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Monchhichi plc (MCC)

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Thursday 25 January, 2018

Monchhichi plc

Interim Results & Sentiance Update

RNS Number : 9711C
Monchhichi plc
25 January 2018
 

For Immediate Release

25 January 2018

 

 

Monchhichi Plc ("Monchhichi" or the "Company")

 

Interim Results for the six months ended 30 September 2017

 

Proposed Material Shareholding Increase in Sentiance N.V

 

and

 

Cancellation from AIM

 

 

Interim Results for the six months ended 30 September 2017

 

Monchhichi today announces its unaudited interim results for the six months ended 30 September 2017. During the Period, the Company made encouraging progress with the first crucial steps of implementing its bespoke investment policy to make a series of cohesive and meaningful acquisitions with clear industry validation and disruptive growth trajectory in the Technology, Media and Internet sectors

 

Proposed Material Shareholding Increase in Sentiance N.V. ("Sentiance") and Cancellation from AIM

 

The Board is pleased to announce that alongside the closing of the primary €10.0 million equity investment in Sentiance as initially announced on 14 September 2017, it is currently in final negotiations to materially increase Monchhichi's initial 14.2% shareholding in Sentiance ("Additional Acquisition"). In order to fund the Additional Acquisition, Monchhichi is presently in the process of placing new ordinary shares in Monchhichi with international investors at a price of 50p per share. Further information will be communicated to shareholders as soon as practical regarding the Additional Acquisition.

 

The Company's shares were suspended from trading on AIM on 28 July 2017 as the initial investment would have constituted a Reverse Take-over pursuant to AIM Rule 14. Under AIM Rule 41, the Company's admission to AIM will be cancelled at 7.00 a.m. on 29 January 2018, having been suspended for six months.

 

The Company still intends to seek admission to the Standard Segment of the Official List and to trading on the Main Market and further details will be communicated via the Company's website after the date of cancellation from AIM.

 

 

 

 

 

Market Abuse Regulation

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. This announcement was approved for release by Simon Fry, Executive Chairman of the Company.

 

 

For further information:

Buchanan (Financial communications)


Richard Oldworth / Henry Harrison-Topham /

Catriona Flint

Tel: +44 (0)20 7466 5000

www.buchanan.uk.com

[email protected]


 

Enquiries:

Panmure Gordon (Nominated Adviser and Broker)

Tel: +44 (0)20 7886 2500

Dominic Morley / Alina Vaskina



 

Chairman's Statement

 

During the first six months of our 2017/18 financial period we made encouraging progress with the first crucial steps of implementing our bespoke investment and acquisition policy. 

 

On 22 September 2017 we announced that we had reached agreement on our first Conviction Investment ("CI") in Sentiance, a leading and proven private technology player in the exciting field of artificial intelligence ("AI"), machine learning and behavioural data science.  Sentiance is an outstanding unquoted technology business operating in the areas of artificial intelligence ("AI"), machine learning and signal processing to interpret real-time and behavioural context from sensor data.  Sentiance already has an impressive roster of Tier I global clients in a variety of vertical market segments, as well as tactical industry partnerships and shareholders.  Its proprietary technology and distinct data science capabilities are presently being tested and deployed into various mainstream mass market data ecosystems.

 

The Sentiance platform uses machine learning algorithms and deep learning techniques to analyse Internet of Things ("IoT") sensor data from mobile phones, wearables and IoT gateways.  It thereafter turns data into behavioural and contextual insights:

 

Understanding and predicting how people go through their everyday lives with full user consent; 

Clients use platform to enrich their first-party client data with real-life behavioural data.  This in turn will deliver context-aware and highly personalised experiences; 

Powers a broad range of applications including world class telematics and driver scoring, personalised health coaching real-time client engagement as well as smart home products and services;

Some of the world's most innovative companies are adopting their platform through Sentiance to help them make their users' lives safer, smarter, healthier, more cost effective and even more convenient.

 

Crucially and as part of our conviction thesis I am happy to inform shareholders that:

 

1.    Sentiance is already benefiting from our international network and behind the scenes support;

2.    Sentiance is operating in the sweet-spot of data analytics, an area that we believe in years to come is going to be crucial for product and service differentiation, improved consumer engagement and response, sustainable higher conversion and retention rates leading to materially better returns.  The Company is confident that Sentiance with the right support, conviction and of course a bit of luck, will emerge and be known by 2020 as one of the global market leaders in its field;      

3.    In the future, we can provide swift liquidity options to Sentiance investors without this leading to management distractions;

4.    For more information please visit www.sentiance.com and do sign up for their regular news broadcasts.

 

I am delighted that we announced today that, prior to formal admission to the Standard List of the Main Market, we plan to materially increase our initial 14.2% shareholding in Sentiance.  This is not only a reflection of our complete confidence in Sentiance, it is also validated by our growing number of high quality long term value focused international investors who want us to act decisively with their full support.  Further details will be provided in the prospectus which we anticipate will be sent to shareholders during February 2018.

 

Organisation Development

 

One of our internal objectives was to attract the right calibre of people to successfully implement and execute our ambitious plans.  As part of this we announced on 10 November 2017 that three additional Board appointments will become effective upon completion of the upcoming General Meeting:

 

Henry Gordon (44) as Executive Director and Chief Operating Officer.  Henry has 20 years of equity markets experience with a deep understanding of capital raising and management in both the public and private arena and previously worked at Goldman Sachs in Australia and Credit Suisse in London before returning to Asia as CEO of BTIG in Singapore.  Henry was most recently MD Equity Sales and Trading at Macquarie Bank Hong Kong.

 

Henry joined Monchhichi in a fulltime capacity in December 2017 and his instant contribution, terrific energy and total dedication combined with a huge dose of positive curiosity to learn and personally deliver 24/7 bodes well for his future contribution.

 

Johnny Chan (58) as Non-Executive Director.  Johnny has 30 years of extensive Asia based experience in venture capital and equity capital markets combined with major senior public service positions in education and technology across the region.  His current roles include President and Executive Director of HK Venture Capital & Private Equity Association and Non-Executive Director of CNQC International Holdings. 

 

Gerald Rossi (67) as Senior Non-Executive Director.  Jerry has over 40 years of executive experience in the TMT sector.  His initial experience included various posts with NYNEX (Verizon) in the US and abroad followed by his appointment as CEO of PT Excelcomindo Pratama ("XL"), one of the largest South East Asia mobile network operators.  He held this position until the company was sold to Telekom Malaysia in January 2005.

 

I very much look forward to be working closely with my new colleagues during 2018 and beyond.

 

As we recently announced, this financial period will be shortened to 31 December 2017 and thus contain only nine months of statutory accounts.  We anticipate the audited accounts being published by the end of February 2018 and our AGM taking place during the second half of March 2018.

 

 

 

 

Conclusion

 

I am pleased with the considerable progress we have been able to make in a very short period of time.  Monchhichi is now a real organisation with proper long-term growth oriented shareholders and more than equal odds to deliver progressively positive results for its stakeholders.  We believe that our Sentiance investment will prove to be an outstanding gem and thus a fitting starting point to what promises to be an intensive and ultimately transformative period ahead.

 

 

Simon Fry

Executive Chairman

25 January 2018


 


Note

6 months ended

30 September 2017

Unaudited

6 months ended

30 September 2016

Unaudited



£

£

Revenue


100,000

-

Expenses




     General and administrative expenses


(571,397)

(207,578)

     Exceptional items

4

(468,406)

-





Loss from Operations


(939,803)

(207,578)









Loss for the period before taxation


(939,803)

(207,578)

     Taxation


-

-





Loss for the period attributable to equity holders


(939,803)

(207,578)

     Other comprehensive income


-

-





Total comprehensive loss for the period


(939,803)

(207,578)









Loss per Ordinary share




     Basic - continuing and total operations


(0.02)

(0.01)

     Diluted - continuing and total operations


(0.02)

(0.01)

     Headline loss per Ordinary share




     Basic - pre exceptional items


(0.01)

(0.01)

     Diluted - pre exceptional items


(0.01)

(0.01)

 


 


Note

As at

30 September 2017

Unaudited

As at

30 September 2016

Unaudited

As at

31 March

2017

Audited



£

£

£

Non-current assets





     Available for sale financial assets

5

600,000

300,000

600,000

    


600,000

300,000

600,000






Current assets





      Cash and cash equivalents


3,235,788

1,073,389

1,237,716

      Trade and other receivables


68,042

20,359

49,339

      Total current assets


3,303,830

1,093,748

1,287,055

     





TOTAL ASSETS


3,903,830

1,393,748

1,887,055






LIABILITIES AND EQUITY





     Current liabilities





     Trade and other payables


102,859

254,916

138,208

     Total liabilities


102,859

254,916

138,208






Equity





     Share capital

6

45,007

590,028

42,452

     Shares to be issued


1,992,427

-

-

     Share premium


996,945

4,510,939

-

     Warrant reserve


-

20,122

-

     Accumulated surplus/(deficit)


766,592

(3,982,257)

1,706,395

     Total equity


3,800,971

1,138,832

1,748,847






TOTAL EQUITY AND LIABILITIES


3,903,830

1,393,748

1,887,055

 

 

Approved by the Board on 25 January 2018

 

 

 

 

F.W. Simonsen

Finance Director

 

 

Company registration 07951073

 


 


6 months ended

30 September 2017

Unaudited

6 months ended

30 September 2016

Unaudited


£

£

Cash flow from operating activities



     Loss for the period before tax

(939,803)

(207,578)

     Adjustments for:



     Shares issued for services rendered

492,000

-

     Warrants issued for consulting services

-

3,000

     (Increase)/ decrease in trade and other receivables

(18,703)

411,750

     (Decrease) in trade and other payables

(35,349)

(11,194)




Cash (used in)/ generated by operations

(501,855)

195,978




Cash flow from investing activities



     Proceeds on allotment of shares

1,992,427

284,713

     Issue of shares

507,500

-




Net cash generated from investing activities

2,499,927

284,713




Increase in cash and cash equivalents

1,998,072

480,691

Cash and cash equivalents at the beginning of the period

1,237,716

592,698




Cash and cash equivalents at the end of the period

3,235,788

1,073,389

 


 


Share

capital

Share premium

Shares to be issued

Warrant reserve

Retained earnings

Total


£

£

£

£

£

£

As at 31 March 2016 (Audited)

577,928

4,255,448

-

-

(3,774,679)

1,058,697

    Shares issued on

    private placement

12,100

273,278

-

17,122

-

302,500

    Warrants issued for

    consulting services

-

-

-

3,000

-

3,000

    Share issue costs

-

(17,787)

-

-

-

(17,787)

    Total comprehensive

    loss for the period

-

-

-

-

(207,578)

(207,578)








As at 30 September 2016 (Unaudited)

590,028

4,510,939

-

20,122

(3,982,257)

1,138,832

 

 


Share

capital

Share premium

Shares to be issued

Warrant reserve

Retained earnings

Total


£

£

£

£

£

£

As at 31 March 2017 (Audited)

42,452

-

-

-

1,706,395

1,748,847

    Shares issued on 

    private placement

1,450

506,050

-

-

-

507,500

    Shares issued in lieu

    of fees, expenses

    and financial

    commitments

1,105

490,895

-

-

-

492,000

    Shares to be issued  

    on private

    placement

-

-

1,992,427

-

-

1,992,427

    Total comprehensive

    loss for the period

-

-

-

-

(939,803)

(939,803)








As at 30 September 2017 (Unaudited)

45,007

996,945

1,992,427

-

766,592

3,800,971

 


 

1.    BASIS OF PRESENTATION

 

Basis of presentation and statement of compliance

 

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 March 2017. These interim financial statements were authorised for issue by the Company's Board of Directors on 25 January 2018.

 

Basis of consolidation

 

The Group financial statements include the financial statements of the Company and its subsidiary undertaking Mercom Capital Canada Inc., a company incorporated in Canada. The results of subsidiary undertakings sold or acquired are included in the Consolidated Statement of Comprehensive Income up to, or from the date control passes. Intra group sales and profits are eliminated fully on consolidation. This subsidiary is currently in the process of being wound up by the Directors.

 

Functional currency

 

The presentational and functional currency of the Group and Company is U.K Sterling.

 

Significant accounting estimates and judgments

 

The preparation of these financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgments and estimates. The financial statements include judgments and estimates which, by their nature, are uncertain. The impacts of such judgments and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognised in the period in which the estimate is revised and the revision affects both current and future periods.

 

Significant assumptions about the future and other sources of judgments and estimates that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

 

·     The accounting treatment of the available for sale financial assets;

·     The valuation of available for sale financial assets; and

·     The judgment that significant influence is not exercised by the Group over its investments.

 


 

Going concern

 

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assume that the Company will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company has no current source of recurring operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity or debt financing. There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realise on its assets and discharge its liabilities in the normal course of business, the net realisable value of its assets may be materially less than the amounts recorded in the Consolidated Statement of Financial Position. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

 

 

 

2.    SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2017.

 

 

 

3.    CAPITAL AND FINANCIAL RISK MANAGEMENT

 

The capital of the Group consists of shareholders' equity. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for other stakeholders.

 

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents.

 

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group's approach to capital management during the period ended 30 September 2017. The Group is not subject to externally imposed capital requirements.

 

Credit risk

All the Group's cash and cash equivalents are held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Group's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. Cash and cash equivalents at the period end include £2,411,394 which was held by the Company's legal advisors.

 

 

 

Commodity price risk

The Group is currently in its development stage and as such exposure to fluctuations in commodity prices is not actively managed.

 

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Group does not have a material exposure to this risk as there are no outstanding debt facilities.

 

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they come due. The Group ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Group's reputation.

The Group utilises authorisation for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources.

 

Foreign currency risk

The Group has limited exposure to foreign currency fluctuations on its cash which is denominated in U.K. Sterling.

 

 

 

4.    EXCEPTIONAL ITEMS

 


6 months ended

30 September 2017

Unaudited

6 months ended

30 September 2016

Unaudited


£

£

Professional costs re: Investment in Sentiance, capital raising and intended move to the Standard UK list of the Main Market

400,000

-

Provision for potential VAT repayment relating to period prior to appointment of new Board

57,218

-

Other legal and professional fees

11,188

-





468,406

-

 

 

 

5.    INVESTMENTS

 

a)    Available for sale financial assets

 

Cost

£

At 1 April 2017

1,368,632

Additions

-

30 September 2017

1,368,632

 

 

 

 

Impairment

£

At 1 April 2017

768,632

Impairment in period

-

At 30 September 2017

768,632

 

 

Net book value

£

At 1 April 2017

600,000

At 30 September 2017

600,000

 

The Company has agreed to dispose of the investments in Viet Energy Ltd and MOWISAT Mexico SAPI for a total cash consideration of £600,000. The initial £100,000 of the consideration was received during the period, is non refundable and has therefore been recognised as income in the period.

 

b)    Investment in subsidiary undertaking

 

The Company has a 100% shareholding in Mercom Oil Sands Canada Inc, a dormant company incorporated in Canada which is in the process of being wound up.

 

 

 

6.    SHARE CAPITAL

 

a)    Shares authorised

 

On 16 July 2014 the Company consolidated its share capital so that every 50 Ordinary shares of £0.001 in the issued share capital of the Company was consolidated into one Ordinary share of £0.05 (New Ordinary share). Each New Ordinary share would have the same rights and would be subject to the same restrictions as an Ordinary share. Following the consolidation, the New Ordinary shares were sub divided into one Ordinary share of £0.001 and one Deferred share of £0.049.

 

On 24 January 2017 the Company purchased and cancelled the 11,238,797 Deferred shares.

 

On 1 March 2017 the Company cancelled the capital redemption reserve and share premium account by Special Resolution, as confirmed by an Order of the High Court of Justice, Chancery Division.

 

b)    Ordinary shares issued

 

Called up, allotted and fully paid:

 


30 September 2017

31 March 2017


£

£

45,007,063 (31 March 2017: 42,452,063) Ordinary shares of £0.001

45,007

42,452

 

 

 

 

During the period 1,450,000 Ordinary shares were issued at 35p per share raising £507,500.

 

On 8 June 2017, 1,000,000 Ordinary shares were issued at 45p in respect of £450,000 of outstanding liabilities and financial commitments. On the same date 60,000 Ordinary shares were issued to the Company's former Company Secretary and 45,000 Ordinary shares in aggregate were issued to the Company's Directors at 40p per share in respect of their remuneration for the quarter up to 31 March 2017.

 

On 22 September 2017, it was announced that adjusted terms had been agreed on the Investment Warrants originally issued on 8 June 2017 which would result in the issue of 25,333,333 shares at 37.5p per share to raise £9.5m. At the period end £1,992,427 of cash had been received from subscribers in advance of issuing the underlying shares and this amount has been shown as a "shares to be issued" reserve at 30 September 2017.

 

c)    Share options

 

On 31 December 2016 the Board adopted the Directors and Senior Management Option Scheme. The initial exercise price under the Scheme was set at 35p per share, representing a premium of 19.7% to the closing mid market price of 29.25p per share on 30 December 2016. There was a subsequent grant made on 29 March 2017 with an exercise price under the Scheme at 80p per share, representing a premium on 139% to the closing mid market price of 33.5p per share on 28 March 2017.

 



Number of options granted



31 Dec 2016

29 March 2017

JP Tranié

Non-executive Director

2,000,000

-

F Simonsen

Finance Director

2,000,000

-

S Fry

Chairman

-

2,000,000

 

The options granted on 31 December 2016 and 29 March 2017 are exercisable at 35p per share and 80p per share respectively. The options of S. Fry and F. Simonsen vest over a three year period with 40% at the end of the first year, a further 30% at the end of the second year and the final 30% at the end of the third year. In the case of JP Tranié's options 1,250,000 shares vested on 30 September 2017 with 375,000 shares vesting on 31 March 2019 and a further 375,000 on 31 March 2020. The blended average price per outstanding option is 55.3p per share.

 

The maximum number of options that can be granted under this scheme is set at 10 million. It is the stated objective of the new Board that their interests will be strongly aligned with shareholders, being well rewarded only in the event of significant shareholder value creation in the medium to long term.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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