TIDMOCT
RNS Number : 6763N
Octagonal PLC
25 September 2019
For immediate release
25 September 2019
Octagonal plc
("Octagonal", the "Group" or the "Company")
ANNUAL REPORT AND ACCOUNTS FOR THE YEARED 31 MARCH 2019
DECLARATION OF DIVID
NOTICE OF ANNNUAL GENERAL MEETING
The Company has today published its audited Report and Accounts
for the year ended 31 March 2019, a copy of which is being posted
to Shareholders along with a Notice of AGM and is also available on
the Company's website, www.octagonalplc.com. The AGM will be held
at Broadgate Tower, 20 Primrose Street London EC2A 2EW at 11.00
a.m. on 18 October 2019
Company has also declared and will pay a dividend of 0.1 pence
per ordinary share as per the timetable below:
-- Ex-Dividend Date: 3 October 2019
-- Record Date: 4 October 2019
-- Payment Date: 18 October 2019
For further information please visit www.octagonalplc.com or
contact:
Octagonal Plc +44 (0) 20 7048 9400
John Gunn, Chairman
Beaumont Cornish (Nominated Adviser and Broker)
James Biddle / Roland Cornish +44 (0) 20 7628 3396
CHAIRMAN'S STATEMENT
YEAR TO 31 March 2019
I am pleased to present the annual report and accounts for the
year ended 31 March 2019.
It has been another challenging year for Octagonal Plc
("Octagonal" or the "Company " or "Group") incorporating its wholly
owned subsidiaries Global Investment Strategy UK Ltd ("GIS") and
Global Investment Strategy HK Limited ( "GIS HK"). and majority
owned subsidiaries Synergis Capital Plc ("Synergis")
Some of the key highlights for the Group during the year:
-- Grant of Securities and Futures Commission (SFC) approval for
GIS HK to carry out Type 1 regulated activity in Hong Kong
-- Group revenues down 18.32% to GBP5.3m (2018: GBP6.5m), -
Non-core corporate finance income reduced to GBP129,000 (2018:
GBP920,000)
-- Group profit before taxation GBP926,000 (2018 GBP1,517,000)
-Non-core corporate finance income reduced by GBP800,000 year on
year.
-- Core operating margin increased to 15.67% (2018: 11.97%)
-- Core pre-tax profits increased by 33.3% to GBP0.796m (2018: GBP0.597m)
-- Cash balance GBP5.5m (2018: GBP5.3m)
-- Declared and paid a dividend of 0.1pence per share, totalling
GBP567,255, on 26 October 2018
-- The Company declares a dividend of 0.1 pence per share
payable to Shareholders on 18 October 2019
Business overview
Our business's 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. Additionally, the business looks
to leverage off its operational capabilities to increase its
product offerings and services to new and existing clients.
Our business model has maintained its focus on driving
profitability and longer-term shareholder value through several key
areas:
(i) growing revenues organically through seeking new clients and
identifying and implementing new services to existing and new
clients,
(ii) improving margins through investing in technology, creating
efficiencies and a drive to reduce operating costs.
The first half of the year saw sales and earnings come in-line
with expectations, as detailed in the interim statement, with the
second half of the financial year presenting many challenges.
Political deadlock and shut down in Washington during our 3rd
quarter coupled with the domestic concerns over Brexit have
undoubtedly had its impact on trading volumes in equity and bond
markets both domestically and overseas.
As a highlight, and included within our longer-term business
plan, GIS has incurred costs associated with the regulatory
governance of the Synergis business brand in key areas of
oversight, IT infrastructure, and mandatory control. This increased
level of commitment is commensurate with our future growth
expectations that are integral in supporting the long-term strategy
in all areas of the business.
We were naturally pleased with the outcome of our application to
the Securities and Futures Commission in Hong Kong for permission
to conduct regulatory activity. We continue to review the potential
of this opportunity and we have recently moved to a new office
location in the Central District of Hong Kong. The businesses
tri-lingual website (www.gishkltd.com) has been launched and
operations have commenced with a number of appointments being made
in Hong Kong and trade execution being offered in the first
instance to existing GIS clients.
Financial review
The 2019 financial results reflect geopolitical uncertainty in
the current market that impacted volatility and market volumes.
Against this backdrop of challenging externalities, the core
business within the group continued to deliver strong results with
a 33.3% increase in profit before tax to GBP0.8m from GBP0.6m
(2018) This was achieved on the back of reduced core turnover of
GBP5.18m (2018: GBP5.5M) but made possible by a significant
increase in operating profit margins to 15.67% (2018: 11.97%) which
reflects an increase of 31% from 2018. In all cases our core
results exclude non- core corporate finance activities which saw a
reduction of GBP0.8m of income during the year
The 33.3% increase in core business operating profit include the
consolidation of both Synergis and GIS HK administration costs
totalling GBP590,000 for the period (Synergis 2018: GBP872,000 and
HIS HK 2018: GBP0). Whilst the investments in both are seen as
significant, the Board expects positive contributions from both
within the next financial year and beyond
Core gross margins showed an increase to 74.8% (2018: 73.74%)
with core operating margin increased to 15.67% (2018: 11.97%) and
these margins include the additional Synergis and GIS HK
consolidated costs mentioned above. Operating costs attributable to
just Octagonal PLC amounted to GBP174,000 (2018: GBP437,000). The
Octagonal costs included an share-based payment charge of
GBP63,000.
Group cash reserves increased by 3.7% to GBP5.5m (2018: GBP5.3m)
despite expenditure of the following: payment of a dividend to
shareholders totalling GBP567,225, investment of GBP176,277 in
Synergis and capitalised start-up costs of GBP190,520 for GIS
HK. The cash resources represent more than adequate cash
reserves for our current operations with Net Assets of GBP8.9
million (2018: GBP8.4 million).
The cash balance result has clearly demonstrated the Group's
ability to be cash generative and profitable in the current
challenging environment and positions the Group to grow and improve
margins and profitability as markets return and once the longer
term strategy crystallises, we hope, to traditional patterns post
recent global political events.
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
Global Investment Strategy UK (GIS)
Trading for the first 3 months of the current financial year to
31 March 2020 is above management's expectations, and the Company
will update shareholders after the half year period which ends on
30th September 2019.
As per the previous year, management and the team have been
working extremely hard on the development of the new enterprises
SynerGIS and GIS HK which we believe will add significant value to
the group and we have further commented on them below.
With the current core business and diversification into the new
enterprises below, this is an exciting growth phase in the business
and the board remain very optimistic that the work to date will
translate into rewarding value for all shareholders.
Synergis Capital Plc (Synergis)
The Company remains ready and appears to have now completed all
material elements for the preparation of the prospectus (for the
base programme for debt securities) with the CBI (the Central Bank
of Ireland) and Euronext Dublin (Irish Stock Exchange).
Discussions continue with the FCA as regards Synergis' activity
and the business is undergoing an evaluation process with our
regulator and we believe we've made good progress in demonstrating
the businesses' robust processes and controls that are essential
for intended specialist lending activity. We are of the opinion
that we have satisfied the regulator in respect of their questions
and now await the outcome following their panel review.
Since the financial year end in March 2019, Synergis has raised
capital again from shareholders, with GIS taking up its full
entitlement of shares by investing a further GBP275,000.
Synergis has developed proprietary fintech applications and
systems that include bond issuance, asset lending management
platforms that directly interface into the internal ledger and
produce both real time exposure risk weighting and capital adequacy
scenario planning with projected liquidity reporting. Synergis
plans to reorganise its capital in the next few months should the
company want to acquire back Synergis shares.
On a very positive point and following a long-term consultation
open to all regulated financial firms, the FCA and Financial
Services Compensation Scheme (FSCS) announced an update to their
compensation limits on 1st April 2019. Effective immediately, the
compensation limit for eligible claimants has risen from GBP50,000
to GBP85,000. This brings the level of FSCS compensation for
investment products in line with that of bank and savings accounts
at GBP85,000.
Global Investment Strategy HK Limited (GIS HK)
GIS HK (formally GIS (FS) HK Limited and now rebranded to Global
Investment Strategy HK Limited) has gone live after obtaining
"approval in principle' to carry on Type 1 regulated activity(ies)
for professional clients under the Securities and Futures Ordinance
(SFO). Type 1 regulated activity(ies) include the provision of
dealing in securities, stock options, and bonds, but also includes
the provision of providing other additional GIS core services such
as safe custody and trade settlement.
GIS HK is now running with a team of 4 full time employees,
supported by an additional responsible officer, with John Gunn, our
Chairman, taking an active role in this business development.
Revenues have started from inbound business flows that we have been
able to generate in the region, but the larger emphasis has been
placed on the focusing of the development of local business lines,
with an anticipated formal launch in October 2019. The feedback we
have received locally for our services has been very encouraging
and our expectations are that the timing and thought management
have put into the planning will result in a positive return within
the current financial year.
Finally, I would like to thank the Board and the entire team in
the Group who have worked exceptionally well in delivering these
results and strengthening the business to deliver greater returns
for shareholders in the year ahead.
We will accompany these results with notice of the Annual
General Meeting, where the Board will be seeking shareholders'
approval to increase the authorised share capital and a waiver of
shareholders pre-emption rights. This plan is part of our
contingency funding plan, which will provide the business with
access to capital should it be required.
The board are also pleased to announce a maintained dividend of
0.1 pence per share and will consider increasing this once the new
business initiatives are implemented and core activities continue
to grow in line with expectations.
John Gunn
Chairman
24 September 2019
The Directors present their strategic report for the Group for
the year ended 31 March 2019.
PRINCIPAL ACTIVITIES
The principal activity of Octagonal is as a Financial Services
group through its subsidiary Global Investment Strategy UK Ltd
("GIS") which provides global settlement and safe custody services
to investors, hedge funds, institutions, family offices and high
net worth individuals, along with other ancillary services. GIS is
the trading entity of the Group, authorised and regulated by the
Financial Conduct Authority, and is a member of The London Stock
Exchange.
During the year the Group submitted an application for
regulatory approval in Hong Kong and proceeded with the development
of its majority owned subsidiary company, Synergis Capital plc,
which it is intended will provide commercial asset backed lending,
financed by an investment bond which will be issued in tranches and
distributed by GIS.
RESULTS AND DIVIDS
Group revenue from continuing operations during the year was
GBP5.3million (2018: GBP.6.5 million) resulting in a pre-tax profit
of GBP926,000 (2018: GBP1,517,000) a 39% decrease pre-tax profit.
Attributable profit for the year after tax was GBP927,000 (2018:
GBP1,025,000). However, Core group business activities were
favourable with an increase of 33.3% in Profit before taxation and
a 30.9% increase in the operating profit margin.
The Directors propose a dividend of GBP586,576 (2018:
GBP567,225). The dividend will be paid in one amount, representing
0.1 pence per Ordinary Share, to shareholders on the register as at
4 October 2019 ( with an ex-date of 3 October 2019) and will be
paid on 18 October 2019.
KEY PERFORMANCE INDICATORS
The Group seeks to grow both the top and bottom lines through
organic growth, the development of new business lines, cost
controls and financial conservatism. These factors have enabled it
to improve margins and seek higher margin revenues, while offering
competitive services to its clients.
The key performance indicators are set out below:
GROUP STATISTICS 2019 2018 Change
(Including non-core Corporate finance %
income)
------------------------------------------ ------------- ------------- --------
Turnover GBP5,311,000 GBP6,502,000 -18.32%
Group profit before tax GBP926,000 GBP1,517,000 -38.96%
Non-core finance income GBP129,000 GBP920,000
CORE BUSINESS ACTIVITY ANALYSIS
CORE OPERATING 2019 2018 Change
(Excluding non-core Corporate finance %
income)
------------------------------------------ ------------- ------------- --------
Turnover GBP5,182,000 GBP5,582,000 7.2%
Group profit before tax GBP796,000 GBP597,000 33.3%
Gross Margin 74.76% 73.74% 1.4%
Group operating profit margin 15.67% 11.97% 30.94%
------------------------------------------ ------------- ------------- --------
KEY RISKS AND UNCERTAINTIES AND RISK MANAGEMENT
The Group is exposed to a number of business risks. The risk
appetite of the Group is determined by the Board.
The Group has identified the following as the key risks and
their mitigation:
MARKET RISK
The Group has limited market risk in respect of its trading as
agent in equities and debt instruments as its services are
principally settlement and custody, which do not have market risk.
Our execution services are minimal and are only carried out under
strict criteria. The Group does have counterparty risk, but we do
not see this as significant given the high level of regulation in
our industry. Market exposure arising from unsettled trades is
closely monitored and managed during each trading day. Market risk
also gives rise to variations in asset values and thus management
fees, and variations in the value of investments held by GIS.
STOCK MARKET CONDITIONS
The Group's business is highly dependent on stock market
conditions, especially volumes of equities and other financial
products traded. Adverse market conditions resulting in reducing
volumes of trading may have a significant negative effect on
revenues and profitability.
CURRENCY RISK
A large proportion of the Group's income and expenses are
incurred in foreign currency, particularly US Dollar. As a result,
fluctuations in currency exchange rates could have an adverse
effect on the financial condition, results of operation or cash
flow of the Group.
OPERATIONAL RISK
There is a range of operational risks to which the Group is
exposed, including reputational risks and the Group seeks to
mitigate operational risk to acceptable residual levels, in
accordance with its risk appetite policy, by maintenance of its
control environment, which is managed through the Group's
operational risk management framework. The Group's controls include
appropriate segregation of duties and supervision of employees;
ensuring the suitability and capability of the employees; relevant
training programmes that enable employees to attain and maintain
competence, and identifying risks that arise from inadequacies or
failures in processes and systems.
The Group has a business continuity and disaster recovery plan
which provides, inter alia, back-up premises and back-office
systems, and which is regularly reviewed.
LOSS OF STAFF
Staff are a key asset in the business and retaining the services
of key staff is essential to ongoing revenue generation and
development of the business.
CHANGES IN REGULATION OR LEGISLATION
The regulatory regime applicable to companies such as Octagonal,
and more specifically its trading subsidiary, GIS, is under regular
review and future changes made by a regulatory body could impose a
greater burden on the Group with consequential additional costs. As
GIS is a regulated business, it relies on continuing to be
authorised under the Financial Conduct Authority ("FCA") to be able
to undertake certain roles and operations.
The Group's business is subject to substantial regulation both
in the UK, US and other jurisdictions. Adverse regulatory
developments could have a material, adverse effect on the Group's
operating results, financial condition and prospects.
The Group conducts its businesses subject to ongoing regulation
and associated regulatory risks, including the effects of changes
in the laws, regulations, policies, voluntary codes of practice and
interpretations in the UK and the other markets where it operates.
Future changes in regulation, fiscal or other policies are
unpredictable and beyond the control of the Directors and could
materially adversely affect the Group's business.
KEY RISKS AND UNCERTAINTIES AND RISK MANAGEMENT (continued)
Areas where changes could have an adverse impact include, but
are not limited to:
-- other general changes in regulatory requirements, such as
prudential rules relating to the capital adequacy or liquidity
frameworks;
-- further developments in the financial reporting, corporate
governance, conduct of business and employee compensation; and
-- other unfavourable political, military or diplomatic
developments producing social instability or legal uncertainty
which, in turn, may affect demand for the Group's products and
services.
INFLUENCE OF CONTROLLING SHAREHOLDER
John Gunn has an interest in approximately 52.7 per cent. of the
Company's issued share capital. John Gunn consequently is in a
position to exert significant influence over the Company, its
strategy, directors and operations. In order to partially mitigate
this risk the Company and John Gunn have agreed a Relationship
Agreement governing his behaviour as the majority shareholder in
the Company.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Group's financial risk management objectives and
policies are set out in Note 21 to these financial statements.
GOING CONCERN
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operation or existence for the
foreseeable future thus we continue to adopt the going concern
basis in preparing the financial statements. Further details
regarding the adoption of the going concern basis can be found in
note 4 of the financial statements.
Samantha Esqulant
Director
24 September 2019
DIRECTORS' REPORT
YEAR TO 31 March 2019
The Directors present their annual report and the audited
financial statements of the Group for the year ended 31 March
2019.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
This information is now included within the Strategic Report
above, as part of the 'Review of the Business' under the Amendment
to the Companies Act 2006 of s.414c(2a).
DIRECTORS
The Board comprised the following directors who served
throughout the year and up to the date of this report save where
disclosed otherwise:
Name Position
------------------ -------------------------------------
John Gunn Executive Chairman
Samantha Esqulant Chief Executive Officer
Nilesh Jagatia Chief Financial Officer / Secretary
Anthony Binnie Non-Executive Director
The Group has qualifying third party indemnity provisions for
the benefit of its Directors which remain in force at the date of
this report.
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at
31 March 2019, held either directly or through related parties,
were as follows:
Name of director Number of ordinary shares % of ordinary share capital and Voting Rights
-------------------- ---------------------------- ------------------------------------------------
John Gunn 299,044,931 52.7%
On 7 May 2019, John Gunn purchased an additional 1,700,000 ordinary shares and thus increasing
his holding to 300,744,931 shares representing 52.89% of the Company's issued share capital.
Details of the Directors' share options are shown below:
Number outstanding
at Exercise Vesting Expiry
Name of Director 31 March 2019 price date Date
----------------- ------------------ -------- ------- ---------
OPTIONS:
J Gunn 5,250,000 3p Various 6.09.2021
S Esqulant 3,750,000 3p Various 6.09.2021
N Jagatia 3,000,000 3p Various 6.09.2021
12,000,000
----------------- ------------------ -------- ------- ---------
DONATIONS
The Group made charitable donations during the year of GBP9,475
(2018: GBP9,000).
EMPLOYEE CONSULTATION
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on various factors affecting the
performance of the Group. This is achieved through formal and
informal meetings. Equal opportunity is given to all employees
regardless of their sex, age, colour, race, religion or ethnic
origin.
SIGNIFICANT SHAREHOLDINGS
On 19 September 2019 the following were interested in 3 per
cent. or more of the Company's share capital (including Directors,
whose interests are also shown above):
% of ordinary
Name of shareholder Number of share capital
ordinary and voting
shares rights
------------------------------------------------- ------------ ---------------
John Gunn 300,744,931 52.89%
Roger Barby 52,500,436 9.23%
Interactive Investors Services Nominees Limited 28,897,411 5.08%
Jim Nominees 25,713,396 4.52%
Vidacos Nominees Limited 18,770,853 3.30%
POST YEAR EVENTS
Global Investment Strategy UK Ltd, paid a dividend of GBP600,000
to the Company after the reporting period.
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each of the persons who are directors of the
Company at the date when this report is approved:
-- So far as each director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- Each of the directors has taken all steps that they ought to
have taken as a director to make themselves aware of any relevant
audit information and to establish that the auditors are aware of
the information.
This information is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
AUDITOR
PKF Littlejohn LLP have expressed their willingness to continue
in office as auditor and it is expected that a resolution to
reappoint them will be proposed at the next annual general
meeting.
CORPORATE GOVERNANCE
The Directors recognise the importance of sound corporate
governance while taking into account the Group's size and stage of
development. As a Group listed on AIM, the Group was not required
to comply with any corporate governance code and the Group did not
choose to voluntarily comply. However, in the interests of
observing best practice on corporate governance, the Group
previously had regard to the provisions of the Corporate Governance
Code insofar as is appropriate.
With effect from 28 September 2018 new corporate governance
regulations apply to all AIM quoted companies and require the
Company to:
-- provide details of a recognised corporate governance code
that the board of directors has decided to apply
-- explain how the Company complies with that code, and where it
departs from its chosen corporate governance code provide an
explanation of the reasons for doing so.
The corporate governance disclosures need to be reviewed
annually, and the company will also need to state the date on which
these disclosures were last reviewed. The QCA code adopted by the
Company is disclosed after the Statement of Director's
Responsibilities.
The Board meets regularly and is responsible for formulating,
reviewing and approving the Group's strategy, budgets, performance,
major capital expenditure and corporate actions.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading
and controlling the Company. The Board of Directors is responsible
for approving Company policy and strategy. It meets regularly and
has a schedule of matters specifically reserved to it for decision.
All Directors have access to advice from independent professionals
at the Company's expense. Training is available for new and
existing Directors as necessary.
Matters which would normally be referred to other than the
appointed committees are dealt with by the Board as a whole.
AUDIT COMMITTEE
The Audit Committee is chaired by Anthony Binnie and its other
member is Samantha Esqulant the Chief Executive Director. It is
expected that they will be joined by the second independent
Non-Executive Director following their appointment. The Audit
Committee acts independently to ensure that the interests of the
Company and its Group are properly protected in relation to
financial reporting and internal controls.
The directors have established the Audit Committee to ensure
that appropriate financial reporting procedures are properly
monitored, controlled and reported on at a minimum by IFRS approved
foreign exchange accounting policies, and rules governed by the FCA
and AIM employing general accepted account practices.
The Audit Committee provides a forum for reporting by the
Group's external auditors. The Committee is also responsible for
reviewing a wide range of matters, including half-year and annual
results before their submission to the Board, and for monitoring
the controls that are in force to ensure the integrity of
information reported to shareholders. The Audit Committee will
advise the Board on the appointment of external auditors and on
their remuneration for both audit and non-audit work, and will
discuss the nature, scope and results of the audit with the
external auditors. The Committee will keep under review the cost
effectiveness and the independence and objectivity of the external
auditors.
The Audit Committee meets not less than twice in each financial
year.
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for making
recommendations to the Board, within agreed terms of reference, on
the Company's framework of executive remuneration and its cost. The
Remuneration Committee also determines and reviews the performance
and the terms of service of the directors, including salary,
incentives and benefits, and makes recommendations to the Board.
The Board itself determines the remuneration of the Executive
Directors.
The Remuneration Committee comprises of the Chief Executive
Director Samantha Esqulant and is chaired by the Independent
Non-Executive Director Anthony Binnie. It is expected that they
will be joined by the second independent Non-Executive Director
following their appointment. The Committee meets as often as it
deems necessary and at least annually to discharge its
responsibilities and to support good decision making by the
Board.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority by
the management. In addition to the publication of an annual report
and an interim report, there is regular dialogue with shareholders
and analysts. The Annual General Meeting is viewed as a forum for
communicating with shareholders, particularly private investors.
Shareholders may question the Managing Director and other members
of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's
system of internal control and for reviewing the effectiveness of
these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of
the Group failing to achieve its strategic objectives. It should be
recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss. The Group
has well established procedures which are considered adequate given
the size of the business.
REMUNERATION
The remuneration of the directors has been fixed by the Board as
a whole. The Board seeks to provide appropriate reward for the
skill and time commitment required so as to retain the right
calibre of director at a cost to the Company which reflects current
market rates.
Details of directors' fees and of payments made for professional
services rendered are set out in Note 9 to the financial statements
and details of the directors' share options are set out in the
Directors' Report.
By order of the Board on 24 September 2019
Samantha Esqulant
Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the report of the
directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have also elected to prepare the Company financial
statements in accordance with IFRS as adopted by the EU. Under
company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs and profit or loss of the Company and Group
for that period. In preparing these financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently
-- make judgments and accounting estimates that are reasonable and prudent
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for the maintenance and
integrity of the corporate, financial and investor information
contained on the Company's website. Legislation in the UK
concerning the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions. The
Company is compliant with AIM Rule 26 regarding the Company's
website.
John Gunn
Executive Chairman
24 September 2019
GROUP INCOME STATEMENT
YEAR TO 31 MARCH 2019
---------------------------------- ------
Notes 2019 2018
---------------------------------- ------
GBP'000 GBP'000
---------------------------------- ------ ----------------- --------
Revenue 6 5,311 6,502
Cost of sales (1,308) (1,466)
Gross profit 4,003 5,036
Administrative expenses (2,998) (3,220)
Share based payment expense (63) (228)
Operating profit 7 942 1,588
Other gains and losses 10 (16) (71)
Profit before tax 926 1,517
Tax 11 1 (492)
Profit for the year 927 1,025
Attributable to:
Shareholders in the parent
company 1061 1,276
Non-controlling interests (134) (251)
----------------------------------- ------ ----------------- --------
927 1,025
---------------------------------- ------ ----------------- --------
Earnings per share attributable
to owners of the parent company
from continuing operations
Basic and diluted (pence per
share) 12
Basic 0.187 0.226
Fully diluted 0.182 0.221
----------------------------------- ------ ----------------- --------
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 pro t
and loss account. The total comprehensive loss for the parent
company for the year was GBP174,000 (2018: GBP373,000).
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 MARCH 2019
GROUP COMPANY
------------------ ------------------
Notes 2019 2018 2019 2018
------------------------------------ ------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------ -------- -------- -------- --------
Non-Current assets
Goodwill 13 2,869 2,869 - -
Other intangible assets 14 657 409 - -
Property, plant and equipment 15 40 60 - -
Investment in subsidiaries 16 - - 9,137 9,137
Deferred tax asset - 66 - -
3,566 3,404 9,137 9,137
------------------------------------ ------ -------- -------- -------- --------
Current assets
Investments held at fair value
through profit and loss 17 266 31 - -
Trade and other receivables 18 708 521 173 152
Cash and cash equivalents 19 5,466 5,324 3 -
6,440 5,876 175 152
--------
Current liabilities
Trade and other payables 20 532 285 1,921 1,220
Current tax liabilities 561 582 - -
1,093 867 1,921 1,220
------------------------------------ ------ -------- -------- -------- --------
Net assets 8,913 8,413 7,392 8,069
------------------------------------ ------ -------- -------- -------- --------
Equity
Share capital 22 285 284 285 284
Share premium account 22 171 171 171 171
Reverse acquisition reserve 679 679 - -
Merger reserve - - 6,555 6,555
Investment reserve - - 110 110
Share option and warrant reserve 162 99 162 99
Retained earnings 7,558 6,972 109 850
------------------------------------ ------ -------- -------- -------- --------
Equity attributable to owners
of the Company 8,855 8,205 7,261 8,069
Non-controlling interests 58 208 - -
------------------------------------ ------ -------- -------- -------- --------
Total equity 8,913 8,413 7,392 8,069
------------------------------------ ------ -------- -------- -------- --------
These financial statements were approved by the Board of
Directors on 24 September 2019
Signed on behalf of the Board by:
Samantha Esqulant
Director Company number: 06214926
The accounting policies and notes are an integral part of these
financial statements
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Reverse Share Retained Equity Non-controlling Total
capital Premium acquisition option earnings attributable interests equity
reserve reserve to owners
of the
Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ ---------- --------- ------------- ---------------- --------
Balance at 31
March 2017 1,104 3,669 679 - 1,148 6,600 37 6,637
Total
comprehensive
income for the
year - - - - 1,276 1,276 (251) 1,025
Capital
reduction (824) (3,669) - - 4,493 - - -
Dividend paid - - - - (568) (568) - (568)
Share issues 4 171 - - - 175 - 175
Share based
payment expense - - - 99 - 99 - 99
Adjustment
arising from
change in
non-controlling
interest - - - - 623 623 422 1,045
Balance at 31
March 2018 284 171 679 99 6,972 8,205 208 8,413
Total
comprehensive
income for the
year - - - - 1,060 1,060 (134) 926
Dividend paid - - - - (568) (568) - (568)
Share issues 1 - - - 1 - 1
Share based
payment expense - - - 63 - 63 - 63
Adjustment
arising from
change in
non-controlling
interest - - - - 94 94 (16) 78
Balance at 31
March 2019 285 171 679 162 7,558 8,855 58 8,913
The accounting policies and notes are an integral part of these
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Premium Merger Investment Share option Retained Total
Reserve reserve and warrant
reserve
capital earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- -------------- --------- ----------- ------------- --------- --------
Balance at 31 March
2017 1,104 3,669 6,555 110 - (2,702) 8,736
Total comprehensive
expense for the year - - - - - (373) (373)
Capital reduction (824) (3,669) - - - 4,493 -
Dividend paid - - - - - (568) (568)
Share issues 4 171 - - - - 175
Share based payment
expense - - - - 99 - 99
Balance at 31 March
2018 284 171 6,555 110 99 850 8,069
Total comprehensive
expense for the year - - - - - (174) (174)
Dividend paid - - - - - (567) (567)
Share issues 1 - - - 1
Share based payment
expense - - - - 63 - 63
Balance at 31 March
2019 285 171 6,555 110 162 109 7,392
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
YEAR TO 31 MARCH 2019
GROUP COMPANY
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------- --------
OPERATING ACTIVITIES
Profit/(loss) for the year before
taxation 925 1,517 (174) (437)
Adjusted for:
Depreciation 31 21 - -
Share based payment expense 63 228 63 228
Shares issued in settlement of
termination payment - 46 - 46
Investment impairment 15 75 - -
Gain on disposal of investments - (4) - -
Operating cash flows before movements
in working capital 1,034 1,883 (111) (163)
(Increase)/Decrease in trade and
other receivables (209) (183) (20) (15)
(Decrease)/increase in trade and
other payables 246 (1) - (29)
Net cash from / (used in) operations 1,071 1,699 (131) (207)
Tax paid - (300) - -
Net cash from / (used in) operating
activities 1,071 1,399 (131) (207)
----------------------------------------- -------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of property, plant and
equipment - (19) - -
Development costs (248) (359) - -
Purchase of investments (250) - - -
Disposal of investments - 24 - -
Loan to a related party (14) (11) - -
Related party repayment of loan - - -
Net cash used in investing activities (512) (365) - -
----------------------------------------- -------- -------- -------- --------
FINANCING ACTIVITIES
Non-controlling interest investment 150 1,045 - -
Increase in inter-company loan - - 702 775
Dividend paid to Company's shareholders (568) (568) (568) (568)
Net cash from financing activities (418) 477 134 207
----------------------------------------- -------- -------- -------- --------
Net increase/(decrease) in cash
and cash equivalents 142 1,511 3 -
Cash and cash equivalents at beginning
of year 5,324 3,813 - -
Cash and cash equivalents at end
of year 5,466 5,324 3 -
----------------------------------------- -------- -------- -------- --------
The accounting policies and notes are an integral part of these
financial statements.
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR TO 31 MARCH 2019
1 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
5PP. 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 following 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:
Effective for
periods beginning
on or after
Amendments to IAS 19 Employee Benefits Plan Amendment, 1 January 2019
Curtailment or Settlement
IFRS 10 Consolidated Sale or Contribution of 1 January 2019
Financial Statements Assets between an Investor
and IAS 28 (amendments) and its Associate or Joint
Venture
IFRS 16 Leases Leases 1 January 2019
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.
3 Accounting Policies (continued)
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.
3 Accounting Policies (continued)
revenue recognition
The Group's Revenue includes commission income, corporate advisory
fees and other ancillary fees.
Revenue is measured at the fair value of the consideration received
or receivable.
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.
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.
CHANGES IN ACCOUNTING POLICIES AND DICLOSURES
New standards, amendments and interpretations adopted by the
Company
The company has applied the following standards and amendments
for the first time for its annual reporting period commencing
1 April 2018:
* IFRS 9 Financial Instruments;
* IFRS 15 Revenue from Contracts with Customers
* Annual improvements 2014-2016 cycle;
Impact of adoption of IFRS 9
The classification and measurement requirements of IFRS 9 have
been adopted with effect from the date of initial application
on 1 April 2018. However, the Company has chosen to take advantage
of the option not to restate comparatives. Therefore, the 2018
figures are presented and measured under IAS 39. The following
table shows the original measurement categories in accordance
with IAS 39 and the new measurement categories under IFRS 9
for the Company's financial assets and financial liabilities
as at 1 April 2018: 1 February 2018 IAS 39 IAS 39 IFRS 9 IFRS 9
classification measurement classification measurement
GBP GBP
Financial
assets
Cash and cash Loans and Amortised
equivalents receivables 5,324,000 cost 5,324,000
Financial Held for
assets trading
at fair value at fair value Fair value
through through profit through profit
profit or loss or loss 31,000 or loss 31,000
Financial
liabilities
Other financial Amortised
Payables liabilities 285,000 cost 285,000
3 Accounting Policies (continued)
Impact of adoption of IFRS 15
IFRS 15 is effective for accounting periods beginning on or
after 1 January 2018 and was adopted by the Company or the accounting
period beginning 1 April 2018. The standard requires entities
to apportion revenue earned from
contracts to individual performance obligations based on a five-step
model. The adoption of this standard has not resulted in any
material impact on reported profits.
FINANCIAL ASSETS
The Company's financial assets comprise investments, cash and
cash equivalents and loans and receivables, and are recognised in
the Company's statement of financial position when the Company
becomes a party to the contractual provisions of the
instrument.
Changes in the fair value of investments held at fair value
through profit or loss and gains and losses on disposal are
recognised in the Statement of Comprehensive Income as "Net change
in fair value of investments".
Financial asset investments
Classification of financial assets
The Company holds financial assets including equities and debt
securities. On 1 April 2018, the Company adopted IFRS 9 Financial
Instruments (IFRS 9). IFRS 9 replaces the classification and
measurement models previously contained in IAS 39 Financial
Instruments: Recognition and Measurement. The classification and
measurement of financial assets at 31 March 2019 is in accordance
with IFRS 9 and the classification and measurement of financial
assets at 31 March 2018 is in accordance with IAS 39 as the Group
has not restated comparative information.
On the initial recognition, the Company classifies financial
assets as measured at amortised cost or fair value through profit
or loss("FVTPL"). A financial asset is measured at amortised cost
if it meets both of the following conditions and is not designated
as at FVTPL:
-- It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specific dates to cash
flows that are Solely Payments of Principal and Interest
(SPPI).
All other financial assets of the Company are measured at
FVTPL.
Business model assessment
In making an assessment of the objective of the business model
in which a financial asset is held, the Company considers all of
the relevant information on how the business is managed,
including:
-- the documented investment strategy and the execution of this
strategy in practice. This includes whether the investment strategy
focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the
financial assets to the duration of any related liabilities or
expected cash outflows or realised cash flows through the sale of
the assets;
-- how the performance of the portfolio is evaluated and
reported to the Company's management;
-- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
-- how the investment advisor is compensated e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cashflows collected.
IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective of
the entity's business model is not based on management's intentions
with respect to an individual instrument, but rather determined at
a higher level of aggregation. The assessment needs to reflect the
way that an entity manages its business.
The company has determined that it has two business models.
-- Held-to-collect business model: this includes cash and cash
equivalents, balances due from brokers and other receivables. These
financial assets are held to collect contractual cash flows.
-- Other Business model: this includes structured finance
products, equity investments, investments in unlisted private
equities and derivatives. These financial assets are managed and
their performance is evaluated, on a fair value basis with frequent
sales taking place in respect to equity holdings.
Valuation of financial asset investments
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 valuations in respect of unquoted
investments (Level 3 financial assets) are explained in note 17.
Changes in the fair value of investments held at fair value through
profit or loss and gains and losses on disposal are recognised in
the consolidated statement of comprehensive income as "Net
gains/(losses) on investments". Investments are
3 Accounting Policies (continued)
initially measured at fair value plus incidental acquisition
costs. Subsequently, they are measured at fair value. This is
either the bid price or the last traded price, depending on the
convention of the exchange on which the investment is quoted.
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 less 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 IAS 38 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 3 Accounting Policies (continued)
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.
3 Accounting Policies (continued)
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
INTANGIBLES
Expenditure on internally developed intangible asset is capitalised
if it can be demonstrated that:
- there is an intention to complete the development,
- adequate resources are available to complete the development,
- it is probable that the asset will generate future economic
benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods
the group expects to benefit from using the asset developed.
The amortisation expense is included within the cost of sales
line in the consolidated Statement of Comprehensive Income.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are recognised
in the consolidated Statement of Comprehensive Income as incurred.
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 subsequently 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.
3 Accounting Policies (continued)
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 recognised 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 fair value adjustment
to the investment in subsidiary in connection with the reverse
acquisition.
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.
3 Accounting Policies (continued)
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.
SHARE-BASED PAYMENTS
All share based payments are accounted for in accordance with
IFRS 2 - "Share-based payments". The Company issues equity-settled
share-based payments in the form of share options to certain
directors and employees. Equity settled share-based payments
are measured at fair value at the date of grant. The fair value
determined at the grant date of equity-settled share-based payments
is expensed on a straight line basis over the vesting period,
based on the Company's estimate of shares that will eventually
vest.
Fair value is estimated using the Black-Scholes valuation model.
The expected life used in the model has been adjusted, on the
basis of management's best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations. At each
balance sheet date, the Company revises its estimate of the
number of equity instruments expected to vest as a result of
the effect of non-market based vesting conditions. The impact
of the revision of the original estimates, if any, is recognised
in profit or loss such that the cumulative expense reflects
the revised estimate, with a corresponding adjustment to retained
earnings.
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.
4 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS (continued)
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:
2019 2018
GBP'000 GBP'000
---------------------------------------------- ---------- ----------
Commissions 3,624 4,426
Share sales - -
Corporate finance and advisory 130 44
Special charges and recharges 1,557 2,032
----------------------------------------------------------------- ---------- ----------
5,311 6,502
----------------------------------------------------------------- ---------- ----------
7 OPERATING PROFIT
2019 2018
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Operating loss is stated after charging:
Staff costs as per Note 9 below 1,254 1,611
Depreciation of property, plant and equipment 14 21
Operating lease rentals 142 142
Write downs of VAT receivable - 29
Net foreign exchange loss/(gain) - 3
-------------------------------------------------------------------- ---------- ----------
8 auditors' remuneration
The analysis of auditors' remuneration is as follows:
2019 2018
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Fees payable to the Group's auditors for the
audit of the Group's annual accounts 20 20
20 20
-------------------------------------------------------------------- ---------- ----------
9 staff costs
The average monthly number of employees (including executive
directors) for the continuing operations was:
2019 2018
No. No.
Group total staff 18 18
2019 2018
GBP'000 GBP'000
------------------------------- ---------------- ----------------
Wages and salaries 1,127 1,104
Bonus shares issued 0 129
Share based payment cost 0 99
Termination benefits 0 46
Pension contributions 12 3
Social security costs 115 101
1,254 1,482
-------------------------------------------------- ---------------- ----------------
Directors' emoluments were as follows:
2019 2019 2019 2019 2018
Directors Bonus Other Total Total
fees shares emoluments
issued
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ --------------- ------------------- -------------- --------------
Grant
L Roberts - - - - 3
John Gunn 12 - 518 530 540
Samantha
L Esqulant 12 - 174 186 165
Nilesh
Jagatia 12 - 66 78 75
Anthony
Binnie 12 - - 12 -
Martin
Davison - - - - 31
48 - 758 806 814
------------------------------ ------------------ --------------- ------------------- -------------- --------------
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.
10 OTHER GAINS AND LOSSES
2019 2018
GBP'000 GBP'000
----------------------------------------- ---------- ----------
Impairment of investments (16) (75)
Gain on disposal of investments - 4
------------------------------------------------------------- ---------- ----------
(16) (71)
------------------------------------------------------------- ---------- ----------
11 taxation
2019 2018
GBP'000 GBP'000
--------------------------------------------------- ------------ -----------
Current tax charge 300 493
Adjustment in respect of previous year (302)
----------------------------------------------------------------------- ------------ -----------
Deferred tax (release) / charge 1 (1)
----------------------------------------------------------------------- ------------ -----------
(1) 492
----------------------------------------------------------------------- ------------ -----------
Reconciliation of tax charge:
Continuing operations
--------------------------------------------------- -------------------------
2019 2018
GBP'000 GBP'000
--------------------------------------------------- ------------ -----------
Profit before tax 858 1,517
----------------------------------------------------------------------- ------------ -----------
Tax at the UK corporation tax rate of 19% (2018:
19%) 163 288
Effects of:
Tax effect of expenses that are not deductible
in determining taxable profit: - 38
Prior Year adjustments (302)
Permanent differences 29
Additional deduction for R&D expenditure (32) -
Deferred tax not recognised 141
Unutilised tax losses - 166
Tax charge for period (1) 492
----------------------------------------------------------------------- ------------ -----------
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 2019 assumes that all shares
have been included in the computation based on the weighted
average number of days since issue.
2019 2018
-------------------------------------------- ------------ ------------
Profit attributable to owners of the Group GBP1,060,000 GBP1,276,000
-------------------------------------------- ------------ ------------
Weighted average number of ordinary shares
in issue for basic earnings 567,866,749 564,703,598
Weighted average number of ordinary shares
in issue for fully diluted earnings 581,616,749 578,453,598
---------------------------------------------------------------- ------------ ------------
Earnings per share (pence per share)
Basic 0.187p 0.226p
Fully diluted 0.182p 0.221p
---------------------------------------------------------------- ------------ ------------
13 GOODWILL
Goodwill arose on the acquisition of Global Investment Strategy
UK Limited ("GIS") by the Company in 2015.
2019 2018
GBP'000 GBP'000
--------------------------- ------------------- ------------------
At 1 April 2,869 2,869
At 31 March 2,869 2,869
----------------------------- ------------------- ------------------
The amount of GBP2,869,000 of Goodwill relates to the Goodwill
arising on the reverse acquisition of GIS.
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 2019 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 OTHER INTANGIBLE ASSETS
System development
costs Total
GBP'000 GBP'000
------------------------------------------------------- ------------------------- ---------
As at 1 April 2017 50 50
Additions 359 359
--------------------------------------------------------------------------- ------------------------- ---------
As at 31 March 2018 409 409
Additions 248 248
As at 31 March 2019 657 657
--------------------------------------------------------------------------- ------------------------- ---------
PROPERTY, plant AND EQUIPMENT
15
Office Equipment Fixtures Short term Motor Group
and fittings leasehold Vehicles Total
property
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ --------------- ------------ ----------- -----------
As at 31 March 2017 56 14 6 63 139
Additions 18 1 - - 19
As at 31 March 2018 74 15 6 63 158
Additions 10 - - - 10
Disposal (63) (63)
As at 31 March 2019 84 15 6 - 105
-------------------------------------- ------------------ --------------- ------------ ----------- -----------
Depreciation
------------------ ------------------ --------------- ------------ ----------- -----------
As at 31 March 2017 25 12 4 36 77
Charge for the year 12 1 2 6 21
As at 31 March 2018 37 13 6 42 98
Charge for the year 8 1 - 5 14
Disposal - - - (47) (47)
As at 31 March 2019 45 14 6 - 65
-------------------------------------- ------------------ --------------- ------------ ----------- -----------
Net book value
------------------ ------------------ --------------- ------------ ----------- -----------
As at 31 March 2019 39 1 - - 40
-------------------------------------- ------------------ --------------- ------------ ----------- -----------
As at 31 March 2018 37 2 - 21 60
-------------------------------------- ------------------ --------------- ------------ ----------- -----------
16 INVESTMENT IN subsidiarY UNDERTAKINGS
The Company's investments in its subsidiary undertakings are as follows
2019 2018
COMPANY GBP'000 GBP'000
--------------------------------------- ------------------- ----------------- ----------
Cost and net book value
At 1 April 2018 9,137 9,137
As at 31 March 2019 9,137 9,137
--------------------------------------- ------------------- ----------------- ----------
All principal subsidiaries of the Group are consolidated into the
financial statements. At 31 March 2019 the subsidiaries were as follows:
Subsidiary Country Principal Holding Holding
undertakings of registration activity %
------------------ ------------------ ------------------- ------------------ ----------
*Global
Investment
Strategy Financial
UK Limited UK services Ordinary shares 100%
**Synergis Financial
Capital Plc UK services Ordinary shares 75%
**Global
Investment
Strategy Financial
HK Limited Hong Kong Services Ordinary shares 100%
** Global
Investment
Strategy
Nominees Financial
Limited UK Services Ordinary shares 100%
------------------ ------------------ ------------------- -------------------------------------- ----------
*Directly held **Indirectly held
17 AVAILABLE-FOR-SALE INVESTMENTS
GROUP COMPANY
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Investments at fair value at
1 April 31 126 - -
Purchases 250 - - -
Impairment of investments (15) (75) - -
Gain on disposals - 4 - -
Disposals - (24) - -
Fair value of investments at
31 March 266 31 - -
----------------------------------------- --------- --------- --------- ---------
Categorised as:
Level 1 Investments 266 31 - -
Level 3 Investments - - - -
---------------------------------- --------- --------- --------- ---------
266 31 - -
----------------------------------------- --------- --------- --------- ---------
Classed as:
Non-current assets - - - -
Current assets 266 31 - -
----------------------------------------- --------- --------- --------- ---------
266 31 - -
----------------------------------------- --------- --------- --------- ---------
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 2019 or 2018.
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 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- --------- --------
At 1 April - 20 - -
Disposal proceeds - (24) - -
Gain on disposal - 4 - -
Impairment of investment - - - -
-------------------------------------- --------- --------- --------- --------
At 31 March - - - -
-------------------------------------- --------- --------- --------- --------
18 TRADE AND OTHER RECEIVABLES
GROUP COMPANY
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- ------- -------
Prepayments and accrued income 25 17 5 -
Trade receivables 88 182 - -
Other receivables 501 218 168 152
Loans receivable 94 104 - -
------------------------------------ ------- ------- ------- -------
708 521 173 152
------------------------------------ ------- ------- ------- -------
Balances with the related parties are disclosed in note 25.
Also included in loans receivable is an amount of GBP85,500
(2019: GBP93,000) 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 instalments, two of which were
received on schedule. 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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------- ------- ------- -------
Cash and cash equivalents 5,466 5,324 3 -
5,466 5,324 3 -
------------------------------- ------- ------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
20 TRADE AND OTHER PAYABLES
GROUP COMPANY
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------- ------- ------- -------
Trade payables 103 100 10 2
Interco loan - - 1,877 1,168
Other payables 308 78 - 17
Accrued expenses 121 107 34 33
------------------------------------- ------- ------- ------- -------
532 285 1,921 1,220
------------------------------------- ------- ------- ------- -------
Balances with the related parties are disclosed in note 24.
21 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:
2019 2018
GBP'000 GBP'000
------------------------------------------------ ------------ -----------
Financial assets:
Cash and cash equivalents 5,466 5,324
Available for sale investments 266 31
Loans and receivables 182 286
------------------------------------------------- --- ------------ -----------
5,914 5,641
----------------------------------------------------- ------------ -----------
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:
2019 2018
GBP'000 GBP'000
--------------------------------------------------- ---------- ---------
Financial liabilities at amortised cost:
Trade and other payables 103 100
Short term borrowings - -
--------------------------------------------------- ---------- ---------
103 100
--------------------------------------------------- ---------- ---------
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.
21 Financial instruments (continued)
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 forward exchange 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:
2019 2018
GBP'000 GBP'000
------------------------------------- ---------- ---------- ---------- ---------
USD 1,086
EUR 3
CAD 43
HKD 625
Other 12 -
------------------------------------- ---------- ---------- ---------- ---------
Sensitivity analysis
The Group is mainly exposed to USD / GBP and EUR / GBP exchange
rates. The following table shows the Group's sensitivity to
a 5% increase and decrease in the GBP against these foreign
currencies. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their
translation at the yearend for a 5% in foreign currency rates:
Profit/(loss) Exchange rate
2019 2018 At 31 March
Effect of 5% decrease in value GBP'000 GBP'000 2019 2018
of GBP
--------------------------------------- ---------- ---------- ---------- ---------
USD - 39 - 1.402
EUR - - 1.14
CAD 2 1.304 -
HKD 27 1.162 -
Effect of 5% increase in value
of GBP
USD - (39) - 1.402
EUR - - - 1.14
CAD (2) 1.304 -
HKD (27) 1.162 -
--------------------------------------- ---------- ---------- ---------- ---------
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.
21 Financial instruments (continued)
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 GBP5,845,000
(2018: GBP5,610,000) 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.
22 Called up share capital
Deferred
shares Ordinary shares
of 0.5p of 0.05p
Number Nominal Number of Nominal Share
of shares value shares value premium
GBP'000 GBP'000 GBP'000
ISSUED AND
FULLY PAID:
At 31 March 2016 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
Classified as merger
reserve in respect
of reverse acquisition (6,555)
Share issue expenses (97)
------------------------------------ --------------- ---------- --------------- ------------- -------------
At 31 March 2017 164,718,820 824 560,226,886 280 3,669
Share issues 7,000,000 4 171
Capital reduction (164,718,820) (824) (3,669)
At 31 March 2018 - - 567,226,886 284 171
------------------------------------ --------------- ---------- --------------- ------------- -------------
Share issues 1,350,000 1 -
At 31 March 2019 - - 568,576,886 285 171
------------------------------------ --------------- ---------- --------------- ------------- -------------
The Company has one class of ordinary shares, which carry no
right of fixed income.
On 8 October 2018, the company announced that awarded a total
of 1,350,000 Ordinary 0.05 pence shares in the company to staff
and employees that were in employment during the initial public
floatation in July 2015
23 EVENTS AFTER THE REPORTING PERIOD
Global Investment Strategy UK Ltd, paid a dividend of GBP600,000
to the Company after the reporting period.
24 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.
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.
2019 2018
GBP'000 GBP'000
-------------------------------------------------------- ---------- ----------
Short term employee benefits 819 827
Termination benefits - 46
---------------------------------------------------------------------------- ---------- ----------
819 873
---------------------------------------------------------------------------- ---------- ----------
Short term employee benefits include payments made to personal
service companies of key management during the year totalled
GBP543,000 (2017: GBP543,000).
Balances with the directors at the yearend are:
2019 2018
GBP'000 GBP'000
Directors' remuneration payable - 8
Loan receivable from John Gunn (included in other
payables / other receivables) 29 54
The amount due from John Gunn was repaid in full on 20 August
2019
transactions with other related parties
In previous years the Group charged rent and administration
services 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:
2019 2018
GBP'000 GBP'000
Total charges/(reversal of charges) in year (including
VAT) - -
Amount due from Inspirit at 31 March (included
in trade and other receivables) 95 95
The amount owed by Inspirit at the year end was settled by the
issue to GIS of GBP95,000 convertible loan notes.
All balances with related parties are unsecured, interest free
and do not have fixed terms of repayment.
25 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The Group had no capital commitments or contingent liabilities
as at the year end (2018: GBPnil).
26 CONTRACTUAL OBLIGATIONS
The Group's future minimum lease payments in respect of non-cancellable
operating leases are as follows:
2019 2018
GBP'000 GBP'000
---------------------------------------------- ------------- -------------
Payable within 1 year 168 43
Payable within 2-5 years 42 -
210 43
------------------------------------------------------------------ ------------- -------------
27 SHARE BASED PAYMENTS
EQUITY-SETTLED SHARE OPTION SCHEME
On 6 September 2017, a total of 12,000,000 options were
granted to three directors of the Company, exercisable
at 3p per share. Half of the options vested immediately
and the other half vested on the anniversary of the date
of grant. The options expire on the fourth anniversary
of the date of grant.
On 28 September 2017, 1,750,000 options were granted on
the same terms to a fourth director.
The fair value of the options was determined using the
Black-Scholes option pricing model.
The significant inputs to the model in respect of the options
granted were as follows:
6 Sep 2017 28 Sep 2017
Grant date share
price 2.575p 2.825p
Exercise share price 3p 3p
No. of share options 12,000,000 1,750,000
Risk free rate 1% 1%
Expected volatility 50% 50%
Option life 4 years 4 years
Calculated fair
value
per share 0.89714p 1.06409p
The total share-based payment expense recognised in the
income statement for the year ended 31 March 2019 in respect
of the share options granted was GBP63,000 (2018: GBP99,000).
Number Granted Exercised Cancelled Number Average Vesting Expiry
of in the in the in the of exercise Date date
options year year year options price
at at
1 Apr 31 Mar
2017 2018
--------- ---------- --------- ---------- ---------- ---------- --------- ----------
- 6,875,000 - - 6,875,000 0.92p 6.09.2017 6.09.2021
- 6,875,000 - - 6,875,000 0.92p 6.09.2018 6.09.2021
- 13,750,000 - - 13,750,000 0.92p
--------- ---------- --------- ---------- ---------- ---------- --------- ----------
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.
Auditors' Report
The comparative figures for the financial year ended 31 March
2019 are not the Company's statutory accounts for that financial
year but the consolidated accounts. Those accounts have been
reported on by the Company's auditors and delivered to the registrar
of companies. The report of the auditors was (i) unqualified,
(ii) did not give any reference to any matters to which the
auditors drew attention by way of emphasis without qualifying
their report, and (iii) did not contain a statement under sections
498 (2) or (3) of the Companies Act 2006, relating to the accounting
records of the company.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEWFLIFUSESU
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