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
	Note	30 June 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.

	Building  Services		Health and  Safety		Interior Contracts		Central and Other		Consolidated
	Period ended 30 June 2012		Period ended 30 June 2012		Period ended 30 June 2012		Period ended 30 June 2012			Period ended 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)

	Building  Services		Health and  Safety		Interior Contracts		Central and Other		Consolidated
	Period ended 31 March  2011		Period ended 31 March  2011		Period ended 31 March  2011		Period ended 31 March  2011			Period ended 31 March  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:

	Period ended 30 June 2012		Year ended 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:

	Period ended 30 June 2012		Year ended 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.

 

END

 

 

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