TIDMREAT
RNS Number : 3555B
React Group PLC
30 January 2020
30 January 2020
REACT GROUP PLC
Publication of 2019 Report & Accounts
The Board of REACT Group PLC has today published the Report
& Accounts for the year ended 30 September 2019.
The accounts, which will be sent to shareholders who have
elected to receive a hard copy, are otherwise available also from
the Company Secretary at c/o International Registrars Limited,
Finsgate, 5-7 Cranwood Street London EC1V 9EE and are also
available on the Company's website: www.reactplc.co.uk. Extracts
are set out below.
Notice of the Annual General Meeting, which will be held at
11.00 a.m on Tuesday 26 February 2020, at Hyatt Place, Gate House,
27 Uxbridge Road, Hayes, UB4 0JN is also available on the Company's
website.
For further information, please contact:
REACT Group:
Gill Leates - Executive Chairman 07799 662642
SPARK Advisory Partners Limited (nominated
adviser)
Neil Baldwin 0113 370 8974
-----------------
Peterhouse Capital (Broker)
Duncan Vasey/Martin Lampshire 0207 459 0930
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Executive Chairman's Statement
For the year ended 30 September 2019
The financial year of 2019 has been one of continued efforts to
maximise cost efficiencies, where appropriate, refocusing the
business on higher margin work in sectors where our services are
valued the most and are most profitable. This has led to a slight
fall in turnover, whilst gross margins and operating profits have
materially improved.
Turnover for the year ended 30 September 2019 was GBP3.10m
(2018: GBP3.30m) as unprofitable work has been discontinued. Gross
margins however were 750-basis points higher at 28.5% (2018: 21.0%)
and operating performance has materially improved to a loss of
GBP183,000 (2018: loss of GBP1,951,000). Excluding exceptional
items, the operating losses were GBP178,000 in 2019 (2018:
GBP614,000).
The Company has retained its most significant clients, and
whilst the public sector remains an important focus for the Company
it has also expanded its reach in the private sector. A new
framework agreement has been signed with an additional NHS Trust
and REACT has been added to a number of approved-supplier lists for
Tier-1 clients. This has led to the Company working for a broader
client base from which it has the potential to grow organically. In
addition, we have augmented the Company's own operator network by
establishing agreements with several small high-quality
subcontractors, which has allowed the Company to increase capacity
and geographical reach using a flexible and more efficient cost
base.
New business activity has resulted in the Company taking on
larger pieces of bespoke work. Examples include the cleaning of a
large food production factory and specialist lift cleaning. As a
newly appointed supplier, the company has successfully been engaged
to carry out an ongoing clean on behalf of a large facilities
management company. Furthermore, in addition to the large London
hospital where our teams have been working for over two years, we
now are working with another two hospitals, one in the private
sector and one in the public sector.
The most recent and significant new business has been the award
of a half a million pound contract to provide specialist deep
cleaning services to one of the Company's Tier-1 clients in the
rail sector. Announced on 23 January 2020, this contract
demonstrates that the quality and capability of our specialist
cleaning teams is recognised as amongst the very best in the
industry.
I am also delighted to report on the strong performance of the
new management team, comprising Shaun Doak BA(Hons) and Andrea
Pankhurst BSc(Hons) FCA; Shaun joined as Managing Director of the
trading subsidiary, REACT Specialist Cleaning Limited (RSC), in
March 2019 and rapidly settled into his role. With significant
experience in building successful Customer-centric service
businesses, he has led from the front to execute the Company's
strategy to grow business in specialist markets that attract higher
margins. Alongside Shaun's efforts to develop stronger
relationships with existing Customers and developing new ones, he
continues to strengthen the management team to improve the quality
of performance and operational efficiency. As a result, we enter
2020 with a greater degree of confidence that we have the
foundations on which we can invest in sales growth and build
scale.
Equally, the appointment of Andrea as Financial Director of RSC,
in January 2019 has been very important to the continued
improvement of the Group's financial results. Andrea has worked
with Shaun to analyse the true margins of our work, continued to
identify cost efficiencies, and with her team focused on recovery
of the very old debt and work in progress that the Company had made
provision for last year.
I am therefore very pleased to report to shareholders that the
financial control and reporting function, is now consistently
operating to a high standard.
Financial Review
During the year ended 30 September 2019 turnover was GBP3.10m, a
small decrease of 6% on the prior year (2018: GBP3.30m). The
business has continued to eliminate lower margin customer contracts
and focus on more profitable work. The operating loss for the Group
from continuing operations (after exceptional items) was GBP183,000
(2018: GBP1,951,000), which includes a bad debt provision of
GBP83,000 (2018: GBP339,000). Of the GBP339,000 provision as at 30
September 2018, GBP189,000 has been collected, GBP131,000 was found
to be uncollectable and in addition to the remaining GBP20,000, a
further GBP63,000 has been provided as at 30 September 2019, mainly
against a currently disputed debt. This provision is deemed to be
prudent given the level and ageing profile of debtors outstanding
at the year end. Many of the problem debts at the previous year end
have now either been resolved or written off as required from the
balances previously provided for. Cash at the year-end was
GBP440,000 (2018: GBP423,000). Within these figures the Company has
continued to improve both the operational and administrative
functions of the business.
Strategy
Last year the Company simplified its business model from three
operating businesses to just one, focusing all its resource on the
REACT Specialist Cleaning business, where the Company provides a
strong competitive proposition and enjoys good customer advocacy
within a broad mix of often high-profile Tier-1 organisations in
both the private and public sector.
REACT Group has core skills and experience in specialist
cleaning beyond many of our competitors, allowing us to be a
reliable solution to the challenging circumstances that arise
across the Company's client base. REACT Group is an extreme
cleaning Company that tackles cleaning problems that
non-specialists cannot or do not wish to cope with. Our highly
trained operators deal with many difficult, yet essential cleaning
tasks, across a broad range of circumstances, including on the UK's
transport system, in prisons and custody cells, at crime scenes,
clearing drug dens and property damaged by tenants and squatters,
specialist vehicle cleans, clearing anti-social waste and damage in
public spaces and both routine and specialist cleaning in hospitals
and the health service. Approximately half the business turnover
comes from 24/7 emergency specialist cleaning and the other half
arises from several long-term specialist contracts for various
public and private clients.
The Board's commitment, made in last year's report, to invest in
targeted sales and marketing resource has begun with the
recruitment of Shaun, with his sales and general management
expertise. The business has started to benefit from this realigned
strategic approach. A more focused sales activity is being
developed, which will lead to a pipeline of opportunities, Tier-1
clients and new supplier chains and networks.
The Board's strategy remains to grow both parts of the business
organically and where appropriate, by acquisition.
Outlook
With a rationalised infrastructure, a fit-for-purpose and
well-motivated management team and a competitive service
proposition in an area of the market often ignored by competitors,
we have established a solid platform from which we can now grow and
move into profitability.
Gill Leates
Executive Chairman
29 January 2020
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2019
Notes 2019 2018
GBP'000 GBP'000
Continuing Operations
Revenue from contracts with customers 3,103 3,295
Cost of sales (2,218) (2,602)
Gross profit 885 693
Administrative expenses 5 (1,068) (2,644)
Exceptional costs included in
administrative expenses 5 (5) (1,337)
---------------------------------------- ------- ---------- ----------
Operating loss for the year before
income tax (183) (1,951)
Income tax credit 6 - 21
Loss for the year from continuing
operations (183) (1,930)
Loss for the year (183) (1,930)
========== ==========
Total comprehensive loss for the year
attributable to the owners of the
company (183) (1,930)
========== ==========
Basic and diluted loss per share -
pence
From continuing operations 7 0.04p 0.67p
Consolidated Statement of Financial Position
As at 30 September 2019
Notes 2019 2018
ASSETS GBP'000 GBP'000
Non-current assets
Intangible assets 9 174 174
Property, plant & equipment 10 81 116
255 290
--------- ---------
Current assets
Trade and other receivables 12 718 1,141
Cash at bank and in hand 14 440 423
1,158 1,564
--------- ---------
TOTAL ASSETS 1,413 1,854
========= =========
EQUITY
Shareholders' Equity
Called up share capital 15 1,039 1,039
Share premium 4,926 4,926
Reverse acquisition reserve (5,726) (5,726)
Capital redemption reserve 3,337 3,337
Merger relief reserve 1,328 1,328
Share based payments 12 20
Accumulated deficit (4,038) (3,863)
Total Equity 878 1,061
--------- ---------
LIABILITIES
Current liabilities
Trade and other payables 16 535 793
Non - current Liabilities
Deferred tax liability 17 - -
TOTAL LIABILITIES 535 793
--------- ---------
TOTAL EQUITY AND LIABILITIES 1,413 1,854
========= =========
These financial statements were approved by the Board of
Directors on 29 January 2020 and were signed on its behalf by:
Gill Leates
Director
Consolidated Statement of Changes in Equity
For the year ended 30 September 2019
Share Share Merger Capital Reverse Share Accumulated Total
capital Premium Relief Redemption Acquisition based deficit equity
Reserve Reserve Reserve payments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1
October
2017 689 4,889 1,328 3,337 (5,726) 22 (1,935) 2,604
Issue of
shares 350 70 - - - - - 420
Share
issue
expenses - (33) - - - - - (33)
Loss for
the
year - - - - - - (1,930) (1,930)
On lapse
of
options - - - - - (2) 2 -
Balance at
30
September
2018 1,039 4,926 1,328 3,337 (5,726) 20 (3,863) 1,061
========== ========== ========== ============= ============== =========== ============== =========
Balance at
1
October
2018 1,039 4,926 1,328 3,337 (5,726) 20 (3,863) 1,061
Issue of
options 2 (2) -
On
surrender
of
warrants (10) 10 -
Loss for
the
period - - - - - - (183) (183)
Balance at
30
September
2019 1,039 4,926 1,328 3,337 (5,726) 12 (4,038) 878
========== ========== ========== ============= ============== =========== ============== =========
Share capital is the amount subscribed for shares at nominal
value. Share premium represents amounts subscribed for share
capital in excess of nominal value.
Merger relief reserve arises from the 100% acquisition of REACT
SC Holdings Limited and REACT Specialist Cleaning Limited in August
2015 whereby the excess of the fair value of the issued ordinary
share capital issued over the nominal value of these shares is
transferred to this reserve in accordance with section 612 of the
Companies Act 2006.
Accumulated deficit represents the cumulative losses of the
Group attributable to the owners of the company.
Reverse acquisition reserve is the effect on equity of the
reverse acquisition of REACT Specialist Cleaning Limited.
The capital redemption reserve represents the value of deferred
shares cancelled as a result of a share buyback.
Consolidated Statement of Cash Flows
For the year ended 30 September 2019
Notes 2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash generated/(utilised) by operations 1 34 (625)
Net cash inflow/(outflow) from operating
activities 34 (625)
--------- ---------
Cash flows from financing activities
Proceeds of share issue - 420
Expenses of share issue - (33)
Other loans - 69
Other loan repayments - (21)
Net cash inflow from financing activities - 435
--------- ---------
Cash flows from investing activities
Disposal of fixed assets 8 20
Capital expenditure (25) (38)
Net cash outflow from investing activities (17) (18)
--------- ---------
Increase/(Decrease) in cash and cash
equivalents 17 (208)
Cash and cash equivalents at beginning of
year 423 631
Cash and cash equivalents at end of
year 2 440 423
========= =========
Notes to the Consolidated Statement of Cash Flows
For the year ended 30 September 2019
1. Reconciliation of loss before income tax to cash outflow from operations
2019 2018
GBP'000 GBP'000
Loss before taxation (183) (1,951)
Decrease/(Increase) in trade
and other receivables 441 (649)
(Decrease)/Increase in trade
and other payables (275) 615
Depreciation and amortisation
charges 52 1,350
(Profit)/Loss on disposal of
fixed assets (3) 10
Share based payment 2 -
Net cash inflow/(outflow) from
operations 34 (625)
========== ==========
2. Cash and cash equivalents
2019 2018
GBP'000 GBP'000
Cash at bank and in hand 440 423
Company Statement of Financial Position
As at 30 September 2019
Notes As at As at
30 September 30 September
2019 2018
ASSETS GBP'000 GBP'000
Non-current assets
Investments 11 174 174
Property, plant and equipment 10 13 17
187 191
--------------- ---------------
CURRENT ASSETS
Trade and other receivables 12 38 42
Cash at bank and in hand 14 256 248
294 290
--------------- ---------------
TOTAL ASSETS 481 481
=============== ===============
EQUITY
Shareholders' Equity
Called up share capital 15 1,039 1,039
Share premium 4,926 4,926
Merger relief reserve 1,328 1,328
Capital redemption reserve 3,337 3,337
Share based payments 12 20
Accumulated deficit (10,198) (10,280)
Total Equity 444 370
--------------- ---------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 16 37 111
TOTAL LIABILITITES 37 111
--------------- ---------------
TOTAL EQUITY AND LIABILITIES 481 481
=============== ===============
These financial statements were approved and authorised for
issue by the Board of Directors on 29 January 2020 and were signed
on its behalf by:
Gill Leates
Director
Company Statement of Changes in Equity
For the year ended 30 September 2019
Called Share Merger Capital Share Accumulated Total
up Premium Relief redemption based deficit equity
Share Reserve reserve payments
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October
2017 689 4,889 1,328 3,337 22 (7,471) 2,794
Issue of shares 350 70 - - - - 420
Expenses of share
issue - (33) - - - - (33)
On lapse of options - - - - (2) 2 -
Loss for the year - - - - - (2,811) (2,811)
Balance at 30 September
2018 1,039 4,926 1,328 3,337 20 (10,280) 370
========== ========== ========== ============= =========== ============= =========
Balance at 1 October
2018 1,039 4,926 1,328 3,337 20 (10,280) 370
On surrender of
warrants - - - - (10) 10 -
Issue of options - - - - 2 (2) -
Profit for the
year - - - - - 74 74
Balance at 30 September
2019 1,039 4,926 1,328 3,337 12 (10,198) 444
========== ========== ========== ============= =========== ============= =========
Share capital is the amount subscribed for shares at nominal
value. Share premium represents amounts subscribed for share
capital in excess of nominal value.
Merger relief reserve arises from the 100% acquisition of REACT
SC Holdings Limited and REACT Specialist Cleaning Limited in August
2015 whereby the excess of the fair value of the issued ordinary
share capital issued over the nominal value of these shares is
transferred to this reserve in accordance with section 612 of the
Companies Act 2006.
Accumulated deficit represents the cumulative losses of the
company attributable to the owners of the company.
The capital redemption reserve represents the value of deferred
shares cancelled as a result of a share buyback.
Company Statement of Cash Flows
For the year ended 30 September 2019
Notes
Year ended Year ended
30 September 30 September
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash generated/(utilised) by operations 1 8 (647)
Net cash inflow/(outflow) from operating activities 8 (647)
--------------- ---------------
Cash flows from investing activities
Purchase of fixed assets - (21)
Net cash outflow from investing activities - (21)
--------------- ---------------
Cash flows from financing activities
Issue of shares - 420
Expenses of share issue - (33)
Net cash inflow from financing activities - 387
--------------- ---------------
Increase/(decrease) in cash and equivalents 8 (281)
Cash and cash equivalents at beginning of year 248 529
Cash and cash equivalents at end of year 2 256 248
=============== ===============
Notes to the Company Statement of Cash Flows
1. Reconciliation of profit/(loss) before income tax to cash generated from operations
2019 2018
GBP'000 GBP'000
Operating profit/(loss) 74 (2,811)
Increase in trade and other receivables (4) (401)
Decrease in trade and other payables (75) (45)
Provision against amounts owed
by group companies 7 1,219
Impairment of Investment value - 1,386
Share based payment 2 -
Depreciation 4 5
Net cash inflow/(outflow) from
operations 8 (647)
========= =========
2. Cash and cash equivalents
2019 2018
GBP'000 GBP'000
Cash at bank and in
hand 256 248
========= =========
Notes to the Financial Statements
For the year ended 30 September 2019
1. General Information
Basis of preparation and consolidation
The Company is based in the United Kingdom and has been
incorporated in England and Wales. Details of the registered
office, the officers and advisors to the Company are presented on
the Company Information page at the start of this report.
The consolidated financial statements present the results of the
company and its subsidiaries ('the Group') as if they formed a
single entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full. Where the company has
control over an investee, it is classified as a subsidiary. The
company controls an investee if all three of the following elements
are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power
to affect those variable returns. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any
of these elements of control.
The equity structure appearing in the Group financial statements
reflects the equity structure of the legal parent, REACT Group PLC,
including the equity instruments issued in order to effect reverse
acquisition accounting. The merger relief reserve represents a
premium on the issue of the ordinary shares for the acquisition of
subsidiary undertakings. The relief is only available to the
issuing company securing at least a 90% equity holding in the
acquired undertaking in pursuance of an arrangement providing for
the allotment of equity shares in the issuing company on terms that
the consideration for the shares allotted is to be provided by the
issue of equity shares in the other company.
2. Accounting Policies
Statement of compliance
The consolidated financial statements of REACT Group PLC have
been prepared in accordance with International Financial Reporting
Standards (IFRSs), International Accounting Standards (IASs) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations (collectively 'IFRSs') as adopted for use in the
European Union and as issued by the International Accounting
Standards Board and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
Basis of preparation
The financial statements have been prepared under the historical
cost convention. The principal accounting policies are summarised
below. They have all been applied consistently throughout the
period under review.
Going concern
Following its review of the Group's financial plans and forecast
growth and the new management team in place, the Board has a good
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The new
significant contract win announced on 23 January 2020 and access to
a new financing facility obtained since the year end also support
this opinion. Therefore, the financial statements do not include
any adjustments that would result if the Group was unable to
continue as a going concern.
New, amended standards, interpretations not adopted by the
Group
The following Adopted IFRSs have been issued but have not been
applied by the Group in these Financial Statements. The full impact
of their adoption has not yet been fully assessed; however,
management do not expect the changes to have a material effect on
the Financial Statements unless otherwise indicated:
-- Annual Improvements to IFRSs - 2015-2017 Cycle (1 January 2019)
-- Amendments to IAS 1 and IAS 8 - on definition of materiality (1 January 2019)
-- Amendments to IAS 19 - employees benefits plan amendments, curtailments or settlements
-- Amendments to IAS 28 on long term interests in associates and joint ventures
-- Amendments to IFRS 3 "Business combinations" on definition of a business
-- Amendments to IFRS 9, financial instruments on prepayment
features with negative compensation
IFRIC Interpretation 22 Foreign Currency Transactions and
Advance Consideration (effective date to be confirmed)
-- Amendments to IAS 40 Investment Property (effective date to be confirmed)
-- IFRIC 23 Uncertainty over Income Tax Treatments (1 January 2019)
-- Amendments to IAS 28 Investments in Associates and Joint
Ventures (effective date to be confirmed)
-- IFRS 16 Leases (1 January 2019)
-- IFRS 17 Insurance contracts (1 January 2021)
Impact of IFRS 16 - Leases
IFRS 16 is effective for annual reporting periods beginning on
or after 1 January 2019. Management have assessed the impact of the
adoption of IFRS 16 in detail and conclude that as the only
operating lease in place at the year end is not material, there is
no impact on the Group's consolidated Financial Statements for
either the year ended 30 September 2019 or on the prior year
comparatives.
Changes in Accounting Policies and Disclosures
New and amended standards adopted by the Group
The Group has applied any applicable new standards, amendments
to standards and interpretations that are mandatory for the
financial year beginning on or after 1 January 2018. However, none
of them has a material impact on the Group's Consolidated Financial
Statements.
Impact of IFRS 15 - Revenue from contracts with customers
IFRS 15 is effective for annual reporting periods beginning on
or after 1 January 2018. Management have assessed the impact of the
adoption of IFRS 15 in detail and conclude that there is no
material impact on the Group's consolidated Financial Statements.
Further there was no impact on prior year revenue. The approach was
to undertake a detailed assessment of the core principles of IFRS
15 and test these against the existing revenue recognition policy
for each type of revenue.
Impact of IFRS 9 - Financial Instruments
IFRS 9 is effective for annual reporting periods beginning on or
after 1 January 2018. Management have assessed the credit loss
model looking 12 months ahead with the trade receivable balances.
The IFRS 9 impairment model requires impairment allowances for all
exposures from the time a debt originated, based on the
deterioration of credit risk since initial recognition. If the
credit risk has not increased significantly, IFRS 9 requires
allowances based on 12 months expected losses.
Revenue recognition
Revenue is recognised in according with the requirements of IFRS
15 'Revenue from Contracts with Customers'. The Company recognises
revenue to depict the transfer of promised goods and services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. This core principle is delivered in a five-step model
framework:
1. Identify the contract(s) with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations
in the contract; and
5. Recognise revenue when (or as) the entity satisfy a
performance obligation.
The Group recognises revenue in the accounting period in which
its services are rendered, by reference to stage of completion of
the specific transaction and assessed on the basis of the actual
service provided as a proportion of the total services to be
provided. Revenues exclude intra-group sales and value added taxes
and represent net invoice value less estimated rebates, returns and
settlement discounts. The net invoice value is measured by
reference to the fair value of consideration received or receivable
by the Group for goods supplied.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
(i) Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules using
tax rates enacted or substantially enacted by the statement of
financial position date. Income tax is recognised in the income
statement or in equity if it relates to items that are recognised
in the same or a different period, directly in equity. Current tax
assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the
taxation authorities.
(ii) Deferred tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference, and
the carrying forward or unused tax assets and unused tax losses can
be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax assets to be utilised. Conversely,
previously unrecognised deferred tax assets are recognised to the
extent that it is probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on the tax rates and
tax laws that have been enacted or substantively enacted at the
balance sheet date.
Investments
Investments in subsidiaries are held at cost less any
impairment.
Financial assets and liabilities
The Group classifies its financial assets at inception into
three measurement categories; 'amortised cost', 'fair value through
other comprehensive income' ('FVOCI') and 'fair value through
profit and loss' ('FVTPL'). The Group classifies its financial
liabilities, other than financial guarantees and loan commitments,
as measured at amortised cost. Management determines the
classification of its investments at initial recognition. A
financial asset or financial liability is measured initially at
fair value. At inception transaction cost that are directly
attributable to its acquisition or issue, for an item not at fair
value through profit or loss, is added to the fair value of the
financial asset and deducted from the fair value of the financial
liability.
Amortised cost measurement
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or liability is measured
at initial recognition, minus principal payments, plus or minus the
cumulative amortisation using the effective interest method of any
difference between the initial amount recognised and maturity
amount, minus any reduction for impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction on the measurement date. The fair value
of assets and liabilities in active markets are based on current
bid and offer prices respectively. If the market is not active the
group establishes fair value by using appropriate valuation
techniques. These include the use of recent arm's length
transactions, reference to other instruments that are substantially
the same for which market observable prices exist, net present
value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the
group has transferred substantially all of the risks and rewards of
ownership. In transaction in which the group neither retains nor
transfers substantially all the risks and rewards of ownership of a
financial asset and it retains control over the asset, the group
continues to recognise the asset to the extent of its continuing
involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset. There have not been
any instances where assets have only been partly derecognised. The
group derecognises a financial liability when its contractual
obligation are discharge, cancelled or expire.
Impairment
The Group assesses at each financial position date whether there
is objective evidence that a financial asset or group of financial
assets is impaired. If there is objective experience (such as
significant financial difficulty of obligor, breach of contract, or
it becomes probable that debtor will enter bankruptcy), the asset
is tested for impairment. The amount of the loss is measured as the
difference between the asset's carrying amount and the present
value of the estimated future cash flows (excluding future expected
credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate (that is, the
effective interest rate computed at initial recognition).The
carrying amount of the asset is reduced through use of an allowance
account. The amount of loss is recognised in the Statement of
Comprehensive Income.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand.
Operating leases
Rent payable under operating leases is not recognised in the
Group's Statement of Financial Position; such costs are expensed on
a straight line basis over the term of the lease.
Trade and other receivables
Trade and other receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. Subsequent to the initial recognition, trade and
receivables are measured at amortised cost less impairment losses
for bad and doubtful debts, except where the receivables are
interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be immaterial.
In such cases, the receivables are stated at cost less impairment
losses for bad and doubtful debts. Impairment losses for bad and
doubtful debts are measured as the difference between the carrying
amount of financial asset and the estimated future cash flows,
discounted where the effect of discounting is material.
Trade and other payables
Trade and other payables are initially recognised at fair value
and thereafter stated in amortised cost, except where the payables
are interest free loans made by related parties without any fixed
repayment terms or the effect of discounting would be immaterial,
in which case they are stated at cost.
Impairment of non-financial assets
At each statement of financial position date, the Group reviews
the carrying amounts of its investments to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life
is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a re-valued amount, in
which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior periods. A reversal
of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation
increase.
Capital management
Capital is made up of stated capital, premium and retained
earnings. The objective of the Group's capital management is to
ensure that it maintains strong credit ratings and capital ratios.
This will ensure that the business is correctly supported and
shareholder value is maximised.
The Group manages its capital structure through adjustments that
are dependent on economic conditions. In order to maintain or
adjust the capital structure, the company may choose to change or
amend dividend payments to shareholders or issue new share capital
to shareholders. There were no changes to the objectives, policies
or processes during the year ended 30 September 2019.
Equity instruments
Equity instruments issued by the company are recorded at the
proceeds received. Incremental costs directly attributable to the
issuance of new ordinary shares are deducted against share
capital.
Share-based compensation
The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest. At each statement of financial position
date, the entity revises its estimates of the number of options
that are expected to vest. It recognises the impact of the revision
to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their
estimated useful lives at the following annual rates:
Leasehold property 20%
Vehicles 25%
Fixtures, fittings & equipment 20% / 33%
Useful lives and depreciation methods are reviewed and adjusted
if appropriate, at the end of each reporting period. During the
year ended 30 September 2018 the depreciation rates used were
reviewed and, based on this review, the estimated useful lives of
motor vehicles and plant, machinery and equipment were extended to
4 years and 5 years respectively.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset, and is
recognised in profit or loss in the period in which the asset is
derecognised.
Intangibles
Purchased goodwill represents the excess of the cost of
acquisition over the company's interest in the fair value of the
identifiable assets and liabilities of a business acquired at the
date of acquisition.
Purchased goodwill is recognized as an asset, reviewed for
impairment at least annually and carried at cost less accumulated
impairment losses. Any impairment is recognised immediately in
profit or loss and is not subsequently reversed. Purchased goodwill
is deemed to have an indefinite useful life due to the expectation
of the acquired business to operate in perpetuity, so is not
amortised.
Customer list represents the value placed on the retained
customer list at the acquisition date. The value recognises that
customers, although contracted to the company are not under an
obligation to use the company services.
The customer list will be amortised over a period of 5 years. An
impairment review will be conducted each year and will look at
significant changes in the turnover received from major
customers.
Employee benefit costs
The group operates a defined contribution pension scheme for
eligible employees. Contributions payable are charged to the income
statement in the period to which they relate.
Exceptional items
Exceptional items are material items of income or expenses which
have arisen in the normal course of business but are not expected
to re-occur on a regular basis.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the financial statements requires management
to make estimates and assumptions concerning the future that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during
the reporting periods.
The resulting accounting estimates will, by definition, differ
from the related actual results.
-- Estimated impairment of goodwill
The Directors have carried out a detailed impairment review in
respect of goodwill. The Group assesses at each reporting date
whether there is an indication that an asset maybe impaired, by
considering the net present value of discounted cashflow forecasts
which have been discounted at 15%. The cashflow projections are
based on the assumption that the Group can realise projected
sales.
-- Share based payments
The fair value of share based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
-- Goodwill and Customer list valuation
Management originally estimated that the useful life of the fair
value of the customer lists acquired on the acquisition to be 5
years. As part of the annual impairment review at 30 September
2018, based on the medium term trading outlook, the decision was
taken to write down the purchased goodwill and acquired customer
list to GBP174,000. As at 30 September 2019 a further review was
undertaken and management judged that no additional impairment was
required.
-- Bad debt provision
We perform ongoing credit evaluations of our customers and grant
credit based on past payment history and industry conditions.
Customer payments are closely monitored and a provision for
doubtful debts is established based on management's assessment of
the expected collectability of all accounts receivable.
3. Segmental Reporting
In the opinion of the Directors, the Group has one class of
business, being that of specialist cleaning and decontamination
services. Although the Group operates in only one geographic
segment, which is the UK, it has also analysed the sources of its
business into the segments of either public or private sector
customers.
2019 2018
Public sector Private sector Total Public sector Private sector Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,628 1,475 3,103 1,944 1,351 3,295
Cost of Sales (1,237) (981) (2,218) (1,535) (1,067) (2,602)
Gross Profit 391 494 885 409 284 693
Administrative
Expenses (472) (596) (1,068) (1,560) (1,084) (2,644)
Operating Loss for the
year (81) (102) (183) (1,151) (800) (1,951)
=============== ================ ========= =============== ================ =========
Total Assets 624 789 1,413 1,094 760 1,854
=============== ================ ========= =============== ================ =========
Total Liabilities (236) (299) (535) (468) (325) (793)
=============== ================ ========= =============== ================ =========
4. Employees and Directors
2019 2018
GBP'000 GBP'000
Wages and salaries 1,932 1,659
Directors fees - 31
Social security costs 174 166
Pension contributions 28 11
2,134 1,867
========= =========
The average monthly number of employees
:
No. No.
Directors 3 3
Operators and administration staff 79 58
82 61
========= =========
Details of emoluments received by Directors of the Group for the
year ended 30 September 2019 were as follows:
Salaries Fees Car benefit 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
G Leates 58 - - 58 48
R Gilbert 22 - - 22 -
M Joyce 17 - - 17 -
L Innes 17 - - 17 32
C Barnes - - - - 44
C Vermaak - - - - 40
S Woolley - - - - 10
Total 114 - - 114 174
------------ ---------- --------- ------------- --------- ---------
These amounts include the share based payments referred to in
Note 2.
5. Administrative expenses
2019 2018
GBP'000 GBP'000
Auditor remuneration
- audit fees (Company GBP4,000; 2018 : GBP4,000) 25 25
- other services 3 8
Staff costs (note 4) 2,134 1,867
Less staff costs included in cost of sales (1,623) (1,224)
Recruitment 38 44
Legal and professional fees (incl AIM related costs) 155 99
Property costs 53 40
Travel expenses 42 7
Insurance 54 52
Advertising 61 12
Provision against bad debts and accrued income (70) 279
Other expenses 180 169
Depreciation 52 124
Less depreciation included in cost of sales (36) (84)
Impairment charge - 1,226
1,068 2,644
================ =========
The non-recurring exceptional costs of GBP5,000 (2018: GBP1,337,000) included in administrative
expenses comprise the following:
2019 2018
GBP'000 GBP'000
Recruitment fees & other employee related costs associated with the changes in the
management
of the business during the period under review (61) (155)
Legal fees relating to resolution of an historic debt (10) -
Impairment of purchased goodwill - (1,106)
Impairment of acquired customer list - (76)
Release of historic VAT provision 66 -
(5) (1,337)
============= =========
6. Income Tax
2019 2018
GBP'000 GBP'000
Current tax charge - -
Deferred tax credit - (21)
- (21)
=========== =========
Analysis of tax expense:
2019 2018
GBP'000 GBP'000
Loss on ordinary activities before income tax (183) (1,951)
========== ==========
Loss on ordinary activities multiplied by the standard rate of corporation tax in UK
of 19%
(2018: 19%) (35) (371)
Effects of:
Amortisation and depreciation not deductible for tax 10 32
Impairment charges - 225
Increase in net losses carried forward 25 93
---------- ----------
Corporation tax charge/(credit) - (21)
========== ==========
The Group has estimated excess management expenses carried forward of GBP1.3m (2018: GBP1.4m)
and trading losses of GBP1m (2018: GBP0.7m) available to use against future profits. The tax
losses have resulted in a deferred tax asset of approximately GBP0.4m (2018: GBP0.4m) which
has not been recognised as it is uncertain whether future taxable profits will be sufficient
to utilise the losses.
7. Loss per Share
Basic loss per share is calculated by dividing the earnings
attributable shareholders by the weighted average number of
ordinary shares outstanding during the year being 415,407,753
(2018: 415,407,753).
Loss Weighted average Loss per
GBP'000 Number of shares share
Loss attributable to ordinary
shareholders:
Continuing operations 183 415,407,753 0.04p
Basic and diluted earnings per share are the same, since where a
loss is incurred the effect of outstanding share options and
warrants is considered anti-dilutive and is ignored for the purpose
of the loss per share calculation. As at 30 September 2019 there
were 19,939,537 (2018: 2,380,000) outstanding share warrants and
65,065,130 (2018: 2,754,077) options which are potentially
dilutive.
8. Company's result for the period
The company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent company income
statement account. The result for the parent company for the period
was a profit of GBP74,000 (2018: loss of GBP2,811,000).
9. Intangible assets
Group Customer
List
Purchased Goodwill Acquired Total
GBP'000 GBP'000 GBP'000
Cost
At 1 October 2018 1,280 220 1,500
-------------------- ----------- ---------
Amortisation and impairment
As at 1 October 2018 1,106 220 1,326
Amortisation charge for the year - - -
Impairment charge for the year - - -
-------------------- ----------- ---------
As at 30 September 2019 1,106 220 1,326
-------------------- ----------- ---------
Carrying amount
As at 30 September 2019 174 - 174
==================== =========== =========
As at 30 September 2018 174 - 174
==================== =========== =========
The purchased goodwill relates to intangible assets that do not
qualify for separate recognition on the acquisition of the REACT
specialist cleaning services business, an unincorporated division
of Autoclenz Limited.
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired, by considering the net
present value of discounted cash flow forecasts. Purchased goodwill
has been allocated for impairment testing purposes to the
individual businesses acquired which are also the cash--generating
units ("CGU") identified. The recoverable amount of a CGU is
determined based on value in use calculations using cash flow
projections based on financial budgets approved by the Directors.
The projections are based on the assumption that the company can
realise projected sales. A prudent approach has been applied with
no residual value being factored into these calculations. If the
projected sales do not materialise there is a risk that the total
value of the intangible assets shown above would be impaired. A
pre-tax discount rate of 15% per annum has been applied to the
cashflow projections, taking into consideration the expected rate
of return and various risks relating to the CGU.
As a result of this annual review, it was decided that given the
current trading performance of the business and the short/medium
term outlook, there was no need to further impair the carrying
value of the Purchased Goodwill.
The key assumptions used in the estimation of the revised value
of Purchased Goodwill are set out below. The values assigned to the
key assumptions represent management's assessment of future
revenues and cash flows of the CGU. The most recent financial
results and forecast approved by management for the next five years
were used and a terminal growth rate thereafter. The projected
results were discounted at a rate which is a prudent evaluation of
the time value of money and the risks specific to the CGU.
Key assumptions used:
%
Average revenue growth rate (of next five
years) 10
Terminal value growth rate 0
Discount rate 15
10. Property, Plant and equipment
Group Leasehold property Fixtures, fittings &
Vehicles equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2018 21 225 84 330
Additions - - 25 25
Disposals - (44) - (44)
At 30 September 2019 21 181 109 311
====================== ========== ============================= ===========
Depreciation
At 1 October 2018 4 159 51 214
Depreciation charge for the
year 4 30 18 52
Disposals - (36) - (36)
At 30 September 2019 8 153 69 230
====================== ========== ============================= ===========
Net book value
At 30 September 2019 13 28 40 81
====================== ========== ============================= ===========
At 30 September 2018 17 66 33 116
====================== ========== ============================= ===========
Company Fixtures, fittings &
Leasehold property Vehicles equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2018 21 - - 21
Additions - - - -
Disposals - - - -
At 30 September 2019 21 - - 21
====================== ========== ============================= ===========
Depreciation
At 1 October 2018 4 - - 4
Depreciation charge for the
year 4 - - 4
Disposals - - - -
At 30 September 2019 8 - - 8
====================== ========== ============================= ===========
Net book value
At 30 September 2019 13 - - 13
====================== ========== ============================= ===========
At 30 September 2018 17 - - 17
====================== ========== ============================= ===========
11. Investment in subsidiary undertakings
Company
GBP'000
Cost
At 1 October 2018 and 30 September 2019 1,560
===============
Impairment
At 1 October 2018 1,386
Impairment charge for the year -
At 30 September 2019 1,386
===============
Carrying amount
At 30 September 2019 174
===============
At 30 September 2018 174
===============
As at 30 September 2019, the company held the following
subsidiaries:
*Audit exemption is taken for this company as it has been
dormant since June 2018.
Name of company Principal Country of Proportion
activities incorporation of
and place equity interest
of business of ordinary
shares
REACT SC Holdings Limited Holding company United Kingdom 100%
Specialist
REACT Specialist Cleaning cleaning &
Limited (held indirectly decontamination
by REACT SC Holdings Limited) services United Kingdom 100%
REACT Environmental Services
Limited* Dormant United Kingdom 100%
Both the subsidiary companies, REACT Occupational Hygiene
Services Limited (ROHS) and REACT Environmental Services Limited
(RES) have been dormant since June 2018 and as it was not
anticipated that these companies would trade again, ROHS was struck
off the register at Companies House on 3 September 2019 and an
application to strike off RES is in progress.
12. Trade and other receivables
Current Note Group Group Company Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 696 1,329 - -
Provision for impairment 13 (83) (339) - -
Net trade receivables 613 990 - -
Amounts owed by Group undertakings - - 1,242 1,238
Provision against amounts owed by Group undertakings - - (1,226) (1,219)
Prepayments and accrued income 105 151 22 23
718 1,141 38 42
========= ========= ========= =========
Trade receivables are amounts due from customers for services
performed in the ordinary course of business. The Group's
impairment and other accounting policies for trade and other
receivables are outlined in note 2.
13. Provision for impairment of receivables
A provision is established for irrecoverable amounts where there
is an indication that amounts due under the original payment terms
will not be collected.
Provision for impairment of receivables Group Group
Relating to debt over 3 months past due
2019 2018
GBP'000 GBP'000
Opening provision 339 40
Impairments in the year 64 299
Amounts released in the year (189) -
Amounts utilised in the year (131) -
Closing provision 83 339
========= =========
There are no receivables in the Company, as all are held by the
trading subsidiary, RSC.
As at 30 September 2019, excluding balances provided for by the
impairment provision, GBP157,000 (2018: GBP153,000) of trade
receivables were past their due settlement date but not
impaired.
The ageing analysis of these trade receivables is as
follows:
2019 2018
GBP'000 GBP'000
Up to 3 months past due 119 153
3 to 6 months past due 37 -
Over 6 months past due 1 -
157 153
=============== ===============
Trade receivables that are neither past due nor impaired are
considered to be fully recoverable.
14. Cash and cash equivalents
Group Group Company Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash and bank balances 440 423 256 248
========= ========= ========= =========
15. Called Up Share Capital
2019 2018
GBP'000 GBP'000
Issued share capital comprises:
415,407,753 (2018 : 415,407,753) Ordinary shares of 0.25p each 1,039 1,039
========= =========
16. Trade and other payables
Current:
Group Group Company Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 232 221 39 43
* Accrued expenses 128 288 - 7
Social security and
other taxes 175 284 (2) 61
535 793 37 111
========= ========= ========= =========
17. Deferred Tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes. Deferred tax is
calculated in full on temporary differences under the liability
method using a tax rate of 19%, the movement on the deferred tax
liability is as shown below:
Group 2019 2018
GBP'000 GBP'000
At 1 October 2018 - 21
Income credit - (21)
At 30 September 2019 - -
=========== =========
Deferred tax assets have not been recognised in respect of all
tax losses and other temporary differences giving rise to deferred
tax assets as the Directors believe it is uncertain that these
assets will be recovered.
18. Related Party Disclosures
Group and company
During the year ended 30 September 2019, there were no related
party transactions. In the prior year the Group was charged
GBP30,900 by Secure and Profitable Growth Limited for consultancy
services provided by C Barnes. There were no amounts outstanding in
respect of any these services at 30 September 2019.
19. Ultimate Controlling Party
No one shareholder has control of the company.
20. Warrants
The warrants held by G M Leates were surrendered on 17 May
2019.
On 17 May 2019 the company issued warrants to Wydelta Limited, a
consulting and advisory firm led by Mark Braund, an operational
strategic adviser to the Company, to subscribe for 19,939,537 new
ordinary shares in the company exercisable at a price of 0.30p per
0.25p ordinary share, exercisable after 24 months. The warrants
have a 5 year exercise period ending on 17 May 2024.
No warrants were exercised in the current or prior year.
Movements in the number of share warrants outstanding and their
related weighted average exercise prices are as follows:
Number of warrants Average exercise
price
2019 2018 2019 2018
No. No. GBP GBP
Outstanding at the beginning
of the period 2,380,000 2,380,000 0.0168 0.0168
Granted during the year 19,939,537 - 0.0030 -
Lapsed during the year (2,380,000) - (0.0168) -
Outstanding at the end
of the period 19,939,537 2,380,000 0.0030 0.0168
------------- ----------- ---------- --------
The fair value of the share warrants issued on 17 May 2019 with
an exercise price of 0.30p is GBP5,834 and was derived using the
Black Scholes model. The following assumptions were used in the
calculations:
Share price at grant
date 0.30p
Risk-free rate 0.58%
Volatility 25%
Expected life 5 years
Expected volatility is based on a conservative estimate for the
company. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
GBP389 (2018: GBPNil) has been recognised during the period for
the share based payments over the vesting period.
21. Share options
The company had introduced a share option programme to grant
share options as an incentive for employees. Each share option
converts into one ordinary share of the company on exercise. No
amounts are paid or payable by the recipient on receipt of the
option and the company has no legal obligation to repurchase or
settle the options in cash. The options carry neither rights to
dividends nor voting rights prior to the date on which the options
are exercised. Options may be exercised at any time from the date
of vesting to the date of expiry.
Movements in the number of share options outstanding and their
related weighted average exercise prices are as follows:
Number of options Average exercise
price
2019 2018 2019 2018
No. No. GBP GBP
Outstanding at the beginning
of the period 2,754,077 16,524,464 0.0168 0.0168
Granted during the year 62,311,053 - 0.0030 -
Lapsed during the year - (13,770,387) - (0.0168)
Outstanding at the end
of the period 65,065,130 2,754,077 0.0036 0.0168
------------ -------------- -------- ----------
The Options shall vest and become capable of exercise in
specified quantities if the mid-market price (as derived from the
AIM Appendix of the Daily Official List and as certified in writing
by the Company's stockbrokers) equals or exceeds a series of
defined Share Hurdle Prices between GBP0.004 and GBP0.0280 for 5
consecutive business days at any time or times during the vesting
period. GBP1,215 (2018: GBPNil) has been recognised during the
period for the share based payments over the vesting period.
22. Financial risk management, objectives and policies
The Group's financial instruments comprise cash balances and
receivables and payables that arise directly from its operations.
The main risks the Group faces are liquidity risk, capital risk and
foreign currency risk.
The board regularly reviews and agrees policies for managing
each of these risks. The Group's policies for managing these risks
are summarised below and have been applied throughout the period.
The numerical disclosures exclude short-term debtors and their
carrying amount is considered to be a reasonable approximation of
their fair value.
Interest risk
The Group is not exposed to significant interest rate risk as it
has no interest bearing liabilities at the period end.
Credit risk
The Group is exposed to credit risk as services are invoiced on
completion. This risk is mitigated as most large customers have
been customers for several years and have exemplary credit ratings.
The board also ensure robust procedures are in place to ensure all
services are invoiced promptly and all payments received in a
timely manner.
As at the year end, 27% of debtors included in trade receivables
are past their due dates. Included in trade receivables are
provisions of GBP83,000.
Liquidity risk
Liquidity risk is the risk that Group will encounter difficulty
in meeting the obligations associated with financial
liabilities.
The responsibility for liquidity risks management rest with the
Board of Directors, which has established appropriate liquidity
risk management framework for the management of the Group's short
term and long-term funding risks management requirements.
During the period under review, the Group has not utilised any
borrowing facilities. The Group manages liquidity risks by
maintaining adequate reserves and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and
liabilities.
Capital risk
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
23. Lease commitments
At 30 September 2019 the Company had outstanding commitments for
future minimum lease payments under a non-cancellable operating
lease for its office premises, which fall due as follows:
2019 2018
GBP'000 GBP'000
Within one year 19 19
Within to two to five years 38 57
At 30 September 2019 57 76
========= =========
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKCBQFBKDNDB
(END) Dow Jones Newswires
January 30, 2020 02:00 ET (07:00 GMT)
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