TIDMABAL
RNS Number : 2405V
Abal Group PLC
02 December 2019
Abal Group plc
("Abal" or the "Company")
Final Results for the year ended 31 March 2019
Abal Group plc, the AIM listed cash shell, today announces its
results for the year ended 31 March 2019.
Overview:
In the year to 31 March 2019 the group underwent the following
fundamental changes.
At the beginning of that year, the group was providing a
combination of software and consultancy solutions to customers who
were interested in innovation objectives. However, due to
disappointing trends in revenues and profitability, the directors
explored opportunities to sell the group and had started detailed
discussions with a number of interested parties. Based on the
limitations of the potential purchasers' proposals, a decision was
soon taken to terminate these discussions.
In early June 2018, it was decided and announced that the
business was to be retained, and a new strategic plan was to be
introduced that involved the departure of the then Chairman and the
Chief Executive Officer, and the seeking of new funds to implement
parallel strategies of revenue growth and the cutting of costs.
Later that month as a result of the rejuvenated sales drive, there
was an early customer win - providing management services to a
leading European wine producer.
In July 2018, an experienced new Chief Executive Officer, Angus
Forrest, was appointed, whose main remit was to place the group on
a secure financial footing and to restructure the business to
generate growth. Later in July, discussions were started with
another major investor, but these discussions were terminated at
the end of September.
In October 2018, the Company announced an improving financial
performance as a result of the cost savings, and customers were
renewing their contracts and there were new customer wins. At the
end of October and in early November, there were major fundraising
initiatives with the issues of shares and a convertible loan note.
In December, there was another share issue to further strengthen
the group's financial position, to support the cost reduction
program, and to provide additional working capital. It was apparent
though that continued progress was by no means certain and would be
likely to be slow, requiring yet further capital.
On 10 January 2019, the directors announced that a conditional
agreement had been reached to sell all of the group's business for
$1.7 million, with the potential for up to another $0.8m depending
on the satisfaction of certain conditions. This sale was approved
at a General Meeting of the Company later that month, and the sale
was completed on 5 February 2019.
From the date of the sale of the business, the group changed its
name and became a cash shell seeking new investment opportunities.
It was subsequently agreed that Angus Forrest would leave the
Company. He resigned as a director with effect from 28 February
2019. I wish to thank him for his fortitude and patience during
what was a difficult and uncertain period for the group. His input
was key to the group's survival.
The group's Income Statement is analysed between the continuing
operations and discontinued operations. The continuing operations
represent the ongoing activities of the holding company as a cash
shell with the costs of maintaining the Company and its listing on
AIM. The discontinued operations include all the trading activities
up to the date of the sale plus the profit on the sale.
Most recently, on 27 September 2019, the group announced that a
conditional share purchase and sale agreement had been reached to
acquire all of the share capital of Supply@Me SRL. Supply@Me SRL is
an Italian company that has developed an innovative, proprietary,
digital system which underpins a fintech platform that enables
customers to carry out 'inventory monetisation' transactions by
transforming their unsold stock of goods to Supply@Me SRL. The
consideration will only be by the issue of new ordinary shares in
Abal, the number of which is uncertain, and a further share placing
is planned to cover the costs of the proposed transaction and to
provide working capital and development capital. This transaction
would be both a reverse takeover and a related party transaction,
because of the relationships between certain persons in relation to
the Company and Supply@Me SRL, and is still subject to several key
approvals. There is no assurance that the agreement will
complete.
Business review
In our 2019 Consolidated Statement of Comprehensive Income,
prepared according to IFRS accounting standards, we are required to
show separately the results of the group's discontinued operations
from its continuing operations.
Discontinued operations
On 5 February 2019 the group sold all of its business and assets
for an initial cash consideration of $1.7m (about GBP1.3m) together
with the potential for further deferred consideration of up to
about $0.8m (about GBP0.6m) subject to achieving certain
conditions. The amount of the deferred consideration has not been
finally agreed at the time of preparing these financial statements.
There has been an agreed price reduction as the purchaser has had
unexpected problems with the collection of one of the larger debts
and the failure of one key customer to renew its contract. The
latest estimate for the amount of the deferred consideration is
$0.06m (about GBP0.04m), and this is the amount that has been
included in the financial statements. On this basis the profit on
disposal of the business was GBP0.9m (2018:Nil).
In his report to shareholders in September 2018 the new Chief
Executive Officer reviewed the business overall as follows:
'The year to 31 March 2019 is one of significant change with the
emphasis being on improving the performance of every part of the
business. Although there may be some adverse impact in the short
term, this will build firm foundations for the future development
of the enterprise. The first objective for the Company is to
improve its financial performance which comprises both cost
reduction and revenue improvement, we are making progress on both
fronts and I look forward to reporting further progress in due
course.'
At a more detailed level, in terms of revenues, in May 2018 the
group announced that revenues continued to be disappointing, and
this followed reducing revenues in the previous year to 31 March
2018. The downward trend in revenues started to improve following a
new strategic plan that was introduced in June 2018 and the
appointment of a new Chief Executive Officer in July 2018. Total
revenues for the 10 month period prior to the sale of the business
on 5 February 2019 were GBP2.3m (2018: 12 months GBP3.7m).
The cost reduction programs that were introduced in the summer
of 2018 were not sufficient to return the trading to profitability.
The investment in development costs was substantially reduced to
GBP0.2m (2018: GBP0.5m). Further details of the trading performance
prior to the sale of the business are set out in Note 4 to the
financial statements.
Continuing operations
Following the sale of all of its business and assets in February
2019, the group became a cash shell. The sale agreement provided
that most employees transferred to the purchaser. The only material
continuing activity of the group after the sale was that of a
holding company continuing with its overheads as an ongoing quoted
company on AIM while seeking new investment opportunities.
Financial overview
In summary, from a financial viewpoint, the group has
transformed successfully from a trading group that had been
consuming all of its cash resources, to a cash shell still listed
on AIM, and now, most recently, to a group considering an exciting
new acquisition opportunity in the fintech space.
Full provision has been made in these 2019 financial statements
for the disposal of all of its business and assets. So, the group
is now moving forward with confidence, and unencumbered from any
ongoing liability for its past loss making, and cash consuming,
activities.
In the year to 31 March 2019 the Company raised GBP1.2m net from
the issue of new ordinary shares (2018: GBP1.3m). At the 2019
year-end cash balances were GBP0.8m (2018: GBP0.1m).
Further enquiries:
Abal plc Tel: +44 (0)7717 436384
Simon Charles
WH Ireland NOMAD and Broker Tel: 0117 945 3471
Mike Coe / Chris Savidge
Peterhouse Capital (Joint broker) Tel: 020 7469 0936
Lucy Williams / Duncan Vasey
Stanford Capital Partners Tel: 020 3815 8881
Patrick Claridge
Consolidated Statement of Comprehensive Income for the Year
Ended 31 March 2019:
2019 2018
Continuing operations Note GBP 000 GBP 000
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (726) (595)
Other operating income 69 65
-------- --------
Operating loss (657) (530)
Finance costs (42) (13)
Loss before tax (699) (543)
Income tax receipt - -
-------- --------
Loss for the year from continuing operations (699) (543)
-------- --------
Discontinued operations
Profit/(loss) for the year from discontinued
operations 325 (612)
Loss for the year and total comprehensive
income (374) (1,155)
======== ========
Loss attributable to:
Owners of the company (374) (1,155)
======== ========
Earnings per share - Basic - Profit/(Loss) Pence Pence
From continuing operations (1.32) (2.63)
Total (0.71) (5.59)
*Restated to show comparative figures for continuing and
discontinued operations and Earnings per Share is adjusted for the
1 for 10 share consolidation in 2019.
Consolidated Statement of Financial Position as at 31 March
2019:
2019 2018
Note GBP 000 GBP 000
Assets
Non-current assets
Property, plant and equipment - 23
Intangible assets - 928
Trade and other receivables - 341
-------- --------
- 1,292
-------- --------
Current assets
Trade and other receivables 121 757
Cash and cash equivalents 771 61
-------- --------
892 818
-------- --------
Total assets 892 2,110
======== ========
Equity and liabilities
Equity
Share capital 4,767 4,765
Share premium 9,599 8,350
Other reserves 1,217 1,252
Retained losses (15,207) (14,814)
-------- --------
Equity attributable to owners of the
Company 376 (447)
-------- --------
Non-current liabilities
Deferred income - 582
Current liabilities
Trade and other payables 463 1,975
Derivative financial instruments 53 -
-------- --------
Total liabilities 516 2,557
-------- --------
Total equity and liabilities 892 2,110
======== ========
Consolidated Statement of Cash Flows for the Year Ended 31 March
2019:
2019
GBP 2018
Note 000 GBP 000
Cash flows from operating activities
Loss for the year (374) (1,155)
Adjustments to cash flows from non-cash
items
Depreciation, amortisation and impairments 203 568
Profit on sale of business (935) -
Share based payment transactions (35) 54
Derivative financial instrument 34 -
Income tax credit (141) (200)
Interest 8 13
------- ------------------
(1,240) (720)
Working capital adjustments
Decrease in trade and other receivables 156 788
Decrease in trade and other payables (512) (1,059)
------- ------------------
Cash absorbed by operations (1,596) (991)
Finance costs (8) (13)
Income taxes received 141 200
------- ------------------
Net cash flow from operating activities (1,463) (804)
------- ------------------
Cash flows from investing activities
Acquisitions of property plant and
equipment - (11)
Proceeds from sale of business 1,207 -
Acquisition of intangible assets (205) (550)
------- ------------------
Net cash flows from investing activities 1,002 (561)
------- ------------------
Cash flows from financing activities
Proceeds from issue of ordinary shares,
net of issue costs 1,171 1,309
------- ------------------
Net increase/(decrease) in cash and
cash equivalents 710 (56)
Cash and cash equivalents at 1 April 61 117
------- ------------------
Cash and cash equivalents at 31 March 771 61
Consolidated Statement of Changes in Equity for the Year Ended
31 March 2019:
Retained
Share capital Share premium Other reserves earnings Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2017 4,041 7,765 1,198 (13,659) (655)
Employee share-based
payment options - - 54 - 54
Issue of share capital 724 585 - - 1,309
Transactions with
owners 724 585 54 - 1,363
Loss for the year
and total comprehensive
income - - - (1,155) (1,155)
At 31 March 2018 4,765 8,350 1,252 (14,814) (447)
------------- ------------- -------------- --------- --------
Retained
Share capital Share premium Other reserves earnings Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2018 4,765 8,350 1,252 (14,814) (447)
Conversion of debt
to equity - - - (19) (19)
Employee share-based
payment options - - (35) - (35)
Issue of share capital 2 1,249 - - 1,251
Transactions with
owners 2 1,249 (35) (19) 1,197
Loss for the year
and total comprehensive
income - - - (374) (374)
At 31 March 2019 4,767 9,599 1,217 (15,207) 376
============= ============= ============== ========= ========
Notes to the Financial Statements for the Year Ended 31 March
2019:
1.) Publication of non-statutory accounts
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
the Companies Act 2006.
The statement of financial position at 31 March 2019 and income
statement, statement of changes in equity, statement of cash flows
and associated notes for the year ended have been extracted from
the Company's 2019 financial statements upon which the auditor
opinion is unqualified however contains a material uncertainty
paragraph in relation to going concern.
Copies of the 2019 Annual Report and Accounts will be
distributed to shareholders shortly and will be available on the
Company's website: www.abalplc.com.
2.) Going concern
For the reasons set out below, the Directors consider that it is
appropriate to adopt the going concern basis in preparing these
financial statements.
At the year-end the group had cash balances of GBP771,000 (2018;
GBP61,000) and other net current liabilities of GBP395,000 (2018:
other net liabilities GBP1,800,000). The group has posted a loss
for the year after tax of GBP374,000 (2018: GBP1,155,000) and
retained losses were GBP15,207,000 (2018: GBP14,814,000).
The group to date has met its financing requirements through the
regular placing of new shares, raising in the year a net cash
amount of GBP1,217,000 (2018: GBP1,450,000).
The group is currently a cash shell listed on AIM that is
seeking new investment opportunities. The Directors have reviewed
the forecast expenditures for the next 12 months excluding the
consequences of any new investment plans.
After the year-end, on 27 September 2019, the group announced
that a conditional share purchase and sale agreement had been
reached to acquire all of the share capital of Supply@Me. Supply@Me
is an Italian company that has developed an innovative,
proprietary, digital system which underpins a fintech platform that
enables customers to carry out 'inventory monetisation'
transactions by transforming their unsold stock of goods to
Supply@Me. The consideration will only be by the issue of new
ordinary shares in Abal, the number of which is uncertain, and a
further share placing is planned to cover the costs of the proposed
transaction and to provide working capital and development capital.
This transaction would be both a reverse takeover and a related
party transaction, and is still subject to several key approvals.
There is no assurance that the agreement will complete on the
current terms or at all.
Providing that the group is able to successfully complete the
announced conditional share and purchase agreement, and to raise
the necessary funding through a new issue of shares, the directors
consider that the group will have sufficient financial resources to
continue in operational existence for the foreseeable future and,
therefore, that it is appropriate to adopt the going concern basis
in preparing these financial statements. As with all business
forecasts, the Directors' statement cannot guarantee that the going
concern basis will remain appropriate given the inherent
uncertainty about future events, specifically due to the material
uncertainty over the raising of funds. Until the proposed
acquisition is completed, there remains a material uncertainty
around going concern. At the year-end on 31 March 2019 the group
had sold all of its business and assets, and was a cash shell that
was seeking new investment opportunities. The group had net cash
funds at 31 March 2019 of GBP771,000 (2018 - GBP61,000). The
directors have announced that they are seeking new investment
opportunities, and further investment may be required from
shareholders when suitable investments have been identified.
Meanwhile, the Directors have concluded, after taking account of
its current funding position, its expectation of raising additional
funding if needed from shareholders, and its ongoing commitments as
a holding company, the Group and the Company expect to have
adequate resources to continue in operational existence for the
foreseeable future. For these reasons the Directors continue to
prepare the financial statements on a going concern basis. There
remains a material uncertainty around going concern. These
financial statements do not include any adjustments that would
result from the going concern basis of preparation being
inappropriate.
3.) Earnings per share
The calculation of the Basic earnings per share (EPS) is based
on the loss attributable to equity holders of the parent for the
year from continuing operations of GBP699,000 (2018 - loss
GBP543,000) and a profit on discontinued operations of GBP325,000
(2018 - loss GBP612,000) giving a net total loss for the year of
GBP374,000 (2018 - loss of GBP1,115,000) and on a weighted average
number of ordinary shares in issue of 52,989,928 (2018 - 20,666,760
having been adjusted for the 1 for 10 share consolidation).
The diluted EPS for the discontinued operations is a profit of
0.57p. The diluted EPS for the continuing operations and the
diluted EPS in total (and in the prior year) were the same as the
Basic EPS as they were all losses. For the calculation of the
diluted EPS for the discontinued operations, the profit used was
the same as for the Basic EPS, and the Basic weighted average
number of shares was increased by 4,428,860 shares in respect of
the outstanding share options and convertible loan note. At 31
March 2019, 7,946,158 options (2018: Nil) were excluded because
their effect would have been anti-dilutive. The average mark value
of the shares for the purposes of calculating the dilutive effect
was based on quoted market prices for the year during which the
options were outstanding.
4.) Subsequent Events
On 27 September 2019, the group announced that a conditional
share purchase and sale agreement had been reached to acquire all
of the share capital of Supply@Me SRL. Supply@Me SRL is an Italian
company that has developed an innovative, proprietary, digital
system which underpins a fintech platform that enables customers to
carry out 'inventory monetisation' transactions by transforming
their unsold stock of goods to Supply@Me SRL. The consideration
will only be by the issue of new ordinary shares in Abal, the
number of which is uncertain, and a further share placing is
planned to cover the costs of the proposed transaction and to
provide working capital and development capital. This transaction
would be both a reverse takeover and a related party transaction,
because of the relationships between certain persons in relation to
the Company and Supply@Me SRL, and is still subject to several key
approvals. There is no assurance that the agreement will
complete.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
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END
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