REG - Nanoco Group PLC - Preliminary Results <Origin Href="QuoteRef">NANON.L</Origin> - Part 3
13/10/2015 07:01
- Part 3: For the preceding part double click ID:nRSM0342Cb
Forfeited/cancelled (250,000) - (250,000) (135,000)
Outstanding at 31 July 12,004,233 530,089 12,534,322 14,224,256
Exercisable at 31 July 8,721,900 530,089 9,251,989 4,968,590
Weighted average exercise price of options
2015 2014
The Group and Company Pence Pence
Outstanding at 1 August 54.4 56.8
Granted during the year 10.0 89.0
Exercised during the year 61.7 -
Forfeited/cancelled 57.0 113.2
Outstanding at 31 July 51.9 54.4
The weighted average fair value of options granted during the year to 31 July
2015 was 10 pence (2014: 89 pence). The range of exercise prices for options
and jointly owned EBT shares outstanding at the end of the year was nil -146
pence, (2014: nil - 146 pence).
For the share options outstanding as at 31 July 2015, the weighted average
remaining contractual life is 6.8 years (2014: 7.6 years).
The weighted average share price at the date of exercise for those share
options exercised during the year to 31 July 2015 was 109 pence (2014: no
share options exercised).
The following table lists the inputs to the models used for the years ended 31
July 2015 and 31 July 2014.
The Group and Company Performance linked grants Non-performance linked grants
2015 2014 2015 2014
Expected volatility (%) 55% n/a n/a 56%
Risk-free interest rate (%) 1.78% n/a n/a 1.84%
Expected life of options (year's average) 3 years n/a n/a 3 years
Weighted average exercise price (pence) 10.0 n/a n/a 89.0
Weighted average share price at date of grant (pence) 147.0 n/a n/a 89.0
Model used Binomial n/a n/a Binomial
The expected life of the options is based on historical data and is not
necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual
outcome.
No other features of options granted were incorporated into the measurement of
fair value.
20. Merger reserve and capital redemption reserve
Merger reserve
The Group £000
At 31 July 2013, 31 July 2014 and 31 July 2015 (1,242)
The merger reserve arises under section 612 of the Companies Act 2006 on the
shares issued by Nanoco Tech Limited to acquire Nanoco Technologies Limited as
part of a simple Group re-organisation on 27 June 2007.
Capital redemption reserve
The Company £000
At 31 July 2013, 31 July 2014 and 31 July 2015 4,402
The capital redemption reserve arises from the off-market purchase of deferred
shares on 4 May 2005 and their subsequent cancellation.
21. Movement in revenue reserve and treasury shares
The Group Retained deficit Treasury shares Total
revenue reserve
£000 £000 £000
As at 31 July 2013 (13,277) (394) (13,671)
Loss for the year (7,811) - (7,811)
As at 31 July 2014 (21,088) (394) (21,482)
Issue of shares by EBT - 297 297
Loss for the year (8,975) - (8,975)
As at 31 July 2015 (30,063) (97) (30,160)
No jointly owned EBT shares were granted during the year (2014: no shares).
During the year, 320,411 jointly owned EBT shares were exercised for an
aggregate consideration of £297,000 (2014: no shares).
Retained deficit represents the cumulative loss attributable to the equity
holders of the parent Company.
Treasury shares include the value of Nanoco Group plc shares issued as jointly
owned equity shares and held by the Nanoco Group sponsored Employee Benefit
Trust ("EBT") jointly with a number of the Group's employees. At 31 July 2015
530,089 shares in the Company were held by the EBT (2014: 850,500). In
addition there are 12,222 (2014: 12,222) treasury shares not held by the EBT.
Retained deficit Treasury shares Total
revenue reserve
The Company £000 £000 £000
At 31 July 2013 (25,316) (394) (25,710)
Profit for the year 39 - 39
At 31 July 2014 (25,277) (394) (25,671)
Issue of shares by the EBTProfit for the year -82 297- 29782
At 31 July 2015 (25,195) (97) (25,292)
22. Commitments
Operating lease commitments
The Group leases premises under non-cancellable operating lease agreements.
The future aggregate minimum lease and service charge payments under
non-cancellable operating leases are as follows:
31 July 2015 31 July 2014
Group Group
£000 £000
Land and buildings:
Not later than one year 723 584
After one year but not more than five years 1,752 1,722
After five years 614 1,002
3,089 3,308
23. Financial risk management
Overview
This note presents information about the Group's exposure to various kinds of
financial risks, the Group's objectives, policies and processes for measuring
and managing risk, and the Group's management of capital.
The board of directors has overall responsibility for the establishment and
oversight of the Group's risk management framework. The executive directors
report regularly to the board on Group risk management.
Capital risk management
The Company reviews its forecast capital requirements on a half-yearly basis
to ensure that entities in the Group will be able to continue as a going
concern while maximising the return to stakeholders.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, reserves and retained
earnings as disclosed in notes 18, 19, 20 and 21 and in the Group statement of
changes in equity. Total equity was £29,100,000 at 31 July 2015 (£16,893,000
at 31 July 2014).
The Company is not subject to externally imposed capital requirements.
Liquidity risk
The Group's approach to managing liquidity is to ensure that, as far as
possible, it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group's reputation.
The Group manages all of its external bank relationships centrally in
accordance with defined treasury policies. The policies include the minimum
acceptable credit rating of relationship banks and financial transaction
authority limits. Any material change to the Group's principal banking
facility requires board approval. The Group seeks to mitigate the risk of bank
failure by ensuring that it maintains relationships with a number of
investment grade banks.
At the reporting date the Group was cash positive with no outstanding
borrowings, apart from a long-term loan which is being repaid on a quarterly
basis in line with the terms of the loan agreement.
Categorisation of financial instruments
Loans and receivables Financial liabilities at amortised cost Group Company
Financial assets/(liabilities) £000 £000 £000 £000
31 July 2015
Trade receivables 107 - 107 -
Inter-company short-term loan to subsidiary - - - 31,823
Short-term investments and cash on deposit 20,000 - 20,000 20,000
Trade and other payables * - (1,909) (1,909) -
Inter-company long-term loan from subsidiary - - - (450)
Financial liabilities - (95) (95) -
20,107 (2,004) 18,103 51,373
Loans and receivables Financial liabilities at amortised cost Group Company
Financial assets/(liabilities) £000 £000 £000 £000
31 July 2014
Trade receivables 116 - 116 -
Inter-company short-term loan to subsidiary - - - 27,500
Short-term investments and cash on deposit 5,791 - 5,791 -
Trade and other payables * - (1,329) (1,329) -
Inter-company long-term loan from subsidiary - - - (450)
Financial liabilities - (158) (158) -
5,907 (1,487) 4,420 27,050
*Excluding deferred revenue.
The values disclosed in the above table are carrying values. The board
considers that the carrying amount of financial assets and liabilities
approximates to their fair value.
The main risks arising from the Group's financial instruments are credit risk
and foreign currency risk. The board of directors reviews and agrees policies
for managing each of these risks which are summarised below.
Other loans (note 17) are subject to interest at base rate plus 2%, however as
the Group's cash deposits which attract interest at rates set for the period
of the respective deposit, are of a greater amount, any increase in base rate
and thus interest payable are more than offset by higher interest income.
Credit risk
The Group's principal financial assets are cash, cash equivalents and
deposits. The Group seeks to limit the level of credit risk on the cash
balances by only depositing surplus liquid funds with multiple counterparty
banks that have investment grade credit ratings.
The Group trades only with recognised, creditworthy third parties. Receivable
balances are monitored on an on-going basis with the result that the Group's
exposure to bad debts is not significant. The Group's maximum exposure is the
carrying amount as disclosed in note 14, which was neither past due nor
impaired. All trade receivables are ultimately overseen by the chief financial
officer and are managed on a day-to-day basis by the UK credit control team.
Credit limits are set as deemed appropriate for the customer.
The maximum exposure to credit risk in relation to cash, cash equivalents and
deposits is the carrying value at the balance sheet date.
Foreign currency risk
The Group is exposed to currency risk on sales and purchases that are
denominated in a currency other than the respective functional currency of the
Company. These are primarily US Dollars (USD) and Euros. Transactions outside
of these currencies are limited.
Almost all of the Company's revenue is denominated in USD. The Group purchases
some raw materials, certain services and some assets in USD which partly
offsets its USD revenue, thereby reducing net foreign exchange exposure.
The Group may use forward exchange contracts as an economic hedge against
currency risk, where cash flow can be judged with reasonable certainty.
Foreign exchange swaps and options may be used to hedge foreign currency
receipts in the event that the timing of the receipt is less certain. There
were no open forward contracts as at 31 July 2015 or at 31 July 2014.
The split of Group assets between Sterling and other currencies at the
year-end is analysed as follows:
31 July 2015 31 July 2014
GBP USD Total GBP USD Total
The Group £000 £000 £000 £000 £000 £000
Cash, cash equivalents and deposits 24,271 40 24,311 12,032 150 12,182
Trade receivables 1 106 107 - 116 116
Trade payables (767) (95) (862) (629) (131) (760)
23,505 51 23,556 11,403 135 11,538
Sensitivity analysis to movement in exchange rates
The following table demonstrates the sensitivity to a reasonably possible
change in Sterling against the US Dollar exchange rate with all other
variables held constant, on the Group's loss before tax (due to foreign
exchange translation of monetary assets and liabilities) and the Group's
equity.
Increase/(decrease) in Sterling vs. US Dollar rate Impact on loss before tax and Group equity Impact on loss before tax and Group equity
% 2015£000 2014£000
10% (4) (12)
5% (2) (6)
(5)% 3 7
(10)% 6 15
Interest rate risk
As the Group has no significant borrowings the risk is limited to the
reduction of interest received on cash surpluses held at bank which receive a
floating rate of interest. The principal impact to the Group is the result of
interest-bearing cash and cash equivalent balances held as set out below:
31 July 2015 31 July 2014
Fixed rate Floating rate Total Fixed rate Floating rate Total
The Group £000 £000 £000 £000 £000 £000
Cash, cash equivalents and deposits 20,000 4,311 24,311 11,996 186 12,182
The Company
Cash, cash equivalents and deposits 20,000 12 20,012 3,733 - 3,733
The exposure to interest rate movements is immaterial.
Maturity profile
Set out below is the maturity profile of the Group's financial liabilities at
31 July 2015 based on contractual undiscounted payments including contractual
interest.
Less than 1 year 1 to 5 years Greater than 5 years Total
2015 £000 £000 £000 £000
Financial liabilities
Trade and other payables * 1,909 - - 1,909
Other loans (including contractual interest) 65 33 - 98
1,974 33 - 2,007
Less than 1 year 1 to 5 years Greater than 5 years Total
2014 £000 £000 £000 £000
Financial liabilities
Trade and other payables * 1,329 - - 1,329
Other loans (including contractual interest) 65 101 - 166
1,394 101 - 1,495
*Excluding deferred revenue.
Trade and other payables are due within three months.
The directors consider that the carrying amount of the financial liabilities
approximates to their fair value.
As all financial assets are expected to mature within the next twelve months
an aged analysis of financial assets has not been presented.
The Company's financial liability, a long-term loan from a subsidiary
undertaking, is due after more than five years.
24. Related party transactions
The Group:
There were no sales to, purchases from, or at the year-end, balances with any
related party.
The Company:
The following table summarises inter-company balances at the year-end between
Nanoco Group plc and subsidiary entities:
Notes 31 July 2015 31 July 2014
£000 £000
Long term loans owed to Nanoco Group plc by:
Nanoco Life Sciences Limited 20,286 20,286
Nanoco Technologies Limited* 2,817 2,198
12 23,103 22,484
Less provision against debt owed by Nanoco Life Sciences Limited 12 (20,286) (20,286)
2,817 2,198
Short-term loan owed to Nanoco Group plc by:
Nanoco Technologies Limited** 14 31,823 27,500
Long-term loan owed by Nanoco Group plc to:
Nanoco Tech Limited 16 (450) (450)
* The movement in the long-term loan due from Nanoco Technologies Limited
relates to the recharge in respect of the expense for share-based payments for
staff working for Nanoco Technologies Limited and is included in investments.
** The movement in the short-term loan due from Nanoco Technologies Limited
relates to transfers of cash balances between the entities for the purposes of
investing short term funds and the funding of trading losses.
There are no formal terms of repayment in place for these loans and it has
been confirmed by the directors that the long-term loans will not be recalled
within the next twelve months.
None of the loans is interest bearing.
25. Compensation of key management personnel (including directors)
2015 2014
£000 £000
Short-term employee benefits 1,228 624
Pension costs 98 204
Benefits in kind 6 64
Share-based payments 405 180
1,737 1,072
This information is provided by RNS
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