REG - Clear Leisure PLC - Final Results <Origin Href="QuoteRef">CLPC.L</Origin> - Part 2
16/07/2015 13:24
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assets and liabilities, income
and expenses. Estimates and judgements are continually evaluated and are
based on historical experience and other factors including expectations of
future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below
Impairment of goodwill
Goodwill has a carrying value of E9,000 (2013: E9,000). The Group tests
annually whether goodwill has suffered any impairment, in accordance with the
accounting policy stated in Note 2. The recoverable amounts of
cash-generating units have been determined based on value-in-use
calculations.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available) and non-financial
assets. This involves developing estimates and assumptions consistent with how
market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always
available. In that case management uses the best information available.
Estimated fair values may vary from the actual prices that would be achieved
in an arm's length transaction at the reporting date.
In order to arrive at the fair value of investments a significant amount of
judgement and estimation has been adopted by the Directors as detailed in the
investments accounting policy. Where these investments are un-listed and there
is no readily available market for sale the carrying value is based upon
future cash flows and current earnings multiples for which similar entities
have been sold.
Going Concern
The Group's activities generated a loss of E3,141,000 (2013: E7,359,000) and
had net current liabilities of E22,634,000 as at 31 December 2014. In addition
the Company's shares are currently suspended on the AIM Market. The Group's
operational existence is still dependant on the ability to raise further
funding either through an equity placing on AIM, or through other external
sources, to support the on-going working capital requirements.
After making due enquiries, the Directors have formed a judgement that there
is a reasonable expectation that the Group can secure further adequate
resources to continue in operational existence for the foreseeable future and
that adequate arrangements will be in place to enable the settlement of their
financial commitments, as and when they fall due.
For this reason, the Directors continue to adopt the going concern basis in
preparing the financial statements. Whilst there are inherent uncertainties in
relation to future events, and therefore no certainty over the outcome of the
matters described, the Directors consider that, based upon financial
projections and dependant on the success of their efforts to complete these
activities, the Group will be a going concern for the next twelve months. If
it is not possible for the Directors to realise their plans, over which there
is significant uncertainty, the carrying value of the assets of the Group is
likely to be impaired.
4.Segment information
IFRS 8 requires reporting segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker.
Information reported to the Group's chief operating decision maker for the
purposes of resource allocation and assessment of segment performance is
specifically focused on the geographical segments within the Group.
Information regarding the Group's reportable segments is presented below:
2014 2013
UK Italy Total UK Italy Total
Continuing operations E'000 E'000 E'000 E'000 E'000 E'000
Revenue - 70 70 - 1,291 1,291
Cost of sales - (1) (1) - (515) (515)
Gross Profit - 69 69 776 776
Finance Income - 1 1 - - -
Finance charges (506) (579) (1,085) (311) (133) (468)
Other operating expenses (1,131) (885) (2,016) (1,506) (803) (2,285)
Other gains and losses 856 (966) (110) - (5,342) (5,342)
Loss for the financial year (781) (2,360) (3,141) (1,817) (5,502) (7,319)
2014 2013
Segment assets Segment liabilities Net additionsto non-currentAssets Net assets/(liabilities) Segment assets Segment liabilities Net Additions to non-current assets Net assets/(liabilities)
E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000
UK 524 (8,302) - (7,778) 60 (7,458) - (7,398)
Italy 46,864 (17,658) - 29,206 50,502 (18,929) - 31,573
47,388 (25,960) - 21,428 50,562 (26,387) - 24,175
5. Employee information
2014Number 2013Number
The average number of employees during the period was as follows:
Management and administration 5 5
2014E'000 2013E'000
Staff costs during the period including directors comprise:
Wages and salaries 279 228
Social security costs 28 20
Other pension costs - -
307 248
Other pension costs relate to contributions to defined contribution pension
schemes and are charged as an expense as they fall due.
6. Directors' Emoluments
2014E'000 2013E'000
Aggregate emoluments 207 239
Social security costs 18 -
225 239
There are no retirement benefits accruing to the Directors. Details of
directors' remuneration are included in the Directors' Report.
7. Other operating income
2014E'000 2013E'000
Discount on settlement of 7% bonds 439 -
Movement in fair value of investments held for trading 417 -
856 -
8. Other gains and losses
2014E'000 2013E'000
Impairment of investments (996) (687)
Impairment of land and buildings - (2,254)
Impairment of goodwill - (1,303)
Increase in provision for costs relating to the loans within Mediapolis Spa - (398)
Provision for infrastructure costs relating to land held by Mediapolis Spa - (700)
(996) (5,342)
9. Finance charges
2014E'000 2013E'000
Interest on convertible bonds 506 311
Interest on bank loans and overdrafts 579 157
1,085 468
10. Auditor's remuneration
2014E'000 2013E'000
Group Auditor's remuneration:
Fees payable to the Group's auditor for the audit of the Company and consolidated financial statements: 40 55
Non audit services:
Other services 6 6
Subsidiary Auditor's remuneration
Other services pursuant to legislation - 20
11. Company income statement
An income statement for Clear Leisure plc is not presented in accordance with
the exemption allowed by Section 408 of the Companies Act 2006. The parent
company's comprehensive income for the financial year amounted to a loss of
E734,000 (2013: loss E12,344,000).
12. Tax
2014E'000 2013E'000
Current taxation - 40
Deferred taxation - -
Tax charge for the year - 40
The Group has a potential deferred tax asset arising from unutilised
management expenses available for carry forward and relief against future
taxable profits. The deferred tax asset has not been recognised in the
financial statements in accordance with the Group's accounting policy for
deferred tax.
The Group's unutilised management expenses and capital losses carried forward
at 31 December 2014 amount to approximately E23 million (2013: E21 million)
and E20 million (2013: E20 million) respectively.
The standard rate of tax for the current year, based on the UK effective rate
of corporation tax is 21.5% (2013 - 23.25%). The actual tax for the current
and previous year varies from the standard rate for the reasons set out in the
following reconciliation:
Continuing operations 2014E'000 2013E'000
Loss for the year before tax (3,141) (7,319)
Tax on ordinary activities at standard rate (675) (1,702)
Effects of:
Expenses not deductible for tax purposes 152 163
Foreign taxes - 40
Tax losses available for carry forward against future profits 523 1,539
Total tax - 40
13. Discontinued operations
On 3 December 2013, as a result of a pending investigation into the financial
irregularities of the subsidiary ORH S.p.A, the Group announced that legal
action had resulted in the settlement of its investment in the subsidiary. The
settlement resulted in a disposal of part of the Group's holding in ORH S.p.A.
In addition a liquidator was appointed by a tribunal in Milan on 2 February
2014. These two events have resulted in the Group no longer holding a
controlling interest in ORH S.p.A.
The results of the discontinued operations, which have been included in the
consolidated income statement, were as follows:
2014E'000 2013E'000
Revenue - 15,335
Expenses - (17,348)
Loss before tax - (2,013)
Attributable tax expense - -
Profit/(loss) on disposal of discontinued operations (see Note 30) 67 (5,345)
Net profit/(loss) attributable to discontinued operations 67 (7,358)
In 2013 a loss of E5,570,000 arose on the disposal of ORH Spa, being the
difference between the proceeds of disposal and the carrying amount of the
subsidiary's net assets and attributable goodwill.
14. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable
to equity shareholders by the weighted average number of ordinary shares in
issue during the period. Diluted earnings per share is computed using the
weighted average number of shares during the period adjusted for the dilutive
effect of share options and convertible loans outstanding during the period.
The loss and weighted average number of shares used in the calculation are set
out below:
LossE'000 2014 Weightedaverage no.of shares000's Per shareAmountEuro LossE'000 2013 Weightedaverage no.of shares000's Per shareAmountEuro
Basic and fully diluted earnings per share
Continuing operations (3,141) 199,409 (E0.01) (7,359) 197,564 (E0.03)
Discontinued operations 67 199,409 E0.00 (7,358) 197,564 (E0.04)
Total operations (3,074) 199,409 (E0.01) (14,717) 197,564 (E0.07)
IAS 33 requires presentation of diluted earnings per share when a company
could be called upon to issue shares that would decrease earnings per share.
In respect of 2013 and 2014 the diluted loss per share is the same as the
basic loss per share as the loss for each year has an anti-dilutive effect.
15. Goodwill
2014E'000 2013E'000
Cost
At 1 January 1,312 9,118
Disposals:
Derecognised on the disposal of ORH Spa - (7,697)
Adjustment on acquisition of non-controlling interest in You Can Srl - (109)
At 31 December 1,312 1,312
Accumulated impairment losses
At 1 January 1,303 2,466
Derecognised on disposal of ORH Spa - (2,466)
Impairment losses for the year - 1,303
At 31 December 1,303 1,303
Net book value 9 9
Goodwill is allocated to cash generating units. The recoverable amount of
each unit is determined based on value-in-use calculations. The key
assumptions for the value-in-use calculation are those regarding discount
rates and growth rates as well as expected changes to costs and selling
prices. Management have estimated the discount rate based on the weighted
average cost of capital. Changes in selling prices and direct costs are based
on past experience and expectations of future change in the markets. These
calculations use cash flow projections based on financial budgets approved by
management looking forward up to five years. Cash flows are extrapolated
using estimated growth rates beyond the budget period. The key assumptions
for the value-in-use calculations are:
· a real growth rate of 2% which has been used to extrapolate cash flows
beyond the budget period; and
· a WACC rate of 15% applied to the cash flow projection.
The Group tests annually for impairment, or more frequently if there are
indications that goodwill might be impaired.
16. Other intangible fixed assets
Development Patents &
costs trademarks Total
E'000 E'000 E'000
Cost
At 1 January 2013 317 4,314 4,631
Additions 64 - 64
*Disposal of subsidiary undertaking (108) (4,314) (4,422)
At 31 December 2013 273 - 273
Closure of operations (104) - (104)
At 31 December 2014 169 - 169
Amortisation
At 1 January 2013 14 107 121
Amortisation charge for the year 28 - 28
*Disposal of subsidiary undertaking (4) (107) (111)
At 31 December 2013 38 - 38
Amortisation charge for year - - -
Closure of operations (20) - 20
At 31 December 2014 18 - 18
Carrying value
At 31 December 2013 235 - 235
At 31 December 2014 151 - 151
*These amounts relate predominantly to the disposal of ORH S.p.A., which
happened during 2013. See Note 13 for further details.
17. Property, plant and equipment
Group Land & buildings Leasehold improvements Plant & machinery Fittings & equipment Total
E'000 E'000 E'000 E'000 E'000
Cost
At 1 January 2013 40,950 88 549 290 41,877
Additions - - 137 - 137
Impairment (2,254) - - - (2,254)
Disposal of subsidiary undertaking - (88) (463) (97) (648)
At 31 December 2013 38,697 - 223 193 39,112
Closure of operations - - (223) (193) (416)
At 31 December 2014 38,697 - - - 38,697
Depreciation
At 1 January 2013 - 11 288 13 312
Depreciation charge for the year - - 30 20 50
Disposal of subsidiary undertaking - (11) (278) (5) (294)
At 31 December 2013 - - 40 28 68
Depreciation charge for the year - - 2 2 4
Disposal of subsidiary undertaking - - (42) (30) (72)
At 31 December 2014 - - - - -
Carrying value
At 31 December 2013 38,697 - 183 165 39,044
At 31 December 2014 38,697 - - - 38,697
Included in Land & Buildings above is the interest in a 497,884 sqm plot of
land located near the town of Albiano D'Ivrea. An independent appraisal of
freehold land owned by the Group was carried out by a chartered architect in
June 2015. The carrying value of the land at the date of the appraisal was
E35 million. The appraisal assessed the market value of the land, with the
detailed planning consents related to it, to be E35.6 million.
18. Investment in subsidiaries
Company 2014E'000 2013E'000
As at 1 January:
Loans to subsidiary undertakings 23,119 33,495
Net Advances during the year 419 624
Impairment of loan to subsidiary undertaking* - (11,000)
As at 31 December
Loans to subsidiary undertakings 23,538 23,119
* The above amount relates to the impairment of the loan to Brainspark
Associates Limited, which is used by the Group as an intermediate holding
company. Following the decline in the valuation of the Italian investments and
the loss on disposal of ORH S.p.A., the Directors have thus decided a
permanent impairment of the loan balance outstanding has been incurred, and
have thus written down the balance by this amount.
The Company has one directly held subsidiary, Brainspark Associates Limited,
which is financed by an inter company loan. The other Group subsidiary
undertakings are held through Brainspark Associates Limited.
The significant subsidiary undertakings held by the Group at 31 December 2014
were as follows:
Subsidiaries Country of incorporation % Owned Nature of business
Brainspark Associates Limited England 100.00 Investment holding company
*Mediapolis Investments SA Luxembourg 71.72 Investment holding company
*Mediapolis S.p.A. Italy **74.67 Lesiure/Real Estate
*SoSushi Company S.r.l.*** Italy 100.00 Brand Management
* Indirectly held.
** Brainspark Associates Limited owns 71.72% and Mediapolis Investments SA
owns 13.07% of Mediapolis Spa
19. Available for sale investments
Group 2014E'000 2013E'000
Fair value
At 1 January 7,556 8,214
Impairment recognised in the income statement (996) (687)
Transfer from trade and other receivables - 29
Disposals - -
Carrying value at 31 December 6,560 7,556
Non-current assets 6,560 7,556
Current assets - -
6,560 7,556
19. Available for sale investments (continued)
Details of each of the Group's material associates at the end of the reporting
period are as follows:
Name of associate Place of incorporation and principal place of busines Proportion of ownership held by the Group (%) Principal activity
Sipiem S.p.A** Italy 50.17 Theme park management
Ascend Capital plc UK 10.00 Corporate broking
**Investments in associates where the proportion of ownership held by the
Group was greater than 50%, but it was determined that the Group did not have
control of the company and that the Group was not exposed to variable returns
from its involvement with the company and did not have the ability to affect
those returns through power of the company.
The available for sale investments are valued in accordance with IFRS 7 and
Level 3 of the fair value hierarchy. Their fair value and the methodology
adopted is determined on the basis of their net assets or, where a sale is
imminent, the best estimate of the eventual proceeds. Given the methodology
adopted, it is not envisaged that the adoption of alternative
assumptions/methodologies, sensitivity analysis, would have a material impact
upon the investments.
20. Investments held for trading
Group and Company 2014E'000 2013E'000
Fair value
At 1 January - -
Net acquisition costs of investments 33 -
Movement in fair value of investments 417 -
Carrying value at 31 December 450 -
The amount of E450,000 shown above is a level 3 investment and represents the
Group's 100% interest in a specific vehicle, which controls the entire share
capital of Hospitality & Leisure Fund (H&L Fund), an Italian real estate fund
regulated by the Italian financial authorities. This investment has been
realised since the year resulting in a futher gain compared to the fund's
valuation as at 31 December 2014.
21. Trade and other receivables
Group2014E'000 Group2013E'000 Company2014E'000 Company2013E'000
Trade and other receivables 90 690 - -
Other receivables 58 1,416 - -
Amounts falling due after one year
Amounts owed by subsidiaries - - 23,538 23,119
148 2,106 23,538 23,119
Non-current assets - - 23,538 23,119
Current assets 148 2,106 - -
The directors consider that the carrying value of trade and other receivables
approximates to their fair value.
22. Cash and cash equivalents
Group Group2014E'000 Group2013E'000 Company2014E'000 Company2013E'000
Cash at bank and in hand 1,373 1,477 5 -
1,373 1,477 5 -
Included in the above is an amount for cash held on escrow relating to the
Mediapolis S.p.A. Land & Buildings.
The Directors consider the carrying amounts of cash and cash equivalents
approximates to their fair value.
23. Trade and other payables
Group2014E'000 Group2013E'000 Company2014E'000 Company2013E'000
Trade Payables 1,199 1,307 516 419
Other taxes payable 84 548 15 4
Other payables 1,141 1,822 249 -
Amounts due to subsidiary undertakings - - 302 342
Accruals 1,905 2,928 543 249
Trade and other payables 4,329 6,605 1,625 1,014
The directors consider that the carrying value of trade and other payables
approximates to their fair value.
Included in other payables is an amount of E830,000 (2013; E1,533,000) which
represents the directors' assessment of the amounts due to fulfil contractual
obligations relating to the purchase of investments.
24. Borrowings
Group2014E'000 Group2013E'000 Company2014E'000 Company2013E'000
Bank loans and overdrafts 9,536 8,683 -
7% Convertible bond 2014 88 2,131 88 2,131
Zero rate convertible bond 2015 5,340 2,368 5,340 2,368
Shareholder loans 4,070 4,070 -
Other borrowings 1,242 1,150 200 200
20,276 18,402 5,628 4,699
Disclosed as:Current borowings 20,276 13,443 5,628 2,331
Non-current borrowings - 4,959 - 2,368
20,276 18,402 5,628 4,699
7% Convertible Bond 2014
On 31 March 2010 the company launched an issue of £10 million (E12 million),
before issue costs, 7% convertible bonds due 2014. The Bonds are denominated
in sterling and are convertible into new ordinary shares of 2.5 pence each in
the company at a conversion rate of 400 New Ordinary Shares per Bond up until
15 March 2014. The nominal value of each Bond is £1,000 (E1,200). The
redemption date of the bonds is 31 March 2014 the coupon of 7% is payable at
the end of each year. The Company, between 1 and 7 April 2012, was able to
repurchase and serve notice on any or all of the bondholders to sell their
Bond in whole or in part at 110% of the nominal value. The bondholders, at any
time prior to redemption, may serve a conversion notice to the company in
respect of all or any integral multiple of £1,000 (E1,200) nominal value of
bonds held by them.
During 2011, a bond holder converted £2.64 million (E3.17 million) into equity
shares for which 8,035,856 ordinary shares of 2.5p each were issued in
exchange for the bond and cumulative interest due thereon.
During 2012, bonds were converted for a total amount of E8.2 million. The
conversion was settled as follows:
E4.9 million (£3.9 million) including cumulative interest was converted into
equity shares (11,000,000 Ordinary 2.5p shares at 36p each.)
E3.3 million (£2.7 million) including cumulative interest was settled in cash
for E1.9 million, with approximately 40% discount realising E1.3 million (£1.1
million) profit for the Group.
In March 2014 E1,885,400 zero bonds were issued in settlement of £1,563,000 7%
bonds including all un paid and accrued interest up to the date of settlement.
This settlement has resulted in a credit to the income statement of
E439,000.
Zero rate Convertible Bond 2015
On 25 March 2013 the Company issued £3,000,000 nominal value of zero rate
convertible bonds at a discount of 22%. The bonds are convertible at 15p per
share and have a redemption date of 15 December 2015.
During 2014 the Company issued E1,885,400 zero bonds in settlement of
£1,563,000 7% bonds (see above). Also E600,000 zero bonds were issued in
settlement of a debt of E518,000 and E450,000 bonds were issued for cash
realising E412,000 before expenses.
Shareholder Loans
Included in the shareholder loans is an amount owing to Olivetti Multiservices
S.p.A. ("OMS") from Mediapolis S.p.A. for E4,070,071 including cumulative
interest. This loan carries interest at Euribor +1% and is secured with a
second charge over the Land within Mediapolis S.p.A.
24. Borrowings (continued)
Under IAS 32 the bonds contain two components, liability and equity elements.
The equity element is presented in equity under the heading of "equity
component of convertible instrument". The effective interest rate of the
liability element on initial recognition is 12.5% per annum.
2014E'000 2013E'000
Liability component at 1 January 4,499 2,021
Net proceeds of issue 930 2,340
Equity component (68) (173)
5,361 4,188
Interest charge for the year 506 311
Conversion during the year including interest - -
Gain on settlement of 7% bonds by issue of zero coupon bonds (439) -
Liability component at 31 December 5,428 4,499
Disclosed as:
Non-Current Liabilities - 2,368
Current Liabilities 5,428 2,131
Interest on the bonds is payable annually on 31 March each year. No interest
payment was made on 31 March 2013 or on 31 March 2014. Interest on the bonds
that were converted in 2012 was included in the value of the shares issued on
conversion. The liability component of the bonds at 31 December 2014 includes
all interest accrued to that date. The unpaid interest relating to 31 March
2014 together with accrued interest to 31 December 2014 is included within
current liabilities.
25. Deferred liabilities and Provisions
2014 2013
Group E'000 E'000
Provisions:
Potential litigation costs in Mediapolis Spa 118 118
Provision for costs relating to loans within Mediapolis Spa 537 537
Provision for infrastructure costs relating to land held by Mediapolis Spa 700 700
1,355 1,355
Deferred liabilities:
Statutory severance liability (see note below) - 25
1,355 1,380
The statutory severance liability related to staff employed in restaurants
operated by SoSushi. The relevant restaurants and the companies operating them
were closed down during the year, and there was no residual liability as at 31
December 2014.
26. Financial instruments
The Group's financial instruments comprise cash, available for sale
investments, trade receivables, trade payables that arise from its operations
and borrowings. The main purpose of these financial instruments is to provide
finance for the Group's future investments and day to day operational needs.
The Group does not enter into any derivative transactions such as interest
rate swaps or forward foreign exchange contracts, as the Group's exposure to
movements in foreign exchange rates is not considered significant (see Foreign
currency risk management) . The main risks faced by the Group are limited to
interest rate risk on surplus cash deposits and liquidity risk associated with
raising sufficient funding to meet the operational needs of the business. The
Board reviews and agrees policies for managing these risks and they are
summarised below.
FINANCIAL ASSETS BY CATEGORYThe IAS 39 categories of financial assets included in the balance sheet and the headings in which they are included are as follows:
2014 2013
E'000 E'000
Financial assets:
Available for sale investments 6,560 7,556
Investments held for trading 450 -
Loans and receivables 148 2,106
Cash and cash equivalents 1,373 1,477
8,531 11,139
FINANCIAL LIABILITIES BY CATEGORYThe IAS 39 categories of financial liability included in the balance sheet and the headings in which they are included are as follows:
2014 2013
E'000 E'000
Financial liabilities at amortised cost:
Trade and other payables 2,424 3,677
Borrowings 20,276 18,402
22,700 22,079
Financial instruments measured at fair value:
Level 1 Level 2 Level 3
E'000 E'000 E'000
As at 31 December 2014
Available for sale investments - - 7,010
As at 31 December 2013 - -
Available for sale investments - - 7,556
The Company has adopted fair value measurements using the IFRS 7 fair value
hierarchy.
Categorisation within the hierarchy has been determined on the basis of the
lowest level of input that is significant to the fair value measurement of the
relevant asset as follows:
Level 1 - valued using quoted prices in active markets for identical
assets
Level 2 - valued by reference to valuation techniques using observable
inputs other than quoted prices included in Level 1.
Level 3 - valued by reference to valuation techniques using inputs that are
not based on observable markets criteria.
Level 3 investments include both investments in associates, per Note 20, as
well as investments in Ascend Capital plc and Geosim Systems Ltd.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising the return to stakeholders
through optimisation of the debt and equity balance. The capital structure of
the Group consists of debt attributable to convertible bond holders,
borrowings, cash and cash equivalents, and equity attributable to equity
holders of the Group, comprising issued capital, reserves and retained
earnings, all as disclosed in the Statement of Financial Position.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including
the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument disclosed in Note 2 to the
financial statements.
Financial risk management objectives
The company is exposed to a variety of financial risks which result from both
its operating and investing activities. The Group's risk management is
coordinated by the board of directors, and focuses on actively securing the
Company's short and medium term cash flows by raising liquid capital to meet
current liability obligations.
Market price risk
The Company's exposure to market price risk mainly arises from movements in
the fair value of its land and buildings as well as investments. The values of
the Land & Buildings are the key drivers in the Net asset value of the Group,
and so the political stability and macro economic factors of Italy all have a
large effect on the market price risk. Therefore other than ensuring
acquisitions are carefully profiled and selected and the Directors ensuring
are in close contact with local government and property industry analysts the
exposure is open to both positive and negative swings. The Group manages its
property price risk actively reviewing market trends in the determined
geographic locations. The Group manages the investment price risk within its
long-term investment strategy to manage a diversified exposure to the market.
The Group's price risk is sensitive to fluctuations to property market. If the
investments were to experience a rise or fall of 15% in their fair value, this
would result in the Group's net asset value and statement of comprehensive
income increasing or decreasing by E5,604,000 (2013: E5,604,000).
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which monitors the Group's short, medium and long-term funding and
liquidity management requirements on an appropriate basis. The Group has very
little cash balance at the balance sheet date (refer to Note 2 - Basis of
preparation of financial statements and going concern). The Group continues to
secure future funding and cash resources from disposals as and when required
in order to meet its cash requirements. This is an on-going process and the
directors are confident with their cash flow models.
The following are the undiscounted contractual maturities of financial
liabilities:
CarryingAmount Less than 1 year Between1 and 5 years Total
E'000 E'000 E'000 E'000
As at 31 December 2014
Trade and other payables 2,424 2,424 - 2,424
Borrowings 20,276 20,276 - 20,276
22,700 22,700 - 22,700
As at 31 December 2013 -
Trade and other payables 3,677 3,677 - 3,677
Borrowings 18,402 13,443 4,959 18,402
22,079 17,120 4,959 22,079
Management believes that based on the information provided in Notes 2 and 3 -
in the 'Basis of preparation' and 'Going concern', that future cash flows from
operations will be adequate to support these financial liabilities.
Interest rate risk
The Group and Company manage the interest rate risk associated with the Group
cash assets by ensuring that interest rates are as favourable as possible,
whilst managing the access the Group requires to the funds for working capital
purposes.
Interest rates are based on respective EURIBOR and other bank prime interest
rates.
The Group's cash and cash equivalents are subject to interest rate exposure
due to changes in interest rates. Short-term receivables and payables are not
exposed to interest rate risk.
Foreign currency risk management
The Group undertakes certain transactions denominated in currencies other than
Euro, hence exposures to exchange rate fluctuations arise. Amounts due to
fulfil contractual obligations of £69,000 (E88,000) are denominated in
sterling. An adverse movement in the exchange rate will impact the ultimate
amount payable, a 10% increase or decrease in the rate would result in a
profit or loss of E9,000. The Group's functional and presentational currency
is the Euro as it is the currency of its main trading environment, and most of
the Group's assets and liabilities are denominated in Euro. The parent
company is located in the sterling area.
Credit risk management
The Group's financial instruments, which are subject to credit risk, are
considered to be trade and other receivables. There is a risk that the amount
to be received becomes impaired. The Group's maximum exposure to credit risk
is E148,000 (2013: E2,106,000) comprising receivables during the period.
27. Share capital and share premium
ISSUED AND FULLY PAID: Number of ordinary shares Ordinary share capitalE'000 Share premiumE'000 Total E'000
At 1 January and 31 December 2014 199,409,377 6,074 42,856 48,930
There were no share issues during the year.
28. Other reserves
The Group considers its capital to comprise ordinary share capital, share
premium, retained losses and its convertible bonds. In managing its capital,
the Group's primary objective is to maintain a sufficient funding base to
enable the Group to meet its working capital and strategic investment needs.
In making decisions to adjust its capital structure to achieve these aims,
through new share issues, the Group considers not only their short-term
position but also their long-term operational and strategic objectives.
Group Merger reserve E'000 Revaluationreserve E'000 Exchange translation reserveE'000 Loan note equity reserveE'000 Total otherReservesE'000
At 1 January 2013 8,325 2,084 (4) 293 10,698
Exchange translation difference - - (2) - (2)
Issue of convertible loan notes - - - 173 173
At 31 December 2013 8,325 2,084 (6) 466 10,869
Acquisition of non-controlling interest - 447 6 - 453
Issue of convertible loan notes - - - 68 68
At 31 December 2014 8,325 2,531 - 534 11,390
29. Cash used in operations
Group2014E'000 Group2013E'000 Company2014E'000 Company2013E'000
Loss before tax (3,074) (14,677) (734) (12,344)
Amounts written off investments 996 687 - 11,000
Impairment of goodwill - 1,303 - -
Movement in fair value of investments held for trading (417) - (417) -
Impairment of property plant and equipment 2,254 -
Discount on settlement of bonds (439) - (439) -
Loss on disposal of investment - 7,358 - -
Depreciation and amortisation 4 78 - -
Finance income (1) - - -
Finance charges 1,085 468 506 311
Increase in provisions - 1,098 - -
Decrease/(Increase) in inventories - 38 - -
Decrease/(increase) in receivables 605 6,530 - 663
(Decrease)/increase in payables 854 (7,840) 611 (1,791)
Cash (used in)/generated by operations (387) (2,703) (473) (2,161)
(2,161)
30. Disposal of subsidiary
As referred to in Note 13, on 3 December 2013 the Group disposed of its
majority interest in ORH Spa.
The net assets of ORH Spa at the date of disposal were as follows:
2013E'000
Other intangible assets 4,311
Tangible fixed assets 354
Inventories 93
Other receivables 8,455
Trade payables (2,536)
Borrowings (6,098)
Convertible loan notes (2,351)
Deferred liabilities and provisions (217)
Attributable goodwill 5,231
Net assets 7,242
Less: non-controlling interests (1,672)
Net assets attributable to owners of the parent company 5,570
Loss on disposal (5,345)
Total consideration 225
The loss on disposal is included in the loss for 2013 from discontinued
operations (see Note 13). In 2014 the Company received total proceeds from
the sale of E292,000 resulting in a profit from discontinued operations of
E67,000 being reflected in the income statement for 2014.
31. Non-controlling interests
The following is a summary of the Group's non-controlling interests.
Mediapolis SpaE'000 You Can Group SrlE'000 ORH S.p.AE'000 TotalE'000
At 1 January 2013 8,329 109 1,673 10,111
Acquisition of non-controlling interests - (109) - (109)
Disposal of subsidiary - - (1,673) (1,673)
Total comprehensive income attributable to non-controlling interests (1,110) - - (1,110)
At 31 December 2013 7,219 - - 7,219
Acquisition of non-controlling interests (3,496) - - (3,496)
Total comprehensive income attributable to non-controlling interests (238) - - (238)
At 31 December 2014 3,485 3,485
Summarised financial information in respect of the Group's current
subsidiaries that have material non-controlling interests is set out below.
The summarised financial information below represents amounts before
intragroup eliminations.
Mediapolis Spa
2014E'000 2013E'000
Current assets 1,724 2,742
Non-current assets 38,696 38,735
Total assets 40,420 41,477
Current liabilities 16,767 13,993
Non-current liabilities 1,355 3,855
Total assets less total liabilities 18,122 23,629
Equity attributable to owners of the parent 18,813 16,410
Non-controlling interests 3,485 7,219
Total equity 22,298 23,629
Total comprehensive income attributable to the owners of the parent (1,285) (2,525)
Total comprehensive income attributable to the non-controlling interests (238) (1,110)
Total comprehensive income for the year (1,523) (3,635)
32. Operating lease commitments
There were no operating lease commitments at 31 December 2013 and 31 December
2014.
33. Ultimate controlling party
The Group considers that there is no ultimate controlling party.
34.
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