30th Sep 2014 18:30
Cientifica PLC
("Cientifica" or the "Company")
Audited Accounts for the year ended 31 March 2014
The Board of Cientifica is pleased to announce the Company's audited report and accounts ("the Accounts") for the year ended 31 March 2014
The Accounts are being posted to shareholders and will shortly be available from the Company's website www.cientifica.com
For further information please contact:
Cientifica PLC | |
Tim Godwin, Chairman | +44 (0) 1604 601002 |
Allenby Capital (Nominated Adviser) | |
Nick Naylor/James Reeve | +44 (0) 203 328 5656 |
Peterhouse Corporate Finance (Broker) | |
Lucy Williams / Heena Karani | +44 (0) 207 469 0930 |
Chairman's Statement for the year ended 31 March 2014
INTRODUCTION
I am very pleased to be making my first Chairman's statement, having joined the Board of Cientifica in September of this year.
The year ended 31 March 2014 was a period of significant change for the Company. During this year, the Company concluded the disposal of Plain Healthcare, Avia Informatics and Avia Investments, together with the assignment of a related £350,000 loan. The Company entered into a Company Voluntary Arrangement (the "CVA") with its creditors and concluded a placing of 19,000,000 new Ordinary Shares which raised £380,000 of new money for the Company.
The accounts for the year ended 31 March 2014 show no turnover, administrative expenses of £293,000, other gains relating to the above disposal and CVA of £584,000 and profit before taxation of £291,000.
Following the disposal of the trading subsidiaries the Company became an Investment Company (as defined under Rule 15 of the AIM Rules for Companies). The Company's investing policy is as follows:
"The Company will seek to acquire and build businesses making use of emerging technologies and advanced materials. These are typically businesses at an early revenue stage where the technology has been proven but not scaled up to meet emerging market demand. The Company focus will be on applications of graphene, nanotechnology and industrial biotechnology, with markets ranging from chemicals, aerospace and microelectronics to smart and sustainable buildings". More detail on the Company's investing policy can be found on the Company's website.
As at 31st March 2014 the Company had completed and commissioned a number of feasibility studies and reviews and concluded exclusivity arrangements that have, or will form the basis of investment agreements with a number of businesses that either own patents or production facilities or will deploy products using emerging technologies and advanced materials to end users. The Company's accounting policy during the year ended 31 March 2014 was to expense the costs incurred in these activities until the costs are able to be recharged to the relevant business as part of a formal investment agreement with the businesses. This process of converting costs incurred by the Company into investments has started and further announcements will be made in due course.
The Company's first major investment agreement was announced on 29th August 2014 with G Heat Limited who are developing an advanced form of infra-red heating using graphene. The Board is currently in advanced discussions with 7 other prospective investee businesses (for which the Company has undertaken work in the last year) which the Board is confident can, in part, be converted into investments. If these conversions are undertaken then the Board are hopeful that the Company will have made sufficient investments to have implemented its investing policy before 25 October 2013 (being the 1 year anniversary of the adoption of the investing policy by the Company's shareholders). In the event that the Company is not able to implement its investing policy before 25 October 2014 then the Company's shares, in accordance with Rule 15 of the AIM Rules for Companies, will be suspended from trading on AIM. Should the investing policy not be implemented by 25 April 2015 then the listing of the Company's shares on AIM will be cancelled.
Since my appointment in September I have been reviewing all aspects of the Company's activities since it became an investing company. As part of this review it has become clear that the Company's systems and procedures have, at times, been less than satisfactory and the Board have undertaken a detailed review of the transactions that the Company has undertaken in: i) the period from the Company becoming an investing company to 31 March 2014; and ii) the period since 31 March 2014. As a consequence the Board is seeking the refund of certain sums which have been advanced to a number of parties. In addition the Company's on-going overheads have been reduced and a revised set of controls procedures and policies have been implemented.
The Board is grateful to the Company's advisors and to key shareholders who have provided and continue to provide invaluable support to the Company.
Tim Godwin MA ACA
Chairman
30 September 2014
Strategic Report for the year ended 31 March 2014
The Directors present their Strategic Report on the Company for the year ended 31 March 2014.
RESULTS AND DIVIDENDS
The Company made a profit after taxation from continuing operations of £291,000 (2013: loss of £2,058,000). The Directors do not propose a dividend (2013:£nil).
PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS DURING THE YEAR
As highlighted in the Chairman's statement, during the year the Company decided to dispose of its software operations, changed its name from Avia Health Informatics plc and become an investment company focused on emerging technologies and advanced materials. As part of this process the Company raised £380,000 (before expenses) in October 2013, to enable it to implement its investing policy and to settle various outstanding creditors, including the amount owed under the CVA (which totalled £5,000, before expenses).
Since the year end, the Company has raised additional equity funds of £100,000 and has commenced the implementation of its investing policy to satisfy the requirements of Rule 15 of the AIM Rules for Companies.
KEY PERFORMANCE INDICATORS ("KPIs")
The Company's activity has changed to that of an investing company and as such going forward the Directors will focus principally on the development of the Company's net asset value.
The key performance indicators are therefore set out below:
COMPANY STATISTICS | 31 March 2014 2014 | 31 March 2013 |
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Net asset value | £79,000 | n/a |
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Net asset value - fully diluted per share | 0.3p | n/a |
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Closing share price | 2.5p | n/a | |||
Market capitalisation | £661,000 | n/a |
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KEY RISKS AND UNCERTAINTIES
Early stage investments in the advanced materials and emerging technologies sectors carry a high level of risk and uncertainty, although the rewards can be outstanding. At this stage, there can be no certainty of outcome and, in addition, there is often a lack of liquidity in the Company's investments which can be either unquoted or quoted, such that the Company may have difficulty in realising the full value in a forced sale. Accordingly, a commitment is only made after thorough research into both the management and the business of the target, both of which are closely monitored thereafter. Details of other financial risks and their management are given in Note 16 to the financial statements.
GOING CONCERN
As disclosed in Note 3, after making enquiries and with the support of a key shareholder, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
ON BEHALF OF THE BOARD
Tim Harper
Director
30 September 2014
Directors' Report for the year ended 31 March 2014
The Directors present their annual report on the affairs of the Company, together with the financial statements for the year ended 31 March 2014.
DIRECTORS
The Directors of the Company who served during the year are listed below.
Tim Harper | (Appointed 23rd October 2013) |
Rod Venables | (Appointed 23rd October 2013) |
Tim Baldwin | (Appointed 23rd October 2013) |
Jeremy Dale | (Resigned 24th October 2013) |
Roger Lane-Smith | (Resigned 24th October 2013) |
Tim Morris | (Resigned 24th October 2013) |
Subsequent to the year end, on 4th September, 2014 Tim Godwin was appointed as a director, and Tim Baldwin resigned as a director.
DIRECTORS' INTERESTS
The Directors' beneficial interests in the ordinary share capital of the Company as at 31 March 2014 were as follows:
Name of director | Number of ordinary shares 2014 | Share options at 3.68 pence per ordinary share 2014 |
Tim Harper | - | 1,750,000 |
Rod Venables | - | 290,000 |
Tim Baldwin | 850,000 | 710,000 |
SUBSTANTIAL SHAREHOLDINGS
The only interests in excess of 3% of the issued share capital of the Company which have been notified to the Company as at 26 September 2014 were as follows:
Name of shareholder | Ordinary shares of 0.10p each Number | Percentage of capital
% |
TV Investments 1 Limited | 6,250,000 | 18.20 |
Hargreave Lansdown | 5,491,973 | 16.00 |
First Equity Limited | 1,750,000 | 5.09 |
Lombard Capital | 1,666,667 | 4.85 |
P3 Limited | 1,666,667 | 4.85 |
Tim Harper | 1,440,000 | 4.19 |
Winterflood Securities Limited | 1,333,333 | 3.88 |
Panmure Gordon (UK) Ltd | 1,250,000 | 3.64 |
Bruce Gordon | 1,250,000 | 3.64 |
CORPORATE GOVERNANCE
Although the Company is not required to comply with the principles of corporate governance, this report sets out how the Company does comply with the principles of good corporate governance.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for approving Company policy and strategy. It meets regularly and has a schedule of matters specifically reserved to it for decision. Management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professionals at the Company's expense. Training is available for new Directors and other Directors as necessary.
The Board consists of three directors, the non-executive chairman Tim Godwin, the Chief Executive Officer Tim Harper, and non-executive director Rod Venables.
Given the size of the Board, there is no separate nomination committee. All Director appointments are approved by the Board as a whole.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. 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 Executive Chairman and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Company'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 Company 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 Company has well established procedures which are considered adequate given the size of the business.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives and policies are set out in Note 16 to these financial statements.
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 Company financial statements for each financial year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare 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 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.
In the case of each person who was a director at the time this report was approved:
· so far as that director is aware there is no relevant audit information of which the Company's auditor is unaware: and
· that director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
POST YEAR END EVENTS
Details of events after the reporting period have been disclosed in Note 21.
AUDITORS
Welbeck Associates, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with section 487(2) of the Companies Act 2006 unless the Company receives notice under section 488(1) of the Companies Act 2006.
ON BEHALF OF THE BOARD
Tim Harper
Director
30 September 2014
Report on Directors' Remuneration for the year ended 31 March 2014
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.
The Board is responsible for the overall remuneration package for the Executive and Non-Executive Directors.
DIRECTORS' EMOLUMENTS
Full details of all elements in the remuneration package of each Director for the year are set out below:
2014 | 2013 |
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Director | £'000 | £'000 |
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Tim Harper | 10 | - |
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Rod Venables | 6 | - |
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| Tim Baldwin | 6 | - | |||
| Barry S Giddings | - | 46 | |||
| Jeremy Dale | - | 43 | |||
| Roger Lane-Smith | - | 9 | |||
| Tim Morris | - | 39 | |||
22 | 137 |
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PENSIONS
No pension contributions were paid in respect of the directors for the year ended 31 March 2014 (2013 £nil).
OPTIONS
Detail of options granted to the directors are shown in note 15.
BENEFITS IN KIND
The directors did not receive any benefits in kind for the year ended 31 March 2014 (2013: £nil).
DIRECTORS LOAN
A director's loan totaling £7,069 was owed by Tim Harper to the Company at 31 March 2014 (2013 £nil).
ON BEHALF OF THE BOARD
Tim Harper
Director
30 September 2014
Report of the Independent Auditor for the year ended 31 March 2014
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CIENTIFICA PLC
We have audited the financial statements of Cientifica plc for the year ended 31 March 2014 which comprise the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of financial position, the statement of cash flows, and the related notes. The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the statement of Directors' responsibilities set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
OPINION ON FINANCIAL STATEMENTS
In our opinion:
· the financial statements give a true and fair view of the state of the Company's affairs as at 31 March 2014 and of the Company's profit for the year then ended;
· the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements.
OPINION
Emphasis of Matter - Going Concern
In forming our opinion on the financial statements, which is not modified, we draw your attention to the disclosures made in note 3 to the financial statements concerning the Company's ability to continue as a going concern.
These conditions, along with other matters explained in note 3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Company to continue as a going concern. The directors have plans to manage the cash flows of the Company to enable it to continue as a going concern. These plans include the necessary additional fundraising required to provide the working capital requirement for the next 12 months. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
· adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
· the financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Jonathan Bradley-Hoare Senior Statutory Auditor for and on behalf of Welbeck Associates Statutory Auditor, Chartered Accountants
30 September 2014 | 30 Percy Street London W1T 2DB |
STATEMENT OF COMPREHENSIVE INCOME For the Year ended 31 March 2014 |
2014 | 2013 | |
Note | £'000 | £'000 | |
Continuing operations | |||
Revenues | - | 136 | |
Costs of Sale | - | (6) | |
Gross Profit | - | 130 | |
Administrative expenses | (293) | (621) | |
Operating profit/ (loss) | 4 | (293) | (491) |
Other gains and losses | 5 | 584 | (1,567) |
Profit/ (loss) on ordinary activities before taxation | 291 | (2,058) | |
Taxation | 7 | - | - |
Profit / (loss) for the year from continuing activities | 291 | (2,058) | |
Loss from discontinued operations | - | - | |
Total comprehensive profit/ (loss) for the year | 291 | (2,058) | |
Basic and diluted profit/(loss) per share | 1.9p | (32.0)p | |
From continuing and total operations | 8 | 1.9p | (32.0)p |
STATEMENT OF FINANCIAL POSITION As at 31 March 2014 |
2014 | 2013 | |
Notes | £'000 | £'000 | |
NON-CURRENT ASSETS | |||
Investments | 9 | 10 | - |
Property, plant and equipment | 10 | 2 | 2 |
12 | 2 | ||
CURRENT ASSETS | |||
Trade and other receivables | 11 | 12 | 4 |
Cash and cash equivalents | 12 | 131 | 2 |
143 | 6 | ||
CURRENT LIABILITIES | |||
Trade and other payables | 13 | 81 | 272 |
Borrowings | 13 | - | 350 |
81 | 622 | ||
NET CURRENT ASSETS/(LIABILITIES) | 62 | (616) | |
NET ASSETS/(LIABILITIES) | 74 | (614) | |
EQUITY | |||
Ordinary share capital | 14 | 223 | 125 |
Share premium | 14 | 2,353 | 2,075 |
Merger reserve | 18 | - | 1,488 |
Share option reserve | 21 | - | |
Retained deficit | (2,523) | (4,302) | |
Equity attributable to owners of the Company and total equity | 74 | (614) |
The financial statements were approved by the Board and ready for issue on 30 September 2014.
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Tim Harper Director |
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2014
Share capital | Share premium | Merger reserve | Share Option reserve | Retained deficit | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 April 2012 | 124 | 2,070 | 1,488 | - | (2,244) | 1,438 |
Loss and total comprehensive income for the year | - | - | - | - | (2,058) | (2,058) |
Issue of share capital | 1 | 5 | - | - | - | 6 |
At 31 March 2013 | 125 | 2,075 | 1,488 | - | (4,302) | (614) |
Profit for the year | - | - | - | - | 291 | 291 |
Issue of new shares | 98 | 295 | - | - | - | 393 |
Share issue costs | - | (17) | - | - | - | (17) |
Transfer of Merger reserve to Retained earnings | - | - | (1,488) | - | 1,488 | - |
Share based payment expense | - | - | - | 21 | - | 21 |
At 31 March 2014 | 223 | 2,353 | - | 21 | (2,523) | 74 |
STATEMENT OF CASH FLOWS
For the year ended 31 March 2014
2014 | 2013 | ||
£'000 | £'000 | ||
OPERATING ACTIVITIES | |||
Profit/(loss) before taxation | 291 | (2,058) | |
Adjustments for: | |||
Depreciation | - | 2 | |
Loss on disposal of fixed assets | 2 | - | |
Share based payment expense | 21 | - | |
Shares issued in lieu of fees | 13 | - | |
Impairment of investment in subsidiary | - | 1,536 | |
Net Gain on transfer of undertaking and assignment of loan | (356) | - | |
Credit arising from CVA | (230) | - | |
Operating cashflow before working capital changes | (259) | (520) | |
(Increase)/decrease in receivables | (8) | 51 | |
Increase/(decrease) in trade and other payables | 39 | 78 | |
Net cash outflow from operating activities | (228) | (391) | |
INVESTMENT ACTIVITIES | |||
Purchase of property, plant and equipment | (2) | - | |
Purchase of investments | (10) | - | |
(12) | - | ||
FINANCING ACTIVITIES | |||
Issue of ordinary share capital | 380 | 6 | |
Share issue costs | (17) | - | |
Net repayment of inter-company loan by subsidiary undertaking | 6 | - | |
Proceeds of loan notes issued | - | 350 | |
Net cash inflow from financing activities from operations | 369 | 356 | |
Net (decrease)/increase in cash and cash equivalents | 129 | (35) | |
Cash and cash equivalents as at 1 April | 2 | 37 | |
Cash and cash equivalents as at 31 March | 131 | 2 |
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1 | NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2014
GENERAL INFORMATION
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| The Company is a public limited company incorporated in the United Kingdom and its shares are listed on the AIM market of the London Stock Exchange. The Company is an investment company, mainly investing in businesses making use of emerging technologies and advanced materials.
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2 | PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.
BASIS OF ACCOUNTING
As in prior periods, the financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.
The financial statements are presented in pounds sterling (£) which is the functional currency of the company.
An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been adopted early by the Company are presented below under 'Statement of Compliance'.
GOING CONCERN
Any consideration of the foreseeable future involved making a judgement, at a particular point in time, about future events which are inherently uncertain. The ability of the Company 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 Company has adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Company's financial statements.
AVAILABLE FOR SALE INVESTMENTS
Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. In respect of quoted investments, this is either the bid price at the period end date or the last traded price, depending on the convention of the exchange on which the investment is quoted, with no deduction for any estimated future selling cost. Unquoted investments are valued by the Directors using primary valuation techniques such as recent transactions, last price or net asset value.
Investments are recognised as available-for-sale financial assets. Gains and losses on measurement are recognised in other comprehensive income except for impairment losses and foreign exchange gains and losses on monetary items denominated in a foreign currency, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.
Investments are assessed for indicators of impairment at each balance sheet date. Investments are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the investment, the estimated future cash flows of the investment have been affected.
For quoted and unquoted investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.
PRINCIPAL ACCOUNTING POLICIES (continued) |
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STATEMENT OF COMPLIANCE
The financial statements comply with International Financial Reporting Standards as adopted by the European Union. At the date of realisation of these financial statements, the following Standards and Interpretations affecting the Company, which have not been applied in these financial statements, were in issue, but not yet effective (and in some cases had not been adopted by the EU):
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KEY ESTIMATES AND ASSUMPTIONS
Estimates and assumptions used in preparing the financial statements are reviewed on an ongoing basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. |
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TAXATION
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.
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FINANCIAL ASSETS
Financial assets are recognised in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument.
The Company's financial assets are classified into the following specific categories: 'available for sale investments', and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
All Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are 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.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. |
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EQUITY
An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
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.
The loan note reserve represents the value of the equity component of the nominal value of the loan notes issued.
The capital reserve represents amounts arising in connection with reverse acquisitions. Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income together with the cumulative amount of share based expenses transferred to equity. |
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FINANCIAL LIABILITIES
Financial liabilities are recognised in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method.
The Company's financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments. |
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SHARE BASED PAYMENTS
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where warrants or options are issued for services provided to the Company, the fair value of the service is charged to the statement of comprehensive income or against share premium where the warrants or options were issued in exchange for services in connection with share issues. Where the fair value of the services cannot be reliably measured, the service is valued using Black Scholes valuation methodology taking into consideration the market and non-market conditions described above.
Where the share options are cancelled before they vest, the remaining unvested fair value is immediately charged to the statement of comprehensive income.
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FOREIGN CURRENCIES
The Directors consider Sterling to be the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Sterling, which is the Company's functional and presentation currency.
Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value was determined.
SEGMENTAL REPORTING
A segment is a distinguishable component of the Company's activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company'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 Company's investment activities as a whole, the directors have identified a single operating segment, that of holding and trading in investments in natural resources, minerals, metals, and oil and gas projects. The directors consider that it would not be appropriate to disclose any geographical analysis of the Company's investments.
No segmental analysis was provided in the financial statements given there was no revenue generated in the period for the continuing activities.
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| 3 | CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS |
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| In the application of the Company's accounting policies, which are described in note 2, 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 Company's activities generated other gains of £584,000 (2013: Loss of £1,567,000), which after administrative expenses resulted in a net profit of £291,000(2013: loss of £2,058,000). The cash balance was £131,000 as at 31 March 2014 and as disclosed in Note 21, on 25 July 2014 the Company raised gross proceeds of £100,000 by way of an equity placing. However, the Company's operational existence is still dependent on the ability to raise further adequate resources.
After making enquiries, the Directors have formed a judgement that there is a reasonable expectation that the Company can secure further adequate resources to continue in operational existence for the foreseeable future and that adequate arrangements will be in place to enable the settlement of their financial commitments.
For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. Whilst there are inherent uncertainties in relation to future events, and therefore no certainty over the outcome of the matters described, the Directors consider that, based upon financial projections and dependent on the success of their efforts to complete these activities, the Company will be a going concern for the next twelve months. If it is not possible for the Directors to realise their plans, over which there is significant uncertainty, the carrying value of the assets of the company is likely to be impaired.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company holds investments that have been designated as available for sale on initial recognition. Where practicable the Company 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.
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| 4 | OPERATING LOSS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2014 | 2013 |
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| £'000 | £'000 |
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| Loss from continuing operations is arrived at after charging: |
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| Directors' remuneration | 22 | 137 |
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| Employee salaries and other benefits | - | - |
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| Auditors' remuneration: |
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| fees payable to the principal auditor for the audit of the Company's annual financial statements |
12 |
16 |
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| fees payables to the Company's auditor and its associates for other services - tax services |
2 |
2 |
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5 | OTHER GAINS AND LOSSES |
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2014 | 2013 | |||
£'000 | £'000 | |||
Net credit arising from CVA | 230 | - | ||
Impairment of investments | - | (1,536) | ||
Provision for intercompany debtor | - | (31) | ||
Net gain on transfer of undertaking and assignment of loan | 356 | - | ||
Loss on disposal of fixed assets | (2) | - | ||
584 | (1,567) | |||
On 16 October 2013, the Company agreed at the meeting of creditors the proposals under a Company Voluntary Arrangement (the "CVA") for a final settlement of £5,000. This resulted in a gain of £230,000 which has been included in other gains and losses for the period.
On the same date, at the Company's annual general meeting, the resolution to approve the proposals under the CVA as above, as well as the planned disposal of Plain Healthcare Limited for £1 was passed.
On the same date the £350,000 convertible loan notes held by Drury Lane Limited were transferred to Plain Healthcare Limited at the time of the disposal.
The costs of the transfer of the undertakings include a £50,000 novation fee for the £350,000 Convertible loan notes owing to Drury Lane Limited.
6 | EMPLOYEE REMUNERATION | ||
The expense recognised for employee benefits for continuing operations is analysed below: | |||
2014 £'000 | 2013 £'000 | ||
Wages and salaries (including directors) | 20 | 128 | |
Share based payment expense | 21 | - | |
Social security costs | 2 | 9 | |
43 | 137 | ||
Details of Directors' employee benefits expense are included in the Report on Remuneration on page 8.
Only the directors are deemed to be key management. The average number of employees in the Company was 2 (2013: 2). | |||
7 | INCOME TAX EXPENSE | ||
2014 | 2013 | ||
£'000 | £'000 | ||
Current tax - continuing operations | - | - | |
The tax on the Company's profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Company as follows: | |||
2014 | 2013 | ||
£'000 | £'000 | ||
Profit/(Loss) before tax from continuing operations | 291 | (2,058) | |
Loss before tax multiplied by rate of corporation tax in the UK of 20% (2013: 20%) | 58 | (412) | |
Expenses not deductible for tax purposes | 4 | - | |
Tax losses utilised | (62) | - | |
Unrelieved tax losses carried forward | - | 412 | |
Total tax | - | - | |
Estimated unrelieved tax losses of £1,559,000 (2013: £1,854,000) remain available to offset against future taxable profits. No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain. | |||
8 | EARNINGS PER SHARE
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The basic and diluted earnings per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year. | ||||
2014 | 2013 | |||
£'000 | £'000 | |||
Profit/ (loss) attributable to owners of the Company | ||||
- Continuing operations | 291 | (2,058) | ||
- Discontinued operations | - | - | ||
291 | (2,058) | |||
2014 | 2013 | |||
Weighted average number of shares for calculating: | ||||
Basic earnings per share | 15,067,585 | 6,438,064 | ||
Fully diluted earnings per share | 15,485,393 | 6,438,064 | ||
2014 | 2013 | |||
Pence | pence | |||
Earnings per share: | ||||
- Basic (pence per share) | 1.93 | (31.96) | ||
- Diluted (pence per share | 1.87 | (31.96) | ||
9 | AVAILABLE FOR SALE INVESTMENTS | |||
2014 | 2013 | |||
£'000 | £'000 | |||
Cost and net book value | ||||
At 1 April | - | 1,536 | ||
Acquisitions | 10 | - | ||
Impairment of investment in subsidiary undertaking | - | (1,536) | ||
Disposals | - | - | ||
Market value of investments as at 31 March | 10 | - | ||
Categorised as: Level 1 Investments | - | - | ||
Level 3 Investments | 10 | - | ||
As discussed above in Note 5, following passing of the relevant resolution on 16 October 2013, at the Company's annual general meeting the Company disposed of all of its subsidiary undertakings, Plain Healthcare Limited, Avia Health Informatics Inc. and Avia Investments Limited for £1 each. Avia Health Informatics Inc. and Avia Investments Limited were subsequently dissolved.
The table above sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisationwithin 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 2014 or 2013.
Level 3 valuation techniques used by the Company are explained in more detail in Note 3.
10 | PROPERTY, PLANT & EQUIPMENT | |||
Plant & equipment | ||||
£'000 | ||||
Cost | ||||
At 1 April 2013 and 1 April 2012 | 9 | |||
Additions | 2 | |||
Disposals | (9) | |||
At 31st March 2014 | 2 | |||
Depreciation | ||||
At 1 April 2013 and 1 April 2012 | 7 | |||
Charge for the year | - | |||
Disposals | (7) | |||
At 31st March 2014 | - | |||
NET BOOK VALUE at 31st March 2014 | 2 | |||
NET BOOK VALUE at 31st March 2013 | 2 | |||
11 | TRADE AND OTHER RECEIVABLES | ||
2014 | 2013 | ||
£'000 | £'000 | ||
Other debtors | 7 | - | |
Prepayments and accrued income | 5 | 4 | |
12 | 4 | ||
No receivables were past due or provided for at the year-end or at the previous year-end.
The fair value of trade and other receivables is considered by the Directors not to be materially different to carrying amounts.
The other debtors includes a balance owed by the CEO, Tim Harper relating to monies advanced against ordinary business expenses.
12 | CASH AND CASH EQUIVALENTS | ||
2014 | 2013 | ||
£ | £ | ||
Cash and cash equivalents | 131 | 2 | |
The fair value of cash and cash equivalents is considered by the Directors not to be materially different to carrying amounts.
13 | TRADE AND OTHER PAYABLES | ||
2014 | 2013 | ||
£ | £ | ||
Trade and other payables | 45 | 150 | |
Accruals and deferred income | 36 | 122 | |
Short term borrowings | - | 350 | |
81 | 622 | ||
The above short term borrowings relate to £350,000 of convertible loan notes that were issued on 3 September 2012.
On 16 October 2013 the Company and Drury Lane Limited ("Drury Lane") entered into a deed of novation providing for the release of the Company's obligation to repay the sum of £350,000 to Drury which was completed following payment of a novation fee of £50,000 by the Company.
The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts.
14
| CALLED UP SHARE CAPITAL | |||||
Number of deferred shares | Number of ordinary shares | Total Number of shares | Value £'000 | Share Premium £'000 | ||
Issued and fully paid Deferred (29.5p) | 312,507 | 312,507 | 92 |
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Ordinary (0.5p each) | 6,399,023 | 6,399,023 | 32 | |||
At 1 April 2012 | 312,507 | 6,399,023 | 6,711,530 | 124 | 2,070 | |
Shares issued in year | - | 125,000 | 125,000 | 1 | 5 | |
At 31 March 2013 | 312,507 | 6,524,023 | 6,836,530 | 125 | 2,075 | |
Shares issued in year (see note below) | - | 19,625,000 | 19,625,000 | 98 | 295 | |
Share issue expenses | (17) | |||||
At 31 March 2014 | 312,507 | 26,149,023 | 26,461,530 | 223 | 2,353 | |
On 22 October 2013 the Company issued 16,300,000 ordinary shares of 0.5p for a price of 2.0p each as a result of a placing, raising £326,000 before expenses.
On 22 October 2013 the Company issued 625,000 ordinary shares of 0.5p at a price of 2.0p to Peterhouse Corporate Finance Limited in lieu of fees.
On 30 October 2013 the Company issued 2,700,000 ordinary shares of 0.5p for a price of 2.0p each as a result of a placing, raising £54,000 before expenses.
WARRANTS On 21 October 2013 the Company issued warrants to subscribe for 3% of the Company's current issued share capital to Peterhouse Corporate Finance pursuant to the share placing of 16,300,000 new ordinary shares, on the same date. | ||||||
15 | SHARE OPTIONS AND WARRANTS |
EQUITY-SETTLED SHARE OPTION SCHEMES
The Company has granted options to certain employees. Options are exercisable at a price equal to the average quoted market price of the Company's shares on the date of grant. If the options remain unexercised after a period of between 3 and 10 years from the date of grant the options expire. Options are forfeited if the employee leaves the Company before the options vest.
On 29 January 2014 the Company granted options over 2,750,000 shares to Tim Harper (1,750,000), Tim Baldwin (710,000) and Rod Venables (290,000). The options are exercisable at any time until 28 January 2024 at 3.68p per share.
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The estimated fair value of the options granted was calculated by applying the Black-Scholes option pricing model. The assumptions used in the calculation were as follows: |
Share price at date of grant Exercise price Expected volatility Expected dividend Vesting criteria Contractual life Risk free rate Estimated fair value of each option | 3.68pence 3.68pence 50% Nil Exercisable 3 years from date of grant 10 years 3% 2.33 pence |
Options: | 2014 | 2013 |
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Weighted average exercise price | Weighted average exercise price | |||||
Number | (pence) | Number | (pence) | |||
Outstanding at 1 April | - | - | - | - | ||
Granted | 2,750,000 | 3.68 | - | - | ||
Lapsed | - | - | - | - | ||
Outstanding at 31 March | 2,750,000 | 3.68 | - | - | ||
The 710,000 options granted to Tim Baldwin have since been cancelled following his resignation from the Company on 4 September 2014.
The options outstanding at 31 March 2014 had a weighted average exercise price of 3.68p and a weighted average remaining contractual life of 9.8 years.
The charge in the income statement in respect of options in 2014 was £21,342 (2013: £nil).
WARRANTS Warrants issued in the period have been listed above in Note 14.
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The estimated fair value of the warrants granted in relation to the charge in the period for the Warrants issued on 21 October 2013 was calculated by applying the Black-Scholes option pricing model.
There was no share based payment charge recognised in the warrant reserve for the year ended 31 March 2014 in respect of the warrants granted. |
16 | RISK MANAGEMENT OBJECTIVES AND POLICIES
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FINANCIAL RISK MANAGEMENT OBJECTIVES
The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company's risk management is coordinated by the board of directors, and focuses on actively securing the Company's short to medium term cash flows by minimising the exposure to financial markets.
Management review the Company's exposure to currency risk, interest rate risk, liquidity risk on a regular basis and consider that through this review they manage the exposure of the Company on a near term needs basis.
There is no material difference between the book value and fair value of the Company's cash.
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CAPITAL RISK MANAGEMENT
The Company's objectives when managing capital are:
· to safeguard the Company's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders; · to support the Company's growth; and · to provide capital for the purpose of strengthening the Company's risk management capability.
The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. | |||
INTEREST RATE RISK
The Company and Company manage the interest rate risk associated with the Company cash assets by ensuring that interest rates are as favourable as possible, whilst managing the access the Company requires to the funds for working capital purposes.
Interest rates are based on respective LIBOR and other bank prime interest rates.
The Company's cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.
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CREDIT RISK
The Company's financial instruments, which are exposed to credit risk, are considered to be mainly cash and cash equivalents. The credit risk for cash and cash equivalents is not considered material since the counterparties are reputable banks.
The Company's exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below:
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2014 £'000 | 2013 £'000 | |
Cash and cash equivalents | 131 | 2 |
131 | 2 | |
LIQUIDITY RISK
Liquidity risk is managed by means of ensuring sufficient cash and cash equivalents are held to meet the Company's payment obligations arising from administrative expenses. The cash and cash equivalents are invested such that the maximum available interest rate is achieved with minimal risk. | ||
17 | FINANCIAL INSTRUMENTS
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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:
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2014 £'000 | 2013 £'000 | |||
Financial Assets: Available for sale investments |
10 |
- | ||
Loans and receivables | 7 | 4 | ||
Cash and cash equivalents | 131 | 2 | ||
148 | 6 | |||
| FINANCIAL LIABILTIES BY CATEGORY The IAS 39 categories of financial liabilities included in the Statement of financial position and the headings in which they are included are as follows:
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| 2014 £'000 | 2013 £'000 | ||
| Financial liabilities at amortised cost: Trade and other payables |
45 |
272 | |
| Short term borrowings | - | 350 | |
| 45 | 622 | ||
18 | RESERVES
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OTHER RESERVES
The merger reserve arose under section 612 of the Companies' Act 2006 on the shares issued by the Company to acquire Plain Healthcare Limited.
It has been transferred to Retained Earnings following the disposal of Plain Healthcare Limited on 16 October 2013 for £1. |
19 | Contingent LIABILITIES |
There were no material commitments or contingent liabilities as at 31 March 2014 (2013: nil). |
20 | RELATED PARTY TRANSACTIONS |
The remuneration of the Directors, who are key management personnel of the Company, is set out in the report on directors remuneration.
There were no other related party transactions during the period.
The Directors do not consider there to be one single ultimate controlling party. |
21 | EVENTS AFTER THE REPORTING PERIOD
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On 25th July 2014 the Company conditionally raised £100,000 (gross) through a placing of 6,666,667 new ordinary shares of 0.5p each in the Company ("New Ordinary Shares") at 1.5p per share.
On 29th August 2014 the Company acquired a 24% interest in G Heat Limited following the acquisition of the entire share capital of THE Investments Limited, a private company owned and controlled by Tim Harper. The Company also agreed to invest up to £204,000 in G Heat Limited by way of convertible unsecured loan notes. |
Related Shares:
CTFA.L