Annual Report • Mar 31, 2016
Annual Report
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General Industries plc
Annual report and financial statements for the year ended 31 March 2016
| Page | |
|---|---|
| Directors and Advisers | 1 |
| Chairman's Statement | 2 |
| Strategic Report | 4 |
| Directors' Report | 10 |
| Corporate Governance Statement | 13 |
| Directors' Remuneration Report | 16 |
| Statement of Directors' Responsibilities | 27 |
| Independent Auditors' Report to the Members | 29 |
| Consolidated Statement of Comprehensive Income | 31 |
| Consolidated and Company Statements of Financial Position | 32 |
| Consolidated Statement of Changes in Equity | 33 |
| Company Statement of Changes in Equity | 34 |
| Consolidated Statement of Cash Flows | 35 |
| Company Statement of Cash Flows | 36 |
| Notes to the Financial Statements | 37 |
| Notice of Annual General Meeting | 64 |
| Directors | Jeffrey C Zitron, Chairman Derek M Joseph Dr Fiona M Underwood Steven F Douglas Richard J C Murphy J Richard Wollenberg |
|---|---|
| Company Secretary | Dr Fiona M Underwood |
| Registered office | Tempus Wharf 29A Bermondsey Wall West London SE16 4SA |
| Independent Auditors | Saffery Champness 71 Queen Victoria Street London EC4V 4BE |
| Corporate Advisor | Beaumont Cornish Limited nd Floor Bowman House 2 29 Wilson Street London EC2M 2SJ |
| Bankers | NatWest Bank 50 High Street Egham Surrey TW20 9EU |
| Registrars | Neville Registrars Neville House 18 Laurel Lane Halesowen B63 3DA |
| Company Number | 08988813 |
| Company website | www.general-industries.co.uk. |
Dear Shareholder,
I am pleased to present the annual report and the Financial Statements for the year to 31 March 2016. These figures include the two acquisitions completed in the period under review.
General Industries plc did not trade during the previous period ending 31 March 2015; the acquisitions were long standing businesses with a strong track record of success. As wholly owned subsidiaries, they make up the expanded group.
The Group's particular expertise is in the provision, financing and management of affordable housing by housing associations, local authorities, government agencies and other non-profit organisations as well as high level business advice to the property sector.
The long-term business plan is to widen the range of professional services either through organic growth or acquisition to offer clients a 'one stop shop' for all their higher level support requirements.
Altair is a specialist management consultancy providing professional services to local authorities, housing associations, charities, property companies, regulators and government departments. It advises on all aspects of the development and management of affordable housing for rent and sale, and on the effective management of organisations operating in this sector.
Altair was the company's first acquisition, achieved by a reverse takeover in August 2015, before which the company had not traded.
Murja is a specialist treasury management consultancy authorised and regulated by the Financial Conduct Authority. It advises local authorities, housing associations, colleges and other bodies on their capital funding requirements and supports them in securing debt finance. Murja was the company's second acquisition which was completed in December 2015.
For the year to 31 March 2016, Group turnover of £4.746m primarily related to Altair's consultancy and interim management business which saw an 13.6% increase over the year. The acquisition of Murja contributed £0.387m to turnover.
As a result of the acquisition of Altair, and in accordance with IFRS accounting, the one-off non-cash deemed cost of listing (£3.105m) arising from the reverse acquisition of Altair substantially affected the bottom line resulting in a loss before tax of (£2.813m). Underlying operational profitability remains strong.
Gross profits in the consultancy and interim management business rose by over £140,000 representing 13.7% enabling a substantial investment in staff to underpin future growth; the Board anticipates that this investment will aid future profit growth. The Group's cash position is also strong, with £2.55m held on deposit at 31 March 2016, more than double that at 31 March 2015.
The directors propose the Group's first final dividend of 0.44p per share making a total dividend for the year of 0.66p per share.
At the Annual General Meeting, shareholders will be invited to approve a change in the name of the company to Aquila Services Group plc. This is the first step in a rebranding of the Group, and part of a marketing strategy designed to increase both the client base and acquisition prospects.
With effect from 1 July 2016, Susan Kane, an executive director of Altair, will be appointed to the Board of the company, replacing Derek Joseph as Group Finance Director. Susan has significant finance and corporate experience in the consulting, local authority, housing association and voluntary sectors. I welcome Susan to the Board and am also delighted to report that Derek will remain as a non-executive director of the company.
Both subsidiaries serve clients that are affected by changes in public spending constraints and the wider residential property market as well as factors specific to their industries. The experience is that these challenges increase the demand for high level consultancy advice as clients look to find ways of using resources – money, people and technology – more effectively and efficiently. Alongside this, the public, regulators and government expect ever improving performance and quality from the Group's clients. The track record of both the company's subsidiaries show that they are well placed to provide the support services and trading conditions therefore remain positive.
The affordable housing sector is a key market for the Group. The impending legislative and policy changes which I referred to in my introduction to our interim results have come to fruition. The Housing and Planning Act 2016 became law in May 2016. Local authorities are now required to sell high value homes to fund both a new voluntary right to buy system for housing association tenants, as well as the development of new homes. The Government continues to reform the welfare benefits system, reducing or capping some benefits. A four-year cap on housing association rent increases is now in place. All these changes translate into major organisational and financial challenges for our clients, thus create opportunities for the Group to increase its revenues and profitability by offering a relevant range of professional skills.
May I take the opportunity to record my thanks to my fellow directors, executive team and the staff of the Group. As a people-business, the Group is dependent on their enormous commitment and expertise. To my fellow directors, may I also express my thanks for making possible the strong achievement in this commendable first year as a Group.
Jeff Zitron - Chairman 24 June 2016
General Industries plc (''the Company'') was incorporated on 9 April 2014 and gained a Standard Listing on the London Stock Exchange (stock code GNI) on 28 August 2014.
During the period under review the Company acquired Altair Consultancy and Advisory Services Limited ("Altair") and Murja Limited ("Murja").
Altair provides support services to enable other organisations to carry out their activities in a more efficient manner. It helps manage complex and diverse organisations through periods of significant change, driving service improvement and delivering creative solutions. Altair's traditional client base includes housing associations, charities and local authorities, although the client base also includes government departments, statutory bodies, financial institutions and other private commercial institutions.
Within the housing sector, Altair provides a broad range of advisory and consultancy services to its clients covering areas such as general management, high level executive recruitment, corporate governance, financial planning, management strategy, organisational improvement, training and raising finance. In the housing sector, Altair has established contacts with the Homes and Communities Agency (the government's affordable homes investment, regeneration and regulation agency in England), Greater London Authority, Welsh Government and the Scottish Regulator. Altair's services also cover the application of government strategies to increase the supply of affordable housing both for rent and home ownership as well as local government initiatives encouraging the transfer of public sector housing to independent vehicles.
Murja specialises in providing advice to organisations principally involved in the affordable housing and education sectors in respect of debt and interest rate risk. With changes to Government policy, there is a strong and growing market for the provision of specialist treasury services to local authorities, housing associations and charities operating in the provision of affordable housing, market rent and low cost home ownership initiatives. Housing associations and local authorities are seeking more complex legal and financial structures for both, particularly with the involvement of house builders and developers in joint ventures. The complementary services and products offered by Altair to the sector provides a significant opportunity for growth.
The strategy and objectives of the Group are:
The year under review has achieved the following financial results.
The Group saw a 16% increase in turnover on 20151 , reflecting continued growth in Altair's housing consultancy and interim management business, as well as the benefit of revenues from Murja joining the Group in December 2015. Gross profit from the consultancy and interim management business rose by over £140,000, with margin remaining consistent at 25%. Altair has made a substantial investment in staff over the last two years in anticipation of future growth; (after allowing for both the additional staff investment mentioned and the charge in respect of staff options) the Board anticipates that this investment will aid future profit growth. The Group is in a very strong net asset position, with over £2.55m in cash held at 31 March 2016.
The underlying business remains strong and there has been continued growth of the client base in the consultancy business. The acquisition of Murja has expanded our offering into the education sector and we are beginning to see the opportunities of the treasury offering complementing Altair's business activities within the housing sector.
The comparison between this reporting year, the mid-year results and the last reporting year are set out below:
| 2016 | September 2015 | 2015 | |
|---|---|---|---|
| £000s | £000s | £000s | |
| Turnover | 4,746 | 1,886 | 4,074 |
| Gross profit | 1,288 | 487 | 1,029 |
| Operating Profit | 290 | 325 | 614 |
Operating profit includes share option charge as follows:
| 2016 | ||
|---|---|---|
| £000s Share option charge 255 |
£000s 45 |
£000s 12 |
The Group has identified one post balance sheet event, the details of which are set out in note 25 to the Financial Statements.
There have been a number of new policies introduced, or in the process of being introduced, by the government and these have and will create opportunities for the business, specifically in the areas of improving governance and developing strategy, providing advice on how organisations structure themselves to be more efficient and providing advice on financial strategy and funding.
The Group anticipates organic growth through targeted recruitment and building a strong consulting team to deliver the expanding workload of both Altair and Murja.
The Group continues to look at opportunities to expand its consultancy base through acquisition. Initial discussions have been held with a number of parties. Most of these businesses are privately owned and the advantages of being part of a listed company are very attractive.
1 Until the acquisition of Altair, the company did not trade. In accordance with the requirements of accounting standards, the results of General Industries are only consolidated for the period post acquisition. The comparative figures and preacquisition results show Altair only.
The Group monitors its key performance indicators (KPI's) regularly. In this first year of trading, as an expanded Group, the KPI's are set out below:
| Revenue | Gross profit | Adjusted earnings per share |
|
|---|---|---|---|
| 2016 | 4,746,144 | 1,287,612 | 0.61p |
| 2015 | 4,074,257 | 1,028,739 | 2.46p |
| Number of clients |
New clients (%) |
Client retention rate (%) |
|
| 2016 | 194 | 40 | 68 |
| 2015 | 130 | 33 | 41 |
The principal risks currently faced by the Group are:
The main financial risks arising from the Group activities are credit risk, foreign currency risk and interest rate risk details of which can be found in Note 27 to the Financial Statements.
The Group's operating results and its financial condition may be negatively affected by a downturn in the general economic climate within the UK which consequently may have adverse effect upon government policy and spending, and private sector investments.
A reduced level of economic activity will restrict the amount of outsourcing by companies, local authorities or other bodies and result in the restriction of funding available for the purchase of such services leading to a decline in the number of firms in the sector and their profitability.
The Group's future revenues and profitability will be dependent on the current UK Government's policy with regard to expenditure on service and social housing improvements and to public expenditure levels in general. The introduction of policies to restrict the income for housing providers is a risk that the Group is monitoring closely.
The UK Government and local authorities may decide in future to change their programmes and priorities including reducing present or future spending and investment where the Group would expect to compete for work.
The contracts and procurement arrangements under which companies operating in these sectors compete for new business can lead to a higher cost of procuring new contracts and the possibility of not meeting fully the terms of contracts leading to reduced margins.
The success of the Group is dependent on retaining, developing, motivating and communicating with senior management and personnel and as the business grows on recruiting appropriately skilled, competent people at all levels. The shortages in the availability of appropriately skilled personnel may have a negative effect on the Group. The Directors of the subsidiaries are expected to contribute to its ability to obtain, generate and manage opportunities.
If the Group cannot successfully attract, retain and motivate such personnel, it may not be able to maintain standards of service or continue to grow its businesses as anticipated. The loss of such personnel, or the inability to attract, retain, motivate and communicate with additional skilled employees required for their activities within an affordable cost base, could have an adverse effect on the Group's business and prospects.
The Group seeks to mitigate these risks through ensuring that it monitors changes in statutory, regulatory and financial changes and maintains good relationships with its principal contacts within government, regulators and other key influencers within the sector.
Following its expansion through the acquisitions of Altair and Murja, the Group is well placed to provide the full range of services needed by housing providers as the external environment changes and the outlook for the business continues to be positive. A continued understanding of its position in the market and delivering value for money to clients will ensure that services and products remain competitive. In addition, the Group will ensure that its people policies are refreshed and follow good practice so that it can continue to attract and retain excellent staff.
A split of our employees and directors by gender as at the end of the year is shown below:
| Male | Female | |
|---|---|---|
| Directors of the Company | 5 | 1 |
| Directors of subsidiary companies not included in above | 3 | 1 |
| Employees in other senior executive positions | - | - |
| Total senior managers other than directors of the Company | 3 | 1 |
| Other employees of the Group | 10 | 13 |
| Total employees of the Group | 18 | 15 |
The Group consults with the employees on a regular basis through direct updates. Altair conducted a staff survey during the year and the results were reviewed and discussed by the Directors and an action plan agreed and discussed with all staff. The Group invests in training and development its employees through both internal and external courses.
The Group follows the legislative requirements set out in the Equality Act 2010 which covers all aspects of equality and diversity, replacing previous legislation covering equal pay, sex, race and disability discrimination. The Group gives due consideration to all applications and provides training and the opportunity for career development wherever possible. The Board is also mindful of the Human Rights Act 1998.
We understand and effectively manage the actual and potential impact of our activities. The Group's operations are conducted such that compliance is maintained with legal requirements relating to the environment.
The Group recognises that we have a responsibility to ensure the impact of our business is positive, and that we are good corporate citizens.
The directors have assessed the prospects of the company over a longer period than 12 months. The Board has conducted this review for a period of three years, which was selected as the company's business plan covers a three-year period and the subsidiary companies have three year plans.
The three-year strategic review considers the company's cash flows and other key financial ratios over the period. These metrics are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the company's principal risks actually occurring. The three-year review also makes certain assumptions about the normal level of capital investment likely to occur and considers whether additional financing facilities will be required.
Based on the results of this analysis, the directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment, and thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Derek Joseph - Director
24 June 2016
The Directors present their report and consolidated financial statements for the year ended 31 March 2016.
General Industries plc is incorporated as a public limited company, and is registered in England and Wales with the registered number 08988813. Details of the Company's issued share capital, together with the details of the movements during the year are shown in note 18. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
The principal activities of the Group are the provision of specialist housing and treasury management consultancy services. The principal activity of the Company is that of a holding company which manages the Group's strategic direction.
The results for the Group for the year ended 31 March 2016 are set out from page 31.
The consolidated financial statements for the year ended 31 March 2016 present only the results of the Altair business up to and including 19 August 2015 (the date the Company acquired Altair by way of reverse acquisition) and the enlarged group thereafter. The comparative results for the year ended 31 March 2015 represent those of Altair only.
The directors recommend a final dividend of 0.44p per Ordinary share to be paid on 18 August 2016 to shareholders on the register on 5 August 2016 which, together with the interim dividend of 0.22p paid on 21 December 2015, makes a total of 0.66p for the year.
The following served as directors of the Company during the period or thereafter:
| Jeffrey Zitron | Chairman and non-executive director |
|
|---|---|---|
| Richard Wollenberg2 | Non-executive director | |
| Derek Joseph3 | Finance Director | |
| David Whittaker | Finance Director and Company Secretary | (resigned 19/08/2015) |
| Steven Douglas | Joint Chief Executive | (appointed19/08/2015) |
| Fiona Underwood | Joint Chief Executive and Company Secretary | (appointed19/08/2015) |
| Richard Murphy | Executive Director | (appointed12/12/2015) |
2 Richard Wollenberg was Chairman up until 19 August 2015
3 Derek Joseph was non-executive director up until 19 August 2015
As at 31 March 2016, the Company was aware of the following notifiable interests in its voting rights:
| Number of Percentage of |
Nature of | ||
|---|---|---|---|
| Ordinary shares | Voting rights | holding | |
| Richard Wollenberg* | 3,808,406 | 11.7% | Direct |
| Steven Douglas | 3,279,440 | 10.1% | Direct |
| Chris Wood | 3,279,440 | 10.1% | Direct |
| Susan Kane | 3,279,440 | 10.1% | Direct |
| Fiona Underwood | 3,279,440 | 10.1% | Direct |
| Derek Joseph | 2,870,403 | 8.8% | Direct |
| Jeffrey Zitron | 2,798,403 | 8.8% | Direct |
| Cardiff Property plc** | 1,000,000 | 3.1% | Direct |
| Brook Hall Limited | 1,000,000 | 3.1% | Direct |
*Includes shares held by immediate family members of Richard Wollenberg
**Richard Wollenberg holds 44.17% of the issued share capital and voting rights of Cardiff Property plc.
The Company is not aware of any changes to the above holdings between 31 March 2016 and the date of this report.
Subject to the Company's Articles of Association, UK legislation and any directions given by special resolution, the business of the Company is managed by the Board of directors. Details of the matters reserved for the Board can be found in the Corporate Governance Statement on pages 13 to 15.
Post balance sheet events are disclosed in note 28.
The Company made no political donations during the period.
The Group has as yet minimal greenhouse gas emissions to report from the operations of the Company and its subsidiaries and does not have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2014.
Saffery Champness have expressed their willingness to remain in office as Auditor and, in accordance with section 489 of the Companies Act 2006, a resolution that Saffery Champness be re-appointed will be proposed at the Annual General Meeting.
| Details of long term incentive schemes as required by Listing Rule 9.4.3R |
see Directors' Remuneration Report |
|---|---|
| Details of any arrangement under which a director of the Company has waived emoluments from the Company |
No such waivers |
| Details of any allotment for cash of equity securities made during the period otherwise than to the holders of such equity shares in proportion to their holdings of such equity shares and which has not been specifically authorised by the Company's shareholders |
Note 19 on page 57 |
| Details of any contract of significance subsisting during the period to which the Company, or one of its subsidiary undertakings, is a party and in which a director of the Company is or was materially interested. |
No such contracts |
| Details of any contract of significance subsisting during the period between the Company, one of its subsidiary undertakings, and a controlling shareholder. |
No such contracts |
| Details of contracts for the provision of services to the Company or any of its subsidiary undertakings by the controlling shareholder. |
No such contracts |
| Details of any arrangement under which a shareholder has waived or agreed to waive any dividends, where a shareholder has agreed to waive future dividends, details of such waiver together with those relating to dividends which are payable during the period under review. |
No such waivers |
The Directors who held office at the date of approval of the Report of the Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Group's Auditor is unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Group's Auditor is aware of that information.
Derek Joseph - Director By order of the Board 24 June 2016
The Corporate Governance Statement forms part of the Directors' Report.
The Board is committed to maintaining appropriate standards of corporate governance. The statement below, together with the report on directors' remuneration on pages 16 to 26, explains how the company has observed principles set out in The UK Corporate Governance Code ("the Code") as relevant to the company and contains the information required by section 7 of the UK Listing Authority's Disclosure Rules and Transparency Rules. For details of the code please refer to https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-2014.pdf
Given the current size and resources of the Group, the Company has decided not to apply the Code provisions in full. A copy of the Company's corporate governance practices is available on the Company's website www.general-industries.co.uk.
The Board currently consists of two independent non-executive directors and four executive directors. The Board determines that Jeffrey Zitron and Richard Wollenberg to be independent Non-Executive Directors; its assessment is based on the fact that neither Jeffrey Zitron nor Richard Wollenberg receive any additional benefits from the Group.
The Board meets regularly with senior staff throughout the year to discuss areas of operational performance, trading outlook and growth opportunities. Due to the two acquisitions completed during the financial year under review, the Board met ten times during the year.
Financial controls have been established so as to provide safeguards against unauthorised use or disposition of the assets, to maintain proper accounting records and to provide reliable financial information for internal use. Key financial controls include:
The directors consider the size of the Group and the close involvement of executive directors in the day-to-day operations makes the maintenance of an internal audit function unnecessary. The directors will continue to monitor this situation.
The Group has three committees; Audit, Remuneration and Nominations with membership of:
| Audit | Remuneration | Nominations | |
|---|---|---|---|
| Committee | Committee | Committee | |
| Jeffrey Zitron | | * | * |
| Richard Wollenberg | * | | |
| Derek Joseph | | ||
| Fiona Underwood | | ||
| Steven Douglas | | ||
*Committee Chairman
The audit committee, which is chaired by Richard Wollenberg, comprises both independent nonexecutive directors, and the Company Secretary. The Board is satisfied that Richard Wollenberg has recent and relevant financial experience to guide the committee in its deliberations.
The primary responsibilities of the Audit Committee are:
The committee will meet with the external auditor at least twice a year to consider the results, internal procedures and controls, and matters raised by the auditor. The audit committee considers auditor independence and objectivity and the effectiveness of the audit process. It also considers the nature and extent of the non-audit services supplied by the auditor reviewing the ratio of audit to non-audit fees. It is a specific responsibility of the audit committee to ensure that an appropriate relationship is maintained between the company and its external auditor. The company has a policy of controlling the provision of non-audit services by the external auditor in order that their objectivity and independence are safeguarded. This control is exercised by ensuring non-audit projects where fees are expected to exceed £5,000 are subject to the prior approval of the audit committee. At least one of the members has relevant recent financial experience.
As part of the decision to recommend to the Board the re-appointment of the external auditor, the committee takes into account the tenure of the auditor in addition to the results of its review of the effectiveness of the external auditor and considers whether there should be a full tender process. There are no contractual obligations restricting the committee's choice of external auditor.
The primary responsibilities of the Nominations Committee are:
The Nominations Committee did not meet during this period.
The primary responsibilities of the Remuneration Committee are:
The report of the Remuneration Committee is set out on pages 16 to 26 of this report.
Presentations are given to institutional investors when requested, normally following the publication of the half year and full year results, when interim and annual reports are delivered to all shareholders. The results of such meetings are discussed with board members. All directors attend the annual general meeting at which they have the opportunity to meet with shareholders.
The information provided on this page of the Directors' Remuneration Report is not subject to Audit.
| Jeff Zitron | Chairman |
|---|---|
| Richard Wollenberg | Non-executive Director |
| Derek Joseph | Group Finance Director |
I am pleased to present the Annual Report on Remuneration for the year ended 31 March 2016.
The remuneration committee has used the policy adopted in August 2015 as a framework to set remuneration levels. Executive directors do not participate in decisions regarding their own remuneration. The committee has access to independent advice but during the year under review they have not sought such advice.
In setting the company's remuneration policy for directors, the remuneration committee has given full consideration to the best practice provisions annexed to The Financial Conduct Authority Listing Rules and the report has been prepared in accordance with Chapter 6 of the Companies Act 2006 and the Directors' Remuneration Report Regulations 2002.
The Remuneration committee met on 18 May 2016 to discuss the remuneration for the directors of the Group. As the acquisition of Altair and Murja had taken place during the period under review, the committee agreed that there would be no changes to directors' remuneration. It was agreed that the remuneration policy would be updated to reflect the expanding Group and this is set out in the report below.
The remuneration policy is designed to attract and retain executive directors and to motivate them in delivering the objectives of the Company. The policy also covers the senior management teams within the subsidiaries who are key to supporting the delivery of those objectives. The underlying principle is that employee and director share ownership is encouraged and the remuneration policy provides opportunity to reward all employees through the award of share options. This links their personal interest to the success of the company.
Jeffrey Zitron Chairman of the Remuneration Committee
24 June 2016
The information provided on pages 17 to 20 of the Directors' Remuneration Report is subject to audit.
The remuneration of the executive directors is made up as follows:
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 1,232 | - | - | - | - | 1,232 |
| Derek Joseph** | 6,140 | - | - | - | - | 6,140 |
| David Whittaker | - | - | - | - | - | - |
| Steven Douglas | 61,110 | 740 | 20,000 | 27,200 | 7,700 | 116,750 |
| Fiona Underwood | 61,110 | 1,950 | 20,000 | 27,200 | 3,666 | 113,926 |
| Richard Murphy | 33,484 | - | - | - | - | 33,484 |
| 163,076 | 2,690 | 40,000 | 54,400 | 11,366 | 271,532 |
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 209 | - | - | - | - | 209 |
| David Whittaker | 83 | - | - | - | - | 83 |
| 292 | - | - | - | - | 292 |
The remuneration of the non-executive directors is made up as follows:
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Richard Wollenberg* | 2,389 | - | - | - | - | 2,389 |
| Jeffrey Zitron | 7,500 | - | - | - | - | 7,500 |
| Derek Joseph** | 388 | - | - | - | - | 388 |
| 10,277 | - | - | - | - | 10,277 |
| Salary | All taxable | Annual | ||||
|---|---|---|---|---|---|---|
| and fees | benefits | bonuses | LTIP | Pension | Total | |
| £ | £ | £ | £ | £ | £ | |
| Jeffrey Zitron | - | - | - | - | - | - |
| Derek Joseph** | 83 | - | - | - | - | 83 |
| 83 | - | - | - | - | 83 |
*Richard Wollenberg held an executive director role up until 19 August 2015.
**Derek Joseph held a non-executive director role up until 19 August 2015.
The taxable benefits above represent private medical insurance.
All the executive directors of the Group's subsidiaries benefit from the executive incentive scheme ("the scheme"). Where a subsidiary is acquired during the reporting period, the Remuneration Committee (RemCo) confirms the eligibility or not of that subsidiary's executive directors for participation in the scheme for the remaining part of the year. For the year under review, only the executive directors of Altair Consultancy and Advisory Services Limited were eligible for the executive incentive scheme.
The scheme, which is discretionary, is dependent on the performance target for the year, as set out in the remuneration policy. The scheme comprises two elements:
The target for those eligible executive directors, in-line with the 2015 policy, was to achieve the subsidiary's 2014/15 outturn (reported profit before tax and exceptional items) plus 10%, adjusted for any Group costs and expenses.
RemCo assessed the performance of the executive directors against the target and agreed that, as the year under review spanned two differing remuneration policies (that of Altair Consultancy and Advisory Services until 19 August 2015 and General Industries plc for the remainder of the financial year) they would use their judgement and award accordingly. The Committee's decision is shown in the table overleaf.
| Performance Target Altair profit increased by 10%4 |
Actual Performance Altair profit increased by 13.6% |
Maximum Possible award |
2015/16 Unconsolidated bonus award |
|---|---|---|---|
| £676,000 | £697,858 | £30,000 | £20,000 |
| £676,000 | £697,858 | £100,000 share options |
100,000 share options (Value to be determined on the date the accounts are signed) |
The Committee believes that the level of reward payable is a fair reflection of the performance over the year.
The share options awarded during the year to directors are set out below:
| Type of | Face value | Length of | |
|---|---|---|---|
| scheme | £ | vesting period | |
| Steven Douglas | Unapproved | 127,500 | Vest on grant date |
| Fiona Underwood | Unapproved | 127,500 | Vest on grant date |
There are no performance measures or targets in relation to the options granted.
The face value of the options has been calculated based on the share price at grant date of 37.5p per share.
The total number of directors' interests in shares as at 31 March 2016 (or date of resignation) is set out below:
| Number of shares | ||
|---|---|---|
| Richard Wollenberg5 | 3,808,406 | |
| Jeffrey Zitron | 2,798,403 | |
| Derek Joseph | 2,870,403 | |
| David Whittaker6 | 268,000 | (resigned 19 August 2015) |
| Steven Douglas | 3,279,440 | |
| Fiona Underwood | 3,279,440 | |
| Richard Murphy | 376,344 |
4 Profit before tax and excluding one-off deemed cost of listing and share option charge
5 Includes shares held by immediate family members of Richard Wollenberg
6 Includes shares held by immediate family members of David Whittaker
The total number of share options in relation to each director with and without performance measures, those vested but unexercised, and those exercised, is set out below:
| With performance measures |
Without performance measures7 |
Vested but unexercised8 |
Exercised during the year |
|
|---|---|---|---|---|
| Richard Wollenberg | - | - | 515,000 | - |
| Jeffrey Zitron | - | - | 300,000 | - |
| Derek Joseph | - | - | 309,000 | - |
| David Whittaker9 | - | - | - | 206,000 |
| Steven Douglas | - | 275,050 | 340,000 | - |
| Fiona Underwood | - | 275,050 | 340,000 | - |
| Richard Murphy | - | - | - | - |
In the year ended 31 March 2016 there was no payments to past directors.
No payments were made to directors for loss of office in the year ended 31 March 2016.
The information provided in this part of the Directors' Remuneration Report is not subject to Audit.
7 A total of 1,713,772 Ordinary Shares at £0.05 per share were issued as "Rollover Options" and are exercisable in tranches from 1 April 2016 with expiry dates between 31 March 2023 and 31 March 2025
8 The Unapproved Options may be exercised at any time up to 20 July 2020
9 Exercised after resignation as director
The information provided on pages 21 to 26 of the Directors' Remuneration Report is not subject to audit.
The following graph shows the company's performance since flotation, measured by total shareholder return, compared with the performance of the FTSE All Share Index also measured by total shareholder return:
Comparison of shareholder distributions and total employee expenditure of the Group is set out below for the years ended 31 March 2015 and 31 March 2016.
| 2016 | 2015 | Change % | |
|---|---|---|---|
| £ | £ | ||
| All employee remuneration | 2,407,049 | 1,517,843 | 58.6% |
| Distributions to shareholders | 212,778 | 134,370 | 58.4% |
The remuneration committee proposes to implement the policy approved by the shareholders at the 2016 annual general meeting.
The Group is committed to on-going shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to directors' remuneration, the reasons for any such vote will be sought, and any actions in response will be detailed here.
The Directors' Remuneration Report for the period ended 31 March 2015 was approved by shareholders at the Annual General Meeting held on 19 August 2015.
| Directors' Remuneration Report | % of votes cast |
|---|---|
| For | 100% |
| Against | 0% |
| Total votes cast | 100% |
The remuneration policy was set in January 2015 and confirmed by the committee in August 2015; the remuneration committee has reviewed the policy and the future policy is set out below. This has been reviewed to take account of the Group's acquisitions during the period under review.
The remuneration policy is designed to attract and retain executive directors and to motivate them in delivering the objectives of the Group. The policy also covers the senior management teams within the subsidiaries who are key to supporting the delivery of those objectives. The underlying principle is that employee and director share ownership is encouraged and the remuneration policy provides opportunity to reward all employees through the award of share options. This links their personal interest to the success of the company.
The future policy has kept the basic principles of the policy that was set in January 2015 and agreed by the Remuneration Committee in August 2015. The main changes are to account for the enlarged Group to ensure that executive directors are adequately rewarded for their services and that there is a consistent approach to remuneration across the Group.
The following table provides a summary of the key components of the remuneration package for directors:
| Purpose | Operation | Performance Criteria | |
|---|---|---|---|
| Salary and fees |
To provide competitive fixed elements of reward which can attract and retain high calibre individuals with the appropriate skills and knowledge to deliver the Group's strategy. |
Salaries are reviewed annually or when an individual changes position or responsibility. The committee will also consider the skills, experience and on going performance of individuals when deciding on any changes to their basic salary. |
Assessment of personal and corporate performance. |
| All taxable benefits |
To provide a range of cost-effective benefits which are in-line with the market. |
The main benefits include a car allowance (capped at that provided to all staff in the Group), private medical insurance and death in service benefit of four times salary. The committee may wish to introduce other benefit provisions |
None |
| Pensions | To provide cost effective long-term retirement arrangements |
from time-to-time. Contributions of 6% of salary is available to all staff. There is no differential for executive directors. A salary sacrifice scheme is available for staff should they wish to increase their personal contributions. |
None |
| Purpose | Operation | Performance Criteria | |
|---|---|---|---|
| Annual bonuses |
To incentivise and reward for achievement of in-year objectives linked to the performance of the Group and the individual subsidiaries. |
Executive directors are eligible for an annual bonus of up to 30% of their annual salary (unconsolidated award) upon achievement of company/subsidiary targets. Half of the executive directors' annual bonus will be paid into a Long Term Incentive Plan (LTIP), which will earn a rate of interest equivalent to a bank deposit and can be drawn, on a rolling basis, after a minimum of three years. Early release or penalties will be relevant to leavers depending on the circumstances. |
Executive directors are measured against an achievement of 10% increase in reported profit before tax and exceptional items year-on-year adjusted for any Group costs and expenses. To take account of further growth within the Group individual subsidiary reported profit for the year of acquisition is used as the baseline for those executive directors. |
| Long-term share incentive plans |
To incentivise and reward for the achievement of long term performance, aligned to the generation of shareholder value. |
An annual grant of share options, which vest after three years subject to continued service and the achievement of targets. Upon the achievement of the target executive directors will be entitled to a share option award which is the equivalent of one third the reported profit (before tax and exceptional items) of the individual subsidiary companies. The number of share options available for distribution is determined from the mid-market price on the day the results are published. The committee can, on the recommendation of the executive directors award share options to individual members of staff to reward exceptional performance. Any share options awarded to staff must be included within the one-third reported profit |
Share option awards are measured against an achievement of 10% increase in reported profit before tax and exceptional items year-on-year adjusted for any Group costs and expenses. To take account of further growth within the Group individual subsidiary reported profit for the year of acquisition is used as the baseline for those staff within each subsidiary. |
distribution for each subsidiary.
The following table provides a summary of the key elements of the remuneration package for nonexecutive directors:
| Purpose | Operation | |
|---|---|---|
| Fees | To attract and retain non executive directors with the required skills and experience |
The fees for the Chair and non-executive directors are periodically reviewed by the committee. |
| The fees of the non-executive directors are decided by the Board based upon comparable market levels. |
||
| Neither the Chair nor the non-executive directors participate in the annual bonus scheme, share incentive scheme, pension scheme or receive any other benefit. |
||
| Their services can be terminated by either party upon giving three months' notice in writing |
||
| Additional fees payable for other duties |
No fees are paid for other duties. |
The Committee's approach to recruitment remuneration is to offer a market competitive remuneration package sufficient to attract high calibre candidates who are appropriate to the role but without paying any more than is necessary.
Any new executive director's remuneration would include the same elements and be in line with the policy set out in this Report.
All executive directors have a service contract. The contract can be terminated by either party upon giving six months' notice in writing. The contracts are available for inspection at the company's offices.
Payments for loss of office would be determined by the remuneration committee taking into account contractual obligations.
The chart below illustrates the remuneration that would be paid to each of the Executive Directors under three different performance scenarios: (i) Minimum; (ii) On-target; and (iii) Maximum.
The elements of remuneration have been categorised into two components: (i) Fixed; and (ii) Annual variable (annual bonus awards); which are set out in the future policy table above.
The Committee has not consulted with its employees on executive pay but is aware of the pay and employment benefits across the wider Group. The wider benefits package available to staff is reflected within the remuneration package for executive directors, the exceptions being the level of bonus awarded and long-term share options.
The Committee will consider shareholder feedback received at the AGM and during meetings with shareholders and investors throughout the year and will use these views to formulate any changes to the remuneration policy.
The remuneration report was approved by the Board on 24 June 2016 and signed on its behalf by:
Jeffrey Zitron - Chairman
24 June 2016
The Directors (whose names and functions are set out on page 10) are responsible for preparing this report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the company and group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and applicable law. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and the profit or loss of the company and the group for that period.
In preparing the Company and Group financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.
The financial statements are published on the Company's website www.general-industries.co.uk., The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.
We confirm that to the best of our knowledge:
On behalf of the Board
24 June 2016
We have audited the financial statements of General Industries plc for the year ended 31 March 2016 set out on pages 31 to 63. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' 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 and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion:
In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
Andrew Gaskell (Senior Statutory Auditor) For and on behalf of Saffery Champness Chartered Accountants Statutory Auditors 71 Queen Victoria Street London EC4V 4BE
24 June 2016
| Notes | Proforma 2016 £ |
Proforma 2015 £ |
|
|---|---|---|---|
| Revenue | 4 | 4,746,144 | 4,074,257 |
| Cost of sales | 6 | (3,458,532) | (3,045,518) |
| Gross profit | 1,287,612 | 1,028,739 | |
| Administrative expenses | 6 | (997,786) | (414,506) |
| Operating profit | 289,826 | 614,233 | |
| Deemed cost of listing | 15 | (3,104,527) | - |
| Finance income | 4 | 1,713 | 2,502 |
| Finance costs | 8 | - | (14,424) |
| (Loss) / profit before taxation | 6 | (2,812,988) | 602,311 |
| Income tax expense | 9 | (124,319) | (114,125) |
| (Loss) / profit for the year | (2,937,307) | 488,186 | |
| Other comprehensive income | - | - | |
| Total comprehensive (loss) / income for the year |
(2,937,307) | 488,186 | |
| (Loss) / earnings per share attributable to owners of the parent |
|||
| Basic | 11 | (10.66p) | 2.46p |
| Diluted | 11 | (10.66p) | 2.43p |
| Adjusted earnings per share before deemed cost of listing |
|||
| Basic | 11 | 0.61p | 2.46p |
| Diluted | 11 | 0.54p | 2.43p |
The income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 37 to 63 form part of these financial statements.
| Proforma | |||||
|---|---|---|---|---|---|
| Group | Group | Company | Company | ||
| 2016 | 2015 | 2016 | 2015 | ||
| Note | £ | £ | £ | £ | |
| Non-current assets | |||||
| Intangible assets | 12 | 317,688 | - | - | - |
| Property, plant and | |||||
| equipment | 13 | 14,654 | - | - | - |
| Investments | 14 | - | - | 9,602,280 | - |
| 332,342 | - | 9,602,280 | - | ||
| Current assets | |||||
| Trade and other receivables | 16 | 1,158,836 | 1,022,518 | 1,770 | 18,000 |
| Deferred tax assets | 17 | 11,671 | 19,072 | - | - |
| Cash and bank balances | 2,552,642 | 1,113,959 | 341,849 | 946,207 | |
| 3,723,149 | 2,155,549 | 343,619 | 964,207 | ||
| Current liabilities | |||||
| Trade and other payables | 18 | 1,276,501 | 1,113,508 | 218,530 | 2,835 |
| Corporation tax | 166,769 | 143,742 | - | - | |
| 1,443,270 | 1,257,250 | 218,530 | 2,835 | ||
| Net current assets | 2,279,879 | 898,299 | 125,089 | 961,372 | |
| Net assets | 2,612,221 | 898,299 | 9,727,369 | 961,372 | |
| Equity | |||||
| Share capital | 19 | 1,630,434 | 515,000 | 1,630,434 | 515,000 |
| Share premium account | 533,235 | 464,960 | 533,235 | 464,960 | |
| 20 | |||||
| Reverse acquisition reserve | 20 | (4,771,473) | (857,429) | - | - |
| Merger reserve Share-based payment |
20 | 7,184,334 | - | 7,184,334 | - |
| reserve | 22 | 281,586 | 17,016 | 281,586 | 17,016 |
| Retained (losses) / earnings | (2,245,895) | 758,752 | 97,780 | (35,604) | |
| Equity attributable to the owners of the parent |
2,612,221 | 898,299 | 9,727,369 | 961,372 |
The notes on pages 37 to 63 form part of these financial statements.
The financial statements were approved by the board on 24 June 2016
Company Registration No. 08988813
| Share capital £ |
Share premium account £ |
Reverse acquisition reserve £ |
Merger reserve £ |
Share based Payment Reserve £ |
Retained earnings / (losses) £ |
Proforma total equity £ |
|
|---|---|---|---|---|---|---|---|
| Balance at 1 April 2014 | - | - | 936 | - | - | 404,936 | 405,872 |
| Issue of shares | 515,000 | 464,960 | (853,272) | - | - | - | 126,688 |
| Total comprehensive income | - | - | - | - | - | 488,186 | 488,186 |
| Share based payment charge | - | - | (5,093) | - | 17,016 | - | 11,923 |
| Dividend | - | - | - | - | - | (134,370) | (134,370) |
| Balance at 31 March 2015 | 515,000 | 464,960 | (857,429) | - | 17,016 | 758,752 | 898,299 |
| Balance at 1 April 2015 | 515,000 | 464,960 | (857,429) | - | 17,016 | 758,752 | 898,299 |
| Issue of shares | 1,115,434 | 68,275 | - | 7,184,334 | - | - | 8,368,043 |
| Reverse acquisition | - | - | (3,914,044) | - | 11,923 | - | (3,902,121) |
| Total comprehensive loss | - | - | - | - | - | (2,937,307) | (2,937,307) |
| Transfer on exercise of options | - | - | - | - | (1,960) | 1,960 | - |
| Share based payment charge | - | - | - | - | 254,607 | - | 254,607 |
| Dividend | - | - | - | - | - | (69,300) | (69,300) |
| Balance at 31 March 2016 |
1,630,434 | 533,235 | (4,771,473) | 7,184,334 | 281,586 | (2,245,895) | 2,612,221 |
The notes on pages 37 to 63 form part of these financial statements.
| Share capital £ |
Share premium account £ |
Merger reserve £ |
Share based payment reserve £ |
Retained earnings / (losses) £ |
Total equity £ |
|
|---|---|---|---|---|---|---|
| Balance at 1 April 2014 | - | - | - | - | - | - |
| Issue of shares | 515,000 | 464,960 | - | - | - | 979,960 |
| Total comprehensive loss | - | - | - | - | (35,604) | (35,604) |
| Share based payment charge | - | - | - | 17,016 | - | 17,016 |
| Dividend | - | - | - | - | - | - |
| Balance at 31 March 2015 | 515,000 | 464,960 | - | 17,016 | (35,604) | 961,372 |
| Balance at 1 April 2015 | 515,000 | 464,960 | - | 17,016 | (35,604) | 961,372 |
| Issue of shares | 1,115,434 | 68,275 | 7,184,334 | - | - | 8,367,043 |
| Total comprehensive income | - | - | - | - | 200,724 | 200,724 |
| Transfer on exercise of options | - | - | - | (1,960) | 1,960 | - |
| Share based payment charge | - | - | - | 266,530 | - | 266,530 |
| Dividend | - | - | - | - | (69,300) | (69,300) |
| Balance at 31 March 2016 | 1,630,434 | 533,235 | 7,184,334 | 281,586 | 97,780 | 9,727,369 |
The notes on pages 37 to 63 form part of these financial statements.
| Proforma 2016 £ |
Proforma 2015 £ |
|
|---|---|---|
| Cash flows from operating activities | ||
| (Loss)/profit for the year | (2,937,307) | 488,186 |
| Interest received | (1,713) | (2,502) |
| Finance costs | - | 14,424 |
| Income tax expense | 124,319 | 114,125 |
| Share based payment charge | 254,606 | 11,923 |
| Deemed cost of listing | 3,104,527 | - |
| Depreciation | 5,457 | - |
| Operating cash flows before movement in working capital | 549,889 | 626,156 |
| Increase in trade and other receivables | (76,254) | (275,101) |
| Increase in trade and other payables | 99,878 | 575,059 |
| Cash generated by operations | 573,513 | 926,114 |
| Income taxes paid | (179,445) | (270,457) |
| Interest paid | - | (14,424) |
| Net cash flow from operating activities | 394,068 | 643,735 |
| Cash flows from investing activities | ||
| Interest received | 1,713 | 2,502 |
| Cash acquired on reverse acquisition | 795,690 | - |
| Cash acquired on purchase of subsidiary | 785,262 | - |
| Purchase of subsidiary | (899,696) | - |
| Purchase of property, plant and equipment | (16,344) | - |
| Proceeds from disposal of investments | 207,834 | - |
| Net cash flow from investing activities | 874,459 | 2,502 |
| Cash flows from financing activities | ||
| Proceeds of share issue | 239,456 | - |
| Dividends paid | (69,300) | (134,370) |
| Repayment of loans | - | (248,312) |
| Net cash flow from financing activities | 170,156 | (382,682) |
| Net increase in cash and cash equivalents | 1,438,683 | 261,053 |
| Cash and cash equivalents at beginning of the period | 1,113,959 | 852,906 |
| Cash and cash equivalents at end of the period | 2,552,642 | 1,113,959 |
| 2016 £ |
2015 £ |
|
|---|---|---|
| Cash flows from operating activities | ||
| Profit/(loss) for the year | 200,723 | (35,604) |
| Dividends received | (300,600) | - |
| Interest received | (1,017) | (2,848) |
| Share based payment charge | - | 17,016 |
| Operating cash flows before movement in working capital | (100,894) | (21,436) |
| Decrease/(increase) in trade and other receivables | 16,230 | (18,000) |
| Increase in trade and other payables | 215,696 | 2,835 |
| Net cash flow from operating activities | 131,032 | (36,601) |
| Cash flows from investing activities | ||
| Interest received | 1,017 | 2,848 |
| Dividends received | 300,600 | - |
| Purchase of subsidiary | (1,053,782) | - |
| Net cash flow from investing activities | (752,165) | 2,848 |
| Cash flows from financing activities | ||
| Proceeds of share issue | 86,075 | 1,010,000 |
| Transaction costs of share issue | - | (30,040) |
| Dividends paid | (69,300) | - |
| Net cash flow from financing activities | 16,775 | 979,960 |
| Net increase in cash and cash equivalents | (604,358) | 946,207 |
| Cash and cash equivalents at beginning of the period | 946,207 | - |
| Cash and cash equivalents at end of the period | 341,849 | 946,207 |
General Industries plc (''the Company'') and its subsidiaries (together, ''the Group'') provide specialist housing and treasury management consultancy services. The principal activity of the Company is that of a holding company for the Group as well as providing all the strategic and governance functions of the Group.
The Company is a public limited company which is listed on the London Stock Exchange, domiciled in the United Kingdom and incorporated and registered in England and Wales. The Company's registered office is Tempus Wharf, 29a Bermondsey Wall West, London, SE16 4SA.
The principal accounting policies applied in preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.
The financial statements of have been prepared in accordance with International Reporting Standards as adopted by the European Union (IFRSs), issued by the International Accounting Standards Board (IASB), including interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis.
The financial statements are presented in Pounds Sterling which is the Group's functional and presentational currency.
The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas of critical accounting estimates and judgements are set out in note 3.
On 20 August 2015 the Company became the legal parent of Altair Consultancy and Advisory Services Limited (''Altair'') through a reverse acquisition. In the judgement of the Directors, the Company was not a business as defined by IFRS 3 prior to the transaction. As such, the transaction is not considered to be a business combination and therefore is deemed to be outside the scope of IFRS 3, instead falling within the scope of IFRS 2.
The principles of IFRS 3 have been applied in identifying Altair as the accounting acquirer. The consolidated financial statements of the Company are presented as a continuation of Altair's financial statements, reflecting the commercial substance of the transaction. However, the equity structure presented in the consolidated financial statements reflects the equity structure of the Company, including the equity instruments issued as part of the transaction. Where information relates or includes the results of Altair pre-reverse acquisition, it has been labelled 'proforma'.
The consolidated financial statements incorporate the financial statements of subsidiary entities. A subsidiary is defined as an entity over which the Company has control. Control is achieved when the Company has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to use its power to affects its returns.
Consolidation of a subsidiary begins when the Company obtains control and ceases when control is lost. The Company reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three control elements listed above.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with the Group's accounting policies.
Other than the reverse acquisition noted above, acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.
Any excess of the consideration over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill is not amortised but is reviewed for impairment at least annually. If the consideration is less than the fair value of the identifiable assets and liabilities acquired, the difference is recognised in the Statement of comprehensive income.
Revenue comprises the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group's activity. Revenue is shown net of value added tax, returns, rebates and discounts. The Group recognises revenue when the amount of the revenue can be reliably measured and when it is probable that economic benefits will flow to the entity.
Un-invoiced fees at the balance sheet date are valued at the fair value of the consideration receivable when it is probable that economic benefits will flow to the Group. Where income is invoiced in advanced of work being completed, revenue is treated in the first instance as deferred income and recognised when the services are performed by the Group.
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for use. Depreciation is recognised so as to write-off the cost of assets less their residual values over their estimated useful lives, using the straight-line method, on the following bases:
Computer equipment 33% per annum Office equipment 33% per annum
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of comprehensive income.
In the company's separate annual financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company, plus any costs directly attributable to the purchase of the subsidiary.
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets can be divided into the following categories: loans and receivables, financial assets at fair value through profit or loss, available-for-sale financial assets and held-tomaturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the instruments were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.
De-recognition of financial instruments occurs when the rights to receive cash flows from investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Trade receivables are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at an effective interest rate computed at initial recognition.
Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group or Company provides money directly to a debtor with no intention of trading the receivables. Loans receivable are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in the income statement.
Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled by the Group using its equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
At initial recognition, financial liabilities are measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.
The Group contributes to defined contribution schemes for the benefit of its directors and employees. Contributions payable are charged to the statement of comprehensive income in the year they are payable.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit or loss, because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled. Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.
Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income. No deferred tax asset is recognised when management believe that it is more likely than not that a deferred asset will not be realised.
The Group assesses at each statement of financial position date if there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss.
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate pretax discount rate.
Rentals payable under operating leases, net of lease incentives, are charged to the statement of comprehensive income on a straight-line basis over the term of the lease.
Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
The Group has issued share options to certain directors and employees. The share options granted become exercisable at varying future dates. If certain conditions are met, following the vesting period, the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.
The share based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.
The fair value of share options granted is determined by applying the Black Scholes model. This model utilises inputs for the risk free rate, expected volatility in share price, dividend yield and the current share price at fair value, which are factors determined on the date the share options are granted.
The following pronouncements have been adopted in the year and either had no impact on the financial statements or resulted in changes to presentation and disclosure only:
*This is the date from which these pronouncements became effective in the EU
At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the Group, which have not been applied in these financial statements, were in issue but were not yet effective. In some cases these standards and guidance have not been endorsed by the European Union.
The directors are evaluating the impact that these standards will have on the financial statements of the Group.
In application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical judgements, apart from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have a significant effect on the amounts recognised in the financial statements.
The directors consider that the share for share exchange between the Company and Altair Consultancy and Advisory Services Limited (Altair) to be a reverse acquisition as Altair is considered to be the acquirer.
Work in progress is calculated on a project by project basis using the fair value of chargeable time that is un-invoiced at the period end. Historic analysis shows that recovery rates of work in progress are very high; the Group does not expect any work in progress to be irrecoverable. Work in progress is reviewed on a monthly basis to ensure it is recognised appropriately, it is probable that economic benefits will flow to the Group and that the fair value can be reliably measured.
The Company has granted share options to certain employees and directors of the Group. The share options granted become exercisable at varying future dates. If certain conditions are met, following the vesting period, the employee will be eligible to exercise their option at an exercise price determined on the date the share options are granted.
The share based payment charge is recognised in the statement of comprehensive income and is calculated based on the Company's estimate of the number of share options that will eventually vest.
Assumptions regarding the fair value of the Company's shares and assumptions regarding employee fluctuation are taken into account when measuring the value of share-based payments for employees, which are required to be accounted for as equity-settled sharebased payment transactions pursuant to IFRS 2. The resulting staff costs are recognised pro rata in the statement of comprehensive income to reflect the services rendered as consideration during the vesting period.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
The carrying amounts of the Group's assets value are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated and an impairment loss is recognised where the recoverable amount is less than the carrying value of the asset. Any impairment losses are recognised in the income statement.
| Proforma 2016 |
Proforma 2015 |
|---|---|
| £ | £ |
| 4,628,195 | 4,074,257 |
| 117,949 | - |
| 4,746,144 | 4,074,257 |
| 1,713 | 2,502 |
| 4,747,857 | 4,076,759 |
The Group has three reportable segments, being consultancy, interim management and treasury management services, the results of which are included within the financial information. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker ("CODM"). In accordance with IFRS 8 'Operating Segments', information on segment assets is not shown, as this is not provided to the CODM. The Group's revenues are derived exclusively from operations in the UK. As a result, the CODM does not review segments by country or continent.
The principal activities of the Group are as follows:
Consultancy – a range of services to support the business needs of a diverse range of organisations (including housing associations and local authority) across the housing sector. The majority of consultancy projects run over one to two months requiring on-going business development to ensure a full pipeline of consultancy work for the employed team.
Interim Management – individuals are embedded within housing organisations (normally registered providers, local authorities and ALMOs) in a substantive role, normally for a specified period of time. Interim management provides the Group with a more extended forward sales pipeline as the average contract is for six months. This section of the business provides low risk as the interim consultants are placed on rolling contractual basis and provides minimal financial commitment as associates to the business, rather than employees, are used for these roles.
Treasury Management – a range of services providing treasury advice and fund-raising services to non-profit making organisations working in the affordable housing and education sectors. Within this segment of the business a number of client organisations enter into fixed period retainers to ensure immediate call-off of the required services.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including Directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.
| Operating segments (continued) | ||
|---|---|---|
| Proforma | Proforma | |
| 2016 | 2015 | |
| £ | £ | |
| Revenue from Consultancy | 2,974,901 | 2,481,290 |
| Revenue from Interim management | 1,653,294 | 1,592,967 |
| Revenue from Treasury management | 117,949 | - |
| 4,746,144 | 4,074,257 | |
| Cost of sales from Consultancy | 2,045,190 | 1,640,633 |
| Cost of sales from Interim management | 1,413,342 | 1,404,885 |
| Cost of sales from Treasury management | - | - |
| 3,458,532 | 3,045,518 | |
| Gross profit from Consultancy | 929,711 | 840,657 |
| Gross profit from Interim management | 239,952 | 188,082 |
| Gross profit from Treasury management | 117,949 | - |
| 1,287,612 | 1,028,739 | |
| Administrative expenses | (997,786) | (414,506) |
| Operating profit | 289,826 | 614,233 |
| Proforma | Proforma | |
|---|---|---|
| 2016 | 2015 | |
| £ | £ | |
| (Loss) / profit before taxation is arrived at after charging: | ||
| Deemed cost of listing | 3,104,527 | - |
| Auditors' remuneration | 36,000 | 35,000 |
| Other fees payable to auditors: | ||
| Taxation - |
12,000 | - |
| Corporate finance services - |
25,000 | - |
| Depreciation of property, plant and equipment | 5,457 | - |
| Staff costs (see note 7) | 2,407,049 | 1,517,843 |
| Operating lease costs – land and buildings |
39,400 | 30,324 |
The share option charge for the year of £254,607 (2015: £11,923) is included within administrative expenses.
| Proforma 2016 |
Proforma 2015 |
|
|---|---|---|
| The average monthly number of employees (including directors) employed by the Group was: |
30 | 21 |
| 2016 | 2015 | |
| £ | £ | |
| Aggregate remuneration (including directors) | ||
| Wages and salaries | 1,878,993 | 1,307,848 |
| Share-based payments | 254,607 | 11,923 |
| Pension contributions | 80,770 | 54,632 |
| Social security costs | 192,679 | 143,440 |
| 2,407,049 | 1,517,843 |
| Proforma | Proforma |
|---|---|
| 2016 | 2015 |
| £ | £ |
| Loan interest - |
13,472 |
| Other interest - |
952 |
| - | 14,424 |
| Proforma 2016 |
Proforma 2015 |
|
|---|---|---|
| £ | £ | |
| Corporation tax: | ||
| Current year | 116,918 | 108,346 |
| Adjustment in respect of prior years | - | 24,851 |
| 116,918 | 133,197 | |
| Deferred tax charge/(credit) | 7,401 | (19,072) |
| 124,319 | 114,125 |
The tax charge for the year can be reconciled to the (loss)/profit in the income statement as follows:
| Proforma 2016 |
Proforma 2015 |
|
|---|---|---|
| £ | £ | |
| (Loss)/profit before taxation | (2,812,988) | 602,311 |
| Tax at the UK corporation tax rate of 20% (2015: 21%) | (562,598) | 126,485 |
| Expenses not deductible | 66,012 | 4,027 |
| Deemed cost of listing | 620,905 | - |
| Tax effect of utilising unrecognised deferred tax asset | - | (21,752) |
| Marginal rate relief | - | (7,126) |
| Adjustments in respect of prior years | - | 24,851 |
| 686,917 | (12,360) | |
| Tax expense for the year | 124,319 | 114,125 |
As permitted by section 408 Companies Act 2006, the Company has not presented its own Income Statement in these financial statements. The Company made a profit of £200,724 (2015: loss of £35,604) for the year ended 31 March 2016.
Basic earnings per share is calculated by dividing the (loss) / profit after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options. In calculating the weighted average number of Ordinary shares during the period in which the reverse acquisition occurs:
The basic earnings per share for each comparative period before the acquisition date shall be calculated by dividing the profit of the legal acquiree in each of those periods by the legal acquiree's historical weighted average number of Ordinary shares outstanding multiplied by the exchange ratio.
| Proforma | Proforma | |
|---|---|---|
| 2016 | 2015 | |
| £ | £ | |
| (Loss) / profit after tax attributable to owners of the parent |
(2,937,307) | 488,186 |
| Weighted average number of shares | ||
| Basic - |
27,566,749 | 19,867,935 |
| Diluted - |
27,566,749 | 20,097,946 |
| Basic (loss)/earnings per share | (10.66p) | 2.46p |
| Diluted (loss)/earnings per share | (10.66p) | 2.43p |
| Adjusted earnings per share before deemed cost of listing |
||
| (Loss)/profit after tax attributable to owners of the parent |
(2,937,307) | 488,186 |
| Deemed cost of listing | 3,104,527 | - |
| Adjusted earnings | 167,220 | 488,186 |
| Weighted average number of shares | ||
| Basic - |
27,566,749 | 19,867,935 |
| Diluted - |
30,918,874 | 20,097,946 |
| Adjusted basic earnings per share | 0.61p | 2.46p |
| Adjusted diluted earnings per share | 0.54p | 2.43p |
Potential Ordinary shares are antidilutive when their conversion to Ordinary shares would increase earnings per share or decrease loss per share from continuing operations.
| Group | Goodwill |
|---|---|
| Cost | £ |
| At 1 April 2014 and 1 April 2015 (proforma) | - |
| Additions | 317,688 |
| At 31 March 2016 | 317,688 |
| Accumulated impairment losses | |
| At 1 April 2014 and 1 April 2015 (proforma) | - |
| Impairment losses for the year | - |
| At 31 March 2016 | - |
| Net book value | |
| At 1 April 2014 | - |
| At 31 March 2015 | - |
| At 31 March 2016 | 317,688 |
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination.
| Group | Computer equipment £ |
|---|---|
| Cost | |
| At 1 April 2014 and 1 April 2015 (proforma) | - |
| Additions | 16,344 |
| Acquired on purchase of subsidiary | 3,767 |
| At 31 March 2016 | 20,111 |
| Accumulated depreciation At 1 April 2014 and 1 April 2015 (proforma) |
- |
| Charge for the year | 5,457 |
| At 31 March 2016 | 5,457 |
| Net book value At 1 April 2014 |
- |
| At 31 March 2015 |
- |
| At 31 March 2016 | 14,654 |
| Company | Investments in subsidiaries £ |
|---|---|
| Cost | |
| At 1 April 2014 and 1 April 2015 | - |
| Additions | 9,602,280 |
| At 31 March 2016 | 9,602,280 |
| Accumulated impairment losses At 1 April 2014 and 1 April 2015 Impairment losses for the year At 31 March 2016 |
- - - |
| Net book value | |
| At 1 April 2014 | - |
| At 31 March 2015 | - |
| At 31 March 2016 | 9,602,280 |
Details of the Company's subsidiaries at 31 March 2016 are as follows:
| Place of incorporation and operation |
Principal activity |
Proportion of ownership and voting rights held |
|
|---|---|---|---|
| Altair Consultancy and Advisory Services Limited |
England and Wales |
Specialist housing consultancy |
100% |
| Murja Limited | England and Wales |
Treasury management consultancy |
100% |
The accounting reference date of each of the subsidiaries is co-terminus with that of the Company.
On 20 August 2015, General Industries plc became the legal parent of Altair Consultancy and Advisory Services Limited by way of reverse acquisition. The cost of the acquisition is deemed to have been incurred by Altair Consultancy and Advisory Services Limited, the legal subsidiary, in the form of equity instruments issued to the owners of the legal parent.
The fair value of the shares in Altair Consultancy and Advisory Services Limited has been determined from the quoted price of General Industries plc as at the acquisition date. The value of the consideration shares was £7,950,000. The fair value of the notional number of equity instruments that the legal subsidiary would have had to have issued to the legal parent to give the owners of the legal parent the same percentage ownership as in the combined entity is £3,862,779. The difference between the notional consideration paid by General Industries plc for Altair Consultancy and Advisory Services Limited and the General Industries plc net assets acquired of £758,252 has been charged to the Consolidated Statement of Comprehensive Income as a deemed cost of listing amounting to £3,104,527.
Details of net assets acquired and the deemed cost of listing are as follows:
| £ | |
|---|---|
| Notional consideration | 3,862,779 |
| Less net assets acquired: | |
| Trade and other receivables - |
7,562 |
| Cash and cash equivalents - |
795,690 |
| Trade and other payables - |
(45,000) |
| 758,252 | |
| Deemed cost of listing | 3,104,527 |
Acquisition-related costs capitalised as part of the investment total £154,086.
On 12 December 2015, the Group acquired 100% of the issued share capital of Murja Limited, thereby obtaining control. The principal activity of Murja Limited is that of treasury management services. Murja Limited was acquired so as to broaden the range of services the Group can offer.
Details of net assets acquired and the goodwill:
| £ | |
|---|---|
| Consideration: | |
| Cash | 868,032 |
| Ordinary shares issued (see note 18) | 331,968 |
| 1,200,000 | |
| Less net assets acquired: | |
| Property, plant and equipment | 3,767 |
| Investments | 207,834 |
| Trade and other receivables | 52,502 |
| Cash and cash equivalents | 785,262 |
| Trade and other payables | (167,053) |
| 882,312 | |
| Goodwill | 317,688 |
Acquisition-related costs capitalised as part of the investment total £31,664.
Included within the Consolidated statement of comprehensive income are the following amounts in relation to Murja Limited:
| £ | |
|---|---|
| Revenue | 117,949 |
| Loss | 31,431 |
| Proforma | ||||
|---|---|---|---|---|
| Group | Group | Company | Company | |
| 2016 | 2015 | 2016 | 2015 | |
| £ | £ | £ | £ | |
| Trade receivables | 995,660 | 919,605 | - | - |
| Other receivables | 17,081 | 9,100 | 1,770 | - |
| Prepayments and accrued | ||||
| income | 146,095 | 93,813 | - | 18,000 |
| 1,158,836 | 1,022,518 | 1,770 | 18,000 |
The directors consider that the carrying amount of trade receivables approximates to their fair value. Trade and other receivables are not considered impaired.
The aged profile of trade receivables not impaired is as follows:
| Total | <30 days | 30-60 days | 66-90 days | >90 days | |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| 31 March 2016 | 995,660 | 687,310 | 236,379 | 50,149 | 21,822 |
| 31 March 2015 | 919,605 | 516,936 | 368,931 | 7,862 | 25,876 |
The following are the major deferred tax assets recognised and the movements thereon during the current and prior reporting period.
| Decelerated capital allowances |
Other timing differences |
Total | |
|---|---|---|---|
| £ | £ | £ | |
| At 1 April 2014 (proforma) | - | - | - |
| Credit to profit or loss (proforma) |
3,045 | 16,027 | 19,072 |
| At 1 April 2015 (proforma) | 3,045 | 16,027 | 19,072 |
| Charge to profit or loss | (1,741) | (5,660) | (7,401) |
| At 31 March 2016 | 1,304 | 10,367 | 11,671 |
Deferred tax assets are recognised to the extent that it is probable that the future tax profits will allow the deferred tax assets to be recovered.
| Proforma | ||||
|---|---|---|---|---|
| Group | Group | Company | Company | |
| 2016 | 2015 | 2016 | 2015 | |
| £ | £ | £ | £ | |
| Trade payables | 220,307 | 265,407 | 19,621 | - |
| Other payables | 61,067 | 21,575 | - | - |
| Amounts owed to Group | ||||
| undertakings | - | - | 183,409 | - |
| Taxes and social security costs | 354,117 | 254,030 | - | - |
| Accruals and deferred income | 641,010 | 572,496 | 15,500 | 2,835 |
| 1,276,501 | 1,113,508 | 218,530 | 2,835 |
The directors consider that the carrying amount of trade payables approximates to their fair value.
| 2016 | 2015 | |
|---|---|---|
| £ | £ | |
| Allotted, called up and fully paid | ||
| 32,608,688 (2015: 10,300,000) Ordinary shares of 5p each | 1,630,434 | 515,000 |
The Company has one class Ordinary share which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
A reconciliation of share capital, share premium account and merger reserve is set out below:
| Number of Ordinary shares |
Amount called up and fully paid |
Share premium |
Merger reserve |
|
|---|---|---|---|---|
| £ | £ | £ | ||
| Ordinary shares of £1 each issued at | ||||
| par on incorporation | 50,000 | 50,000 | - | - |
| Subdivided into Ordinary shares of | ||||
| 5p each on 29 May 2014 | 950,000 | - | - | - |
| Issued at £30,000 per share on 29 | ||||
| May 2014 | 1 | - | 30,000 | - |
| Issued at 10p per share on 28 August 2014 |
9,299,999 | 465,000 | 465,000 | - |
| Transaction costs of issue of shares | - | - | (30,040) | - |
| At 1 April 2015 | 10,300,000 | 515,000 | 464,960 | - |
| Issued at 37.5p per share on 19 | ||||
| August 2015 to acquire Altair Issued at 46.5p per share on 15 |
21,200,000 | 1,060,000 | - | 6,890,000 |
| December 2015 to acquire Murja |
120,000 | 6,000 | - | 49,800 |
| Issued at 43.65p per share on 11 | ||||
| March 2016 to acquire Murja | 632,688 | 31,634 | - | 244,534 |
| Issued at 43.65p per share on 11 | ||||
| March 2016 | 150,000 | 7,500 | 57,975 | - |
| Issued at 10p per share on 11 March | ||||
| 2016 upon exercise of options | 206,000 | 10,300 | 10,300 | - |
| At 31 March 2016 | 32,608,688 | 1,630,434 | 533,235 | 7,184,334 |
The share premium account represents the amount received on the issue of Ordinary shares by the Company in excess of their nominal value and is non-distributable.
The merger relief reserve arose on the Company's acquisition of Altair and Murja. There is no legal share premium on the shares issued as consideration as section 612 of the Companies Act 2006, which deals with merger relief, applies in respect of the acquisition.
The reverse acquisition reserve arises due to the elimination of the Company's investment in Altair. Since the shareholders of Altair became the majority shareholders of the enlarged group, the acquisition is accounted for as though the legal acquiree is the accounting acquirer.
| Proforma | ||
|---|---|---|
| 2016 | 2015 | |
| £ | £ | |
| Amounts recognised as distributions to equity holders |
||
| Interim dividend paid prior to Group reconstruction | - | 134,370 |
| Interim dividend paid of 0.22p per share | 69,300 | - |
| 69,300 | 134,370 | |
| Proposed final dividend of 0.44p per share | 143,478 | - |
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend is payable on 18 August 2016 to shareholders on the Register of Members on 5 August 2016. The total recommended dividend to be paid is 0.44p per share. The payment of this dividend will not have any tax consequences for the Group.
The Company operates various share option schemes. The total expense recognised in the year to 31 March 2016 arising from share-based payment transactions is 254,067.
On 22 August 2014, the Company granted 1,030,000 share options to certain directors at an exercise price of 10p per share. The options are exercisable between the date granted and 22 August 2019.
On 10 November 2014, the Company granted 300,000 to a further director at an exercise price of 26p per share. The options are exercisable between the date granted and 22 August 2019.
| Weighted | ||
|---|---|---|
| Number of | average | |
| shares | exercise price | |
| Outstanding at 1 April 2015 | 1,330,000 | 13.6p |
| Options granted during the year | - | - |
| Forfeited during the year | - | - |
| Exercised during the year | 206,000 | 10p |
| Expired during the year | - | - |
| Outstanding at 31 March 2016 | 1,124,000 | 12.06p |
| Exercisable at 31 March 2016 | 1,124,000 | 12.06p |
At the date the options above were exercised, the share price was 47.5p. The exercise price of the options outstanding at 31 March 2016 ranges between 10p and 26p. The weighted average remaining contractual life of the options at 31 March 2016 is 3.4 years.
On 28 November 2014, Altair granted 32 EMI share options to certain employees and directors at an exercise price of £1 per share. 16 of the options were exercisable between 1 April 2016 and 31 March 2023, with the other 16 options exercisable between 1 April 2017 and 31 March 2024.
On 31 March 2015, Altair granted 49 EMI share options to certain employees and directors at an exercise price of £1 per share. The options were exercisable between 1 April 2018 and 31 March 2025.
As part of the reverse acquisition in August 2015, the above options were surrendered and replaced by options granted by the Company. The number of options granted by the Company as replacements was based on the original number of Altair options multiplied by the exchange ratio established in the acquisition. In accordance with IFRS 2, the replacement options are accounted for as modifications. The modification did not result in any increase in the original fair value of the options granted.
The replacement options have an exercise price of 5p per share. Of the total 1,713,772 replacement options granted, 338,523 are exercisable between 1 April 2016 and 31 March 2025, 338,523 are exercisable between 1 April 2017 and 31 March 2025 and 1,036,726 are exercisable between 1 April 2018 and 31 March 2025.
| Weighted | ||
|---|---|---|
| Number of | average | |
| shares | exercise price | |
| Outstanding at 1 April 2015 (equivalent to 81 Altair options) |
1,713,722 | 5p |
| Options granted during the year | - | - |
| Forfeited during the year | - | - |
| Exercised during the year | - | - |
| Expired during the year | - | - |
| Outstanding at 31 March 2016 | 1,713,722 | 5p |
| Exercisable at 31 March 2016 | - | - |
The exercise price of the options outstanding at 31 March 2016 is 5p. The weighted average remaining contractual life of the options at 31 March 2016 is 9 years.
The weighted average fair value of the share options at modification date was £0.162. The fair value of the options was calculated using the Black-Scholes valuation model. The key inputs into the model were as follows:
| Weighted average share price | 37.5p |
|---|---|
| Expected volatility | 1% |
| Risk free rate | 0.8% |
| Option life | 9.6 years |
On 20 August 2015, the Company granted 1,360,000 unapproved share options to certain employees and directors of the Group at an exercise price of 29.5p. The options are exercisable between the date granted and 22 August 2020.
| Weighted | ||
|---|---|---|
| Number of |
average | |
| shares | exercise price | |
| Outstanding at 1 April 2015 | - | - |
| Options granted during the year | 1,360,000 | 29.5p |
| Forfeited during the year | - | - |
| Exercised during the year | - | - |
| Expired during the year | - | - |
| Outstanding at 31 March 2016 | 1,360,000 | 29.5p |
| Exercisable at 31 March 2016 | 1,360,000 | 29.5p |
The exercise price of the options outstanding at 31 March 2016 is 29.5p.
The weighted average remaining contractual life of the options at 31 March 2016 is 4.4 years.
The weighted average fair value of the share options at grant date was £0.092. The fair value of the options was calculated using the Black-Scholes valuation model. The key inputs into the model were as follows:
| Weighted average share price | 37.5p |
|---|---|
| Expected volatility | 1% |
| Risk free rate | 0.8% |
| Option life | 5 years |
On 31 March 2016, the Company granted 103,093 unapproved share options to a certain director of the Group at an exercise price of 5p. The options are exercisable between the 31 March 2018 and 31 March 2021.
| Weighted | ||
|---|---|---|
| Number of | average | |
| shares | exercise price | |
| Outstanding at 1 April 2015 | - | - |
| Options granted during the year | 103,093 | 5p |
| Forfeited during the year | - | - |
| Exercised during the year | - | - |
| Expired during the year | - | - |
| Outstanding at 31 March 2016 | 103,093 | 5p |
| Exercisable at 31 March 2016 | - | - |
The exercise price of the options outstanding at 31 March 2016 is 5p.
The weighted average remaining contractual life of the options at 31 March 2016 is 5 years.
The weighted average fair value of the share options at grant date was £0.417. The fair value of the options was calculated using the Black-Scholes valuation model. The key inputs into the model were as follows:
| Weighted average share price | 37.5p |
|---|---|
| Expected volatility | 21.5% |
| Risk free rate | 0.88% |
| Option life | 5 years |
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
| 2016 £ |
2015 £ |
|
|---|---|---|
| Within one year | 39,400 | 36,400 |
| In the second to fifth years inclusive | 91,000 | 127,400 |
| 130,400 | 163,800 |
Operating lease payments represent rentals payable by the Group for certain of its office properties.
Balances and transactions between the Group and other related parties are disclosed below:
The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
| 2016 | 2015 | |
|---|---|---|
| £ | £ | |
| Short-term employee benefits | 586,283 | 500,000 |
| Share-based payments | 212,116 | 8,940 |
| Post-retirement benefits | 22,934 | 21,220 |
| 821,333 | 530,160 |
Dividends totalling £49,709 were paid in the year in respect of Ordinary shares held by the Company's directors.
During the year the Group charged £24,060 to DMJ Consultancy Services Limited for administrative services, a company in which Derek Joseph serves as a director. At 31 March 2016, the balance owed to the Group by DMJ Consulting Limited was £14,436.
During the year the Group was charged £12,410 by Jeffrey Zitron for consultancy services.
Defined contribution schemes
| 2016 | 2015 | |
|---|---|---|
| £ | £ | |
| Contributions payable by the Group for the year | 130,400 | 163,800 |
In the opinion of the Directors there is no single ultimate controlling party.
The Group's activities are exposed to a variety of market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.
Credit risk is the risk of financial loss to the Group resulting from counterparties failing to discharge their obligations to the Group. The Group's principal financial assets are trade and other receivables and cash and cash equivalents.
The Group considers its credit risk to be low. Of the total trade receivables at the 2016 year end, £68,808 (2015: £95,841) is due from one customer. There are no other customers that represent more than 7% of the total balance of trade receivables. The maximum exposure to credit risk is equal to the carrying value of these instruments.
Liquidity risk is the risk of the Group being unable to meet its liabilities as they fall due. The Group manages liquidity risk by maintaining sufficient cash reserves and holding banking facilities, and by continuously monitoring forecast and actual cash flows. In addition, the Group is a cash generative business with income being received regularly over the course of the year. The Group held cash reserves of £2,552,642 at the year-end.
Foreign exchange risk is the risk of loss due to adverse movements in the exchange rates affecting the Group's profits and cash flows. Only a very small number of clients are invoiced in Euros and the foreign exchange exposure is not considered a significant risk. The Group's principal financial assets are cash and cash equivalents and trade and other receivables, which are almost exclusively denominated in Pounds Sterling.
The Group does not undertake any hedging activity in this area. The main element in interest rate risk involves sterling deposits which are placed on deposit.
Capital requirements of the Group are governed by internal requirements. Internal working capital requirements are low and the only need to retain capital is for remuneration.
In line with the remuneration policy, the Remuneration committee agreed that 500,000 share options would be granted to key members of staff in recognition of their services in 2015-16.
There were no capital commitments at 31 March 2016.
There were no contingent liabilities at 31 March 2016.
Notice is hereby given that the Annual General Meeting of General Industries plc will be held at Tempus Wharf 29A, Bermondsey Wall West, London, SE16 4SA on 21 July 2016 at 12:noon, for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions numbered 1 to 9, 11 and 13 will be proposed as ordinary resolutions and resolutions 10 and 12 below will be proposed as special resolutions:
provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require relevant securities to be allotted and the directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the directors to allot relevant securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.
The power granted by this resolution will expire on the conclusion of the Company's next annual general meeting (unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if section 561(1) of the CA 2006 did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities.
13.3 the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of:
(b) the value of an Ordinary Share calculated on the basis of the higher of the price quoted for:
any number of Ordinary Shares on the Official List.
13.4 The authority conferred by this resolution shall expire on the conclusion of the Company's next annual general meeting save that the Company may, before the expiry of the authority granted by this resolution, enter into a contract to purchase Ordinary Shares which will or may be executed wholly or partly after the expiry of such authority.
Tempus Wharf Dr Fiona May Underwood 29a Bermondsey Wall West Company Secretary London SE16 4SA 24 June 2016
Registered office: By order of the board
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