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Octagonal PLC (OCT)

  Print      Mail a friend       Annual reports

Friday 19 August, 2016

Octagonal PLC

Report & Accounts to 31 March 2016, Notice of AGM

RNS Number : 7117H
Octagonal PLC
19 August 2016
 

 

For immediate release                                                                                                                                            19 August 2016

 

OCTAGONAL PLC ("Octagonal" or the "Company")

 

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2016

 

NOTICE OF ANNNUAL GENERAL MEETING

 

 

The Company is pleased to announce its final audited results for the year ended 31 March 2015.   The Annual Report and Accounts  (the "Accounts"), together with a Notice of Annual General Meeting, are being posted to shareholders today and are available on the Company's website www.octagonalplc.com

 

The Annual General Meeting will take place at 11.00 am on 26 September 2016 at the offices of Beaumont Cornish Limited, 2nd Floor, Bowman House, 29 Wilson Street, London EC2M 2SJ

 

Extracts from the Accounts are set out below:

 

CHAIRMAN'S STATEMENT

I am pleased to present the annual report and accounts for the year ended 31 March 2016.

It has been a transformational year for Octagonal having  acquired all the remaining issued shares in Global Investment Strategy Ltd ("GIS") by way of a reverse takeover on 30 June 2015, and in addition, GIS exceeded expectation for both revenue and profits.  Such performance is a testament to the quality of the business, the focus and dedication of managment and the wider team.

Some of the key highlights for GIS, the Group's operating business,:

·     GIS traded significantly above 2015 - Revenue up 26.6% to £4.2m (2015: £3.3m)

·     GIS increased operating margin to 25.6% (2015: 14.2%)

·     GIS increased operating profits by 128.3% to £1.08m (2015: £473,000)

·     Implementation of a new processing system - enhancing existing risk management procedures and improving client reporting which will result in efficiency gains

Business overview 

Our business' core focus is on providing global settlement and safe custody services to investors worldwide,  priding ourselves on customer satisfaction through personalised service delivered by experienced industry individuals.

Our business model, since acquiring GIS, has been to focus on driving profitability and longer-term shareholder value through two key areas:

(i)           growing revenue organically through seeking new clients and identifying and implementing new services to existing and new clients, and

(ii)          improving margins through investing in technology, creating efficiencies and a drive to reduce frictional costs etc. This focus is already bearing fruit with revenue improvements and margin gains.  

Financial review 

For the year ending 31 March 2016 GIS has delivered results above expectations and overall the Group has achieved revenues of £4.2 million (2015: £3.3 million) and operating profit  of £788,000 (2015: £473,000) a year on year increase of 26.6% and 66.6% respectively.  Gross margins showed a strong increase to 69.3% (2015: 60.5%) with operating margin also increasing to 18.8% (2015: 14.2%).  Operating costs attributable just to Octagonal, post merger, amounted to £265,000, which include exceptional one-off costs of £146,000 in relation to the reverse takeover and write-offs. 

This strong performance has been achieved in spite of facing some of the most challenging markets seen in years, with the investment-banking sector clearly demonstrating the effect of the downturn in corporate activity.  Despite this the Group has turned in a strong set of maiden results following the acquisition of GIS. 

This has clearly demonstrated the Group's ability to be cash generative and profitable in such environments and positions the Group to grow and improve margins and profitability as markets return to traditional patterns, which we have clearly seen in the first quarter of the current financial year.

At the year end the Group had cash balances in excess of £1.5 million (2015: £300,000) which represent more than adequate cash reserves for our current operations with Net Assets of £5.4 million (2015: £1.9 million).  Post BREXIT we have seen a decline in the value of the Pound. GIS generates the majority of its income in USD, with costs divided between Euro, principally for banking costs, and GBP for overheads. Clearly if rates remain at these levels it will have a positive impact on the Group's earnings.

We do not see the long term implications of BREXIT having a material impact on our business and even though the initial reaction was felt in the financial markets we have since seen stability return. Our strong USD income will again not be affected by BREXIT as this income is mostly derived outside the EU. 

We remain very optimistic that the measures we have put in place will see this business grow further this year and increase profitability.

 

Future developments

The business has continued to see growth in both revenues and new client generation over this period. The Group remains focused on growing the core settlement and safe custody business organically and diversifying only into new areas that are earnings enhancing.

The continued focus of the core business will be on organic development seeking to improve relationships with both clients and counterparties and to grow this base, whilst improving efficiencies and driving cost savings. 

In addition, the Group is currently implementing a new range of services to our existing client base alongside our settlement and custody services, to include enhanced FX trading, Futures and Options trading and Portfolio management. This continues our strategy of organic growth through offering a broader range of services to clients where we see long-term value. We will continue to explore other avenues to increase revenue in the financial services arena, where the Board sees longer-term value and the enhancement of earnings.

The Group has had a strong full year performance and we continue with a number of ongoing initiatives focused at increasing clients and operating profits.  The prospects for the coming year remain positive and the Board is confident of achieving market expectations. 

Finally, I would like to thank John and his team who have worked exceptionally well in delivering the results in this Report in challenging conditions.

 

Grant Roberts

Chairman

19 August 2016 

 

 

 

 

For further information please visit www.octagonalplc.com or contact:

 

Octagonal Plc

+44 (0) 20  7048 9400

John Gunn




Beaumont Cornish Limited (Nominated Adviser)

James Biddle / Roland Cornish

+44 (0) 20 7628 3396



Northland Capital Partners Limited (Broker)


Patrick Claridge / John Howes / David Hignell

+44 (0) 20 7382 1100

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

 


GROUP INCOME STATEMENT

YEAR TO 31 MARCH 2016

 


Notes

2016

£'000

*2015

£'000






Revenue


6

4,202

3,320

Cost of sales



(1,289)

(1,312)

Gross profit



2,913

2,008






Administrative expenses



(2,125)

(1,535)






Operating profit


7

788

473






Other gains and losses


10

-

(492)

Finance income



4

49

Finance costs



(1)

-






Profit before tax



791

30






Tax


11

(188)

(25)











Profit for the year



603

5











Earnings per share attributable to owners of the parent company


12








Basic and diluted (pence per share)





From continuing and total operations



0.135

0.001






 

*In accordance with reverse acquisition accounting convention the comparative figures for 2015 relate to the results of GIS.

There are no recognised gains or losses in either period other than the profit for the year and therefore no statement of comprehensive income is presented

 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company profit and loss account.  The total comprehensive loss for the parent company for the year was £864,000 (2015: £1,128,000).

 

The accounting policies and notes are an integral part of these financial statements.

 

 


GROUP AND COMPANY  STATEMENTS OF FINANCIAL POSITION

AS AT 31 MARCH 2016

 


GROUP


COMPANY


Notes

2016

£'000

2015

£'000


2016

£'000

2015

£'000








Non-Current assets







Goodwill

13

2,869

-


-

-

Property, plant and equipment

15

55

65


-

-

Investment in subsidiaries

16

-

-


9,137

-

Available for sale investments

17

-

-


-

804



2,924

65


9,137

804








Current assets







Available for sale investments

17

689

568


-

69

Trade and other receivables

18

705

1,141


112

334

Cash and cash equivalents

19

1,552

349


1

146



2,946

2,058


113

549








Current liabilities







Trade and other payables

20

270

153


375

143

Current tax liabilities


213

18


-

-

Borrowings

21

2

7


-

-



485

178


375

143

Non-Current liabilities







Borrowings

21

-

2


-

-








Net assets/(liabilities)


5,385

1,943


8,875

1,210








Equity







Share capital

23

1,104

2,613


1,104

878

Share premium account

23

3,669

-


3,669

1,713

Reverse acquisition reserve


679

-


-

-

Merger reserve


-

-


6,555

-

Investment reserve


-

-


110

-

Share option and warrant reserve


-

-


-

318

Retained earnings


(67)

(670)


(2,563)

(1,699)

Total equity


5,385

1,943


8,875

1,210

These financial statements were approved by the Board of Directors on 19 August 2016.

Signed on behalf of the Board by:

Nilesh Jagatia

Director                                                                                                                                          Company number: 06214926

The accounting policies and notes are an integral part of these financial statements


GROUP STATEMENT OF CHANGES IN EQUITY

YEAR TO 31 MARCH 2016

 

Share

capital

Share Premium

Reverse acquisition reserve

Share option and warrant reserve

Retained

earnings

Total

 equity

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2014

2,613

-

-

-

(675)

1,938

Total comprehensive income for the year

-

-

-

-

5

5

 

 

 

 

 

 

 

Balance at 31 March 2015

2,613

-

-

-

(670)

1,943

Total comprehensive income for the year

 

 

 

 

603

603

Adjustment for reverse acquisition

(1,552)

2,109

679

-

-

1,236

Proceeds of share issues

43

1,657

-

-

-

1,700

Share issue costs

-

(97)

-

-

-

(97)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 March 2016

1,104

3,669

679

-

(67)

5,385

 

 

 

 

 

 

 

During the year the Company completed the acquisition of Global Investment Strategy UK Limited ("GIS"), a financial services business, based in London.  GIS is a London Stock Exchange member firm and regulated by the FCA. The consideration for the acquisition was £8.2 million satisfied through the issue of 336,136,132 new ordinary shares and £1.5 million in cash.

 

The accounting policies and notes are an integral part of these financial statements.


COMPANY STATEMENT OF CHANGES IN EQUITY

YEAR TO 31 MARCH 2016

 

Share

 capital

Share Premium

Merger Reserve

Investment reserve

Share option and warrant reserve

Retained

earnings

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Balance at 1 April 2014

640

1,148

-

-

84

(571)

1,301

Total comprehensive expense for the year

-

-

-

-

-

(1,128)

(1,128)

Net proceeds of share issues

238

599

-

-

-

-

837

Share issue costs

-

(34)

-

-

-

-

(34)

Share based payment costs

-

-

-

-

234

-

234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 March 2015

878

1,713

-

-

318

(1,699)

1,210

 

 

 

 

 

 

 

 

Total comprehensive expense for the year

-

-

-

110

-

(864)

(754)

Issue of share capital

226

2,053

6,555

-

(318)

-

8,516

Share issue costs

-

(97)

-

-

-

-

(97)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 March 2016

1,104

3,669

6,555

110

-

(2,563)

8,875

 

 

 

 

 

 

 

 

 

The accounting policies and notes are an integral part of these financial statements.


GROUP AND COMPANY STATEMENTS OF CASH FLOWS

YEAR TO 31 MARCH 2016

 

    GROUP


    COMPANY


2016

2015


2016

2015


£'000

£'000


£'000

£'000

OPERATING ACTIVITIES






Profit/(loss) for the year before taxation

791

30


(897)

(1,128)

Adjusted for:






Finance expense

1

1


-

-

Finance income

(4)

(43)


(2)

-

Depreciation

18

22


-

-

Equity settled share based payments

-

-


-

234

Shares issued in settlement of fees

-

-


46

-

Fair value movement on investments

-

-


-

(9)

Investment impairment

-

428


-

84

Loss/(gain) on disposal of investments

-

65


(9)

-







Operating cash flows before movements in working capital

806

503


(862)

(819)

(Increase)/Decrease in trade and other receivables

308

(214)


255

(310)

Increase/(Decrease) in trade and other payables

117

15


232

8







Net cash used in operations

1,231

304


(375)

(1,121)

Tax paid

-

-


-

-

Net cash used in operating activities

1,231

304


(375)

(1,121)

INVESTING ACTIVITIES






Purchase of property, plant and equipment

(8)

(67)


-

-

Purchase of investments

(50)

(221)


(1,500)

(848)

Payment to shareholders as part of reverse acquisition (Note 14)

(1,500)

-


-

-

Disposal of investments

-

117


78

-

Loan to a related party

(76)

-


-

-

Finance income received

4

1


2

-







Net cash from/(used in) investing activities

(1,630)

(170)


(1,420)

(848)

FINANCING ACTIVITIES






Net proceeds from share issues

1,603

-


1,650

803

Repayment of short term borrowings


(142)




New finance leases

-

9




Interest paid

(1)

(1)


-








Net cash from/(used in) financing activities

1,602

(134)


1,650

803

Net (decrease)/increase in cash and cash equivalents

1,203

-


(145)

(1,166)

Cash and cash equivalents at beginning of year

349

349


146

1,312

Cash and cash equivalents at end of year

1,552

349


1

146

 


 

 

1

NOTES TO THE GROUP FINANCIAL STATEMENTS YEAR TO 31 MARCH 2016

 

GENERAL INFORMATION


The Company is incorporated and domiciled in England and Wales as a public limited company and operates from its registered office 2nd Floor 2 London Wall Buildings, London, England, EC2M 2SJ.  Octagonal plc's shares are listed on the AIM of the London Stock Exchange. The Group's main activity is that of a financial services business offering a wide range of services to institutional, family office and high net worth clients.

 

2

STATEMENT OF COMPLIANCE


The financial statements comply with IFRS as adopted by the European Union.  The following new and revised Standards and Interpretations have been adopted in the current period by the Company for the first time and do not have a material impact on the group.


IFRS 12   -

Disclosures of interests in other entities


A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the financial statements of the Company.

 

3

Accounting Policies


The principal accounting policies adopted and applied in the preparation of the Group and Company Financial statements are set out below.

These have been consistently applied to all the years presented unless otherwise stated:


BASIS OF ACCOUNTING

The financial statements of Octagonal plc (the "Company") and its subsidiaries (the "Group") have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union ("EU") applied in accordance with the provisions of the Companies Act 2006.

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the International Financial Standards Interpretations Committee ("IFRS IC") and there is an ongoing process of review and endorsement by the European Commission. The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.

In accordance with reverse acquisition accounting convention the comparative information for the group for 2015 relates to the business of GIS.


GOING CONCERN

Any consideration of the foreseeable future involves making a judgement, at a particular point in time, about future events which are inherently uncertain. The ability of the Group to carry out its planned business objectives is dependent on its continuing ability to raise adequate financing from equity investors and/or the achievement of profitable operations.

Nevertheless, at the time of approving these Financial Statements and after making due enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Financial Statements.

 

 





BASIS OF CONSOLIDATION

The Group's consolidated financial statements incorporate the financial statements of Octagonal Plc (the "Company") and entities controlled by the Company (its subsidiaries). Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.  The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. 

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.  They are de-consolidated from the date that control ceases.

The Company acquired Global Investment Strategy UK Limited on 30 June 2015 through both cash consideration and a share-for-share exchange. As the shareholders of GIS have control of the legal parent, Octagonal plc, the transaction has been accounted for as a reverse acquisition in accordance with IFRS 3 "Business Combinations".

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.  Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated.  Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.


Business Combinations

The acquisition of subsidiaries is accounted for using the acquisition method under IFRS 3.  The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.  The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.


Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.  If, after reassessment, the Group's interest in the net fair value of the acquirer's identifiable assets, liabilities and contingent liabilities exceed the cost of the business combination, the excess is recognised immediately in the income statement.


revenue recognition

The Group's Revenue  includes the net profit/loss on principal trading, commission income, corporate advisory fees, fund management fees and other ancillary fees. It also includes the fair value of options over securities which have been received as consideration for corporate finance services rendered.

Dividends and interest arising on bull and bear positions in securities form part of dealing profits and, because they are also reflected by movements in market prices, are not identified separately.

Fees for advisory engagements for which the work is substantially complete or which are at a stage where work for which separate payment is due is substantially complete, and which will become due but are not yet invoiced are recorded on a right to consideration basis.  Where such fees are contingent on the outcome of a transaction they are only accounted for after the transaction has completed.

Income from Stock Exchange transactions is determined under the principles of trade date accounting.

Management fees and interest are credited to income in the period in which they relate.




foreign currencies

At each year end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date.  Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement.  Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.  For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.


AVAILABLE FOR SALE INVESTMENTS

Available for sale (AFS) financial assets include equity investments and debt securities. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions. Purchases and sales of AFS financial assets are recognised and derecognised on a trade date basis.

Investments are initially measured at fair value plus directly attributable incidental acquisition costs.  Subsequently, they are measured at fair value in  accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

Gains and losses on measurement are recognised in other comprehensive income except for impairment losses and foreign exchange gains and losses on monetary items denominated in a foreign currency, until the assets are derecognised, at which time the cumulative gains and losses previously recognised in other comprehensive income are recognised in the income statement.

The Group assesses at each year end date whether there is any objective evidence that a financial asset or group of financial assets classified as AFS has been impaired. An impairment loss is recognised if there is objective evidence that an event or events since initial recognition of the asset have adversely affected the amount or timing of future cash flows from the asset. A significant or prolonged decline in the fair value of a security below its cost shall be considered in determining whether the asset is impaired.

When a decline in the fair value of a financial asset classified as AFS has been previously recognised in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss is removed from other comprehensive income and recognised in the income statement. The loss is measured as the difference between the cost of the financial asset and its current fair value less any previous impairment.




 


INVESTMENTS HELD FOR TRADING

All investments determined upon initial recognition as held at Fair Value through Profit or Loss ("FVTPL") were designated as investments held for trading.  Investment transactions are accounted for on a trade date basis.  Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. The fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price and net asset value. Changes in the fair value of investments held at FVTPL and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as "Net gains on investments". Investments are initially measured at fair value. Subsequently, they are measured at fair value in accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

The Company determines the fair value of its Investments based on the following hierarchy:

LEVEL 1 - Where financial instruments are traded in active financial markets, fair value is determined by reference to the appropriate quoted market price at the reporting date. Active markets are those in which transactions occur in significant frequency and volume to provide pricing information on an on-going basis.

LEVEL 2 - If there is no active market, fair value is established using valuation techniques, including discounted cash flow models. The inputs to these models are taken from observable market data including recent arm's length market transactions, and comparisons to the current fair value of similar instruments; but where this is not feasible, inputs such as liquidity risk, credit risk and volatility are used

LEVEL 3 - Valuations in this level are those with inputs that are not based on observable market data.


GOODWILL

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition and is included as a non-current asset.

Goodwill is tested annually, or more regularly should the need arise, for impairment and is carried at cost leff accumulated impairment losses. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

Goodwill is allocated to cash generating units for the purpose of impairment testing.

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

In accordance with IAS 36 the Group values Goodwill at the lower of its carrying value or its recoverable amount, where the recoverable amount is the higher of the value if sold and its value in use. In addition IAS38 requires intangible assets with finite useful lives to follow the same impairment testing as Goodwill including the use of value in use calculations.

 


 


taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the year end date.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each year end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.  Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and where they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.


IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS EXCLUDING GOODWILL

At each financial year end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.  Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.  An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount and the impairment loss is recognised as an expense immediately.

When an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years.  A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 



 


 


PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost, less depreciation, less adjustments for impairment, if any.

Significant improvements are capitalised, provided they qualify for recognition as assets. The costs of maintenance, repairs and minor improvements are expensed when incurred.

Tangible assets retired or withdrawn from service are removed from the balance sheet together with the related accumulated depreciation. Any profit or loss resulting from such an operation is included in the income statement.

Tangible assets are depreciated on straight-line method based on the estimated useful lives from the time they are put into operations, so that the cost is diminished over the lifetime of consideration to estimated residual value as follows:

Office equipment - Over 5 years

Other Fixtures & Fittings - Over 10 years

Leasehold property- Over period of the lease

Other Motor Vehicles - Over 4 years


TRADE RECEIVABLES, loans and other receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified under 'loans and receivables'. Loans and receivables are initially measured at fair value and subequently measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.

Other receivables, that do not carry any interest, are measured at their nominal value as reduced by any appropriate allowances for irrecoverable amounts.

 

 

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents.


FINANCIAL LIABILITIES

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Financial liabilities are classified as either financial liabilities at fair value through profit or loss ("FVTPL") or 'other financial liabilities'.

There were no financial liabilities 'at FVTPL' during the current, or preceding, period.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.


OTHER FINANCIAL LIABILTIES, BANK AND SHORT TERM BORROWINGS

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.  Finance charges are accounted for on an accruals basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Other short term borrowings being intercompany loans and unsecured convertible loan notes issued in the year are rec/ ognised at amortised cost net of any financing or arrangement fees.


TRADE PAYABLES

Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

 



 


 


EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL

Equity instruments issued by the Company are recorded at the proceeds received, net of incremental costs attributable to the issue of new shares.

An equity instrument is any contract that evidences a residual interest in the assets of a company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Share capital represents the amount subscribed for shares at nominal value.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Any bonus issues are also deducted from share premium.

The merger reserve represents the premium on the shares issued less the nominal value of the shares, being the difference between the fair value of the consideration and the nominal value of the shares.

The reverse acquisition reserve arises from the acquisition of Global Investment Strategy UK Limited by the Company and represents the total amount by which the fair value of the shares issued in respect of the acquisition exceed their total nominal value.

The investment reserve represents the difference between the purchase costs of the available for sale investments less any impairment charge and the market or fair value of those investments at the accounting date.

The warrant reserve represents the fair value, calculated at the date of grant, of warrants unexercised at the balance sheet date.

Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.


SHARE-BASED PAYMENTS

The Group has applied the requirements of IFRS 2 Share-based payments

The Group operates a number of equity-settled share-based payment schemes under which share options are issued to certain employees.  Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant.  The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of the Black Scholes model.  The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

 



 



 


REVERSE ACQUISITION

The acquisition of Global Investment Strategy UK Limited on 30 June 2015 was accounted for using the reverse acquisition method. The following accounting treatment was applied in respect of the reverse acquisition:

·      The assets and liabilities of the legal subsidiary were recognised and measured in the consolidated financial statements at their pre-combination carrying amounts without restatement to fair value;

·      The identifiable assets and liabilities of the legal parent (the accounting acquiree) are recognised in accordance with IFRS 3 at the acquisition date. Goodwill is recognised in accordance with IFRS 3;

·      The retained earnings and other equity balances recognised in the consolidated financial statements are those of the legal subsidiary (the accounting acquirer) immediately before the business combination.


The amount recognised as issued equity instruments in the consolidated financial statements is determined by adding the fair value of the legal parent (which is based on the number of equity interests deemed to have been issued by the legal subsidiary) determined in accordance with IFRS 3 to the legal subsidiary's issued equity immediately before the business combination. However, the equity structure (that is, the number and type of equity instruments issued) shown in the consolidated financial statements reflects the legal parent's equity structure, including the equity instruments issued by the legal parent to effect the combination. The equity structure of the legal subsidiary (accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares issued by the legal parent (the accounting acquiree) in the reverse acquisition.

 

 

4

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS

In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period. Judgements and estimates that may affect future periods are as follows:

GOING CONCERN

The Directors consider that, based upon financial projections, the Company will be a going concern for the next twelve months.  For this reason, The directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in existence for the foreseeable future.  Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.


FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group holds investments that have been designated as available for sale on initial recognition. Where practicable the Group determines the fair value of these financial instruments that are not quoted (Level 3), using the most recent bid price at which a transaction has been carried out. These techniques are significantly affected by certain key assumptions, such as market liquidity.  Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

 

 



 

5

SEGMENTAL INFORMATION

 


A segment is a distinguishable component of the Group or Company's activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

As the chief operating decision maker reviews financial information for and makes decisions about the Group's activities as a whole, the directors have identified a single operating segment, that of corporate broking and advisory services. The Group operates in a single geographical segment which is the UK.

 

 

6

ANALYSIS OF TURNOVER



An analysis of turnover by class of business is as follows:




2016

£'000

2015

£'000


Commissions

3,260

2,753


Share sales

-

4


Corporate finance and advisory

130

19


Special charges and recharges

812

544



4,202

3,320

 

7

OPERATING PROFIT




2016

£'000

2015

£'000


Operating loss is stated after charging:




Staff costs as per Note 9 below

918

481


Depreciation of property, plant and equipment

18

22


Operating lease rentals

134

-


Write downs of VAT receivable

56

-


Net foreign exchange (gain)/loss

(11)

-

 

8

auditors' remuneration


The analysis of auditors' remuneration is as follows:



2016

£'000

2015

£'000






Fees payable to the Group's auditors for the audit of the Group's annual accounts

14

14


Total audit fees

14

14


Fees payable to the Group auditor and their associates for other services to the Group:




   - Tax services

-

-







14

14



 

9

staff costs


The average monthly number of employees (including executive directors) for the continuing operations was:


 

2016

No.

2015

No.


Group total staff

13

12


 

 

 


 

2016

£'000

2015

£'000


Wages and salaries

865

439


Social security costs

53

42






 

918

481

 


Directors' emoluments were as follows:


 

 


2016

2016

2016

2015

 

 


Directors

 fees

Other emoluments

Total

 

Total

 




£'000

£'000

£'000

£'000


CURRENT DIRECTORS  (note 1)






L

Grant Roberts 


9

-

9

-

L

John Gunn


9

214

223

-

 

Nilesh Jagatia


9

1

10

-

 

Samantha Esqulant


5

29

34

-

 

Martin Davison


9

-

9

-

 







 

PREVIOUS DIRECTORS  (note 2)






 

Jason Charles Berry


15

*30

45

56

 

Hamish Harris


-

-

-

126

 

David Lenigas


15

*30

45

68

 

Donald Strang


20

*30

50

126

 

Daniel Maling


-

-

-

18

 



91

334

425

394

 

Note 1  The remuneration of the current directors relates to the period since the date of their appointment.  With the exception of Samantha Esqulant the fees for all the current directors were invoiced by companies of which they were directors and controlling shareholders.

Note 2  The remuneration of the previous directors covers the period up to the date of their resignation. 

*Jason Charles Berry, David Lenigas and Donald Strang each received a £30,000 termination payment on their resignation from the Board.

 



 

 

10

OTHER GAINS AND LOSSES

 

 

2016

£'000

2015

£'000

 

Impairment of investments

-

(428)

 

Loss on disposal of investments

-

(64)

 


-

(492)

 




 

11

taxation


Reconciliation of tax charge:



Continuing operations



2016

£'000

2015

£'000






Profit before tax

791

30


Tax at the UK corporation tax rate of 20% (2015: 20%)

158

6


Effects of:




Tax effect of expenses that are not deductible in determining taxable profit:

28

6


Short term timing differences

2

81


Utilisation of tax losses

-

(68)


Tax charge for period

188

25


The total taxation charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which the Group operates.

 

12

EARNINGS PER SHARE

 

The basic earnings per share is based on the profit/(loss) for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year ended 31 March 2016 assumes that all shares have been included in the computation based on the weighted average number of days since issue.



2016

2015


Profit attributable to owners of the Group

£603,000

£5,000


Weighted average number of ordinary shares in issue for basic and fully diluted earnings*

448,057,989

*415,694,132


EARNINGS PER SHARE (PENCE PER SHARE)




BASIC AND FULLY DILUTED*:

0.135p

0.001p

*The weighted average number of shares for 2015 represents the number of shares issued on the acquisition of Global Investment Strategy UK Limited.



 



 

13

GOODWILL


Goodwill has arisen during the year on the acquisition of Global Investment Strategy UK Limited ("GIS") by the Company. See Note 14 for further details





2016

£'000

2015

£'000


At 1 April



-

-


Arising on acquisition of GIS



2,869

-


At 31 March



2,869

-

The amount of £2,869,000 of Goodwill relates to the Goodwill arising on the reverse acquisition of GIS. See Note 14 for further details.

Goodwill is monitored by management at the level of the operating segment. The recoverable amount is determined based on value-in-use calculations which uses cash flow projections based on financial budgets approved by the Directors covering a five-year period, and a discount rate of 12% per annum.

Cash flows beyond the five-year period are extrapolated using the estimated growth rates of 10% which is based on the average growth for 5 years covered by the projections. The Directors believe that any reasonably possible change in key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.

The Directors have reviewed the carrying value of Goodwill as at 31 March 2016 and consider that no impairment provision is required.

The Directors continue to review Goodwill on an on-going basis and where necessary in future periods will request external valuations to further support the valuation basis.



 

 



 

14

ACQUISITION


On 30 June 2015, the Group acquired 90.03% of the issued share capital of Global Investment Strategy UK  Limited ("GIS"), being the balance of the equity not already owned by Octagonal, by way of a share for share exchange. The total consideration was 336,136,132 ordinary shares in the Company (legal parent) and £1,500,000 in cash, resulting in the former shareholders of GIS obtaining 60.6% of the issued ordinary shares of the Company at the time. GIS's principal activity is that of a corporate broking and advisory business.  This transaction has been accounted for by the reverse acquisition method of accounting as prescribed by IFRS 3 Business Combinations. Thus for the purposes of this transaction GIS has been treated as the acquirer (or accounting parent), and the Company as the acquiree. The net assets of the Company at the date of acquisition consisted of shareholders funds of £782,000.

Adjustments to equity are primarily disclosed to recognise the legal parent's (the Company) capital structure after recognising the cost of the transaction in equity as prescribed by IFRS 3 Business Combinations.

Net assets acquired:



Book Value

Adjustments

Fair Value Adjustments

Fair Value



£'000

£'000

£'000

£'000


Current assets

60

-

-

60


9.97% investment in GIS

804

-

110

914


Current liabilities

(193)

-

-

(193)



671

-

110

781


Less fair value of shareholding in GIS




(914)


Net liabilities acquired at fair value




(133)


Goodwill




2,869


Consideration




2,736

 

Satisfied by:






Implied consideration - Shares issued in exchange




2,736

 



 

 

15

PROPERTY, plant AND EQUIPMENT


 

Office Equipment

Fixtures

 and fittings

Short term leasehold property

Motor Vehicles

Group Total


Cost  

£'000

£'000

£'000

£'000

£'000


As at 1 April 2014

25

11

-

-

36


Additions

3

1

-

63

67


As at 31 March 2015

28

12

-

63

103


Additions

2

-

6

-

8


As at 31 March 2016

30

12

6

63

111







Depreciation







As at 1 April 2014

7

9

-

-

16


Charge for the year

5

1

-

16

22


As at 31 March 2015

12

10

-

16

38


Charge for the year

4

-

2

12

18


As at 31 March 2016

16

10

2

28

56


Net book value







As at 31 March 2016

14

2

4

35

55


As at 31 March 2015

16

2

-

47

65

 

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:

 

 

2016

£'000

2015

£'000

 

Motor vehicles

11

15

 






 

16

INVESTMENT IN subsidiarY UNDERTAKINGS

 

The Company's investments in its subsidiary undertakings are as follows

 

COMPANY


2016

£'000

2015

£'000

 

Cost and net book value




 

At 1 April


-

-

 

Reclassified from available for sale investments


804

-

 

Additions


8,223

-

 

Fair value adjustment


110

-


As at 31 March


9,137

-


All principal subsidiaries of the Group are consolidated into the financial statements.  At 31 March 2016 the subsidiaries were as follows:


Subsidiary undertakings

Country of registration

Principal activity

Holding

Holding %


Global Investment Strategy UK Limited

UK

Financial services

Ordinary shares

100%





 

17

AVAILABLE-FOR-SALE INVESTMENTS



GROUP

COMPANY



2016

£'000

2015

£'000

2016

£'000

2015

£'000


Investments at fair value at 1 April

568

795

873

100


Purchases

50

201

-

848


Accrued interest

71

-

-

-


Reclassified as investment in subsidiary

-

-

(804)

-


Disposals

-

-

(69)

-



689

996

-

948


Market value adjustments to investment

-

(428)

-

(75)


Market value of investments at 31 March

689

568

-

873


Categorised as:






Level 1 Investments

416

366

-

69


Level 3 Investments

273

202

-

804



689

568

-

873


Classed as:






Non-current assets

-

-

-

804


Current assets

689

568

-

69



689

568

-

873


The table above sets out the fair value measurements using the IFRS 7 fair value hierarchy.  Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

There were no transfers between Level 1, Level 2 and Level 3 in either 2016 or 2015.

 

17

AVAILABLE-FOR-SALE INVESTMENTS (continued)


Measurement of fair value of financial instruments

The Group's management team perform valuations of financial items for financial reporting purposes, including Level 3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information.


Level 3 financial assets

Reconciliation of Level 3 fair value measurement of financial assets:



GROUP

COMPANY


COMPANY

2016

2015

2016

2015



£'000

£'000

£'000

£'000


At 1 April

202

-

804

-


Purhases

-

202

-

804


Reclassified as Investment in Subsidiary

-

-

(804)

-


Accrued interest

71

-

-

-


At 31 March

273

202

-

804


Investments held by the Company as Level 3 investments in 2015 were reclassified to "Investment in Subsidiary" in the 2016 period. During the 2015 period the Company held a position in unquoted securities that did not exert significant influence, as such they were classified as "Available for Sale" Level 3 financial assets. During the 2016 period the position held in the unquoted securities changed to a controlling stake in the investment. As a result, the classification of the investment moved from "Available for Sale Investments" to "Investment in Subsidiary" (Note 16).

CITY GOLF CLUBS LIMITED

The Group holds 50,000 preference shares and 107 ordinary shares in City Golf Clubs Limited (''City Golf Clubs'') together with a loan owing to GIS in the amount of £160,763.34. The loan carries interest of 16% per annum and is repayable on demand.

Having carried out a fair value review of the investment the Directors feel no impairment charge is required.



 

18

TRADE AND OTHER RECEIVABLES



GROUP

COMPANY



2016

2015

2016

2015



£'000

£'000

£'000

£'000


Prepayments and accrued income

26

-

13

256


Trade receivables

132

-

-

-


Other receivables

360

1,031

99

78


Loans receivable*

187

110

-

-



705

1,141

112

334

*Included in loans receivable is an amount of £76,000 due from Inspirit Energy Holdings Limited. This amount was repaid by Inspirit shortly after the year end. Further details are set out in Note 25 Related Party Transactions.  

Also included in loans receivable is an amount of £111,000 being the balance of an amount due from Amisud S.A.  In March 2015 GIS agreed to convert a prior investment in Amisud S.A, an Argentinian based agriculture company, into a debt owed to GIS totalling approximately US$215,000. Amisud S.A is required to repay the debt to GIS in four equal instalments, one of which was received in the previous year and one of which was shortly received post year end. As such the Directors feel no impairment charge is required.

No receivables were past due or provided for at the year-end or at the previous year end.

The Directors consider the carrying amount of intercompany loans and other receivables approximates to their fair value.

 

19

CASH AND CASH EQUIVALENTS



GROUP

COMPANY



2016

2015

2016

2015



£'000

£'000

£'000

£'000








Cash and cash equivalents

1,552

349

1

146







The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.

 



 

20

TRADE AND OTHER PAYABLES



GROUP

COMPANY



2016

2015

2016

2015



£'000

£'000

£'000

£'000


Trade payables

131

71

57

126


Other payables

27

32

270

-


Accrued expenses

112

50

48

17



270

153

375

143



 

 



 

21

BORROWINGS



GROUP

COMPANY



2016

2015

2016

2015



£'000

£'000

£'000

£'000


Net obligations under hire purchase contracts and finance leases

2

9

-

-


Classified as:

Short term - within one year

2

2

-

-


Long term - 1-2 years

-

7

-

-



2

9

-

-

The Directors consider the carrying amount of short term borrowings approximates to their fair value.

 

 

1.1  22

FINANCIAL INSTRUMENTS


FINANCIAL ASSETS BY CATEGORY

The IAS 39 categories of financial assets included in the Statement of financial position and the headings in which they are included are as follows:




2016

2015




£'000

£'000


Financial assets:





Cash and cash equivalents


1,552

349


Available for sale investments


689

568


Loans and receivables


319

110




2,560

1,027

 


FINANCIAL LIABILITIES BY CATEGORY

The IAS 39 categories of financial liability included in the Statement of financial position and the headings in which they are included are as follows:




2016

2015




£'000

£'000


Financial liabilities at amortised cost:





Trade and other payables


133

79


Short term borrowings


2

4




135

83


CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, (previously includes the borrowings) cash and cash equivalents and equity attributable to equity holders of the Parent Company, comprising issued capital, reserves and retained earnings, all as disclosed in the Statement of Financial Position.



 

 




FINANCIAL RISK MANAGEMENT OBJECTIVES

The Group is exposed to a variety of financial risks which result from both its operating and investing activities.  The Group's risk management is coordinated by the board of directors, and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets.

The main risks the Group is exposed to through its financial instruments are credit risk and liquidity risk.


CURRENCY risk management

The Group undertakes transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. The Group does not enter into forwardexchange contracts to mitigate the exposure to foreign currency risk as amounts paid and received in specific currencies are expected to largely offset one another and the currencies most widely traded are relatively stable. The Directors consider the balances most susceptible to foreign currency movements to be the Cash and cash equivalents.

The carrying amount of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follow:



Liabilities

Assets

Net



2016

2015

2016

2015

2016

2015



£'000

£'000

£'000

£'000

£'000

£'000


USD

(15,781)

(4,356)

112

145

(15,669)

(4,211)


HKD

-

-

5,124

20

5,124

20


EUR

-

-

1,379

6,269

1,379

6,269


Other

-

(170)

2

85

2

(85)


Sensitivity analysis

The Group is mainly exposed to USD / GBP, HKD / GBP and EUR / GBP exchange rates. The following table shows the Group's sensitivity to a 5% increase and decrease in the GBP agains these foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% in foreign curreny rates:



Profit/(loss)

Exchange rate



2016

2015

At 31 March


Effect of 5% decrease in value of GBP

£'000

£'000

2016

2015


USD

(746)

(201)

1.438

1.485


HKD

244

1

11.154

11.511


EUR

66

299

1.263

1.382


Effect of 5% increase in value of GBP






USD

746

201

1.438

1.485


HKD

(244)

(1)

11.154

11.511


EUR

(66)

(299)

1.263

1.382


In the Directors' opinion, the sensitivity analysis is unrepresentative of the inherent exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

 



 

 




Credit risk management

The Company's financial instruments, which are subject to credit risk, are considered to be cash and cash equivalents and trade and other receivables, and its exposure to credit risk is not material. The credit risk for cash and cash equivalents is considered negligible since the counterparties are reputable banks.

The Group's maximum exposure to credit risk is £1,871,000 (2015: £459,000) comprising trade and other receivables and cash.


Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the Group's short, medium and long-term funding and liquidity management requirements on an appropriate basis. The Group manages liquidity risk by maintaining adequate reserves and banking facilities.

 

 

 



 

23

Called up share capital

 



Deferred shares of 0.5p


Ordinary shares of 0.05p


 



Number of  shares

Nominal value

£'000

Number of shares

Nominal value

£'000

Share premium

£'000

 


ISSUED AND FULLY PAID:






 


At 31 March 2014

56,255,351

281

716,943,422

358

1,148

 


Ordinary shares issued in year



476,154,737

239

599

 


Share issue expenses





(34)

 


At 31 March 2015

56,255,351

281

1,193,098,159

597

1,713

 


1 for 11 share consolidation

108,463,469

543

108,463,469

54


 


Ordinary shares issued in year



451,763,417

226

8,608

 


Classifed as merger reserve in respect of reverse acquisition





(6,555)

 


Share issue expenses





(97)

 


At 31 March 2016

164,718,820

824

560,226,886

280

3,669

 



 

 


WARRANTS

The numbers of warrants referred to in this note are the adjusted amounts following the 1 for 11 share consolidation.

At 31 March the following warrants were outstanding:

·        4,272,727 warrants issued on 2 October 2013 and exercisable at 1.1p per share, with an expiry date of 2 October 2018.

·        A total of 36,745,454 warrants issued on 7 February 2014 and 28 February 2014 and exercisable at 3.3p on or before 28 February 2016.

The 4,272,727 warrants exercisable at 1.1p each were exercised on 28 June 2015, resulting in the issue of 4,272,730 new ordinary shares.  Of the remaining warrants 36,412,121 warrants were cancelled in consideration for the issue of 18,206,070 new ordinary shares and the balance of 333,333 warrants expired during the year.

The above issues of warrants are summarised as follows:


 

Issue Date

Number of warrants issued

Exercise price

Expiry date


Brought forward at 31 March 2015





2 October 2013

4,272,727

1.1p

2 October 2018


7 & 28 February 2014

36,745,454

3.3p

28 February 2016



41,018,181




Exercised in year

(4,272,727)

1.1p



Cancelled for consideration of issue of shares

(36,412,121)

3.3p



Lapsed in year

(333,333)

3.3p



At 31 March 2016

-

-



SHARE OPTIONS

The numbers of share options referred to in this note are the adjusted amounts following the 1 for 11 share consolidation.

At 31 March the following warrants were outstanding:

·        1,409,091 options exercisable at 3.3p per share, with an expiry date of 7 February 2019.

·        7,363,636 options exercisable at 3.3p per share with an expiry date of 7 February 2019.

All these options were cancelled in consideration for the issue of 5,848,485 new ordinary shares.

The above share options are summarised as follows:


 

Issue Date

Number of options granted

Exercise price

Expiry date


Brought forward at 31 March 2015






1,409,091

3.3p

7 February 2019



7,363,636

3.3p

12 May 2019



8,772,727




Cancelled for consideration of issue of shares

(8,772,727)

3.3p



At 31 March 2016

-





 

24

EVENTS AFTER THE REPORTING PERIOD


There have been no material events since the year end.

 

25

Related party tranSactions


Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in these financial statements.


Remuneration of key management personnel

The remuneration of the directors and other key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.  Further information about the remuneration of individual directors of the Company is provided in Note 9.

 

 

2016

£'000

2015

£'000

 

Short term employee benefits

440

361

 

Termination benefits

90

-

 


530

361


Payments made to personal service companies of key management during the year totalled £279,000 (2015: £120,000). The amounts outstanding in respect of these payments as at year end were £9,000 (2015: £nil).


During the year the Group charged rent and administration services totalling £57,000 to Inspirit Energy Holdings Limited ("Inspirit"), a Company connected to the Group, by way of John Gunn being a director and substantial shareholder in Inspirit.  The amount due from Inspirit in respect of rent and services is summarised as follows:


Amount due from Inspirit at 31 March 2015

£42,000



Total charges in year (including VAT)

£57,000



Amount due from Inspirit at 31 March 2016

£99,000



The amount due to the Group from John Gunn was £nil (2015: £736,000) in respect of short term unsecured loans.

 

 

26

CONTRACTUAL OBLIGATIONS


A summary of the Group's principal, contractual, financial obligations is shown below:


Payments due by period


 

Obligation

Total

£'000

< 1 year

£'000

1-3 years

£'000

3-5 years

£'000


Borrowings

2

2

-

-


Operating lease commitments

292

130

162

-


Total

294

132

162

-

 



 

 

27

CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES


The Group had no capital commitments or contingent liabilities as at the year end (2015: £nil).

 

28

ULTIMATE CONTROLLING PARTY


The Directors regard Mr. J Gunn as being the ultimate controlling party, by way of his controlling interest in the issued share capital of the Company.

 


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