13th Apr 2018 07:00
ACHP plc
13 April 2018
ACHP plc
2017 Audited Full Year Results
ACHP plc (the "Company" or "ACHP") today announces audited results for the year ended 31 December 2017.
The Company is listed on the AIM market and owns 33% of the voting shares and 30% of the economic rights in Asta Capital Limited ("Asta"), one of the best performing service providers in the Lloyd's market. After the period end date, the Company repaid most of its borrowings and now has only £1.6 million of debt remaining.
The Company was formerly known as Pro Global Insurance Solutions plc and was renamed ACHP plc on 30 June 2017. On 22 December 2016, the Company announced that it had conditionally agreed to sell the shares in its subsidiaries operating its outsourcing and consulting business to Pro Global Holdings Limited. Following the approval of shareholders and receipt of all required regulatory approvals, the sale was completed on 30 June 2017. The final consideration was £7.0 million comprising an initial headline consideration of £8.3 million less £1.3 million contractual closing adjustments. £6.6 million from the funds received were used to fully repay the loan from Natixis on 3 July 2017.
Enquiries:
Tim Carroll, Chairman, ACHP plc | 020 7068 8123 |
James Britton, Peel Hunt LLP (nominated adviser and broker) | 020 7418 8900 |
STRATEGIC REPORT
The Directors present their Strategic Report for ACHP plc ("the Company") for the year ended 31 December 2017. Principal activity and review of business The Company is listed on the AIM market and owns 33% of the voting shares and 30% of the economic rights in Asta Capital Limited ("Asta"), Asta is one of the best performing third party managing agency service providers in the Lloyd's market. The Company was formerly known as Pro Global Insurance Solutions plc and was renamed ACHP plc on 30 June 2017. On 22 December 2016, the Company announced that it had conditionally agreed to sell the shares in its subsidiaries operating its outsourcing and consulting business to Pro Global Holdings Limited. Following the approval of shareholders and receipt of all required regulatory approvals, the sale was completed on 30 June 2017. The final consideration was £7.0 million comprising an initial headline consideration of £8.3 million less £1.3 million contractual closing adjustments. £6.6 million from the funds received were used to fully repay the loan from Natixis on 3 July 2017. Change in accounting framework Following the sale of the Company's subsidiaries, the Company is no longer required to prepare consolidated group accounts and therefore the financial information presented in the accounts as at 31 December 2017 and the comparative information for 2016 relates to ACHP plc as a single company. Previously the financial statements were prepared in accordance with International Accounting Standards ("IAS"). This year the Directors voluntarily elected to apply United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice "UK GAAP") including FRS 102, as the Directors are of the opinion that these accounting standards present the financial performance and position of the Company in the most meaningful way. Development and financial performance during the year The principal key performance indicators for the Company are: • Changes in the valuation of the investment in Asta; • Results of operating activities during the period comprising dividends received from the investment in Asta less expenses incurred in operating the Company; • Changes in cash and cash equivalents; and • Changes in borrowings. Operating loss from operations before finance costs for the year to 31 December 2017 was £(0.3) million (2016: £(1.3) million) and finance costs comprising interest payable on borrowings were £(0.3) million (2016: £(0.5) million). The loss recognised in these financial statements from the sale of the Company's subsidiaries was £(0.5) million (2016: £(2.1) million) comprising agreed adjustments to the sale's price and other costs relating to the sale. Total loss for the period was £(1.2) million (2016: £(3.3) million). The proceeds from the sale of subsidiaries and the redemption of the preference shares held in Asta have enabled the Company to reduce its borrowings from £9.0 million to £1.6 million. As a consequence of the transactions listed above, cash and cash equivalents have increased by £0.3 million to £0.4 million. Financial position at the reporting date The investment in Asta is valued at the end of 2017 at £18.0 million compared to £19.6 million, being the restated balance at the end of 2016 due to the change in accounting framework. This change of £1.6 million is primarily due to the redemption of the preference shares held in Asta Borrowings from the Company's bank and parent company have reduced to £1.6 million; cash held has increased to £0.4 million; other net current assets have increased to £0.7 million. Net assets are £17.0 million compared to £17.7 million as at the end of 2016. |
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017
| 31 Dec 2017 | 31 Dec 2016 | |||
Notes | £000's | £000's | |||
Income from investment in associated undertaking | 4 | 822 | 208 | ||
Administrative expenses | (1,167) | (1,476) | |||
Results of operating activities | (345) | (1,268) | |||
Loss on disposal/impairment of subsidiary undertakings | 3 | (525) | (2,072) | ||
Interest payable and similar expenses | 5 | (299) | (511) | ||
Loss on ordinary activities before taxation | 6 | (1,169) | (3,851) | ||
Taxation | 10 | - | 543 | ||
Loss for the year | (1,169) | (3,308) |
Earnings per share | 11 | ||||
Basic: Ordinary shares (pence per share) | (1.01) | (2.91) | |||
Diluted: Ordinary shares (pence per share) | (1.01) | (2.91) |
STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
31 Dec 2017 | 31 Dec 2016 | ||||
Notes | £000's | £000's | |||
Fixed assets | |||||
Investment in subsidiary undertakings | 3 | - | 8,300 | ||
Investment in associated undertaking | 12 | 17,964 | 19,621 | ||
17,964 | 27,921 | ||||
Current assets | |||||
Debtors - amounts falling due within one year | 13 | 467 | 75 | ||
Cash and cash equivalents | 396 | 83 | |||
863 | 158 | ||||
Current liabilities | |||||
Creditors - amounts falling due within one year | 14 | (148) | (3,886) | ||
Net current assets | 715 | (3,728) | |||
Total assets less current liabilities | 18,679 | 24,193 | |||
Creditors - amounts falling due after one year | 14 | (1,645) | (6,511) | ||
Net assets | 17,034 | 17,682 | |||
Capital and reserves | |||||
Called up share capital | 15 | 2,362 | 2,280 | ||
Revaluation reserve | 14,376 | 14,376 | |||
Other reserves | 256 | 3,072 | |||
Profit and loss account | 40 | (2,046) | |||
Total shareholders' funds | 17,034 | 17,682 |
The financial statements of ACHP plc (Company number: 4200676) were approved by the Board of Directors and authorised for issue on 9 April 2018 and were signed on its behalf on 12 April 2018 by:
Gilles Erulin
Chief Executive Officer
STATEMENT OF CHANGES IN EQUITY
As at 31 December 2017
Other reserves | ||||||||||||
Called up share capital | Reval-uation reserve | Share based payments ("SBP") reserve | Capital redemp-tion reserve | Total other res-erves | Profit and loss account | Total | ||||||
£000's | £000's | £000's | £000's | £000's | £000's | £000's | ||||||
Balance at 1 January 2016, as previously stated | 2,264 | - | 2,691 | 256 | 2,947 | (1,683) | 3,528 | |||||
Changes on transition to FRS 102 | - | 14,376 | - | - | - | 2,945 | 17,321 | |||||
Loss for the year | - | - | - | - | - | (3,308) | (3,308) | |||||
Total comprehensive losses for the year | - | - | - | - | - | (3,308) | (3,308) | |||||
Issue of share capital | 16 | - | - | - | - | 16 | ||||||
Credit to equity for equity settled SBP | - | - | 125 | - | 125 | - | 125 | |||||
Balance at 31 December 2016 | 2,280 | 14,376 | 2,816 | 256 | 3,072 | (2,046) | 17,682 | |||||
Balance at 1 January 2017 (restated) | 2,280 | 14,376 | 2,816 | 256 | 3,072 | (2,046) | 17,682 | |||||
Loss for the year | - | - | - | - | - | (1,169) | (1,169) | |||||
Total comprehensive losses for the year | - | - | - | - | - | (1,169) | (1,169) | |||||
Issue of share capital | 82 | - | (45) | - | (45) | - | 37 | |||||
Credit to equity for equity settled SBP | - | - | 484 | - | 484 | - | 484 | |||||
Transfer of lapsed and issued equity settled SBP | - | - | (3,255) | - | (3,255) | 3,255 | - | |||||
Balance at 31 December 2017 | 2,362 | 14,376 | - | 256 | 256 | 40 | 17,034 |
Share-based payments reserve: The Company operated share schemes providing for the grant of awards over ordinary shares. Awards were recorded in this reserve.
Capital redemption reserve: The nominal value of share capital cancelled is recorded in this reserve.
The profit and loss account reserve represents cumulative profits or losses, net of dividends paid and other adjustments.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2017
31 Dec 2017 | 31 Dec 2016 | ||||
Note | £000's | £000's | |||
Net cash from operating activities | 16 | (730) | (994) | ||
Taxation received | - | 543 | |||
Net cash used in operating activities | (730) | (451) | |||
Cash flow from investing activities | |||||
Disposal of subsidiary undertakings | 6,963 | - | |||
Purchase of further shares in associate undertaking | (643) | - | |||
Receipts from redemption of associated undertakings preference shares | 2,300 | 1,700 | |||
Dividends received from associated undertaking | 822 | 208 | |||
Net cash generated from investing activities | 9,442 | 1,908 | |||
Cash flow from financing activities | |||||
Proceeds on issue of shares | 37 | 16 | |||
Repayment of borrowings | (8,130) | (1,175) | |||
Interest paid | (304) | (511) | |||
Net cash used in financing activities | (8,397) | (1,670) | |||
Net increase in cash and cash equivalents | 315 | (213) | |||
Cash and cash equivalents at the beginning of the year | 83 | 296 | |||
Exchange gains on cash and cash equivalents | (2) | - | |||
Cash and cash equivalents at the end of the year | 396 | 83 |
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
Significant accounting policies
The principal accounting policies are summarised below. The accounting policies have all been applied consistently throughout the year and the preceding year in dealing with items which are considered material in relation to the Company's financial statements. General information and basis of accounting ACHP plc is a Company incorporated in the United Kingdom under the Companies Act. The address of the registered office is given on page 4. The nature of the Company's operations and its principal activities are set out in the Strategic Report on page 1. The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and are in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice "UK GAAP"), Financial Reporting Standard (FRS 102) issued by the Financial Reporting Council. In 2016 the Company presented, in its consolidated financial statements, results from the sale of subsidiary undertakings as discontinued operations. In 2017 the Company is only presenting standalone Company financial statements, and as a holding company, the holding, and subsequent sale, of investments is considered part of its normal operations. As such the loss on sale of subsidiary undertakings has been presented within continuing operations in the Company only financial statements. The prior year's financial statements were prepared in accordance with International Accounting Standards (IAS). The Directors voluntarily changed the accounting framework to United Kingdom Accounting Standards UK GAAP in the current year. The prior year financial statements were restated for material adjustments on adoption of FRS 102 in the current year. For more information see note 21. ACHP plc meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its financial statements. Exemptions have been taken in relation to financial instruments and remuneration of key management personnel. Segment reporting As the Company currently has no identified reportable segments no segmental analysis has been prepared. Going concern The Company's activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The Strategic Report also details: the financial position of the Company; its cash flows and liquidity position. In addition, the section on principal risks and uncertainties includes an analysis of the risks the Company faces and its policies for mitigating those risks. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the annual report and accounts. There are no subsequent events to suggest any going concern issues. Foreign currencies The Company's functional currency is pound sterling, as this is the currency of the primary economic environment in which the entity operates. The financial statements are presented in pound sterling and rounded to the nearest thousand. Transactions in foreign currencies are initially recorded using the rates of exchange ruling at the date the transaction occurs. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the income statement. Monetary assets and liabilities denominated in foreign currencies at the period end date are translated using the rates of exchange prevailing at the period end date. Any gains or losses arising on translation are included in the income statement. Revenue recognition Dividend income Dividend income from investments is recognised when the shareholders' rights to receive payment have been established. Dividend income is shown as investment return in the income statement. |
Employee benefits Share-based payments The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of its original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share-based payment reserve. Fair value is measured by use of two stochastic valuation models, namely the Monte Carlo method and the Black-Scholes valuation model. The expected life used in the models has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restriction, and behavioural considerations. Taxation Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted by the period end date. The charge for taxation is based on the profit for the period and takes into account deferred taxation. Deferred taxation is provided in full on timing differences between recognition of gains and losses in the financial statements and the recognition for taxation purposes. Deferred taxation liabilities are provided in relation to transactions that have occurred by the period end date. Deferred taxation assets are recognised when it is considered that the benefit is more likely than not to accrue to the Company. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and tax laws that have been enacted or substantively enacted by the period end date. Deferred tax is measured on a non-discounted basis. Investment in subsidiary undertakings Investments in subsidiary undertakings were stated at cost less, where appropriate, provisions for impairment. Investment in associated undertakings Investment in associated undertakings are initially recognised at the transaction price, including transaction costs. The Company has elected to subsequently account for its investment in associated undertakings at fair value, with changes in fair value recognised in other comprehensive income. Fair value measurement The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique. Financial instruments Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. The Company has chosen to apply the provisions of both Section 11 and Section 12, of FRS 102, in full to account for all of its financial instruments. Financial assets and liabilities Basic financial assets, include loans and receivables and cash and cash equivalents. Basic financial liabilities, include borrowings and other liabilities. Financial assets and liabilities are initially measured at the transaction price including transaction costs, unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the transaction is measured at the present value of the future receipts / payments discounted at a market rate of interest for a similar debt instrument. |
Financial assets and liabilities that are due within one year Financial assets and liabilities which meet the conditions of basic financial instruments that are classified as payable or receivable within one year on initial recognition are subsequently measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment. Any losses arising from impairment are recognised in the income statement in administrative expenses.
Financial assets and liabilities that are due after one year Financial assets and liabilities which meet the conditions of basic financial instruments that are classified as payable or receivable after one year on initial recognition are subsequently measured at amortised cost using the effective interest method. As the Company revises its estimates of payments or receipts, the carrying amount of these financial assets or financial liabilities is adjusted to reflect actual and revised estimated cash flows. The Company recalculates the carrying amount by computing the present value of estimated future cash flows at the financial instrument's original effective interest rate. The resulting adjustment is recognised as income or expense in the income statement at the date of the revision. Derecognition of financial assets and liabilities Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party. Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires. Impairment of assets Assets are assessed for indicators of impairment at each period end date. If there is objective evidence of impairment, an impairment loss is recognised in the income statement as described below. Financial assets
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date. Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event, and it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date that is the amount that the entity would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party. |
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Valuation of investment in associated undertaking
Determining the fair value of the Company's investment in its associated undertaking requires estimation. As the investment is not quoted in an active market and the price of a recent transaction for an identical asset is unavailable; the Company is required to estimate the fair value by means of a valuation technique. The valuation technique is to estimate what the transaction price would have been on the measurement date in an arm's length exchange motivated by normal business considerations.
The valuation applies judgement and makes assumptions when determining what maintainable annual profits are reasonably expected to be should the associated undertaking operate at its current size and capacity, without making any allowances for risk or growth.
Judgement and assumptions are similarly made when deciding what multiples to apply to the maintainable profits. The multiples should reflect the combination of the growth prospects of the business and the inherent risks of the industry as a whole and the Company in particular. The Company's applied multiples were agreed by the Directors and reflect Asta's risk and growth prospects.
.
Sale of subsidiary undertakings
The Company announced the sale of all its subsidiary undertakings to Pro Global Holdings Limited on 22 December 2016. Following regulatory approval, the sale completed on 30 June 2017. Details of the subsidiary undertakings wholly disposed of are below:
Subsidiary undertakings disposed | Portion of ownership held and disposed | ||
C.I.R.A.S Limited | 100.00% | ||
Chiltington Holdings Limited * | 100.00% | ||
Chiltington Internacional S.A de CV | 85.00% | ||
Chiltington International Holding GmbH * | 100.00% | ||
Chiltington International Inc | 100.00% | ||
Chiltington International Limited | 100.00% | ||
Hermes People Limited | 100.00% | ||
P.I.R Holder S.L. (formerly Chiltington Internacional S.L.) | 100.00% | ||
Pro Claims Solutions GMBH | 100.00% | ||
PRO Insurance Solutions Limited * | 100.00% | ||
Pro Insurance Solutions S.A. (formerly Chiltington Internacional S.A.) | 98.00% | ||
Pro Insurance Solutions GmbH | 100.00% | ||
PRO IS, Inc * | 100.00% | ||
Pro US Holdings, Inc * | 100.00% | ||
Professional Resources Limited | 100.00% | ||
Professional Resources SA | 85.00% | ||
STRIPE Global Services Limited * | 100.00% | ||
Tasca Consulting Limited | 100.00% |
* Held directly by ACHP plc
The assets disposed of and the related sale proceeds were as follows:
| 30 Jun 2017 | ||
£000's | |||
Investment in subsidiary undertakings disposed | 8,300 | ||
Loss on disposal of operations | (1,337) | ||
Sale proceeds | 6,963 | ||
Satisfied by: | |||
Cash and cash equivalents | 6,963 |
The consideration was settled in cash by the purchaser on 30 June 2017. The loss on disposal/impairment of subsidiary undertakings is:
| 31 Dec 2017 | 31 Dec 2016 | |
£000's | £000's | ||
Impairment of investment in subsidiary undertakings | - | (2,072) | |
Loss on disposal of operations | (1,337) | - | |
Intercompany write-backs and costs directly related to the sale | 812 | - | |
Loss on disposal/impairment of subsidiary undertakings | (525) | (2,072) |
Income from investment in associated undertaking
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Ordinary share dividends received from associated undertaking | 714 | - | |||
Preference share dividends received from associated undertaking | 108 | 208 | |||
Total income from interest in associated undertaking | 822 | 208 |
Interest payable and similar expenses
31 Dec 2017 | 31 Dec 2016 | ||||
£000's | £000's | ||||
Interest payable on bank borrowings | (164) | (379) | |||
Interest payable on other borrowings | (91) | (108) | |||
Commitment fee payable on other borrowings | (44) | (24) | |||
Total finance costs | (299) | (511) |
Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after charging/(crediting):
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Net foreign exchange losses | (153) | (265) | |||
Share-based payments | (484) | (125) |
Auditor's remuneration
An analysis of auditor's remuneration is as follows:
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Fees payable to the Company's auditor for the audit of the Company's annual accounts | 30 | 40 | |||
Fees payable to the Company's auditor for audit related assurance services | 22 | 20 | |||
Total auditor's remuneration | 52 | 60 | |||
There were no non-audit services provided to the Company.
Staff numbers and costs
The average monthly number of employees including Executive Directors was:
31 Dec 2017 | 31 Dec 2016 | ||||
Executive and management | 1.4 | 6.0 | |||
Other | - | - | |||
Average number of employees | 1.4 | 6.0 |
Their aggregate remuneration comprised:
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Salaries | 548 | 254 | |||
Social security costs | 10 | 64 | |||
Pension costs | - | - | |||
Redundancy payments | 206 | - | |||
Total employees' remuneration | 764 | 318 |
Included in salaries is a share-based payments expense of £484k (2016: £125k) which arose from transactions accounted for as equity settled share-based payment transactions.
Directors' remuneration and transactions
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Directors' remuneration: | |||||
Emoluments | 150 | 544 | |||
Company contributions to pension schemes | - | 34 | |||
Share-based payments | 365 | 75 | |||
515 | 653 |
Two Directors were awarded shares during the year (2016: one). Two Directors exercised share options during the year (2016: none).
Retirement benefits are accruing to no Directors under the Company's defined contribution pension scheme (2016: two).
31 Dec 2017 | 31 Dec 2016 | ||||
£000's | £000's | ||||
Remuneration of the highest paid Director: | |||||
Emoluments | 62 | 487 | |||
Company contributions to pension schemes | - | 34 | |||
62 | 521 |
The highest paid Director did not exercise any share options during the year and also received no shares under the Company's share schemes.
Taxation
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Current taxation on loss on ordinary activities: | |||||
UK Corporation tax on loss for the year | - | - | |||
Group relief surrendered at non-standard rates | - | 543 | |||
Total taxation | - | 543 | |||
Loss for the year | (1,169) | (3,851) | |||
Taxation at standard UK corporation tax rate of 19.25% (2016: 20%) | 225 | 770 | |||
Effects of: | |||||
(Income)/expenses not taxable/deductible for tax purposes | 386 | (450) | |||
Effect of unutilised losses | (611) | (83) | |||
Group relief recoverable at non-standard rates | - | (237) | |||
Group relief surrendered at non-standard rates | - | 543 | |||
UK Corporation tax on loss for the year | - | 543 |
Effective 1 April 2017 the UK corporation tax rate reduced from 20% to 19%. A further reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted in March 2016, and has therefore been considered when calculating deferred tax at the reporting date. Deferred tax balances at the reporting date are measured at 17% (2016: 17%).
There is an unrecognised deferred tax asset of £589k (2016: £3,324k) in respect of accumulated losses that has not been recognised, as it is not certain that the Company will be able to realise this asset by generating sufficient future taxable profits.
Earnings per share
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Earnings | |||||
Earnings for the purposes of basic earnings per share being net loss attributable to equity holders of the Company | (1,169) | (3,308) | |||
31 Dec 2017 | 31 Dec 2016 | ||||
Number of shares | |||||
Weighted average number of Ordinary Shares for the purposes of basic earnings per share | 115,906,970 | 113,637,418 | |||
Effect of dilutive potential Ordinary Shares: Share options | - | - | |||
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share | 115,906,970 | 113,637,418 | |||
31 Dec 2017 | 31 Dec 2016 | ||||
Basic earnings per share | UK pence | UK pence | |||
Basic: Ordinary Shares (pence per share) | (1.01) | (2.91) | |||
Diluted: Ordinary Shares (pence per share) | (1.01) | (2.91) |
Investment in associated undertaking
The Company has a 30% interest in Asta Capital Limited ("Asta"), a private company incorporated in Great Britain. The Company owns 300 £1 ordinary shares and 1,064 1p B shares (2016: 300 £1 ordinary shares and 2,299,700 £1 preference shares). Asta is a leading turnkey managing services company in Lloyds.
The Company previously accounted for its investment at cost, less any provisions for impairment. When the Company transitioned to FRS 102, it elected to value its investment at fair value through other comprehensive income, as explained in accounting policy note 1i.
| 31 Dec 2017 | 31 Dec 2016 | |||||||
Carrying value | Cost | Carrying value | Cost | ||||||
£000's | £000's | £000's | £000's | ||||||
Balance at 1 January, as previously stated | 19,621 | 2,300 | 4,000 | 4,000 | |||||
Change on transition to FRS 102 | - | - | 17,321 | - | |||||
Balance at 1 January, (restated) | 19,621 | 2,300 | 21,321 | 4,000 | |||||
1,064 1p B shares acquired | 643 | 643 | - | - | |||||
Redemption of preference shares | (2,300) | (2,300) | (1,700) | (1,700) | |||||
Balance at 31 December | 17,964 | 643 | 19,621 | 2,300 |
Asta's shares are not traded in an active market, and there is no quoted market price available. An independent valuation was carried out on 30 November 2016 which valued the Company's equity investment at £17,321k. For the purpose of these financial statements, this was taken as the value at 31 December 2016 and 31 December 2017.
The valuation was prepared on an earnings basis by applying multiples to adjusted maintainable earnings before interest tax, depreciation and amortisation ("EBITDA"). This basis was chosen as Asta has a history of making profits. The maintainable EBITDA is the sustainable profit figure which could reasonably be expected to be produced annually by Asta operating at its current size and capacity, without any allowances for risk or growth. The multiples used were agreed by the Directors and reflect Asta's risk and growth prospects.
On 2 August 2017 Asta redeemed its remaining preference shares realising £2,300k.
Debtors
| 31 Dec 2017 | 31 Dec 2016 | ||||||
Due within one year | Due after one year | Total | Due within one year | Due after one year | Total | |||
£000's | £000's | £000's | £000's | £000's | £000's | |||
Due from: parent company | 75 | - | 75 | 75 | - | 75 | ||
Due from: related parties | 338 | - | 338 | - | - | - | ||
Other debtors | 54 | - | 54 | - | - | - | ||
Total debtors | 467 | - | 467 | 75 | - | 75 |
Creditors
| 31 Dec 2017 | 31 Dec 2016 | ||||||
Due within one year | Due after one year | Total | Due within one year | Due after one year | Total | |||
£000's | £000's | £000's | £000's | £000's | £000's | |||
Bank borrowings | - | - | - | (2,828) | (2,944) | (5,772) | ||
Other borrowings due to: parent company | - | (1,645) | (1,645) | - | (3,220) | (3,220) | ||
Interest on borrowings | (4) | - | (4) | (388) | (347) | (735) | ||
Other liabilities and provisions | ||||||||
Due to: group undertakings | - | - | - | (275) | - | (275) | ||
Due to: related parties | (97) | - | (97) | - | - | - | ||
Accruals | (47) | - | (47) | (395) | - | (395) | ||
Total creditors | (148) | (1,645) | (1,793) | (3,886) | (6,511) | (10,397) |
Bank borrowings - The Company had a secured loan facility with Natixis Bank which was secured by the Company's investment in Asta. The rate of interest for the loan was 6 month LIBOR plus a margin of 4.5%. On 3 July 2017, this facility was fully repaid (2016: balance £6,432k).
Other borrowings - At 31 December 2017, an €8 million facility was in place for an unsecured revolving facility with the Company's ultimate parent company, Financière Pinault. With effect from 31 March 2018, the capacity of this facility was reduced to €1.9 million. The rate of interest for the loan is 3.5% per annum above LIBOR and the facility's final maturity date is 30 September 2019. On 31 August 2017, €1,981k of the outstanding balance was repaid. At 31 December 2017 the balance payable including interest was £1,649k (2016: £3,295k).
Called up share capital
| 31 Dec 2017 | 31 Dec 2016 | ||||
Number | £000's | Number | £000's | |||
Allotted and fully paid ordinary shares of £0.02 | ||||||
Balance at 1 January | 113,977,782 | 2,280 | 113,977,782 | 2,280 | ||
Settlement of share-based payments | 4,146,066 | 82 | - | - | ||
Balance at 31 December | 118,123,848 | 2,362 | 113,977,782 | 2,280 |
The Company has one class of ordinary shares which carry no right to fixed income.
On 11 July 2017 and 6 November 2017 the Company issued 4,018,566 £0.02 ordinary shares and 127,500 £0.02 ordinary shares respectively, relating to shares vesting under certain award schemes. There are no ongoing share based payment arrangements.
Net cash from operating activities
| 31 Dec 2017 | 31 Dec 2016 | |||
£000's | £000's | ||||
Loss for the year | (1,169) | (3,308) | |||
Adjustments for: | |||||
Taxation | - | (543) | |||
Finance costs | 299 | 511 | |||
Income from investment in associated undertaking | (822) | (208) | |||
Effect of foreign exchange rate changes | 50 | 133 | |||
Loss on disposal/impairment of subsidiary undertakings | 1,337 | 2,072 | |||
Share-based payment charge | 484 | 125 | |||
Operating cash flow before movements in working capital | 179 | (1,218) | |||
(Increase)/decrease in debtors | (392) | 2,675 | |||
Decrease in creditors | (517) | (2,451) | |||
Net cash from operating activities | (730) | (994) |
Contingent liabilities
At 31 December 2017, the Company did not have any material contingent liabilities.
Subsequent events
There are no significant non-adjusting events after the end of the reporting period.
Share-based payments
Until 30 June 2017 the Company operated various share schemes designed to align the interests of senior management, staff and shareholders to deliver outstanding results.
A written resolution, that all outstanding share awards were to vest on completion of the sale of the Company's subsidiaries, was passed on 22 June 2017. The sale completed on 30 June 2017 and the resolution was effected on that date. All the outstanding share awards were therefore exercised on 30 June 2017. Following this the Company is not intending to issue any new shares under any scheme.
Details of the shares outstanding are as follows:
| 31 Dec 2017 | 31 Dec 2016 | ||
Number of share awards | Number of share awards | |||
Outstanding at the beginning of the year | 4,593,366 | 5,927,100 | ||
Granted during the year | 1,225,000 | 2,041,666 | ||
Modifications made during the year | (1,672,300) | - | ||
Exercised during the year | (4,146,066) | (793,300) | ||
Lapsed during the year | - | (2,582,100) | ||
Outstanding at the end of the year | - | 4,593,366 |
No share options were exercisable at the end of the year (2016: £nil).
The Company recognised total expenses of £484k (2016: £125k) related to share based payments in 2017:
| 31 Dec 2017 | 31 Dec 2016 | ||
£000's | £000's | |||
Recognised in administrative expenses | (156) | 125 | ||
Recognised in loss on disposal of subsidiary undertakings | (328) | - | ||
Total share-based payment expense | (484) | 125 |
For the 1,225,000 options that were granted on 1 June 2017, and exercised on 30 June 2017. The share price on date of grant, being 14 pence per share, was used to determine their fair value.
Related party transactions
The following have been identified as related parties to the Company for the periods presented:
• Subsidiary undertakings;
• Associate undertaking Asta Capital Limited and its subsidiaries ("Asta");
• A company subject to common control, Tawa Associates Limited;
• Directors of the Company;
• Key management personnel: and
• Parent company and ultimate controlling party.
Subsidiary undertakings
FRS 102 paragraph 33.1A exempts disclosure of transactions entered into between members of the same group, provided that the subsidiary undertakings party to the transactions are wholly owned by the Company. Therefore, transactions and balances between the Company and wholly owned subsidiary undertakings are not disclosed in this note.
Associated undertaking
During the year to 31 December 2017 the Company received dividends of £822k (2016: £208k) from Asta and its preference shares were redeemed for £2,300k (2016: £1,700k).
Company subject to common control
During the year to 31 December 2017 the Company was charged a management fee of £97k (2016: £nil) by Tawa Associates Limited. At 31 December 2017 the Company owed Tawa Associates Limited £97k (2016: £nil).
Directors of the Company
Directors' remuneration is fully disclosed in note 9.
Key management personnel
The Company has taken advantage of the FRS 102 paragraph 1.12(e) disclosure exemption available to it in respect of remuneration to key management personnel.
Parent company and ultimate controlling party
The ultimate parent company is Financière Pinault S.C.A., a Société en commandite simple incorporated in France. The parent undertaking of the largest group which includes the Company and for which group accounts are prepared is Financière Pinault S.C.A., a company incorporated in France. Copies of the group financial statements of Financière Pinault S.C.A. may be obtained from the Tribunal de Commerce de Paris, 1 Quai de Corse, 75004, Paris, France.
During the year to 31 December 2017 Financière Pinault S.C.A. charged the Company fees and interest of £135k (2016: £70k being £145k fees and interest less a credit note of £75k). As at 31 December 2017 the Company owed Financière Pinault S.C.A. £1,649k (2016: £3,295k), full details are disclosed in note 14. As at 31 December 2017 the Company was due £75k (2016: 75k) from Financière Pinault S.C.A., full details are disclosed in note 13.
Transition to Financial Reporting Standard 102 ("FRS 102")
The Directors have voluntarily elected to apply United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice "UK GAAP") including FRS 102 as the Directors are of the opinion that these accounting standards present the financial performance and position of the Company in the most meaningful and accessible way.
This is the first year the Company has presented its financial statements using Financial Reporting Standard 102 (FRS 102) as issued by the Financial Reporting Council. The financial statements were prepared in accordance with International Accounting Standards ("IAS") for the year ended 31 December 2016. The date of transition to FRS 102 is therefore 1 January 2016. As a consequence of adopting FRS 102, a number of accounting policies have changed to comply with that standard. The only change to have an impact is the change to the Company's investment in associated undertakings accounting policy. Previously this investment was held at cost less any provisions for impairment. On a UK GAAP basis, the Company has chosen to subsequently account for its investment in associated undertakings at fair value through other comprehensive income.
| As at 31 Dec 2016 | |||
As previously stated | Changes on transition to FRS 102 | As restated | ||
Statement of other comprehensive income | £000's | £000's | £000's | |
Loss for the year | (3,308) | - | (3,308) | |
Other comprehensive income | ||||
Gains arising on revaluation of investment in associated undertaking | - | - | - | |
Total comprehensive losses for the year | (3,308) | - | (3,308) | |
As at 31 Dec 2016 | ||||
As previously stated | Changes on transition to FRS 102 | As restated | ||
Statement of changes in equity | £000's | £000's | £000's | |
Balance as at 1 January 2016 | 3,528 | 17,321 | 20,849 | |
Loss for the year | (3,308) | - | (3,308) | |
Other comprehensive income | ||||
Gains arising on revaluation of investment in associated undertaking | - | - | - | |
Total transactions recognised directly in equity | 141 | - | 141 | |
Balance as at 31 December 2016 | 361 | 17,321 | 17,682 | |
Related Shares:
ACH.L