REG-Clear Leisure Plc: Final Results <Origin Href="QuoteRef">CLPC.L</Origin> - Part 2
30/06/2016 16:35
- Part 2: For the preceding part double click ID:nPRrU86E4a
provision is established when there is objective evidence that
the Group will not be able to collect all amounts due. The amount of any
provision is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is
objective evidence that a financial asset, or a group of financial assets, is
impaired. A financial asset, or a group of financial assets, is impaired, and
impairment losses are incurred, only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial
recognition of the asset (a "loss event"), and that loss event (or events) has
an impact on the estimated future cash flows of the financial asset, or group
of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence
of an impairment loss include:
- significant financial difficulty of the issuer or obligor;
- a breach of contract, such as a default or delinquency in interest or
principal repayments;
- the disappearance of an active market for that financial asset because of
financial difficulties;
- observable data indicating that there is a measurable decrease in the
estimated future cash flows from a portfolio of financial assets since the
initial recognition of those assets, although the decrease cannot yet be
identified with the individual financial assets in the portfolio; or
- for assets classified as available-for-sale, a significant or prolonged
decline in the fair value of the security below its cost.
Assets carried at amortised cost
The amount of impairment is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred), discounted at the financial
asset's original effective interest rate. The asset's carrying amount is
reduced, and the loss is recognised in the statement of comprehensive income.
As a practical expedient, the Group may measure impairment on the basis of an
instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognised (such as an improvement in the debtor's credit rating), the
reversal of the previously recognised impairment loss is recognised in the
statement of comprehensive income.
Financial liabilities
The Group's financial liabilities comprise convertible bonds, borrowings and
trade payables. Financial liabilities are obligations to pay cash or other
financial liabilities and are recognised when the Group becomes a party to the
contractual provisions of the instruments.
Convertible bonds
Convertible bonds are regarded as compound instruments, consisting of a
liability component and an equity component. At the date of issue, the fair
value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference between the
proceeds of issue of the convertible loan notes and the fair value assigned to
the liability component, representing the embedded option to convert the
liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the
convertible loan notes based on their relative carrying amounts at the date of
issue. The portion relating to the equity component is charged directly against
equity.
The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible loan note.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in the statement of comprehensive income over the period of the
borrowings, using the effective interest method. Borrowings are classified as
current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the
reporting period.
Borrowings costs
Borrowing costs are recognised in profit or loss in the period in which they
are incurred.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Segmental reporting
In identifying its operating segments, management generally follows the Group's
service lines, which represent the main products and services provided by the
Group. The measurement policies the Group uses for segment reporting under IFRS
8 are the same as those used in its financial statements. The disclosure is
based on the information that is presented to the chief operating decision
maker, which is considered to be the board of Clear Leisure plc.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
issued by the Group are recorded at the proceeds received net of direct issue
costs.
Share capital account represents the nominal value of the shares issued.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax benefits.
Retained losses include all current and prior period results as disclosed in
the statement of comprehensive income.
Other reserves consists of the merger reserve, revaluation reserve, exchange
translation reserve and loan equity reserve.
- the merger reserve represents the premium on the shares issued less the
nominal value of the shares, being the difference between the fair value of the
consideration and the nominal value of the shares.
- the revaluation reserve represents the difference between the purchase costs
of the available for sale investments less any impairment charge and the market
or fair value of those investments at the accounting date.
- the exchange translation reserve represents the movement of items on the
statement of financial position that were denominated in foreign before
translation
- the loan equity reserve represents the value of the equity component of the
nominal value of the loan notes issued.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the year-end date, taking into
account the risks and uncertainties surrounding the obligation.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of 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 €nil (2014: €9,000). 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 €20,246,000 (2014: €3,141,000) and
had net current liabilities of €16,477,000 as at 31 December 2015. 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:
2015 2014
UK Italy Total UK Italy Total
Continuing operations €'000 €'000 €'000 €'000 €'000 €'000
Revenue - - - - 70 70
Cost of sales - - - - (1) (1)
Gross Profit - - - 69 69
Finance Income - - - - 1 1
Finance charges (684) (339) (1,023) (506) (579) (1,085)
Other operating expenses (354) (300) (654) (1,131) (885) (2,016)
Other gains and losses 860 (19,429) (18,569) 856 (966) (110)
Profit/(Loss) for the (178) (20,068) (20,246) (781) (2,360) (3,141)
financial year
2015 2014
Segment Segment Net Net assets/ Segment Segment Net Net assets/
assets liabilities additions assets liabilities Additions
(liabilities) to (liabilities)
to non-current
non-current assets
Assets
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
UK 8,284 (8,702) - (418) 524 (8,302) - (7,778)
Italy 19,243 (17,485) - 1,758 46,864 (17,658) - 29,206
27,527 (26,187) - 1,340 47,388 (25,960) - 21,428
5. Employee numbers
2015 2014
Number Number
The average number of employees during the period was as
follows:
Management and administration 2 5
6. Staff costs
2015 2014
€'000 €'000
Staff costs during the period including directors
comprise:
Wages and salaries 250 279
Social security costs - 28
Other pension costs - -
250 307
Other pension costs relate to contributions to defined contribution pension
schemes and are charged as an expense as they fall due.
7. Directors' Emoluments
2015 2014
€'000 €'000
Aggregate emoluments 250 207
Social security costs - 18
250 225
There are no retirement benefits accruing to the Directors. Details of
directors' remuneration are included in the Directors' Report.
8. Other gains and losses
2015 2014
€'000 €'000
Impairment of investments - (996)
Impairment of property investments (20,583) -
Decrease in provisions 650 -
Writeback of VAT tax credit 300
Revaluation of investments 614 -
Profit on disposal of H & L fund 450 -
(18,569) (996)
9. Finance charges
2015 2014
€'000 €'000
Interest on convertible bonds 684 506
Interest on bank loans and overdrafts 339 579
1,023 1,085
10. Auditor's remuneration
2015 2014
€'000 €'000
Group Auditor's remuneration:
Fees payable to the Group's auditor for the audit of the 28 40
Company and consolidated financial statements:
Non audit services:
Other services 6 6
Subsidiary Auditor's remuneration
Other services pursuant to legislation - -
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 €
15,589,000 (2014: loss €734,000).
12. Tax
2015 2014
€'000 €'000
Current taxation - -
Deferred taxation - -
Tax charge for the year - -
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 2015 amount to approximately €24 million (2014: €23 million) and
€35 million (2014: €20 million) respectively.
The standard rate of tax for the current year, based on the UK effective rate
of corporation tax is 20.25% (2014 - 21.5%). 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 2015 2014
€'000 €'000
Loss for the year before tax (20,246) (3,141)
Tax on ordinary activities at standard rate (4,100) (675)
Effects of:
Expenses not deductible for tax purposes 280 152
Foreign taxes - -
Tax losses available for carry forward against future 3,820 523
profits
Total tax - -
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:
2015 2014
€'000 €'000
Revenue - -
Expenses - -
Loss before tax - -
Attributable tax expense - -
Profit/(loss) on disposal of discontinued operations - 67
(see Note 30)
Net profit/(loss) attributable to discontinued - 67
operations
In 2013 a loss of €5,570,000 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:
Loss 2015 Per Loss 2014 Per share
Weighted share Weighted
€'000 €'000 Amount
average no. Amount average no.
Euro
of shares Euro of shares
000's 000's
Basic and fully
diluted earnings
per share
Continuing (17,016) 208,378 (€0.08) (3,141) 199,409 (€0.01)
operations
Discontinued - - - 67 199,409 -
operations
Total operations (17,016) 208,378 (€0.08) (3,074) 199,409 (€0.01)
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 2014 and 2015 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
2015 2014
€'000 €'000
Cost
At 1 January 1,312 1,312
At 31 December 1,312 1,312
Accumulated impairment losses
At 1 January 1,303 1,303
Impairment loss for the year 9 -
At 31 December 1,312 1,303
Net book value - 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
costs Total
€'000 €'000
Cost
At 1 January 2014 273 273
Closure of operations (104) (104)
At 31 December 2014 169 169
At 31 December 2015 169 169
Amortisation
At 1 January 2014 38 38
Amortisation charge for the year - -
Closure of operations (20) (20)
At 31 December 2014 18 18
Closure of operations 101 101
At 31 December 2015 119 119
Carrying value
At 31 December 2014 151 151
At 31 December 2015 50 50
17. Property, plant and equipment
Group Land & Leasehold Plant & Fittings Total
buildings improvements machinery &
equipment
€'000 €'000 €'000 €'000 €'000
Cost
At 1 January 2014 38,697 - 223 193 39,112
Closure of operations - - (223) (193) (416)
At 31 December 2014 38,697 - - - 38,697
Impairment of property (20,583) - - - (20,583)
At 31 December 2015 18,114 - - - 18,114
Depreciation
At 1 January 2014 - - 40 28 68
Depreciation charge for - - 2 2 4
the year
Disposal of subsidiary - - (42) (30) (72)
undertaking
At 31 December 2014 - - - - -
At 31 December 2015 - - - - -
Carrying value
At 31 December 2014 38,697 - - - 38,697
At 31 December 2015 18,114 - - - 18,114
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 2016. The carrying value of the land at the date of the appraisal was €13
million.
18. Investment in subsidiaries
Company 2015 2014
€'000 €'000
As at 1 January:
Loans to subsidiary undertakings 23,538 23,119
Net (repayments)/advances during the (1) 419
year
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