TIDMSWG
RNS Number : 9078P
Shearwater Group PLC
06 September 2017
6 September 2017
SHEARWATER GROUP PLC
("Shearwater" or the "Company" and, together with its
subsidiaries, the "Group")
Final Results for the year ended 31 March 2017
Shearwater Group plc (AIM: SWG), the digital resilience group,
is pleased to announce its audited results for the year ended 31
March 2017, a period prior to the acquisitions of SecurEnvoy and
Newable Consulting.
Highlights (including activities after the financial year
end)
-- Established Shearwater's senior leadership team and launched
the Group's digital resilience strategy
-- Raised GBP16.5 million in gross proceeds to be used for
acquisitions and organic growth initiatives
-- Successfully completed the first two acquisitions under the
Group's new strategy
o In May 2017, acquired SecurEnvoy for GBP20 million
o In July 2017, acquired Newable Consulting for GBP0.6 million,
subsequently rebranded Xcina Consulting
-- Established the Group's new information security and
assurance solutions business, Xcina
Commenting on the results, David Williams, Chairman of
Shearwater Group said: "2017 and the start of the new financial
year have been transformational for the Company. Following our
interims in December 2016 we have established the foundations which
have supported the launch of our new digital resilience strategy
and we are now ideally positioned to realise the benefits of the
considerable market opportunities we are seeing as a business.
"We are delighted to have completed the first two acquisitions
of what we expect to be many under our new strategy and these have
now fully transitioned across to the Group. As we move through the
new financial year, we continue to focus on securing new
acquisition and investment opportunities from our pipeline
alongside delivering the ambitious growth plans we have for our
first two portfolio companies."
The Annual Report and Financial Statements for the year ended 31
March 2017 and the Notice of Annual General Meeting will be posted
to shareholders shortly and will be available immediately on the
Company's website www.theshearwatergroup.co.uk.
The Annual General Meeting will be held at 11.00 a.m. on 29
September 2017 at the offices of the Company's solicitors, Mayer
Brown International LLP, 201 Bishopsgate, London EC2M 3AF.
Contacts:
Shearwater Group plc www.theshearwatergroup.co.uk
David Williams +44 (0) 797 014 8016
Michael Stevens +44 (0) 780 171 2582
WH Ireland Limited - Nominated www.whirelandcb.com
Adviser & Broker
Mike Coe, Ed Allsopp +44 (0) 117 945 3470
Powerscourt - Financial shearwater@powerscourt-group.com
PR
Ben Griffiths, Andy Jones +44 (0) 20 7250 1446
business review of activities
Overview
The financial year ended 31 March 2017 and the start of the new
financial year have been transformational for Shearwater Group plc
(the "Company"), as the Board has transitioned the Company away
from natural resources to the information security, cyber and cyber
security sectors. Through the implementation of this new strategy,
the Company aims to build a UK based group focused on the provision
of advanced digital resilience solutions for its customers, which
in turn the Board believes will deliver enhanced returns to the
Company's shareholders.
Since the beginning of the financial year ended 31 March 2017,
considerable progress has been made, including the appointment of a
new senior leadership team with substantial experience operating
within the high technology, cyber, information security, digital
and communication sectors, and the launch of the Company's new
digital resilience strategy. In May 2017, the Company completed its
first transaction as Shearwater Group plc through the acquisition
of SecurEnvoy Limited ("SecurEnvoy"), which established the
Company's presence within the large and rapidly growing identity
and access management sector. In July 2017, the Company completed
its second transaction through the acquisition of Newable
Consulting. Rebranded Xcina Consulting, this now forms a core
component of the Company's newly launched information security and
assurance solutions business, Xcina.
Market opportunity
As digitalisation and the interconnectivity of enterprises,
people and devices continues apace, organisations are rethinking
traditional approaches to cyber security, which are aimed at
meeting minimum levels of compliance to ways in which cyber
security can be embedded within operational processes to protect
core data and information assets, while still enabling businesses
to compete effectively in an increasingly globalised and
interconnected world. Developing this digital resilience will be
key for all organisations and presents a significant market
opportunity for those providers of digital resilience solutions
which maintain trust between users, provide assurance around the
protection of critical information assets, and support operational
effectiveness.
Business strategy
The Company is focused on building a UK based group providing
digital resilience solutions and services. Through the application
of its "buy, focus, grow" strategy, the Company aims to identify
investment and acquisition opportunities where the target company
has a leading product, solution, service or consulting capability
whose potential can be unlocked through active management and
capital investment.
In line with this approach, in May 2017, the Company completed
its first acquisition under its new digital resilience strategy, by
acquiring SecurEnvoy, a leading provider of multifactor
authentication software solutions. In July 2017, the Company made
its second acquisition by acquiring the business and assets of
Newable Consulting, a specialist risk, technology, governance,
cyber security assurance and advisory consultancy. As innovative,
UK based businesses, both companies are led by exceptional
operators and are prime examples of the type of organisations which
the Board believes will benefit from the Company's clear strategy
for growth, access to capital and to industry expertise through the
Company's experienced leadership team.
The Company also holds a number of legacy mining assets, which
it is looking to divest of. These include two gold projects, which
are held through a joint arrangement with Ormonde Mining plc
("Ormonde") (AIM: ORM), a 20% carried interest in the Morille
tungsten project and 715,000 ordinary shares (0.55%) held by the
Company in ASX listed Plymouth Materials Limited (ASX: PLH)
("Plymouth").
Business progress
During the financial year ended 31 March 2017, the Company's key
transformation milestones have included:
-- In October 2016, the Company established its new senior
leadership team and raised a total of GBP1.5 million of gross
proceeds before expenses through two placings in September 2016 and
November 2016.
-- In January 2017, the Company implemented its new operating
structure and established its operational management team, raised a
further GBP6.0 million of gross proceeds before expenses through a
further placing and launched its new digital resilience strategy,
which included the Company's change of name to Shearwater Group
plc.
Following the end of the financial year, the Company's key
transformation milestones have been:
-- In April 2017, the Company announced it had secured its first
transformational acquisition under its new strategy by
conditionally agreeing to acquire SecurEnvoy for GBP20 million.
-- In May 2017, the Company raised GBP9.0 million of gross
proceeds before expenses to support the acquisition of SecurEnvoy
and provide further growth capital, and also received shareholder
approval to complete the acquisition of SecurEnvoy.
-- In July 2017, the Company acquired the business and assets of
Newable Consulting for GBP0.6 million, which was subsequently
rebranded Xcina Consulting. The acquisition has provided a core
component of Xcina, the Company's newly launched information
security and assurance solutions business.
Key financials
For the twelve months to 31 March 2017 (and prior to the
acquisition of SecurEnvoy and launch of Xcina), the Company
reported a loss of GBP1,584k compared to a loss of GBP243k for the
same period in 2016.
After adjusting for exceptional items of GBP429k associated with
the Company's growth strategy, depreciation and amortisation of
GBP1k and share based payments of GBP79k, the Company generated a
loss before interest, tax, depreciation and amortisation for the
period ("Underlying EBITDA") of GBP1,076k (2016: GBP179k). The
significant driver of this increase is higher administrative costs,
reflecting the establishment of the new Board, operational team and
launch of the Company's new digital resilience strategy.
Cash management and cost control remain key priorities for the
Company and the Board believes it now has an appropriate platform
which will support the accelerated growth of the business over the
coming years without any material increases in central
administrative costs.
Key performance indicators (KPIs)
Revenue, costs and profit before tax, before one-off items,
share based payment charges, finance charges, depreciation and
amortisation ("Underlying EBITDA"): The Board and management
monitor actual against budgeted revenue / costs / Underlying EBITDA
on a monthly basis.
Finance: Control of bank and cash balances is a priority for the
Company and these are budgeted and monitored closely to ensure that
the Company maintains adequate liquidity to meet financial
commitments as they arise.
Qualified person
As the Company continues to hold its legacy mining assets
pending their disposal, Sean Finlay, Professional Geologist,
Chartered Engineer, Consultant to the Company, and a qualified
person as defined in the Guidance Note for Mining, Oil and Gas
Companies, June 2009, of the London Stock Exchange, has reviewed
and approved the technical mining information contained in this
report.
Summary and outlook
As a result of the new transformation strategy, the Company now
has the ideal foundations in place from which to drive further
growth across the business. The Board will continue to identify
acquisition targets which have a leading product, solution, service
or consulting capability whose full potential can be unlocked
through active management and capital investment, and while there
can be no guarantee that all of the acquisition targets identified
will come to fruition, the Company's current pipeline of organic
and inorganic growth opportunities is considerable and would
provide a broad mix of capabilities across complementary end user
markets.
This next year will see the Company focus on securing these
growth opportunities as it progresses its strategy towards
delivering on its objective of becoming a leading UK based group
providing digital resilience solutions.
On behalf of the Board, I would like to thank our employees, our
existing shareholders and our new shareholders for their continued
support as we enter what is expected to be another incredibly
exciting year in the Company's development.
David Williams
Chairman
5 September 2017
STATEMENT OF COMPREHENSIVE INCOME year ended 31 march 2017
2017 2016
GBP'000 GBP'000
Impairment charge - (64)
Administrative expenses
-------------------------------------------- -------- --------
Exceptional items (429) -
Share based payments (79) -
Other administrative expenses (1,077) (179)
-------------------------------------------- -------- --------
Total administrative expenses (1,585) (179)
-------- --------
Operating loss (1,585) (243)
Finance Income 1 -
-------- --------
Loss for the year before taxation (1,584) (243)
Taxation - -
-------- --------
Loss for the year after taxation (1,584) (243)
-------- --------
Loss after taxation (1,584) (243)
Other comprehensive income:
Items that may be reclassified
to profit or loss:
Change in fair value of available-for-sale
financial assets 76 27
-------- --------
Total comprehensive loss for
the year (1,508) (216)
-------- --------
Loss per share expressed in
pence per share
Basic and Diluted 2 (0.54p) (0.14p)
-------- --------
statement of financial position as at 31 march 2017
2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 935 926
Investment in subsidiary - -
Property, plant and equipment 1 -
Investments 118 42
--------- ---------
Total non-current assets 1,054 968
--------- ---------
Current assets
Receivables 86 11
Cash and cash equivalents 7,073 45
--------- ---------
Total current assets 7,159 56
--------- ---------
Total assets 8,213 1,024
--------- ---------
Liabilities
Current liabilities
Convertible Loan - 50
Trade and other payables 737 67
--------- ---------
Total current liabilities 737 117
--------- ---------
Total liabilities 737 117
--------- ---------
Net assets 7,476 907
--------- ---------
Capital and reserves attributable
to the equity holders of the
company
Share capital 5,353 1,719
Share premium 15,957 11,593
Available for sale reserve 103 27
Capital reserve 39 -
Retained deficit (13,976) (12,432)
--------- ---------
Total Equity 7,476 907
--------- ---------
statement of Changes in equity year ended 31 march 2017
Available Capital Shares
Share Share for sale reserve to be Retained Total
capital premium reserve issued deficit Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 1,461 11,596 - - 140 (12,189) 1,008
Total loss for
the year - - - - - (243) (243)
Other
comprehensive
income
Fair value
adjustment
on available
for
sale investment - - 27 - - - 27
-------- -------- --------- ---------------- -------- -------------- ---------------
Total
comprehensive
loss for the
year - - 27 - - (243) (216)
-------- -------- --------- ---------------- -------- -------------- ---------------
Issue of shares
net of issue
costs 118 (3) - - - - 115
Shares to be
issued 140 - - - (140) - -
At 31 March 2016 1,719 11,593 27 - - (12,432) 907
-------- -------- --------- ---------------- -------- -------------- ---------------
Total loss for
the year - - - - - (1,584) (1,584)
Other
comprehensive
income
Fair value
adjustment
on available
for sale
investment - - 76 - - - 76
-------- -------- --------- ---------------- -------- -------------- ---------------
Total
comprehensive
loss for the
year - - 76 - - (1,584) (1,508)
-------- -------- --------- ---------------- -------- -------------- ---------------
Share based
payments - - - 39 - 40 79
Issue of shares
net of issue
costs 3,634 4,364 - - - - 7,998
At 31 March
2017 5,353 15,957 103 39 - (13,976) 7,476
-------- -------- --------- ---------------- -------- -------------- ---------------
STATEMENT of cash flows year ended 31 march 2017
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year before tax (1,584) (243)
Adjustments for:
Impairment charge - 64
Depreciation of fixed assets 1 -
Finance income (1) -
Share based payments 79 -
Cash flow from operating activities
before changes in working capital (1,505) (179)
---------- --------------------
(Increase)/decrease in other receivables (75) 2
Increase/(decrease) in trade and
other payables 670 (22)
---------- --------------------
Net cash flow used in operating
activities (910) (199)
---------- --------------------
Investing activities (2)
Purchase of fixed assets -
Interest income 1 -
(9) (27)
Ormonde joint arrangement payments (27) -
---------- --------------------
Net cash flow used in investing
activities (10) (27)
---------- --------------------
Financing activities
Proceeds from issue of share capital 8,084 118
Expenses paid in connection with
share issues (236) (3)
Proceeds from convertible loan 100 50
---------- --------------------
Net cash flow from financing activities 7,948 165
---------- --------------------
Net increase (decrease) in cash
and cash equivalents 7,028 (61)
---------- --------------------
Cash and cash equivalents at the
beginning of the year 45 106
Cash and cash equivalents at the
end of the year 7,073 45
---------- --------------------
NOTES TO THE FINAnCIAL STATEMENTS for the year ended 31 march
2017
1. Basis of preparation
The financial statements are presented in Great Britain Pounds
Sterling, which is also the Company's functional currency. All
values are rounded to the nearest thousand Pounds (GBP'000), unless
otherwise stated.
These financial statements for the year ended 31 March 2017 have
been prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations
as adopted by the European Union (collectively EU IFRS). It is
required of Group management to exercise judgement in applying the
Group's accounting policies. The areas where significant judgments
and estimates have been made in preparing the financial statements
and their effect are disclosed in note 2 of the Annual Report.
The Financial statements have been prepared on the going concern
basis, following the Directors review of the Company's operations,
current financial position and cash flow forecasts and future
financing requirements and based on the Company's new strategic
expansion plan and recent successful fundraises to support this
strategy. The Directors are satisfied that sufficient cash
resources are available to meet the financial commitments as they
arise and for at least twelve months from the date of signing the
financial statements.
The financial information for the year ended 31 March 2017 and
the year ended 31 March 2016 does not constitute the company's
statutory accounts for those years.
The statutory accounts for the year will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. The auditors' reports on those accounts was unqualified,
did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
2. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to the ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted loss per share, the weighted average number of
shares in issue is adjusted to assume conversion of all the
dilutive potential ordinary shares. The potential dilutive shares
are anti-dilutive in 2016 and 2017 as the Company is loss
making.
At the reporting date, there were 3,378,882 (2016: 3,950,000)
potentially dilutive ordinary shares. Dilutive potential ordinary
shares relate to share options.
2017 2016
GBP'000 GBP'000
Net loss attributable to equity
holders of the parent:
From total operations (1,584) (243)
----------------------- --------
2017 2016
Number Number
Weighted average number of
shares:
Weighted average number of
shares 291,850,286 170,580,011
------------ ------------
3. Events after the reporting period
On 20 April 2017, the Company announced the proposed acquisition
of SecurEnvoy for GBP20 million, proposed placing of up to
200,000,000 new Ordinary Shares at GBP0.04 per share, proposed open
offer of up to 25,488,108 new Ordinary Shares at GBP0.04 per share,
and admission of the Company's enlarged share capital to trading on
AIM. Following the Company's General Meeting which took place on 8
May 2017, the Company's shareholders approved the acquisition of
SecurEnvoy and the requisite placing and open offer, and the
acquisition of SecurEnvoy was completed on 9 May 2017. The GBP20
million of consideration was satisfied through the payment of GBP10
million in cash and GBP10 million through the issuance of
200,000,000 new Ordinary Shares at GBP0.05 per share. The
acquisition of SecurEnvoy established the Company's presence within
the large and rapidly growing identity and access management
sector.
Certain Directors were issued new Ordinary Shares pursuant to
the placing and open offer approved by Shareholders on 8 May 2017.
David Williams, Chairman subscribed for 12,500,000 new Ordinary
Shares in the placing. In addition, Michael Stevens, Chief
Executive Officer and Non-Executive Directors Robin Southwell,
Stephen Ball and Giles Willits, each subscribed for 625,000 new
Ordinary Shares in the placing. Christopher Eadie (via his wife),
Executive Director, applied for 625,000 new Ordinary Shares in the
open offer.
The new Ordinary Shares were issued to those Directors at the
issue price of GBP0.04 per share.
On 26 July 2017, the Company announced the acquisition of the
business and assets of Newable Consulting for an initial
consideration of GBP600,000. As part of the transaction, Newable
Consulting agreed to subscribe for 3,620,806 new Ordinary Shares at
GBP0.04143 per share. Subject to the future financial performance
of Newable Consulting, a further payment of up to GBP100,000 may be
made to Newable Consulting, which will be settled through the
issuance of new Ordinary Shares.
At the date of authorisation of these financial statements, a
detailed assessment of the fair values of the identifiable net
assets for both SecurEnvoy and Newable Consulting have not been
completed, and therefore are not included within this note.
Post year end the Company incorporated four new companies; Xcina
Limited, Xcina Consulting Limited, SecurEnvoy GmbH and SecurEnvoy,
Inc. Xcina Limited is a wholly owned subsidiary of Shearwater Subco
Limited and is an intermediary holding company of Xcina Consulting
Limited. SecurEnvoy GmbH and SecurEnvoy, Inc. are overseas trading
subsidiaries of SecurEnvoy Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDCXDGBGRU
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