On 11 August 2017, the Group entered into a conditional Sale and Purchase Agreement to sell all of the group’s operating business and assets to to Kilavan Holdings Limited. This transaction was concluded on 8 September 2017 following approval by the company’s shareholders at the extraordinary general meeting (EGM) which took place on 30 August 2017.
As outlined in the circular to shareholders dated 14 August 2017, the board’s decision to sell all of the group’s operating business and assets arose from changes introduced by the MNOs during the last quarter of 2016 which significantly impacted the Group and its Business to Business (‘B2B’) customers’ ability to acquire new subscribers on the Payforit platform. In the light of these changes in its principal market, the Board of zamano plc took the decision in February 2017 to formally wind down all existing Premium Rate SMS business lines over the course of 2017 and during the period to 30 June 2017, the Board concluded that the wind down of the Premium Rate SMS business would most effectively be completed by a sale of the Group’s remaining operating business and assets..
As anticipated, the impact of the changes to Payforit resulted in a significant fall off in the Company’s revenue and operating outcomes in the period ended 30 June 2017. A sales process was instigated during this period, during the course of which, Group management agreed to purchase all of the group’s operating business and assets. As the Board had committed to a sale or wind down of the entire Premium Rate SMS business prior to 30 June 2017, all related assets and liabilities are presented in the condensed consolidated financial statements for the half year ended 30 June 2017 as part of a disposal group held for sale.
At 30 June 2017, the disposal group was stated at a fair value of a negative €1,232,000, comprising trade and other receivables of €1,206,000 and trade and other payables of €2,438,000, including estimated transaction costs of €250,000.
The entire business operations of the Group represent a discontinued operation and all results have been displayed as such in the income statement, statement of other comprehensive income and in the cash flow statement for the six months ended 30 June 2017, except any administration costs incurred in respect of the Group’s listing on the Alternative Investment Market (AIM) in London and the Enterprise Securities Market (ESM) in Dublin and any costs specifically precluded from the plan to sell the Premium Rate SMS business. The he comparative consolidated income statement has been re-presented to show the discontinued operation separately from continuing operations.
In addition to the transfer of liabilities of €982,000, the Group transferred cash and cash equivalents of €1,537,000 and a loss on disposal of €554,999 arose.
In our circular to shareholders dated 13 August 2017 it was stated that zamano’s net cash position after disposing of the Premium Rate SMS business would be approximately €5,582,000 which would be used in part to discharge the Company’s existing Plc liabilities and transaction costs related to the Disposal of approximately €282,000. Following the discharge of such liabilities and transaction expenses related to the Disposal, it was expected that zamano would retain approximately €5,300,000 of cash, and would have no other significant assets or liabilities. The Board is pleased to confirm that the estimated financial outcome described above is likely to be achieved.
Since the completion of the Disposal, the Board has commenced the process required for the Company to be in a position to make a return of cash to shareholders. Such process is expected to take up to six months. In the meantime, the Board considers it is in Shareholders’ interests to continue to examine possible investment opportunities. The Board confirms that any material or significant investment opportunity will be conditional on Shareholder approval in due course.
Since the Disposal, which concluded on 8 September 2017, the Company is classified as an AIM Rule 15 cash shell company under the AIM Rules and an investing company under the ESM Rules.
The Company’s investing policy was approved by the shareholders at its EGM on 30 August 2017. The Company’s investing policy will be to seek to invest in and or acquire companies with either strong existing profitability or significant growth potential, in, inter alia, manufacturing, service activities, or extractive industries/exploration. The Directors intend to focus primarily on the UK and Ireland where the Directors believe that there are suitable opportunities, although other countries may also be considered to the extent that the Board considers that value opportunities exist and attractive returns can be achieved.
In selecting investment opportunities, the Board will focus on businesses that are available at attractive valuations and hold opportunities to unlock embedded value over the medium term. The Board will seek to invest in business where it can influence the business at a board level. The ability to work alongside a strong management team to maximise returns through revenue growth will be something the Board will focus upon.
Since the completion of the Disposal, the board has been engaged in a process to return cash to shareholders and / or explore and examine suitable investment opportunities. We will, of course, continue to keep shareholders fully appraised on all progress made in relation to either a cash distribution to shareholders or any investment opportunities that may crystallise at the appropriate time.