TIDMSPC
RNS Number : 5594D
U.K. SPAC PLC
30 June 2021
30 June 2021
U.K. SPAC Plc
("UK SPAC" or "Company")
Final Results for the Period ended 31 March 2021
The Directors of U.K. SPAC Plc announce the Company's final
results for the period ended 31 March 2021 ("Final Results").
The Annual Report and Accounts for the period ended 31 March
2021 will shortly be posted to shareholders and uploaded to the
Company's website, www.ukspacplc.com.
For further information, please contact:
U.K. SPAC Plc 07500 558 235
Peter Jay
Cairn Financial Advisers
LLP 020 7213 0880
Jo Turner / Sandy Jamieson
Peterhouse Capital Limited 020 7469 0930
Lucy Williams / Duncan Vasey
CHAIRMAN'S REPORT
The Board of UK SPAC Plc ("the Company") presents its report on
the accounts for the fifteen month period ended 31 March 2021.
Key Features
-- The Company's two trading subsidiaries were disposed of and it became a cash shell
-- The Group produced a loss before tax and after disposal of subsidiaries during the period of GBP6,867,732 (2019:
GBP840,740 - profit).
-- Turnover (discontinued operations) : GBP12.5m (2019: GBP21m)
-- Net cash position : GBP2,858,775 (2019: GBP802,885)
-- Gross Margin (discontinued operations) : 12.11% (2019: 10.4%)
Financial Performance
The period, which was the most difficult that the Company and
its subsidiaries, (together "the Group") had endured since the
Recession of 2008/9 saw dramatic changes to its trading environment
and to the fortunes of the Group itself.
As explained below, the Company disposed of both of its trading
subsidiaries on 3 March 2021. These financial statements contain
the results of the subsidiaries to the date of their disposal and
of the Company for the entire fifteen-month period.
As expected, the results for the period to 31 March 2021 show a
significant decline in the fortunes of the subsidiaries in the
period with the result that the underlying trading performance of
the Group resulted in revenues of GBP12.5m for the period to
disposal compared to GBP21m for the 12 months to 31 December
2019.
The results then show the loss on disposal of the subsidiaries
together with the costs of disposal.
Simultaneous with the disposal of the subsidiaries, at which
point the Company became an AIM Rule 15 Cash Shell, a placing was
undertaken by the Company's brokers raising gross proceeds of
GBP3.1m. At the year-end, GBP2.86m was retained and this put the
Company in a strong position to pursue its new strategy of
acquiring a new business or asset by way of a reverse
acquisition.
Disposal of subsidiaries
The Group was formed in October 2008 following Group's
acquisition of the shares of Mountfield Building Group Limited
("MBG") and Connaught Access Flooring Limited ("CAF") both of which
were suppliers of specialist construction services. In the same
month, the Group's shares were admitted onto AIM.
Although financial results in 2019 were disappointing, the Board
was optimistic in January 2020 that the Group's performance in the
coming year would show an improvement on that of the previous
year.
That optimism (balanced however by concerns over the impact of
Brexit) ended with the first lock-down in March 2020. For several
weeks construction activity was frozen across the industry and even
after sites were re-opened, activity levels and demand for
construction services remained very low.
There was also the apparent structural change that caused
concern to the Board - large numbers of employees and of employers
found that home working provided a number of advantages, and it
appeared likely that as a result, working practices would not
necessarily revert to previous patterns when the pandemic ends.
The Board acknowledged that the impact of this structural change
was likely to impact adversely on the business of CAF which was
focussed on the supply and installation services of large flooring
areas for banking, finance and professional businesses in the City
of London and Canary Wharf and which had been the more profitable
of the two subsidiaries.
Although the business of MBG was less likely to be affected by
these changes, demand for its services was weakened by the pandemic
and by Brexit.
The Board saw little prospect of the business of either of the
subsidiaries returning to the pre-pandemic levels of profitability
in the short to medium term and was concerned that, at this level
of trading activity, its marginal profitability and limited cash
generation made it increasingly difficult to maintain the cost of
the Company's AIM quotation. The Board therefore made the decision
that it would be in the best interests of its shareholders for the
Company to dispose of its two subsidiaries and that it should
reinvest in another sector or opportunity. It was concluded that
offers made by the chief executives of the two subsidiaries were in
the best interests of shareholders and, in separate transactions
but on the basis that both subsidiaries were sold, the Company was
left free of any liabilities. The Board was advised that the terms
of the sales were fair and reasonable.
The sale of the subsidiaries was completed on 3 March 2021 and
the Board decided that the accounting period should be extended to
31 March 2021 so that it terminated after the Company ceased to own
any trading businesses.
On completion of the two sales, the executive directors (Andy
Collins, who acquired CAF, and Graham Read, who acquired MBG)
resigned from the Board and I was joined by two new non-executive
directors, Nigel Fitzpatrick and Simon Grant-Rennick, both of whom
had extensive experience of corporate transactions and of being
board members of listed companies. The Company also changed its
name to U.K. SPAC Plc.
Outlook for the Group
The sale was accompanied by a placing by its brokers, Peterhouse
Capital Limited, of the Company's ordinary shares to raise GBP3.1m
in order that it may be changed from a trading company into an AIM
Rule 15 cash shell with the intention that the Board, with its new
composition post the sale of the subsidiaries, would look for a
company that could be the subject of a reverse acquisition and
which, it was hoped, would result in the value creation for
shareholders.
Within six months of it having become an AIM Rule 15 cash shell
(on 3 March 2021), the Company must make an acquisition or
acquisitions which constitutes a reverse takeover under AIM Rule 14
failing which its shares would be suspended from trading. Since 3
March, the newly constituted Board has been engaged in seeking an
acquisition that has the prospect of creating value for the
shareholders of the Company.
The Board currently comprises:
Peter Jay - Executive Chairman - in addition to being Chairman,
Peter also manages the Company's relationships with its nomad,
brokers and professional advisers. Peter was formerly a corporate
lawyer and a partner in DAC Beachcroft LLP.
Simon Grant-Rennick - Non-Executive Director - Simon
Grant-Rennick graduated from the Camborne school of mines and has
been actively involved with mining, metal trading and agriculture
for over 35 years . During this time has served on both private
companies and public companies listed in the UK, Australia and
America
Nigel Fitzpatrick - Non-Executive Director - Nigel Fitzpatrick
has had over 20 years' experience as a corporate finance consultant
and brings with him considerable quoted company experience, with
current directorships including Lombard Capital Plc, Path
Investments Plc and Vela Technologies Plc. He has been instrumental
in advising a number of companies on their acquisitions, funding
and subsequent flotations.
On 3 March 2021 Andrew Collins the Group CEO and managing
director of CAF and Graham Read the managing director of MBG
resigned from the Board of the Company.
Group Companies
At 31 March 2021 the Company had no subsidiaries.
Finance
The Company had no finance facilities in place at 31 March 2021,
however it had significant cash resources at its disposal.
Company's strategy
The Company's share capital is traded on AIM, part of the London
Stock Exchange. Having disposed of its trading businesses on 3
March 2021 the Company is currently an AIM Rule 15 cash shell
following a placing of GBP3.1m of its Ordinary Shares that was
undertaken by its brokers, Peterhouse Capital Limited.
As a cash shell the Company is required to make an acquisition
or acquisitions which together constitute a reverse takeover under
AIM Rule 14 within six months of 3 March 2021 or be re-admitted to
trading on AIM as an investing company under the AIM Rules (which
would require the raising of at least GBP6m) failing which the
Company's Ordinary Shares would be suspended from trading on
AIM.
The Directors of U.K. SPAC Plc are currently looking to source a
company, the acquisition of which would constitute a reverse
take-over and also provide the basis for providing value to its
shareholders.
Section 172(1) statement
The Board has a legal responsibility under section 172 of the
Companies Act 2006 to act in the way we consider, in good faith,
would be most likely to promote the Company's success for the
benefit of its members as a whole and to have regard to:
-- the likely consequences of any decision in the long term,
-- the interests of the Company's employees,
-- the need to foster the Company's business relationships with suppliers, customers
and others,
-- the impact of the Company's operations on the community and the environment,
-- the desirability of the Company maintaining a reputation for high standards of
business conduct, and
-- the need to act fairly as between members of the Company.
Information on how the directors have regard to the requirements
of section 172(1) can be found throughout the Strategic Report and
as more specifically detailed below.
As disclosed in the Directors' Report the Company complies the
QCA Corporate Governance Code and based on its principals they
develop and adapt the Company's strategy with the aim of promoting
long-term value to shareholders.
As stated above this statement during the period the strategy of
the Company has been adapted to reflect uncertainties in the
construction sector and wider economy primarily due to the COVID-19
pandemic. The strategy will be reviewed regularly by the Board to
ensure that it is appropriate to the Company and in the best
interests of the key stakeholders.
The Board keeps the Company's shareholders updated about
developments relating to the Company through RNS announcements.
In addition to its shareholders the key stakeholders include
employees, customers, suppliers and local communities in which our
businesses reside.
Whatever sector the Company makes an acquisition in, it will
insist on regular communication with stakeholders, customers,
suppliers and staff, both formal and informal, and will provide
managers with the input they require on a daily basis and allows
them to respond to the feedback in similar manner.
Principal risks
The principal risks and uncertainties that faced the Company and
Group during the period relate to:
COVID-19
COVID-19 brought with it many risks to the Group's business in
terms of working practices and impact on the economy.
The Group worked with its employees, suppliers and customers to
introduce COVID-19 safe working practices on site and its
offices.
At the year end the Company has little risk relating to
COVID-19.
Economic downturn and other macroeconomic factors
The Group's success was substantially dependent on the general
level of economic activity and economic conditions in the United
Kingdom.
Many of the Group's contracts, including renewals or extensions
of previous contracts, were awarded through competitive bidding
processes. Any downturn in the economy, or any other macroeconomic
factor, either in the UK or globally, may reduce the number of
contracts coming up for bidding.
The competitive bidding processes present a number of additional
risks, including the incurrence of substantial cost and managerial
time to prepare bids and proposals for contracts that the Group may
not ultimately win.
The Company is currently in a strong position with its
substantial cash resources to deal with any economic downturn.
Reliance on key customers and clients
The Company does not currently have any key customers or
clients.
Reliance on subcontractors
The Company does not currently have reliance on any
subcontractors.
Attraction and retention of key employees
The Company's future success is substantially dependent on the
continued services and performance of its Directors.
Health and safety
The Group undertook Construction activities, often working
within difficult conditions and with heavy machinery which, if
improperly used, could result in personal injury or in extreme
cases, fatalities.
The Group takes the health and safety of its employees and
clients very seriously and employs Health and Safety advisers on
all significant contracts. It also has a firm of Health and Safety
Advisers with whom it consults on a regular basis.
The Company has no significant risk in this area at the period
end.
Acquisition of subsidiaries
Within six months of it having become an AIM Rule 15 cash shell
(on 3 March 2021), the Company must make an acquisition or
acquisitions which constitutes a reverse takeover under AIM Rule 14
or its shares will be suspended from trading and since 3 March the
newly constituted Board.
The Company has significant cash resources to enable it to make
such acquisition or acquisitions.
Key performance indicators
The Directors use a number of performance indicators which are
used to manage the business but, as with most businesses, the focus
in the Statement of Comprehensive Income at the top level is on
sales, margins, and profit before tax. In the Statement of
Financial Position the focus is on managing working capital. The
key performance indicators for the Group were turnover, gross
profit margin and operating profit, as disclosed in the Strategic
Report. These are no longer relevant at the year end following the
disposal of the subsidiaries.
Financial instruments
Details of the Company's financial risk management objectives
and policies are included in note 21 to the financial
statements.
Peter Jay
Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 31 MARCH 2021
15 months Year to
to 31 March 31 December
2021 2019
GBP GBP
Revenue - -
Cost of sales - -
------------- --------------
Gross profit - -
Administrative expenses (414,048) (261,568)
------------- --------------
Operating loss (414,048) (261,568)
Net finance costs (2,132) (9,158)
------------- --------------
Loss before income tax (416,180) (270,726)
Income tax expense - (5,562)
Loss from continuing operations (416,180) (276,288)
(Loss)/profit from discontinued
operations, net of tax (6,465,990) 942,301
(Loss)/profit for the year and
total comprehensive income (6,882,170) 666,013
Earnings per share
Continued operations:
Basic earnings per share (0.115)p (0.109)p
Diluted earnings per share (0.087)p (0.109)p
========= =========
Discontinued operations:
Basic earnings per share (1.792)p 0.371p
Diluted earnings per share (1.353)p 0.371p
========= =======
There are no recognised gains and losses other than those
passing through the Statement of Comprehensive Income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
31 March 31 December
2021 2019
GBP GBP
ASSETS
Non-current assets
Intangible assets - 6,874,308
Property, plant and equipment - 101,601
Right-of-use assets - 18,083
------------ ------------
- 6,993,992
------------ ------------
Current assets
Inventories - 147,033
Trade and other receivables 35,617 3,543,322
Cash and cash equivalents 2,858,775 802,885
------------ ------------
2,894,392 4,493,240
------------ ------------
TOTAL ASSETS 2,894,392 11,487,232
============ ============
EQUITY AND LIABILITIES
Issued share capital 4,122,400 2,524,426
Share premium 2,816,208 1,490,682
Capital redemption reserve 7,500 7,500
Merger reserve - 4,051,967
Reverse acquisition reserve - (2,856,756)
Retained earnings (4,180,798) 1,483,645
------------ ------------
TOTAL EQUITY 2,765,310 6,701,464
------------ ------------
Current liabilities
Trade and other payables 129,082 4,199,058
Short-term borrowings - 297,199
Lease liabilities - 18,083
Corporation tax liability - 181,428
129,082 4,695,768
Non-current liabilities
Loan notes - 90,000
129,082 4,785,768
------------ ------------
TOTAL EQUITY AND LIABILITIES 2,894,392 11,487,232
============ ============
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIODED 31 MARCH 2021
Period to Year to
31 March 31 December
2021 2019
GBP GBP
Cash flows from operating activities
Operating profit (6,850,493) 850,851
Adjusted for:
Depreciation 55,032 44,611
Loss on disposal of tangible fixed
assets 1,079 -
Loss on disposal of subsidiaries 6,751,996 -
Share based payment charge 22,516
Decrease/(increase) in inventories 22,423 (31,731)
Increase trade and other receivables (1,813,977) (1,132,254)
Increase in trade and other payables 1,830,032 777,976
------------ -------------
Cash generated in operations 18,608 509,453
Finance costs (17,239) (10,111)
Taxation paid (181,114) (223,088)
------------ -------------
Net cash inflow from operating
activities (179,745) 276,254
------------ -------------
Cash flows from investing activities
Disposal of discontinued operation,
net of cash disposed of (557,980) -
Purchases of property, plant and
equipment (31,356) (12,557)
Proceeds from sale of property, 600 -
plant and equipment
------------ -------------
Net cash (used in)/generated from
investing activities (588,736) (12,557)
------------ -------------
Cash flows from financing activities
Proceeds from issues of shares 3,156,000 -
Share issue costs (232,500)
Lease payments (36,167) (31,000)
Repayment of non-convertible loan
notes (62,962) (36,001)
Repayment of short-term loans - (71,558)
Net cash flows (used in)/generated
from financing activities 2,824,371 (138,559)
------------ -------------
Net cash increase in cash and
cash equivalents 2,055,890 125,138
Cash and cash equivalents brought
forward 802,885 677,747
------------ -------------
Cash and cash equivalents carried
forward 2,858,775 802,885
============ =============
During the year the Group disposed of its subsidiaries for a
consideration of GBP3,963,000 of which GBP3,007,478 was settled by
utilising the outstanding intercompany and loan note balances.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 MARCH 2021
Capital Reverse
Share Share redemption Merger acquisition Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP
---------- ---------- ----------- ------------ ------------ ------------ ------------
At 1 January
2019 2,524,426 1,490,682 7,500 4,051,967 (2,856,756) 817,632 6,035,451
Total
comprehensive
income for
the year - - - - - 666,013 666,013
At 31 December
2019 2,524,426 1,490,682 7,500 4,051,967 (2,856,756) 1,483,645 6,701,464
========== ========== =========== ============ ============ ============ ============
Issue of
shares during
the year 1,597,974 1,558,026 - - - - 3,156,000
Share issue
costs - (232,500) - - - - (232,500)
Transfer
of reserves - - - (4,051,967) 2,856,756 1,195,211 -
Share based
payment
charge - - - - - 22,516 22,516
Total
comprehensive
income for
the year - - - - - (6,882,170) (6,882,170)
At 31 March
2021 4,122,400 2,816,208 7,500 - - (4,180,798) 2,765,310
========== ========== =========== ============ ============ ============ ============
Merger Reserve
The merger reserve exists as a result of the acquisitions of
Mountfield Building Group Limited, MBG Construction Limited,
Connaught Access Flooring Holdings Limited and Mountfield Land
Limited where the consideration included the issue of new shares by
the Company, thereby attracting merger relief under the Companies
Act 2006. The merger reserve represents the difference between the
nominal value of the share capital issued by the Company and the
fair value of those shares at the date of acquisition.
A transfer has been made from the merger reserve to retained
earnings to reflect amounts that have become realised through
impairment write downs in previous accounting periods and the
disposal in the current year.
Reverse Acquisition Reserve
The reverse acquisition reserve exists as a result of the method
of accounting for the acquisition of Mountfield Building Group
Limited and MBG Construction Ltd (note 1.5).
A transfer has been made from the reserve acquisition reserve to
retained earnings to reflect amounts that have become realised
following the disposal of the its subsidiaries.
Share Capital
Share capital represents the nominal value of shares that have
been issued.
Share premium
Share premium represents the difference between the nominal
value of shares issued and the total consideration received.
Capital redemption reserve
Capital redemption reserve represents amounts transferred
following the purchase of own shares.
Retained earnings
Retained earnings represent cumulative profit or losses, net of
dividends and other adjustments
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 MARCH 2021
1. General information
U.K. SPAC Plc is a public company limited by shares and
incorporated in England and Wales. The registered number of the
Company is 06374598. The address of its registered office is 3(rd)
Floor, 80 Cheapside, London, EC2V 6EE.
Above is an extract from the Final Results for the period ended
31 March 2021 and, therefore, references page numbers and notes
refer to the Final Results and not this extract. The Final Results,
which will shortly be posted to all shareholders and available on
the Group's website, should be read in full.
The financial statements are for the 15 months to 31 March 2021
while the comparative period is for the 12 months to 31 December
2019. The accounting period was extended to 31 March 2021 in order
to encompass the sale of its former subsidiaries and to ensure the
change in activity is split into appropriate reporting periods.
During the year, the Company changed its name from Mountfield
Group Plc to U.K. SPAC Plc.
2. Going concern
The financial statements have been prepared on a going concern
basis. The Company's intention is to make an acquisition and
currently has sufficient cash resources in order to maintain its
proposed plans for at least twelve months from the date of approval
of these financial statements. The Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future and are confident
that further funding would be obtainable if required.
3. Earnings per Share
The basic earnings per share is calculated by dividing the
earnings attributable to equity shareholders by the weighted
average number of shares in issue. The diluted earnings per share
is calculated by dividing the earnings attributable to equity
shareholders by the weighted average number of shares in issue plus
the number of warrants and share options.
2021 2019
Basic earnings per share (from continuing operations) GBP GBP
Loss for the financial year (416,180) (276,288)
Weighted average number of shares 360,776,100 254,244,454
============ ============
2021 2019
Basic earnings per share (from discontinued operations) GBP GBP
(Loss)/Profit for the financial year (6,465,990) 942,301
Weighted average number of shares 360,776,100 254,244,454
============ ============
Diluted earnings per share (from continuing operations) GBP GBP
Loss for the financial year (416,180) (276,288)
Weighted average number of shares 478,024,638 254,244,454
============ ============
2021 2019
Diluted earnings per share (from discontinued operations) GBP GBP
(Loss)/Profit for the financial year (6,465,990) 942,301
Weighted average number of shares 478,024,638 254,244,454
============ ============
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