RNS Number : 8432C
DJI Holdings PLC
30 June 2016
 

 

30 June 2016          

DJI Holdings plc

("DJI", or "the Group")

 

Audited Final Results for the 12 months ended 31 December 2015

 

DJI Holdings plc, (AIM: DJI), a provider of technology for the promotion and transaction of online bookings, mobile payments and lottery sales in China, today announces its financial results for the 12 months ended 31 December 2015.

 

Financial Highlights

•    Revenue from continuing operations of £5.5m (2014: £47.5m - restated)

•    Gross Profit of £1.2m (2014: £5.6m)

•    Operating Loss of £9.3m (2014: £3.4m)

•    Loss after tax of £11.4m (2014: £3.6m)

•    EBITDA loss of £9.0m (2014: £3.1m), marginally ahead of expectations

•    Basic loss per share of 8.48p (2014: 3.4p)

•    Cash and cash equivalents of £4.0m (2014: £10.8m)

Operating and Corporate Highlights

•   Strategy of diversification implemented to build new revenue streams, leveraging the Group's technology platform and growing database

•    Positioning the Group to benefit from regulatory change in the Chinese lottery market, following the temporary suspension in March 2015 of online sales

•    Agreement with Heilongjiang Sports Bureau, which includes B2B online sports booking

•   Exclusive marketing agreements for digital content secured with Manchester City and Arsenal football clubs

•    Decision to pursue a secondary listing on NASDAQ, alongside the company's peer group

Post year end

•  Major partnership with Xinhuatong to facilitate payments on the Xinhua News Mobile App, supported by share placing to raise £10.5m

•   The Xinhuatong partnership has already signed agreements with nine of the ten largest provinces in China, and expects to have launched the majority of these by year end

•    Significant strengthening of the Board with Chinese directors and a CFO to be appointed, which is the subject of a separate announcement today, reflecting the Group's growth potential and impending NASDAQ listing          

 

Commenting on the results, Darren Mercer, CEO of DJI Holdings plc, said:

"This was a year of transition for DJI, in which the Board identified and began successfully to tackle two main challenges: positioning the Group's lottery businesses to benefit from anticipated regulatory changes following the suspension of online sales that impacted 2015 revenues; and launching a strategy of diversification aimed at transforming the Group into a provider of internet technology operating at the heart of China's largest mobile apps. The development of potential new revenue streams accelerated significantly after the year-end and a number of new material opportunities are being progressed. The Board therefore views the remainder of 2016 and beyond with considerable confidence and excitement."

 

For further information, please contact:

 

DJI Holdings plc 

+44 (0) 1565 872990

Darren Mercer, Group Chief Executive

 

IHA Consulting Limited (Financial PR)

Stephen Benzikie

+44 (0) 20 3393 1185

 

 

 

Strand Hanson Limited (Nominated Adviser to DJI)

+44 (0) 20 7409 3494

Andrew Emmott / Ritchie Balmer

 

 

 

Mirabaud Securities LLP (Broker to DJI)

+44 (0) 20 7878 3362

Peter Krens

 

 

 

 

 

CHAIRMAN'S REVIEW

In 2015, DJI's first full year as a publicly listed company, the group succeeded in developing partnerships to use its versatile platform in areas beyond its initial sphere of operation in the online distribution channels of the Sports and Welfare lotteries.

China is moving online rapidly - most notably through mobile - and DJI is making steady progress in placing its technology at the heart of this important secular trend. The Chinese government's Internet Plus strategy is integrating traditional industries with digital capabilities, promoting e-commerce in all sectors and equipping consumers to access all the information they need with the roll-out of broadband and 4G, particularly in rural areas.

This shift is being accelerated by the steady migration of individuals from the countryside to China's urban centres, which in any event have higher levels of smartphone ownership. The government aims to increase the urbanised population by 60% by 2020. Mobile users in China downloaded 38 billion apps in 2015 and their average daily phone usage grew from 1.67 hours to 2.36 hours. More than two-thirds of mobile users use apps every day, with some apps used up to 78 times, particularly those for 'life' activities - social networking, watching videos, playing games, news, location services and booking services.

Online sales of lottery products remain suspended in China pending the publication of new regulations by central government lottery authorities and the Ministry of Finance. The lottery industry maintains its firm expectation that the central government will lift the suspension and, in due course, vigorously promote this public welfare project. Recent investment in lottery operations by major Chinese corporations, not least the purchase of a controlling stake in AG Tech, the Hong Kong listed lottery operator and technology business, by Alibaba and Ant Financial, indicate the confidence of sector operators in the opportunity for growth in the lottery market in China.

The Board of DJI remains hopeful but patient as it awaits the return of a better regulated lottery landscape. In the meantime, the Company's strategy continues to focus on working with channel partners, government and provincial lottery centres to identify new revenue streams using its robust, secure, flexible and scalable technology and regulatory platform. DJI is in discussions with a number of significant partners and provinces in China and the Company looks forward to announcing these in the near future.

In addition, as a company whose focus is primarily on the Chinese market, with all of its key management and executives Chinese nationals, as well as many other staff working and residing in China for the majority of the year, the Group intends to reflect its Chinese corporate identity in the Board at both Executive and Non-Executive level. At the same time, the Board intends to maintain the highest standards of international corporate governance, both internally and in its dealings with external parties.

While the Board looks forward eagerly to the resumption of online lottery sales, it believes that the Group's progress in developing additional sources of revenue in 2015 and during the year to date enables us all to view the remainder of 2016 and beyond with confidence, as we begin to capitalise on a growing number of exciting opportunities and see them bear fruit.

Lord Mancroft

Chairman

 

29 June 2016

 

 

CHIEF EXECUTIVE'S REVIEW

 

Overview

China's consumers are migrating online at a rapid pace and DJI has secured a strong position, supported by key commercial partnerships, at the heart of this very exciting opportunity.

The Board's strategy of diversification is transforming the Company, focusing on the versatility of its secure and robust marketing technology platform and rapidly growing databases. New strategic joint ventures and the extension of existing alliances with blue chip organisations are taking DJI into many sectors beyond its earlier focus on lottery, in which it can develop significant and reliable income streams.

The potential for our technology to support payments and other consumer transactions in China, online and through mobile on a very large scale, is huge. The Chinese government, through its Internet Plus strategy, is supporting a seismic shift towards a digital economy, enabling businesses, government departments and individuals to connect with each other. The expansion of fast broadband, 4G mobile networks and smartphone ownership in rural areas, combined with an ongoing program of urbanisation, is creating and sustaining a very substantial potential market for DJI, in which 900m are now connected to the internet. Some 98% of the population is expected to have 4G connection by the end of 2017.

Our first move away from lottery revenues was accelerated by our investment alongside Heilongjiang Sports Bureau (HSB), announced in September 2015 together with a placing of new ordinary shares to raise £5.6m. HSB operates or is responsible for all sports lottery activities in Heilongjiang, China's sixth largest province with a population of approximately 40 million. HSB also owns and operates an extensive portfolio of sporting venues and facilities across the province, including Yabuli, China's largest ski resort.

DJI and HSB have invested in a new venture, Longti, which includes, for the first time in a Chinese province, a business-to-business (B2B) online booking system for sports. Based on DJI's technology, this system is expected to generate significant incremental revenue in a substantial market for online bookings.  Longti has agreed terms with three of China's leading e-commerce portals to sell and promote its B2B system, giving it direct access to their significant customer bases.

Applying the same principle of working with high volume websites, yet at a potentially transformational level to operate nationwide, DJI's partnership through NewNet with Xinhuatong, the preferred partner of Xinhua to provide payment facilitation and lottery promotion via the Xinhua News Mobile App (the official news app of China's national news agency), is utilising the group's technology platform to support a leading portal for mobile payments and information nationwide which is targeted to reach 300 million users next year.

With the temporary suspension of online lottery sales in March 2015, the Board identified two key strategic challenges to ensure the future success of the Group: to position itself to benefit from impending regulatory change in the Chinese lottery market; and to identify new revenue streams utilising its established technology platform. Two major deals announced, Heilongjiang in 2015 and, in April 2016, Xinhuatong, demonstrate early success in achieving these strategic goals.

DJI's involvement supporting China's sporting ambitions increased substantially in 2015. Football in China is seeing explosive growth prompted by President Xi Jinping's three wishes: for China to qualify for, host and win a World Cup.  The nation is determined to become a force in football and has made it a compulsory part of the national curriculum for schools.  The Sports Lottery will remain a key funder of this ambition.

DJI is operating at the heart of this exciting opportunity, engaging in partnerships to support the growth of football at grass roots level, encouraging amateur players to join in leagues and competitions through to providing unique and engaging digital content to lottery players about some of the most popular clubs in Europe. Manchester City and Arsenal are two such clubs with which DJI secured agreements in 2015. These relationships will see the Company developing money-can't-buy offers such as exclusive merchandise, tickets and events, as well as tailored information helping fans to make informed decisions when playing the lottery.

Financial results

For the year ended 31 December 2015, the Company reported consolidated gross sales from continuing operations, revenue from continuing operations and loss after tax of £79m (2014: £583m), £5.5m (2014: £47.5m - restated) and £11.4m (2014: £3.6m) respectively.  The EBITDA loss for the year was £9.0m (2014: £3.1m).

Administration expenses before exceptional items in 2015 were £9.0m (2014: £8.3m).

A further £0.7m of costs was charged to the income statement relating to share based payments and fundraising activity in 2015 (2014: £0.6m). These have been treated as exceptional.

The Company reacted to the suspension of online lottery sales, which effectively eliminated almost entirely our ability to generate revenue, by rapidly re-purposing our overhead into the development of our platform. Our overall level of administration expenses remained consistent year-on-year.

Financial Position

At the year end DJI had £4.0m in cash and cash equivalents. Any additional capital market activity this year will be to take advantage of exciting new opportunities that continue to present themselves to our business because of our unique market position and strong relationships within our sector. Non-current assets decreased by £8.1m, including a £8.6m decrease in goodwill arising as a result of the disposal of I Will Win Limited.

The lottery market

On 1 March 2015, a number of Provincial Lottery Centres temporarily suspended accepting online purchase orders for lottery products while they began their respective self-inspection processes in response to an official joint notice from the Ministry of Finance, Ministry of Civil Affairs and the General Administration of Sports of the People's Republic of China. 

The Group views this continued suspension as an important step to control unauthorised online lottery sales and to ensure healthy development of the online lottery market in China.  DJI believes such measures will have long-term beneficial effects on the industry. The Group continues to engage actively with all relevant authorities regarding this temporary situation and has taken steps in the intervening period to position the business to continue to be a major player in the lottery industry in the immediate and foreseeable future.

NASDAQ listing

As announced previously, the Group is preparing an application for admission to trading on NASDAQ and is targeting early Q3 2016. The Board continues to believe that a secondary NASDAQ listing will benefit the Company and shareholders by positioning the company alongside other major technology businesses in its peer group and accessing a deeper pool of capital and liquidity.

Post Year End

So far in 2016, DJI has announced a number of significant development and revenue opportunities based on the strength of its technology platform.

In March 2016, the Company unveiled a major expansion in Qingdao, one of the largest cities in Shangdong province, through a collaboration with the provincial lottery authority to promote the first Ministry of Finance approved mobile lottery sales app throughout Shangdong.  With 15 million lottery players, Shangdong is a key market for DJI.  The province has the second highest sports lottery sales in China, an 11% market share totalling approximately RMB 15.89bn (£1.75bn) in 2014, with mobile sales comprising 40% and rising. Its Gross Domestic Product is the third highest in China.

Through this venture, Qingdao Baifa, DJI expects to accelerate the recruitment of higher-spending, white-collar users by offering incentives to new Sports Lottery registrants and collaborating with promotional partners China Mobile (62 million users in Shandong Province), China Unicom (32 million users) and China UnionPay, the country's only bankcard operator.

Also in March 2016, Longti, DJI's associate in Heilongjiang, secured an exclusive service agreement to operate sports lottery scratchcard sales across Heilongjiang Province. Under the agreement, Longti has full responsibility for all marketing and promotion of this key lottery product, sales of which totalled RMB 635m (£70m) in 2015, and will receive both a marketing fee and share of revenues for its services.  A further initiative to develop and launch online sales of physical scratchcards is already underway.  The incremental revenue generated from scratchcard activity in Heilongjiang is expected to be substantial in the current financial year.

In addition, Longti has been granted a contract by the Heilongjiang Sports Lottery Administration Centre to launch DJI's sports platform on the province's official website, along with the provision of news, analysis and exclusive information. The platform will continue to promote sports lottery through its retail portfolio during the Euro 2016 football tournament and through other channels after the resumption of online sales.

An important aspect of the HSB relationship and these latest contracts is increasing access to data regarding the province's lottery players.  When online lottery sales return, such data regarding consumers' activity online and their appetite for gaming will be valuable.  DJI will continue to use this key advantage to expand its marketing platform, which may then be used to distribute new, revenue generating promotional content.

Longti's provision of content will be extended by the anticipated roll out this year of DJI's high-frequency virtual sports game, which was trialed in-store during 2015. Further games are at an advanced stage of development, with approval expected in the second half of 2016.

Whilst Longti is in its early stages, bookings to date are in line with expectations and the system is now entering its next phase of development towards a more extensive e-commerce roll-out during 2016. Agreements are being made with prestigious channel partners, including leading Chinese online television company, LeTV, and major B2C online retailer, JD.com, and further revenue enhancing deals are being targeted to drive Longti's progress to profitability in the second half of 2016.

In April 2016, DJI announced possibly the most transformational deal since the Company's formation, alongside a placing of new shares to raise £10.5m.  Through a partnership with Xinhuatong, the preferred partner of Xinhua to provide payment facilitation and lottery promotion via the Xinhua News Mobile App (the official news app of China's national news agency), DJI will supply its technology platform to support a leading portal for mobile payments and information nationwide.

The partnership has already signed an initial nine of the ten largest provinces in China, out of a targeted twelve provinces, facilitating payment through the Xinhua News App for public utility bills including electricity, gas, water, mobile phone top-ups and traffic fines.

Xinhua launched its mobile news app in June 2015 and is reported to have already registered 120 million users by February 2016.  It is expected that the recent average growth of 10 million users per month will continue into the foreseeable future as the app develops additional functionality and the partners believe that the app will reach 300 million registered users during 2017.  Xinhua's stated intent is for the Xinhua News Mobile App to become a leading mobile unified information platform for all Chinese citizens.

The immediate opportunity for DJI's platform to facilitate payments through the Xinhua News App is substantial and will utilise its existing relationships with key channel service providers, as well as working direct to customer, through this rapidly growing app.  Each of the initial areas in which this facility will be deployed is a very significant market.  In 2014, approximately RMB 4.3 trillion (£475 billion) was spent on electricity, water, gas, waste disposal, toll fees and broadband.  Mobile phone top-ups totalled approximately RMB614 billion (£67 billion) in the same year and traffic fines approximately RMB 211 billion (£23 billion). 

In 2014, approximately 90% of utility bills were paid through physical payments in physical outlets. These methods included rechargeable cards, self-service terminals, company stores and Post Office counters. Where there is the opportunity to use existing online payment methods, this facility is confined to larger cities in the provinces.  In the 12 provinces initially targeted, the large sectors of gas, water and electricity payments still collect less than 15% of payments online, while the more competitive sector of mobile top ups receives fewer than 29% of its payments online.

These provinces, with a total population of c.700 million, represent coverage of approximately three-quarters of all existing utility payments in China. The initial launch in Zhejiang and Shanghai provinces is expected to be revenue generating early in Q3 2016.

Services will initially focus on the key areas of mobile top-ups, traffic fines and utility payments. The first three months of operation will take place chiefly in major cities in the first provinces, with Xinhua's mobile app supporting the roll-out further afield.

NewNet and Xinhuatong are committed to exploring a wide range of sales channels for marketing their enhanced platform. Whilst the B2C model offers significant exposure directly through the Xinhua news app, the parties will also support a B2B model with major e-commerce channel partners, banks and third party payment providers.  As a result of this and other key commercial relationships in China, the Group is gaining access to further significant opportunities with potential to enhance earnings.

Outlook

The scale of the Chinese payments market not yet online has the potential both to accelerate earnings growth substantially and to significantly enhance the Group's presence in new industry sectors across China.

The Directors of DJI believe that the Xinhua agreement represents a significant opportunity for the Group's game and technology platform to be a central part of one of the leading mobile apps in China. They expect this partnership to make a substantial contribution to DJI's revenues in the remainder of 2016 and beyond.

DJI will continue to work with Chinese government agencies at national and provincial level, e-commerce channel partners and payment providers to develop opportunities to support a wide range of services and transactions online, including mobile and digital media.

There is no clear indication how long the temporary suspension of online lottery sales will last, but it is apparent that the internet is recognised as an important channel for this established source of sports and welfare funding.

We continue to develop new channels as evidenced by our investments in Shangdong, which has recently launched Sports Lottery sales via mobile phones, and Heilongjiang provinces, which has developed new games for on-line and was awarded the contract to market Sports Lottery scratchcards.

The Board of DJI believes that the Company will benefit significantly from the positive long-term effects of robust regulation on the industry and that, together with other previously authorised operators, it will be well positioned in the new regime. The Company continues to engage actively with all relevant authorities and will provide a further update when additional information is available.

We view the remainder of 2016 with confidence and look forward to reporting further success in the development of the business.

 

 

Darren Mercer

Chief Executive

 

29 June 2016
 

 

Consolidated Income Statement

For the year ended 31 December 2015

(all figures reported in £ sterling)

 

 

 

 

Note


 

2015


 

2014

(restated - note 2)

Continuing Operations

 

 

 

Revenue

2

5,518,598

47,513,567

Cost of sales

 

(4,297,129)

(41,917,195)

Gross Profit

 

1,221,469

5,596,372

Administrative expenses before exceptional items

 

(9,034,865)

(8,330,999)

Exceptional items

4

(652,037)

(560,737)

Administrative expenses after exceptional items

 

(9,686,902)

(8,891,736)

Share of results of associates

9

(847,803)

(118,581)

Operating loss

 

(9,313,236)

(3,413,945)

Finance costs

5

(1,394,590)

(537,782)

Loss before tax

 

(10,707,826)

(3,951,727)

Tax

6

(156,961)

(427,370)

Loss for the year from continuing operations

 

(10,864,787)

(4,379,097)

Discontinued Operations

 

 

 

(Loss)/profit for the year from discontinued operations

8

(583,041)

753,448

Loss for the year after discontinued operations

 

(11,447,828)

(3,625,649)

Attributable to:

 

 

 

Owners of the Company

 

(11,366,011)

(4,212,848)

Non-controlling interests

 

(81,817)

587,199

 

 

(11,447,828)

(3,625,649)

 

 

 

 

 

 

 

 

Basic and diluted loss per share from continuing and discontinued operations

3

8.48 pence

3.40 pence

 

 

 

 

Basic and diluted loss per share from continuing operations

3

8.05 pence

3.85 pence

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

(all figures reported in £ sterling)

 

 

 

2015

2014

Loss for the year

 

(11,447,828)

(3,625,649)

Items that may be reclassified subsequently to profit or loss:

 

 

 

Exchange differences on translation of foreign operations

 

155,318

(19,909)

Total comprehensive expenses

 

(11,292,510)

(3,645,558)

Attributable to:

 

 

 

Owners of the Company

 

(11,206,377)

(4,252,495)

Non-controlling Interests

 

(86,133)

606,937

 

 

(11,292,510)

(3,645,558)

 

Non-statutory performance measure

A reconciliation between Operating loss and managements chosen EBITDA non-statutory performance measure is shown below:

EBITDA

 

2015

2014

 

 

 

 

Operating loss

 

(9,313,236)

(3,413,945)

Add:

 

 

 

Depreciation and amortisation

 

277,217

302,803

EBITDA

 

(9,036,019)

(3,111,142)

 

 

 

Consolidated Balance Sheet

As at 31 December 2015

(all figures reported in £ sterling)

 

 

Non-current assets

Note

2015

2014

Goodwill

7

3,919,154

12,192,699

Other intangible assets

 

192,115

320,387

Property, plant and equipment

 

383,270

359,384

Investments in associates

9

5,217,479

4,941,260

 

 

9,712,018

17,813,730

Current assets

 

 

 

Inventories

 

18,661

151,716

Trade and other receivables

10

4,449,464

4,711,639

Cash and cash equivalents

 

4,028,279

10,834,439

 

 

8,496,404

15,697,794

Total assets

 

18,208,422

33,511,524

Current liabilities

 

 

 

Trade and other payables

12

5,626,151

9,532,852

Borrowings

11

-

-

 

 

5,626,151

9,532,852

Non-current liabilities

 

 

 

Contingent consideration

12

-

2,891,336

Convertible loan notes

11

5,978,001

5,964,107

 

 

5,978,001

8,855,443

Net assets

 

6,604,270

15,123,229

Equity

 

 

 

Share capital

13

14,430,682

13,052,339

Share premium

 

22,432,330

19,432,947

EBT Reserve

 

(574,613)

(574,613)

Retained earnings

 

(29,939,944)

(17,473,653)

Equity attributable to owners of the Company

 

6,348,455

14,437,020

Non-controlling interests

 

255,815

686,209

Total equity

 

6,604,270

15,123,229

 

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

(all figures reported in £ sterling)

 

                                                                                                                                                                                

Share  
capital  
_____________
Share  
premium  
____________
EBT  
reserve  
_________
Accumulated  
deficit  
____________
Total  
_________  
Non-
controlling
interest
___________  
Total  
equity  
_________  

Balance at 1 January 2014

34,464

31,435,434

(508,200)

(23,058,475)

7,903,223

(50,885)

7,852,338

Loss for the year

-

-

-

(4,212,848)

(4,212,848)

587,199

(3,625,649)

Exchange differences

-

-

-

(39,647)

(39,647)

19,738

(19,909)

Total comprehensive loss for the year

-

-

-

(4,252,495)

(4,252,495)

606,937

(3,645,558)

Issue of share capital

1,198,544

7,676,244

(66,413)

(177,568)

8,630,807

-

8,630,807

Acquisition of subsidiary

695

2,139,905

-

-

2,140,600

130,157

2,270,757

Equity-settled share based payments

-

-

-

14,885

14,885

-

14,885

Capital reduction

-

(10,000,000)

 

10,000,000

-

-

-

Bonus issue

11,818,636

(11,818,636)

-

-

-

-

-

Balance at 31 December 2014

13,052,339

19,432,947

(574,613)

(17,473,653)

14,437,020

686,209

15,123,229

Loss for the year

-

-

-

(11,366,011)

(11,366,011)

(81,817)

(11,447,828)

Exchange differences

-

-

-

159,634

159,634

(4,316)

155,318

Total comprehensive loss for the year

-

-

-

(11,206,377)

(11,206,377)

(86,133)

(11,292,510)

Issue of share capital

1,378,343

2,999,383

-

179,690

4,557,416

-

4,557,416

Equity-settled share based payments

-

-

-

454,750

454,750

-

454,750

Disposal of subsidiary

-

-

-

(2,381,854)

(2,381,854)

(344,261)

(2,726,115)

Proceeds for shares not yet issued

-

-

-

487,500

487,500

-

487,500

Balance at 31 December 2015

14,430,682

22,432,330

(574,613)

(29,939,944)

6,348,455

255,815

6,604,270

 

 

 

Consolidated Cash Flow Statement

For the year ended 31 December 2015

(all figures reported in £ sterling)

 

 

Note

2015

2014

Net cash used in operating activities

14

(8,830,722)

(4,023,532)

Investing activities:

 

 

 

Purchases of property, plant and equipment

 

(252,366)

(96,677)

Proceeds on disposal of property plant and equipment

 

18,801

21,148

Investment in associates

 

(1,341,510)

(4,130,400)

Purchase of other intangible assets

 

-

(33,636)

Disposal of subsidiary net of cash disposed

8

(177,572)

-

Acquisition of subsidiary net of cash acquired

 

(1,167,243)

(347,472)

Net cash used in investing activities

 

(2,919,890)

(4,587,037)

Financing activities

 

 

 

Proceeds on issue of shares

 

4,401,137

8,130,807

Proceeds on shares not yet issued

 

487,500

-

Issue of convertible loan notes

 

-

5,958,318

Net cash generated by financing activities

 

4,888,637

14,089,125

Net (decrease)/increase in cash and cash equivalents

 

(6,861,975)

5,478,556

Effect of foreign exchange rate changes

 

55,815

49,208

Cash and cash equivalents at beginning of year

 

10,834,439

5,306,675

Cash and cash equivalents at the end of the year

 

4,028,279

10,834,439

 

 

 

Notes to the Financial Statements 

For the year ended 31 December 2015

 

1. Accounting policies and basis of preparation

Directors' responsibilities

 

The Directors of DJI Holdings plc are responsible for preparing and issuing this preliminary announcement, which was approved on 28 June 2016.

 

Basis of preparation

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs nor does it constitute statutory accounts as defined in sections 435 (1) and (2) of the Companies Act 2006. The Company expects to publish full financial statements that comply with IFRSs and the Companies Act 2006, which are scheduled to be posted to shareholders on 30 June 2016.

 

The auditor has reported on those financial statements, their report was be unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006. However the auditor's report drew attention to the going concern disclosure in the 2015 financial statements by way of emphasis (which is included below) without qualifying the accounts. The 2014 Annual Report of DJI Holdings plc, can be found on the Group's website (www.djiholdings.com) and the 2015 Annual Report will be included on the website shortly.

 

The financial information is prepared on the basis of the accounting policies set out in the 2014 Annual Report of DJI Holdings plc, except in relation to the new standards which have been adopted in the year with no impact on the results for the current or prior year.       

                                     

Going concern

 

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future; that is for at least 12 months from the date of signing of the financial statements.


During the year all online lottery sales (which represented approximately 96% of the Group's revenues) were temporarily suspended across the industry following the Self-Inspection Notice jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of the People's Republic of China and remain suspended at the date of this report.

The lottery remained suspended at the end of 2015 and beyond, and therefore the timing of eventual resumption of online lottery sales, and the ability of the Group to meet any new regulatory requirements that may be imposed by the relevant Chinese Authorities represents a material uncertainty which could have a significant impact on the Group's ability to continue as a going concern.

In response to this suspension, the Directors have pursued a plan to leverage the key strengths of the Group, being its technology platform and key relationships in China, to build and diversify other revenue streams. The most significant of these being the provision of the Group's technology to support the introduction of mobile payments for public utility bills and traffic fines through the Xinhua News Mobile App.

The Directors have reviewed trading and cash flow forecasts, which take into consideration the uncertainties in the current operating environment, including their expectations that online lottery sales will resume during the second half of 2016 and the revenues that are expected to be generated from new investments, some of which are yet to fully launch.

After making the appropriate enquiries and, considering the Group's existing cash reserves and forecasts, the Directors have concluded that they have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future.

However, the timing of resumption of online lottery sales and the ability of the Group to meet any new regulatory requirements imposed by the relevant Chinese Authorities and therefore deliver its business plans, along with uncertainties of the future performance of the Group's new investments, represents a material uncertainty which could cast substantial doubt on the Group's ability to continue as a going concern.

2. Revenue

IFRS 8 'Operating Segments' requires the segmental information presented in the financial statements to be that used by the chief operating decision maker to evaluate the performance of the business and decide how to allocate resources. The Group has identified the Group's Chief Executive Officer as its chief operating decision maker. The Group's Chief Executive Officer considers the results of the business as a whole when assessing the performance of the business and making decisions about the allocation of resources. Accordingly the Group has one operating segment and therefore the results of the segment are the same as the results for the Group.

The Group's revenues principally relate to commissions receivable by the Group from the sale of lottery tickets and related products. In previous periods commissions payable to the Group's B2B channel partners were deducted from revenue, however the Directors have reassessed this policy, and have concluded IFRS requires these commissions payable to be shown as a cost of sale. Accordingly, the Directors have re-presented the results for the prior year financial statements and as a result revenue and cost of sales have increased by £41,764,479 for the year ended 21 December 2014 - there has been no impact on gross profits, or net loss or loss per share.

The Group's revenue is analysed between the Land and Online routes to market and this information is provided to the Group's chief operating decision maker.  An analysis of the Group's revenue by channel, all of which arose from the Group's operations in China, is as follows:

 

2015

 

2014

(restated)

Continuing operations:

 

 

Land

257,945

504,004

Online

5,260,653

47,009,563

 

5,518,598

47,513,567

Discontinued operations:

 

 

Online

932,276

7,664,454

Total

6,450,874

55,178,021

 

Included in revenues arising from the Online business are revenues of approximately £879,762 (2014: £40,233,866) which arose from sales to the Group's largest customer in the year.  No other single customer contributed 10% or more to the Group's revenue in either 2015 or 2014.

Gross sales are shown below as a memorandum disclosure and represent the total transaction value of all lottery sales and services, net of VAT and other sales taxes.  The Group reports the total transaction value since the Directors believe that it reflects more accurately the transactional volume within the Group.

Gross sales

2015

2014

Continuing operations:

 

 

Land

5,378,742

6,558,356

Online

74,039,532

576,320,773

 

79,418,274

582,879,129

Discontinued operations:

 

 

Online

25,228,279

59,533,377

Total

104,646,553

642,412,506

Geographical information

The Group's revenue from external customers is generated entirely in China, information about its segment assets (non-current assets excluding financial instruments, deferred tax assets and other financial assets) by geographical location are detailed below:

Non-current assets

2015

2014

China

9,599,558

17,523,437

United Kingdom

112,460

290,293

 

9,712,018

17,813,730

 

3. Loss per share

From continuing and discontinuing operations

 

 

 

The calculation of basic and diluted loss per share is based on the following information:

 

 

 

 

2015

2014

Losses for the purposes of basic and diluted loss per share being net losses attributable to the owners of the Company


(11,366,011)

 

 

 

 

 

 

2015

2014

Weighted average number of ordinary shares for the purposes of basic loss per share

No.

No.

 

134,022,373

123,964,909

 

Effect of dilutive potential ordinary shares

 

 

 

- Share warrants

-

-

 

- Convertible loan notes

-

-

 

Weighted average ordinary shares for the purposes of diluted loss per share


134,022,373


123,964,909

 

The Company made a loss in the current and prior years and therefore all potentially issuable shares are anti-dilutive.
 

 

2015

2014

 

pence

pence

Basic loss per share

8.48

3.40

Diluted loss per share

8.48

3.40

From continuing operations

 

 

Losses for the purposes of basic and diluted loss per share

 

 

 

2015

2014

 

£

£

Net losses attributable to the owners of the Company

(11,366,011)

(4,212,848)

Adjustments to exclude loss/(profit) for the year from discontinued operations

583,041

(557,473)

Loss for the purpose of basic and diluted earnings per share from continuing operations

(10,782,970)

(4,770,321)

 

Pence

pence

Basic loss per share

8.05

3.85

Diluted loss per share

8.05

3.85

The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and discontinued operations.

From discontinued operations:

 

 

 

2015

2014

 

pence

pence

Basic loss/(earnings) per share

0.44

(0.45)

Diluted loss/(earnings) per share

0.44

(0.45)

 

4.   EBITDA and exceptional items

In addition to measuring financial performance of the Group based on operating profit or loss, we also measure performance based on EBITDA.  EBITDA is defined as the Group profit or loss before depreciation, amortisation, net finance expense, taxation and specific items not considered to reflect the underlying performance of the Group.  EBITDA is a common measure used by investors and analysts to evaluate the operating financial performance of companies.  We consider EBITDA to be a useful measure of our operating performance because it approximates the underlying operating cash flow by eliminating depreciation and amortisation.  EBITDA is not a direct measure of our liquidity, which is shown by our cash flow statement, and needs to be considered in the context of our financial commitments.

A reconciliation from Group operating profit or loss, the most directly comparable IFRS measure, to reported and adjusted Group EBITDA, is set out under the Consolidated Statement of Comprehensive Income.

 

2015

2014

EBITDA

(9,036,019)

(3,111,142)


Exceptional items

Exceptional items are those items which management consider to be of such significance they require separate disclosure in the financial statements to avoid distortion of the underlying financial results.  Exceptional items included within administration expenses principally related to costs associated with the settlement of historic clams made by former advisers of the Company (which have been settled through the issuance of 255,000 shares in the Company), the cost related to share warrants granted to Company director D Mercer and external consultant White & Company, costs associated with the company's initial listing on AIM and planned NASDAQ listing and direct costs of acquisitions.  Exceptional items incurred were:

 

2015

2014

Settlement agreement

(156,279)

-

Share warrant

(454,750)

-

Acquisition costs

-

(21,770)

Listing fees

(39,902)

(461,633)

Other fees

(1,106)

(77,334)

 

(652,037)

(560,737)

 

5.  Finance costs

 

2015

2014

Continuing operations

 

 

Interest on convertible loans

1,378,987

441,862

Other interest

1,709

90,131

Debt issue costs

13,894

5,789

 

1,394,590

537,782

Discontinued operations

 

 

Other interest

-

30,114

 

1,394,590

567,896

         

 

6.  Tax

 

2015

2014

Corporation tax: Current year

156,961

427,370

 

156,961

427,370

Deferred tax

-

-

Total tax expense

156,961

427,370

 

Corporation tax is calculated at 20.25% (2014: 21.50%) of the estimated taxable loss for the year.  Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.  The charge for the year can be reconciled to the loss in the income statement as follows:

 

2015

2014

Loss before tax on continuing operations

(10,707,826)

(3,951,727)

Tax at the UK corporation tax rate of 20.25% (2014: 21.50%)

(2,168,335)

(849,621)

Effect of foreign tax rates

55,285

83,757

Tax effect of non-deductible expenses

308,691

294,494

Change in unrecognised deferred tax assets

469,622

17,192

Utilisation of tax losses not previously recognised

-

(767,207)

Carry-forward of unrecognised tax losses

1,491,698

1,648,755

Tax expense for the year

156,961

427,370

 

 

 

7.  Goodwill

Cost and carrying amount     

2015

 

2014

At 1 January

12,192,699

 

3,752,765

Additions

-

 

7,844,454

Disposals

(8,617,239)

 

-

Exchange differences

343,694

 

595,480

At 31 December

3,919,154

 

12,192,699

Allocation to CGUs
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated as follows:

 Allocation to cash generating units     

2015

 

2014

Chinese operations

3,919,154

 

3,888,913

Woying

-

 

8,303,786

Total

3,919,154

 

12,192,699

Goodwill is not deductible for tax purposes.

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amount of the Chinese operations CGU is determined from a value in use calculation. Underpinning future revenues is the development and provision of the Group's technology to support the introduction of mobile payments for public utility bills and traffic fines through the Xinhua News Mobile App (as disclosed in note 29). The key assumptions for the value in use calculation are therefore those regarding the discount rate and market share attainable through the Xinhua News Mobile App. The directors have assessed the total market size based upon external market research and used this, along with their experience and discussions with the Group's business partners, to estimate likely market shares. Commission rates have been estimated based on the current status of negotiations with the Group's business partners. Management estimates an appropriate discount rate using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The rate used to discount the forecast cash flows from the Chinese operations is 60 per cent.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows thereafter with no assumed growth rate. This rate does not exceed the average long-term growth rate for the relevant markets.

The Group has conducted a sensitivity analysis on the impairment test of each CGU and the group of units carrying value. Management believes that any reasonably possible change in any of the key assumptions would not cause the aggregate carrying amount of the Chinese operations to exceed the recoverable amount.

8.   Discontinued operations

As reported last year, the Group obtained control of I Will Win Limited and its subsidiaries ('Woying') from WinFast Global Limited and its controlling parties (the 'sellers') with effect from 31 March 2014. Subsequent to the acquisition, and as a result of the suspension of online lottery sales in China during the first quarter of 2015, the Group and the sellers (some of whom were key management of Woying) were unable to complete certain post-closing commitments relating to the transfers of licences and other assets between Woying and the Group's pre-existing subsidiaries, and the full operational integration of the business. The Directors continued negotiations with the sellers throughout 2015 in the hope that the regulations covering online lotteries would have been restarted by the Ministry of Finance and that both the Group and the sellers would meet their respective post-closing commitments. However, it became clear that the sellers were not able to satisfy those commitments, therefore, the Group determined that, in light of other substantial opportunities available to it and because of its expectation of developments in the lottery market as a result of changes in regulation as and when the suspension is lifted, the Group's interests are better served by focusing on these other opportunities and preparations for the lifting of the lottery suspension without Woying.  The Company has therefore exercised its rights under the agreement to cancel the acquisition and has treated Woying as having been disposed of during 2015. The consolidated financial statements show Woying as a discontinued operation during the year and the assets and liabilities of Woying have been derecognised. The results of the discontinued operations were as follows:

 

2015

2014

Revenue

932,276

7,664,454

Expenses

(123,895)

(6,674,844)

Profit before tax

808,381

989,610

Attributable tax expense

-

(236,162)

 

808,381

753,448

Loss on disposal of discontinued operations

(1,660,893)

-

Reclassification of translation adjustments

269,471

-

 

(583,041)

753,448

Net loss attributable to discontinued operations

 

 

- attributable to owners of the Company

(583,041)

557,473

- attributable to non-controlling interests

-

195,975

 

(583,041)

753,448

 

During the year, Woying contributed £nil (2014: £331,933) to the group's net operating cash flows, paid £nil (2014: £4,245) in respect of investing activities and paid £nil (2014: £361,417) in respect of financing activities.  A loss of £1,660,893 arose on the disposal of Woying, being the difference between the fair value of the DJI shares surrendered by the sellers at the deemed disposal date of 1 March 2015 (the proceeds of disposal) and the carrying amount of the subsidiary's net assets and attributable goodwill.

The net assets of Woying at the date of deemed disposal were as follows:

 

 

Property, plant and equipment

19,520

Trade receivables

1,845,353

Prepayments and other receivables

471,134

Bank balances and cash

177,572

Trade and other payables

(291,961)

 

2,221,618

Attributable goodwill

8,617,239

Contingent consideration

(6,721,320)

Non-controlling interest

(344,261)

 

3,773,276

Loss on disposal

(1,660,893)

Total consideration

2,112,383

 

 

Satisfied by:

 

Share consideration

2,112,383

Total consideration

2,112,383

 

Net cash outflow arising on disposal:

 

Consideration received in cash and cash equivalents

-

Less: cash and cash equivalents disposed of

(177,572)

 

(177,572)

 

The sellers held 2,321,300 shares (with an estimated fair value of £2,112,383) in DJI Holdings PLC which were issued in connection with the acquisition of Woying, These are to be returned by the sellers and have been valued at the closing share price of the group on 1 March 2015 for the purpose of accounting for the disposal.  The shares were returned to the group on 9th May 2016, which is subsequent to the year end, consequently the shares receivable from the sellers have been shown as a deduction within equity.

9.   Investment in associates

Associate 1:  On 7 July 2014 Beijing New Net Science and Technology Development Limited ("NewNet"), a Company within the Group, entered into an agreement with Xinhautong Software Development (Beijing) Co., Limited, to develop and promote new lottery products.  As part of the agreement, a new company was formed, Beijing Xinhaucai Technology Co., Limited ("Xinhuacai"), of which NewNet owns 49%.

Associate 2:  In Dec 2015, Harbin TengCai Science & Technology Development Co. Ltd ("TengCai"), a Company newly formed and majority owned (80%) by Beijing New Net Science and Technology Development Limited within the Group, entered into an agreement with HeiLongJiang sports bureau, to develop and promote new lottery products and sports facility bookings.  As part of the agreement, a new company was formed, HeiLongJiang LongTi Technology Co., Ltd ("LongTi"), of which TengCai owns 40%.

Associate 3:  On 6 August 2015 Beijing New Net Science and Technology Development Limited ("NewNet"), a Company within the Group, entered into an agreement with a Chinese national to develop and promote online sports lottery products in the Chinese province of Shandong.  As part of the agreement a new company was formed, Qingdao BaiFa Technology Co., Limited ("BaiFa"), of which the Group owns 50%.

All associates are accounted for using the equity method of accounting.

 

2015

2014

ASSOCIATE 1:

 

 

Summarised financial information in respect of Xinhuacai is set out below:

 

 

Aggregated amounts relating to associates

 

 

Non-current assets

267,539

258,301

Current assets

2,923,778

4,586,049

Total assets

3,191,317

4,844,350

Total liabilities

(48,567)

(26,999)

Net assets

3,142,750

4,817,351

Total revenue

-

-

Loss and other comprehensive loss for the year

1,706,471

242,416

Group's share of net assets of associates

49%

49%

 

 

 

ASSOCIATE 2:

 

 

Summarised financial information in respect of LongTi is set out below:

 

 

Aggregated amounts relating to associates

 

 

Non-current assets

43,000

-

Current assets

1,504,192

-

Total assets

1,547,192

-

Total liabilities

(17,118)

-

Net assets

1,530,074

-

Total revenue

7,900

-

Loss and other comprehensive loss for the year

29,081

-

Group's share of net assets of associates

40%

-

 

ASSOCIATE 3:

 

 

Summarised financial information in respect of BaiFa is set out below:

 

 

Aggregated amounts relating to associates

 

 

Non-current assets

-

-

Current assets

23,775

-

Total assets

23,775

-

Total liabilities

(9,043)

-

Net assets

14,732

-

Group's share of net assets of associates

50%

-

Associate 3 did not trade during the year.
 

 

 

Reconciliation of the above summarised financial information to the carrying amounts in the Group financial statements is shown below:

Proportion of the Group's ownership interest in associate 1 (49%)

1,539,948

2,360,502

Goodwill

2,597,755

2,580,758

Total associate 1 (49%)

4,137,703

4,941,260

Proportion of the Group's ownership interest in associate 2 (40%)

612,030

-

Goodwill

415,774

-

Total associate 2 (40%)

1,027,804

-

Proportion of the Group's ownership interest in associate 2 (50%)

7,366

-

Goodwill

44,606

-

Total associate 3 (50%)

51,972

-

 

 

2015

2014

Total proportion of the Group's ownership interest in associates

2,159,344

2,360,502

Total Goodwill

3,058,135

2,580,758

Total associates

5,217,479

4,941,260

Group's share of loss of associates

 

 

Associate 1

836,171

118,581

Associate 2

11,632

-

Associate 3

-

-

 

847,803

118,581

 

10.   Trade and other receivables

 

2015

2014

Trade receivables

22,491

887,620

Unpaid share capital

11,433

11,433

Amounts owed by related parties

61,423

52,348

Other debtors

1,083,543

657,592

VAT receivable

980,377

-

Prepayments

2,290,197

3,102,646

 

4,449,464

4,711,639

Trade receivables

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.  The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.  The concentration of credit risk is limited due to the customer base being large and unrelated.  There are no customers who represent more than 5% of the total balance of trade receivables.

The Group does not hold any collateral or other credit enhancements over any of its trade receivables nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

11.   Borrowings

 

2015

2014

Unsecured borrowing at amortised cost:

 

 

Convertible loan notes

5,978,001

5,964,107

 

5,978,001

5,964,107

 

 

2015

2014

Amount due for settlement within:

 

 

1 year

-

-

2-5 years

5,978,001

5,964,107

 

5,978,001

5,964,107

All borrowings are in Pound Sterling

Convertible loan notes are denominated in Pounds Sterling and carry interest at 16% per annum in the first year, 20% per annum in the second year and 24% thereafter.  The loan notes and accrued interest are repayable after three years and can be converted into shares at the option of the loan note holder at any time prior to this.  The conversion price of £115 was at a 15% premium to the share price on initial placing on AIM.  Subsequent to the year end the terms of the loan notes have been amended as described in note 15.

 

 

12. Trade and other payables

Current

2015

2014

Trade creditors

537,853

701,544

Amounts owed to related parties

686,028

931,529

Accruals

2,143,747

982,874

Income tax payable

48,327

266,726

Other taxes and social security

26,860

-

Contingent consideration

849,927

5,458,948

Other payables

1,333,359

1,191,231

 

5,626,151

9,532,852

Non-current

 

 

Contingent consideration

-

2,891,336

 

-

2,891,336

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.  The average credit period taken for purchases is 50 days (2014: 62 days). For most suppliers, no interest is charged on the trade payables.  The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

13.  Share Capital

Allotted, called-up and fully paid

2015

2014

144,306,820 ordinary shares of 10p each (2014: 130,523,391)

14,430,682

13,052,339

During the year, the Company issued 13,528,429 ordinary shares of 10p each for cash consideration of £4,734,950 giving rise to a share premium of £2,868,604, which is net of £513.503 share placing costs.

The Company has one class of ordinary shares which carry no right to fixed income.

As at 31 December 2015, the group had received £487,500 in respect of 1,392,855 shares which were not allotted and issued until post year end.  The proceeds are shown as a credit within equity.

As described in note 4, the group issued 255,000 shares with a face value of £156,279 in settlement of claims from former advisors giving rise to a share premium of £130,779.

At 31 December 2015, the group had 4,500,000 warrants in issue with an exercise price at 35 pence each which expire in December 2018 and a further 653,892 warrants with an exercise price of 35p each which expire in October 2020.

 

 

14.   Notes to the cash flow statement

 

2015

2014

Consolidated loss for the year

(11,447,828)

(3,625,649)

Adjustments for:

 

 

Share of results of associate

847,803

118,581

Income tax expense

156,961

663,532

Finance costs

1,394,590

567,896

Exceptional items

-

21,770

Loss on disposal of discontinued operations

1,660,893

-

Loss on disposal of property, plant and equipment

1,147

-

Depreciation of property, plant and equipment

200,538

214,118

Amortisation of intangible assets

76,679

88,685

Share based payment charge

611,029

14,885

Operating cash flows before movements in working capital

(6,498,188)

(1,936,182)

Decrease in inventories

134,056

241,007

Increase in receivables

(2,205,906)

(1,720,021)

Increase/(decrease) in payables

116,421

(91,286)

Net cash used by operations

(8,453,617)

(3,506,482)

Income taxes paid

(375,396)

(396,806)

Interest paid

(1,709)

(120,244)

Net cash used by operating activities

(8,830,722)

(4,023,532)

 

Significant non-cash transactions include warrant issues, settlement agreements, share proceeds on disposal of Woying and interest accruals.

 

2015

2014

Cash and bank balances

4,028,279

10,834,439

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts.  The carrying amount of these assets is approximately equal to their fair value.

Analysis of changes in debt

 

31 Dec 2014


Cash flow

Non-cash movements

31 Dec 2015

Cash and bank balances

10,834,439

(6,861,975)

55,815

4,028,279

Other loans

(5,964,107)

-

(13,894)

(5,978,001)

Net debt

4,870,332

(6,861,975)

41,921

(1,949,722)

 

 

 

15.   Subsequent events

1. Technology partnership with Beijing NewNet Science & Technology Development Co., Ltd. ("NewNet") to support Xinhua News Mobile App funded by additional placing to raise £10.5 million

The Group announced on 21 April 2016 that NewNet will enter into an agreement with Xinhuatong Network Co., Ltd. ("Xinhuatong") and branch offices of Xinhua News Agency ("Xinhua"), the national news agency in China, to supply a game technology platform and facilitate mobile payments through the Xinhua News Mobile App for public utility bills including electricity, gas, water, mobile phone top-ups and traffic fines in an initial seven of 12 targeted provinces in China.

The Group's investment in this new venture was successfully entered into.  It was funded by the proceeds of placing 17,580,000 new ordinary shares at a price of 60p each to raise approximately £10.5 million before expenses through Mirabaud Securities LLP ("Mirabaud").  The shares were admitted to trading on AIM in two stages, 14,900,000 shares were placed using the Directors' existing authority to allot shares for cash on a non pre-emptive basis on 28 April 2016 and, following the passing of Resolutions at the Company's General Meeting on 16 May 2016, 2,680,000 Shares were admitted to trading on AIM on 17 May 2016.

2. Renegotiation of convertible loan notes

The Company also announced on 21 April 2016 that the Group agreed with the noteholder, Stadium Parkgate Limited, to cancel the existing Convertible Loan Notes (note 12) and to issue new notes for the same principal amount of £6.0 million, but carrying an interest rate of 6 per cent.

The new notes, together with accrued interest, are capable of conversion to Ordinary Shares at any time after 31 December 2016 and prior to 17 July 2018, other than in circumstances of certain changes of control where the new notes will be capable of conversion to Ordinary Shares prior to 31 December 2016. The conversion price of the new notes will be the lower of 115p and the closing mid-market price of an Ordinary Share on 31 December 2016, other than in circumstances of certain changes of control where the conversion price of the New Notes will be 115p.

In addition, further new interest notes were issued for the sum of £2,426,960, this being the accrued interest to date on the Convertible Loan Notes. The new interest notes are capable of conversion to Ordinary Shares at any time after 31 December 2016 and prior to 31 January 2017 at the lower of 115p and the closing mid-market price of an Ordinary Share on 31 December 2016. Separately, at any time after 31 January 2017 or prior to 31 December 2016 in the event of certain changes of control, the new interest notes are capable of conversion to Ordinary Shares at the lower of 115p and the closing mid-market price of an Ordinary Share on 31 December 2016, other than in circumstances of certain changes of control where the conversion price of the new notes will be 115p.

3. Share subscriptions completing post year end

The Company announced its intention on 11 September 2015 to conditionally place 15,957,000 shares of par value 10p each at a price of 35p each. The placement went ahead and was fully subscribed.  2,428,571 shares were allotted after the year end and proceeds of £362,500 were received after the year end.

 

Full accounts have been posted to shareholders on 30 June 2016 and may be obtained, free of charge, at the Company's registered office, at First Floor, Mallory House, Goostrey Way, Mobberley, Knutsford, Cheshire WA16 7GY for a period of one month.

The Annual General Meeting of DJI Holdings plc will be held at the offices of Mirabaud Securities LLP, 33 Grosvenor Place, London, SW1X 7HY  on Thursday 28 July 2016 at 2pm.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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