REG - Hawkwing PLC - Final Results
01/06/2022 07:00
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RNS Number : 4797N Hawkwing PLC 01 June 2022
1 June 2022
Hawkwing plc
("Hawkwing", or the "Company")
2021 Final Results
Hawkwing plc (LSE: HNG) announces its audited financial results for the year
ended 31 December 2021.
Financial Highlights
· Operating loss from continuing operations of £0.39 million (2020
loss: £0.34 million)
· Loss before tax of £0.39 million (2020 loss: £0.34 million)
· Loss per share from continuing operations of £0.0004 (2020 loss:
£0.019)
· Raised £16.5 million through the issue of Convertible Unsecured
Loan Notes
· Provided a £13.7 million loan to IFG to fund the acquisitions of
Northcore Limited and Shade Limited
Keith Sadler, Senior Independent Non-Executive Director, commented: "Our
strategy is to identify opportunities for acquisition, targeting sectors such
as digital marketing, medical applications, business and financial services
and the sports sector. We are committed to maintaining careful cost controls
to preserve cash as we continue to search for and review various prospects. On
behalf of the Board, I would like to thank shareholders for their support and
we will provide a further update as and when appropriate opportunities arise."
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
Enquiries:
Hawkwing plc
Keith Sadler Senior Independent Non-Executive Director +44 20 7618 9100
Luther Pendragon
Harry Chathli, Alexis Gore +44 20 7618 9100
About Hawkwing plc
Hawkwing is a Standard List Cash Shell. It intends to pursue a reverse
takeover transaction, with the aim of delivering shareholder value. The board
intends to seek a business with the prospects of being profitable and cash
generative. For more information, please visit www.hawkwing.co
(http://www.hawkwing.co)
STRATEGIC REPORT
2021 Full Year Results
The Company's headline results are set out as follows:
HEADLINE RESULTS Year ended
31 December 2021 Year ended
31 December 2020
£000 £000
Revenue - -
Operating loss (388) (340)
Headline EBITDA(1) (388) (235)
Loss before tax (90) (340)
Loss per share (£)(2) (0.0004) (0.019)
1. Headline EBITDA is operating loss adjusted to remove the impact of
exceptional income/costs. 2020 costs relate to the move from AIM to the
Standard List of the Main Market.
BALANCE SHEET
31 December 31 December
2021 2020
£000 £000
Non-current assets
Investments in financial assets 14,414 -
Current assets
Trade and other receivables 1,577 43
Cash and cash equivalents 2,311 1,060
Current liabilities
Trade and other payables (90) (32)
Non-current liabilities
Convertible loan notes (15,283) -
Deferred tax (417) -
Net assets 2,512 1,071
Principal Activities And Business Review
As a cash shell, the principal activity of the business in the year has been
to identify potential acquisition opportunities. On 12 July 2021 we
announced the potential reverse takeover of Internet Fusion Group ("IFG"), and
on 12 August 2021 the Company issued £16.5 million of Convertible Unsecured
Loan stock ("CULS"). £13.7 million of the net proceeds of the CULS were
then loaned to IFG on 17 September to acquire Northcore Limited and Shade
Limited (t/a Shade Station). The loan to IFG was secured against the
assets of the two acquisitions and guaranteed by IFG; it was for a three-year
term carrying an 8% per annum interest rate. In addition, there was a
redemption premium depending on when the loan is repaid. On 13 December
2021, IFG withdrew from the potential reverse takeover. As set out in the
Company's announcement on 24 December, the Company is in discussions with IFG
to unwind the loan. The Company's listing is currently suspended as a result
of the loan to IFG.
The Company's strategy continues to be to consider opportunities with an
initial focus on acquiring one or more companies in industries such as digital
marketing, medical applications, business and financial services and the
sports sector. The Board will continue to review potential targets and will
update shareholders when appropriate, as and when appropriate opportunities
arise. Whilst an acquisition is being sought, the Board intends to keep
costs to a minimum to preserve cash.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the Company and the execution of the Company's strategies
are subject to certain risks, and the main new areas of risks the Company
faces are in connection with the convertible loan notes and secured loan
receivable. These and the other key business risks are detailed below.
Identifying suitable acquisition opportunities
The success of the Company's business strategy is dependent on its ability to
identify sufficient suitable acquisition opportunities. The Company cannot
estimate how long it will take to identify suitable acquisition opportunities
or whether it will be able to identify any suitable acquisition opportunities
at all within one year after the date of admission. If the Company fails to
complete a proposed acquisition (for example, because it has been outbid by
a competitor) it may be left with substantial unrecovered transaction costs,
potentially including fees, legal costs, accounting costs, due diligence or
other expenses to allow it to pursue further opportunities. Furthermore, even
if an agreement is reached relating to a proposed acquisition, the Company
may fail to complete such acquisition for reasons beyond its control. Any
such event will result in a loss to the Company of the related costs incurred,
which could materially adversely affect subsequent attempts to identify and
acquire another target business. In lieu of the fact that an acquisition has
not been announced within the first 12 months of Admission the Board will ask
Shareholders to approve to continue pursuing an acquisition for a further 12
months at its AGM.
Risk management
The risks that the Company faces have been considered and policies have been
implemented to best deal with each risk. The most significant risks are set
out as follows:
Interest rate risk
The Company has both interest-bearing assets and interest-bearing
liabilities. Interest bearing assets comprise of cash balances which earn
interest at floating rates and a loan on which interest is charged at a fixed
rate, plus a redemption premium. Interest bearing liabilities consist of
convertible loan notes which attract interest at a fixed rate.
The Company's policy is to minimise interest charges through active cash
management. Interest charges on the Company's financial assets and
liabilities form part of a pre-planned and structured arrangements, and these
arrangements are kept under regular review.
Credit risk
The Company has no trade receivable balances, and the other receivable
balances predominantly relate to the costs of issuing the convertible loan
notes and granting the secured loan receivable which are due to be reimbursed
to the Company under the terms of the secured loan arrangement. The IFG loan
is secured against the assets of the loan counterparty. In view of the
security in place there is considered to be no significant risk of
non-payment.
Liquidity risk
The Company's approach to managing its liquidity risk is to maintain
sufficient cash and other working capital to always meet its liabilities when
they fall due. Liquidity risk and cash requirements are regularly reviewed by
reference to short term cash flow forecasts and medium-term working capital
projections.
Currency risk
The Company's only current exposure to currency risk is with regard to amounts
held in foreign currency bank accounts. The non-sterling cash balances at 31
December 2021 were US$60 (2020: US$130).
COVID-19
Trading conditions are likely to remain dynamic amid social and market
uncertainty related to the Covid-19 pandemic. The Company continues to monitor
the situation however, the full impact of the Covid-19 pandemic on the Company
will depend on a variety of factors including the length of time any
restrictions on social movement are in place and the extent to which further
measures are required. The Company is of the opinion that the operations and
business model of the Company should be able to accommodate a relatively high
degree of variability.
Key Performance Indicators ("KPI's")
Following the divestment of all its investments in group undertakings, the
Company no longer has any operational businesses using KPI's. As a result,
performance against KPIs is not presented within these financial statements.
The Company's immediate future performance criteria relate to a successful
future acquisition/reverse takeover.
Environmental policy
The Company is committed to minimising the environmental impact of the
activity of its employees through the application of modern working practices
to reduce business miles travelled.
Employees
The Company is an Equal Opportunities Employer and no job applicant or
employee receives less favourable treatment on the grounds of age, sex,
marital status, sexual orientation, race, colour, religion or belief.
It is the policy of the Company that individuals with disabilities, whether
registered or not should receive full and fair consideration for all job
vacancies for which they are suitable applicants. Employees who become
disabled during their working life will be retained in employment whenever
possible and will be given help with any rehabilitation and retraining.
Corporate and social responsibility
The Board recognises the growing awareness of social, environmental and
ethical matters and it endeavours to take account of the interest of the
Company's stakeholders when operating the business.
Human rights
Whilst the Company does not have a specific human rights policy, it takes
seriously the responsibility to respect human rights. Fairness and integrity
are an important part of the way the business is run and employees are
encouraged to raise any concerns in this area to management at the earliest
opportunity.
Anti-corruption and anti-bribery
The Company takes seriously the risks of its operations associated to
corruption and fraud. The Company has implemented up to date internal control
procedures to mitigate the risks of corruption and fraud and the Board
acknowledges its responsibility for maintaining these improved processes.
Engagement with employees
The Company currently does not have any employees (other than directors) or
customers but recognises that the long-term success of the business relies on
effective engagement with customers and employees.
Engagement with suppliers
The Company's only suppliers currently are those supplying professional
services. The Company manages relationships with suppliers as closely as
possible to ensure the services provided meet the Company's high standards.
Engagement with shareholders
The Board recognises the importance of effective communication with its
shareholders. A range of corporate information is available on the Company's
website, and this statement and the information within the Company's Annual
Report provide details to stakeholders on how the Company is governed. Company
performance is communicated to its shareholders and the market in its results
announcements, with further trading updates made where required and
appropriate.
Events since the year end
There have been no significant events since the year end.
Section 172 Statement
The Directors set out their statement of compliance with s172 (1) of the
Companies Act 2006 which should be read in conjunction with the rest of the
annual report.
The Directors of the Company have a duty to promote the success of the
Company. A director of the Company must act in a way they consider, in good
faith, to promote the success of the Company for the benefit of its members
and in doing so have regards (amongst other matters) to:
· The likely consequence of any decision in the long term;
· The interest of the Company's employees;
· The need to foster the Company's business relationships with
suppliers, customers and others;
· The impact of the Company's operations on the community and the
environment;
· The desirability of the Company to maintain a reputation for
highest standards of business conduct; and
· The need to act fairly between members of the Company.
The Directors are committed to developing and maintaining a governance
framework that is appropriate to the business and supports effective decision
making coupled with robust oversight of risk and internal controls.
Dividends
The Directors, having consideration to the cash resources of the Company, do
not propose to pay a dividend for the financial year (2020: Nil).
Cash flow and net debt
The Company's cash balance as at 31 December 2021 was £2.3 million (2020:
£1.1 million) and it had £16.5 million of Convertible Unsecured Loan Notes
as at 31 December 2021.
Approved by the Board of Directors and signed on its behalf by:
Dwight Mighty
Director
Extracted from directors' responsibilities statement pursuant to the
Disclosure and Transparency Rules
Each of the Directors; being Keith Sadler; Ken Wotton; Ian Robinson and Dwight
Mighty (all Non-Executive) confirm that, to the best of each person's
knowledge:
a. the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair review of the assets,
liabilities, financial position and profit or loss of the Company; and
b. the Strategic Report contained in the Annual Report includes a fair
review of the development and performance of the business and the position of
the Company, together with a description of the principal risks and
uncertainties that it faces.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Hawkwing plc website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
By order of the Board
Keith Sadler
Senior Independent Non-Executive Director
Condensed Income statement
Income Statement
For the year ended 31 December 2021
Note 2021 2020
£000 £000
Administrative expenses (410) (340)
Other operating income 22 -
______
Operating loss 3 (388) (340)
Headline EBITDA (388) (235)
Exceptional costs 3 - (105)
______
Operating loss (388) (340)
Other gains and losses 1,029 -
Finance costs (731) -
______
Loss before taxation (90) (340)
Income tax 4 70 -
______
Loss for the year (20) (340)
(Loss per share from continuing operations:
Basic 2 (0.0004) (0.019)
Diluted 2 (0.0004) (0.019)
No statement of Comprehensive Income has been produced as all items pass
through the Income Statement
Condensed Balance Sheet
As at 31 December 2021
Note 2021 2020
£000 £000
Non-current assets
Investments in financial assets 14,414 -
Current assets
Trade and other receivables 1,577 43
Cash and cash equivalents 2,311 1,060
__________ __________
Total current assets 3,888 1,103
Current liabilities
Trade and other payables (90) (32)
Net current assets 3,798 1,071
Non-current liabilities
Convertible loan notes (15,283) -
Deferred tax liabilities (417) -
(15,700) -
Net assets 2,512 1,071
Equity
Share capital 5 3,731 3,731
Share premium 30,056 30,056
Option premium reserve 1,461 -
Merger reserve 251 251
Retained loss (32,987) (32,967)
Total equity 2,512 1,071
Condensed Statement of Changes in Equity
For the year ended 31 December 2021 and 2020
Share capital Share premium Option premium reserve Merger Retained loss Total
reserve
£000 £000 - £000 £000 £000
Balance at 1 January 2020 2,869 29,648 - 251 (32,627) 141
Total comprehensive expense for the year - - - - (340) (340)
Issue of share capital 862 408 - - - 1,270
Balance at 31 December 2020 3,731 30,056 - 251 (32,967) 1,071
Total comprehensive expense for the year - - - - (20) (20)
Equity component of convertible loan notes - - 1,948 - - 1,948
Deferred tax on equity component of convertible loan notes - - (487) - - (487)
Balance at 31 December 2021 3,731 30,056 1,461 251 (32,987) 2,512
Condensed Statement of Cash Flows
For the year ended 31 December 2021
Note
2021 2020
£000 £000
Net cash flows used in operating activities 6 (1,549) (338)
Investing activities
Advance of loan receivable (13,700) -
Net cash used in investing activities (13,700) -
Financing activities
Net proceeds on issue of shares - 1,227
Proceeds on issue of convertible loan notes 16,500 -
Net cost from financing activities 16,500 1,227
Net increase in cash and cash equivalents 1,251 889
Cash and cash equivalents at beginning of the year 1,060 171
Cash and cash equivalents at end of the year 2,311 1,060
Principal accounting polices
General information
Hawkwing PLC (the "Company") is incorporated and domiciled in the England and
Wales under the Companies Act. The Company is a public limited company and the
registered office address is: The Walbrook Building, 25 Walbrook, London,
England, EC4N 8AF. The Company's principal activity is set out as part of the
Strategic Report.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in the financial statements.
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on the financial statements together
with estimates with significant risk of material adjustment in the next year
are set out within these accounting policies.
Basis of preparation
The financial statements have been prepared in accordance with IFRS, as
adopted by the United Kingdom, including interpretations issued by the
International Financial Reporting Interpretations Committee, applicable to
companies reporting under IFRS and the Companies Act 2006 applicable to
companies reporting under IFRS.
The financial statements have been prepared under the historical cost
convention, except where fair value accounting is used.
Functional, presentational and foreign currency translation
The functional and presentational currency of the Company is Sterling.
Transactions in currencies other than the Company's functional and
presentational currency are recorded at the rate of exchange at the date of
the transaction or, if hedged, at the forward contract rate.
Standards and interpretations in issue not yet adopted
There are no new standards or amendments in issue but not yet adopted that are
either applicable to the financial statements of the Company or that would
have any material impact on the financial statements of the Company.
Application of new standards in issue
For the preparation of these financial statements, the following new or
amended standards have been adopted for the financial year beginning 1 January
2021:
· Amendments to IFRS 9, IAS 39, IFRS 4, IFRS 7 and IFRS 16 Interest
Rate Benchmark (effective 1 January 2021)
· IFRS 16 Leases Covid-19 Related Rent Concessions beyond 30 June
2021 (effective 1 April 2021)
The adoption and implementation of these new or amended standards has had no
impact on the Company's financial statements.
Going concern
The Company raised £1.3m, before costs, in September 2020 and issued
convertible loan notes for proceeds of £16.5m in August 2021. After an onward
secured loan of £13.7m in September 2021 the Company has £2.3m in cash on
its balance sheet at the year end. The directors consider that the security
arrangements in place on the loan receivable are such that loan and associated
interest and redemption premium will be fully recoverable. The Company has
minimal ongoing costs which reflect the costs of administrating its listing on
the London Stock Exchange.
Based on the current cash availability and predicted expenditure levels, the
directors believe the Company's resources are sufficient to allow the Company
to meet its obligations as they fall due for the foreseeable future, and as a
minimum for a period of at least 12 months from the date of approval of these
financial statements. Consequently, the Directors will continue to prepare the
financial statements on a going concern basis.
1. Segmental analysis
The Company's single reportable segment is that of its activities as an
investment holding company. This activity takes place wholly in the United
Kingdom.
2. Loss per share attributable to ordinary shareholders
2021 2020
per share
per share
£
£
Basic loss per share (0.0004) (0.019)
Diluted loss per share (0.0004) (0.019)
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for calculating diluted earnings per ordinary share are
identical to those used for basic loss per ordinary share for the years ended
31 December 2020 and 2021. All share options formerly in issue had expired.
The calculation of loss per share is based on the following data:
2021 2020
£000 £000
Loss for the purposes of basic earnings per share being net loss attributable (20) (340)
to owners of the Company
Number of Shares
Weighted average number of shares in issue: 50,288,019 18,127,232
There were no shares with a dilutive, or potentially dilutive, impact (2020:
nil).
3. Operating loss
The following are included in operating loss for the year:
2021 2020
£000
£000
Exceptional costs (see analysis below) - 105
Staff costs 176 18
Auditor's remuneration (see note 4) 38 33
Lease payments 2 2
Foreign exchange losses 1 -
The exceptional costs/(income) relate to:
2021 2020
£000
£000
Costs relating to the move to the LSE Standard List - 105
Exceptional costs - 105
The Company's lease payments entirely relate to short term leases which, in
accordance with IFRS 16 Leases, are recognised as an expense on a
straight-line basis over the lease term.
4. Tax
2021 2020
£000 £000
Current taxation
UK corporation tax - -
Deferred tax
Origination and reversal of timing differences (70) -
Total tax credit (70) -
The charge for the year can be reconciled to the income statement as follows:
2021 2020
£000 £000
Loss before tax (90) (340)
Tax credit at the UK corporation tax rate of 19% (2020: 19%) (17) (65)
Effects of:
Losses (utilised)/not recognised (36) 65
Adjustment for changes in tax rate (17) -
Tax (credit) / charge for the year (70) -
The Company has tax losses carried forward of £982,784 (2020: £1,284,693) in
respect of which no deferred tax asset has been recognised due to uncertainty
of the Company's expected future profitability.
Changes to UK corporation tax rates were substantively enacted by the Finance
Bill 2021 on 24 May 2021. These included an increase of the corporation tax
rate to 25% from 1 April 2023. As this change was substantively enacted at the
balance sheet date, deferred tax is recognised at a rate of 25% in the current
year.
5. Share capital
The issued share capital of the Company is as follows:
Share Capital Ordinary Shares Share Capital Deferred Shares
£000' £000'
At 1 January 2020 2,869 -
Sub division and issue of shares on 29 June 2020 (2,725) 2,725
Ordinary shares issued on 30 September 2020 862 -
1,006 2,725
Share capital as at 31 December 2020 and
31 December 2021
5. Share capital (continued)
The movement in share capital is set out below.
Number Number
Ordinary Shares Deferred Shares
Ordinary shares of £0.001 each
At 1 January 2020 143,427,199 -
Issue of shares on 29 June at £0.02 1 -
Sub division of shares on 29 June 2020 into ordinary shares of £0.02 (136,255,840) -
Issue of deferred shares on 29 June 2020 at £0.019 per share - 143,427,200
Ordinary shares issued on 30 September 2020 43,116,659
50,288,019 143,427,200
Share capital as at 31 December 2020 and
31 December 2021
On the 29 June 2020 the Company completed a 20:1 share consolidation.
On 30 September 2020 the Company moved to the Standard Segment of the Official
List and raised £1.293 million by placing 43,116,659 at 3p per share.
The ordinary shares confer the right to receive a dividend, the right to one
vote per share and the right to participate in a distribution on a winding up
of the Company or a return of capital.
The deferred shares confer no rights to receive a dividend or other
distribution, no right to participate in income or profit and no right to
receive notice or speak or vote at a general meeting. They solely confer the
right on the return of capital after the nominal value together with the
£100,000,000 has been paid to the ordinary shareholders.
6. Notes of Cash Flow Statement
2021 2020
£000 £000
Loss before taxation (90) (340)
Adjustments for:
Other gains and losses (1,029) -
Finance costs 731 -
Foreign exchange 1 -
Expenses paid with issue of shares - 43
Operating cash flows before movements in working capital (387) (297)
(Increase)/decrease in receivables (1,188) 20
Increase/(decrease) in payables 26 (61)
Net cash flows used in operating activities (1,549) (338)
6. Notes of Cash Flow Statement (continued)
Cash and cash equivalents comprise cash and short-term bank deposits with an
original maturity of three months or less. The carrying amount of these assets
is approximately equal to their fair value.
The Company's net cash has moved as follows during the year:
1 January Cash flow Non-cash 31 December
2021 Movements 2021
£000 £000 £000 £000
Cash and bank balances 1,060 1,251 - 2,311
Net cash 1,060 1,251 - 2,311
7. Annual report and accounts
The Company will shortly be publishing its annual report and accounts
including a notice of AGM. These will be made available on the Company's
investor relations website at www.hawkwing.co (http://www.hawkwing.co) . The
AGM is to be held at the offices of DAC Beachcroft LLP, 25 Walbrook, London
EC4N 8AF at 11 a.m. on 24 June 2022.
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