TIDMRGP
RNS Number : 6090K
Ross Group PLC
29 August 2019
Ross Group Plc Half Yearly Financial Report 30(th) June 2019
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2019
Financial Summary (6 months
to 30 June 2019) 2019 2018
GBP'000 GBP'000 Change
Group Revenue - 68 -100%
Gross Profit/(Loss) - 10 -100%
Profit/(Loss) before tax (3,151) 10 -31,610%
Basic earnings per share -28.1p 0.006p -4,718%
Diluted earnings per share -28.1p 0.006p -4,718%
Chairman's Statement
For the half year to 30th June 2019, I would like to report that in this
period, during which the acquisition of the start-up businesses within the
Archipelago Aquaculture Group was duly completed in January 2019, the Ross
Group PLC has now proceeded to implement its planned investment strategy
and as a result has therefore subsequently made a net loss after tax of
GBP3,151,000 without revenue, which is both in line with management expectation
and to the Board's satisfaction at this stage.
The Board in the first half 2019 has already started the process of integrating
the respective start-up businesses acquired within its existing operations
and is currently implementing its supply chain management protocols, procedures
and respective disciplines, in order to put in place a vertically integrated
organization that will be in a position to provide a forecast in the foreseeable
future of being able to produce high quality Chitin in the years to come.
Notwithstanding the previous years whereby we utilised our specialist supply
chain management services in order to sustain our operational overhead -
whilst also endeavouring and exploring other strategic opportunities - our
efforts nowadays are fully focused on building a business that will hopefully
become the best in the Chitin and/or Chitin-related industries.
As a result, there has been no revenue during this period from any outside
third party contracts.
As per the duly executed Sale & Purchase Agreement ("SPA") with Global Blue
Technologies Group Inc. ("GBTGI"), all of the now enlarged Ross Group's
overhead and cashflow are to be fully financed for at least the first 18
months, during which there are various performance-related SPA parameters
in place in order to protect the value and integrity of this most important
first acquisition.
Business Outlook
For the second half of 2019 the Board and myself will continue, along with
our team of Advisors and Consultants, to work tirelessly with our new related-party
GBTGI shareholders and their specialist management team in trying to successfully
build a business through implementing our unique, patented production process
(for which we recently received the internationally prestigious Green Chemical
Award) and hopefully to be able to enter into proto-type pilot production
phase and/or trials in the foreseeable future.
In addition, we are also continuing to explore synergistic opportunities
to further grow our overall business; both horizontally and vertically -
so as to try to become the best in our chosen specialist industry.
Dividend
No ordinary interim dividend is proposed after considering the result for
the first half of the year, and the existing deficiency of retained reserves.
I would very much like to thank the members of the Board of Directors, as
well as our contractors, consultants and advisors for all their continued,
and highly appreciated, support, expertise and hard work.
Finally, as always, I would also like to personally extend my sincere thanks
to our extraordinarily loyal and also now new (GBTGI) shareholders for all
their continued confidence, patience and truly exceptional understanding.
However, please kindly know that this is now a new and exciting period for
our Ross Group and I sincerely hope that we will all be able to enjoy an
exciting future together.
Barry Richard Pettitt
Chairman and Group Managing Director
Approved 29 August 2019
CONDENSED CONSOLIDATED INCOME
STATEMENT UNAUDITED
6 months 6 months Year Ended
ended 30 ended 30
June June 31 Dec
2019 2018 2018
GBP'000 GBP'000 GBP'000
Group Revenue
Continuing Operations - 68 70
Discontinuing Operations - - -
Operating (Loss) / Profit
Continuing Operations (2,926) 10 (196)
Discontinuing Operations - - -
(Loss) / Profit before Finance
Cost (2,926) 10 (196)
--------- --------- -----------
Finance Cost 225 - 54
(Loss) / Profit before Taxation (3,151) 10 (250)
--------- --------- -----------
Taxation - - -
(Loss) / Profit for the Period (3,151) 10 (250)
--------- --------- -----------
Earnings per share (pence) -28.1 0.006 -0.14
Adjusted earnings per share
(pence) -28.1 0.006 -0.14
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY UNAUDITED
Share Accumulated Other Total
Capital Losses Reserves
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 Jan 2018 11,179 (35,634) 18,187 (6,268)
Profit for the period - 10 - 10
--------- ------------ ---------- --------
Total recognised income - 10 - 10
--------- ------------ ---------- --------
Balance at 30 June 2018 11,179 (35,624) 18,187 (6,258)
--------- ------------ ---------- --------
(Loss) / Profit for the
period - (260) - (260)
--------- ------------ ---------- --------
Total recognised income - (260) - (260)
--------- ------------ ---------- --------
Value of conversion rights
on convertible loans - - 5,127 5,127
Balance at 31 Dec 2018 11,179 (35,884) 23,314 (1,391)
--------- ------------ ---------- --------
Balance at 1 Jan 2019 11,179 (35,884) 23,314 (1,391)
(Loss) / Profit for the
period - (3,151) - (3,151)
--------- ------------ ---------- --------
Total recognised income
/ (deficit) - (3,151) - (3,151)
--------- ------------ ---------- --------
Foreign exchange adjustment - (9) - (9)
Share capital issued 39 - 343 382
Movement on convertible
loans - - 205 205
Balance at 30 June 2019 11,218 (39,044) 23,862 (3,964)
--------- ------------ ---------- --------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION UNAUDITED
6 months 6 months Year Ended
ended 30 ended 30
June June 31 Dec
2019 2018 2018
GBP'000 GBP'000 GBP'000
Non Current Assets 19,039 - -
Current Assets
Inventories 1,311 - -
Trade and Other Receivables 6,570 79 83
Cash and Cash Equivalents 263 1 20
8,144 80 103
Total Assets 27,183 80 103
--------- --------- -----------
Equity and Liabilities
Shareholders' Equity
Share Capital 11,218 11,179 11,179
Share Premium Account 3,146 2,803 2,803
Other Reserves 15,384 15,384 15,384
Convertible debentures 5,332 - 5,127
Retained Earnings (39,044) (35,624) (35,884)
--------- --------- -----------
Total Equity (3,964) (6,258) (1,391)
Non-Current Liabilities
Long Term Borrowings 29,767 6,072 632
Current Liabilities
Trade and Other Payables 856 256 316
Bank Overdraft and Loans 524 10 546
--------- --------- -----------
Total Liabilities 31,147 6,338 1,494
Total Equity and Liabilities 27,183 80 103
--------- --------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS UNAUDITED
6 months 6 months Year Ended
ended 30 ended 30
June June 31 Dec
2019 2018 2018
GBP'000 GBP'000 GBP'000
Net Cash From/(Used In) Operating
Activities 11,749 (18) (114)
Net Cash Used In Investing
Activities (8,553) - (15)
Cash Flows From Financing Activities:
Amount withdrawn by Directors (11) - (38)
Value of conversion rights
on convertible shares - - 5,127
Proceeds from the issue of
shares 382 - -
Interest paid - - (54)
Net Increase/(Decrease) In
Borrowings (3,324) - (4,905)
--------- --------- -----------
Net Cash Flow From Financing
Activities 243 (18) 1
--------- --------- -----------
Net Increase/(Decrease) In
Cash and Cash Equivalents 243 (18) 19
Cash and Cash Equivalent at
Beginning of Period 20 19 1
--------- --------- -----------
Cash and Cash Equivalent at
End of Period 263 1 20
--------- --------- -----------
Notes to the Interim Report
(1) The financial information contained in these statements for the six
months ended
30 June 2019 and 30 June 2018 is unaudited and does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006.
These statements are prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted in the EU.
The interim financial statements have been prepared on the basis of the
accounting policies set out in the audited statutory accounts for the year
ended
31 December 2018 together with additional accounting policies as follows:-
Goodwill
Goodwill arising on consolidation arises from the fair value of the identifiable
assets acquired by the group at the date of acquisition. An impairment loss
calculation is undertaken at the financial period end of the assets acquired
and any impairment in the value is taken to the Income Statement. The first
impairment review is to be undertaken within a twelve-month period of the
date of the acquisition and therefore this will take place in the 31 December
2019 financial statements. The directors do not believe there is any indication
of impairment at this time.
Intangible assets
These mainly consist of software and licences. Intangible assets are stated
at cost less accumulated amortisation and impairment losses.
Licences are amortised over their term period or their estimated useful
economic lives, as appropriate, on a straight-line basis which is considered
to be 15 years.
Property, plant and equipment
Property plant and equipment are carried at cost or deemed cost (fair value
on acquisition through business combination) less accumulated depreciation
and impairment provisions.
Acquisition cost includes the purchase price plus other costs related to
acquisition, such as freight, postage, duties, commissions, interest on
investment loans recorded before the tangible assets are capitalised or
before they are put into use.
The costs of expansion, modernisation, or improvements leading to increased
productivity, capacity or efficiency are capitalised. Maintenance and repair
expenses are expensed as incurred.
Where the carrying amount of an asset is greater than the amount that it
is estimated to be recoverable, it is written down to its recoverable amount.
The Group depreciates its property, plant and equipment on a straight line
basis in order to write off the cost of each asset less the estimated residual
value over its estimated useful life as follows:
Building 39 years straight line basis
Leasehold Improvements Over the term of the lease
Plant, Machinery and Equipment 7 years straight line basis
Right of use assets Over the term of the lease
Leases
IFRS 16 leases accounting has been applied from 1 January 2019. Finance
lease arrangements for the group's overseas locations are recognised in
the Consolidated Statement of Financial Position on signing of the lease
as a right-of-use asset. The lease cost will be recognised as the depreciation
of the right-of-use asset over the term of the lease.
A lease liability is recognised on signing of the lease equal to the present
value of the lease payments and estimated renovation costs discounted using
a borrowing rate determined by the company. The interest expense will be
recognised in the Consolidated Income Statement as the lease payments are
made.
The impact of the implementation of IFRS 16 is reflected in the acquisition
of AAG.
Inventory
Inventories are measured at the lower of cost and net realisable value.
Foreign currencies
Transactions in currencies other than the functional currency (foreign currencies)
are translated into the functional currency at exchange rates which approximate
those applicable at transaction dates. Foreign currency monetary assets
and liabilities at the statement of financial position date are translated
into the functional currency at exchange rates ruling at that date. Non-monetary
items that are measured in terms of historical cost in a foreign currency
are not retranslated. Any gain or loss arising from a change in exchange
rates subsequent to the date of the transaction is included as an exchange
gain or loss in the statement of comprehensive income.
(2) Reconciliation of Operating Profit to Net Cash Flows From Operating
Activities 6 months 6 months Year Ended
ended 30 ended 30
June June 31 Dec
2019 2018 2018
GBP'000 GBP'000 GBP'000
Operating (Loss) / Profit On
Continuing Activities (2,926) 10 (196)
Impairment - - 15
Exchange difference (9) - -
Depreciation and Amortisation 1,478 - -
(Increase)/ Decrease In Inventories (1,311) - -
(Increase)/ Decrease In Trade
and Other Receivables (102) (75) (68)
Increase/(Decrease) In Trade
and Other Payables 14,619 47 135
Net Cash Generated From/(Used
In) Operations 11,749 (18) (114)
--------- --------- -----------
(3) No ordinary interim dividend is proposed for 2019 (2018 - GBPNil).
(4) The comparative cash flow for the year ended 31 December 2018 has been
extracted from the audited accounts. The cash flows for the six months ended
30
June 2019 and 30 June 2018 are unaudited.
(5) Reconciliation of Movements In Equity 6 months 6 months Year Ended
ended 30 ended 30
June June 31 Dec
2019 2018 2018
GBP'000 GBP'000 GBP'000
Share Premium Account
Brought Forward 2,803 2,803 2,803
Movement 343 - -
--------- --------- -----------
Carried Forward 3,146 2,803 2,803
--------- --------- -----------
Other Reserves
Brought Forward 15,384 15,384 15,384
Movement - - -
--------- --------- -----------
Carried Forward 15,384 15,384 15,384
--------- --------- -----------
Retained Earnings
Brought Forward (35,884) (35,634) (35,634)
(Loss) / Profit for the Period (3,151) 10 (250)
Foreign exchange adjustment (9) - -
Carried Forward (39,044) (35,624) (35,884)
Convertible Debenture
Brought Forward 5,127 - -
Movement 205 5,127 -
Carried Forward 5,332 5,127 -
--------- --------- -----------
(6) On the 7 January 2019 the company acquired the entire capital of Archipelago
Aquaculture Group LLC ("AAG"), a company registered in the United States,
for equity consideration amounting to GBP202,731 representing the issue
of 21,340,104 Ordinary Shares at a market value of .95p per share in a share
for share exchange.
AAG are specific supply chain companies involved in the research and development
of Chitin.
The fair value of the group acquired is as follows
GBP,000
Non current assets 19,940
Inventory 1,096
Trade and other receivables 5,206
Cash and cash equivalents 1,178
Current liabilities (447)
Non current liabilities (26,973)
Net Identifiable assets acquired -
Add Goodwill 203
Total Consideration 203
---------
AAG group generated a loss to the group for the period amounting to GBP2,879,000
(7) Non Current Assets Intellectual Property,
Property Plant &
Goodwill Licences Equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 - - - -
Additions 956 12,661 6,900 20,517
At 30 June 2019 956 12,661 6,900 20,517
--------- ------------- ---------- --------
Depreciation / Amortisation
At 1 January 2019 - - - -
Charge for the period - 1,318 160 1,478
--------- ------------- ---------- --------
At 30 June 2019 - 1,318 160 1,478
--------- ------------- ---------- --------
Net Book Value
At 30 June 2019 956 11,343 6,740 19,039
--------- ------------- ---------- --------
At 1 January 2019 - - - -
--------- ------------- ---------- --------
(8) Inventory 30 June 31 Dec 30 June
2019 2018 2018
GBP'000 GBP'000 GBP'000
Raw materials 1,271 - -
Finished goods 40 - -
1,311 - -
-------- -------- --------
(9) Current Assets 30 June 31 Dec 30 June
2019 2018 2018
GBP'000 GBP'000 GBP'000
Trade receivables 68 68 68
Prepayments and accrued income 55 - -
Other debtors 51 5 11
Directors loan 22 10 -
Loans to associated undertakings 6,374 - -
6,570 83 79
-------- -------- --------
(10) Current Liabilities 30 June 31 Dec 30 June
2019 2018 2018
GBP'000 GBP'000 GBP'000
Trade payables 226 201 179
Other creditors 78 23 27
Accruals and deferred income 345 92 23
Directors loan - 27 -
Lease creditor 207 -
Debentures 524 367
Other loans - 179 10
1,380 862 266
-------- -------- --------
(11) Non Current Liabilities 30 June 31 Dec 30 June
2019 2018 2018
GBP'000 GBP'000 GBP'000
Accruals and deferred income 14,286 - -
Licence fee payable 11,964 - -
Lease creditor 489 - -
Debentures 420 632 -
Loans from associated undertakings 2,608 - 6,072
29,767 632 6,072
-------- -------- --------
(12) The Group is supported by short term borrowings from its larger
shareholders and supporters by way of formal agreements. At 30 June 2018
total borrowings from One World Limited were GBP4,010,000 and GBP2,062,172
from Excite Enterprises Limited, neither of which is a related party.
On 27 September 2018 two convertible loan debentures were issued for GBP4,010,000
and GBP2,062,172 with a coupon rate of 5%.
The loan notes are convertible into Ordinary shares of the parent entity
in three years after the date of issue. The convertible loan debenture will
give right to a percentage of the issued share capital of the parent company
at the date of conversion. Each tranche of GBP1 million debenture owed by
the long term holders correspond to 4.925% of the issued share capital at
the date of conversion, resulting in a fixed percentage of the issued share
capital of the company to be allotted to the loan holders regardless of
the value / amount of the share capital of the company.
30 June 31 Dec
2019 2018
GBP'000 GBP'000
Face value of notes issued 6,072 6,072
Value of conversion rights 5,332 5,127
Convertible loan debenture liability 740 945
-------- --------
Interest expense 151 54
-------- --------
During the period a subsidiary company, Ross Group Plc Inc, received a loan
from One World Limited amounting to $800,000 which equates to GBP639,720.
Interest is charged on this loan at 6%
On 29 January 2019 the company issued 17,947,943 Ordinary Shares to GBTGI
for a total cash consideration of GBP179,479.
During the period the group received working capital from GBTGI and its
affiliated companies amounting to GBP1,968,120 and made loans to them amounting
to GBP6,374,361.
GBTGI have provided assurance to the Ross Group that they will fund ongoing
cashflow requirements for a period of 18 months from January 2019.
(13) The Chief Operating Decision Maker (CODM) has considered the requirements
of future segmental reporting following the acquisition of US based AAG
in January 2019.
At this stage the AAG group is in start up and is not revenue generating.
This group is therefore reported as one reportable segment to the CODM.
As the UK activities of the Ross Group are less than 10 percent in terms
of assets, liabilities and loss for the period and no revenue has been generated
throughout the group during this financial period the CODM believes the
information already disclosed in the interim financial statements is adequate
to fulfill the requirements of IFRS 8 segmental reporting, this will be
reconsidered at the year end and in future periods as AAG begins to trade.
(14) The Interim Report will be sent by mail to all registered shareholders
and copies will be available from the Company's registered office at 71-75
Shelton Street, London, WC2H 9JQ. A downloadable copy will also be posted
on the Company's website www.ross-group.co.uk
Responsibility statement:
The Directors confirm that, to the best of their knowledge: -
a) the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting';
b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for the
remaining six months of the year); and
c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
On behalf of the Board
B Pettitt
Chief Executive Officer
Ross Group plc
Registered Office
71 - 75 Shelton Street
London WC2H 9JQ
Contact - M Simon, Non Executive Director
Tel. - 0203 978 4598
Email - info@ross-group.co.uk
Website - www.ross-group.co.uk
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END
IR PLMITMBMTBRL
(END) Dow Jones Newswires
August 29, 2019 10:12 ET (14:12 GMT)
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