TIDMSORB
RNS Number : 4197C
Sorbic International PLC
19 January 2015
Press Release 19 January 2015
Sorbic International Plc
("Sorbic International" or the "Group" or the "Company")
Preliminary Unaudited Results
Sorbic International plc, (AIM:SORB), the third largest sorbates
producer in China, today announces its preliminary unaudited
results for the year ended 30 September 2014.
Summary
-- Revenue for the year was GBP14.1 million (2013: GBP14.6 million)
-- Gross profit margin for the year of 9.8% (2013: 12.9%)
-- EBITDA for the year of GBP0.6 million (2013: GBP1.2 million)
-- Profit from operations before impairment of GBP0.1 million
(2013: GBP0.6 million)
-- Loss before tax of GBP0.2 million (2013: Loss GBP6.1 million)
after impairment provision (2014: Nil, 2013: Loss GBP6.7
million)
-- Cash generative and cash balances at 30 September 2014 of
GBP6.9 million (2013: GBP5.3 million)
-- Net assets per share of GBP0.18 (2013: GBP0.21)
John McLean, Non-Executive Chairman of Sorbic International,
commented: "The Board is pleased that the Group continues to be
cash generative. Demand for the Group's products remains strong and
the Board remains focused in bringing the Group's operations back
to a normal state of activity in 2015.
"Additionally the Board is also pleased to announce the
appointment of Jay Newman as a non-executive director, alongside
the appointment of an additional director which will take place in
due course. The strengthened Board will contribute further to the
significant progress that has been made during the year to
facilitate the repayment of outstanding loan note and cash
transfers from China."
- Ends-
For further information:
Sorbic International Plc
John McLean, Non-Executive Chairman Tel: +44 (0) 7768 031 454
www.sorbicinternational.com
FinnCap
Geoff Nash / Kate Bannatyne Tel: +44 (0) 207220 0500
(Corporate Finance)
Hybridan LLP (Broker) Tel: +44 (0) 20 3713 4581
Claire Louise Noyce
Media enquiries:
Abchurch Communications
Henry Harrison-Topham / Canace Tel: +44 (0) 20 7398 7702
Wang
henry.ht@abchurch-group.com www.abchurch-group.com
Notes to Editors:
Sorbic International's principal activity is the production and
sale of the food preservatives Sorbic Acid and Potassium Sorbate
from its base in Linyi City, Shandong Province, People's Republic
of China. Approximately half of Sorbic International's production
is sold to overseas markets, across 46 countries and half into the
Chinese domestic market.
Sorbic Acid is a naturally occurring organic compound that is
used in all kinds of foods for its anti-decomposition and
anti-fungus function and also in grains, medicines, cosmetics,
toothpaste, tobacco, animal feed, latex, paper-manufacturing and
pesticides. Potassium Sorbate is used to inhibit moulds and yeasts
in many foods, such as cheese, wine, yogurt, dried meat, baked
goods, cosmetics and pharmaceuticals.
CHAIRMAN'S STATEMENT
Introduction
The Board reports that the Group's operating subsidiary, Linyi
Van Science and Technique Co., Ltd ("LVST") revenues for the year
ended 30 September 2014 were GBP14.1 million, which was slightly
down on the prior year (2013: GBP14.6 million), which is mainly due
to foreign exchange. During the second half of the year, LVST has
witnessed increased fluctuations on the selling price of potassium
sorbate. This has impacted on the LVST's overall operating margin
for the full year, which was 9.8% (2013: 12.9%), as well as, a
reduction in the Group's EBITDA to GBP0.6 million compared to
GBP1.2 million for 2013.
Revenues continue to be dominated by exports to the US (via the
APAC Chemical Corporation) and Chinese domestic business, which
together, account for approximately 91% (2013: 92%) of overall
activity. Overall sales mix has remained practically constant at
50% each for the respective products.
Margins for Sorbic Acid have softened to 4% for 2014 from 5% in
2013, whilst for Potassium Sorbate the margins have reduced to 15%
from 20% in 2013. For both products, selling prices were stronger
at the beginning of the year and started to soften for the
remainder of the year. Cost of sales increases have now started to
decline which the Board expects to help in the recovery of gross
margins.
The improvement in the cash balance at the year-end reflects the
positive cash flow from the operating subsidiary in China, combined
with a lower inventory level. The increase in the accruals and
other payables results from the re-classification of the amount due
to Inner Mongolia for the purchase of land, which was previously
included as part of Mr Wang's loan balance.
UK and Singapore overheads have shown a slight year-on-year
decline and are running at GBP220,000 per annum.
Overall, the Group has generated an operating profit of
GBP100,000 compared to GBP600,000 for the previous year. In
addition, loan stock interest, which was previously capitalised as
part of the Inner Mongolian development, has now been expensed.
Inner Mongolia
As previously reported, a framework to determine the amount of
compensation has been agreed and within that framework, preliminary
indicative figures would indicate that the compensation could be
sufficient to cover the current carrying costs (GBP2.5 million).
Currently, the negotiations are on hold whilst the land audit takes
place, and once this is concluded, it is expected that negotiations
will restart.
In my interim results statement on 23 June 2014, I indicated
that the balance sheet had previously stated that that the funding
for the land purchases had been provided by the Company's CEO, Mr
Wang Yan Ting ("Mr Wang"). This has proven not to be the case as
the funding was provided by either loans or grants from the local
industrial zone. As the documentation for the loans/grants from the
local authorities is minimal, the Board have adopted a prudent
approach in assuming the entire purchase was loan funded.
Accordingly, the accounts have been reclassified to reflect the
change in liability which has no effect on the reported net assets.
Thus, a key task for the coming year is to bring the controls into
line with current best practice among Chinese companies as part of
our work to improve corporate governance.
Linyi
In respect of the proposed move to a new site within Linyi, an
agreement has largely been reached with the new land identified and
the relocation package outline agreed, with the Linyi authorities
covering the cost of a new building and infrastructure as well as
reimbursing expenses for moving. It is not expected that there will
be any direct cash compensation, merely a substitution of an old
plant for a new one. In respect of the equipment, it is expected
that this will be a combination of new plant, the existing plant
and the equipment purchased for Inner Mongolia. Timing for the
conclusion of the negotiations and the start of building is
expected to be in the first half of 2015.
Loan notes
As announced in August 2014, the outstanding loan stock of
GBP3.6 million (including accrued interest and redemption premium)
was rolled over until 31 December 2014 to allow sufficient time for
the loan to be repaid. Currently, the loan notes remain outstanding
and are therefore in default. The Company is in discussions with a
number of the loan-note holders and has recently visited China to
expedite the redemption of the outstanding loan stock. Discussions
have taken place with Mr Wang and the Company's advisors and a plan
has been agreed to take the necessary action to redeem the
outstanding loan stock. LVST, the Group's Chinese subsidiary had
approximately GBP6.9 million in the bank at the year-end (GBP7.2
million as of 30 November 2014). The timing of the process is
uncertain, however, the Board anticipates that the necessary
actions will be put in place within the next few months.
As I reported in the trading update last month, Mr Wang agreed
in the October Board meeting for LVST's funds to be transferred and
again at the Board meeting on 7 December 2014, he confirmed this
statement. To ensure that the repayment happens on a timely basis,
the Board have appointed eCFO, which is a business consultancy,
based in China with over 20 years' experience of dealing with such
issues, both to advise and to implement the Board's funds
repatriation policy.
Board changes
As I mentioned in the interim statement, the Board was going to
take steps to appoint two China experienced bilingual directors and
as part of this process, I am pleased to report that Jay Newman has
today been appointed as a non-executive director. Jay has over 20
years experience of working in China and specifically, he has been
working with me over the last 18 months as the Loan Notes observer.
I welcome his appointment. In respect of the appointment of the
second director, the Board has agreed to appoint a particular
candidate subject to certain due diligence. It is expected that in
addition to these two appointments, the Board will be further
strengthened.
Cash
As shareholders have been aware and in order to fund the
Singapore office and the UK listing costs, cash has been raised
during the year to fund the non-China costs: obviously with a net
cash position of approximately of GBP4 million, the raising of
additional cash is unsatisfactory and therefore as part of eCFO's
involvement they will be reviewing the necessary processes required
to fund overseas expenditure.
Going concern
Whether the Group will have sufficient resources to continue in
operational existence for the foreseeable future will ultimately be
dependent on the repayment of the outstanding loan notes and the
successful initiation of the funds transfer out of China. On an
ongoing basis, the Company will remain reliant on a regular
transfer of funds out of China to meet the costs of running an AIM
listed public company and to repay the outstanding convertible loan
notes.
Outlook
Demand for the Group's products remains strong, but the hurdles
of cash transfers, Inner Mongolian negotiations, the Linyi move and
Mr Wang's reluctance to engage with the Board have all contributed
to a challenging year. Significant progress has been made on all
fronts, but there are challenges in the coming year which, if not
resolved quickly, could prove as difficult as last year's. However,
once the convertible loans have been repaid, the Board expects the
Group to return to a more normal state of activity and seek
opportunities to return to growth.
John McLean
Chairman
19 January 2015
Unaudited Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 30 September
Notes 2014 2013
GBP GBP
Revenue 3 14,074,421 14,619,913
Cost of sales (12,698,901) (12,726,137)
-------------- ------------------
Gross profit 1,375,520 1,893,776
Distribution and selling expenses (187,905) (184,121)
Administrative expenses (1,108,425) (1,105,984)
-------------- ------------------
Profit from operations 79,190 603,671
Impairment loss 4 - (6,684,701)
-------------- ------------------
Profit/(loss) from operations 79,190 (6,081,030)
Finance income 33,424 30,867
Unrealised foreign exchange loss (28,386) (5,016)
Finance costs (303,376) (74,471)
-------------- ------------------
Loss before tax (219,148) (6,129,650)
Income tax expense 5 (132,322) (221,240)
-------------- ------------------
Loss for the year (351,470) (6,350,890)
Other comprehensive income/(loss)
-Exchange differences on translating
foreign operation (88,562) 288,423
-------------- ------------------
Total comprehensive loss, net
of tax (440,032) (6,062,467)
-------------- ------------------
Loss attributable to equity holders
of the parent (351,470) (6,350,890)
-------------- ------------------
Total comprehensive loss for the
year attributable to equity holders
of the parent (440,032) (6,062,467)
-------------- ------------------
Loss per share
- Basic (pence) 6 (0.65) (13.00)
- Fully diluted (pence) 6 (0.65) (13.00)
Unaudited Consolidated Statement of
Changes in Equity
Share Share Capital Surplus Retained Share Foreign Reverse Convertible Hedging Total equity
capital premium reserve reserve earnings based currency acquisition loan notes reserve attributable
payment translation reserve - equity to owners
reserve reserve of the
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP parent
GBP
At 1 October
2012 2,703,273 22,085,073 2,725,219 485,805 7,202,912 30,000 2,034,520 (20,911,925) 76,019 (451,353) 15,979,543
Issue of
ordinary
shares 499,886 83,314 - - - - - - - - 583,200
Expiry of
share
options - - - - 30,000 (30,000) - - - - -
Share issue
cost - (48,122) - - - - - - - - (48,122)
----------- ----------- ---------- -------- ------------ --------- ------------ ------------- ------------ ---------- -------------
Loss for the
period - - - - (6,350,890) - - - - - (6,350,890)
Other
comprehensive
income - - - - - - - - - -
Exchange
differences
on
translation
of foreign
operations - - 63,699 11,356 - - 211,545 - 1,823 - 288,423
----------- ----------- ---------- -------- ------------ --------- ------------ ------------- ------------ ---------- -------------
Total
comprehensive
income for
the
period 63,699 11,356 (6,350,890) - 211,545 - 1,823 - (6,062,467)
At 30
September
2013 3,203,159 22,120,265 2,788,918 497,161 882,022 - 2,246,065 (20,911,925) 77,842 (451,353) 10,452,154
=========== =========== ========== ======== ============ ========= ============ ============= ============ ========== =============
Issue of
ordinary
shares 2,500 122,500 - - - - - - - 125,000
Share issue
cost - (13,125) (13,125)
----------- ----------- ---------- -------- ------------ --------- ------------ ------------- ------------ ---------- -------------
Loss for the
period - - - - (351,470) - - - - - (351,470)
Other
comprehensive
income
Exchange
differences
on
translation
of foreign
operations - - (19,387) (3,456) - - (65,944) - 225 - (88,562)
----------- ----------- ---------- -------- ------------ --------- ------------ ------------- ------------ ---------- -------------
Total
comprehensive
loss for the
period - - (19,387) (3,456) (351,470) - (65,944) - 225 - (440,032)
At 30
September
2014 3,205,659 22,229,640 2,769,531 493,705 530,552 - 2,180,121 (20,911,925) 78,067 (451,353) 10,123,997
=========== =========== ========== ======== ============ ========= ============ ============= ============ ========== =============
Unaudited Consolidated Statement of Financial Position
As at As at
30 September 30 September
2014 2013
Notes GBP GBP
Assets
Non-current assets
Property, plant and equipment 5,388,472 6,001,071
Land use rights 2,163,567 2,243,331
7,552,039 8,244,402
-------------- --------------
Current assets
Inventories 436,577 1,083,429
Trade receivables 1,138,403 1,271,036
Prepayments, deposits and other
receivables 251,521 259,040
Cash and cash equivalents 6,947,185 5,311,311
Amount due from director 6,115,280 6,142,668
14,888,966 14,067,484
Total assets 22,441,005 22,311,886
============== ==============
Liabilities
Current liabilities
Trade payables 167,462 96,226
Advanced payments 180,476 161,143
Accruals and other payables 1,912,426 225,336
Amount due to directors 6,929,129 8,588,833
Current tax liabilities 30,735 102,780
Convertible loan notes 7 3,096,777 2,685,414
-------------- --------------
12,317,008 11,859,732
Total liabilities 12,317,008 11,859,732
============== ==============
Equity
Capital and reserves attributable
to equity holders of the company
Share capital 8 3,205,659 3,203,159
Share premium 8 22,229,640 22,120,265
Capital reserves 2,769,531 2,788,918
Surplus reserves 493,705 497,161
Retained earnings 530,552 882,022
Share based payment reserve - -
Reverse acquisition reserve (20,911,925) (20,911,925)
Convertible loan notes - equity 78,067 77,842
Foreign currency translation
reserve 2,180,121 2,246,065
Hedging reserve (451,353) (451,353)
-------------- --------------
Total equity 10,123,997 10,452,154
-------------- --------------
Total equity and liabilities 22,441,005 22,311,886
============== ==============
Unaudited Consolidated Cash flow statement
For year ended 30 September 2014
Year ended Year ended
30 September 30 September
2014 2013
GBP GBP
CASH FLOWS FROM OPERATINGACTIVITIES
Loss for the period before tax (219,148) (6,129,650)
Adjustments for:
Amortisation of prepaid land lease
payments 51,801 54,109
Depreciation 532,320 564,294
Impairment loss - 6,684,702
Interest income (33,425) (30,867)
Interest expense 303,376 74,471
Operating cash flows 634,924 1,217,059
Changes in working capital:
Decrease/(Increase) in inventories 639,321 (646,583)
Decrease in trade and other receivables 138,207 174,505
Increase/(decrease) in trade and other
payables 109,118 (19,525)
Cash generated from operations 1,521,570 725,456
Income tax paid (132,322) (150,542)
Interest paid (3,662) (74,471)
Net cash generated from operating activities 1,385,586 500,443
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 33,436 30,879
Net cash generated from investing activities 33,436 30,879
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from financial institution raised - 1,208,400
Repayment of loan from financial institution - (1,208,400)
Proceeds from issuance of new shares,
net of issue costs 111,875 535,078
Proceeds from issuance of convertible loan
notes, net of costs 111,875 88,260
Net cash generated from financing activities 223,750 623,338
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,642,772 1,154,660
Exchange (losses)/gains on cash and
cash equivalents (6,898) 68,058
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 5,311,311 4,088,593
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD 6,947,185 5,311,311
==============
Notes to the financial information
1. General information and principal activities
The Group's principal activities include the production and sale
of food preservatives, Sorbic Acid and Potassium Sorbate. The
Group's main operations are in the People's Republic of China
("PRC").
The Company, Sorbic International Plc, a public limited company,
is the Group's ultimate parent company. It is incorporated and
domiciled in the United Kingdom. The Company's registered office is
17 Hanover Square, London W12 1HU and its shares are listed on the
AIM Market of the London Stock Exchange
2. Basis of preparation
The Group's financial statements for the year ended 30 September
2014 will be prepared in accordance with International Financial
Reporting Standards as adopted by the European Union ("IFRS").
The accounting policies adopted by the Group are consistent with
those of the previous financial year except in the current
financial year, the Group has adopted all the new and revised
standards and Interpretations of IFRS that are effective for annual
periods beginning on or after 1 October 2013 and as outlined below.
The adoption of these standards and interpretations did not have
any effect on the financial performance or position of the Group
and the Company.
Going concern
The preparation of financial information requires an assessment
on the validity of the going concern assumption. The validity of
the going concern assumption is dependent on finance being
available for the continuing working capital requirements of the
Group and finance for the development of the Group's projects
becoming available.
As discussed in the Chairman's Statement, the following key
areas impact on the going concern basis:
-- The Company's requirement for either further equity fund
raising or the transfer of funds from the Chinese operations in
order to meet its ongoing costs.
-- The Company has convertible loan notes which matured on 31
December 2014, having been extended twice. The repayment,
conversion or renegotiation of the loan notes is dependent on
matters such as the performance of the Group and the point
highlighted above.
In approving this financial information, the Board has
recognised that the combination of these circumstances creates a
level of uncertainty. However, having made enquiries and considered
the uncertainties outlined above, the directors have a reasonable
expectation that the Company and the Group have sufficient
resources to continue operational existence for the foreseeable
future.
Accordingly, the Board believes it is appropriate to adopt the
going concern basis in the preparation of the financial
information.
Whilst the financial information included in this preliminary
announcement has been computed in accordance with IFRS this
announcement does not itself contain sufficient information to
comply with IFRS. The Company will publish full-consolidated
financial statements that comply with IFRS by the end of March
2015.
3. Segmental information
Segment information is presented in respect of the Group's
geographical and operating segments. The Group's operating segments
are as follows:
(i) Sorbic acid
(ii) Potassium sorbate
(iii) Head office and other adjustments, which incorporates a
measure of assets and liabilities not included in the other
segments
Geographical Information -
Revenue
Year ended Year ended
30 September 2014 30 September
2013
GBP GBP
PRC 6,577,712 6,862,773
United States 6,248,004 6,604,170
Russia 49,445 107,018
Netherlands 249,302 375,194
Other 949,958 670,758
Consolidated 14,074,421 14,619,913
------------------------- -------------------------
Operating Segments Sorbic acid Potassium sorbate Head office Consolidated
and other
adjustments
GBP GBP GBP GBP
------------------- ------------ ------------------ ------------- -------------
Year ended 30 September 2014
Revenue 6,941,135 7,133,286 - 14,074,421
Gross profit 290,701 1,084,819 - 1,375,520
Loss before taxation - - (219,148) (219,148)
Taxation - - (132,322) (132,322)
Net loss after tax - - (351,470) (351,470)
Segment assets 219,020 180,640 22,041,345 22,441,005
Segment liabilities - - 12,317,008 12,317,008
Finance income - - 33,424 33,424
Finance costs - - (303,376) (303,376)
Depreciation and
amortisation - - 584121 584,121
Capital expenditure - - - -
Year ended 30 September 2013
Revenue 7,283,223 7,336,690 - 14,619,913
Gross profit 412,064 1,481,712 - 1,893,776
Profit before taxation - - (6,129,650) (6,129,650)
Taxation - - (221,240) (221,240)
Net profit after
tax - - (6,350,890) (6,350,890)
Segment assets 299,957 232,652 21,779,277 22,311,886
Segment liabilities - - 11,859,732 11,859,732
Finance income - - 30,867 30,867
Finance costs - - (74,471) (74,471)
Depreciation and
amortisation - - 618,403 618,403
Capital expenditure - - -
4. Impairment loss
In the prior year, the Directors decided not to continue to
pursue the commencement of rebuilding the existing facility in
Inner Mongolia. The Group continues to seek compensation and
negotiations are currently taking place on the understanding that
the compensation agreement will be 'fair and reasonable' to both
parties.
The net book value of the non-current assets in respect of Inner
Mongolia prior to any impairment amounted to GBP9,138,000, of which
GBP1.65 million included within intangible assets, and the
remaining GBP7.59 million included within plant, property and
equipment. The Directors made an impairment provision against all
of the intangible assets (GBP1.65 million) as well as GBP5.03
million against property, plant and equipment. The total provision
in this respect amounts to GBP6.68 million. The unprovided
non-current assets relate to equipment purchased which the
Directors expect to use in a new facility.
The provision will be reassessed when the quantum of the
compensation agreement has been agreed.
5. Income tax expense
Year ended Year ended
30 September 30 September 2013
2014
GBP GBP
Current tax 132,322 221,240
============== ===================
Loss before tax (219,148) (6,129,650)
Tax on loss at standard rate (23%;
2013: 25%)* (50,404) (1,532,413)
Tax effect of non-deductible expenditure 182,726 1,753,653
Tax losses carried forward against - -
future period
Current tax expense recognised
in income statement 132,322 221,240
============== ===================
Effective tax rate (60.4)% (3.6)%
* The Company is subject to a United Kingdom Tax rate of 23%
(2013: 25%). No tax provision is provided at the Company level, as
all current profits are foreign derived income.
The Company's subsidiary Honour Field International Limited is a
BVI registered company and has tax-exempt status.
The Company's subsidiary Linyi Van Science and Technique Co.,
Limited ("LVST"), is subject to a PRC Enterprise Income Tax rate of
25% (2013: 25%).
The tax charge on profits assessable has been calculated at the
rates of tax prevailing in China, in which the Group through its
China subsidiaries operate based on existing legislation,
interpretation and practices in respect thereof.
Deferred income tax assets are recognised for tax loss carried
forward to the extent that the realisation of the related tax
benefit through the future taxable profits is probable. The Group
did not recognise deferred income tax assets of GBP678,616 (2013:
GBP639,724) at the year-end in respect of losses amounting to
GBP2,950,504 (2013: GBP2,284,727) that can be carried forward
against future taxable income since future profits were not
considered probable.
6. Earnings per share
Basic
2014 2013
Loss attributable to equity holders of GBP(351,470) GBP(6,350,890)
the Company (GBP)
Weighted average number of Ordinary shares
in issue (number) 53,906,528 48,843,733
Basic loss per share (pence) (0.65) (13.00)
============= ===============
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has two categories of dilutive potential ordinary shares: share
options and convertible loan notes. For the convertible loan notes,
a calculation is done to determine the number of shares that could
have been acquired based on the monetary value of the subscription
rights attached to outstanding share options and convertible loan
notes. The number of shares calculated as above is adjusted for the
number of shares that would have been issued assuming the exercise
of the convertible loan notes. The contingently issuable shares
included within the share options and convertible loan notes are
anti-dilutive and are not included in the calculation.
2014 2013
Loss attributable to equity holders of GBP(351,470) GBP(6,350,890)
the Company (GBP)
Weighted average number of Ordinary shares
in issue (number) 53,906,528 48,843,733
53,906,528 48,843,733
Diluted loss per share (pence) (0.65) (13.00)
============= ===============
7. Convertible loan notes
The convertible loan notes were issued on 27 August 2010,25
February 2011 and 26 April 2013. The notes are convertible into
ordinary shares of the Company at any time between the date of
issue of the notes and their maturity date of 31 August 2014. The
loan notes are convertible at GBP0.09 per share at the option of
the loan note holder. The effective interest rate used to calculate
the interest charged to the income statement was 12%.
On 29 August 2014, the loan notes were rolled over for a further
period of 4 months to 31 December 2014 with a redemption premium
equal to 20% of the principal amount outstanding if the principal
is repaid between 1 November 2014 and 31 December 2014. As at the
date of these statements, the loan notes remain outstanding and are
in default.
If the notes have not been converted, they will be redeemed on
their maturity date at par. Interest of 10 % per annum will be paid
biannually up until that date.
The net proceeds received from the issue of the convertible loan
notes have been split between the liability element and an equity
component, representing the fair value of the embedded option to
convert the liability into equity of the Group as follows:
30 September A Loan Notes B Loan Notes Total
2014
Gross Transaction Net Gross Transaction Net Net
amount costs amount amount costs amount amount
GBP GBP GBP GBP GBP GBP GBP
Convertible loan
notes issued 1,812,000 163,859 1,648,141 876,000 72,199 803,801 2,451,942
Equity component 59,221 4,904 54,317 25,887 2,137 23,750 78,067
Liability component
at date of issue 1,752,779 158,955 1,593,824 850,113 70,062 780,051 2,373,875
Transfer of A
to B notes (395,292) 395,292 -
Interest charged 596,249 528,620 1,124,869
Interest paid (228,032) (173,935) (401,967)
---------- ---------- ------------
Liability component
at 30 September
2014 1,566,749 1,530,028 3,096,777
========== ========== ============
30 September A Loan Notes B Loan Notes Total
2013
Gross Transaction Net Gross Transaction Net Net
amount costs amount amount costs amount amount
GBP GBP GBP GBP GBP GBP GBP
Convertible loan
notes issued 1,687,000 150,732 1,536,268 876,000 72,199 803,801 2,340,069
Equity component 58,969 4,876 54,093 25,887 2,137 23,750 77,843
Liability component
at date of issue 1,628,031 145,856 1,482,175 850,113 70,062 780,051 2,262,226
Transfer of A
to B notes (395,292) 395,292 -
Interest charged 444,641 380,514 825,155
Interest paid (228,032) (173,935) (401,967)
---------- ---------- ------------
Liability component
at 30 September
2013 1,303,492 1,381,922 2,685,414
========== ========== ============
The directors estimate the fair value of the liability component
of the convertible loan notes at 30 September 2014 to be
approximately GBP3,096,777 (2013: GBP2,685,414).
8. Share capital
As at As at
30 September 30 September
2014 2013
Authorised GBP GBP
100,000,000 Ordinary share of GBP0.001
each
(2013: 100,000,000 Ordinary share of
GBP0.06 each) 100,000 6,000,000
100,000,000 Deferred shares of GBP0.059 5,900,000 -
each (2013: nil)
============== ==============
The movement on the share capital account was as follows:
Ordinary shares Deferred
shares
Issued, called up and fully paid GBP GBP
At 1 October 2012
45,054,551 Ordinary shares of 2,703,273 -
GBP0.06 each
Issue of shares on 28 March 2013
3,274,286 Ordinary shares of GBP0.06 196,457 -
each
Issue of shares on 26 April 2013 303,429 -
5,057,143 Ordinary shares of GBP0.06
each
---------------- ------------
At 30 September 2013 3,203,159 -
Split and redenomination of shares
on 15 July 2014 (3,149,773) 3,149,773
Issue of shares on 16 July 2014
2,500,000 Ordinary shares of GBP0.001 2,500 -
each
---------------- ------------
55,886 3,149,773
================ ============
At 30 September 2014
The principal amount of the convertible loan notes issued on 27
August 2010, 25 February 2011 and 26 April 2013 can be converted
into such number of new fully paid ordinary shares of the Company
at a conversion price of 9 pence per share at any time up to the
final redemption date of 31 December 2014. As at 30 September 2013,
29,866,667 ordinary shares are reserved for issue. No conversion
took place during the year.
On 15 July 2014, the Ordinary Shares of GBP0.06 were
redenominated and split into New Ordinary Shares of GBP0.001 each
and Deferred Shares of GBP0.059 each. The Deferred Shares are not
entitled to receive dividends or other distributions, does not
entitle the holder to vote or speak at General Meetings of the
company, and provide a return of assets on a winding up after the
repayment of the capital paid-up on the Ordinary Shares.
On 16 July 2014, the Company issues 2,500,000 Ordinary Shares of
GBP0.001 at a premium of GBP0.05 per share.
On 15(th) December, 6,000,000 ordinary shares of 0.01p were
issued at 4p per share, raising GBP240,000.
The movement on the share premium account was as follows:
Share premium GBP
As at 1 October 2012 22,085,073
Issue of shares on 28 March 2013 and 26 April
2013 for a consideration of GBP0.06 per share 83,314
Share issue costs (48,122)
-----------
As at 30 September 2013 22,120,265
Issue of shares on 16 July 2014 for a consideration
of GBP0.05 per share 122,500
Share issue costs (13,125)
-----------
At 30 September 2014 22,229,640
===========
9. Non-statutory financial information
The financial information set out in this preliminary
announcement does not constitute the Group's statutory financial
statements as defined in Section 435 of the Companies Act 2006 for
the years ended 30 September 2014 and 2013.
The financial information for the year ended 30 September 2013
is derived from the statutory financial statements for that year
prepared in accordance with IFRS, which have been delivered to the
Registrar of Companies. The auditors reported on those financial
statements; their report was unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain a statement under Sections 498(2) or (3) Companies
Act 2006.
The audit of the statutory financial statements for the year
ended 30 September 2014 is not yet complete. These financial
statements will be finalised on the basis of the financial
information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies
following the Company's annual general meeting. The auditors have
indicated that in view of the Company's need to seek to renegotiate
the terms of the loan notes and the requirement for additional
capital or the transfer of funds from China, the auditors report
may draw attention to these matters by way of emphasis in
connection with the assessment of going concern, without qualifying
their report. It is anticipated that the report and accounts for
the year ended 30 September 2014 will be posted to shareholders in
March 2015.
The directors do not propose a dividend in respect of the year
ended 30 September 2014 (2013: nil).
The Board of Directors approved this announcement on 16 January
2015.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EASFKFENSEFF
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