Final Results

RNS Number : 1996B

One Delta PLC

28 March 2013

 



28 March 2013

One Delta plc

("One Delta" or the "Company")

Audited financial statements for the fourteen months ended 30 November 2012

Chairman's Statement

Restructure & Change of Director

As shareholders will be aware, the Company was admitted to trading (following the completion of a reverse takeover) in January 2012. At the time of that transaction, One Delta Limited was an early stage company with the majority of its business relationships based on products that had yet to come to market.  It was felt that One Delta Limited was capable of offering exciting growth opportunities because of these relationships and the Board had hoped that they would come to fruition during the period under review.

Unfortunately, One Delta Limited has faced considerable challenges in achieving the revenue that the Board and shareholders had hoped for since admission.  New product launches, focused primarily in the Construction Sector and Public Sector, in the current economic environment have been very difficult and the team have been further frustrated by longer sales cycles than expected. In addition, the lack of one of the larger contracts that the team had spent considerable time pursuing has undermined the Company's ability to deliver growth. Ultimately, although the business has moved from R&D to revenue, the size and pace of the development has been well behind where the Board expected it to be at this stage.

The results for the 14 months to 30 November 2012 show revenue of £33,318 and a loss for the period of £780,602 excluding the exceptional item of £1,135,755 being the impairment of goodwill. At the period end the group had cash resources of £149,750.

Given the delay in commercialisation and the impact on resources, it has been necessary for the Board to review the structure and the business of the group.

Following discussions within the Board, we have concluded that the best course of action would be to restructure the group to maintain an ongoing interest in One Delta Limited while reducing shareholders' exposure to any losses. As such, this will also allow the Board to assess any other opportunities for the Company.

Accordingly, the Company has entered into a conditional share purchase agreement to dispose of 47.5% of One Delta Limited to Phil Dale, Richard Ludford and I. In consideration for the interest in One Delta Limited we will transfer back to the Company our holding of 15,000,005 ordinary shares in itself. These shares include shares subscribed for and those received as consideration.  These shares will be held in treasury and it is intended that they will be cancelled in due course.

In addition, upon completion of the transaction, the Company will enter into a management agreement with One Delta Limited, Phil Dale, Richard Ludford and I, which will govern how One Delta Limited will be run following the transaction.

Completion of the proposed transaction is subject to certain conditions including shareholder approval at an Extraordinary General Meeting of the Company.

Following completion of the transaction but prior to cancellation of the shares, the Company will have 31,574,356 ordinary shares in issue but only 16,574,351 voting rights.

One Delta Plc. will also maintain a keen interest in the success of the trading business.

These changes are a positive step forward and ensure that One Delta Plc. has the maximum flexibility and the trading business can remain as a significant part of the business.

As a result of these changes, I have decided to stand down as Chairman and resign from the Board, so I can focus my efforts on the trading business, which I believe will be a major source of future value for One Delta plc.

Related party transaction

Under the AIM Rules, the sale of part of One Delta Limited to Phil Dale, Richard Ludford and I, is classified as a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Independent Directors, being Roger King and Roger Maddock, having consulted with the Company's Nominated Adviser, Sanlam Securities UK, consider the terms of the transaction to be fair and reasonable insofar as the Company's shareholders are concerned. In advising the Independent Directors, Sanlam Securities UK has taken into account the commercial judgment of the Independent Directors.

Sean Reel

Chairman

28 March 2013

Enquiries:

One Delta plc
Sean Reel, Executive Chairman Roger King, Executive Director	Tel: [phone] Tel: [phone]
Sanlam Securities UK Limited (Nominated Adviser and Broker)
Simon Clements/Virginia Bull	Tel: [phone]

Consolidated Statement of Comprehensive Income

		Group Fourteen months ended 30 November 2012	Company Fourteen months ended 30 November 2012	Group and Company Year ended 30 September 2011
	Note	£	£	£
Sales income		33,318	-	380
Cost of sales		(39,773)	-	-
Gross loss		(6,455)	-	380
Other income		478	-	15,795
Rental expenses	4	(11,054)	-	(70)
Investment management fee	4	-	-	(88,288)
Other administrative expenses		(753,571)	(530,868)	(201,362)
Finance income		-	-	2,290
Impairment of goodwill / investment in subsidiary	4	(1,135,755)	(1,360,000)	-
Amortisation of intangible asset	4	(10,000)	-	-
Net loss before taxation		(1,916,357)	(1,890,868)	(271,255)
Taxation		-	-	-
Provision for winding down expenses		-	-	265,524
Net loss for the year from continuing operations		(1,916,357)	(1,890,868)	(5,731)
Basic earnings per share (pence)	2	(7.3)	(7.2)	(0.2)
Diluted earnings per share (pence)	2	(7.3)	(7.2)	(0.2)

Notes

(a)  The Group and Company had no recognised gains or losses other than those disclosed in the Consolidated Statement of Comprehensive Income.

(b)  The loss per share is calculated on the weighted average number of Participating Shares in issue during the year.

Consolidated Statement of Financial Position 

		30 November 2012	30 September 2011
	Notes	£	£
Non-current assets
Goodwill	9	300,000	-
Intangible asset	9	40,000	-
		340,000	-
Current assets
Inventory		16,818	-
Other receivables	6	15,708	3,375
Cash and cash equivalents		149,750	310,096
		182,276	313,471
Liabilities - amounts falling due within one year
Other payables	7	(54,199)	(47,079)
Net current assets		128,077	266,392
Total net assets		468,077	266,392
Equity
Stated capital		5,326,952	3,208,910
Capital reserve		(706,395)	(706,395)
Issue costs reserve		(679,868)	(679,868)
Revenue reserve		(3,472,612)	(1,556,255)
Total shareholders' funds (all equity)		468,077	266,392

Company Statement of Financial Position

		30 November	30 September
		2012	2011
	Notes	£	£
Non-current assets
Investment in subsidiaries	8	340,000	-
		340,000	-
Current assets
Intercompany loan		60,000	-
Other receivables	6	3,200	3,375
Cash and cash equivalents		125,733	310,096
		188,933	313,471
Liabilities - amounts falling due within one year
Other payables	7	(35,367)	(47,079)
Net current assets		153,566	266,392
Total net assets		493,566	266,392
Equity
Stated capital		5,326,952	3,208,910
Capital reserve		(706,395)	(706,395)
Issue costs reserve		(679,868)	(679,868)
Revenue reserve		(3,447,123)	(1,556,255)
Total shareholders' funds (all equity)		493,566	266,392

Statement of Cash Flows

		Group Fourteen months ended 30 November 2012	Company Fourteen months ended 30 November 2012	Group and Company Year ended 30 September 2011
	Notes	£	£	£
Net cash outflow from operating activities	10	(579,667)	(329,913)	(292,466)
Cash flow from investing activities
Cash from acquisition of subsidiary		107,832	-	-
Interest income received		-	-	2,529
Deposit recovered		-	-	1,099,997
Net cash inflow from investing activities		107,832	-	1,102,526
(Decrease) / increase in cash before financing		(471,835)	(329,913)	810,060
Cash flow from financing activities
Shares issued		223,750	208,750	150,000
Loan payments received / (issued)		87,739	(63,200)	-
Redemption of shares		-	-	(1,434,735)
Net cash inflow / (outflow) from financing activities		311,489	145,550	(1,284,735)
Net decrease in cash and cash equivalents		(160,346)	(184,363)	(474,675)
Cash and cash equivalents at the start of the period		310,096	310,096	784,771
Cash and cash equivalents at the end of the period		149,750	125,733	310,096

Statement of changes in equity

Group	Stated Capital	Capital reserve	Issue costs reserve	Revenue reserve	Total
	£	£	£	£	£
For the fourteen months ended 30 November 2012
At 1 October 2011	3,208,910	(706,395)	(679,868)	(1,556,255)	266,392
Loss for the period	-	-	-	(1,916,357)	(1,916,357)
Issue of fee shares	209,292	-	-	-	209,292
Issue of consolidation shares	1,700,000	-	-	-	1,700,000
Issue of participation shares	208,750	-	-	-	208,750
At 30 November 2012	5,326,952	(706,395)	(679,868)	(3,472,612)	468,077
For the year ended 30 September 2011
At 1 October 2010	4,493,645	(706,395)	(679,868)	(1,550,524)	1,556,858
Redemption of shares	(1,434,735)	-	-	-	(1,434,735)
Issue of participation shares	150,000	-	-	-	150,000
Loss for the year	-	-	-	(5,731)	(5,731)
At 30 September 2011	3,208,910	(706,395)	(679,868)	(1,556,255)	266,392

Company	Stated Capital	Capital reserve	Issue costs reserve	Revenue reserve	Total
	£	£	£	£	£
For the fourteen months ended 30 November 2012
At 1 October 2011	3,208,910	(706,395)	(679,868)	(1,556,255)	266,392
Loss for the period	-	-	-	(1,890,868)	(1,890,868)
Issue of fee shares	209,292	-	-	-	209,292
Issue of consolidation shares	1,700,000	-	-	-	1,700,000
Issue of participation shares	208,750	-	-	-	208,750
At 30 November 2012	5,326,952	(706,395)	(679,868)	(3,447,123)	493,566
For the year ended 30 September 2011
At 1 October 2010	4,493,645	(706,395)	(679,868)	(1,550,524)	1,556,858
Redemption of shares	(1,434,735)	-	-	-	(1,434,735)
Issue of participation shares	150,000	-	-	-	150,000
Loss for the year	-	-	-	(5,731)	(5,731)
At 30 September 2011	3,208,910	(706,395)	(679,868)	(1,556,255)	266,392

Notes

(a)        The capital reserve arose from recognised losses on property development and holding.

(b)        The issue costs reserve arose from expenses incurred on a share issue in 2006.

Notes to the financial statements

1. Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the 14 months ended 30 November 2012 and the year ended 30 September 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following completion of those accounts and the Company's Annual General Meeting. The Auditors have reported on the accounts for the 14 months ended 30 November 201; their report was unqualified.

The financial statements have been prepared for a 14 month period to align with new group accounting arrangements after the acquisition of One Delta Limited. Users of these financial statements should be aware that, because of this, amounts shown in the Consolidated Statement of Comprehensive Income will not be entirely comparable.

The consolidated financial statements have been prepared under the historical cost convention, as modified to include the revaluation of quoted investments and investment properties and in accordance with applicable Accounting Standards as adopted by the European Union. Applicable Accounting Standards for these purposes are International Financial Reporting Standards ("IFRS"), as adopted by the European Union.

Following the group restructuring carried out after the year end and a review of the business plan and related commitments, the Directors have concluded that the Group has adequate financial resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing the accounts. 

2. Loss per share

Basic earnings per share amounts are calculated by dividing the net loss for the period attributable to ordinary equity holders of the Company by the weighted average number of participating ordinary shares outstanding during the year.

Diluted earnings per share are not applicable to the Company, since there is only one participating class of share issued by the Company.

The following reflects the income and share data used in the basic earnings per share computation:

	Group fourteen months ended 30 November 2012	Company fourteen months ended 30 November 2012	Group and Company year ended 30 September 2011
Loss attributable to ordinary shareholders	£(1,916,357)	£(1,890,868)	£(5,731)
Weighted average of shares in issue	26,366,056	26,366,056	2,869,107
Basic and diluted loss per share	(7.3)p	(7.2)p	(0.2)p

3. Operating segment

The subsidiary company, One Delta Limited, is currently in the early stages of developing its technology and hence only has one operating and geographical segment.

4. Other operating expenses

The profit for the period is stated after charging the following:

	Group Fourteen months ended 30 November 2012	Company Fourteen months ended 30 November 2012	Group and company Year ended 30 September 2011
	£	£	£
Impairment of goodwill / investment in subsidiary	1,135,755	1,360,000	-
Amortisation of intangible assets	10,000	-	-
Director loans written off	80,509	-	-
Wages and salaries	69,945	-	-
Research and development	16,386	-	-
Auditors' fees - for audit services	20,300	17,900	12,700
Other amounts due to auditors	3,600	3,600	-
Directors' remuneration	62,616	62,616	40,333
Cost of inventories sold	39,773	-	-
Rental expenses	11,054	-	70
Provision for winding down expenses	-	-	(265,524)
Acquisition costs	227,129	227,129	-

5. Taxation

Profits arising in the company for the 2012 Year of Assessment will be subject to Jersey Income Tax at the rate of NIL per cent (2011: NIL per cent).

	30 November	30 September
	2012	2011
Reconciliation of taxable profit Net loss on ordinary activities before finance costs and taxation
	(1,916,357)	(271,255)
Adjustment for disallowable income and expenses	1,916,357	271,255
Taxable profit	-	-

6. Other receivables

			Group				Company
	30 November		30 September		30 November		30 September
	2012		2011		2012		2011
	£		£		£		£
Accounts receivable	15,708		-		3,200		-
Prepayments	-		3,375		-		3,375
	15,708		3,375		3,200		3,375

7. Other payables

			Group				Company
	30 November		30 September		30 November		30 September
	2012		2011		2012		2011
	£		£		£		£
Accruals	37,320		30,200		18,488		30,200
Tax	16,879		16,879		16,879		16,879
	54,199		47,079		35,367		47,079

8. Investment in subsidiaries

The Company has the following investments in subsidiaries:

	Country of Incorporation	Class of shares held	%
One Delta Limited	England and Wales	Ordinary	100%
Fusion Delta Limited	England and Wales	Ordinary	100%

On 23 December 2011 the Company acquired the entire shareholding of One Delta Limited. The consideration of £1,700,000 was met by the issue of 21,250,002 shares in One Delta plc. to the previous shareholders of One Delta Limited.  The value of 8 pence per share was a combination of the value attributed to Cholet Investments plc. and the price at which investors were prepared to subscribe the additional £275,750 on the reverse take-over.

Of the issue of these shares, 89% were defined as Locked-in and therefore specified shareholders were unable to dispose of any shares until 12 months after the date of admission to trading on the AIM.

One Delta Limited is incorporated in the United Kingdom and is 100% owned by One Delta plc. The results of One Delta Limited are included within these financial statements.

One Delta Limited		£	£
	Cost		1,700,000
	Cash	107,832
	Accounts receivable	116,567
	Intangible asset	50,000
	Accounts payable	(15,218)
	Other payable	(11,736)
	Inventory	16,800
			264,245
	Goodwill		1,435,755

In the interim financial statements, goodwill was shown at a value of £1,468,981. Since then, the directors have re-assessed the cost of One Delta Limited to include Intellectual Property at £50,000, to be amortised over 5 years, and have impaired the value of goodwill to £300,000 (see note 9).  Goodwill will be reviewed for impairment on an annual basis.  The accounts receivable amount included director loans totaling £80,509 which were written off during the period.

The reason for the business combination is in order for the trading company to enhance its marketing ability and thereby attract more sales through its relationship with the plc.  The goodwill was attributed to the chance of acquiring a number of significant contracts.

The statement of comprehensive income includes turnover of £33,318 and loss of £239,734 of the subsidiary since acquisition. Had the subsidiary been acquired at the start of the reporting period, turnover and profit would not have been significantly different to that reported.

9. Intangible assets

Included in the financial statements is Intellectual Property which the directors have valued at £50,000.

One Delta Limited has developed a portfolio of products that can be produced from waste plastic.  No similar products have been sold therefore the valuation is based on known costs of £30,248 plus some unaccounted costs.

	Goodwill	Patents and trade-marks	Development and other costs	Total other intangible assets
Cost	£	£	£	£
Balance at 1 October 2010  and 30 September 2011	-	-	-	-
Balance at 1 October 2011	-	-	-	-
Acquisitions through business combinations	1,435,755	7,020	42,980	50,000
Balance at 30 November 2012	1,435,755			50,000
Amortisation and impairment
Balance at 1 October 2010  and 30 September 2011	-			-
Balance at 1 October 2011	-			-
Amortisation and impairment for the year	1,135,755			(10,000)
Balance at 30 November 2012	1,135,755			(10,000)
Net book value
Balance at 1 October 2010 and 30 September 2011	-			-
Balance at 1 October 2011	-			-
Balance at 30 November 2012	300,000			40,000

It has been estimated that the intangible asset has a useful life of 5 years and is therefore being amortised on a straight line basis at £10,000 per year with the carrying value at 30 November 2012 being £40,000.

It is clear that One Delta Limited has faced considerable challenges in achieving the revenue that the Board and Shareholders had hoped for in 2012.  Launching new products, focused primarily in the Construction Sector and Public Sector with current economic activity being severely constrained has been very difficult.

This was further frustrated by unusually long sales cycles and the lack of the Olympic contracts that the team had spent considerable time pursuing.

The amortisation and impairment charges are shown separately in the Consolidated Statement of Comprehensive Income.

There is only one cash generating unit thus the figures above represent the total amortisation and impairment deductions for the Company.  The recoverable amount is forecast to be £329,573 and has been calculated with reference to its value in use.  The directors consider 12% to be appropriate for One Delta Limited on the basis of the anticipated risk and return.

Management forecasts are based on a 5 year period with sales expected to increase at 30% per annum until the trading year 2015/16 and at 50% per annum thereafter.  Costs of sales are expected to remain at a constant percentage of sales whilst other costs are expected to increase at between 10% and 20% over the same 5 year period.  Management have assumed that any future price rises in cost of sales will be negated by the ability to purchase with volume discounts.

The growth rates used in the value in use calculation reflect the rates currently experienced in the construction sector.

10. Cash outflow from operating activities

	Fourteen months ended 30 November	Year ended 30 September
	2012	2011
	£	£
Rental income received	-	2,268
Deposit interest received	-	2,529
Sales income	33,548	-
Other income	478	15,787
Investment management fees paid	-	(88,288)
Purchase of stock	(15)	-
Rental expenses	(10,445)	(70)
Other expenses	(603,233)	(224,692)
Net cash outflow from operating activities	(579,667)	(292,466)

11. Related party transactions

The compensation of key management personnel, including the directors, is as follows:

	2012	2011
	£	£
Director fees	1,616	40,333
Share based payments	61,000	-

Roger King and Roger Maddock hold 25,640 shares and 998,556 shares respectively and are directors of the Company. Roger King and Roger Maddock agreed that from 31 March 2011 all fees due under their service contracts would become payable following, and conditional upon, a reverse takeover being undertaken by the Company and in consideration for such waiver of fees, that if fees should become payable, they would be paid at double their usual rate. At 30 September 2011 Roger King was due £10,000 and Roger Maddock was due £5,000.  These fees were satisfied in the introduction of share capital on 23 December 2011.

Roger King and Donald Reid are directors of Anglo Saxon Trust Limited, who act as administrator to the Company. Fees paid to this company during the period amounted to £46,200 (2011:£41,614).  Balances due to Anglo Saxon Trust Limited at the period end amounted to £2,093 (2011:£nil).

During the period, the following balances due from the directors of the parent company and the subsidiary were written off:

	£
Sean Reel	17,073
Phil Dale	63,436

12.   Post balance sheet event

Given the delay in commercialisation and the impact on resources, it has been necessary for the Board to review the structure and the business of the group.

Following discussions within the Board, it was concluded that the best course of action would be to restructure the group to maintain an ongoing interest in One Delta Limited while reducing shareholders' exposure to any losses. As such, this will also allow the Board to assess any other opportunities for the Company.  A full explanation of this restructuring is noted in the Chairman's Statement.

13. Copies of the report and accounts

Copies of the Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at PO Box 264, JP Morgan House, Grenville Street, St. Helier, Jersey JE4 8TQ and on its website www.onedeltaplc.com.

 

END

 

 

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