hold at least ten board meetings throughout the year. The board is responsible for formulating, reviewing and approving the group’s strategy, budgets, major items of capital expenditure and acquisitions.

All board members have access, at all times, to sufficient information about the business to enable them to fully discharge their duties. All directors are committed to continuing professional development.

The board monitors and evaluates performance of individuals via financial and non-financial targets. Performance of the group is evaluated by review of monthly results against budget, together with an understanding of significant variances and updates of expectations for the year.

Board agendas are agreed in advance with the Chairman to ensure the right issues are addressed at the right time and sufficient time is allocated to allow for appropriate consideration and debate. During the last financial year matters dealt with by the board included:

� review of financial and operational performance;

� review of financial statements and approval of dividends and agreement on share buy back;

� review and approval of acquisitions;

� approval of group budgets and consideration of business strategy, both short and medium term;

� consideration of large bids and contracts; and

� approval of significant items of capital expenditure.

Board committeesThe directors have established an audit committee, a remuneration committee and a nominations committee with formally delegated rules and responsibilities. Each of the committees currently comprises the non-executive directors and will meet regularly and at least twice each year in respect of the audit committee, once a year in respect of the remuneration committee and as needed in respect of the nominations committee.

The audit committee is responsible for ensuring that the financial performance of the group is properly reported on and monitored and is also responsible for meeting the auditors and reviewing the reports from the auditors relating to accounts and internal control systems. It meets once a year with the auditors without executive board members present. The audit committee comprises of the non-executive directors of the group and is chaired by G R Norfolk.

The remuneration committee will review the performance of the executive directors and will set and review the scale and structure of their remuneration, the basis of their remuneration and the terms of their service agreements with due regard to the interests of shareholders. In determining the remuneration of executive directors, the remuneration committee will seek to enable the company to attract and retain executives of the highest calibre. The remuneration committee will also make recommendations to the board concerning the allocation of share options to employees. No director will be permitted to participate in discussions or decisions concerning their own remuneration. The remuneration committee comprises the non-executive directors and is chaired by S Duckworth. The report of the remuneration committee can be found at page 19.

The nominations committee will meet as required for the purpose of considering new or replacement appointments to the board. The nominations committee comprises the non-executive directors of the company and is chaired by S Duckworth.

Shareholder engagementThe board welcomes dialogue with shareholders and actively engages with shareholders through face to face meetings, written queries, and at the company’s annual general meeting. Individual meetings are conducted with those substantial shareholders who so request following the announcement of final and half year results. Further information is provided on the Investors section of the company’s website.

Going concernThe directors have satisfied themselves that the group is able to meet its liabilities as they fall due for the foreseeable future and accordingly have prepared the financial statements on the going concern basis. Further details are disclosed within the group accounting policies.


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Remuneration report

Remuneration committee, remuneration policy and directors’ remuneration reportThe remuneration committee, chaired by S Duckworth and comprising the other non-executive directors, met three times during the financial year to consider the following matters:

� consider and set executive and non-executive remuneration for the financial year;

� consider and set the annual bonus objectives and targets applicable to the executives;

� consider and award performance related and co-investment share options for executives; and

� consider and vary the terms of a long term incentive plan related to increases in shareholder value and dependent upon shareholders realising that gain, the recipients under this plan being the chairman, chief executive officer and finance director.

Each non-executive did not participate in the discussion of, or approval of, their own remuneration.

The main purpose of the remuneration committee is to align the interests of executive and non-executive remuneration with the group’s business strategy and the long term creation of (realised) shareholder value. Outlined below is the framework within which the remuneration committee seeks to achieve this.

Executive remunerationBasic pay and benefitsExecutive remuneration is subject to annual review in April/May of each year. Basic pay and benefits are intended to provide a level of base remuneration which is not significantly out of line with market comparators and which take account of the skills and contribution of the individual. In setting the level of basic pay, however, the remuneration committee is cognisant of the potential gains available under the Long Term Incentive Plan and this is reflected in the level of remuneration set.

None of the executive directors benefit or have access to a non-contributory occupational pension.

Annual bonusesG A P Lyons and I D Winn participate in an annual performance bonus which is based upon achieving certain performance criteria set by the remuneration committee at the start of each financial year and amended as necessary during the year.

Annual bonuses are dependent upon short term, in-year goals and are paid in cash.

The stretch targets in the financial year were not met and therefore no bonus was accrued or payable for the financial year ended 31 March 2014.

Share optionsShare options, both performance related and non-performance related (but with a co-investment requirement on the executive), have been used to reward executives for deemed exceptional performance and to ensure that their interests are aligned with shareholders. During the last financial year performance related options were issued which were dependent upon achievement of EBITDA targets for 2014 (which were achieved) as recognition for the successful sale of the Webscreen IP. Additionally co-investment options were granted to G A P Lyons following his personal investment in the company’s shares.

Whilst share options remain a part of the potential range of benefits open to new executives the remuneration committee believe that in the near future the use of share options for existing executives will be limited.

Long Term Incentive Plan (“LTIP”)In 2011 the company established a long term incentive plan which was intended to attract the appropriate calibre of executive and non-executive candidates to the business. At the time the group was considerably smaller than it is now and attracting the right people who would enable the business to achieve its medium term objectives was more difficult. At the time the group’s medium term objectives were focused on a “buy, build and sell” strategy and therefore in aligning with this objective the success criteria were set based on a sale of the company (an “Exit”). The use of this LTIP was crucial in securing the services of the chairman and chief executive during 2011 and 2012.

During 2014 the LTIP was extended to the finance director and the terms for rewards under it reviewed as it was recognised that the existing scheme, based on the increase in market value during the year, had the potential to become onerous on the company. The LTIP remains under review as our market capitalisation, scale of the opportunities available to us and a more general review of our medium term strategy are undertaken.

A portion of the revised LTIP has been reserved for allocation to future executives and/or key operational management in order to recruit and incentivise the very best people.

Full details of the basis for calculations under this LTIP are included in the remuneration report.

Non-executive remunerationNon-executive directors receive fixed fees agreed by reference to similar roles in comparator companies. Reimbursement of expenses is provided for expenses incurred in attending board meetings and board committees and any other situations where the company requires the non-executive to travel on company business.

The board and remuneration committee believe it is appropriate, given the scale and nature of the company, for non-executive directors to benefit from participation in share options and LTIP where it is considered necessary and relevant. The board is acutely aware of the guidelines and directions regarding the granting of options to non-executive directors and the perception such awards have on the independence of the non-executive directors; however on balance the board believe the awards made to date are appropriate given the nature of the group.

Service contracts Executive directors benefit from a service contract containing six month notice provision and in the event of termination provide for compensation up to a maximum of basic salary for the notice period.

Non-executive directors are appointed for an initial period of twelve months and terminable upon three months notice thereafter.

The service contracts for all executive and non-executive directors are held at the company’s registered office in Basingstoke.


Governance

Remuneration report continued

Employment conditions elsewhere in the groupRemuneration arrangements throughout the group are based on the same principles in so much as employees are rewarded for their contribution to the short and long term aims of the business and based on comparable market rates. Given the market in which the group operates it has to be particularly aware of the latter point in order that it can find and retain appropriately qualified people. The executives and senior management are responsible for executing the remuneration policy within the boundaries of an agreed annual budget, without redress to the board.

Share options have been and will be considered (subject to ABI guidelines) as a method of further aligning the interests of employees with shareholders. Any such options will be recommended by the executive directors to the remuneration committee for its final approval.

Remuneration reportAs the company’s shares are listed on AIM, the market of that name operated by the London Stock Exchange, the company is required to report in accordance with the remuneration requirements of the AIM Rules.

The directors of the company accrued salaries and benefits as shown below:

Year ended 31 March 2014

DirectorGross

£Fees

£Benefits

£Bonus

£

Compensation for loss

of office£

Total £

N Kingsbury 40,000 — — — — 40,000G A P Lyons 146,750 — 2,300 — — 149,050I D Winn 115,500 — 3,732 — — 119,232G R Norfolk — 28,000 — — — 28,000S Duckworth DL 28,000 — — — — 28,000

Total 330,250 28,000 6,032 — — 364,282

Year ended 31 March 2013

DirectorGross

£Fees

£Benefits

£Bonus

£

Compensation for loss

of office£

Total £

N Kingsbury 36,000 — — — — 36,000

G A P Lyons (appointed 1 August 2012) 93,333 — — 57,500 — 150,833

I D Winn 110,000 — 2,923 37,500 — 150,423

G R Norfolk — 25,000 — — — 25,000

A I Smith (resigned 20 November 2012) — 30,575 — — 48,000 78,575

S Duckworth DL 24,000 — — — — 24,000

Total 263,333 55,575 2,923 95,000 48,000 464,831

Options are exercisable as shown:

DirectorShare options

heldExercise

price

G R Norfolk* 503,000 15.00p

N Kingsbury 400,000 9.00p

S Duckworth DL 300,000 9.88p

G A P Lyons 200,000 15.12p

G A P Lyons 1,000,000 12.50p

I D Winn 500,000 9.00p

I D Winn 500,000 12.50p

I D Winn 50,000 49.00p

Total 3,453,000

* Includes a beneficial interest in 251,500 share options.

S M Hartley, a former director of the company, retains options over 503,000 ordinary shares on the same terms as G R Norfolk.

During the year I D Winn exercised the following options: 400,000 options at 7.13p and 50,000 options at 12.5p.


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LTIPThe background and rationale for this scheme are described in the remuneration policy statement.

Following changes made during the year the LTIP now breaks down into two components.

The LTIP only pays out (subject to a partial exemption for N Kingsbury) in the event of an exit event, which is defined as a sale of the business (“Exit”).

Outlined below are the two schemes that operate and the participants’ benefits under each.

The LTIP is under review and the remuneration committee is further considering the level of rewards and the extent to which such rewards should be entirely Exit focused, and whether this now aligns with shareholders’ interests.

LTIP 1

N Kingsbury G A P Lyons I D Winn

Lower market cap (“Lower Rate”) £12.2m £18.0m £28.0m

Hurdle market cap (“Hurdle Rate”) £18.0m £18.0m £28.0m

Higher market cap (“Higher Rate”) £23.0m £32.0m £38.0m

% rate (“Bonus Rate”) 3% 7% 2%

Maximum payable bonus £0.8m £1.4m £0.2m

* Market Cap: market capitalisation.

The bonus is determined by reference to the Exit market cap, the amount by which it exceeds the Lower Rate (subject to the Hurdle Rate being achieved) and the Bonus Rate. There is no payment to an individual should there be an Exit at a market cap lower than the Hurdle Rate and for any Exit achieved at a market cap between the Hurdle and Higher rate the Bonus Rate is restricted.

Within the terms of N Kingsbury’s agreement there is provision for part payment of this bonus (not dependent upon an Exit) on the anniversary of his appointment, subject to a maximum payable of three times his annual salary. Under the current terms of the contract, and subject to the share price at 13 October 2014 being above the level on 13 October 2013, a payment of £120,000 will be made. Any payment made will be treated as early payment of this LTIP and will be deducted from the final calculated payment upon Exit.

The LTIP requires the participants to be employed by the company at Exit and standard good and bad leaver provisions prevail.

LTIP 2

N Kingsbury G A P Lyons I D Winn

Lower market cap (“Lower Rate 2”) £38.0m £38.0m £38.0m

% rate (“Bonus Rate 2”) 0.5% 3.5% 1.0%

This LTIP operates in addition to LTIP 1 and will only be operative if the Exit market cap exceeds £38m, with the calculated bonus being the excess of the Exit market cap above the Lower Rate 2 multiplied by the relevant Bonus Rate 2. There is currently no cap on this amount.

The same provisions operate for this scheme in terms of requiring the participant to be employed at Exit and standard good and bad leaver provisions prevail.


Governance

Directors’ report

The directors submit their report and the group financial statements of Accumuli plc for the year ended 31 March 2014.

Acquisitions and disposalsOn 13 May 2013 the company announced that it had reached agreement with the vendors of EdgeSeven to settle early the contingent consideration payable. Following a Deed of Variation entered into on that date, £1.25m was paid in cash and £1.25m was settled on 1 November 2013 by the issue of new ordinary shares at an allocation price of 12p, representing 6,770,833 ordinary shares and £0.44m in cash.

On 13 June 2013 the company acquired the entire share capital of Signify Solutions Limited (“Signify”) for £4.19m.

On 2 December 2013 the company acquired the entire share capital of Eqalis Limited (“Eqalis”) for initial consideration of £1.0m and deferred consideration of £1.22m payable in three equal instalments on 29 November 2014, 2015 and 2016.

On 16 December 2013 1,700,000 ordinary shares were issued to the Employee Benefit Trust (“EBT”) to satisfy the exercise of employee options.

On 24 January 2014 450,000 ordinary shares were issued to the EBT to satisfy the exercise of employee options.

On 6 February 2014 500,000 ordinary shares were issued to the EBT to satisfy the exercise of employee options.

On 6 February 2014 Accumuli BV received US$1m representing release of the escrow balance following the anniversary of the disposal of the Webscreen assets to Juniper Networks.

Results and dividendsThe trading results for the period and the group’s financial position at the end of the period are shown in the following financial statements.

The directors have recommended a dividend of 0.46p per share payable in October 2014 based on the financial year in line with its stated aim of distributing to shareholders up to 30% of group EBITDA.

Review of the period and future developmentsA detailed review of the period and future developments for the business are contained in the chairman’s statement and business review on pages 4 to 5.

Principal risks and uncertaintiesThese are detailed on pages 14 and 15 and exposures arising from price risk, credit risk and cash flow risk are detailed in note 25 of the consolidated financial statements.

Going concernThe group had cash balances of £3.6m at 31 March 2014.

After reviewing the budgets and cash projections for the next twelve months and beyond the directors believe that the group and 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. Further details are disclosed within the group accounting policies.

Key performance indicatorsThe board has set key performance indicators (“KPIs”) at group level which allow it and shareholders to monitor the group as a whole.

� Group revenue £16.6m (2013: £14.1m)

� Gross margin 60% (2013: 53%)

� Gross profit generated from recurring revenues 61% (2013: 51%)

� Trading group EBITDA1 before plc costs £3.6m (2013: £3.1m)

� Group EBITDA £2.9m (2013: £2.2m)

� Net cash generated from trading activities £3.6m (2013: £2.4m) and net cash position2 £3.6m (2013: £7.2m)

1 Earnings before interest, tax, amortisation, depreciation, share-based payment costs, separately identifiable costs and income (acquisition costs and one off costs/income), but including trading income from discontinued activities and plc costs of £0.7m (2013: £0.6m).

2 Cash position includes £nil held on escrow account and classified as other receivables (2013: £0.7m).

These are discussed in more detail in the strategic and finance review on pages 6 to 15.

The directors and their interests in share capitalThe directors who served the company during the period, together with their beneficial interests including family holdings in the shares of the company, were as follows:

Ordinary shares of 0.25p each at

31 March 2014and at 20 June 2014

Number% shareholding at

20 June 2014% shareholding at

31 March 2014

Ordinary shares of 0.25p each at 31 March 2013

Number

N Kingsbury 448,522 0.3 0.3 448,522

G A P Lyons 200,000 0.1 0.1 —

I D Winn1 700,000 0.4 0.4 250,000

G R Norfolk 655,546 0.4 0.4 655,546

S Duckworth D 1,300,000 0.8 0.8 1,500,000

1 I D Winn retires by rotation and, being eligible, offers himself for re-election as a director of the company.


Go

vernance

Employee benefit trustOn 11 December 2013 company transferred 100,000 ordinary shares that it held in treasury to its employee benefit trust at no cost.

Third party indemnity provision for directorsQualifying third party indemnity provision is in place for the benefit of all directors of the company.

Political contributionsThe group made no political contributions (2013: £nil) during the year.

EmployeesThe group will employ disabled persons when they appear to be suitable for a particular vacancy and every effort is made to ensure that they are given full and fair consideration when such vacancies arise. There is a training scheme in operation so that employees who have been injured or disabled in the course of their employment can, where possible, continue in employment with the group. There were no disabled persons employed by the group during the year.

The group’s policy is to consult and discuss with employees matters likely to affect employees’ interests. Information on matters of concern to employees is given through information bulletins and reports, which seek to achieve a common awareness on the part of all employees of the regular and frequent financial and economic factors affecting the group’s performance.

AuditorsA resolution to re-appoint Grant Thornton UK LLP as auditors will be put to the members at the next annual general meeting. Grant Thornton UK LLP have indicated their willingness to continue in office.

Purchase of own sharesThe company is permitted to purchase its own shares subject to statutory requirements. Such purchases must be authorised by the shareholders at a general meeting.

Statement as to disclosure of information to auditorsThe directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the company’s auditors are unaware. Each of the directors has confirmed that they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditors.

On behalf of the board

Ian WinnFinance director23 June 2014


Governance

The directors are responsible for preparing the strategic report, directors’ report and financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare group and company financial statements for each financial year. Under that law the directors have elected to prepare the consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and have elected under company law to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards).

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and of the profit or loss of the company and group for that period.

In preparing these financial statements, the directors are required to:

� select suitable accounting policies and then apply them consistently;

� make judgements and accounting estimates that are reasonable and prudent;

� state whether applicable 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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the company 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 the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of directors’ responsibilities

Financial statem

ents


Independent auditors’ reportto the members of Accumuli plc

We have audited the financial statements of Accumuli plc for the year ended 31 March 2014 which comprise the consolidated statement of financial position and parent company balance sheet, the consolidated statement of comprehensive income, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (“IFRSs”) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the statement of directors’ responsibilities set out on page 24, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statementsIn our opinion:

� the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2014 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 parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

� the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in strategic report and directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

� adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

� the parent company financial statements are not in agreement with the accounting records and returns; or

� certain disclosures of directors’ remuneration specified by law are not made; or

� we have not received all the information and explanations we require for our audit.

Kevin EngelSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsManchester23 June 2014


Financial statements

Consolidated statement of comprehensive incomefor the year ended 31 March 2014

Notes

Year ended31 March

2014£’000

Year ended31 March

2013£’000

Revenue 1 16,624 14,118

Cost of sales 6,687 6,628

Gross profit 9,937 7,490

Other operating expenses 2 7,078 5,321

Profit from continuing operations before amortisation, depreciation, share-based payment costs and separately identifiable costs 2,859 2,169

Amortisation of intangibles 2 1,930 1,376

Depreciation 2 251 145

Share-based payment costs 2 208 111

Operating profit from continuing operations before separately identifiable costs and income 470 537

Separately identifiable costs/(income):

– acquisition and disposal costs 2 643 65

– net adjustments to consideration 2 — 219

– re-organisation costs 2 333 —

– fair value adjustment on EdgeSeven share consideration 2 423 —

– fair value adjustment on MXC option 2 — 344

– other non-recurring income 2 (12) (408)

Operating (loss)/profit from continuing operations 2 (917) 317

Finance income 5 30 27

Finance costs 5 (56) (46)

(Loss)/profit before tax from continuing operations (943) 298

Income tax credit/(expense) 6 188 (31)

(Loss)/profit for the year from continuing operations (755) 267

Profit from discontinued operations 2 — 3,186

(Loss)/profit for the year attributable to owners of the parent (755) 3,453

Other comprehensive incomeItems that will be reclassified subsequently to profit or loss:

– exchange differences on translating foreign operations (40) —

Other comprehensive losses for the year, net of tax (40) —

Total comprehensive (losses)/income for the year attributable to owners of the parent (795) 3,453

(Loss)/earnings per share from continuing and discontinued operations

– basic (p) 7 (0.50) 2.35

– diluted (p) 7 (0.50) 2.34

(Loss)/earnings per share from continuing operations

– basic (p) 7 (0.50) 0.18

– diluted (p) 7 (0.50) 0.18

Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income

– basic (p) 7 1.36 0.93

– diluted (p) 7 1.35 0.93

Financial statem

ents


Consolidated statement of financial positionas at 31 March 2014

Notes

As at31 March

2014£’000

As at31 March

2013£’000

Assets

Non-current assets

Property, plant and equipment 8 429 272

Investment property 9 284 284

Goodwill 10 9,041 7,413

Intangible assets 10 8,370 5,213

Deferred tax 16 125 191

Other investments 11 301 301

18,550 13,674

Current assets

Inventories 12 25 8

Trade and other receivables 13 7,106 6,999

Cash and cash equivalents 3,629 7,228

10,760 14,235

Total assets 29,310 27,909

Equity and liabilities

Equity attributable to the equity holders of the parent

Share capital 19 395 372

Share premium reserve 9,885 9,361

Merger relief reserve 4,034 2,671

Share-based payment reserve 286 181

Treasury shares — (11)

EBT reserve (299) —

Translation reserve (40) —

Available for sale reserve 216 216

Retained earnings 592 1,838

Total equity shareholders’ funds 15,069 14,628

Non-current liabilities

Trade and other payables 810 —

Financial liabilities — 40

Deferred tax 16 1,565 1,083

2,375 1,123

Current liabilities

Financial liabilities 28 44

Trade and other payables 14 11,375 11,537

Provisions 17 — 100

Current tax liabilities 463 477

11,866 12,158

Total equity and liabilities 29,310 27,909

The consolidated financial statements on pages 26 to 52 were approved by the board of directors and authorised for issue on 23 June 2014 and are signed on its behalf by:

Ian WinnDirectorAccumuli plc, company registration number 4178393



Consolidated statement of changes in equityfor the year ended 31 March 2014

Sharecapital£’000

Sharepremium

reserve£’000

Mergerrelief

reserve£’000

Share-based

paymentreserve

£’000

Treasury shares£’000

EBTreserve

£’000

Translationreserve

£’000

Availablefor salereserve

£’000

Retained(losses)/

earnings£’000

Total£’000

Balance at 31 March 2012 354 8,896 2,671 70 — — — 216 (1,959) 10,248

Total comprehensive income for the year — — — — — — — — 3,453 3,453

Transactions with owners in their capacity of owners

Release of fair value adjustment on MXC option on exercise — — — — — — — — 344 344

Issue of shares (net of expenses) 18 465 — — — — — — — 483

Share-based payments — — — 111 — — — — — 111

Purchase of own shares — — — — (11) — — — — (11)

Total transactions with owners in their capacity of owners 18 465 — 111 (11) — — — 344 927

Balance at 31 March 2013 372 9,361 2,671 181 (11) — — 216 1,838 14,628

Total comprehensive income for the year — — — — — — (40) — (755) (795)

Transactions with owners in their capacity of owners

Issue of shares (net of expenses) 17 — 1,363 — — — — — — 1,380

Share-based payments — — — 208 — — — — — 208

Transfer of shares to EBT — — — — 11 (11) — — — —

Exercise of share options 6 524 — (103) — (288) — — 103 242

Dividends paid — — — — — — — — (594) (594)

Total transactions with owners in their capacity of owners 23 524 1,363 105 11 (299) — — (491) 1,236

Balance at 31 March 2014 395 9,885 4,034 286 — (299) (40) 216 592 15,069

The share capital reserve represents the number of shares issued at nominal price.

The share premium reserve represents the amount received for shares issued over and above the nominal value of the shares issued.

The merger relief reserve represents the premium on shares issued in the acquisition of 100% owned subsidiaries, Accumuli Security Services Limited and EdgeSeven Limited.

The share-based payment reserve is a reserve to recognise those amounts in retained earnings in respect of share-based payments.

Treasury shares represent those shares purchased by the company under its buy back authority.

The EBT reserve represents the cost of £11,000 (2013: £nil) of shares held by the Accumuli EBT and the premium of £288,000 (2013: £nil) on shares issued to satisfy the exercise of options during the year. The open market value of the shares held at 31 March 2014 was £21,250.

The translation reserve represents the difference arising on translating the balance sheet of the group’s overseas subsidiaries at closing exchange rates and the difference arising on translating their profit and loss accounts at actual rates.

The available for sale reserve represents the revaluation of available for sale financial assets.

Retained earnings represent the earnings generated by the group since trading commenced.

Financial statem

ents


Consolidated statement of cash flowsfor the year ended 31 March 2014

Notes

Year ended31 March

2014£’000

Year ended31 March

2013£’000

Cash flow from operating activities

Cash generated from continuing operations 23 1,900 1,891

Cash generated from discontinued operations — 319

Income tax paid (394) (438)

Finance cost (56) (46)

Net cash generated from operating activities 1,450 1,726

Cash flow from investing activitiesAcquisitions of subsidiaries, net of cash acquired 20 (3,347) (656)

Additional purchase consideration paid (1,688) (661)

Net proceeds from sale of intellectual property 21 669 4,571

Purchase of property, plant and equipment 8 (184) (301)

Purchase of intangible assets 10 (111) (122)

Proceeds from disposal of property, plant and equipment — 123

Finance income 30 27

Net cash (used in)/generated from investing activities (4,631) 2,981

Cash flow from financing activities

Proceeds from the exercise of share options 232 483

Purchase of own shares — (11)

Drawdown under finance lease — 123

Payment of finance lease liabilities (56) (38)

Dividends paid (594) —

Net cash (used in)/generated from financing activities (418) 557

Net (decrease)/increase in cash and cash equivalents (3,599) 5,264

Cash and cash equivalents at beginning of period 7,228 1,964

Cash and cash equivalents at end of period 3,629 7,228



Consolidated accounting policiesfor the year ended 31 March 2014

Basis of accountingAccumuli plc (“the company”) is a company incorporated and domiciled in the UK.

For the year ended 31 March 2014, the consolidated financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as adopted by the EU and the Companies Act 2006 and on the historical cost basis except for the revaluation of investment properties and available for sale financial assets.

Recently issued accounting pronouncementsDuring the current period, the following relevant Standards and Interpretations became effective and have been adopted:

� IFRS 13 Fair Value Measurements (effective 1 January 2013)

� IAS 19 Employee Benefits (revised June 2011) (effective 1 January 2013)

� IAS 12 Deferred tax – Recovery of Underlying Asset (Amendment) (effective 1 January 2013)

� Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7 (effective 1 January 2013)

There have been no significant impacts on the results arising from the adoption of these standards.

Going concernThe group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the strategic and operating review on pages 6 to 10. The financial position of the group, its cash flows and liquidity position are disclosed in the finance review on pages 11 to 13.

The directors have considered the nature of the loss for the year just ended, anticipated future cash flows of a material nature and the opportunities available to the group in the future from the current trading businesses. The group’s financial projections show that it can operate adequately within the level of the cash resources currently available to it. The directors consider that, should the trading performance of any trading subsidiary deteriorate, then the group has sufficient flexibility to manage its cost base accordingly. Therefore the directors consider it appropriate to prepare financial statements on a going concern basis.

Basis of consolidationThe group financial statements incorporate the accounts of the company and all group undertakings. These are adjusted, where appropriate, to conform to group accounting policies. Acquisitions are accounted for under the acquisition method and goodwill is reviewed annually for impairment. The results of companies acquired or disposed of are included in the consolidated statement of comprehensive income after or up to the date that control passes, respectively.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date, about facts or circumstances existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.

Changes in contingent consideration arising from additional information, obtained within one year of the acquisition date, about facts or circumstances that existed at the acquisition date are recognised as an adjustment to goodwill. Other changes in contingent consideration that arise from legally binding agreements since the acquisition are recognised through profit or loss, unless the contingent consideration is classified as equity. In such circumstances, changes are recognised within equity.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Segment reportingOperating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group’s executive directors. The group’s current segments comprise Technology Sales, Managed and Support Services and Professional Services. Segmental revenue represents the total revenue of each business within a reporting segment and includes inter-segment revenues. Segmental trading group EBITDA is the measure used to assess performance and is calculated as earnings before interest, taxation, depreciation, amortisation, share-based payments and separately identified costs/(income).

Financial statem

ents


Property, plant and equipment (“PPE”)Property, plant and equipment are stated at historic cost less accumulated depreciation and any recognised impairment losses.

Depreciation is charged so as to write off the cost of assets to their estimated residual values over their estimated useful lives using the straight-line method on the following bases:

� leasehold improvements – 25%

� computer equipment – 25%

Material residual value estimates and estimates of useful life are updated as required, but at least annually.

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the consolidated statement of comprehensive income.

GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary or associate at the date of acquisition.

Upon the acquisition of subsidiaries, goodwill is separately recognised.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not subsequently reversed. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal, along with the net book value of assets disposed and costs incurred in the disposal process.

Other intangible assetsCosts that are directly attributable to a project’s development phase are recognised as intangible assets, provided they meet the following recognition requirements:

� the development costs can be measured reliably;

� the project is technically feasible and commercially viable;

� the group intends to and has sufficient resources to complete the project;

� the group has the ability to use or sell the software; and

� the software will generate probable future economic benefits.

Development costs not meeting those criteria for capitalisation are expensed as incurred.

Customer contracts and trademarks acquired as part of a business combination are initially measured at fair value and amortised on a straight-line basis over their useful economic lives. Assumptions are used in estimating the fair value of acquired intangible assets and include management’s estimate of revenue and profits to be generated by the acquired businesses. Separate values are not attributed to internally generated customer and supplier relationships.

Amortisation is calculated to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

� development costs – over the life of the associated product or service

� trademarks – over five years

� customer contracts – dependent on the contract, currently between three and seven years

� software – over four years

Impairment of PPE and intangible assets excluding goodwillAt each reporting date, the group reviews the carrying amounts of PPE and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised within the consolidated statement of comprehensive income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.



Consolidated accounting policies continuedfor the year ended 31 March 2014

Investment propertiesInvestment property comprises leasehold properties that are held to earn rentals or for capital appreciation or both. It is not depreciated but is stated at fair value based on valuations by independent registered valuers, where material or applicable, or alternatively by direct reference to prevailing market rates. Fair value is based on current prices for similar properties in the same location and condition. Any gain or loss arising from a change in fair value is recognised in profit or loss. Rental income from investment property is recognised on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

InventoryInventory mainly comprises items of equipment held for sale or rental and consumable items. Equipment held and consumable items are stated at the lower of cost and estimated net realisable value, after provisions for obsolescence. Cost is based on the price of purchase and is calculated on a first-in-first-out basis. Net realisable value is based on estimated selling price less additional costs to completion and disposal.

Cash and cash equivalentsCash and cash equivalents comprise cash in hand, deposits repayable on demand and short term deposits. Cash and cash equivalents are £3,629,000 (2013: £7,228,000).

Foreign currenciesMonetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the reporting dates. Transactions in foreign currencies are translated into sterling at the rate of exchange prevailing at the date of the transaction. Exchange differences are taken into account when arriving at operating profit. The functional and presentational currency used is sterling.

The financial statements of overseas subsidiaries are translated into sterling at the exchange rate ruling at the reporting date; income and expenses are translated at exchange rates at the date of the transaction. The resulting surpluses and deficits are credited or charged to other comprehensive income and recognised in the Translation Reserve in equity.

Financial instrumentsFinancial assets and financial liabilities are recognised on the consolidated statement of financial position when the group has become a party to the contractual provisions of the instrument.

Loans and receivablesLoans and receivables are recognised initially at fair value plus transaction costs, then carried subsequently at amortised costs under the effective interest method. Provision for impairment is made when there is objective evidence of impairment.

Available for sale financial assetsAvailable for sale financial assets are non-derivative financial assets that are designated to this category or do not qualify for inclusion in any of the other categories of financial assets.

The group’s available for sale financial assets relate to the equity investment in an unlisted business, which has no publicly quoted price. The equity investment was initially measured at cost, as its fair value could not be estimated reliably. Subsequent to this, an existing strategic investor in the unlisted business increased its shareholding through the purchase of shares from all remaining shareholders in October 2011. Accordingly, a fair value was determined for the investment at that time with a gain being recognised in other comprehensive income and reported within the available for sale reserve within equity.

When the asset is disposed of or is determined to be impaired, the cumulative gain or loss in other comprehensive income will be reclassified from the equity reserve to profit or loss and presented as a reclassified adjustment within other comprehensive income.

Financial liabilitiesFinancial liabilities are classified according to the substance of the contractual arrangements entered into. Interest associated with financial liabilities is recognised in the consolidated statement of comprehensive income on an accruals basis over the term of the instrument using the effective interest method.

Trade payablesTrade payables are classified as “financial liabilities at amortised cost” in accordance with IAS 39. They are initially recognised at fair value net of transaction costs and subsequently measured at amortised cost.

LeasingRentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the group, and hire purchase contracts are capitalised in the statement of financial position and are depreciated over their useful lives. The capital element of future obligations under the leases and hire purchase contracts are included as liabilities in the statement of financial position.

Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of lease obligation so as to achieve a constant rate of interest on the balance of the liability. Finance charges are charged directly against income.

Financial statem

ents


Revenue recognitionRevenue arises from the sale of goods and the rendering of services. It is measured by reference to the fair value of consideration received or receivable, excluding valued added tax, rebates, trade discounts and other sales related taxes.

The group enters into sales transactions involving a range of the group’s products and services, for example for the delivery of hardware, software, support services, managed services and professional services. The group applies the revenue recognition criteria set out below to each separately identifiable component of the sale transaction. The consideration received from multiple-component transactions is allocated to each separately identifiable component in proportion to its relative fair value.

Sale of goods (hardware and software)Sale of goods is recognised when the group has transferred to the buyer the significant risks and rewards of ownership, which is when the customer has taken undisputed delivery of the goods.

Revenue from the sale of goods with no significant service obligation is recognised on delivery.

Rendering of servicesThe group generates revenues from managed service, support services, maintenance and professional services. Consideration received for these services is initially deferred, included in accruals and deferred income and is recognised as revenue in the period when the service is performed.

In recognising managed service and support services revenues, the group recognises revenue equally over the duration of the contractual term. Third party costs relating to these services are, likewise, spread equally over the duration of the contractual term.

In certain cases the group will simply act as a reseller of maintenance support on behalf of a third party vendor, with no added value and no requirement to provide ongoing support. In such cases the revenue and cost of sales are recognised at the point of sale.

Share-based paymentsThe group issues equity-settled share-based awards to its employees. Equity-settled share-based awards are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based awards is expensed on a straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model. The expected life used in the model is based upon exercise restrictions and expected volatility is based upon historical volatility over the expected life of the scheme.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

The group also has a cash-settled plan in place. The group measures the services acquired and the liability incurred at the fair value of the liability at each reporting date, any changes in fair value are recognised in profit or loss for the period. The fair value is measured by the use of a Monte Carlo simulation.

Retirement benefit costsPayments to defined contribution retirement benefit plans are charged to the consolidated statement of comprehensive income as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.

TaxationThe tax expense represents the sum of the current tax and the deferred tax elements.

The current tax is based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred 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. Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. 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 that are recognised 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 income. 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 statement of comprehensive income, except where they relate to items that are charged or credited directly to other comprehensive income or equity in which case the related deferred tax is also charged or credited directly to other comprehensive income or equity as appropriate.



Consolidated accounting policies continuedfor the year ended 31 March 2014

Employee benefit trustThe company operates an employee benefit trust, Accumuli plc Employee Benefit Trust (“EBT”), and has de facto control of any shares held by the trust and bears their benefits and risks. Accordingly, the group consolidates the EBT within these group financial statements. At the balance sheet date 10,000 shares were held by the EBT.

Separately identifiable costs/(income)Separately identifiable costs represent those costs/(income) that are considered by the directors to be either exceptional in nature or non-recurring and that require separate identification to give a true and fair view of the group’s results for the year.

Dividend paymentsDividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date.

Critical accounting estimates and judgementsThe preparation of the group financial statements in conformity with IFRS as adopted by the European Union requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the present circumstances.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the group financial statements, are disclosed below.

Customer contracts and relationshipsThe group recognises customer contracts and relationships as intangible assets on business combinations, with a net book value at the balance sheet date of £8,213,000 (2013: £5,118,000). These assets are subsequently amortised over the estimated useful economic life to the group, which is estimated to be between three and seven years. The initial valuation of these assets is based on an incremental income method valuation which requires the use of assumptions relating to future revenue, profitability and relationship life with each customer. Changes in the assumptions for useful economic life or incremental profits will have an impact on the annual amortisation charge recognised in the financial statements. The loss of a major customer may result in the recognition of an impairment loss. The directors revisit these assumptions on a regular basis.

Impairment provisionsNo impairment provisions have been made against goodwill as management have calculated the recoverable amount in each case to be in excess of the carrying values. The carrying amount of goodwill in the group financial statements is £9,041,000 (2013: £7,413,000) and this amount was tested for impairment at the balance sheet date using a discount rate of 3% (2013: 4%) as set out in note 22. Using this discount rate, the net present value of the future cash flows associated was in excess of the carrying amount. The impairment tests require a number of assumptions and judgements to be made in relation to future operating results and the determination of a suitable discount rate. An explanation of these judgements and estimations is detailed in the impairment test within note 22 to the financial statements.

Share-based incentive arrangements Share-based incentive arrangements are provided to management and certain employees. These are valued at the date of grant using the Black-Scholes option pricing model for options with non-market vesting conditions. Management has to exercise judgement over the likely exercise period, interest rate and share price volatility (note 19). Management uses various sources of information including its own share price performance, experience from the historical exercise of options and published data on risk free rates.

Long Term Incentive PlanLong term incentive arrangements are provided to the executive chairman, chief executive officer and finance director. Payments under these are dependent upon a sale of the business and certain valuation metrics having been achieved which relate to the share price valuation of the company; further details can be found at page 21. Valuation is performed at the balance sheet date using a Monte-Carlo simulation and assumptions about the future valuation metrics of the business, likelihood of a sale and the continued employment of the participants and their associated probabilities, and a charge is made to the consolidated statement of comprehensive income based on this expected charge over the expected period to sale. These assumptions will vary annually.

Deferred tax assetThe extent to which deferred tax assets can be recognised is based on an assessment of the probability of the group’s future taxable income against which the deferred tax assets can be utilised.

Investment propertyThe fair value of the group’s investment property at 31 March 2014 has been arrived at by considering the option to purchase price contained within the lease with its tenant which reflects market yields and conditions. The directors consider that there was no change in fair value (2013: no change) of the investment property in the year ended 31 March 2014. The directors will revisit these valuations on a regular basis.

Financial statem

ents


1. Revenue and segmental reportingThe chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group’s executive directors. Operating segments for the year to 31 March 2014 were determined on the basis of the reporting presented at regular board meetings of the group. The segments comprise:

Technology Solutions (“Product”)This segment comprises the resale of solutions (hardware and software) from leading technology vendors and our own portfolio of developed products.

Support and Managed Services (“Service”)This segment comprises the value added resale of vendor support contracts and providing outsourced Managed IT Security services to customers.

Professional Services (“PS”)This segment comprises the provision of highly skilled resource to consult, design, install, configure and integrate IT Security technology.

Plc costsThis comprises the costs of running the plc, incorporating the cost of the board, listing costs and other professional service costs such as audit, tax, legal and group insurance.

2014 2013

Product£’000

Service£’000

PS£’000

Plccosts£’000

Total£’000

Product£’000

Service£’000

PS£’000

Plccosts£’000

Total£’000

Total segment revenue 4,921 9,253 2,450 — 16,624 7,061 6,518 1,667 — 15,246

Inter-segment revenue — — — — — (487) — — — (487)

External revenue from continuing and discontinued operations 4,921 9,253 2,450 — 16,624 6,574 6,518 1,667 — 14,759

Discontinued operations — — — — — (641) — — — (641)

External revenue from continuing operations 4,921 9,253 2,450 — 16,624 5,933 6,518 1,667 — 14,118

Total segment gross profit from continuing and discontinued operations 1,810 6,056 2,071 — 9,937 2,608 3,852 1,566 — 8,026

Total segment gross profit from continuing operations 1,810 6,056 2,071 — 9,937 2,072 3,852 1,566 — 7,490

Trading group EBITDA from continuing and discontinued operations 651 2,177 740 — 3,568 1,079 1,414 634 — 3,127

Trading group EBITDA from continuing operations 651 2,177 740 — 3,568 760 1,414 634 — 2,808

Plc costs — — — 709 709 — — — 639 639

Amortisation 352 1,176 402 — 1,930 381 708 287 — 1,376

Depreciation — 251 — — 251 — 145 — — 145

Share-based payment costs 14 47 16 131 208 14 27 10 60 111

Operating profit/(loss) from continuing operations before separately identifiable costs/(income) 285 703 322 (840) 470 365 534 337 (699) 537

(Loss)/profit before tax from continuing operations 285 703 322 (2,253) (943) 365 534 337 (938) 298

Total assets 5,152 16,937 6,337 884 29,310 6,434 12,426 7,368 1,681 27,909

Revenues from continuing operations derived from customers outside of the UK during the period were £2,320,000 (2013: £3,407,000).

There were no customers during the year (2013: one) that represented more than 10% of revenue. Revenue recognised during the prior year in relation to this customer amounted to £1,769,000.

There are no assets held outside the UK (2013: none).

Notes to the consolidated financial statementsfor the year ended 31 March 2014



Notes to the consolidated financial statements continuedfor the year ended 31 March 2014

2. Result from continuing operations (A) Profit before tax from continuing operations is stated after charging:

2014£’000

2013£’000

Depreciation of owned PPE 251 145

Amortisation of intangible assets 1,930 1,376

Staff costs 5,167 3,851

Foreign currency losses 40 12

Auditors’ remuneration:

– fees payable to the company auditors for the audit of the company’s consolidated financial statements 6 6

Other services:

– audit of the accounts of any associate of the company 40 36

– audit related assurance services 5 5

– tax compliance services 23 19

– tax advisory services 17 3

– corporate finance services 23 20

Share-based payment expense (note 19) 208 111

2014£’000

2013£’000

Separately identifiable costs

Acquisition and disposal costs:

– legal and financial due diligence for acquisitions 190 31

– nominated advisor — 15

– origination fees 93 —

– stamp duty 38 19

– legal and financial advise for disposals 65 —

– insurance premium related to disposal 257 —

643 65

Fair value adjustment on MXC option — 344

Adjustments to consideration on Boxing Orange resulting from third party recoveries — 219

Fair value adjustments on EdgeSeven share consideration 423 —

Re-organisation costs 333 —

Other non-recurring income (12) (408)

Non-recurring income relates to further net recoveries made following the discovery of anomalies in the Boxing Orange business at acquisition.

The fair value adjustment for EdgeSeven share consideration of £423,000 (2013: nil) was recognised upon the issue of shares to the employee shareholders of EdgeSeven, representing the difference between the share price used to price the share consideration element of deferred consideration and the share price at issue of the shares.

Re-organisation costs of £333,000 (2013: £nil) were incurred on redundancy payments, notice periods and settlement agreements relating to the re-organisation of the business in October 2013, following the acquisition and integration of Signify.

Non-recurring income relates to net recoveries made following the discovery of anomalies in the Boxing Orange business at acquisition of £12,000 (2013: £428,000).

(B) The following table analyses the nature of other operating expenses:

2014£’000

2013£’000

Staff costs (note 3) 5,167 3,851

Premises costs 636 261

Marketing expenses 197 113

Professional fees 549 410

Other expenses 529 686

7,078 5,321

Included in the above, the costs associated with the company were £709,000 (2013: £639,000).

Financial statem

ents


3. Particulars of employeesThe average number of staff employed (including executive directors) by the group during the financial period amounted to:

2014Number

2013Number

Administrative staff 6 5

Sales, technical staff and management 67 50

73 55

The aggregate payroll costs of the above were:

2014£’000

2013£’000

Wages and salaries 4,533 3,398

Social security costs 557 413

Other benefits 77 40

5,167 3,851

4. Directors’ emolumentsThe aggregate emoluments of directors in respect of qualifying services were:

2014£’000

2013£’000

Emoluments of directors who served the full period 364 235

Emoluments of directors who served part of the period — 230

Total directors’ emoluments 364 465

Emoluments of the highest paid director were:

2014£’000

2013£’000

Total emoluments (excluding pension contributions) 149 151

No director accrued any pension benefits during the period (2013: none). There were no other payments made for other long term benefits or termination benefits.

Further information about the remuneration of individual directors is provided in the directors’ remuneration report on page 20.

5. Finance income and costs

2014£’000

2013£’000

Finance income – dividends received from unlisted investments 30 27

Finance costs:

– interest payable on bank borrowings 56 26

– facility fees — 20




6. Taxation on ordinary activities(A) Taxation

2014£’000

2013£’000

Current tax

UK corporation tax based on the results for the period at 23% (2013: 24%) 518 501

Over provision on earlier periods (291) (15)

Total 227 486

Deferred tax

Tax losses 83 35

Deferred tax on intangible assets (444) (313)

Change in tax rate and finalisation of previous year tax loss (54) (177)

Tax on (loss)/profit on ordinary activities (188) 31

(B) Factors affecting total tax chargeThe tax assessed on the loss on ordinary activities for the period differs from the standard rate of corporation tax in the UK of 23% (2013: 24%).

2014£’000

2013£’000

(Loss)/profit before tax from continuing activities (943) 298

(Loss)/profit on ordinary activities by rate of tax (217) 72

Differences between capital allowances and depreciation 41 10

Other short term timing differences 16 (7)

Expenses disallowed 317 148

Change in tax rate for deferred tax (54) (177)

Over provision on earlier periods (291) (15)

Total tax (note 6(A)) (188) 31

7. (Loss)/earnings per share

2014 2013

Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income – basic (p) 1.36 0.93

Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income – diluted (p) 1.35 0.93

(Loss)/earnings per share on continuing operations – basic (p) (0.50) 0.18

(Loss)/earnings per share on continuing operations – diluted (p) (0.50) 0.18

(Loss)/earnings per share on continuing and discontinued operations – basic (p) (0.50) 2.35

(Loss)/earnings per share on continuing and discontinued operations – diluted (p) (0.50) 2.34

For the year ended 31 March 2014, the calculation of diluted earnings per ordinary share is identical to that used for the basic earnings per ordinary share as the exercise of the options would have the effect of reducing the loss per share on continuing operations and is, therefore, not dilutive.

(Loss)/earnings for the year and the number of shares used in the calculations of (loss)/earnings per share are set out below:

2014£’000

2013£’000

Earnings per share from continuing operations before amortisation of intangibles and related deferred tax and separately identifiable costs and income 2,064 1,373

(Loss)/earnings for the year from continuing operations (755) 267

(Loss)/earnings for the year attributable to owners of the parent (755) 3,453

Financial statem

ents


7. (Loss)/earnings per share continuedWeighted average number of shares used in the calculations of earnings/(loss) per share is set out below:

2014Number

2013Number

For basic earnings per share 152,038,445 146,983,255

For diluted earnings per share 153,040,492 147,343,193

8. Property, plant and equipment

Leaseholdimprovements

£’000

Computerequipment

£’000Total

£’000

Cost

At 1 April 2012 10 361 371

Acquisitions through business combinations — 3 3

Additions — 301 301

Disposals — (213) (213)

At 31 March 2013 10 452 462

Acquisitions through business combinations — 224 224

Additions — 184 184

At 31 March 2014 10 860 870

Depreciation

At 1 April 2012 1 100 101

Charge for the year — 145 145

Disposals — (56) (56)

At 31 March 2013 1 189 190

Charge for the year — 251 251

At 31 March 2014 1 440 441

Net book valueAt 31 March 2014 9 420 429

At 31 March 2013 9 263 272

At 1 April 2012 9 261 270

9. Investment property

£’000

Fair value

At 1 April 2012 284

Write down in property value —

At 31 March 2013 284

Fair value

At 1 April 2013 284


At 31 March 2014 284

Investment property comprises a leasehold property owned on 999-year leases granted in 1989. The fair value of the group’s investment property at 31 March 2014 has been arrived at by considering the option to purchase price contained within the lease with its tenant which reflects market yields and conditions. The valuation gives rise to no change (2013: no change) in the fair value of the property at £284,000 as at 31 March 2014.

The property rental income earned by the group from its investment property, which is leased under an operating lease, amounted to £34,000 (2013: £23,000). Direct operating expenses arising on the investment property that generated rental income in the period amounted to £8,000 (2013: £4,000). Direct operating expenses arising on the investment property that did not generate rental income in the period amounted to £nil (2013: £nil). The group has not entered into a contract for the maintenance of its investment property.

At 31 March 2014, the group had no contractual obligations to purchase, construct or develop the investment property.




10. Intangible assets and goodwill

Intangible assets

Software£’000

Developmentcosts£’000

Trademarks£’000

Customercontracts

£’000Total

£’000Goodwill

£’000

Cost

At 1 April 2012 — 176 1,697 7,705 9,578 5,355

Acquisitions through business combinations (note 20) — — — 1,090 1,090 2,558

Additions 42 80 — — 122 —

Disposals — (155) (1,697) (756) (2,608) (500)

At 31 March 2013 42 101 — 8,039 8,182 7,413

Acquisitions through business combinations (note 20) — — — 4,976 4,976 1,628

Additions — 111 — — 111 —

Disposals — — — — — —

At 31 March 2014 42 212 — 13,015 13,269 9,041

Amortisation

At 1 April 2012 — 63 339 1,662 2,064 —

Charge for the year 14 44 — 1,318 1,376 —

Disposals — (73) (339) (59) (471) —

At 31 March 2013 14 34 — 2,921 2,969 —

Charge for the year 14 35 — 1,881 1,930 —

Disposals — — — — — —

At 31 March 2014 28 69 — 4,802 4,899 —

Net book value At 31 March 2014 14 143 — 8,213 8,370 9,041

At 31 March 2013 28 67 — 5,118 5,213 7,413

At 1 April 2012 — 113 1,358 6,043 7,514 5,355

Intangible assets impairment reviewFollowing the disposal of the Webscreen IP in the year ended 31 March 2013 the segmental split of the business was re-assessed and the following operating segments adopted: Technology Sales, Managed and Support Services and Professional Services. This required a re-assessment of the intangible assets to identify them with the relevant operating segment for assessing impairment.

An impairment review has been undertaken on the intangible assets. The underlying assumptions used to value the assets have been reviewed and validated against current operating activity and volumes. The key assumptions for the value in use calculations, used to review impairment, are as follows:

� forecast revenue and gross margin from the group’s forecast model for the period 2015 to 2017, and for any periods after 2017 by extrapolating at a growth rate of 5% (in line with general compound growth rates for the IT Security market and based on past gross margin performance and anticipated change in sales mix in the future); and

� a discount rate of 3% has been used based on assumptions on the company’s beta, market and risk free rates of return.

On the basis of this review no impairment adjustment was considered necessary for the current financial year.

11. Investments

Investment inassociate

£’000

Availablefor sale

financialassets£’000

Total£’000

Cost and net book value

At 1 April 2012 1 300 301

At 31 March 2013 1 300 301

At 31 March 2014 1 300 301

Financial statem

ents


11. Investments continuedThe group’s other investments relate to shares in an unlisted business, which has no publicly quoted price. An existing strategic investor in the business increased its shareholding through the purchase of shares from all remaining shareholders in October 2011. This allowed a fair value to be determined for the investment at that time and this was reflected through a revaluation. There has been no new information received during the year which would lead to a revision of the carrying value. A final dividend of £30,000 was received in April 2013.

Details of the company’s principal associates at 31 March 2014 are as follows:

Name of associate

Place ofincorporation

and operation

Proportion of

ownershipinterest %

Proportion of voting

power held %Principal

activity

Porttracker Limited UK 33 33Licence holder of networkmanagement software IP

There is no financial information available for Porttracker Limited at 31 March 2014. The company continues to generate a low level of licence revenue, but in all other regards is non-trading. The investment is carried at the nominal value of the shares issued on the grounds of materiality and the group has no obligation to make good any deficit in Porttracker Limited.

12. Inventories

2014£’000

2013£’000

Inventory held for resale 25 8

There are no significant balances held at net realisable value.

No inventories were written down during the period (2013: £nil) and no earlier inventory write downs were reversed during the current or preceding years.

13. Trade and other receivablesCurrent

2014£’000

2013£’000

Trade receivables 3,768 3,644

Other receivables 205 977

Prepayments and accrued income 3,133 2,378

7,106 6,999

Other receivables includes £nil (2013: £669,000) held on escrow.

All of the above fall due in one year. All trade receivables were reviewed for indications of impairment and no further provision was made (2013: £nil).

The average credit period taken on sale of goods and services is 48 days (2013: 38 days).

The analysis below provides an aged analysis of trade receivables:

2014£’000

2013£’000

Current 3,137 3,175

Up to 30 days overdue 574 100

Over 30 days and up to 60 days overdue — 71

Over 60 days overdue 60 301

3,771 3,647

Bad debt provisionThe movement in the allowance account was as follows:

2014£’000

2013£’000

Opening balance (3) (3)

Receivables written off during the year — —

Provisions made — —

Closing balance (3) (3)




14. Trade and other payablesCurrent

2014£’000

2013£’000

Trade payables 2,345 1,829

Other taxation and social security 1,108 741

Other payables 582 33

Accruals 441 4,619

Deferred income 6,899 4,315

11,375 11,537

Included within trade payables is £1,153,000 (2013: £919,000) which is denominated in foreign currency.

The average credit period for trade purchases is 60 days (2013: 37 days).

15. Other financial assets and liabilitiesFinancial instruments – assets

2014

Availablefor sale


Loans andreceivables

£’000Total

£’000

Non-current financial assets

Investment property 284 — 284Investments 300 — 300

Current financial assets

Trade and other receivables — 3,973 3,973Cash and cash equivalents — 3,629 3,629

— 7,602 7,602

Total 584 7,602 8,186

2013

Availablefor sale


Loans andreceivables

£’000Total

£’000

Non-current financial assets

Investment property 284 — 284

Investments 300 — 300

Current financial assets

Trade and other receivables — 4,621 4,621

Cash and cash equivalents — 7,228 7,228

— 11,849 11,849

Total 584 11,849 12,433

Financial instruments – liabilities

2014

Fair valuethrough

profitand loss

£’000

Financialliabilities at

amortisedcost

£’000Total

£’000

Financial liabilities

Trade and other payables – amortised cost — 2,963 2,963Contingent consideration 1,215 — 1,215

Total 1,215 2,963 4,178

Financial statem

ents


15. Other financial assets and liabilities continuedFinancial instruments – liabilities continued

2013

Fair valuethrough

profitand loss

£’000

Financialliabilities atamortised

cost£’000

Total£’000

Financial liabilities

Trade and other payables – amortised cost — 3,837 3,837

Contingent consideration 2,644 — 2,644

Total 2,644 3,837 6,481

Financial instruments measured at fair valueThe following table presents financial assets and liabilities which are measured at fair value in the balance sheet in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets. The fair value hierarchy has the following levels:

� Level 1: quoted prices (unadjusted) in active markets for identical instruments;

� Level 2: inputs other than quoted prices included within Level 1 that are observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

� Level 3: inputs for the instrument that are not based on observable market data (unobservable inputs).

The level within which the financial asset is classified is determined based on the lowest level of significant input to the fair value measurement. The financial assets measured at fair value in the balance sheet are grouped into the fair value hierarchy as follows:

2014 Level 1 Level 2 Level 3 Total

Available for sale assets – investment property — — 284 284Available for sale financial assets – other investments — — 300 300

Net fair value — — 584 584

Liabilities

Fair value through profit and loss — — 1,215 1,215

Net fair value — — 1,215 1,215

2013 Level 1 Level 2 Level 3 Total

Available for sale assets – investment property — — 284 284

Available for sale financial assets – other investments — — 300 300

Net fair value — — 584 584

Liabilities

Fair value through profit and loss — — 2,644 2,644

Net fair value — — 2,644 2,644

The group’s other investments relate to shares in an unlisted business, which has no publicly quoted price. An existing strategic investor in the business increased its shareholding through the purchase of shares from all remaining shareholders in October 2011. This allowed a fair value to be determined for the investment at that time and this was reflected through a revaluation. There has been no new information received during the year which would lead to a revision of the carrying value. A final dividend of £30,000 was received in April 2013.

The investment property’s fair value has been derived from the option to purchase price contained within the lease with its tenant, which reflects market yields and conditions.

The liabilities held at fair value through profit and loss are measured using a present value technique. The fair value is estimated by estimating future cash outflows.




16. Deferred taxationThe movement in deferred taxation during the year was:

2014£’000

2013£’000

Provision brought forward 892 1,649

Credited to income for the period — (967)

Trading losses 83 —

Credit arising from business combinations 465 210

Provision carried forward 1,440 892

2014£’000

2013£’000

Excess of taxation allowances over depreciation on all non-current assets (7) 10

Temporary differences on long leasehold properties — —

Temporary differences on investments 76 76

Temporary differences on intangible assets 1,479 997

Trading losses (108) (191)

1,440 892

Deferred taxation has been calculated at a rate of 21% (2013: 23%). The group has unrelieved tax losses amounting to £514,000 (2013: £804,000) to offset against future taxable profits, which the directors believe will be recoverable in the foreseeable future based on expected trading.

There are no material deductible temporary differences, unused tax losses/credits for which no deferred tax asset has been recognised.

There are no other material temporary timing differences for which deferred tax liabilities have not been recognised.

Corporation tax for the year ended 31 March 2014 was calculated at 23% of profits for the year. During the year ended 31 March 2013, as a result of the reduction in the UK corporation tax rate to 24% from 1 April 2012, corporation tax has been calculated at an effective rate of 24%.

During the year ended 31 March 2013 a further reduction in the UK corporation tax rate to 21% was substantively enacted into law and will be effective from 1 April 2014; the relevant deferred tax balances have been re-measured at this rate. Further reductions in the main rate are proposed to reduce the rate by 1% per annum to 20% by 1 April 2015.

Deferred taxation at the period end is analysed as follows:

2014£’000

2013£’000

Deferred tax asset (125) (191)

Deferred tax liability 1,565 1,083

1,440 892

17. ProvisionsProvision for onerous contracts

2014£’000

2013£’000

Provision for onerous contract — 100

The provision for onerous contracts arose from the sale of the Webscreen IP on 1 February 2013. The group had a contract and commitment to provide Webscreen product support beyond 31 December 2013 to certain customers. This would previously have been at no net cost to the group; however the support had to be purchased from Juniper Networks beyond 31 December 2013. The amount provided represented the level of expected outlay to provide product support under existing contractual commitments at the time. However, following published pricing in September 2013 and based on the renewal profile of the contracts, the provision was released to cost of sale during the current financial year.

Financial statem

ents


18. Related party transactionsGroup transactions with related parties are as follows:

2014 2013

Salesto

£’000

Purchasesfrom

£’000

Tradereceivablesbalance at31 March

£’000

Tradepayables

balance at31 March

£’000

Salesto

£’000

Purchasesfrom

£’000


£’000

Tradepayables

balance at31 March

£’000

Acorn Capital Partners Limited — 28 — 8 — 20 — 8

Camwood Limited — — — — 3 — — —

Porttracker Limited — — — — (11) 40 — 42

G R Norfolk, a non-executive director of the company, is also a director of Acorn Capital Partners Limited (the company that receives the director’s fees payable for his services) and Camwood Limited which previously leased one of the company’s properties.

Porttracker Limited is a network management software developer and associated company of Accumuli Security Networks Limited.

Details of key management compensation is summarised below:

2014£’000

2013£’000

Salaries including bonuses 364 417

Social security costs 38 38

Termination benefits — 48

Total short term benefits 402 503

Share-based payments 154 60

Total key management compensation 556 563

The following options are held directly or indirectly by directors:

Director VestedShare

options held Exercise price

G R Norfolk* Yes 503,000 15.00p

N Kingsbury Vests December 2014 400,000 9.00p

S Duckworth DL Vests June 2014 300,000 9.88p

G A P Lyons Yes 1,000,000 12.50p

G A P Lyons Vests December 2015 200,000 15.12p

I D Winn Yes 500,000 9.00p

I D Winn Yes 500,000 12.50p

I D Winn Yes 50,000 49.00p

Total 3,453,000

* Beneficial interest in 251,500 share options.

During the financial year I D Winn exercised the following options:

� 400,000 options at 7.13 pence; and

� 50,000 options at 12.5 pence.




18. Related party transactions continuedDividendsThe following dividends were paid to directors related to their beneficial holdings during the year. There were no dividends paid in the prior year:

Director Dividend £

N Kingsbury 1,794

I D Winn 1,000

G R Norfolk 2,622

S Duckworth 6,000

LTIPIf the criteria for payment of the LTIP had been satisfied at 31 March 2014 then £1,797,000 (2013: £nil) would have been paid to the recipients.

19. Share capital

2014Number

of shares2014

£’000

2013Number

of shares2013£’000

Allotted, called up and fully paid as at beginning of the period 148,595,089 372 141,259,191 354

New shares issued relating to acquisition of EdgeSeven 6,770,832 17 7,435,898 18

Transfer of treasury shares to EBT 100,000 — — —

Purchase of own shares — — (100,000) —

New shares issued to satisfy share options 2,650,000 6 — —

As at end of the period ordinary shares of 0.25p each 158,115,921 395 148,595,089 372

Approved share optionsThe company has granted equity-settled share options to selected employees. The exercise price is the market value of the shares at the date of grant, or in certain circumstances where agreed by the remuneration committee they may be issued at a discount to market price. The vesting periods are two or three years. If the options remain unexercised after a period of ten years from the date of grant the options expire.

Details of these share options outstanding during the year are as follows:

2014 2013

Numberof shareoptions

Weightedaverageexercise

pricep

Numberof shareoptions

Weightedaverageexercise

pricep

Outstanding at beginning of the period 3,700,000 9.4 3,800,000 9.4

Granted during the period 5,052,650 11.1 100,000 9.9

Exercised during the period (2,650,000) 8.8 — —

Lapsed during the period — — (200,000) 9.0

Outstanding at end of the period 6,102,650 10.8 3,700,000 9.4

The weighted average share price on the date of exercise of options during the year was 20.1 pence.

The weighted average remaining contractual life of the options is nine years (2013: eight years).

Financial statem

ents


19. Share capital continuedThe following summarises the unexercised approved share options:

Date of grant Exercise price Expiry date

Number ofshares for

which rightsare exercisable Vested Vesting date

Approved share options

7 July 2007 49.50p 7 July 2016 50,000 Yes

14 December 2011 9.00p 14 December 2021 900,000 Yes

9 August 2012 9.88p 9 August 2022 100,000 No 9 August 2014

29 August 2013 12.50p 29 August 2023 1,500,000 Yes

23 September 2013 15.00p 23 September 2023 333,333 No 23 September 2015

29 November 2013 15.00p 29 November 2023 1,600,000 No29 November 2014,

2015 and 2016

29 November 2013 0.25p 29 November 2023 1,169,317 No29 November 2014,

2015 and 2016

11 December 2013 15.12p 11 December 2023 200,000 No 11 December 2015

24 January 2014 19.75p 24 January 2024 250,000 No 24 January 2016

None of the unvested share options are subject to performance criteria.

The fair value of options granted under the scheme is measured by use of the Black-Scholes model at the date of grant. The inputs into the Black-Scholes model are as follows for options issued in the current year:

2014

Share price (p) 15.75–21.0Exercise price (p) 0.25–19.75Expected volatility (%) 20Vesting period (years) 2–3Risk free rate (%) 1.96Expected dividends (%) —

Expected volatility was based upon the historical volatility over the expected life of the schemes. The vesting period is based upon vesting restrictions.

Share-based compensationThe proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised or if the exercise of shares is satisfied through the EBT then the proceeds received are classed as a repayment of the loan to the EBT.

Unapproved share optionsThe following summarises the unapproved share options:

Date of grantSubscription

price Expiry date

Number ofshares for

which rightsare exercisable

Unapproved share options

G R Norfolk1 21 November 2005 15.00p 1 July 2017 503,000

S M Hartley1 21 November 2005 15.00p 1 July 2017 503,000

S Duckworth DL2 2 June 2011 9.88p 2 June 2021 300,000

N Kingsbury2 14 December 2011 9.00p 14 December 2021 400,000

1 The option is exercisable upon the sale of the company or specific share price performance, which were operative at 31 March 2014.

2 The option is exercisable three years after the date of grant and is not subject to performance criteria.

The group recognised the following cost relating to share-based payments:

2014£’000

2013£’000

Charged to consolidated statement of comprehensive income:

– For share-based options 98 111

– For LTIP (see page 21) 110 —




20. Acquisition of subsidiaries during the financial yearSignify Solutions Limited (“Signify”) On 13 June 2013 the group acquired the whole of the issued share capital of Signify Solutions Limited (“Signify”) for cash consideration of £4.2m.

The acquisition was made to enhance the group’s Managed IT Security portfolio of services.

The fair values and calculation of goodwill for the acquisition of Signify are detailed below:

Book value£’000

Fair valueadjustment

£’000Fair value

£’000

Provisional net assets acquired

Property, plant and equipment 218 — 218

Inventories 17 — 17

Trade and other receivables 824 — 824

Intangible assets — 3,138 3,138

Cash and cash equivalents 1,560 — 1,560

Total assets 2,619 3,138 5,757

Trade and other payables 1,707 — 1,707

Current tax liabilities 127 — 127

Deferred tax liability — 619 619

Total liabilities 1,834 619 2,453

Fair value of identifiable assets and liabilities 785 2,519 3,304

Goodwill 889

Total consideration (excluding direct costs) 4,193

Net cash outflow arising from business combination:

– cash consideration paid 4,193

4,193

Net cash outflow arising from business combinations:


– cash and cash equivalents acquired (1,560)

Net cash outflow 2,633

The goodwill arising on this acquisition is attributable to cross-selling opportunities that are expected to be achieved from marketing Accumuli’s portfolio of solutions and services across Signify’s existing customer base.

Direct acquisition costs amounting to £157,000 have been written off to the consolidated statement of comprehensive income.

The fair value of the trade and other receivables amounted to £824,000, with a gross contractual amount of £824,000. As of the acquisition date, the group’s best estimate of the contracted cash flow not expected to be collected amounted to £nil.

Subsidiary tradingSignify contributed £2.7m revenue, £0.4m EBITDA and £0.2m profit after tax during the year.

If Signify had been acquired on 1 April 2013, revenue of the group would have been £17.2m, and the loss for the year would have been unchanged.

Financial statem

ents


20. Acquisition of subsidiaries during the financial year continuedEqalis Limited (“Eqalis”) On 2 December 2013 the group acquired the whole of the issued share capital of Eqalis Limited (“Eqalis”) for initial cash consideration of £1.0m and £1.2m being deferred and payable over three years in cash.

The acquisition was made to enhance the group’s data analytics capability and product offering.

The fair values and calculation of goodwill for the acquisition of Eqalis are detailed below:

Book value£’000

Fair valueadjustment

£’000Fair value

£’000

Provisional net assets acquired

Property, plant and equipment 6 — 6

Trade and other receivables 192 241 433

Intangible assets — 1,838 1,838

Cash and cash equivalents 287 — 287

Total assets 485 2,079 2,564

Trade and other payables 384 341 725

Deferred tax liability — 361 361

Total liabilities 384 702 1,086

Fair value of identifiable assets and liabilities 101 1,377 1,478

Goodwill 738

Total consideration (excluding direct costs) 2,216

Net cash outflow arising from business combination:


– contingent cash consideration payable over three years 1,215

2,216

Net cash outflow arising from business combinations:


– cash and cash equivalents acquired (287)

Net cash outflow 714

The goodwill arising on this acquisition is attributable to cross-selling opportunities that are expected to be achieved from leveraging the Big Data analytics capability of Eqalis across the group’s customer base.

Direct acquisition costs amounting to £145,000 have been written off to the consolidated statement of comprehensive income.

The fair value of the trade and other receivables amounted to £433,000, with a gross contractual amount of £433,000. As of the acquisition date, the group’s best estimate of the contracted cash flow not expected to be collected amounted to £nil.

Subsidiary tradingEqalis contributed £1.1m revenue, £0.3m EBITDA and £0.1m profit after tax during the year.

If Eqalis had been acquired on 1 April 2013, revenue of the group would have been £17.9m, and the loss for the year would have increased by £0.2m.

21. Disposal of the Webscreen IPOn 6 February 2014 Accumuli BV received US$1m (£669,000) representing release of the escrow balance following the anniversary of the disposal of the Webscreen IP to Juniper Networks.




22. GoodwillNo goodwill is expected to be deductible for tax purposes.

Goodwill is allocated to cash-generating units (“CGUs”) identified on the basis of the group’s operating segments.

A summary of the goodwill allocated is presented below:

2014£’000

2013£’000

Technology Sales 1,676 1,454

Managed and Support Services 4,246 2,914

Professional Services 3,119 3,045

9,041 7,413

The goodwill arising from these acquisitions was primarily attributable to cost synergies and cross-selling opportunities arising from the business combination.

The recoverable amount of each CGU has been determined based on value in use calculations. These calculations use pre-tax cash flow projections over the next four years which are based on: budgets for the current year submitted to the board for approval, forecast model for years 2 and 3, and cash flows for year 4 are extrapolated using the estimated growth rates per the table below. In accordance with IAS 36, the growth rates beyond the forecast model three year period do not exceed the long term average growth rate for the industry.

The key assumptions applied in the calculations were:

%

Gross margin 55

Growth rate 5

Discount rate 3

Gross margin over the next four years has been estimated based on past performance of each operating segment taking into account the anticipated changes in sales mix and future trading conditions. The sales mix takes into account estimated future revenue from current customer contracts as well as anticipated future demand from existing and potential new customers. It has been assumed that overhead costs and asset replacement will continue at the same levels. Cash flows have been derived from future earnings based on assumptions that key suppliers will be paid within the credit periods provided and that customers will continue to take the same length of time to pay as they have in the current year.

The long term growth rates are not inconsistent with those included in publicly available industry reports whilst the discount rates have been calculated based on the company’s post-tax weighted average cost of capital adjusted to a pre-tax basis and to reflect the risks specific to each service line.

The recoverable amounts of the Technology Sales, Managed and Support Services and Professional Services CGUs exceed their respective carrying amounts by £1.9m, £11.1m and £1.4m. There would need to be a substantial deterioration in the gross margin assumptions and expected level of business before the carrying amount would exceed the recoverable amount.

23. Cash flow analysis (A) Reconciliation of profit to net cash generated from operating activities

2014£’000

2013£’000

(Loss)/profit before tax from continuing operations (943) 298

Adjustments for:

– net adjustments to consideration — 219

– depreciation of property, plant and equipment and amortisation of intangibles 2,181 1,521

– share-based payment charge 208 111

– fair value adjustment on MXC option — 344

– fair value adjustments on EdgeSeven share consideration 423 —

– finance income (30) (27)

– finance costs 56 46

Operating cash flows before changes in working capital and provisions from continuing operations 1,895 2,512

Adjustments for:

– increase/(decrease) in inventories 1 (12)

– decrease/(increase) in receivables 464 (2,620)

– (decrease)/increase in payables (360) 2,011

– decrease in current provisions (100) —

Net cash generated from operating activities from continuing operations 1,900 1,891

Financial statem

ents


24. ControlIn the opinion of the directors there is no single controlling party.

25. Derivatives and financial instrumentsIt is not the group’s policy to enter into financial derivatives for speculative or trading purposes. The financial instruments employed by the group other than short term receivables and payables are used to fund its operations and comprise cash and short term deposits.

The group’s policy during the period ended 31 March 2014 was to place the majority of its cash on short term deposit with its bankers and to finance the purchase of property, plant and equipment through cash, or where deemed more appropriate the use of finance leases.

The group’s exposure to interest rate risk is not considered material.

Interest rate risk profile of financial assetsThe interest rate profile of cash and cash equivalents of the group as at 31 March 2014 is as follows:

Floating ratefinancial

assets£’000

Total£’000

2014

Sterling 2,459 2,459

2013

Sterling 6,253 6,253

2014

Currency – dollar and euro 1,170 1,170

2013

Currency – dollar and euro 975 975

Floating rate financial assets comprise cash deposits on money market deposit at call and short term treasury deposits upon which the interest rates were variable.

Trade and other receivables and financial asset investments of £4,273,000 (2013: £4,921,000) carry no interest.

Interest rate risk profile of financial liabilitiesTrade and other payables of £2,927,000 (2013: £1,862,000) carry no interest.

Credit riskThe group’s credit risk is primarily attributable to trade and other receivables. The maximum credit risk in respect of the group’s financial assets at 31 March 2014 is represented by the balance outstanding on trade and other receivables. Credit risk arises because a counterparty may fail to perform its obligations. The amounts recognised in the consolidated statement of financial position are net of appropriate allowances for doubtful receivables, estimated by the group’s management based on prior experience and their assessment of the current economic environment. Appropriate credit checks are undertaken on all potential customers before new contracts are accepted. Individual exposures are monitored with customers subject to credit limits to ensure the group’s exposure to bad debts is minimised. The group’s customers are spread across a wide range of industry and service sectors and consequently the group is not exposed to material concentrations of credit risk on its trade receivables. Given the nature of the services provided by the group there is a preponderance of “blue chip” customers, which reduces credit risk arising from counterparty risk; however it can have the effect of increasing the time taken to pay invoices.

Liquidity riskLiquidity risk represents the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation. The group actively forecasts, manages and reports its working capital requirements on a regular basis to ensure that it has sufficient funds for its operations. Significant items of capital expenditure require prior approval by the board.

Currency exposuresThe group is exposed to currency fluctuations, both in terms of its purchasing and invoicing. Its currency exposure is limited to movements between sterling and euros/dollars. It seeks wherever possible to match payments and receipts in the same currency, as this provides the most cost effective means of mitigating currency exposure. Where this is not possible then management monitors the positions being created and reacts accordingly to reduce costs and risk to the business.

Fair value of financial assets and financial liabilities The fair value, based upon the market value or discounted cash flows, of the financial instruments detailed above was not materially different from their book values.




25. Derivatives and financial instruments continuedCapital managementThe group’s main objective when managing capital is to generate returns to shareholders by investing in line with its approved investment strategy whilst safeguarding the group’s ability to continue as a going concern. The group aims to maintain a strong credit rating and headroom whilst optimising return to shareholders through an appropriate balance of debt and equity funding. The group manages its capital structure and makes adjustments to it with regard to the risks inherent in the business and in light of changes to economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may in the future issue new shares, raise additional debt finance, sell assets to reduce debt, adjust the amount of dividends paid to shareholders or return capital to shareholders.

Capital is managed by maximising retained profits subject to the group’s stated dividend policy to pay approximately 30% of group EBITDA as dividend. Working capital is managed in order to generate maximum conversion of these profits into cash and cash equivalents.

At present, with the exception of a finance lease agreement on which £28,000 is outstanding, the group does not have net debt.

Capital includes share capital, share premium reserve, merger relief reserve and retained earnings.

There were no changes to the group’s approach to capital management during the year.

26. Exemption from audit by parent guaranteeThe following group subsidiary companies are exempt, under section 479C, from the requirement of the Companies Act relating to statutory audit on the basis of a guarantee given by Accumuli plc.

Name Country of incorporation Registered number

Accumuli (Holdings) Limited England and Wales 04178768

Fujin Technology Limited England and Wales 06304398

Accumuli Security Services Limited England and Wales 04179336

Accumuli Security Technology Limited England and Wales 05375649

Accumuli Security Systems Limited England and Wales 05466582

EdgeSeven Limited England and Wales 07546075

27. Post Balance Sheet EventsOn 20 June 2014 the group acquired the whole of the issued share capital of ArmstrongAdams Limited for initial cash consideration of £2.2m with £0.8m being contingent upon post acquisition performance and payable over two years. Net cash consideration paid at completion was £nil.

Net Assets of ArmstrongAdams Limited in its most recently filed, abbreviated accounts for the year ended 31 August 2013 were £1.2m. In light of the scale of the business and the net cash consideration payable at completion the acquisition is not considered material to the results of the group or statement of financial position and therefore the full disclosures under IFRS3 have not been deemed necessary.

The acquisition was made to enhance the group’s product offering and add capability to its Sales Team.

Financial statem

ents


Notes

As at31 March

2014£’000

As at31 March

2013£’000

Fixed assets

Tangible fixed assets 2 51 89

Intangible fixed assets 3 61 —

Investment property 4 284 284

Investments 5 300 300

696 673

Current assets

Debtors 6 25,422 15,857

Cash at bank and in hand — 828

25,422 16,685

Creditors

Amounts falling due within one year 7 9,584 5,832

Net current assets 15,838 10,853

Total assets less current liabilities 16,534 11,526

Creditors

Amounts falling due after more than one year 8 — 40

Provisions for liabilitiesDeferred taxation 9 78 78

Net assets 16,456 11,408

Capital and reserves

Share capital 10 395 372

Share premium account 11 9,885 9,361

Merger relief reserve 11 4,034 2,671

Share-based payment reserve 11 286 181

Purchase of own shares 11 — (11)

EBT reserve 11 (11) —

Revaluation reserve 11 216 216

Profit and loss account 11 1,651 (1,382)

Shareholders’ funds 16,456 11,408

The company financial statements on pages 53 to 59 were approved by the board of directors and authorised for issue on 23 June 2014 and are signed on its behalf by:

Ian WinnDirector

Accumuli plc, company registration number 4178393

Company balance sheetas at 31 March 2014



Basis of accountingThe financial statements have been prepared under the historical cost convention, except that they have been modified to include the revaluation of certain fixed assets, and in accordance with applicable accounting standards.

TurnoverAccumuli plc is a holding company following an investment strategy. Accumuli plc derives its revenue from its investment strategy and through the levying of management charges to operating companies within the group. It also derives rental income from the investment property it holds.

Investments and investment propertyInvestments are stated at cost less any provision for diminution in value.

Investment properties comprise freehold and leasehold properties that are held for their investment potential. They are not depreciated but are stated at market value based on valuations by independent registered valuers, where material or applicable. Market value is based on current prices for similar properties in the same location and condition. Any gain or loss arising from a change in market value is recognised in the revaluation reserve. Rental income from investment property is recognised on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income and are recognised as income on a straight-line basis over the shorter of either the lease term or the period up to the first rent review date.

The treatment of investment properties under the Companies Act does not give a true and fair view as these assets are not held for consumption in the business but as investments, the disposal of which would not materially affect any manufacturing or trading operations of the enterprise. In such a case it is the current value of these investments, and changes in that current value, which is of prime importance. Consequently, for the proper appreciation of the financial position, the accounting treatment required by SSAP 19 is considered appropriate for investment properties.

Tangible fixed assetsTangible fixed assets are stated at historic cost less accumulated depreciation and any recognised impairment losses.

Depreciation is charged so as to write off the cost of assets to their estimated residual values over their estimated useful economic life using the straight-line method on the following basis:

Computer equipment 25%

Material residual value estimates of useful life are updated as required, but at least annually.

Intangible fixed assetsIntangible fixed assets are recognised for software, and project development costs that meet the following requirements:

� the development costs can be measured reliably;

� the project is technically feasible and commercially viable;

� the company intends to and has sufficient resources to complete the project;

� the company has the ability to use or sell the software; and

� the software will generate probable future economic benefits.

Amortisation is calculated to write off the cost of an asset, less its estimated residual value, over the useful economic life of the asset, which in this case is assessed to be 36 months (and is subject to review at least annually).

Finance lease agreementAssets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the group, and hire purchase contracts, are capitalised in the balance sheet and are depreciated over their useful lives. The capital element of future obligations under the leases and hire purchase contracts are included as liabilities in the balance sheet.

The liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of lease obligation so as to achieve a constant rate of interest on the balance of the liability. Finance charges are charged directly against income.

Company accounting policiesfor the year ended 31 March 2014

Financial statem

ents


Deferred taxationDeferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the group’s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

Financial instrumentsFinancial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Employee benefit trustThe company operates an employee benefit trust, Accumuli plc Employee Benefit Trust (“EBT”), and has de facto control of any shares held by the trust and bears their benefits and risks. The company records certain assets and liabilities of the trust as its own. Any assets held by the EBT cease to be recognised on the company balance sheet when the assets vest unconditionally in identified beneficiaries. The costs of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares held increase equity. Neither the purchase nor the sale of own shares leads to a gain or loss being recognised in the profit or loss account. The distribution of shares to employees is at the discretion of the directors. At 31 March 2014 there were 100,000 shares held by the EBT (2013: nil).

Share-based paymentsThe company has applied the requirements of FRS 20 “Share-based Payments”.

The company issues equity-settled share-based awards to its employees. Equity-settled share-based awards are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based awards is expensed on a straight-line basis over the vesting period, based on the company’s estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model. The expected life used in the model is based upon exercise restrictions and expected volatility is based upon historical volatility over the expected life of the scheme.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

The company also has a cash-settled plan in place. The company measures the services acquired and the liability incurred at the fair value of the liability at each reporting date, any changes in fair value recognised in profit or loss for the period. The fair value is measured by the use of a Monte Carlo simulation.

Other investmentsOther investments comprise of the equity investment in an unlisted business, which has no publicly quoted price. In accordance with SI2008.410, the investment is being carried at the director’s assessment of market value. The value has been determined as a result of an existing strategic investor in the unlisted business increasing its shareholding through the purchase of shares from all remaining shareholders in October 2011. The gain recognised as a result of this valuation has been credited to the revaluation reserve within equity. Any subsequent gain or loss arising from a change in value is recognised in the revaluation reserve. Dividend income from the investment is recognised in the period in which the company becomes legally entitled to receive it and a dividend of £30,000 was received during the financial year.



1. Profit/(loss) attributable to members of the parent companyThe profit dealt with in the accounts of the parent company was £3,524,000 (2013: loss £462,000).

2. Tangible fixed assets

Computerequipment

£’000

Cost at 1 April 2013 123

Additions —

Cost at 31 March 2014 123

Depreciation at 1 April 2013 34

Charge for the year 38


Net book value

At 31 March 2014 51

At 31 March 2013 89

The assets detailed above are all held under finance leases; the leases are secured against these assets.

3. Intangible fixed assets

Developmentcosts£’000

Cost at 1 April 2013 —

Additions 66

Cost at 31 March 2014 66

Depreciation at 1 April 2013 —

Charge for the year 5


Net book value

At 31 March 2014 61

At 31 March 2013 —

4. Investment property

Investmentproperty

£’000

Valuation

At 1 April 2013 284


At 31 March 2014 284

Investment property comprises a leasehold property owned on 999-year leases granted in 1989. The fair value of the group’s investment property at 31 March 2014 has been arrived at by considering the option to purchase price contained within the lease with its tenant which reflects market yields and conditions. The valuation gives rise to no change (2013: no change) in the fair value of the property at £284,000 as at 31 March 2014.

Notes to the company financial statementsfor the year ended 31 March 2014

Financial statem

ents


5. Investments

Subsidiaryundertakings

£’000

Otherinvestments

£’000

Cost and net bank value

At 1 April 2013 — 300

Revaluation during the year — —

At 31 March 2014 — 300

The company’s other investments relate to shares in an unlisted business, which has no publicly quoted price. An existing investor in the business increased its shareholding through the purchase of shares from all remaining shareholders in October 2011. This allowed a fair value to be determined for the investment at that time and this was reflected through a revaluation. There has been no new information received during the year which would lead to a revision of the carrying value. A final dividend of £30,000 was received in April 2013.

Shares in subsidiary undertakings are stated at cost. Accumuli plc directly owns all the following subsidiaries:

NameCountry of

incorporation Activity

Holding ofordinary

shares

Subsidiaries

Accumuli (Holdings) Limited England and Wales Sub-holding company 100%

Accumuli Debenture Limited England and Wales Dormant 100%

Accumuli Europe Limited England and Wales Dormant 100%

Accumuli Managed Services Limited England and Wales Dormant 100%

Accumuli Employee Benefit Trust Jersey Holding of shares on behalf of employees 100%

The following companies are subsidiaries of Accumuli (Holdings) Limited:

NameCountry of

incorporation Activity

Holding ofordinary

shares

Accumuli Security Limited (formerly Accumuli Security Networks Limited) England and Wales IT infrastructure solutions 100%

Fujin Technology Limited England and Wales Sub-holding company 100%

Accumuli Security Technology Limited England and Wales Security systems integrator 100%

Accumuli Security Services Limited England and Wales Security services 100%

Accumuli Security Systems Limited (formerly Webscreen Systems Limited) England and Wales Distributed denial of service protection 100%

EdgeSeven Limited England and Wales SIEM consultancy and product sale 100%

Signify Solutions Limited England and Wales Managed service IT Security 100%

Eqalis Limited England and Wales Data analytics 100%

6. Debtors

2014£’000

2013£’000

Trade debtors 9 1

Amounts owed by group undertakings 25,234 15,632

Prepayments and accrued income 29 6

VAT recoverable 54 44

Deferred taxation (note 9) 96 174

25,422 15,857

Included in amounts owed by group undertakings are £23,115,000 (2013: £13,548,000) which are not expected to be recovered in less than one year.



7. Creditors: amounts falling due within one yearCurrent

2014£’000

2013£’000

Trade creditors 71 257

Bank overdraft and short term borrowings 1,251 —

Finance lease 28 44

Amounts owed to group undertakings 8,175 5,368

Other taxation and social security 13 12

Other creditors 6 —

Accruals and deferred income 40 151

9,584 5,832

8. Creditors: amounts falling due after more than one year

2014£’000

2013£’000

Finance lease — 40

9. Provisions for liabilities

2014£’000

2013£’000

Deferred taxation (18) 78

The movement in deferred taxation during the period was:

2014£’000

2013£’000

Provision brought forward (96) (121)

Credited to the profit and loss account 78 25

Provision carried forward (18) (96)

2014£’000

2013£’000

Excess of taxation allowances over depreciation on all fixed assets 2 2

Timing differences on investments 76 76

Trading losses (96) (174)

(18) (96)

Deferred tax has been calculated at a rate of 21% (2013: 23%). The company has unrelieved tax losses amounting to £450,000 (2013: £734,000) which the directors believe will be recoverable in the foreseeable future against management charges levied against group companies.

10. Share capital

2014£’000

2013£’000

Allotted, called up and fully paid

158,115,921 (2013: 148,595,089) ordinary shares of 0.25p each 395 372

Details of share options can be found on pages 46 and 47.

During the year the company issued 9,420,832 shares (2013: 7,435,898). The total consideration received was £1,910,000 (2013: £483,000). 6,770,832 shares were issued to satisfy the deferred consideration on EdgeSeven; the difference between the nominal value of these shares and the share price at date of issue has been credited to the merger reserve.

Notes to the company financial statements continuedfor the year ended 31 March 2014

Financial statem

ents


11. Shareholders’ funds

Sharecapital£’000

Sharepremium

reserve£’000

Share-based

paymentreserve

£’000

Mergerrelief

reserve£’000

Profitand lossaccount

£’000

Revaluationreserve

£’000

Treasury shares£’000

EBTreserve

£’000

Totalshareholder

funds£’000

Balance brought forward 372 9,361 181 2,671 (1,382) 216 (11) — 11,408

Issue of shares (net of expenses) 23 524 — 1,363 — — — — 1,910

Share-based payment — — 208 — — — — — 208

Profit for the financial year — — — — 3,524 — — — 3,524

Exercise of options — — (103) — 103 — — — —

Transfer of shares to EBT — — — — — — 11 (11) —

Dividend paid — — — — (594) — — — (594)

Balance carried forward 395 9,885 286 4,034 1,651 216 — (11) 16,456

The company has taken advantage of section 408 of the Companies Act 2006 not to publish its own profit and loss account.

The revaluation reserve relates to the unrealised gain on revaluing the other investments.

12. Related party transactionsCompany transactions with related parties are as follows:

2014 2013

Salesto

£’000

Purchasesfrom

£’000


£’000

Tradepayables

balance at31 March

£’000

Salesto

£’000

Purchasesfrom

£’000


£’000

Tradepayables

balance at31 March

£’000

Acorn Capital Partners Limited — 28 — 8 — 20 — 8

Camwood Limited — — — — 3 — — —

G R Norfolk, a non-executive director of the company, is also a director of Acorn Capital Partners Limited (the company that receives the director’s fees payable for his services) and Camwood Limited which previously leased one of the company’s properties.

The following options are held directly or indirectly by directors:

Director VestedShare

options heldExercise

price

G R Norfolk* Yes 503,000 15.00p

N Kingsbury Vests December 2014 400,000 9.00p

S Duckworth DL Vests June 2014 300,000 9.88p

G A P Lyons Yes 1,000,000 12.50p

G A P Lyons Vests December 2015 200,000 15.12p

I D Winn Yes 500,000 9.00p

I D Winn Yes 500,000 12.50p

I D Winn Yes 50,000 49.00p

Total 3,453,000

* Beneficial interest in 251,500 share options.

During the financial year I D Winn exercised the following options:

� 400,000 options at 7.13 pence; and

� 50,000 options at 12.5 pence.

The company has taken advantage of the exemptions in “IFRS 8 Related Party Transactions” and has not disclosed transactions with wholly owned subsidiary undertakings.



Notice is hereby given to the shareholders of Accumuli plc (the “company”) that the annual general meeting of the company will be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN on 24 September 2014 at 11.00 am for the following purposes:

Ordinary businessTo consider and, if thought fit, pass the following resolutions, each of which will be proposed as an ordinary resolution:

1. to receive and consider the company’s annual accounts for the financial period ended 31 March 2014, including the directors’ report, the directors’ remuneration report and the independent auditors’ report;

2. to re-appoint Grant Thornton UK LLP as auditors of the company to hold office from the conclusion of the meeting until the conclusion of the next general meeting at which accounts are laid before the company;

3. to authorise the directors to fix the remuneration of the auditors;

4. to re-elect Ian D Winn, who retires by rotation pursuant to article 32.1 of the articles of association of the company and who, being eligible, offers himself for re-election as a director of the company;

5. to declare a final dividend of 0.46 pence per ordinary share in respect of the year ended 31 March 2014; and

6. THAT, in accordance with section 551 of the Companies Act 2006 (the “2006 Act”) the directors of the company be and are generally and unconditionally authorised to allot:

6.1 Relevant Securities (as defined in the notes to this resolution):

6.1.1 up to a maximum nominal amount of £19,000 (in pursuance of the exercise of outstanding options granted by the company prior to the date hereof but for no other purpose); and

6.1.2 up to an aggregate nominal amount of £132,000 (in addition to the authority conferred in sub-paragraph 6.1.1 above) representing approximately one third of the company’s issued share capital,

provided that these authorities, unless duly renewed, varied or revoked by the company, will expire on the date being fifteen months from the date of the passing of this resolution or, if earlier, the conclusion of the next annual general meeting of the company to be held after the passing of this resolution, save that the company may, before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted after such expiry and the directors may allot Relevant Securities in pursuance of such an offer or agreement notwithstanding that the authority conferred by this resolution has expired.

This authority is subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any applicable regulatory body or stock exchange.

This resolution revokes and replaces all unexercised powers previously granted to the directors to allot Relevant Securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.

Special businessTo consider and, if thought fit, pass the following resolutions, each of which will be proposed as a special resolution:

7. THAT, conditional on the passing of resolution 6, the directors be given the general power to allot equity securities (as defined in section 560 of the 2006 Act) pursuant to the authority conferred by resolution 6 as if section 561(1) of the 2006 Act did not apply to any such allotment, provided that this power shall be limited to:

7.1 the allotment of equity securities in connection with an offer by way of a rights issue:

7.1.1 to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and

7.1.2 to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary;

7.2 the allotment (otherwise than pursuant to sub-paragraph 7.1 above) of equity securities on the exercise of options granted by the company prior to the date hereof; and

7.3 the allotment (otherwise than pursuant to sub-paragraphs 7.1 and 7.2 above) of equity securities up to an aggregate nominal amount of £40,000 (representing approximately 10%. of the company’s issued share capital),

provided that the power granted by this resolution will expire on the date being 15 months from the date of the passing of this resolution or, if earlier, the conclusion of the next annual general meeting of the company to be held after the passing of this resolution (unless renewed, varied or revoked by the company prior to or on such date), save that the company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such an offer or agreement notwithstanding that the authority conferred by this resolution has expired.

This authority is subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any applicable regulatory body or stock exchange.

Notice of annual general meeting

Financial statem

ents


Special business continued This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if section 561(1)

of the 2006 Act did not apply but without prejudice to any allotment of equity securities already made, offered or agreed to be made pursuant to such authorities.

8. THAT the company be, and is hereby, generally and unconditionally authorised for the purposes of sections 693 and 701 of the 2006 Act to make one or more market purchases (within the meaning of section 693(4) of the 2006 Act) of ordinary shares of 0.25p each in the capital of the company on such terms and in such manner as the directors shall determine, provided that:

8.1 the maximum aggregate number of ordinary shares that may be purchased is 7,900,000 ordinary shares (representing approximately 5% of the issued share capital of the company as at 23 June 2014;

8.2 the minimum price (excluding expenses) which may be paid for each ordinary share is 0.25p;

8.3 the maximum price (excluding expenses) which may be paid for each ordinary share is an amount equal to 105% of the average of the closing middle market price for an ordinary share as derived from the AIM appendix to the London Stock Exchange’s Daily Official List for the five business days immediately prior to the day the purchase is made;

8.4 this authority shall expire on the conclusion of the next annual general meeting of the company unless previously revoked, varied or renewed; and

8.5 the company may, before the expiry of the authority granted by this resolution, enter into a contract to purchase ordinary shares which will or may be executed wholly or partly after the expiry of such authority, and may make a purchase of ordinary shares pursuant to any such contract as if such authority had not expired.

By order of the board

Ian Winn Registered OfficeDirector Tuscany House23 June 2014 White Hart Lane Basingstoke RG21 4AF



Explanatory notesResolutions 6.1 and 7.31. On 23 June 2014, the total number of options to subscribe for ordinary shares in the company amounted to 7,475,317. This represented

4.7% of the company’s issued ordinary share capital on that date. If this authority to purchase shares was exercised in full the options would represent 4.5% of the issued ordinary share capital (excluding treasury shares) as at 23 June 2014. The company does not have any outstanding share warrants.

Resolution 82. The company’s articles of association provide that the company may from time to time purchase its own shares subject to statutory

requirements. Such purchases must be authorised by the shareholders at a general meeting.

3. This resolution seeks authority for the company to make market purchases of its own ordinary shares and is proposed as a special resolution. If passed, the resolution gives authority for the company to purchase up to 7,900,000 of its ordinary shares, representing approximately 5% of the company’s issued ordinary share capital as at 23 June 2014.

4. The resolution specifies the minimum and maximum prices which may be paid for any ordinary shares purchased under this authority. The authority will expire on the conclusion of the next annual general meeting of the company unless previously revoked, varied or renewed.

5. Although the directors do not currently have any intention of exercising the authority granted by this resolution, they consider that it is in the best interests of the company and its shareholders to keep the ability to make market purchases of the company’s own shares in appropriate circumstances, without the cost and delay of a general meeting. The directors will only exercise the authority to purchase ordinary shares where they consider that such purchases will be in the best interests of shareholders generally and will result in an increase in earnings per ordinary share.

6. The company may either cancel any shares it purchases under this authority or transfer them into treasury (and subsequently sell or transfer them out of treasury or cancel them).

Entitlement to attend and vote7. Only those members registered on the company’s register of members at:

� 11.00 am on 22 September 2014; or

� if this meeting is adjourned, at 11.00 am on the day two days prior to the adjourned meeting,

shall be entitled to attend and vote at the meeting.

Appointment of proxies8. If you are a member of the company at the time set out in note 7 above, you are entitled to appoint a proxy to exercise all or any of your rights

to attend, speak and vote at the meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.

9. A proxy does not need to be a member of the company but must attend the meeting to represent you. Details of how to appoint the chairman of the meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the meeting you will need to appoint your own choice of proxy (not the chairman) and give your instructions directly to them.

10. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to more than one share. To appoint more than one proxy please refer to the notes on the proxy form.

Appointment of proxy using hard copy proxy form11. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using

the proxy form, the form must be:

� completed and signed;

� sent or delivered to SLC Registrars Limited, Thames House, Portsmouth Road, Esher, Surrey KT10 9AD; and

� received by SLC Registrars Limited, Thames House, Portsmouth Road, Esher, Surrey KT10 9AD no later than 11.00 am on 22 September 2014.

12. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.

13. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form.

Appointment of proxy by joint members14. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most

senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the company’s register of members in respect of the joint holding (the first-named being the most senior).

Notice of annual general meeting continued

Financial statem

ents


Explanatory notes continuedChanging proxy instructions15. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for

receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.

16. Where you have appointed a proxy using the hard copy proxy form and would like to change the instructions using another hard copy proxy form, please contact SLC Registrars Limited, Thames House, Portsmouth Road, Esher, Surrey KT10 9AD.

17. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

Termination of proxy appointments18. In order to revoke a proxy instruction you will need to inform the company by sending a signed hard copy notice clearly stating your intention

to revoke your proxy appointment to SLC Registrars Limited, Thames House, Portsmouth Road, Esher, Surrey KT10 9AD.

19. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.

20. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.

21. The revocation notice must be received by SLC Registrars Limited, Thames House, Portsmouth Road, Esher, Surrey KT10 9AD no later than 11.00 am on 22 September 2014.

22. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.

23. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.

Documents on display24. The following documents will be available for inspection at the registered office of the company on any weekday (excluding public holidays)

during normal office hours from the date of this notice until the time of the meeting and for at least 15 minutes prior to the meeting and during the meeting:

� copies of the service contracts of the executive directors of the company; and

� copies of the letters of appointment of the non-executive directors of the company.

Relevant Securities25. “Relevant Securities” means shares in the company other than shares allotted pursuant to:

� an employee share scheme (as defined in section 1166 of the 2006 Act);

� a right to subscribe for shares in the company where the grant of the right itself constituted a Relevant Security;

� a right to convert securities into shares in the company where the grant of the right itself constituted a Relevant Security; or

� any right to subscribe for or convert any security into shares in the company other than rights to subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined in section 1166 of the 2006 Act). References to the allotment of Relevant Securities in the resolution include the grant of such rights.



Corporate information

DirectorsNick Kingsbury Non-executive chairman

Gavin LyonsChief executive

Ian David Winn ACAFinance director

Graham Richard Norfolk ACANon-executive director

Simon Duckworth DLNon-executive director

Company secretary Ian David Winn ACA

Registered officeTuscany House White Hart Lane Basingstoke RG21 4AF

Principal place of businessTuscany House White Hart Lane Basingstoke RG21 4AF

Endeavour House Vision Park Histon Cambridge CB24 9ZR

5 Beaconsfield Court Garforth Leeds LS25 1QH

Company registration number4178393

Nominated advisor and brokerfinnCap Limited60 New Broad Street London EC2M 1JJ

M&A advisorsMXC Capital Advisory LLP15 Buckingham Gate London SW1E 6LB

Solicitors to the companyDAC Beachcroft LLP100 Fetter Lane London EC4A 1BN

AuditorsGrant Thornton UK LLP4 Hardman Square Manchester M3 3EB

Principal bankersHSBC70 Pall Mall London SW1Y 5EZ

RegistrarsSLC RegistrarsThames House Portsmouth Road Esher Surrey KT10 9AD

Accum

uli plc A

nnual repo

rt and acco

unts 2014

Accumuli plcTuscany House White Hart Lane Basingstoke RG21 4AF

Tel: 0845 678 8450

Email: [email protected]

Accumuli plc - Annual report and accounts 2014

Documents

Transcript of Accumuli plc - Annual report and accounts 2014