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Interim Report for the six months ended 31 December 2016

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

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Introduction

Over the course of the last few days there have been a number of developments at Ve Interactive Limited ("Ve"), a business which represents Concha's principal investment in which it invested £4m at a £930m valuation (representing 0.43% of the issued share capital) during March 2016 and so the timing of the release of this interim statement provides an expedient opportunity to provide an update as to the status and performance of this key investment.

As I stated in my previous Chairman's Statement in December 2016, we had been encouraged by the November announcement of the appointment of Stuart Chambers as Chairman designate of Ve and the governance changes which immediately followed provided comfort that the business was being prepared for the next stage of its strategic development, including an anticipated round of institutional funding. We had, as I have previously stated made a number of introductions to global investment banking institutions which by its nature had afforded us closer ties with the company's executive management team and a greater insight in to the company's trading performance.

Over the course of the last six months, the disconnect between Ve's aggressive programme to extend its geographical reach and the required access to working capital has widened. This, coupled with revenue growth which has fallen behind Ve management's near term expectation, has placed significant strain on both Ve's operations and heightened frustrations amongst shareholders and other stakeholders alike. Earlier this month, a consortium of experienced long-term shareholders of Ve, advanced a number of funding proposals which will not only provide Ve with the access to capital required to fund its near-term operations but also to fund its longer-term growth aspirations. Consideration for the initial tranche of funding has largely been satisfied by the transfer of existing Ve equity from management, the effect of which has minimised the dilutive effect on the equity interests of the existing shareholder base. It is anticipated that further funds will be secured by way of a rights issue and that this process is expected to conclude in the near future.

In addition to the provision of funding, the consortium has also sought to introduce a number of experienced executives to steward the business through this period of transition. The introduction of a new CEO and interim Chairman, together with a professional multi-disciplined team will supplement the existing talent present within the business. Over the course of the next three months, this new team intends to commence and conclude a process of re-organisation, rationalisation and revenue growth, the latter resulting from a number of identified revenue opportunities which will allow Ve's portfolio of offerings, including the optimisation of its mobile browsing services to improve both market share and yield. Significant reductions to its operating cost base will see the business exit from smaller markets, centralise its global finance function and drive growth from three core geographical hubs (EMEA, Americas and Asia) which in combination will support the new management team's plans to secure a position of being cash break-even by the end of 2017.

Our initial view of Ve and its potential remain the same. The technology that underpins its business is proven and its vision to use technology to overcome the common challenge faced by all online businesses in respect of expanding and converting customers without flaw. However, in order to scale effectively it must now shed its "start-up" culture, rationalise its operating base and focus on the introduction of a number of identified revenue enhancing "martech" and advertising product initiatives that are intended to drive the business to break even during 2017. Whilst recent events will no doubt impact the perception of the investment opportunity Ve represents, the Board believes that this decisive action will accelerate Ve's timetable to profitability and in turn provide an earlier exit opportunity than would otherwise have been possible. However, the vision proposed is not without its challenges. The business will need to restructure both its short and long-term liability base as well as secure the support of the shareholders, many of whom will have invested at valuations significantly higher than the implied valuation now placed upon the business.

The current funding proposals are still being negotiated and may therefore be subject to change. We will however, ensure that our shareholders are kept abreast of developments at Ve as it begins a new phase in the development of its business and make further announcements as appropriate.

Unaudited Interim Results

Whilst your Board has closely monitored the developments of Ve outlined above, it has also continued to evaluate the merits of other investment opportunities. Whilst we have not supplemented our investment portfolio during the period, the reported loss before exceptional items of £0.28m for the period (2015: Loss £0.39m) reflects the costs associated with pursuing discussions with target investee opportunities and preserving Concha's status as an AIM quoted entity. In addition, and in the light of recent events at Ve, your Board has also sought to impair the carrying value of its investment in Ve to more fairly reflect the valuation of recent transactions at Ve, which indicates a current valuation of Ve of £300m, the impact of which has been to further increase the loss for the year by £2.71m as a result of impairing the investment via the inter-company loan, resulting in a retained loss of the period of £2.99m (2015: Loss £0.38m).

Your Board will continue its process of review and will update the market further as and when it is appropriate to do so.

 

INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JULY 2016 TO 31 DECEMBER 2016

    Half year to Half year to Year Ended
    31.12.2016 31.12.2015 30.06.2016
    (Unaudited) (Unaudited) (Audited)
  Notes £000's £000's £000's
         
Revenue 2 8 8 15
    ----------- ----------- -----------
Gross profit   8 8 15
         
General & administrative expenses   (285) (397) (1,006)
    ----------- ----------- -----------
Loss from operations before exceptional items   (277) (389) (991)
         
Impairment of amounts recoverable from subsidiary   (2,710) - -
    ----------- ----------- -----------
         
Loss from operations   (2,987) (389) (991)
         
Investment income   1 5 7
    ----------- ----------- -----------
Loss before tax   (2,986) (384) (984)
         
Tax   - - -
    ----------- ----------- -----------
Retained Loss after tax for the period   (2,986) (384) (984)
    ----------- ----------- -----------
         
Retained loss attributable to:        
Owners of the company   (2,986) (384) (984)
    ----------- ----------- -----------
Loss for period   (2,986) (384) (984)
    ----------- ----------- -----------
Total comprehensive loss attributable to:        
Owners of the company   (2,986) (384) (984)
    ----------- ----------- -----------
Total comprehensive loss for the period   (2,986) (384) (984)
    ----------- ----------- -----------
         
         
Loss per share        
Basic and diluted 3 - -
    ----------- ----------- -----------

 

INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016

    As at As at As at
    31.12.2016 31.12.2015 30.06.2016
    (Unaudited) (Unaudited) (Audited)
  Notes £000's £000's £000's
ASSETS        
         
Non-current assets        
Investments   514 500 514
    ----------- ----------- -----------
    514 500 514
    ----------- ----------- -----------
Current assets        
Trade and other receivables   1,827 263 4,509
Cash and cash equivalents   940 5,618 1,255
    ----------- ----------- -----------
    2,767 5,881 5,764
    ----------- ----------- -----------
         
TOTAL ASSETS   3,281 6,381 6,278
    ======= ======= =======
         
         
EQUITY        
Share capital 4 1,623 1,553 1,623
Deferred share capital   1,795 1,795 1,795
Share premium reserve   21,563 21,433 21,563
Warrant reserve   583 314 583
Retained loss   (22,353) (18,767) (19,367)
    ----------- ----------- -----------
TOTAL EQUITY   3,211 6,328 6,197
    ======= ======= =======
         
CURRENT LIABILITIES        
Trade and other payables   70 53 81
         
         
TOTAL EQUITY AND LIABILITIES   3,281 6,381 6,278
    ======= ======= =======
         

 

 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JULY 2015 TO 31 DECEMBER 2016

    Deferred Share      
  Share share premium Warrant Retained Total
  capital capital account reserve loss  
  £000's £000's £000's £000's £000's £000's
             
Balance at 1 July 2016 1,623 1,795 21,563 583 (19,367) 6,197
Loss for the period - - - - (2,986) (2,986)
             
Total comprehensive income for the period - - - - (2,986) (2,986)
Share capital issued - - - - - -
Share based payments - - - - - -
Balance at 31 December 2016 1,623 1,795 21,563 583 (22,353) 3,211
             
  £000's £000's £000's £000's £000's £000's
             
Balance at 1 July 2015 1,478 1,795 21,043 314 (18,383) 6,247
Loss for the year - - - - (384) (384)
             
Total comprehensive income for the period - - - - (384) (384)
Share capital issued 75 - 390 - - 465
Share based payments - - - (42) 42 -
Balance at 31 December 2015 1,553 1,795 21,433 314 (18,767) 6,328

 

 

INTERIM STATEMENT OF CASH FLOW
FOR THE PERIOD FROM 1 JULY 2016 TO 31 DECEMBER 2016

  Half Year to Half Year to Year Ended
  31.12.2016 31.12.2015 30.06.2016
  £000's £000's £000's
  (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities      
Loss for the period (2,986) (384) (984)
Share based payment - - 269
Impairment of amounts recoverable from subsidiary 2,710 - -
Investment income (1) (5) (7)
  ----------- ----------- -----------
Operating cash flows before movements in working Capital (277) (389) (722)
       
Increase in receivables (3) (9) (115)
(Decrease) / increase in payables (11) (1) 27
  ----------- ----------- -----------
  (14) (10) (88)
       
Investment income 1 5 7
  ----------- ----------- -----------
Net cash outflow from operating activities (290) (394) (803)
       
Cash flow from investing activities      
Purchase of investments - - (4,154)
  ----------- ----------- -----------
Net cash outflow from investing activities - - (4,154)
       
Cash flow from financing activities      
Net proceeds from issue of share capital - 465 665
Loans advanced (25) - -
  ----------- ----------- -----------
Net cash flow from financing activities (25) 465 665
       
Net cash outflow for the period (315) 71 (4,292)
  ----------- ----------- -----------
       
Cash and cash equivalents at start of period 1,255 5,547 5,547
  ----------- ----------- -----------
Cash and cash equivalents at end of period 940 5,618 1,255
  ======= ======= =======
       

 

Notes

The notes to the consolidated financial statements are available in the PDF download

 

Page last up-dated: 17 March 2017