Annual Results for the Year Ended 31 December 2016
25 April 2017
SigmaRoc plc
('SigmaRoc' or the 'Company')
Annual Results for the Year Ended 31 December 2016
SigmaRoc, which was established to pursue a buy-and-build strategy in construction materials markets, is pleased to announce its results for the year ended 31 December 2016. These results pre-date the acquisition of Ronez Limited ('Ronez'), SigmaRoc's first acquisition completed in January 2017. In addition, the Company announces that its Annual General Meeting ('AGM') will be held at the Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE on 17 May 2017 at 4 p.m. Copies of the Company's Annual Report and Financial Statements, together with the Notice of AGM, will be posted to shareholders today and will shortly be available to view and download on the Company's website at www.sigmaroc.com.
Strategic Highlights
· Change of company name to SigmaRoc plc and approval of new investment strategy
· SigmaRoc raises £50m in December 2016 to fund Ronez acquisition
· Acquistion of Ronez for £45m, with the transaction completing on 5 January 2017
· Ronez 2016 revenue of £24.4m, EBITDA of £4.9m and profit before tax of £3.1m
· Creation of SigmaGsy Limited in April 2017, a subsidiary dedicated to bulk shipping around the British Isles and northern Europe
· Q1 performance to 31 March 2017, which includes Ronez Ltd, has been strong with EBITDA 12% higher for Q1 compared to Q1 in the prior year
David Barrett, Chairman of SigmaRoc, said: "We are delighted to have successfully acquired Ronez, and have been further encouraged by progress in the first quarter of this year. SigmaRoc is in a strong position, underpinned by a solid cash generative AIM listed platform from which to further deliver on our buy-and-build strategy."
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.
For further information, please contact:
SigmaRoc plc +44(0)20 7129 7828
Max Vermorken
Strand Hanson Limited (Nominated and Financial Adviser) +44(0)207 409 3494
James Spinney
James Dance
Zeus Capital Limited (Joint Broker) +44(0)203 829 5000
Rob Collins
Alex Wood
Temple Bar Advisory (Public Relations Advisor) +44(0)207 002 1080
Ed Orlebar
Tom Allison
Alycia MacAskill
CHAIRMAN'S STATEMENT
I am pleased to report on our first financial year as SigmaRoc plc, following the Company's change of name and new investment strategy approved at the Company's General Meeting on 22 August 2016 (the 'GM'). At the GM, a consortium of shareholders acquired the Company's subsidiary, TeleMessage Ltd ('TeleMessage'), and a new Board was appointed with the vision to pursue a buy-and-build strategy in the construction materials sector. Approximately eight months into this new incarnation of the Company, I am delighted to advise that we are well on track with the implementation of this strategy.
The heavy construction materials industry is a highly localised industry. Transportation costs are significant and products are manufactured and consumed locally. Competition is typically fierce and solid knowledge of the local competitive environment is essential.
These realities are the drivers of our decentralised niche strategy. SigmaRoc targets quality businesses with untapped potential, run by skilled management, but lacking the freedom to operate their business as an independent localised entity. The financial markets have recognised the potential in this sector and, as a result, SigmaRoc raised an initial £500,000 and a subsequent £50 million (before expenses) to implement its new strategy.
This implementation is progressing faster than anticipated. 2016 was characterised by a very efficient reverse takeover process for the acquisition of LafargeHolcim's operations in the Channel Islands, Ronez Limited. The financials presented in this Annual Report therefore primarily relate to the costs incurred for the acquisition of the Ronez business.
Acquisition update and Outlook
The Company completed the acquisition of Ronez from LafargeHolcim, the world's largest cement maker, on 5 January 2017 for cash consideration of £45 million. Ronez is the market leader in all heavy construction materials on Jersey and Guernsey, as owner of quarries, concrete and asphalt plants on both islands.
Three months after completion of the acquisition of Ronez I am happy to report that we have made a solid start to the year. The management team and local staff have been receptive to change and shown a strong willingness to embrace the new structure. Implementation of key operational and reporting changes has progressed at a much faster pace and lower cost than expected. We are now in a good position to realise further potential from the Ronez business.
Ronez's unaudited results for 2016 reported revenue of £24.4 million, earnings before interest, taxation, depreciation & amortisation ('EBITDA') of £4.9 million and profit before tax of £3.1 million. Year-on-year the business is 12% ahead on EBITDA based on the unaudited results for the quarter ended 31 March 2017. The outlook for the year for the Ronez business is therefore very positive.
The SigmaRoc management team is now in a position to refocus its attention on the Company's buy-and-build strategy, having integrated the Ronez business. As announced on 3 April 2017, the first demonstration of this renewed focus on further expansion is the creation of SigmaGsy Limited ('SigmaGsy'), a company dedicated to specialised bulk shipping around the British Isles and the North Sea. The new subsidiary allows SigmaRoc to retain full control over its shipping requirement at competitive rates, while generating a profit through services offered in this specialised sector. This is a small but significant addition to the business and further supports our belief that a focus on niche areas of the construction materials space can generate attractive returns for our shareholders. We anticipate SigmaGsy will add in excess of £200,000 per year to operational EBITDA, starting from the second quarter of this year.
To conclude, SigmaRoc is in a strong position underpinned by a solid and cash generative business, which means that the Board and management team can now leverage their knowledge of the construction materials industry and further deliver on their buy-and-build strategy. As the year progresses we will continue to keep the market informed of our progress, to the extent possible, taking into consideration the usual confidentiality clauses and regulations that govern transactions. We believe SigmaRoc will continue to deliver value to all its stakeholders and our progress to date is a strong signal of that.
David Barrett
Executive Chairman
INCOME STATEMENT
For the year ended 31 December 2016
|
|
|
Year ended 31 December 2016 |
Year ended 31 December 2015 |
|
|
|
Note |
£ |
£ |
|
|
|
|
|
|
|
|
Revenue |
6 |
36,000 |
72,000 |
|
|
|
|
|
|
|
|
Administrative expenses |
7 |
(1,975,866) |
(78,950) |
|
|
Net finance (expense)/income |
10 |
6,473 |
11,443 |
|
|
Other net gains/(losses) |
11 |
(469,673) |
(2,018,475) |
|
|
Foreign exchange |
|
(551) |
- |
|
|
|
|
|
|
|
|
Loss before tax |
|
(2,403,617) |
(2,013,982) |
|
|
|
|
|
|
|
|
Tax expense |
12 |
(115) |
(950) |
|
|
|
|
|
|
|
|
Loss |
|
(2,403,732) |
(2,014,932) |
|
|
|
|
|
|
|
|
Basic and diluted earnings per share (pence) |
|
(1.40) |
(1.74) |
|
|
|
|
|
|
|
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
|
|
|
Year ended 31 December 2016 |
Year ended 31 December 2015 |
|
|
Note |
£ |
£ |
|
|
|
|
|
|
Loss |
|
(2,403,732) |
(2,014,932) |
|
Other comprehensive income |
|
|
|
|
Items that will or may be reclassified to profit or loss |
|
|
|
|
Currency translation differences |
|
- |
68,096 |
|
|
|
(2,403,732) |
(1,946,836) |
|
|
|
|
|
|
Total comprehensive loss |
|
(2,403,732) |
(1,946,836) |
|
|
|
|
|
STATEMENT OF FINANCIAL POSITION
As at 31 December 2016 Company number: 05204176
|
|
|
31 December 2016 |
31 December 2015 |
|
|
Note |
£ |
£ |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
13 |
4,515 |
- |
|
Investment in subsidiary undertakings |
14 |
- |
500,000 |
|
|
|
4,515 |
500,000 |
|
Current assets |
|
|
|
|
Trade and other receivables |
15 |
154,384 |
53,000 |
|
Cash and cash equivalents |
16 |
181,434 |
7,316 |
|
|
|
335,818 |
60,316 |
|
Total assets |
|
340,333 |
560,316 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
17 |
1,770,357 |
61,608 |
|
|
|
1,770,357 |
61,608 |
|
Total liabilities |
|
1,770,357 |
61,608 |
|
|
|
|
|
|
Net assets/(liabilities) |
|
(1,430,024) |
498,708 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
18 |
270,555 |
579,361 |
|
Share premium |
18 |
266,667 |
- |
|
Other reserves |
20 |
1,117,178 |
785,974 |
|
Retained earnings |
|
(3,084,424) |
(866,627) |
|
Total equity |
|
(1,430,024) |
498,708 |
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
|
|
|
Share capital |
Share premium |
Other reserves |
Retained earnings |
Total |
|
|
Note |
£ |
£ |
£ |
£ |
£ |
|
Balance as at 1 January 2015 |
|
579,361 |
- |
717,878 |
1,148,305 |
2,445,544 |
|
Loss for the year |
|
- |
- |
- |
(2,014,932) |
(2,014,932) |
|
Other comprehensive income for the year |
|
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
|
|
|
Currency translation differences |
|
- |
- |
68,096 |
- |
68,096 |
|
Total comprehensive income/(loss) for the year |
|
- |
- |
68,096 |
(2,014,932) |
(1,946,836) |
|
Balance as at 31 December 2015 |
|
579,361 |
- |
785,974 |
(866,627) |
498,708 |
|
|
|
|
|
|
|
|
|
Balance as at 1 January 2016 |
|
579,361 |
- |
785,974 |
(866,627) |
498,708 |
|
Loss for the year |
|
- |
- |
- |
(2,403,732) |
(2,403,732) |
|
Other comprehensive income for the year |
|
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
|
|
|
Currency translation differences |
|
- |
- |
(185,935) |
185,935 |
- |
|
Total comprehensive income/(loss) for the year |
|
- |
- |
(185,935) |
(2,217,797) |
(2,403,732) |
|
Proceeds from share issues |
|
208,333 |
291,667 |
- |
- |
500,000 |
|
Issue costs |
|
- |
(25,000) |
- |
- |
(25,000) |
|
TeleMessage disposal |
|
(169,522) |
- |
169,522 |
- |
- |
|
Capital re-organisation |
|
(347,617) |
- |
347,617 |
- |
- |
|
Transactions with owners, recognised directly in equity |
|
(308,806) |
266,667 |
517,139 |
- |
475,000 |
|
Balance as at 31 December 2016 |
|
270,555 |
266,667 |
1,117,178 |
(3,084,424) |
(1,430,024) |
STATEMENT OF CASH FLOWS
For the year ended 31 December 2016
|
|
|
Year ended 31 December 2016 |
Year ended 31 December 2015 |
|
|
Note |
£ |
£ |
|
Cash flows from operating activities |
|
|
|
|
Loss before taxation |
|
(2,403,617) |
(2,013,982) |
|
Adjustments for: |
|
|
|
|
Depreciation and amortisation |
|
75 |
- |
|
Impairment of investments |
|
500,000 |
2,018,475 |
|
Net finance (income)/expense |
|
(6,473) |
(11,443) |
|
Interest paid |
|
- |
- |
|
Increase in trade and other receivables |
|
(101,384) |
(14,773) |
|
Increase in trade and other payables |
|
1,708,749 |
17,687 |
|
Cash consumed by operations |
|
(302,650) |
(4,036) |
|
Income taxes paid |
|
(115) |
(950) |
|
Net cash flows from operating activities |
|
(302,765) |
(4,986) |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(4,590) |
- |
|
Finance income |
|
6,473 |
11,443 |
|
Net cash generated by investing activities |
|
1,883 |
11,443 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds from issue of share capital |
|
500,000 |
- |
|
Transaction costs of share issue |
|
(25,000) |
- |
|
Net cash used in financing activities |
|
475,000 |
- |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
174,118 |
6,457 |
|
Cash and cash equivalents at beginning of period |
|
7,316 |
859 |
|
Exchange differences on cash and cash equivalents |
|
- |
- |
|
Cash and cash equivalents and end of period |
16 |
181,434 |
7,316 |
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
The principal activity of SigmaRoc plc (the 'Company') is to make investments and/or acquire projects in the construction materials sector. The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is 47 Charles Street, London, W1J 5EL.
On 22 August 2016 at a general meeting of the Company shareholders voted in favour of changing the name of the Company from Messaging International plc to SigmaRoc plc.
2. Accounting policies
The principal accounting policies applied in the preparation of these Financial Statements are set out below ('Accounting Policies' or 'Policies'). These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparing of financial statements
The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRIC Interpretations Committee ('IFRS IC') as adopted by the European Union. The Financial Statements have also been prepared under the historical cost convention.
The Financial Statements are presented in UK Pounds Sterling rounded to the nearest pound.
The preparation of Financial Statements in conformity with IFRS's requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in Note 4.
(a) New and amended standards mandatory for the first time for the financial period beginning 1 January 2016
A number of new standards and amendments to standards and interpretations are effective for the financial period beginning on or after 1 January 2016 and have been applied in preparing these Financial Statements.
Amendments to IAS 1 Disclosure Initiative.
Amendments to IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgement in presenting their financial reports by making the following changes:
- clarification that information should not be obscured by aggregating or by providing immaterial information, materiality considerations apply the all parts of the Financial Statements, and even when a standard requires a specific disclosure, materiality considerations do apply;
- clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarification that an entity's share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss; and
- additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in paragraph 114 of IAS 1.
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation.
Amends IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets to:
- clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment;
- introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated; and
- add guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.
Amendments to IAS 27 Equity Method in Separate Financial Statements.
Amendments to IAS 27 Separate Financial Statements to permit investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements.
Amendments to IFRS 11 Accounting for Acquisitions of Interest in Joint Operations.
Amendments to IFRS 11 Joint Arrangements to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to:
- apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11; and
- disclose the information required by IFRS 3 and other IFRSs for business combinations.
The amendments apply both to the initial acquisition of an interest in a joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held interests are not re-measured).
Annual Improvements 2012-2014 Cycle.
Makes amendments to the following standards:
- IFRS 5 - Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.
- IFRS 7 - Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements.
- IAS 9 - Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.
- IAS 34 - Clarify the meaning of 'elsewhere in the interim report' and require a cross-reference.
There are no other new standards and amendments to standards and interpretations effective for the financial period beginning on or after 1 January 2016 that are material to the Company and therefore not applied in preparing these Financial Statements.
(b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Financial Statements are listed below. The Company intends to adopt these standards, if applicable, when they become effective.
|
Standard |
Impact on initial application |
Effective date |
|
IAS 7 (Amendments) |
Disclosure Initiative |
*1 January 2017 |
|
IAS 12 (Amendments) |
Recognition of Deferred Tax |
*1 January 2017 |
|
IFRS 2 (Amendments) |
Classification and Measurement of Share-based payments |
*1 January 2018 |
|
IFRS 9 |
Financial Instruments |
1 January 2018 |
|
IFRS 15 |
Revenue from Contracts with Customers |
*1 January 2018 |
|
IFRS 16 |
Leases |
*1 January 2019 |
|
|
|
|
* Subject to EU endorsement
The Company is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Company's results or shareholders' funds.
2.2. Going concern
The Financial Statements have been prepared on a going concern basis notwithstanding the loss for year of £2,403,732, net current deficit £1,434,539 and net liabilities of £1,430,024. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the Financial Statements. The Directors' assessment is supported by the following:
· the successful acquisition of Ronez Limited wherein the Company raised £50 million through the issue and allotment of 100,000,000 new ordinary shares of £0.01 each at a price of 40 pence per share raising £40 million and the issue of 10,000,000 convertible loan notes at £1 per note;
· positive cashflow projection of at least 12 months from the signing of the Financial Statements; and
· agreed terms between the Company and Santander UK plc for a £2 million credit facility and advanced discussions for a further £18 million term facility.
2.3. Segment reporting
Operating segments are reported in a manner consistent with the 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 Board of Directors that makes strategic decisions.
2.4. Foreign currencies
a) Functional and presentation currency
Items included in the Financial Statements are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Company's functional currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance income or costs'. All other foreign exchange gains and losses are presented in the income statement within 'Other net gains/(losses)'.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value, such as equities classified as available for sale, are included in other comprehensive income.
2.5. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.
Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:
|
Office equipment |
50% |
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other net gains/(losses)' in the Income Statement.
2.6. Trade receivables
Trade receivables are amounts due from third parties in the ordinary course of business. If collection is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets.
2.7. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and are subject to an insignificant risk of changes in value.
2.8. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.9. Reserves
Foreign currency translation reserve - the foreign currency translation reserve represents the effect of changes in exchange rates arising from translating the financial statements of subsidiary undertakings into the Company's presentation currency.
Capital redemption reserve - the capital redemption reserve is the amount equivalent to the nominal value of shares redeemed by the Company.
Retained earnings - the retained earnings reserve includes all current and prior periods retained profit and losses.
Deferred shares - are shares that effectively do not have any rights or entitlements.
2.10. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
2.11. Taxation
Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.12. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods or services supplied in course of ordinary business, stated net of discounts, returns and value added taxes. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the Company's activities described below.
Revenue from the sale of goods is recognised when delivery has taken place and the transfer of risks and rewards of ownership has been completed. The significant risks and rewards of products sold are transferred according to the specific delivery terms that have been formally agreed with the customer, generally upon delivery when the bill of lading is signed as evidence that they have accepted the product delivered to them.
Revenue from the provision of services is recognised as the services are rendered, in accordance with customer contractual terms.
2.13. Finance income
Interest income is recognised using the effective interest method.
3. Financial risk management
3.1. Financial risk factors
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Risk management is carried out by the UK based management team under policies approved by the Board of Directors.
a) Market risk
The Company is exposed to market risk, primarily relating to interest rate, foreign exchange and commodity prices. The Company does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. The Company has not sensitised the figures for fluctuations in interest rates, foreign exchange or commodity prices as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Company's financial operations and initiate suitable risk management measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. To manage this risk, the Group periodically assesses the financial reliability of customers and counterparties.
The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
c) Liquidity risk
The Company's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
With exception to deferred taxation, financial liabilities are all due within one year.
3.2. Capital risk management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, in order to enable the Company to continue its construction material investment activities, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the issue of shares or sell assets to reduce debts.
The Company defines capital based on the total equity of the Company. The Company monitors its level of cash resources available against future planned operational activities and may issue new shares in order to raise further funds from time to time.
4. Critical accounting estimates
The preparation of the Financial Statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce this Financial Statements.
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 circumstances.
5. Segment information
The Company operated in one geographical area for the year, being the United Kingdom.
6. Revenue
Revenue of £36,000 (31 December 2015: £72,000) relates to management services provided to TeleMessage Limited which the Company disposed of on 22 August 2016. See Note 21 for more information.
7. Expenses by nature
|
|
31 December 2016 |
31 December 2015 |
|
Administrative expenses |
£ |
£ |
|
Directors' fees |
17,870 |
16,250 |
|
Fees payable to the Company's auditors for the audit of the Company |
20,000 |
17,350 |
|
Fees payable to the Company's auditors for tax and other services |
1,000 |
- |
|
Professional & consulting fees |
561,254 |
12,551 |
|
Insurance |
9,371 |
4,454 |
|
Depreciation |
75 |
- |
|
Travel and subsistence expenses |
22,659 |
- |
|
AIM related costs including public relations |
80,387 |
27,824 |
|
Ronez acquisition transaction costs |
1,226,700 |
- |
|
Other expenses |
36,550 |
521 |
|
|
1,975,866 |
78,950 |
8. Employees
The Company had no full time employees during the year. The Directors provided professional services as required on a part-time basis. Details of Directors' remuneration are disclosed in Note 9.
9. Directors' remuneration
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Executive Directors |
|
|
|
Guy Levit (3) |
2,500 |
5,000 |
|
David Barrett (1) |
4,290 |
- |
|
Max Vermorken (1) |
4,290 |
- |
|
Non-executive Directors |
|
|
|
Dominic Traynor (1) |
4,290 |
- |
|
David Rubner (2) |
2,500 |
5,000 |
|
Irvin Fishman (2) |
- |
5,000 |
|
Geoffrey Simmonds (4) |
- |
1,250 |
|
|
17,870 |
16,250 |
(1) Appointed on 22 August 2016.
(2) Resigned on 22 August 2016.
(3) Resigned on 1 October 2016.
(4) Resigned on 27 March 2015.
No pension benefits are provided for any Director.
10. Net finance (expense)/income
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Interest on loan to TeleMessage Limited |
6,473 |
11,443 |
|
|
6,473 |
11,443 |
11. Other net gains/(losses)
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Cash received and foreign currency exchange gains relating to disposal of investment in TeleMessage Limited |
30,327 |
- |
|
Impairment of investments in subsidiaries |
(500,000) |
(2,018,475) |
|
|
(469,673) |
(2,018,475) |
12. Taxation
Only a notional income tax charge to the Income Statement arises due to the losses incurred. No deferred tax asset has been recognised on accumulated tax losses, as the recoverability of any assets is not likely in the foreseeable future.
|
|
31 December 2016 |
31 December 2015 |
|
Income tax expense |
£ |
£ |
|
Tax on loss for the year |
115 |
950 |
|
|
115 |
950 |
The tax on the Company's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Loss before tax |
(2,403,617) |
(2,013,982) |
|
Tax at the applicable rate of 20% (2015: 20%) |
(480,723) |
(402,796) |
|
Effects of: |
|
|
|
Expenditure not deductible for tax |
379,860 |
- |
|
Net tax effect of losses carried forward |
100,748 |
403,746 |
|
Tax charge |
(115) |
(950) |
13. Property, plant and equipment
|
|
Office equipment |
Total |
|
|
£ |
£ |
|
Cost |
|
|
|
As at 1 January 2015 |
- |
- |
|
As at 31 December 2015 |
- |
- |
|
Additions |
4,590 |
4,590 |
|
As at 31 December 2016 |
4,590 |
4,590 |
|
Depreciation |
|
|
|
As at 1 January 2015 |
- |
- |
|
As at 31 December 2015 |
- |
- |
|
Charge for the year |
75 |
75 |
|
As at 31 December 2016 |
- |
- |
|
Net book value |
|
|
|
As at 31 December 2015 |
- |
- |
|
As at 31 December 2016 |
4,515 |
4,515 |
14. Investment in subsidiary undertakings
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Shares in subsidiary undertakings |
|
|
|
At beginning of the year |
500,000 |
2,518,475 |
|
Impairment |
(500,000) |
(2,018,475) |
|
|
- |
500,000 |
Refer to Note 21 for information on disposal of subsidiary undertaking during the year.
15. Trade and other receivables
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Prepayments |
13,113 |
10,069 |
|
VAT receivable |
141,271 |
- |
|
Other receivables |
- |
42,931 |
|
|
154,384 |
53,000 |
16. Cash and cash equivalents
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Cash at bank and on hand |
181,434 |
7,316 |
|
|
181,434 |
7,316 |
The vast majority of the Company's cash at bank is held with private banking institutions.
17. Trade and other payables
|
|
31 December 2016 |
31 December 2015 |
|
|
£ |
£ |
|
Trade payables |
998,487 |
- |
|
Accruals |
771,870 |
18,677 |
|
Other payables |
- |
42,931 |
|
|
1,770,357 |
61,608 |
18. Share capital and share premium
|
|
Company |
|||
|
|
Number of shares |
Ordinary shares |
Share premium |
Total |
|
|
|
£ |
£ |
£ |
|
Issued and fully paid |
|
|
|
|
|
As at 1 January 2015 |
115,872,148 |
579,361 |
- |
579,361 |
|
As at 31 December 2015 |
115,872,148 |
579,361 |
- |
579,361 |
|
Capital re-organisation - 22 August 2016 |
- |
(347,617) |
- |
(347,617) |
|
TeleMessage disposal - 22 August 2016 |
(169,521,886) |
(169,522) |
- |
(169,522) |
|
Issue of new shares - 22 August 2016 (1) |
208,333,333 |
208,333 |
266,667 |
475,000 |
|
As at 31 December 2016 |
270,555,743 |
270,555 |
266,667 |
537,222 |
(1) Includes issue costs of £25,000
On 22 August 2016 at a general meeting of the Company shareholders voted in favour of:
· a share capital reorganisation to sub-divide each of the issued ordinary shares of £0.005 each into two new ordinary shares of £0.001 each and three deferred shares of £0.001 each ('Deferred Shares'); and
· the re-designation of 169,521,886 ordinary shares of £0.001 each into Deferred Shares.
On 22 August 2016 the Company raised £500,000 (gross) through the issue of 208,333,333 new ordinary shares of £0.0001 each full paid at a price of 0.24 pence each.
19. Share options
As at 31 December 2015 there were 33,161,477 share options held by employees and directors of the Company and 8,396,804 warrants exercisable between 0.63 pence and 0.91 pence each held by Mizrahi Tefahot Bank Ltd. As part of the TeleMessage disposal, all of these options and warrants were cancelled.
As at 31 December 2016 there were no options or warrants in the Company on issue. Refer to Note 23 for details of options and warrants issued after the year-end.
20. Other reserves
|
|
Company |
|||
|
|
Deferred shares |
Foreign currency translation reserve |
Capital redemption reserve |
Total |
|
|
£ |
£ |
£ |
£ |
|
As at 1 January 2015 |
- |
- |
600,039 |
- |
|
Transfer between reserves |
- |
- |
- |
- |
|
As at 31 December 2015 |
- |
185,935 |
600,039 |
785,974 |
|
Disposal of TeleMessage |
169,522 |
(185,935) |
- |
(16,413) |
|
Capital re-organisation |
347,617 |
- |
- |
347,617 |
|
As at 31 December 2016 |
517,139 |
- |
600,039 |
1,117,178 |
21. Related parties
TeleMessage disposal
On 22 August 2016 at a general meeting of the Company shareholders voted in favour of selling the entire issued share capital of TeleMessage Limited ('TeleMessage') to a consortium which included Guy Levit, Horacio Furman and David Rubner. Consideration for TeleMessage included cash of £38,400, the re-designation of 169,521,886 existing ordinary shares of £0.001 each into Deferred Shares, cancellation of all employee and director options and the cancellation of warrants to and release of certain obligations from Mizrahi Tefahot Bank Ltd.
Prior to its disposal the Company charged management fees of £36,000 (2015: £72,000) and interest of £6,473 (2015: £11,443) to TeleMessage during the year.
Other transactions
Skyeye Consulting Limited, a limited liability company of which Max Vermorken is a director, invoiced a fee of £49,150 (2015: £nil) for the provision of corporate management and consulting services to the Company. A balance of £522 was outstanding at the year-end.
Heytesbury Corporate LLP, a limited liability partnership of which Garth Palmer is a partner, invoiced a fee of £83,695 (2015: £nil) for the provision of corporate management and consulting services to the Company. A balance of £75,000, for services provided in relation to the acquisition of Ronez Limited, was outstanding at the year-end.
Ronaldsons LLP, a limited liability partnership of which Dominic Traynor is a partner, invoiced a fee of £36,100 (2015: £nil) for the provision of legal services to the Company in relation to the acquisition of Ronez Limited. A balance of £36,100 was outstanding at the year-end.
Arram Berlyn Gardner (AH) Limited, a limited liability company, invoiced a fee of £17,580 (2015: £14,167) for the services of Irvin Fishman as a director and for other professional services provided to the Company. No balance was outstanding at the year-end.
22. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
23. Events after the reporting date
On 3 January 2017 at a general meeting of the Company shareholders voted in favour of the following:
· acquisition of Ronez Limited for £45 million cash consideration;
· share consolidation whereby 104 existing ordinary shares were consolidated into 1 new ordinary share;
· the issue and allotment of 100,000,000 new ordinary shares of £0.01 each at a price of 40 pence per share raising £40 million;
· the issue of 10,000,000 convertible loan notes at £1 per note; and
· grant of the following options & warrants:
o 1,026,014 warrants exercisable at 44p and valid until 4 January 2022;
o 78,044 warrants exercisable at 25p and valid until 22 August 2021;
o 390,219 options exercisable at 25p and valid until 5 January 2022; and
o 12,183,225 options exercisable at 40p and valid until 5 January 2022.
Acquisition of Ronez Limited
Subsequent to shareholder approval noted above, on 5 January 2017 the Company entered into a sale and purchase agreement with Aggregate Industries Limited for the acquisition of the entire share capital of Ronez Limited for cash consideration of £45,181,874.
In accordance with IFRS 3 (Revised) the details of the acquisition are as follows:
|
Total consideration |
£ |
|
Cash |
45,181,874 |
|
|
45,181,874 |
|
Recognised amounts of identifiable assets acquired and liabilities assumed based on Ronez Limited balance sheet as at 5 January 2017 |
£ |
|
Non-current assets |
|
|
Property, plant & equipment |
20,509,789 |
|
Intangible assets |
1,988,060 |
|
|
22,497,849 |
|
Current assets |
|
|
Trade & other receivables |
1,935,159 |
|
Inventories |
2,025,587 |
|
Cash & cash equivalents |
267,107 |
|
Other current assets |
339,269 |
|
|
4,567,122 |
|
Current liabilities |
|
|
Trade & other payables |
1,865,212 |
|
Provisions |
631,749 |
|
|
2,496,961 |
|
|
|
|
Fair value of total net assets |
24,568,010 |
This information is provided by RNS
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