TIDMDJI
RNS Number : 2707L
DJI Holdings PLC
30 September 2016
30 September 2016
DJI Holdings plc
Unaudited interim results for the six months ended 30 June
2016
DJI Holdings plc (AIM: DJI, "the Group", "DJI"), a Chinese
technology, content and services company, announces its unaudited
interim results for the six months ended 30 June 2016.
Highlights
-- Signing in April of the partnership between NewNet and
Xinhuatong in which NewNet will provide technology to facilitate
mobile payments on the Xinhua News App across 12 provinces (10 of
which have already been signed) in China
-- Loss after tax of GBP4.2m (H1 2015: GBP4.8m loss)
-- Robust cash and cash equivalent position of GBP7.1m (31 December 2015 GBP4.0m)
-- Completed fundraising of GBP10.5m in April. Post period end
completed two further fundraisings with gross proceeds totalling
GBP40.5m
-- Welcomed high quality institutional investors onto
shareholder register, including Hadron Capital LLP, Henderson
Global Investors and Capital Research & Management
-- Strengthening of Board of Directors with announcement of
Group CFO, Scott Kennedy, China CEO and COO, Wei Qi, and
non-executive director, Dong Jinhua
-- Expected strong fourth quarter as the payment fulfilment platform rolls out
-- Initial filing documents shortly to be submitted to SEC to
formally commence Nasdaq listing process
-- General Meeting 7 October 2016 to vote on the proposed Group
name change to BNN Technology plc
The Group's transformational partnership with Xinhuatong,
through NewNet, to facilitate mobile payments across China on the
Xinhua News mobile app, signalled a significant step forward in
applying DJI's platform technology to deliver new services for
Chinese citizens. The partnership of NewNet with Xinhuatong, the
main operator of the Xinhua News App, will enable the Group to
capitalise on the rapid growth of mobile payments in China.
The Group is well positioned for future growth and investment
following the completion of the April placing and two further
placings post period end totalling cash injections of over GBP50m.
To facilitate this next evolution of DJI and capitalise on the
mobile payments opportunity, we raised funds to accelerate
investment in the Group and strengthen the board.
The appointment of Scott Kennedy as Group Chief Financial
Officer provides stability and focus in the Finance area, and the
introduction of two Chinese nationals to the Board provides
cultural balance and valuable local expertise. Specifically, the
announcement of Dong Jinhua to the Board as a non-executive
director demonstrates the strength and long-term nature of the
relationship and partnership between NewNet, Xinhuatong and
DJI.
DJI will shortly submit the initial filing document with the
U.S. Securities & Exchange Commission, which initiates the
Nasdaq listing process.
Commenting on the first half performance, Darren Mercer, CEO of
DJI, said:
"In the first half of 2016, we demonstrated substantial progress
towards our goal of being a leading Chinese technology, content and
services company and, with the partnership between NewNet and
Xinhuatong propelling us into the high growth mobile payments
market, established a strong position at the heart of one of
China's largest mobile apps. In the second half, we have continued
that progress and recently updated that market on our successful
pivot away from lottery services, with re-branding and
re-positioning of our business as a dynamic technology platform
provider that can facilitate mobile payments, deliver mobile
content and provide data management to consumers throughout China,
along with NewNet's strategic investment in Xinhuatong, further
deepening our ties with a key player in this growing market."
Three sizeable placings were completed this year, two of which
were post period end. In raising just over GBP50m this year, we
have successfully strengthened the balance sheet, which has allowed
us not only to rollout the opportunity with our partners NewNet and
Xinhuatong in the final quarter of this year and beyond, but also
given us the necessary funding to move forward with other
significant, complementary, opportunities for the Group. We look
forward to updating the market in due course on these
opportunities."
The progress to date on our partnership with NewNet and
Xinhuatong is exceptionally pleasing The extensive and sizeable
testing process began in mid-August, initially in two provinces,
and, in September, we extended the testing to seven provinces and
that testing is now nearly complete. As a result, we are confident
that the large e-commerce partners, which have substantial user
bases and will assist our sales drive, will come on stream in
October and will deliver significant gross sales and revenues from
that point onwards. As we embark on the final quarter and into
2017, we will be broadening service offerings on the mobile app and
introducing unique content that will drive customer acquisition and
enhance customer retention. With increased customer activity on the
app, this will, importantly, drive sizeable data acquisition."
With the prospects for a Nasdaq submission, the roll out of our
payment platform accompanied by strong revenue growth, and new
opportunities for the Group, my Board and I are extremely confident
about the remainder of 2016 and beyond."
-S -
For further information, please contact:
DJI Holdings plc +44 (0) 1565 872990
Darren Mercer, Chief Executive
Scott Kennedy, Chief Financial
Officer
Stephen Benzikie, Communications
+44 (0) 20 7404
Brunswick Group (Public Relations) 5959
Brian Buckley / Diana Vaughton
Strand Hanson Limited (Nominated +44 (0) 20 7409
& Financial Adviser) 3494
Andrew Emmott / Ritchie Balmer
Mirabaud Securities LLP (Broker) +44 (0) 20 7878
Peter Krens 3362
About the Group
DJI Holdings plc is a Chinese technology, content and services
company that builds long-term partnerships to deliver China's
citizens with value-added services, content and evolving
opportunities.
Listed on AIM since 2014 the Group principally engages in
providing technology to partners to facilitate fulfilment of
payments online and on mobile apps through partnerships or
affiliate agreements and, developing digital content, both online
and mobile. Through its partnership with NewNet, DJI works with
Xinhuatong to facilitate mobile payments and other key services on
the Xinhua News mobile app in 12 provinces in China. The Chinese
consumer shift to 'life on mobile' is only just beginning and DJI's
platform technology enables urban and rural communities across
China to access exclusive content and pay for more services
online.
The Group employs over 300 professionals throughout China and is
expected to grow over the next six months.
Business review
The first half of 2016 was a period of repositioning and
investment for the Group with a number of new ventures being
announced and fund raising and investment taking place to ensure we
maximise those opportunities. The result for period, a loss of
GBP4.2 million (2015: loss of GBP4.8 million) was in line with
expectations.
In April 2016, we announced a major partnership with NewNet and
Xinhuatong allowing us to take advantage of the continuing growth
in the Chinese smartphone user market and the rapidly growing
mobile payments market. This is demonstrated by the increase in the
China smartphone market, which is forecast to increase from 785
million users in 2015 to nearly 1 billion users in 2017[1], and the
fact that Chinese mobile-payment transactions doubled last year to
USD235bn[2].
This partnership has given the Group the opportunity to provide
the technology to NewNet and Xinhuatong to facilitate mobile
payments on the Xinhua Mobile app in up to 12 provinces with a
total population of approximately 700 million people. The deal will
allow the Group to generate commission revenues initially from the
payment of utility bills, mobile top ups and traffic fines. The
partnership was not revenue generating in the first half of 2016,
as we recruited the necessary staff to build and test the payment
fulfilment platform.
In March we announced our joint venture, Qingdao Baifa, would
promote an approved mobile lottery offering by using our football
club resources and unique game content. After a slow start early in
the second quarter, the European Championships helped to improve
daily game activity as the games are primarily focussed on
football.
At the end of March, the Group, through its investment with the
Heilongjiang Sports Bureau (HSB), Longti, secured an exclusive
service agreement to promote sports lottery scratch card sales
across Heilongjiang Province. Performance was broadly in line with
expectations in the first half. The online booking platform is well
positioned and ready for the forthcoming winter sports season
(which begins in the autumn) and the scratch card business is
generating gross sales in line with expectations.
Whilst no longer the primary focus for the Group, the land and
digital lottery businesses generated GBP8.3m in gross sales,
resulting in revenues of GBP0.5m in the first half of 2016.
Outlook
The second half of 2016, and particularly the fourth quarter, is
expected to see a significant increase in gross sales and revenues
for the Group as we see the transaction volumes from the Xinhua
News mobile app payments begin to flow through our platform. With
the continued rollout and growth in transaction volumes from our
mobile payments business and expectation of new revenue streams
coming online, we expect the Group to return to profitability in
2017.
Short-term
Our payment fulfilment platform, supporting the mobile payments
on the Xinhua News app, was revenue generating in August, albeit
only a small amount of transactions was processed, as we
deliberately restricted the initial volumes in two provinces in
order to ensure the robustness of the platform and allow the
platform to complete certain performance levels in stages.
In September, we extended the testing to a further seven
provinces, which required testing on a significant number of
interfaces within each province, and saw a marginal increase in
gross sales versus August. The volume of transactions and gross
sales of the Group are expected to increase significantly in
October as the testing phase is completed. Gross sales are then
expected to continue to grow each month over the rest of the fourth
quarter as B2B volumes increase and the roll out of the platform
continues. In the fourth quarter we remain on target for mobile
payments on the Xinhua News app to be live in ten of the twelve
targeted provinces.
The Group's full year net revenues will, in the majority,
reflect the revenues from payment fulfilment through the Xinhua
News Mobile app, with a small contribution from our legacy land and
digital lottery business. The earnings from the Group's associates,
being Longti, Baifa and Xinhuacai, which are presented on a
consolidated basis as share of associates results on the income
statement, are expected to be around breakeven for the year.
Accordingly, results for the full year are expected to be in line
with expectations.
Medium and long-term
In addition to the growth anticipated from the revenue streams
which have been launched already, management is focused on
continuing to explore how we can grow and diversify revenue streams
over the medium and long-term. To that end, we are working on
several initiatives, some of which we hope to announce to the
market over the coming quarter.
As announced previously, we intend to commence the Nasdaq
listing process shortly following the name change, which is
expected to come in to effect shortly after the general meeting on
7 October 2016. Further announcements on the progress of the Nasdaq
application will be provided as we work through the process.
Darren Mercer Scott Kennedy
Chief Executive Officer Chief Financial Officer
Financial review
The Group's revenues of GBP0.5m (H1 2015: GBP5.3m) have been
materially reduced when compared with last year because of the
suspension of online lottery licences in China in March 2015. Some
sales involving an online element have been allowed to continue
which are included in Digital business in note 2. The Group
continued to operate some land based lottery sales, but the Group's
focus has been on efforts to move away from exclusively lottery
based revenue streams into other areas. Our cost of sales, which is
principally commissions paid to B2B customers, also declined in
line with revenue leaving a gross profit of GBP0.3m (H1 2015:
GBP1.2m).
Our administrative expenses increased by 15.0% to GBP5.1m (H1
2015: GBP4.4m). We have been investing in our Chinese headcount in
NewNet in accordance with our business model for the cooperation
agreement between NewNet and Xinhuatong. This has involved the
establishment of a Research & Business Development group within
our Chinese operations, into which we had recruited an additional
31 people by the end of June, as well as increased headcount of 22
across the online and administration departments. The first half
also saw the establishment of the first provincial location for the
Xinhua cooperation agreement where we have set up a new wholly
owned subsidiary in Hangzhou province. Nevertheless, our staff
costs for the period which amounted to GBP2.1m (H1 2015: GBP2.5m)
are lower than the prior period reflecting the headcount reduction
we undertook in 2015 following the lottery suspension. We
anticipate higher staff costs going forward as the full year impact
of our new hires flows through. Overall our administrative costs
have increased reflecting investment into the establishment of
branch offices in various Chinese provinces as NewNet prepares for
the launch of the payment facilitation platform within the Xinhua
News mobile app.
DJI's investments in Xinhuacai, Longti and Baifa are accounted
for as associates and the Group income statement includes only the
Group's share of their results under "Share of results of
associates". Following the transfer of NewNet's lottery assets, to
Xinhuacai, all future revenues and profits from those assets will
be recognised through the Group's share of the profits of
Xinhuacai, which is also accounted for as an associate.
Our finance income of GBP1.1m (H1 2015: GBP0.5m expense)
consists of two principal elements. The first is an expense being
the interest payable on the convertible loan notes. The interest
cost has increased from a charge of GBP0.5m in H1 2015 to GBP0.8m
in H1 2016. This loan note was renegotiated in April 2016, the new
loan arrangements are more favourable to the Group and carry a
lower rate of interest as described in note 7. Our ongoing
borrowing cost is therefore expected to fall in the second half of
the year.
The other element of the finance income is an unrealised foreign
exchange gain on our internal group loans of GBP1.8m which offsets
an unrealised loss taken directly to reserves on the retranslation
of the net assets of our Chinese subsidiaries of GBP0.8m. In
addition, at 30 June 2016, approximately half of the Group's bank
deposits were denominated in pounds sterling and half in Chinese
renminbi. Since the majority of its operations, monetary assets and
liabilities are conducted both in pounds sterling or Chinese
renminbi, the Group manages exchange risk as an ordinary part of
its financial decision-making process. The Group made the decision
not to hedge sterling into renminbi in advance of the referendum
concerning the possible exit of the United Kingdom from the
European Union. The outcome of the referendum which took the
financial markets by surprise resulted in a large movement in the
exchange rate between pound sterling and Chinese renminbi. The
consequence of the movement in the foreign exchange rate is that
future investments into China by us will be relatively more
expensive when translated into the sterling equivalent if the rate
at the end of June 2016 is used.
The net loss for the period as a result of the above factors
reduced to GBP4.2m (H1 2015: GBP4.8m). The Board has not declared
an interim dividend.
Our balance sheet has seen an increase in cash arising from
successful share placings (GBP10.1m net of issue costs) offset by
investments in the business as we prepare for the future. Cash and
cash equivalents were GBP7.1m (31 Dec 2015: GBP4.0m).
Total assets and net current assets of the Group were GBP28.0m
and GBP6.2m respectively (31 Dec 2015: GBP18.2m and GBP2.9m
respectively).
Financial statements (unaudited)
Condensed consolidated income statement (unaudited)
Six months ended 30 June 2016 2015
GBP 000 GBP 000
(restated
- note
Note 2)
Continuing operations:
Revenue 2 537 5,288
Cost of sales (242) (4,117)
Gross profit 295 1,171
Administrative expenses (5,095) (4,429)
Share of results of associates (407) (379)
Operating loss (5,207) (3,637)
Finance income/(costs) 1,050 (489)
Loss before tax (4,157) (4,126)
Tax - (105)
Loss for the period from continuing
operations (4,157) (4,231)
Discontinued operations:
Loss for the period from
discontinued operations - (584)
Loss for the period after discontinued
operations (4,157) (4,815)
-------- -----------
Attributable to:
Owners of the Company (4,081) (4,833)
Non-controlling interests (76) 18
(4,157) (4,815)
-------- -----------
Loss per share (pence)
From continuing and discontinued
operations:
Basic & Diluted 3 (2.8) (3.7)
-------- -----------
From continuing operations:
Basic & Diluted 3 (2.8) (3.3)
-------- -----------
Condensed consolidated statement of comprehensive
income (unaudited)
Loss for the period (4,157) (4,815)
Items that may be reclassified
subsequently to profit or
loss:
Exchange differences on translation
of foreign operations (848) 96
Total comprehensive loss for the
period (5,005) (4,719)
--------- --------
Attributable to:
Owners of the Company (4,946) (4,688)
Non-controlling interests (59) (31)
---------
(5,005) (4,719)
--------- --------
Condensed consolidated balance sheet (unaudited)
Notes As at As at
30 June 31 December
2016 2015
GBP 000 GBP 000
Non-current assets
Goodwill 4,206 3,919
Other intangible assets 297 192
Property, plant and equipment 448 383
Investments in associates 5,198 5,218
Other investments 6 3,725 -
13,874 9,712
--------- -------------
Current assets
Inventories 20 19
Trade and other receivables 4 7,030 4,449
Cash and cash equivalents 7,074 4,028
14,124 8,496
--------- -------------
Total assets 27,998 18,208
--------- -------------
Current liabilities
Trade and other payables 5 4,700 5,626
Borrowings 6 3,226 -
7,926 5,626
--------- -------------
Non-current liabilities
Convertible loan notes 7 8,381 5,978
Net assets 11,691 6,604
--------- -------------
Equity
Share capital 8 16,432 14,431
Share premium 31,010 22,432
EBT reserve (575) (575)
Accumulated deficit (35,384) (29,940)
--------- -------------
Equity attributable to owners
of the Company 11,483 6,348
Non-controlling interests 208 256
Total equity 11,691 6,604
--------- -------------
Condensed consolidated statement of changes in
equity (unaudited)
Share Share EBT Accumulated Non-controlling Total
capital premium reserve deficit Total interests equity
GBP GBP GBP GBP GBP GBP
000 000 000 GBP 000 000 000 000
At 1 January
2015 13,052 19,433 (575) (17,473) 14,437 686 15,123
Loss for
the period - - - (4,833) (4,833) 18 (4,815)
Exchange
differences - - - 145 145 (49) 96
--------- --------- --------- ------------ -------- ---------------- --------
Total comprehensive
loss for
the period - - - (4,688) (4,688) (31) (4,719)
Disposal
of subsidiary - - - (2,382) (2,382) (344) (2,726)
At 30 June
2015 13,052 19,433 (575) (24,543) 7,367 311 7,678
Loss for
the period - - - (6,535) (6,535) (100) (6,635)
Exchange
differences - - - 15 15 45 60
--------- --------- --------- ------------ -------- ---------------- --------
Total comprehensive
loss for
the period - - - (6,520) (6,520) (55) (6,575)
Issue of
share capital 1,379 2,999 - 180 4,558 - 4,558
Equity-settled
share based
payments - - - 455 455 - 455
Proceeds
for shares
not yet
issued - - - 488 488 - 488
At 31 December
2015 14,431 22,432 (575) (29,940) 6,348 256 6,604
Loss for
the period - - - (4,081) (4,081) (76) (4,157)
Exchange
differences - - - (865) (865) 17 (848)
--------- --------- --------- ------------ -------- ---------------- --------
Total comprehensive
loss for
the period - - - (4,946) (4,946) (59) (5,005)
Issue of
share capital 1,862 8,230 - - 10,092 - 10,092
Issue of
share capital
in respect
of proceeds
received
in prior
period 139 348 - (487) - - -
Transactions
with non-controlling
interests - - - (11) (11) 11 -
At 30 June
2016 16,432 31,010 (575) (35,384) 11,483 208 11,691
--------- --------- --------- ------------ -------- ---------------- --------
Condensed consolidated cash As at As at
flow statement (unaudited)
30 June 30 June
2016 2015
Loss for the period (4,157) (4,815)
Adjustments for:
Depreciation and amortisation 95 152
Finance costs (1,050) 489
Share of results of associates 407 379
Income tax expense - 105
Loss on disposal of discontinued
operations - 1,661
Operating cash flows before
movements in working capital (4,705) (2,029)
(Increase)/Decrease in inventories (1) 6
(Increase)/Decrease in receivables (2,093) 540
Increase/(Decrease) in payables 505 (2,184)
Net cash used by operations (6,294) (3,667)
Income taxes paid (4) (105)
Interest paid (38) (483)
Net cash outflow from operating
activities (6,336) (4,255)
-------- --------
Investing activities:
Purchase of property, plant
and equipment (188) (99)
Purchase of intangibles (138) -
Purchase of other investments (3,725) -
Net cash used in investing
activities (4,051) (99)
-------- --------
Financing activities
Issue of shares 10,092 -
Proceeds from borrowings 3,226 -
Payment of contingent consideration - (1,391)
Net cash generated by/(used
in) financing activities 13,318 (1,391)
-------- --------
Net decrease in cash and cash
equivalents 2,931 (5,745)
Exchange differences 115 8
Cash and cash equivalents at
beginning of period 4,028 10,834
Cash and cash equivalents at
end of period 7,074 5,097
-------- --------
Notes to the condensed consolidated financial information
1. Basis of preparation
The unaudited interim condensed consolidated financial
statements of DJI Holdings PLC (the 'Group') for the six months
ended 30 June 2016 have been prepared in accordance with
International Accounting Standard ("IAS") 34 - Interim Financial
Reporting, as issued by the International Accounting Standards
Board ("IASB") and as adopted by the European Union.
The unaudited interim condensed consolidated financial
statements for the six months ended 30 June 2016 do not comprise
statutory accounts for the purpose of section 434 of the Companies
Act 2006 and should be read in conjunction with the Annual Report
for the year ended 31 December 2015. Those accounts have been
reported upon by the Group's auditor and delivered to Companies
House. The report of the auditor on those accounts was unqualified,
however it drew attention to the disclosures made by the directors
with respect to the going concern assumption. The Annual Report is
published in the Investors section of the Group website at
www.djiholdings.com and is available from the Company on
request.
The unaudited interim condensed consolidated financial
statements are prepared on the basis of the accounting policies
stated in the Group's Annual Report 2015 which is available on the
Group's website at www.djiholdings.com.
The interim report was approved by the board of directors, the
financial information for the 6 months ended 30 June 2016 has been
reviewed by the Company's auditor and their report is included
within this announcement.
Going concern
The Directors have reviewed trading and cash flow forecasts
which take into consideration the uncertainties in the current
operating environment.
At 30 June 2016, the Group was funded by cash balances of
GBP7.1m and did not have access to any undrawn borrowing
facilities. As a continuation of the Company's business strategy
and in response to the need for continuing investment support,
subsequent to the end of the reporting period, as noted in more
detail in note 4, the Company has raised gross proceeds of GBP40.5m
through the placement of approximately 42.6 million new ordinary
shares.
After making enquiries and taking into account the share placing
referred to above, the Directors have a reasonable expectation that
the Company and the Group will have adequate resources to continue
in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the
interim condensed consolidated financial statements.
2. Gross sales and revenue
IFRS 8 'Operating Segments' requires the segmental information
presented in the financial statements to be the used by the chief
operating decision maker to evaluate the performance of the
business and decide how to allocate resources. The Group has
identified the Group's Chief Executive Officer as its chief
operating decision maker. The Group's Chief Executive Officer
considers the results of the business as a whole when assessing the
performance of the business and making decisions about the
allocation of resources. Accordingly, the Group has one operating
segment and therefore the results of this segment are the same as
the results for the Group.
The Group's revenues principally relate to commissions
receivable by the Group from the sale of lottery tickets and
related products. In the prior interim period, commissions payable
to the Group's B2B channel partners were deducted from revenue,
however the directors reassessed this policy at the prior year end,
and concluded IFRS requires these commissions payable to be shown
as a cost of sale. Accordingly, the Directors have re-presented the
results for the prior interim financial statements and as a result
revenue and cost of sales have increased by GBP4,092,000 for the
six months ended 30 June 2015 - there has been no impact on gross
profits, net loss or net loss per share.
The Group's revenue is analysed between Land and Digital
(previously described as 'Online') routes to market and this
information is provided to the Group's chief operating decision
maker. Gross sales are also shown below as a memorandum disclosure
and represent the total transaction value of all lottery sales and
services, net of VAT and other sales taxes for the six month
periods as indicated. The Group reports the total transaction value
since the Directors believe that it reflects more accurately the
transactional volume within the Group.
An analysis of the Group's gross sales and revenue by channel,
all of which arose from the Group's operations in China, is as
follows:
Gross sales Revenue
2016 2015 2016 2015
Six months ended GBP 000 GBP 000 GBP 000 GBP
30 June 000
-------------------------- ---------------- -------- ------------- ------
Continuing operations:
Land business 2,319 2,855 51 55
Digital business 5,942 57,874 486 5,233
---------------- -------- ------------- ------
8,261 60,729 537 5,288
Discontinued operations:
Digital business - 25,228 - 932
8,261 85,957 537 6,220
---------------- -------- ------------- ------
3. Loss per share
30 June 30 June
2016 2015
GBP 000 GBP 000
Losses attributable to owners
of the company (4,081) (4,833)
Adjustment to exclude loss
from discontinued operations - 584
-------- ------------
Losses for the purposes of
earnings per share from continuing
operations (4,081) (4,249)
-------- ------------
Weighted average number of
ordinary shares in issue (thousands) 147,962 130,523
Basic and diluted loss per
share from:
* Continuing and discontinued operations 2.8p 3.7p
* Discontinued operations n/a 0.4p
* Continuing operations 2.8p 3.3p
4. Trade and Other Receivables
30 June 30 June
2016 2015
GBP 000 GBP 000
Trade receivables 23 23
Unpaid share capital 11 11
Amounts owed by related parties 295 61
Other receivables 1,697 1,084
VAT receivable 1,252 980
Prepayments 3,752 2,290
7,030 4,449
--------- ---------
Amounts owed by related parties includes GBP224,000 (2015:
GBPnil) owed by Qingdao Baifa Technology Co. Limited, an associate
of the Group, and GBP71,000 (2015: GBP61,000) owed by the Directors
of the Group.
5. Trade and Other Payables
31 December
30 June 2015
2016
Current GBP 000 GBP 000
Trade creditors 1,193 538
Amounts owed to related parties 672 686
Accruals 454 2,144
Income tax payable 47 48
Other taxes and social security 39 27
Other payables 1,387 1,333
Contingent consideration 908 850
4,700 5,626
------------------------- -----------------------
Amounts owed to related parties includes GBP672,000 (2015:
GBP686,000) owing to Xinhuatong Software Development (Beijing) Co.
Ltd., an associate of the Group.
6. Financing Arrangement
On 1 June 2016 DJI Holdings plc established a financing
relationship with China Everbright Bank in order to efficiently
provide working capital funding to its trading subsidiary Beijing
NewNet Science & Technology Development Co., Ltd. Under the
arrangements, the China Everbright Bank Hong Kong Branch provided
Beijing NewNet Science & Technology Development Co., Ltd. with
a Chinese Renminbi denominated loan of which RMB 29.7m (c. GBP3.2m)
was drawn down at the period end and carries an interest rate of
4.6% and is repayable in May 2017. This was secured by a sterling
cash deposit made with the China Everbright Bank Hong Kong Branch
of GBP3.4m by Xinhuacai Hong Kong Trading Limited ("XHKT") (A
company whose shares were held by Darren Mercer with the knowledge
of the Company and, as outlined in note 9, has been purchased by
the Group on 29 September 2016 for the consideration of GBP1). XHKT
was provided with a loan of GBP3.7m by the Group to finance the
deposit, the loan is non-interest bearing and it is intended that
the loan is capitalised into share capital of XHKT. As there is no
fixed repayment date, the instrument has been classified as a
non-current investment. Subsequent to the period end, the Group has
acquired the share capital of this company as set out in note
9.
The amounts loaned to Xinhuacai Hong Kong Trading Limited are
shown as other investments within and the amounts owing to
Everbright Hong Kong China Branch are presented as borrowings.
7. Convertible Loan Notes
On 21 April 2016 the Company agreed with the noteholder, Stadium
Parkgate Limited, to cancel the previously existing Convertible
Loan Notes and to issue new notes for the same principal amount of
GBP6.0 million, but carrying an interest rate of 6 per cent. This
has been accounted for as an extinguishment of the previously
existing notes, which were derecognised on cancellation and an
issuance of the new convertible loan notes.
The new notes, together with accrued interest, are capable of
conversion at the option of the noteholder to Ordinary Shares at
any time after 31 December 2016 and prior to 17 July 2018, other
than in circumstances of certain changes of control where the new
notes will be capable of conversion to Ordinary Shares prior to 31
December 2016. The conversion price of the new notes will be the
lower of 115p and the closing mid-market price of an Ordinary Share
on 31 December 2016 provided that the conversion price cannot be
less than 60p, other than in circumstances of certain changes of
control where the conversion price of the new notes will be
115p.
In addition, further new interest notes were issued for the sum
of GBP2,403,288, this being the accrued interest to the date of
cancellation of the previous Convertible Loan Notes. The new
interest notes are capable of conversion at the option of the
Company to Ordinary Shares at any time after 31 December 2016 and
prior to 31 January 2017 at the lower of 115p and the closing
mid-market price of an Ordinary Share on 31 December 2016 provided
that the conversion price cannot be less than 60p. The new interest
notes carry an interest rate of 20 per cent from 17 February
2017.
Separately, at any time after 31 January 2017 or prior to 31
December 2016 in the event of certain changes of control, the new
interest notes are capable of conversion at the option of the
noteholder to Ordinary Shares at the lower of 115p and the closing
mid-market price of an Ordinary Share on 31 December 2016 provided
that the conversion price cannot be less than 60p, other than in
circumstances of certain changes of control where the conversion
price of the new notes will be 115p.
8. Share capital
30 June 31 December
2016 2015
Allotted, called-up and fully
paid
GBP 000 GBP 000
164,315,391 ordinary shares
of 10p each (Dec 2015: 144,306,820) 16,432 14,431
----------- -----------------------
During the period the Company allotted and issued 1,392,855
ordinary shares in respect of cash subscriptions received in the
prior year of GBP0.5m and issued a further 18,615,716 ordinary
shares of 10p each for cash consideration of GBP10.9m giving rise
to a share premium of GBP8.2m, after the deduction of GBP0.8m share
issue costs.
9. Events after the balance sheet date
Share Placings
DJI, through its broker, Mirabaud Securities LLP, placed
42,626,000 new Ordinary Shares at a price of 95p each (the "Placing
Shares"), raising gross proceeds of GBP40.5m through two placings.
The first was announced on 1 July 2016, 30,526,000 shares were
admitted to trading in two tranches, the second tranche being
admitted on 29 July 2016. The second placing for the issuance of
12,100,000 shares raising gross proceeds of GBP11.5m was announced
on 19 July 2016. These shares were admitted to trading on 1 August
2016. The net proceeds of the Placings, together with existing cash
resources, will be used to meet the Group's ongoing funding
commitments, and for general working capital purposes.
Acquisition of Xinhuacai Hong Kong Trading Limited
On 29 September 2016, DJI agreed to acquire 100% of the share
capital of Xinhuacai Hong Kong Trading Limited for cash
consideration of GBP1. The Company, as set out in Note 6, was
established to facilitate the financing of our trading subsidiaries
in China.
Investment in Xinhuatong
DJI announced on 22 September 2016 that it is making a cash
investment of 20m RMB plus the Group's lottery assets to acquire a
10% shareholding in Xinhuatong Technology Co. Ltd ("Xinhuatong").
Xinhuatong already is a 49% shareholder in DJI's associate
investment, Xinhua Lottery Technology Co. Ltd. Xinhuatong is the
exclusive provider of mobile payments, information and other key
services to the Xinhua News Mobile App owned by China's national
news agency. In the announcement DJI stated that it expected to
benefit from enhanced revenues and profits as a result of the
stronger partnership between NewNet and Xinhuatong.
Change of name of DJI
DJI announced on 22 September 2016 that it is convening a
general meeting on 7 October 2016 to seek shareholders approval to
change the name of the Company to BNN Technology plc. The
resolution to approve the name change will be a special resolution
of the Company.
INDEPENDENT REVIEW REPORT TO DJI HOLDINGS PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2016 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to
9. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the AIM Rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
30 September 2016
[1] Source: IDC, MIIT, JP Morgan estimates August 2016
[2] Source: Red Pulse China Market Intelligence August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BCGDCUDDBGLC
(END) Dow Jones Newswires
September 30, 2016 02:01 ET (06:01 GMT)
BNN Technology (LSE:BNN)
Historical Stock Chart
From Mar 2024 to Apr 2024
BNN Technology (LSE:BNN)
Historical Stock Chart
From Apr 2023 to Apr 2024
