REG-Clear Leisure Plc: Final Results <Origin Href="QuoteRef">CLPC.L</Origin> - Part 1
07/07/2017 07:05
7 July 17
Clear Leisure Plc
("Clear Leisure", "the Company" or “the Group”)
FINAL RESULTS
For the Year Ended 31 December 2016
Clear Leisure (AIM: CLP), the AIM listed investment company focusing on the
leisure and real estate sectors in Italy is pleased to announce its final
results for the year ended 31 December 2017.
HIGHLIGHTS:
* Loss before Tax reduced to €397,000 (2015: €20,246,000)
* Operational Loss reduced to €156,000 (2015: €654,000)
* Net Asset Value of the Group increased to €1.6 million (2015: €1.34
million)
Francesco Gardin, CEO and Chairman of Clear Leisure, commented, “The Board
remains committed to improving the financial health of Clear Leisure through
court-led recoveries of misappropriated assets, asset sales and the buy-back
of the debts of its subsidiaries at significant discounts. Whilst we have
achieved success with more than one of these areas, there remain a number of
challenges to overcome before shareholders are rewarded for their patience. We
are confident that by continuing with our process, this ultimate goal will be
achieved.”
The Company advises that the 2016 Report and Accounts has been posted out to
shareholders.
-ends-
For further information please contact:
Clear Leisure plc +39 335 296573
Francesco Gardin, CEO and Executive Chairman
ZAI Corporate Finance (Nominated Adviser) +44 (0)20 7060 2220
Tim Cofman/Peter Trevelyan-Clark
Peterhouse Corporate Finance (Broker) +44 (0) 20 7469 0935
Lucy Williams / Heena Karani
Leander (Financial PR) +44 (0) 7795 168 157
Christian Taylor-Wilkinson
About Clear Leisure Plc
Clear Leisure plc (AIM: CLP) is an AIM listed investment company with a
portfolio of companies primarily encompassing the leisure and real estate
sectors mainly in Italy. The focus of management is to pursue the monetisation
of all of the Company’s existing assets, through selected realisations,
court-led recoveries of misappropriated assets and substantial debt-recovery
processes. For further information, please visit, www.clearleisure.com
CHAIRMAN’S STATEMENT
I am pleased to present below the Company’s Final Results for the year ended
31 December 2016.
Overview
The Company continued to execute its well-founded strategy during 2016 and,
along with the first six months of 2017, has begun to make positive steps with
the creditors of its Italian subsidiaries, ownership rights of its assets and
funding requirements.
As at 31 December 2016, we had bought back consolidated Group debt to the
value of €1.3 million at a discount of 76 per cent. Subsequently, in May of
this year we purchased a further €3.14 million of loans owing by Mediapolis
Srl to a syndicate of three Italian banks, also at a 76 per cent discount.
That debt, now owing by Mediapolis Srl to Clear Leisure, is secured by a first
charge on valuable land owned by Mediapolis Srl.
These discounted debt purchases improve Clear Leisure’s consolidated balance
sheet, reduce the Group’s interest burden and save the management time
consumed in dealing with the relevant creditors. The Board intends to remain
alert to further such opportunities to improve the Company’s financial
position.
Funding for the May 2017 debt buy back was facilitated by a €1.2 million
loan from Eufingest, the Lugano based investment manager and our largest
shareholder. This loan, together with all other loans due by Clear Leisure to
Eufingest, and in total then amounting to €2.475 million, has been
consolidated into a single loan repayable by 28 April 2020 and carrying an
annual interest rate of just 1 per cent. Clear Leisure can repay the loan
(plus interest) at any time before the maturity date whilst Eufingest has the
right to convert all or part of the loan at 0.89 pence per share.
Through these transactions, Eufingest has demonstrated its support for the
Board of Clear Leisure and we are confident that Eufingest will continue to
give careful consideration to any financial restructuring or business
opportunity uncovered by Clear Leisure.
As a further part of the debt restructuring initiated by the Board, a
bondholders meeting held on 30 December 2016 approved the extension of the
final maturity of the Zero Rate Convertible Bond 2015 to 15 December 2018. It
further agreed to reduce the redemption amount to be paid at final maturity on
the nominal amount of the bonds, from 114.49 per cent to 103.03 per cent,
thereby reducing the effective annual interest from 7.0 per cent to 1.0 per
cent. This new arrangement will produce an interest saving for the Company
of €792,000 (£682,000). Eufingest is responsible for €3 million of the
bonds and voted in favour of the resolutions at the bondholders meeting.
In addition to the financial support provided by Eufingest during the 2016
year, the Company made two share issues to provide working capital; primarily
to assist with the legal costs associated with contesting asset ownership. On
4 August, the Company raised £150,000 via a placing at 0.5p per share. On 14
September 2016, the Company made a further placing for £200,000 at 0.9p per
share, with one warrant for every placing share to be exercised at 1.5p up to
20 March 2017. None of the warrants were exercised by 20 March 2017.
An additional £50,000 was contributed to working capital in June 2016 by the
sale of the Company’s 9.9 per cent portfolio shareholding in Ascend Capital,
a London based broker.
In the 2015 Chairman’s Statement I announced that we intended to report
future results in Sterling. However, we have now decided to continue to report
in Euros as this currency best represents our current activities and funding.
Financial Review
The Group reported a loss before tax of €397,000 for the year ended 31
December 2016 (December 2015: loss before tax €20,246,000); operating losses
for the period were €156,000 (December 2015: €654,000).
The undiluted Net Asset Value (NAV) of the Group as of 31 December 2016 was
€1.601 million, compared to €1.340 million at 31 December 2015. The
increase in value is due to the buyback of the bond in Mediapolis.
Operational Review
During the year under review, we entered into new loan arrangements with
Eufingest totaling €0.46 million and £0.3 million. By year-end, the total
amount of loans outstanding to Eufingest was €1.1 million and, as mentioned
earlier in my statement, by May 2017 amounted to €2.475 million,
consolidated into a single loan.
A favourable ruling in February 2016 by the Turin Court, Companies Section,
meant that Clear Leisure was finally confirmed the legitimate controlling
owner of 50.17 per cent of SIPIEM which, in turn, is a minority shareholder in
T.L.T S.p.A., owner of the profitable Ondaland Waterpark, the largest such
park in Northern Italy. Importantly, this court ruling entitled SIPIEM to have
representation at shareholder meetings and appoint the legal representative of
the company, fundamental towards obtaining title to the T.L.T. S.p.A. shares
owing to the Company, and gaining access to the revenue and profits of
Ondaland. In July 2016, the Company presented at a SEPIEM shareholders
meeting, a resolution to recover damages from former management and internal
audit committee members. This action has prompted the Ondaland controlling
shareholders to enter into negotiations with SIPIEM, which we expect will lead
to a positive resolution of outstanding issues to the benefit of Clear
Leisure.
On 26 February 2016, the Company entered into a settlement agreement for a
secured loan, which had been arranged by the previous board. The original loan
was for £250,000 (€292,992) plus interest of £80,000 (€93,758). Under
the settlement, the loan principal has been repaid whilst the remaining
£85,000 (€99,617) will be settled this year.
On 24 March 2016, the previous Board negotiated settlement in principle with
Digital Magics S.p.A. to close all outstanding disputes arising from past
transactions involving a number of deals between Clear Leisure and Digital
Magics S.p.A. The agreement involved the issue of further €400,000, Zero
Rate Convertible Bond 2015 and a cash payment for €17,500. The new Board
renegotiated this settlement, agreeing instead to issue €300,000 of the
existing Zero Rate Convertible Bond 2015 maturing in December 2017 and to pay
€17,500 in cash, as before. The Zero Rate Convertible Bond 2015 was
subsequently renegotiated as set out below.
At a meeting on 30 December 2016 of bond holders for the Company’s Zero Rate
Convertible Bond 2015, agreed new repayment terms, with the maturity date
extended to 15 December 2018 and the interest payable on the bonds reduced
from 7 per cent to 1 per cent.
In March 2016, the Company drew down a £200,000 (€234,394) convertible loan
agreed with Eufingest, bearing a 2.5 per cent interest, with a conversion
price of 0.75 pence per Clear Leisure share and repayable on 30 September
2016. This loan, along with all other Eufingest loans, has now been
consolidated into the one €2.475 million loan referred to earlier in my
review.
In May 2016, Eufingest provided a convertible facility of £100,000
(€117,197) with an annual interest rate of 2.5 per cent and convertible into
Clear Leisure shares at 0.75 per share. The facility was repayable on 30
September 2016. A further €50,000 loan was made available at the end of May
and on the same terms as the earlier facilty. Between September and December
2016, Eufingest provided four convertible facilities of total €460,000 with
an annual interest rate of 2.50 per cent. These facilities have subsequently
been absorbed into the one single loan referred to above.
At the end of July 2016, Clear Leisure allotted 1,428,571 ordinary Clear
Leisure shares to Francesco Gardin in settlement of £12,500 (€14,650) of
his salary due for the period August 2015 to December 2015. The allotment of
shares was in accordance with his contract and the effective issue price of
the shares was 0.875 pence.
Portfolio Companies
An update on the Group’s portfolio companies on 31 December 2016 is as
follows (percentage of equity held is shown in parenthesis):
Mediapolis Srl (84.04%): owns a strategically located, development site,
covering 497,884 sqm, in north-west Italy on the A4/A5 motorway between Milan
and Turin. Planning was approved in 2007 for a theme park, with additional
guest facilities, shops and offices but the necessary building permits have
not been forthcoming. In January 2015, Mediapolis launched a €39.65 million
claim against the regional government of Piedmont for failing to honour its
commitment to approve the construction of the park. Mediapolis continues to
pursue this claim and to seek an acceptable development plan. Mediapolis also
owns 10 holiday villas in the Porto Cervo area, the most exclusive holiday
location in Sardinia, some of which are currently let to an adjacent hotel.
SIPIEM SpA (50.17%): is a minority shareholder in T.L.T. S.p.A. which owns a
number of real estate assets including the operating Ondaland Waterpark
located in north-west Italy. In July 2016, the Company voted at a SIPIEM
shareholders meeting, presenting a resolution to recover damages from former
management and internal audit committee members. The Board is confident that
its legal procedures will result in a successful outcome for the Company and
that the holding in SIPIEM will become a significant realisable asset.
GeoSim Systems Ltd (www.geosim.co.il) (4.53%): is an Israeli company seeking
to establish itself as the world leader in building complete and
photorealistic 3D “virtual” cities and in delivering them through the
Internet for use in local searches, real estate and city planning, homeland
security, tourism and entertainment. Autonomous car projects and other new
applications will inevitably require very detailed 3D models of cities and in
this regard, the release of GeoSim’s Vancouver 3D model represents an
important milestone for the company. GeoSim technology remains one of the best
options worldwide. GeoSim is not a core asset and will be sold at the right
opportunity.
ORH SpA (73.43%): owned a chain of hotels in Italy and East Africa under the
Ora Hotels brand. It was put into administration in February 2014, allegedly
due to gross financial misconduct by the certain individuals associated with
the company, prior to the sale to Clear Leisure. The Company continues to
pursue a claim against these entities, with the objective of recovering all
the funds historically invested, of nearly €6 million in cash and shares.
There are also other claims and issues that the company continues to deal
with, that may yield some return to the Group.
Post-Balance Sheet Events
On 10 May 2017, the Company consolidated its outstanding loans with Eufingest
into one convertible loan of €2.475 million with a repayment date of 28
April 2020 and an interest rate of 1 per cent. Eufingest can convert the loan
into shares at any time up to the repayment date at a price of 0.89p per
share, being the weighted average conversion price of the loans then
converted into the new facility.
The new loan facilitated the completion of the €3.14 million debt buy-back
at 76 per cent discount of Mediapolis bank debt with a first charge on a
strategic 497,884 sqm site in north-west Italy on the A4/A5 motorway between
Milan and Turin. A Clear Leisure wholly owned vehicle is now the beneficiary
of the debt, any unpaid interest on the debt and a first charge on the land up
to €5 million on the debt.
On 15 May, Clear Leisure was informed that the Court Prosecutor of Ivrea,
Metropolitan City of Turin, had filed a winding up request on Mediapolis Srl.
The petition arose from an initiative of the Ivrea Court following a claim
which has now been settled by the Company. Nonetheless under Italian Law,
once the request from the Court has been passed to the prosecutor, the winding
up petition may proceed in consideration of other outstanding debts,
notwithstanding that the original debt has been settled.
A hearing of the court was held on 9 June, at which Mediapolis Srl provided
evidence of its continuing discussion with its creditors. A second hearing
took place on 23 June, where Mediapolis Srl submitted additional documentation
for the consideration of the court. A decision of the court, with respect to
the winding up petition of the Court Prosecutor, is now not expected before
early July.
Meanwhile Mediapolis Srl called a shareholder meeting (“AGM”) for 21 June
2017 both to approve the accounts for the year ending December 2016 and to
discuss the winding-up petition and possible further funding by its
shareholders. At the AGM Mediapolis shareholders approved the 2016 financial
accounts, reporting a profit of €335,000. The shareholders present indicated
their support for Mediapolis to raise funds to satisfy creditors, subject to
Mediapolis Srl not being wound up by the court and provided that the
development land remains under the ownership of Mediapolis Srl.
Outlook
The Board remains committed to improving the financial health of Clear Leisure
through court-led recoveries of misappropriated assets, asset sales and the
buy-back of the debts of its subsidiaries at significant discounts. Whilst we
have achieved success with more than one of these directives, there remain a
number of challenges to overcome before shareholders are rewarded for their
patience. We are confident that by continuing with our process, this ultimate
goal will be achieved.
Francesco Gardin
Chairman
6 July 2017
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Note 2016 2015
€’000 €’000
Revenue 63 -
Cost of sales - -
63 -
Other operating income 943 -
Administration expenses (1,162) (654)
Operating loss (156) (654)
Other gains and losses 8 24 (18,569)
Finance charges 9 (251) (1,023)
Loss before tax (383) (20,246)
Tax 12 (14) -
Loss for the year (397) (20,246)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (397) (20,246)
Loss for the year attributable to:
Owners of the parent (450) (17,016)
Non-controlling interests 53 (3,230)
Earnings per share:
Basic and fully diluted loss from continuing operations 13 (€0.00) (€0.08)
Basic and fully diluted loss from discontinued operations - -
Basic and fully diluted loss per share (€0.00) (€0.08)
The accounting policies and notes form part of these financial statements.
STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2016
Notes Group 2016 €’000 Group 2015 €’000 Company 2016 €’000 Company 2015 €’000
Non-current assets
Goodwill 14 - - - -
Other intangible assets 15 20 50 - -
Property, plant and equipment 16 18,014 18,114 - -
Available for sale investments 18 - 60 - -
Investments in subsidiaries 17 - - 9,548 8,537
Other receivables 20 62 - - -
Total non-current assets 18,096 18,224 9,548 8,537
Current assets
Investments held for trading 19 634 614 - -
Trade and other receivables 20 7,136 6,847 75 35
Cash and cash equivalents 21 1,370 1,842 2 475
Total current assets 9,140 9,303 77 510
Current liabilities
Trade and other payables 22 (4,245) (4,948) (844) (1,058)
Borrowings 23 (19,880) (20,832) (6,641) (6,680)
Total current liabilities (24,125) (25,780) (7,485) (7,738)
Net current (liabilities) (14,985) (16,477) (7,408) (7,228)
Total assets less current liabilities 3,111 1,747 2,140 1,309
Non-current liabilities
Borrowings 23 (1,103) - (1,103) -
Provisions 24 (407) (407) - -
Total non-current liabilities (1,510) (407) (1,103) -
Net assets 1,601 1,340 1,037 1,309
Equity
Share capital 26 6,344 6,112 6,344 6,112
Share premium account 26 43,351 42,954 43,351 42,954
Other reserves 28 11,441 11,412 585 556
Retained losses (59,843) (59,393) (49,243) (48,313)
Equity attributable to owners of the Company 1,293 1,085 1,037 1,309
Non-controlling interests 30 308 255 - -
Total equity 1,601 1,340 1,037 1,309
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total €’000 Non-controlling interests €’000 Total equity €’000
At 1 January 2016 6,112 42,954 11,412 (59,393) 1,085 255 1,340
Total comprehensive loss for the year - - - (450) (450) 53 (397)
Issue of shares 232 397 - - 629 - 629
Share option charge - - 29 - 29 - 29
At 31 December 2016 6,344 43,351 11,441 (59,843) 1,293 308 1,601
Company
At 1 January 2016 6,112 42,954 556 (48,313) 1,309 - 1,309
Loss and total comprehensive income for the year - - - (930) (930) - (930)
Issue of shares 232 397 - - 629 - 629
Share option charge - - 29 - 29 - 29
At 31 December 2016 6,344 43,351 585 (49,243) 1,037 - 1,037
The accounting policies and notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total €’000 Non-controlling interests €’000 Total equity €’000
At 1 January 2015 6,074 42,856 11,390 (42,377) 17,943 3,485 21,428
Total comprehensive loss for the year - - - (17,016) (17,016) (3,230) (20,246)
Issue of shares 38 98 - - 136 - 136
Share option charge - - 22 - 22 - 22
At 31 December 2015 6,112 42,954 11,412 (59,393) 1,085 255 1,340
Company
At 1 January 2015 6,074 42,856 534 (32,724) 16,740 - 16,740
Total comprehensive loss for the year - - - (15,589) (15,589) - (15,589)
Issue of shares 38 98 - - 136 - 136
Share option charge - - 22 - 22 - 22
At 31 December 2015 6,112 42,954 556 (48,313) 1,309 - 1,309
The accounting policies and notes form part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Note Group 2016 €’000 Group 2015 €’000 Company 2016 €’000 Company 2015 €’000
Net cash outflow from operating activities 29 (1,352) (835) (1,290) (835)
Cash flows from investing activities
(Increase)/decrease in loan to subsidiary undertakings - - - -
Sale of available for sale assets 63 - - -
Purchase of available for sale investments - 900 - 900
Net cash (outflow) from investing activities 63 900 - 900
Cash flows from financing activities
Proceeds of issue of shares 629 136 629 136
Repayment of long term debt (195) (272) (195) (272)
Proceeds from borrowing 383 540 383 540
Net cash inflow from financing activities 817 404 817 404
Net (decrease) /increase in cash for the year (472) 469 (473) 470
Cash and cash equivalents at beginning of year 1,842 1,373 475 5
Exchange differences - - - -
Cash and cash equivalents at end of year 21 1,370 1,842 2 475
The accounting policies and notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2016
1.General Information
Clear Leisure plc is a company incorporated in the United Kingdom under the
Companies Act 2006. The Company’s ordinary shares are traded on AIM of the
London Stock Exchange. The address of the registered office is given on the
Company information page. The nature of the Group’s operations and its
principal activities are set out in the Directors’ report on page 10.
Standards and amendments which became effective during the year have not had a
material impact on the financial statements.
Statement of compliance
The financial statements comply with IFRS as adopted by the European Union. A number of new and revised Standards and Interpretations have been adopted in the current period by the Group for the first time and do not have a material impact on the group.
The following new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the financial statements of the Group.
IFRS 9 Financial instruments 1 January 2018
IFRS 15 Revenue from Contracts with Customers 1 January 2018
IFRS 16 Leases 1 January 2017
IAS 7 Statement of cash flows 1 January 2017
IAS 12 Income taxes 1 January 2017
IFRIC 22 Foreign currency transactions and advance consideration
2.Accounting policies
The principal accounting policies are summarised below. They have all been
applied consistently throughout the period covered by these consolidated
financial statements.
Basis of preparation
The consolidated Financial Statements of Clear Leisure plc have been prepared
in accordance with International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee (IFRS IC) as adopted by the European Union and the
parts of Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost
convention except in respect of revalued properties (as permitted by IFRS 1),
and for certain available for sale investments that are stated at their fair
values and land and buildings that have been revalued to their fair value.
The preparation of Financial Statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
Financial Statements are disclosed in Note 3.
The Consolidated Financial Statements are presented in Euros (€), the
presentational and functional currency, rounded to the nearest €’000.
Going Concern
Any consideration of the forseeable future involves making a judgement, at a
particular point in time, about future events which are inherently uncertain.
The ability of the Group to carry out its planned business objectives is
dependent on its continuing ability to raise adequate financing from equity
investors and/or the achievement of profitable operations.
Nevertheless, at the time of approving these financial statements and after
making due enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue operating for the forseeable future.
For this reason they continue to adopt the going concern basis of preparing
the Group’s financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Group and entities controlled by the Group (its subsidiaries) made up to
31 December each year. Control is achieved where the Group has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the group. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
are present ownership interests entitling their holders to a proportionate
share of net assets upon liquidation may initially be measured at fair value
or at the non-controlling interests' proportionate share of the fair value of
the acquiree's identifiable net assets. The choice of measurement is made on
an acquisition-by-acquisition basis. Other non-controlling interests are
initially measured at fair value. Subsequent to acquisition, the carrying
amount of non-controlling interests is the amount of those interests at
initial recognition plus the noncontrolling interests' share of subsequent
changes in equity. Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amount of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Group.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), less
liabilities of the subsidiary and any non-controlling interests. Amounts
previously recognised in other comprehensive income in relation to the
subsidiary are accounted for (i.e. reclassified to profit or loss or
transferred directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities are disposed of. The fair value
of any investment retained in the former subsidiary at the date when control
is lost is regarded as the fair value on initial recognition for subsequent
accounting under lAS 39 Financial Instruments: Recognition and Measurement or,
when applicable, the costs on initial recognition of an investment in an
associate or jointly controlled entity.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration for each acquisition is measured at the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or
liability resulting from a contingent consideration arrangement, measured at
its acquisition-date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify as measurement
period adjustments (see below). All other subsequent changes in the fair value
of contingent consideration classified as an asset or liability are accounted
for in accordance with relevant IFRSs. Changes in the fair value of contingent
consideration classified as equity are not recognised.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are remeasured to fair value
at the acquisition date (i.e. the date the Group attains control) and the
resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to
profit or loss, where such treatment would be appropriate if that interest
were disposed of.
The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3(2008) are recognised at
their fair value at the acquisition date, except that:
*
deferred tax assets or liabilities and liabilities or assets related to
employee benefit arrangements are recognised and measured in accordance with
lAS 12 Income Taxes and lAS 19 Employee Benefits respectively;
*
liabilities or equity instruments related to the replacement by the Group of
an acquiree's sharebased payment awards are measured in accordance with IFRS
2 Share-based Payment; and
*
assets (or disposal groups) that are classified as held for sale in accordance
with IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations are
measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see
below), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised as
of that date.
The measurement period is the period from the date of acquisition to the date
the Group obtains complete information about facts and circumstances that
existed as of the acquisition date, and is subject to a maximum of one year.
Goodwill
Goodwill arising in a business combination is recognised as an asset at the
date that control is acquired (the acquisition date). Goodwill is measured as
the excess of the sum of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of the acquirer's
previously held equity interest (if any) in the entity over the net of the
acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
If, after reassessment, the Group's interest in the fair value of the
acquiree's identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and
the fair value of the acquirer's previously held equity interest in the
acquiree (if any), the excess is recognised immediately in profit or loss as a
bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent
period.
On disposal of a subsidiary, the attributable amount of goodwill is included
in the determination of the profit or loss on disposal.
Acquired intangible assets
Intangible assets acquired separately or as part of a business combination are
capitalised at cost and fair value as at the date of acquisition,
respectively. Intangible assets are subsequently amortised on a
straight-line basis over the expected period that benefits will accrue to the
Group:
Patents and trade marks over 10 years
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not
subject to amortisation and are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value
in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date.
Intangible assets
Internally generated development expenditure is capitalised as an intangible
asset only if all the following criteria are met:
*
the asset can be identified;
*
it is probable that the asset will generate future economic benefits;
*
the fair value of the asset can be measured reliably.
Capitalised development expenditure is amortised on a straight-line basis over
the period of expected future sales of the resulting products, which has been
assessed as between 5 and 10 years.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or
services, or for administrative purposes, are stated in the balance sheet at
their revalued amounts, being the fair value at the date of revaluation, less
any subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be determined
using fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such land and buildings
is credited to the properties revaluation reserve, except to the extent that
it reverses a revaluation decrease for the same asset previously recognised as
an expense, in which case the increase is credited to the income statement to
the extent of the decrease previously expensed. A decrease in carrying amount
arising on the revaluation of such land and buildings is charged as an expense
to the extent that it exceeds the balance, if any, held in the properties
revaluation reserve relating to a previous revaluation of that asset.
Depreciation on revalued buildings is charged to income. On the subsequent
sale or scrap page of a revalued property, the attributable revaluation
surplus remaining in the properties revaluation reserve is transferred
directly to retained earnings.
Properties in the course of construction for production, supply or
administrative purposes, or for purposes not yet determined, are carried at
cost, less any recognised impairment loss. Cost includes professional fees
and, for qualifying assets, borrowing costs capitalised in accordance with the
group's accounting policy. Depreciation of these assets, on the same basis as
other property assets, commences when the assets are ready for their intended
use.
Freehold land is not depreciated.
Plant and equipment and fixtures and fittings are stated at cost less
accumulated depreciation and any accumulated impairment losses. Depreciation
is provided on all tangible assets to write down the cost less estimated
residual value of each asset over its expected useful economic life on a
straight line basis at the following annual rates:
Land and buildings Nil
Leasehold improvements Straight line over the remaining period of the lease
Plant and machinery 15% straight line
Fixtures and fittings 20% straight line
Asset residual values and useful economic lives are reviewed and adjusted if
appropriate at the end of each reporting period. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised in the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. The
cost of finished goods and work in progress comprise all direct expenditure
and an appropriate proportion of fixed and variable overheads. Net realisable
value is the estimated selling price in the ordinary course of business, less
applicable variable selling expenses.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for
impairment.
Foreign currency
The functional currency is Euro. Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates
of the transactions or valuation where items are re-measured. Exchange gains
and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of
Comprehensive Income. Exchange gains and losses that relate to borrowings
and cash and cash equivalents are presented in the income statement within
‘finance income or costs’. All other Exchange gains and losses are
presented in the income statement within ‘other (losses)/gains – net’.
Changes in the fair value of monetary securities denominated in foreign
currency classified as available for sale are analysed between translation
differences resulting from changes in the amortised cost of the security and
other changes in the carrying amount of the security. Translation differences
related to changes in amortised cost are recognised in profit or loss, and
other changes in carrying amount are recognised in other comprehensive income.
Taxation
The tax expense represents the sum of the tax currently payable and any
deferred tax.
Current taxes are based on the results of the Group companies and are
calculated according to local tax rules, using the tax rates that have been
enacted or substantially enacted by the period-end date.
Deferred tax is provided in full using the financial position liability method
for all taxable temporary differences arising between the tax bases of assets
and liabilities and their carrying values for financial reporting purposes.
Deferred tax is measured using currently enacted or substantially enacted tax
rates. Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
Deferred tax assets are recognised to the extent the temporary difference will
reverse in the foreseeable future and that it is probable that future taxable
profit will be available against which the asset can be utilised. Deferred tax
is recognised for all deductible temporary differences arising from
investments in subsidiaries and associates, to the extent that it is probable
that the temporary difference will reverse in the foreseeable future and
taxable profit will be available against which the temporary difference can be
utilised.
Revenue
Revenue is measured at the fair value of the consideration received or
receivable for the services rendered net of Value Added Tax, represents the
value of. Consultancy fees are recognised as earned on unconditional supply of
services.
Interest income
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected
life of the financial asset to that asset’s net carrying amount on initial
recognition.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
The Group’s financial assets are classified into the following specific
categories: “available for sale investments”, “trade and other
receivables”, and “cash and cash equivalents”. The classification
depends on the nature and purpose of the financial assets and is determined at
the time of initial recognition.
Available for sale investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under a contract whose terms require delivery of
the investment within the timeframe established by the market concerned, and
are initially measured at cost, including transaction costs.
Investments classified as available for sale are measured at subsequent
reporting dates at fair value. Fair value is defined as the price at which an
orderly transaction would take place between market participants at the
reporting date and is therefore an estimate and as such requires the use of
judgement. Where possible fair value is based upon observable market prices,
such as listed equity markets or reported merger and acquisition transactions.
Alternative bases of valuation may include contracted proceeds or best
estimate thereof, implied valuation from further investment and long-term cash
flows discounted at a rate which is tested against market data. Gains and
losses arising from changes in fair value are recognised directly in other
comprehensive income, until the security is disposed of or is determined to be
impaired, at which time the cumulative gain or loss previously recognised in
other comprehensive income is included in the net profit or loss for the
period. Impairment losses recognised in the income statement for equity
investments classified as available-for-sale
- More to follow, for following part double click ID:nPRr7ADFBbRecent news on Quantum Blockchain Technologies
See all newsREG-Quantum Blockchain Technologies Plc: Result of AGM
AnnouncementREG-Quantum Blockchain Technologies Plc: REPO Rollover
AnnouncementREG-Quantum Blockchain Technologies Plc: Final Results
AnnouncementREG-Quantum Blockchain Technologies Plc: Business Update
AnnouncementREG-Quantum Blockchain Technologies Plc: AI Oracle Video & Bitcoin 2025
Announcement