Kennedy Ventures PLC (KENV) - Final Results RNS Number : 4861N Kennedy Ventures PLC 28 September 2012 FOR IMMMEDIATE RELEASE 28 SEPTEMBER 2012 Kennedy Ventures plc Preliminary announcement of results for the 15 months ended 30 June 2012 Highlights · $85,000 investment in Bison Energy Services Limited · Disposal of remaining operating activities in December 2011 · Re-classification as an investing company under AIM rules · CVA and re-financing to raise £500,000 gross Chairman's statement During the financial period under review, the Company has undergone a substantial operational and financial restructuring. The Company's operational businesses were disposed of in their entirety or were closed down. However, this was not sufficient to restore the Company to financial solvency and it was therefore decided by the then Board to put the Company into a Company Voluntary Arrangement ("CVA") in order to provide some return to creditors and some residual value to shareholders. The CVA was approved by creditors and shareholders on 25 May 2012 when it was also resolved to dispose of the Group's remaining assets and to carry out a capital reorganisation. The Company adopted a new investing policy which is to seek investments in the resources and energy sectors and the Company changed its name to Kennedy Ventures plc. A placing of 2,500,000,000 new ordinary shares at a price of 0.2p was completed, raising £500,000 before expenses - of which some £122,000 is being applied to meeting the creditor settlement under the CVA. The CVA is nearing completion now, as more fully detailed in the Note 1 to this announcement. The circumstances leading to the CVA were fully described in the Circular to Shareholders dated 8 May 2012 and I shall not repeat them in detail. In summary, the then Board disposed of the Compliance Division in August 2011 for £3.85 million to a division of The Capita Group plc as they did not consider the Company had sufficient resources to develop this activity. In November 2011, they disposed of the Group's remaining business, the MSS Building Services division, to Rentokil Initial plc; the initial agreed terms were for a consideration of £6.5 million but the final adjusted consideration was agreed at £4.1 million, a figure materially below the then Board's expectations. As a result of the decrease in consideration, the then Board decided that the Group would not be able to meet its long term liabilities, principally a long term lease entered into by previous management. They therefore decided that the only viable course other than liquidation was the CVA previously referred to. The qualification to the accounts arises from the fact that we were unable to gain access within the necessary timescale to the books and records of the MSS Building Services and Compliance divisions for those months during which they remained part of the Group . Since this period preceded the CVA and refinancing, this has had no impact on the accuracy of the balance sheet presented to shareholders or the total quantum of the loss for the period. In addition, the Group balance sheet includes approximately £110,000 of non-trading subsidiary companies' liabilities which are not guaranteed by the Company and are not intended to be settled. The Company balance sheet, showing net assets of £238,000, gives a better indication of the effective net asset position of the Group. Following approval of the CVA and the placing, the then Board resigned in its entirety and I joined the Board, as Chairman, along with my colleague Chris Yates. Since then, we have been engaged in reviewing a range of investment opportunities in trading businesses as well as dealing with a number of outstanding administration issues. Our focus is principally in the energy and resources sectors where we are seeking a suitable reverse opportunity that will bring capital growth for shareholders. However, we are also looking at other smaller opportunities which will hopefully give the potential for more immediate returns. We have to date made one such investment - a loan and share investment of $85,000 within an overall fundraise of $7.6 million in Bison Energy Services Limited, a company that has been established to invest principally in the supply of frac sand to the growing US fracking industry. Frac sand is a necessary ingredient in the fracking process in which fractures are propagated in a rock layer to enable the release of oil and gas from the rock formations, a technique which gives access to vast reserves of formerly inaccessible hydrocarbons. The proceeds of Bison's fundraising have principally been used to complete the acquisition of certain property in Wisconsin, USA on which deposits of Northern White sand, a high quality frac sand, are located - this sand only tends to be found in Wisconsin and Minnesota. These deposits are well located to supply the oil shale areas in northern USA, including the Bakken Shale area in North Dakota which is one of the largest oil deposits in the USA. Your Directors believe that this investment, which has been made on particularly favourable terms, has the potential to deliver substantial returns in the short to medium term. We will continue to seek opportunities both in terms of investments and in seeking a more substantial transaction in the coming months. I would like to close by thanking the Company's staff and advisers who have contributed to giving it a new and hopefully profitable lease of life. Peter Redmond Chairman FOR FURTHER INFORMATION, PLEASE CONTACT: Kennedy Ventures plc Peter Redmond, Chairman 07718 660727 Cenkos Securities plc Stephen Keys/Camilla Hume 020 7397 8900 Peterhouse Corporate Finance John Levinson 020 7469 0935 Kennedy Ventures plc CONSOLIDATED INCOME STATEMENT for the period ended 30 June 2012 Period ended Year ended 30 June Note 2012 31 March 2011 £'000 £'000 PROFIT BEFORE TAX FROM CONTINUING OPERATIONS - - Income tax - - PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS - - Discontinued operations Loss for the period from discontinued operations 3 (9,628) (1,382) Discontinued operations LOSS FOR THE FINANCIAL PERIOD (9,628) (1,382) BASIC LOSS PER SHARE (pence) Discontinued operations 4 (1.77) (0.74) DILUTED LOSS PER SHARE (pence) Discontinued operations 4 (1.77) (0.73) There are no recognised gains or losses in either period other than the loss for that period and therefore no consolidated statement of comprehensive income is presented. The comparatives have been restated to present the Group's results as discontinued operations (note 3). Kennedy Ventures plc COMPANY BALANCE SHEET as at 30 June 2012 Note 30 June 2012 31 March 2011 £'000 £'000 NON CURRENT ASSETS Goodwill - - Investments in subsidiaries - 475 - 475 CURRENT ASSETS 5 448 13,714 TOTAL ASSETS 448 14,189 CURRENT LIABILITIES 6 (210) (629) NET CURRENT ASSETS 238 13,085 NON CURRENT LIABILITIES Convertible loan notes - (500) TOTAL LIABILITIES (210) (1,129) NET ASSETS 238 13,060 EQUITY Share capital 7 271 2,098 Share premium account 7,571 7,373 Capital redemption reserve 2,077 - Share based payments reserve 1,456 1,456 Retained earnings (11,137) 2,133 TOTAL EQUITY 238 13,060 Kennedy Ventures plc CONSOLIDATED BALANCE SHEET as at 30 June 2012 Note 30 June 2012 31 March 2011 £'000 £'000 NON CURRENT ASSETS Goodwill - 8,000 Other intangible assets - 4,125 Property, plant and equipment - 804 - 12,949 CURRENT ASSETS 5 459 7,908 TOTAL ASSETS 459 20,857 CURRENT LIABILITIES 6 (322) (11,004) NET CURRENT ASSETS/(LIABILITIES) 137 (3,096) NON CURRENT LIABILITIES Convertible loan notes - (500) Obligations under finance leases - (11) - (511) TOTAL LIABILITIES (322) (11,515) NET ASSETS 137 9,342 EQUITY Share capital 7 271 2,098 Share premium account 7,571 7,373 Capital redemption reserve 2,077 - Share based payments reserve 1,456 1,456 Retained earnings (11,238) (1,605) Equity attributable to owners of the Company 137 9,322 Non-controlling interests - 20 TOTAL EQUITY 137 9,342 Kennedy Ventures plc CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 June 2012 Period ended Year ended Note 30 June 2012 31 March 2011 £'000 £'000 NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES 10 (3,179) (2,496) INVESTING ACTIVITIES Interest received - 5 Proceeds from sale of assets held for sale - 150 Proceeds on disposal of property, plant and equipment 65 792 Net proceeds on disposal of subsidiaries 9 6,797 - Purchases of property, plant and equipment (197) (457) Cash disposed of with subsidiary undertakings 3 (444) - Acquisition of businesses Cash paid 8 (9) (7,972) Cash acquired 8 - 1,677 Deferred consideration payments 8 (277) (1,266) NET CASH FROM / (USED IN) INVESTING ACTIVITIES BY DISCONTINUED OPERATIONS 5,935 (7,071) FINANCING ACTIVITIES (Decrease) / Increase in short term borrowings (3,017) 2,840 Repayment of obligations under finance leases (77) (13) (Repayment of) / proceeds from convertible loan notes (500) 500 Net proceeds of share issue 448 2,920 NET CASH (USED IN ) / FROM FINANCING ACTIVITIES BY DISCONTINUED OPERATIONS (3,146) 6,247 NET DECREASE IN CASH (390) (3,320) CASH AT THE BEGINNING OF PERIOD 815 4,135 CASH AT THE END OF THE PERIOD 425 815 Kennedy Ventures plc NOTES TO THE FINANCIAL STATEMENTS 30 June 2012 1 ACCOUNTING POLICIES Going concern On the 25th May 2012 the company was placed into a Company Voluntary Arrangement ("CVA") under Part 1 Insolvency Act 1986. Since then the Supervisor of the CVA has been establishing valid claims against the Company and the opportunity for proving such claims has now closed. In the near future, it is expected that the Supervisor will despatch payments in respect of valid claims at the rate set in the approved arrangement, being nine pence in the Pound. Following such payment there will be a short period during which creditors whose claims were not agreed as valid can challenge the Supervisor's decision. Then, following agreement of the claim by HMRC, the Supervisor will be in a position to conclude the CVA. Following the disposal of the two trading divisions of the Group and the cessation of trade of the Interiors division, the Group no longer has any trading activities. As such, and as required under IFRS, the financial statements have been prepared on a basis other than going concern. As a result of the CVA, liabilities have been stated at their fair value of 9p in the Pound as per the CVA. No other material adjustments arose. Basis of preparation The financial information contained in this announcement has been derived from the financial statements of the Company for the period ended 30 June 2012 which are prepared in accordance with applicable IFRS including standards and interpretations issued by the International Accounting Standards Board as adopted by the EU; in the case of the consolidated financial statements the Group has also complied with Article 4 of the IAS Regulation. The financial report has been prepared on the basis of historical cost, except for the revaluation of financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The qualification to the Company's accounts arises from the fact that we were unable to gain access to the books and records of the MSS Building Services division for those months during which it remained part of the MSS Group. Since this period preceded the CVA and refinancing, this has had no impact on the accuracy of the balance sheet presented to shareholders or the total quantum of the loss for the period. The amounts reflect the fair values of the liabilities based on the amounts that will be settled as a result of the Company Voluntary Arrangement process that commenced in May 2012. Basis of consolidation The Consolidated Financial Statements incorporate the Financial Statements of Kennedy Ventures plc and the entities controlled by it (its subsidiaries) made up to 30 June 2012. Control is achieved when Kennedy Ventures plc has the power to govern the financial and operating policies of an invested entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Income Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profit or loss from discontinued operations A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale. The profit or loss from discontinued operations, including prior year components of profit or loss, is presented in a single amount in the income statement. This amount, which comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale, is further analysed in note 3. The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by 30 June 2012. 2 BUSINESS AND GEOGRAPHICAL REPORTING The Group's operations were only in the United Kingdom. Following the disposal of the Group's Compliance division, the cessation of operations at its Interior Contractors division, the sale of the Building Services division, and the subsequent discontinued Central and Other division, the results reported in the Consolidated Income Statement relate solely to discontinued operations. The segmental results are now reported under Note 3 "Discontinued operations". 3 DISCONTINUED OPERATIONS The results for the discontinued operations classified under Building Services division and Compliance division are derived from the Group's Management Accounts for the period. Health and Interior Building Central Services Safety Contracts and Other Consolidated Period Period Period ended ended ended Period ended Period ended 30 June 30 June 30 June 30 June 2012 2012 2012 2012 30 June 2012 £'000 £'000 £'000 £'000 £'000 Result (Loss) / profit before tax (12,030) 421 32 1,893 (9,684) Tax - - (8) 64 56 (Loss) / profit after tax (12,030) 421 24 1,957 (9,628) Health and Interior Building Central Services Safety Contracts and Other Consolidated Period Period Period Period ended ended ended ended Period ended 31 March 31 March 31 March 31 March 31 March 2011 2011 2011 2011 2011 £'000 £'000 £'000 £'000 £'000 Result (Loss) / profit before tax 1,052 373 (179) (2,602) (1,356) Tax (24) - (2) - (26) (Loss) / profit after tax 1,028 373 (181) (2,602) (1,382) Period ended 30 June 2012 £'000 Profit on disposal of operation Total consideration 7,100 Provisions and disposal costs (303) Net liabilities disposed 699 Pre-tax profit on disposal 7,496 Cash received from disposal of operations 7,100 Disposal costs (303) Cash and cash equivalents of subsidiaries disposed (444) Net cash inflow on disposal 6,353 The results of the discontinued operations up until the point of disposal during the year ended 30 June 2012 and the comparative year, which have been disclosed separately in the consolidated income statement, as required by IFRS 5, are as follows: Compliance Division On the 26 August 2011 the Group disposed of its interests in its Compliance division for a net consideration of £3 million. The division was sold to Capita Symonds, a trading division of The Capita Group plc. The results included in the consolidated income statement are as follows: Year ended Period ended 30 June 2012 31 March 2011 £'000 £'000 Revenue 1,100 2,336 Operating profit before items identified below 178 576 Forgiveness of Intercompany balances (563) - plc Management charges - (200) Profit on disposal of subsidiary 806 - Operating profit before tax 421 376 Taxation - (3) Profit attributable to discontinued operation 421 373 The assets and liabilities of the Compliance division were as follows: £'000 £'000 Plant, property and equipment 56 42 Trade and other receivables 498 622 Cash and cash equivalents 52 - Trade and other payables (1,354) (1,103) Net liabilities (748) (439) Interior Contracts Division On 30th November 2011, the Group's Interior Contracts Division ceased trading. The results included in the consolidated income statement are as follows: Year ended Period ended 30 June 2012 31 March 2011 £'000 £'000 Revenue 910 3409 Operating loss before items identified below (341) 138 Forgiveness of Intercompany balances 368 - Profit on disposal of fixed assets 5 - plc Management charges - (200) Restructuring of operations - (117) Operating profit / (loss) before tax 32 (179) Taxation (8) (2) Profit / (loss) attributable to discontinued operation 24 (181) The assets and liabilities of the Interior Contracts Division are as follows: £'000 £'000 Plant, property and equipment - 17 Trade and other receivables - 774 Cash and cash equivalents 11 - Trade and other payables (85) (889) Net liabilities (74) (98) Building Services Division On 5th December 2011, the Group disposed of its interests in the Building Services Division for a net consideration of £4,100,000. The division was sold to Rentokil Initial plc. The results included in the consolidated income statement are as follows: Period ended Year ended 30 June 31 March 2012 2011 £'000 £'000 Revenue 13,431 22,427 Operating (loss) / profit before items identified below (2,599) 1,072 Impairment of goodwill (12,073) - plc Management charges - (300) Amortisation of intangibles - (350) Restructuring of operations - (669) Profit on disposal of subsidiaries 6,027 - Profit on disposal of fixed assets 8 - Impairment of investments (3,124) - Forgiveness of Intercompany balances (269) 2,172 Cost of acquisitions - (348) Operating (loss) / profit before tax (12,030) 1,577 Taxation - (7) Loss / (profit) attributable to discontinued operation (12,030) 1,570 The assets and liabilities of the Building Services division were as follows: £'000 £'000 Intangible assets - 12,146 Investments - 3,624 Plant, property and equipment 633 745 Trade and other receivables 5,095 7,412 Cash and cash equivalents 392 410 Trade and other payables (5,408) (8,877) Amounts owing to fellow subsidiaries - (14,506) Net assets 712 954 Central and Other Division As a result of the disposal of the Group's operations and the Company Voluntary Arrangement entered into on 25th May 2012, the Central division has also been classified as a Discontinued Operation. The results included in the consolidated income statement are as follows: Period ended Year ended 30 June 31 March 2012 2011 £'000 £'000 Revenue - 700 Operating loss before items identified below (2,426) (1,076) Forgiveness of Intercompany balances 380 (2,172) Profit on disposal of investments 661 - Amortisation of intangibles (660) (343) Restructuring of operations (434) - Increase in share based payments - (236) Elimination of impairment of investments 3,124 - Effect of Company Voluntary Arrangement 1,248 - Operating profit / (loss) before tax 1,893 (3,127) Taxation 64 (17) Profit / (loss) attributable to discontinued operation 1,957 (3,144) The assets and liabilities of the Central division were as follows: £'000 £'000 Elimination of Investments - (4,125) Trade and other receivables 34 13,315 Cash and cash equivalents 414 405 Trade and other payables (210) (670) Net assets 238 8,925 4 LOSS PER SHARE The calculation of basic and diluted loss per share is based on the following data 2012 2011 £'000 £'000 Discontinued operations Loss for the financial period (9,628) (1,382) Number of shares Weighted average number of shares for the purposes of basic earnings per share 543,135,524 187,503,084 Potentially dilutive ordinary shares - 2,750,000 Weighted average number of shares for the purposes of diluted earnings per share 543,135,524 190,253,084 Basic loss per ordinary share (pence) Discontinued operations (1.77) (0.74) Diluted loss per ordinary share (pence) Discontinued operations (1.77) (0.73) 5 CURRENT ASSETS 2012 2011 2012 2011 £'000 £'000 £'000 £'000 Group Company Work in progress - 499 - - Trade and other receivables 34 6,594 34 13,309 Cash and cash equivalents 425 815 414 405 459 20,857 448 14,189 6 CURRENT LIABILITIES 2012 2011 2012 2011 £'000 £'000 £'000 £'000 Group Company Trade and other payables 322 7,641 210 624 Short term borrowings - 3,017 - - Current tax liabilities - 234 - - Obligations under finance leases - 66 - - Provisions for liabilities - 46 - 5 322 11,515 210 1,129 The amounts reflected above represent the fair values of the liabilities based on the amounts that will be settled as a result of the Company Voluntary Arrangement process that commenced in May 2012. 7 SHARE CAPITAL 2012 2011 £'000 £'000 Issued and fully paid 209,802,191 Ordinary shares of 1p each - 2,098 2,709,802,191 Ordinary shares of 0.01p each 271 - 271 2,098 A special resolution was passed at a general meeting on 25 May 2012 to sub divide each ordinary issued share of 1p into one ordinary share of 0.001p and one deferred share of 0.099p. The deferred shares were not listed, had no voting or dividend rights and only very limited rights on return of capital. A resolution to approve the purchase and subsequent cancellation of the deferred shares was approved at the same meeting. The deferred shares were bought for an aggregate consideration of 1p. On the 25 May 2012, the Company placed 2,500,000,000 shares at 0.02p per share. The placement generated net proceeds of £448,000 after costs On 25 May 2012 and in association with the CVA and Placing, the Company granted to Peterhouse Corporate Finance Limited by way of a deed a warrant to subscribe shares representing 3% of the Company's issued ordinary share capital from time to time exercisable at 0.02 pence per share at any time up to 20 March 2015. 8 ANALYSIS OF CASH FLOWS USED FOR ACQUISITIONS Period ended Year ended 30 June 31 March 2012 2011 £'000 £'000 Purchase of businesses Group Discontinued operations Deferred consideration paid (277) (1,266) Investment in MSS Building Services Limited (9) - Net cash paid for acquisitions - (6,295) (286) (7,561) The deferred consideration settled during the period related to the Group's acquisition of Environmental Control Services Limited in September 2010. The Group settled £151,650 in October 2011 and £125,000 in December 2011. 9 ANALYSIS OF CASH FLOWS USED IN DISPOSALS Period ended Year ended 30 June 31 March 2012 2011 £'000 £'000 Disposal of businesses Group Discontinued operations Proceeds on disposal of subsidiaries 7,100 - Costs associated with disposal of subsidiaries (303) - 6,797 - 10 NOTES TO THE CASH FLOW STATEMENT Group 2012 2011 £'000 £'000 Operating loss from discontinued activities (9,616) (1,290) Adjustments for: Depreciation of property, plant and equipment 260 323 Amortisation of intangible assets 660 693 Impairment of Goodwill 12,073 - Share based payments - 236 Impairment of investments Impairment of intercompany balance - - Profit on disposal of investment in subsidiaries (7,494) - Profit on disposal of property, plant and equipment (13) (15) Other non-cash items - (64) Operating cash flows before movement in working capital (4,130) (117) Decrease / (increase) in work in progress 78 (244) Decrease / (Increase) in receivables 1,382 (297) (Decrease) / increase in payables (217) (1,433) Decrease in provisions (46) (220) Cash (utilised) / generated by discontinued operating activities (2,933) (2,311) Income taxes paid (178) (114) Interest paid (68) (71) Net cash flow (used in) / from discontinued operating activities (3,179) (2,496) Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and other short term, highly liquid investments with a maturity of three months or less. 11 STATUS OF FINANCIAL INFORMATION This preliminary announcement is authorised for issue by the Board on 28 September 2012. The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information contained in the announcement has been extracted from audited statutory financial statements for the 15 months ended 30 June 2012 and from the audited accounts for the year ended 31 March 2011. The auditor's report on the financial statements for the year ended 31 March 2011 was unqualified. In respect of the financial statements for the period to 30 June 2012 the auditor has given a qualified report and the relevant parts of the opinion are as follows (note 9 to the financial statements is note 3 to this announcement): "Basis of qualified opinion With respect to the result on disposal of discontinued operations relating to the MSS Building Services and Compliance divisions and the associated consolidated results to the date of disposal as described in the basis of preparation and note 9 to the financial statements, the audit evidence available to us was limited because we were unable to access the accounting records of those divisions up to the date of disposal. Owing to the nature of those divisions' records, we were unable to obtain sufficient appropriate audit evidence regarding the disclosure of consolidated results up to the date of disposal and associated profits on disposal by using other audit procedures. Opinion on financial statements In our opinion except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, the financial statements: · give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2012 and of the group's loss for the period then ended; · have been properly prepared in accordance with IFRSs as adopted by the European Union; and · have been prepared in accordance with the requirements of the Companies Act 2006." The audited financial statements of the Company for the year ended 31 March 2011 have been filed with the Registrar of Companies as required by the Companies Act 2006 and those for the for the period to 30 June 2012 have not been, but will be, filed with the Registrar of Companies as required by the Companies Act 2006. 12 PUBLICATION OF FINANCIAL STATEMENTS The audited financial statements of the Company will be despatched to shareholders shortly and their despatch will be announced. Copies of the financial statements will then be available from the Company's registered office, c/o Morrison & Foerster, CityPoint, One Ropemaker Street, London EC2Y 9AW. This information is provided by RNS The company news service from the London Stock Exchange END FR SEFFDAFESEEU -0- Sep/28/2012 13:25 GMT
Kennedy Ventures PLC KENV Final Results
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