HIGHWAY CAPITAL PLC
INTERIM REPORT 2016
Chairman's Statement
Dear Shareholders
In line with the new strategy of Highway Capital, of which the general outline was presented through the Chairman's statement in the latest Annual Report, the first half of 2016 was marked with intense efforts aimed at strengthening of the business position of the Company.
The Company's directors have been seeking to identify profitable potential transactions on the one hand, and to seek reliable sources of financing on the other. A number of possible deals have been considered in respect of both of these aspects and we continue to investigate further opportunities.
The decision was taken in May 2016 to provide finance of approximately £89,000 by way of a loan to Mylux, a Cypriot SPV. Mylux utilised the proceeds of the loan to acquire a 48% interest in a new payment services company in Poland known as Multipay. A further loan of £120,000 was advanced to Mylux in June 2016 in order to acquire a minority investment in a medical technology company.
Although neither loan constituted an acquisition for the purposes of the Listing Rules under which the Company operates, the UK Listing Authority informed the directors in September 2016 that they considered that making the loans fundamentally changed the strategic direction of the business away from its stated aim to find an acquisition that would enhance shareholder value. As a result, the Company's shares were suspended from trading on 22 September pending the completion of the "reverse" procedure required to resume trading.
Rather than invest the significant time and expense in changing the scope of the Company's business activities to encompasses the short term loans extended to Mylux, the directors are working towards securing an acquisition which will constitute a reverse and for which they will seek readmission of the Company to the Official List and to trading on the London Stock Exchange. Whilst there can be no certainty whether such a transaction can be achieved, nor when, the board believe that the volume of opportunities presented to them will ultimately result in a successful outcome and further announcements will be made in due course.
Dr L Sobolewski
Chairman
30 November 2016
Statement of comprehensive income | Notes | 6 months ended 31 August 2016 (unaudited) £'000 | 6 months ended 31 August 2015 (unaudited) £'000 | Year ended 29 February 2016 (audited) £'000 |
Management fees | | - | - | - |
Administrative expenses | | (106) | (65) | (132) |
Operating loss | 2 | (106) | (65) | (132) |
Interest receivable | | 4 | - | - |
Loss on ordinary activities before taxation | | (102) | (65) | (132) |
Tax credit on loss on ordinary activities | | - | - | - |
Loss for financial period and total comprehensive income | | (102) | (65) | (132) |
| | | | |
Basic and diluted loss per share | 3 | (1.17)p | (0.74)p | (1.51)p |
Basic and diluted loss per share from continuing operations | 3 | (1.17)p | (0.74)p | (1.51)p |
Statement of financial position | Notes | 31 August 2016 (unaudited) £'000 | 31 August 2015 (unaudited) £'000 | 29 February 2016 (audited) £'000 |
Fixed assets | | | | |
Investments | | 221 | - | - |
Current assets | | | | |
Debtors | | 23 | 14 | 4 |
Cash at bank and in hand | | 12 | 16 | 1 |
| | 35 | 30 | 5 |
Creditors: amounts falling due within one year | | (194) | (83) | (125) |
Net current assets/(liabilities) | | (159) | (53) | (120) |
Total assets less current liabilities | | 62 | (53) | (120) |
Creditors: amounts falling due after more than one year | 5 | (434) | (150) | (150) |
| | | | |
Net assets/(liabilities) | | (372) | (203) | (270) |
Capital and reserves | | | | |
Share capital | 6 | 175 | 175 | 175 |
Share premium | | 368 | 368 | 368 |
Profit and loss account | | (915) | (746) | (813) |
Total equity shareholders' funds/(deficit) | | (372) | (203) | (270) |
Statement of changes in Equity | | 6 months ended 31 August 2016 (unaudited) £'000 | 6 months ended 31 August 2015 (unaudited) £'000 | Year ended 29 February 2016 (audited) £'000 |
Loss attributable to ordinary shareholders | | (102) | (65) | (132) | |
Issue of new ordinary shares less costs | | - | - | - | |
Net decrease in shareholders' funds | | (102) | (65) | (132) | |
Opening Shareholders' funds/(deficit) | | (270) | (138) | (138) | |
Closing Shareholders' funds/(deficit) | | (372) | (203) | (270) | |
| | | | | | | | | | |
Statement of cash flows | | 6 months ended 31 August 2016 (unaudited) £'000 | 6 months ended 31 August 2015 (unaudited) £'000 | Year ended 29 February 2016 (audited) £'000 |
Cash flows from operating activities Loss for the financial period | | | (102) | | (65) | | (132) |
Adjustments for: | | | | | | | |
Interest receivable | | | (4) | | - | | - |
Changes in: | | | | | | | |
Trade and other debtors | | | (15) | | (8) | | 2 |
Trade and other creditors | | | 69 | | (43) | | (1) |
Net cash from operating activities | | | (52) | | (116) | | (131) |
Cash flows from investing activities | | | | | | | |
Purchase of investments | | | (11) | | - | | - |
Loans made | | | (210) | | - | | - |
Interest received | | | - | | - | | - |
Net cash used in investing activities | | | (221) | | - | | - |
Cash flows from financing activities | | | | | | | |
Proceeds from loans | | | 284 | | 120 | | 120 |
Net cash from financing activities | | | 284 | | 120 | | 120 |
| | | | | | | |
Net increase/(decrease) in cash and cash equivalents | | | 11 | | 4 | | (11) |
Cash and cash equivalents at beginning of period | | | 1 | | 12 | | 12 |
Cash and cash equivalents at end of period | | | 12 | | 16 | | 1 |
Notes to the Interim Report
1. Basis of preparation of the interim report
The condensed set of financial statements for the six months ended 31 August 2016 has been prepared on a basis consistent with the financial statements for the year ended 29 February 2016.
The condensed set of financial statements for the six months ended 31 August 2016 has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.
The comparative financial information for the year ended 29 February 2016 has been extracted from the audited financial statements, on which the auditors issued an unqualified audit report, and which have been delivered to the Registrar of Companies.
The financial information contained in the interim statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.
There are no acquired or discontinued operations in the relevant financial periods.
There are no recognized gains or losses other than the profit or loss for the relevant financial periods.
Highway Capital plc is a stand-alone company and does not prepare consolidated accounts. It has therefore continued to prepare its accounts in accordance with UK rather than international accounting standards, as permitted under EC Regulation 1606/2002.
2. Operating loss
This is stated after charging: | | | |
| | 6 months ended 31 August 2016 (unaudited) £'000 | 6 months ended 31 August 2015 (unaudited) £'000 | Year ended 29 February 2016 (audited) £'000 |
Directors' remuneration | | | |
- salaries and fees | 32 | 22 | 48 |
Auditors' remuneration | | | |
- audit services | | 5 | 5 | 10 |
- other services | | - | - | - |
3. Loss per share
The loss per ordinary share calculation has been based on the loss attributable to ordinary shareholders of £102,000 (August 2015: £65,000; February 2016: £132,000), divided by 8,740,201 (August 2015: 8,740,201; February 2016: 8,740,201) being the weighted average number of ordinary shares in issue during the period. There is no difference between the basic and the diluted loss per ordinary share.
There are no discontinued operations in the periods and, therefore the basic and the diluted loss per ordinary share from continuing operations are the same as the basic and the diluted loss per ordinary share.
4. 2016 interim dividend
No interim dividend has been declared.
5. Creditors: due after more than one year
The creditor due after more than one year of £434,000 (August 2015: £150,000; February 2016: £150,000), is made up of the following: (a) loans of £250,000 from Wildman Asset Management SA which are unsecured, repayable after 2 years and bearing interest at a rate of 5% per annum; (b) loans of £30,000 from M Szytko, a director and shareholder, which are unsecured, repayable after 2 years and bearing interest at a rate of 5% per annum, and (c) loans of £127,000 from M Szytko and £27,000 from D Zych, a director, which are unsecured, repayable after 5 years and convertible at the holder's request into new ordinary shares in the company at a price of 10 pence per share; in the event that the loans are not repaid or converted prior to their maturity date then they will attract accrued interest at a rate of 5% per annum.
6. Share capital
| | 31 August 2016 (unaudited) | 31 August 2015 (unaudited) | 29 February 2016 (audited) |
Ordinary shares of 2p each | | | |
Allotted, called-up, fully paid | | | |
Number of shares | 8,740,201 | 8,740,201 | 8,740,201 |
Nominal value | £174,804 | £174,804 | £174,804 |
7. Related party transactions
As at the balance sheet date, there are loans of £157,000 to the company from M Szytko, a director and shareholder of the company; and loans of £27,000 to the company from Dariusz Zych, a director of the company. The terms of these loans are set out in note 5 above.
8. Responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with FRS 104 Interim Financial Reporting issued by the Financial Reporting Council;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
By order of the Board
Dr L Sobolewski M Szytko
Chairman Non-Executive Director
9. Publication
Copies of this statement will be available on the company's website at www.highwaycapital.co.uk.
