TIDMGON
RNS Number : 9094G
Galleon Holdings PLC
13 May 2014
Galleon Holdings plc
("Galleon" or the "Company")
Final Results
The board of Galleon announces its final results for the year
ended 30 September 2013.
CHAIRMAN'S STATEMENT & STRATEGIC REPORT
The Company has undertaken a restructuring following the
approval by shareholders at the general meeting (GM) and creditors
at a creditors' meeting on 30 September 2013 of the Company
Voluntary Arrangement ('CVA') and is currently an investing company
as defined in the AIM Rules. The Directors have decided to publish
the accounts of the Company alone and not prepare or publish
consolidated accounts for the Group as at the year ending 30
September 2013 as they consider this basis of preparation more
accurately represents to shareholders the Company as an investing
company going forward. Further detail is set out below.
Section 414C of the Companies Act 2006 (the "Act") requires the
Company to inform members as to how the directors have performed
their duty to promote the success of the Company, by way of a
Strategic Report.
Set out below are the applicable reporting requirements under
the Act for the purposes of the Strategic Report.
Fair review of the business (Section 414C (2) (a) of the
Act)
The Company has gone through a restructuring following the
approval by shareholders at the General Meeting ("GM") on the 30
September 2013 of the Company Voluntary Arrangement ('CVA'), the
disposal of Phoenix Investment Global Limited ('the Disposal'), the
share capital reorganisation, the sale of 3.9 million new Ordinary
Shares to Q Holdings Limited ('the Placing'), the adoption of a new
policy to invest principally, but not exclusively, in the resources
and energy sectors ('the Investing Policy') and a waiver under Rule
9 of the Takeover Code.
The Group's principal activity during the year under review was
that of a publisher of digital games and content across online and
mobile platforms primarily in China which was supported by
activities in the development and exploitation of multiplatform
entertainment, intellectual property rights and premiums and
promotions.
On 30 September 2013 all resolutions in the circular to
shareholders were passed at the GM meaning a fundamental change of
business of the Company resulting in it being classified as an
investing company (as defined in the AIM Rules). The Company's
investing policy is to invest principally, but not exclusively, in
the resources and energy sectors.
On 12 November 2013, the Company announced that it had reached
agreement in principle with a consortium of sellers represented by
Iron Extraction Corporation Hungary KFT ("the Seller") regarding
the potential acquisition of at least 85% of the issued share
capital of Aktobe Steel Production LLP which, if consummated, would
represent a reverse takeover under the AIM Rules. The Company
entered into a loan agreement with the Seller, whereby the Seller
agreed to extend a loan of up to GBP400,000 to the Company for the
sole purpose of funding transaction costs relating to the proposed
transaction.
Due to the use of funds to be drawn from the loan being tied to
the proposed transaction, the Company requested the suspension of
trading in its ordinary shares on AIM in accordance with AIM Rule
14, until such time as the Company publishes an admission document
relating to the proposed transaction or otherwise ceases discussion
with the Seller. Trading in the Company's ordinary shares on AIM
was suspended on 12 November 2013.
On 12 May 2014 the Company announced that it had terminated
discussions regarding this potential transaction and terminated the
loan agreement with the Seller. The suspension to trading is
therefore expected to be lifted pending publication of this annual
report. The Company will continue to explore investment
opportunities over the coming months.
Financial year ended 30 September 2013
During the year the Company has completed the disposal of
Phoenix Investment Global Limited, a share capital reorganisation
and a placing of 3,906,250 new ordinary shares. In addition on 3
July 2013 the Company announced that it had filed a Notice of
Appointment of Administrators in the Royal Courts of Justice in
London and on 29 July 2013 the Directors filed a Notice of
Administrators Appointment in the High Court of Justice in Northern
Ireland. The CVA was approved on 30 September 2013 along with the
restructuring and new investing policy for the Company as noted
above. Subsequent to the year end, the Company has divested its
interest in the Croco Worldwide (Asia) Limited for consideration of
HK$1.
As a result of the disposals completed during and subsequent to
the year end the Company no longer has access to the financial
books and records for the entities disposed of. The lack of access
to such records would lead to the Company's auditors including a
limitation of scope in their audit opinion. Further, as a result of
the CVA, the Company's administrators have sought to realise the
value of any assets held by the Company during their
administration. Therefore, the financial statements of the Company
going forward and the statement of financial position at year end
reflects that of an investing company rather than that of a trading
Group.
Accordingly the Directors have decided to publish the accounts
of the Company alone and not prepare or publish consolidated
accounts for the Group as at the year ending 30 September 2013 as
they consider this basis of preparation more accurately represents
to shareholders the Company as an investing company going forward.
As such, the auditor's opinion on the financial statements is
qualified only in respect of the lack of preparation of Group
accounts as required by the provisions of IAS 27 and Companies Act
2006. The auditors' opinion on the "Company only" financial
statements is however, unqualified. We do believe the presentation
we have adopted in this annual report for the Company does provide
a clearer representation of the accounts to shareholders showing
what they have invested in going forward.
Principal risks and uncertainties (Section 414C (2) (b) of the
Act
This annual report contains certain forward looking statements.
These statements are made by the Directors in good faith, based on
the information available to them up to the time of approval of
this report. Actual results may differ to those expressed in such
statements depending on a variety of factors. These factors include
variability in the levels of demand in the market, restrictions to
market access, competitive pressures on pricing, delays or
additional cost in implementing the new investment strategy and
overall economic conditions.
Following the CVA and decision to change the investment strategy
the business has become an investing company and faces the
following new principal risks:
- Its ability to identify potential investment targets; and
- Its ability to raise the necessary capital to make an
investment as required.
To mitigate these risks, the Directors believe that their broad
collective experience, together with their extensive network of
contacts, will assist them in the identification, evaluation and
funding of suitable investment opportunities. In addition, they
propose to carry out a thorough review process in all material
aspects of any potential investment which will be subject to
rigorous due diligence.
Analysis of the development and performance of the business
(Section 414C (3) of the Act) and analysis of the position of the
business (Section 414C (3) of the Act)
As noted in the section above "Financial year ended 30 September
2013" this has been a period of transition for the Company and the
Directors believe that the current structure of the Company, once
the Company emerges from the CVA, will be the basis of a solid
platform for the next stage of the Company's evolution. The
Directors note during this transition stage that the Company has
not been able to perform to its full potential and therefore the
results for the year reflect the "tidying up" of the Company and
it's structure in order to ensure that a solid platform is in place
to allow the roll out of the Company's new investment strategy.
Analysis using key financial performance indicators (Section
414C (4) (a) of the Act) and analysis using other key performance
indicators (Section 414C (4) (b) of the Act)
The results are set out below. The profit after tax for the year
ended 30 September 2013 was GBP531,000 (2012: loss after tax of
GBP4,077,000). The profit for the year will be transferred to
reserves. The Directors note that the profit in the year arises as
a result of the release of the Company from its obligation under
the loan provided by Medical Consultant Management Limited ("MCM").
The principal amount of the loan drawn down during the prior period
was GBP700,000 of which GBP400,000 was repaid in the current year.
As a result of the CVA an arrangement was reached with MCM that the
obligation of the Company with regard to the loan would be reduced
to and capped at GBP50,000. This reduction in the Company's
obligations under the loan has resulted in a large credit,
representing the release of the Company's obligation, to the income
statement. The Company has also seen additional credits to the
income statement due to relinquishment of other liabilities.
The historic financial KPIs used by the Board to review the
performance of the business are now no longer considered relevant.
At present the Directors monitor the progress of the CVA and the
funding position of the Company as they continue to consider
strategic investment opportunities for the Company. Following the
approval of the CVA and subsequent share placing of 3,906,250 New
Ordinary Shares on 30 September 2013 raising proceeds of
GBP350,000, the business will implement new key performance
indicators relevant to its operations.
Approval of the Board (Section 414D (1) of the Act)
This Chairman's Statement and strategic report was approved and
authorised for issue by the Board of Directors on 12 May 2014.
By order of the Board
Ashar Qureshi
Non Executive Director
REPORT OF THE DIRECTORS
For the year ended 30 September 2013
The Directors present their report together with the financial
statements for the year ended 30 September 2013. As noted in the
Chairman's statement and Strategic Report, the financial statements
for the year ended 30 September 2013 present the results of the
Company only.
Strategic report
The following information is included within the Strategic
Report:
-- A fair review of the business
-- Principal risks and uncertainties
-- The analysis of the development and performance of the
business and an analysis of the position of the business
-- An analysis using key financial performance indicators and an
analysis using other key performance indicators.
Future developments
These have been detailed in the Strategic Report above.
Results and Proposed Dividend
The Company profit for the year after tax from continuing
operations was GBP531,000 (2012: Loss after tax of GBP4,077,000).
This profit for the year will be carried forward. The Directors do
not recommend the payment of a dividend (2012: GBPnil).
Principal risks and uncertainties
Capital Structure
Details of the issued share capital, together with details of
the movements in the Company's issued share capital during the year
are shown in Note 17 to the Financial Statements. The Company has
two classes of ordinary shares. Details of the rights of each class
of shares are disclosed in Note 17.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the articles of association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights.
Details of share-based payments are set out in Note 18 to the
Financial Statements.
No person has any special rights of control over the Company's
share capital.
Financial instruments
The Company's financial instruments include cash and short term
borrowings, which are used to provide finance for its operations.
The Company has various other financial instruments such as other
receivables and other payables, which arise directly from its
operations. The Company does not enter into derivative
transactions.
It is, and has been throughout the year under review, the
Company's policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Company's financial
instruments at the year end are currency risk, credit risk,
liquidity risk and interest rate risk. The Board's policies in
these areas are detailed further below and in note 16 to these
financial statements.
Credit risk
The Company has historically been funded by the trading
operations within its Group. These operations were either disposed
of during the year under review or subsequent to the year end. At
the date of disposal of these entities any remaining inter-company
balances with the disposed of entities were written down to nil
value. Going forward the Company is seeking equity or debt funding
for its operations and will be subject to credit risk of the
financial institutions from which it receives debt funding or
places cash on deposit.
Interest rate risk
At the present time, the Directors do not consider it necessary
to use specific measures to control this risk. The Group's
borrowings of GBP50,000 at 30 September 2013 (2012: GBP700,000) is
the maximum amount payable in accordance with the CVA approved on
30 September 2013 and the MCM Settlement agreement dated 5
September 2013. As at year end the Company no longer has any
borrowings subject to interest charges.
Liquidity risk
The Company seeks to manage liquidity risk, to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. It does this by continuously
monitoring forecast and actual cash flows. As noted in the
Chairman's Statement and Strategic Report GBP350,000 of funds was
invested into the Company on 30 September 2013 by Q Holdings
Limited. These funds were partly used to fund the CVA and partly
used for general working capital purposes. All of the GBP350,000
funds have been received as at the date of the approval of these
financial statements..
Foreign currency risk
The Board will consider any foreign currency risk associated
with new investments as part of the due diligence process.
Environmental risk
The Company's policy is to ensure that it fully understands and
manages the actual and potential environmental impact of its
activities. The Company's operations are conducted in such a way
that it complies with the legal requirements relating to the
environment in all areas of the business.
Directors
The membership of the Board during the year of review is set out
below:
Pritesh Desai*
David Wong*
Hayden Eastwood*
Yu Peng*
* Note: On 30 September 2013 Pritesh Desai, David Wong, Hayden
Eastwood and Yu Peng resigned as directors following the passing of
all resolutions in the Circular at the General Meeting.
The new Board effective from 30 September 2013 is set out
below:
Ashar Qureshi
Hamish Harris
Ashar Qureshi has a beneficial interest in 70% of the Company's
share capital through his ownership and control of Q Holdings
Limited.
Qualifying Indemnity Provisions
The Company provides the Company's Directors and Officers with
third party indemnity insurance.
Corporate Governance
The Board currently consists of two non-executive directors. The
Directors will review the composition of the Board and corporate
governance structure on a regular basis as required and will also
consider appointing additional directors with relevant experience
if the need arises during the process of identifying, evaluating
and funding of potential investment targets.
Relations with shareholders
The Company values the views of its shareholders and recognises
their interest in the Company's strategy and performance. The
Annual General Meeting is used to communicate with private
investors and they are encouraged to participate. The Directors
will be available to answer questions. Separate resolutions will be
proposed on each issue so that they can be given proper
consideration and there will be a resolution to approve the annual
report and accounts.
Internal control
The Board is responsible for maintaining a strong system of
internal control to safeguard shareholders' investment and the
Company's assets and for reviewing its effectiveness. The system of
internal financial control is designed to provide reasonable, but
not absolute, assurance against material misstatement or loss.
The Board has determined that there is currently no requirement
for an internal audit function. However, the Directors will
continue to review the requirement for an internal audit function
on a regular basis.
Remuneration Committee
The Company does not currently have a Remuneration Committee.
The Directors will continue to keep this under review and when a
suitable investment has been identified will put in place an
appropriate remuneration committee.
Remuneration policy
The Company's policy on remuneration is to attract, retain and
motivate high quality executives capable of achieving the Company's
objectives and thereby enhancing shareholder value. In doing so the
Company will endeavour to pay competitive remuneration packages,
including share options, relevant to each future executive's role,
experience, the external market and based on performance.
Audit Committee
The Audit Committee comprises Ashar Qureshi and Hamish Harris.
The Audit Committee has written terms of reference that require it
to report to the Board on such issues as:
-- the Company's annual accounts and interim reports
-- the scope and findings of the external audit
-- the appointment of the external auditors and the audit fee.
Going concern
The Company raised GBP350,000 through a subscription of
3,906,250 New Ordinary Shares on 30 September 2013. The proceeds of
the Placing have been used to fund a GBP180,000 payment due to
creditors pursuant to the CVA and the balance of GBP170,000 to
provide the Company with working capital to implement its new
Investing Policy. In addition to this, the Company has received
written confirmation that subject to appropriate due diligence, Q
Holdings Limited will provide the necessary financial support to
the Company if the need arises.
The directors have prepared profit and loss, balance sheet and
cash flow projections through to 30 May 2015, incorporating the
management and other costs associated with the implementation of
the new investment strategy. The projections also take account of
the on-going management costs of the Company. In the event an
investment is made in line with the new investment strategy, it is
likely that new funding will be raised.
Taking the above into account, the Directors believe that it
remains appropriate for the financial statements to be prepared on
a going concern basis. The financial statements do not include any
adjustments that would result if the assumptions detailed above are
not met.
Post Reporting Date Events
Post reporting date events are described in Note 23 to the
Financial Statements.
Disclosure of information to auditors
The Directors confirm that
-- so far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have
taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of that information.
Auditors
The Audit Committee has determined that following recent Board
changes, it was in the best interest of audit quality that the
audit of the Company was put out to competitive tender. Following
due process the Directors of the Company decided to appoint BDO LLP
as auditors to the Company. BDO have accepted this appointment and
a resolution to re-appoint BDO LLP as the Company's auditor will be
proposed at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
Ashar Qureshi
Non Executive Director
12 May 2014
Statement of Directors' Responsibilities
For the year ended 30 September 2013
Directors' responsibilities
The directors are responsible for preparing the Strategic
Report, Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. 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 of the
Company and of the profit or loss of the Company for that period.
The directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for
companies whose securities are traded on AIM.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, 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 requirements of 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.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Company number: NI030649
On behalf of the Board
Ashar Qureshi
Non Executive Director
12 May 2014
Independent auditor's report
For the year ended 30 September 2013
TO THE MEMBERS OF GALLEON HOLDINGS PLC
We have audited the financial statements of Galleon Holdings Plc
for the year ended 30 September 2013 which comprise the company
statement of comprehensive income, the company statement of changes
in equity, the company statement of financial position, the company
cash flow statement and the related notes. The financial reporting
framework that has been applied in their preparation 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, 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 Financial Reporting
Council's (FRC's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the FRC's website at
www.frc.org.uk/auditscopeukprivate.
Basis of qualified audit opinion on the financial statements
The company has not prepared group financial statements, which
is contrary to the provisions of the Companies Act 2006 and the
requirements of International Accounting Standard 27 ("IAS 27")
'Consolidated and Separate Financial Statements' (as disclosed in
note 1). As further explained in note 1, the financial statements
have not been consolidated on the grounds that the information
necessary for the preparation of consolidated financial statements
cannot be obtained due to the loss of control by the Company of the
subsidiaries disposed of.
Qualified opinion arising from failure to prepare group
accounts
In our opinion except for the effects of the matters described
in the Basis for qualified opinion paragraphs:
-- the financial statements give a true and fair view of the
state of the parent company's affairs as at 30 September 2013 and
of the company's profit for the year then ended;
-- the financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
Notwithstanding our qualified opinion regarding the lack of
group financial statements, in our opinion the information given in
the Directors' report and Strategic Report for the financial year
for which the financial statements are prepared is consistent with
the financial statements.
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, 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.
Anne Sayers, (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
Date 12 May 2014
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127)
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2013
Year ended Year ended
30 September 30 September 2012
Note 2013
GBP'000 GBP'000
Revenue 3 12 91
Cost of sales - (50)
------------- ------------------
Gross profit 12 41
Administrative expenses 575 (3,921)
Administrative expenses
Relinquishment of creditors 13 & 14 1,190 393
Impairment of assets (163) (3,834)
Other administrative expenses (452) (480)
-------------------------------------------------------------------------- ------- ------------- ------------------
Profit/(Loss) from operations 4 587 (3,880)
Finance costs 5 (56) (187)
Profit/(Loss) before taxation 4 531 (4,067)
Taxation 7 - (10)
Profit/(Loss) for the financial year after tax and total comprehensive
income attributable
to the equity holders of the Company 531 (4,077)
- Basic and Diluted 8 31.7p (243.5p)
============= ==================
The accompanying accounting policies and notes form an integral
part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 September 2013
----------------------------------------------------------------------------------------------------------------------
30 September 30 September 2012 30 September 2011
Note 2013
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 9 - - 3
Property, plant and equipment 10 - - 36
Investments 11 - - 3,036
------------ ----------------- -----------------
- - 3,075
------------ ----------------- -----------------
Current assets
Trade and other receivables 12 10 30 1,416
Due from shareholders 12 350 - -
Restricted cash 13 109 - -
Cash and cash equivalents - 20 41
------------ ----------------- -----------------
Total assets 469 50 4,532
============ ================= =================
LIABILITIES
Current liabilities
Trade and other payables 14 301 113 292
Borrowings 15 50 700 950
Total liabilities 351 813 1,242
============ ================= =================
Net assets/(liabilities) 118 (763) 3,290
============ ================= =================
EQUITY
Share capital 17 1,674 1,674 1,674
Shares to be issued 350 - -
Share premium 26,269 26,269 26,269
Capital redemption reserve 9,601 9,601 9,601
Share Options Reserve - 380 356
Retained deficit (37,776) (38,687) (34,610)
------------ ----------------- -----------------
Equity interests attributable to equity holders of the
Company 118 (763) 3,290
============ ================= =================
The financial statements were approved by the Board of Directors
and authorised for issue on 12 May 2014.
Ashar Qureshi
Non Executive Director
Company number: NI030649
The accompanying accounting policies and notes form an integral
part of these financial statements
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 September 2013
Year ended Year ended
30 September 30 September
2013 2012
GBP'000 GBP'000
Operating activities
Profit/(Loss) for the year
before tax 531 (4,067)
Finance costs 56 187
Relinquishment of creditors (1,190) (393)
Impairment of assets 163 3,834
(440) (439)
Decrease in trade and other
receivables 20 50
Increase/(Decrease) in trade
and other payables 188 (179)
Share based payments - 24
(232) (544)
Taxation paid - (10)
Interest paid (56) (187)
Net cash inflow/(outflow) from
operating activities (288) (741)
------------- -------------
Investing activities
Purchase of property, plant
and equipment - (8)
Proceeds from sale of plant,
property and equipment - 81
Net cash inflow from investing
activities - 73
------------- -------------
Financing activities
Receipts from borrowings - 700
Movements in funding from former
subsidiaries 777 273
Transfer to restricted cash (109) -
Repayment of loan (400) (950)
Net cash inflow from financing
activities 268 23
------------- -------------
Movement in cash and cash equivalents (20) (645)
Cash and cash equivalents brought
forward 20 665
Cash and cash equivalents carried
forward - 20
============= =============
The accompanying accounting policies and notes form an integral
part of these financial stateme
COMPANY statement of changes in equity
FOR THE YEAR ENDED 30 SEPTEMBER 2013
Capital Shares Share
Share Share redemption to be Option Retained Total
Capital premium reserve issued Reserve Deficit Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2011 1,674 26,269 9,601 - 356 (34,610) 3,290
Share based payments - - - - 24 - 24
Total comprehensive
expense for the
year - - - - - (4,077) (4,077)
---------- --------- ------------ --------- ---------- --------- --------
At 30 September
2012 1,674 26,269 9,601 - 380 (38,687) (763)
Transfer to retained
deficit - - - - (380) 380 -
Total comprehensive
income for the
year - - - - - 531 531
Shares to be issued - - - 350 - - 350
---------- --------- ------------ --------- ---------- --------- --------
At 30 September
2013 1,674 26,269 9,601 350 - (37,776) 118
========== ========= ============ ========= ========== ========= ========
The following describes the nature and purpose of each reserve
within owners' equity.
Share Capital Represents the nominal value of share capital
Share premium Amount subscribed for share capital in excess of
nominal value.
Capital redemption reserve Amounts transferred from share
capital on redemption of issued shares
Shares to be issued Shares which have been allotted and called
up but are yet to be issued
Share option reserve Cumulative fair value of options charged to
the income statement.
Retained deficit Cumulative net gains and losses recognised in
the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2013
1 ACCOUNTING POLICIES
a) Basis of preparation
These financial statements represent the individual Company
financial statements only. These financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) adopted for use in the European Union and the
Companies Act 2006. The Company's shares are listed on the AIM
market of the London Stock Exchange.
For all periods up to and including the year ended 30 September
2012, the Company prepared its financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice. These
financial statements for the year ended 30 September 2013 are the
first financial statements the Company has prepared in accordance
with IFRS. Refer further below for information on how the Company
adopted IFRS.
The financial statements have been prepared on a going concern
basis.
The financial statements have been prepared under the historic
cost convention.
b) Accounting standards
Standards, amendments and interpretations that are not yet
effective and have not been early adopted:
Standard Impact on initial application Effective date
IFRS 13 Fair value measurement 1 January 2013
IAS 19 (Amendment 2011) Employee benefits
1 January 2013
IFRS 7 (Amendment 2011) Disclosures - offsetting financial
assets and financial liabilities 1 January 2013
IAS 32 (Amendment 2011) Offsetting financial assets and financial liabilities
1 January 2014
IFRS 11 Joint arrangements 1 January 2014
IFRS 10 Consolidated financial statements 1 January 2014
IFRS 12 Disclosure of interest in other entities
1 January 2014
IAS 27 (Amendment 2011) Separate financial statements
1 January 2014
IAS 28 (Amendment 2011) Investments in associates and joint ventures
1 January 2014
IFRIC 21 Levies 1 January 2014
IFRS 9 Financial instruments 1 January 2015
The Company does not expect the standards and interpretations to
have a material impact on the financial statements
c) Going concern
The Company raised GBP350,000 through a subscription of
3,906,250 New Ordinary Shares on 30 September 2013. The proceeds of
the Placing have been used to fund a GBP180,000 payment due to
creditors pursuant to the CVA and the balance of GBP170,000 to
provide the Company with working capital to implement its new
Investing policy. In addition to this, the Company has received
written confirmation that subject to appropriate due diligence, Q
Holdings Limited will provide the necessary financial support to
the Company if the need arises.
The directors have prepared profit and loss, balance sheet and
cash flow projections through to 30 May 2015, incorporating the
management and other costs associated with the implementation of
the new investment strategy. The projections also take account of
the on-going management costs of the Company. In the event an
investment is made in line with the new investment strategy, it is
likely that new funding will be raised.
Taking the above into account, the Directors believe that it
remains appropriate for the financial statements to be prepared on
a going concern basis. The financial statements do not include any
adjustments that would result if the assumptions detailed above are
not met.
d) First--time adoption of IFRS
These financial statements, for the year ended 30 September
2013, are the first financial statements the Company has prepared
in accordance with IFRS as adopted by the European Union ("IFRS").
For periods up to and including the year ended 30 September 2012,
the Company prepared its financial statements in accordance with UK
Generally Accepted Accounting Principles ("UK GAAP").
Accordingly, the Company has prepared financial statements which
comply with IFRS applicable for periods ending on or before 30
September 2013, together with the comparative period data as at and
for the year ended 30 September 2012, as described in the
accounting policies.
In preparing these financial statements, the Company's opening
statement of financial position was prepared as at 1 October 2011,
the Company's date of transition to IFRS. On adoption of IFRS no
adjustments or reclassifications have been made by the Company in
the UK GAAP statement of financial position as at 1 October 2011
and its previously published UK GAAP financial statements as at and
for the year ended 30 September 2012.
e) Revenue
The Company follows IAS18, Revenue, in determining the
appropriate revenue recognition policies. Revenue is recognised
when the Company has obtained the right to consideration through
the performance of its investments.
Clearly identifiable costs which relate directly to the revenues
received from such license fees are recognised as a "Cost of
sale".
f) 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 reporting
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 profit
or loss.
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 financial
statements with their respective tax bases. Deferred tax is not
provided on the initial recognition of goodwill, or 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 reporting date.
Most changes in deferred tax assets or liabilities are
recognised as a component of tax expense in profit or loss. 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. Current and
deferred tax that relates to items recognised in other
comprehensive income is recognised in other comprehensive
income.
1 ACCOUNTING POLICIES (CONTINUED)
g) Intangible assets
Intellectual property rights
The costs of creating and protecting internally generated
intellectual property including the development of online games,
patents and know-how and the costs of acquiring rights to the use
of third party intellectual property are capitalised and, subject
to impairment reviews, amortised over the estimated economic life
of the intellectual property concerned, estimated to be a maximum
of 10 years or 2 years in respect of intellectual property relating
to the development of online games.
h) Impairment of non-current assets
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation.
i) Property, plant and equipment
Measurement bases
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. The cost of an
asset comprises its purchase price and any directly attributable
costs of bringing the asset to the working condition and location
for its intended use. Subsequent expenditure relating to property,
plant and equipment is added to the carrying amount of the assets
only when it is probable that future economic benefits associated
with the item will flow to the Company and the cost of the item can
be measured reliably. All other costs, such as repairs and
maintenance are charged to profit or loss during the period in
which they are incurred. The carrying amount of assets which are
replaced are derecognised.
When assets are sold, any gain or loss resulting from their
disposal, being the difference between the net disposal proceeds
and the carrying amount of the assets, is included in profit or
loss.
Depreciation
Depreciation is provided to write-off the cost of property,
plant and equipment less their residual values over their estimated
useful lives, using the straight-line method, at the following
rates per annum:
Computer equipment 33.3%
Office equipment 20%
Leasehold improvements Length of lease
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each reporting date.
j) Leased assets
In accordance with IAS 17 Leases, the economic ownership of a
leased asset is transferred to the lessee if the lessee bears
substantially all the risks and rewards related to the ownership of
the assets, the related asset is recognised at the inception of the
lease at its fair value or, if lower, the present value of the
lease payments. A corresponding liability is recognised when the
interest element of the lease payments represents a constant
proportion of the capital balance outstanding and is charged to
profit or loss over the period of the lease.
All other leases are treated as operating leases. Payments under
operating leases are charged as an expense in the statement of
comprehensive income on a straight line basis over the term of the
lease. Lease incentives are spread over the term of the lease.
Benefits recovered as an incentive to enter into an operating lease
are spread over the lease term on a straight line basis.
1 ACCOUNTING POLICIES (CONTINUED)
k) Financial assets and liabilities
Financial assets
Classification
The Company classifies its financial assets in the appropriate
categories depending on the purpose for which the financial assets
were acquired. Management determines the classification of its
financial assets at initial recognition.
The Company classifies its financial assets as loans and
receivables. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except for
maturities greater than 12 months after the end of the reporting
period. These are classified as non-current assets. The Company's
loans and receivables comprise other receivables.
Recognition and measurement
Loans and receivables are initially recognised at fair value
plus transaction costs. Financial assets are derecognised when the
rights to receive cash flows from the investments have expired or
have been transferred and the Company has transferred substantially
all risks and rewards of ownership.
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.
The Company assesses at the end of each reporting period whether
there is objective evidence that a financial asset classified as a
loan or receivable is impaired. The financial asset is considered
impaired when objective evidence is received that the Company will
not be able to collect all amounts due to it in accordance with the
original terms of the receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount
and the present value of estimated future cash flows discounted at
the original effective interest rate.
Financial liabilities
The Company's financial liabilities include a loan from a
related party, trade and other payables. Financial liabilities are
recognised when the Company becomes a party to the contractual
agreements of the instrument. All interest related charges are
recognised as an expense in "finance cost" in the statement of
comprehensive income.
Trade payables are recognised initially at their fair value less
transaction costs and subsequently measured at amortised cost using
the effective interest method. Interest bearing bank loans, other
loans and overdrafts are stated at fair value after deduction of
issue costs. Significant finance charges are accounted for on an
accruals basis in profit or loss and are added to the carrying
amount of the instrument to the extent they are not settled in the
period in which they arise.
l) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
bank deposits repayable on demand and other short-term highly
liquid investments with original maturities of 3 months or less
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Restricted cash represents funds controlled by the CVA
Administrator on behalf of the Company. The funds are held in
separate accounts designated as being for the benefit for the
Company but are managed and controlled by the CVA
Administrator.
1 ACCOUNTING POLICIES (CONTINUED)
m) Equity
Share capital is determined using the nominal value of shares
that have been issued. The share premium account represents
premiums received on issuing the share capital. Any transaction
costs associated with the issuing of shares are deducted from share
premium attributable to those shares, net of any related income tax
benefits.
The capital redemption reserve represents the nominal value of
shares cancelled on the purchase of own shares in order to maintain
the capital base of the Company.
Retained deficit include all current and prior period results as
disclosed in the income statement.
n) Share based payments
All share-based payment arrangements are recognised in the
financial statements. The Company has historically operated
equity-settled share-based remuneration plans for the remuneration
of its employees.
All services received in exchange for the grant of any
share-based remuneration are measured at their fair values. These
are indirectly determined by reference to the fair value of the
share options awarded. Their value is appraised at the grant date
and excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets).
Share-based payments are ultimately recognised as an expense in
profit or loss with a corresponding credit to retained deficit in
equity, net of deferred tax where applicable. If vesting periods or
other vesting conditions apply, the expense is allocated over the
vesting period, based on the best available estimate of the number
of share options expected to vest. Non-market vesting conditions
are included in assumptions about the number of options that are
expected to become exercisable. Estimates are subsequently revised
if there is any indication that the number of share options
expected to vest differs from previous estimates. No adjustment is
made to the expense or share issue cost recognised in prior periods
if fewer share options ultimately are exercised than originally
estimated.
Upon exercise of share options, the proceeds received net of any
directly attributable transaction costs up to the nominal value of
the shares issued are allocated to share capital with any excess
being recorded as share premium.
o) Segment Reporting
IFRS 8 requires operating segments to be identified on the basis
of the internal reports about operating units of the Company that
are regularly reviewed by the chief operating decision maker to
allocate resources and to assess their performance. The Company
does not have separately identifiable operating units managed
separately in the current and prior periods presented.
p) Investments
Investments in former subsidiaries are carried at cost less
provision for impairment and have been fully impaired.
2 CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCE OF ESTIMATion UNCERTAINTY
The key source of estimation uncertainty that has had the most
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the financial year is
identified below:
Impairment of current and non-current assets
Management have reviewed the carrying value of the current and
non-current assets at the reporting date. Details of the impairment
reviews are included in notes 9, 10, and 11 to the Company
financial statements.
3 SEGmental analysis
An operating segment is a distinguishable component of the
Company that engages in business 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 noted in Note 1, the Company represents in a single
cash generating unit therefore no segmental disclosure has been
made.
4 PROFIT/(Loss) FOR THE YEAR
The profit/ (loss) is stated after:
2013 2012
GBP'000 GBP'000
Staff costs (note 6) 392 400
Share based payments (note 18) - 24
Impairment of assets 163 3,834
Operating lease rentals - land and buildings 16 15
Auditors' remuneration:
Fees payable to the Company's auditor for the
audit of the financial statements 24 23
Fees payable to the for other services:
- Taxation services - 6
5 FINANCE COSTS
20132 2012
GBP'000 GBP'000
On financial liabilities and loans and overdrafts 56 187
======= =======
6 Directors and employees
Staff costs including directors during the year were as
follows:
2013 2012
GBP'000 GBP'000
Wages and salaries 361 356
Social security costs 31 20
Share based payment charge (note 18) - 24
392 400
======== ========
The average number of employees (including directors) of the
Company during the year was:
2013 2012
Number Number
Administration 3 3
3 3
======= =======
Remuneration in respect of Directors was as follows:
Salary and fees
2013 2012
GBP'000 GBP'000
Executive
David Wong 111 148
Hayden Eastwood 175 129
Non-Executive
Pritesh Desai 11 15
--------- ---------
Total 297 292
========= =========
The remuneration only consists of salaries and fees, with the
exception of Hayden Eastwood which includes GBP51,000 of
compensation for loss of office. There were no pension or bonus
payments paid to Directors in 2013 (2012: nil).
The amounts set out above include remuneration in respect of the
highest paid Director as follows:
2013 2012
GBP'000 GBP'000
Emoluments 175 148
======= =======
Remuneration in respect of directors and key management of the
Group was as follows:
2013 2012
GBP'000 GBP'000
Wages and salaries 297 292
Social security costs 19 12
Share based payments charge (note 18) - 24
316 328
======= =======
During the year ended 30 September 2013, GBP111,000 (2012:
GBP148,000) was payable to Medical Consultants and Management
Limited (MCM Limited) of which David Wong is a retained consultant.
MCM is an investment company registered in Jersey which is wholly
owned by a trust settled by Mr D Wong, the beneficiaries of which
are Mr D Wong's wife and children.
7 Taxation
2013 2012
GBP'000 GBP'000
United Kingdom corporation tax at 23.5% (2012: - -
25%)
Adjustment in respect of prior year - 10
Total current taxation - 10
Deferred taxation
Origination of temporary differences - -
Adjustments in respect of prior years - -
Taxation charge for the year - 10
======= =======
The tax assessed for the year differs from the standard rate of
Corporation Tax in the UK as explained below:
2013 2012
GBP'000 GBP'000
Profit / (Loss) before tax 531 (4,067)
-------- --------
Profit / (Loss) before tax multiplied by standard
rate of Corporation Tax in the
UK of 23.5% (2012: 25%) 125 (1,016)
Effect of:
Expenses not deductible for tax purposes 38 1,016
Non-taxable income (163) -
Adjustment in respect of prior years - 10
Tax charge for the year - 10
======== ========
There are no unrelieved tax losses available to offset (2012:
nil) against allowable future taxable trading profits.
8 EARNINGS/(Loss) per share
Basic and diluted earnings/(loss) per share have been calculated
by dividing the profit/(loss) attributable to ordinary shareholders
by the adjusted weighted average number of ordinary shares in issue
during the year.
The weighted average number of shares used in the calculation of
the loss per share for the year ended 30 September 2013 and 30
September 2012 has been adjusted to reflect the share
reorganisation on 30 September 2013. There were no potentially
dilutive shares at the period end (2012: nil).
2013 2012
GBP'000 GBP'000
Profit/(Loss) after tax attributable to ordinary
equity holders 531 (4,077)
Number Number
Adjusted weighted average number of shares (in '000) 1,674 1,674
Basic and Diluted earnings/(loss) per share (in pence) 31.7p (243.5p)
9 INTANGIBLE ASSETS
Intellectual Trademarks Website Total
property
rights
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2011 and 30
September
2012 and 30 September
2013 1,000 31 46 1,077
--------------------- ---------------------- ------------------------ ------------------
Amortisation
At 1 October 2011 1,000 31 43 1,074
Provided during 2012 - - 3 3
At 30 September 2012 and
30 September
2013 1,000 31 46 1,077
--------------------- ---------------------- ------------------------ ------------------
Net book value at 30 - - - -
September
2013 and 30 September
2012
===================== ====================== ======================== ==================
Net book value at 30
September
2011 - - 3 3
===================== ====================== ======================== ==================
10 PROPERTY, PLANT AND EQUIPMENT
Computer Office Leasehold Total
Equipment Equipment Improvements
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2011 43 37 42 122
Additions - 3 5 8
Disposals (2) (37) (42) (81)
At 1 October 2012 and 30 September
2013 41 3 5 49
--------------------- ---------------------- -------------- ------------------
Depreciation
At 1 October 2011 37 16 33 86
Provided during the year 6 7 4 17
Disposals (2) (20) (32) (54)
At 1 October 2012 and 30 September
2013 41 3 5 49
Net book value at 30 September - - -
2013 and 30 September 2012 -
--------------------- ---------------------- -------------- ------------------
Net book value at 30 September
2011 6 21 9 36
===================== ====================== ============== ==================
11 INVESTMENTS
GBP'000
Cost
At 1 October 2011 and 30 September
2012 and 30 September 2013 17,658
-------------
Provision
At 1 October 2011 14,622
Provided during 2012 3,036
At 30 September 2012 and 30 September
2013 17,658
-------------
Net book value at 30 September 2013 -
and 30 September 2012
-------------
Net book value at 30 September 2011 3,036
=============
The Company held the following investments at 30 September
2013
Proportion held
By the
company
Subsidiary Country of incorporation % Nature of business
Croco Worldwide Ltd England and Wales 100 Premiums and promotions
J Christopher Entertainment United States of
LLC America 51 Dormant
Galleon Holdings USA
Inc. Delaware 100 Dormant
Impairment of intangible assets, property plant and equipment
and investments
During the year, the Company entered into a CVA and has disposed
of or liquidated its operations either during the year or
subsequent to the year end. Therefore, all intangible assets,
property, plant and equipment and investments have been fully
impaired. Going forward, the Company will invest principally, but
not exclusively, in the resources and energy sector.
12 TRADE AND OTHER RECEIVABLES
2013 2012 2011
GBP'000 GBP'000 GBP'000
Trade receivables - 19 -
Other receivables 1 - -
Amounts owed by former subsidiaries - - 1,336
Other taxes and social security
costs 4 2 35
Prepayments and accrued income 5 9 45
Due from shareholders 350 - -
360 30 1,416
======= ======= =======
Subsequent to the Company entering into CVA, all intercompany
debtors have been written off during the year. On 30 September
2013, the Company also completed a placing of 3,906,250 new
ordinary sharesto be issued to Q Holdings Limited for a price of
GBP0.0896 per share. Of the total proceeds of GBP350,000,
GBP180,000 is ring-fenced for the purposes of the CVA.
Trade receivables over 30 days are individually assessed based
on estimated recoverable amounts, determined by past experience.
Before accepting any new customer, the Company uses, where
possible, an external credit scoring system to assess the potential
customer's credit quality. Customers are allocated specific credit
limits.
The Company's management consider that all trade receivables
that are neither past due nor impaired to be of good credit
quality.
Ageing of past due but not impaired receivables.
2013 2012
GBP'000 GBP'000
30-90 days - 19
- 19
======= =======
13 RESTRICTED CASH
The total cash balance as at 30 September 2013 of GBP109,000 is
being held by the CVA administrators in accordance with the terms
of the CVA. Therefore, it has been classified as restricted cash.
There was no restricted cash in the prior periods.
14 TRADE AND OTHER PAYABLES
2013 2012 2011
GBP'000 GBP'000 GBP'000
Trade payables 125 31 219
Other taxes and social security
costs 24 8 8
Accruals and deferred income 152 74 65
301 113 292
======= ======= =======
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. Subsequent to
the Company entering into CVA all intercompany creditors have been
relinquished during the year . See Note 15 for details. This
reduction in the Company's obligations has resulted in a large
credit, representing the release of the Company's obligation, to
the income statement.
15 BORROWINGS
2013 2012 2011
GBP'000 GBP'000 GBP'000
Secured borrowings
Bank loans - - 400
Other loans 50 700 550
Amounts due for settlement within
12 months 50 700 950
======= ======= =======
At 30 September 2012 all loans were due in less than one year
and secured on the receivables of the product business, attracting
interest at a fixed rate of 2% per month. The directors considered
that this represented a market rate for this financial
instrument.
The principal amount of the loan drawn down during the prior
period was GBP700,000 of which GBP400,000 had been repaid in the
current year. As a result of the CVA an arrangement was reached
with Medical Consultant Management Limited ("MCM"), the loan
provider, that the obligation of the Company in regards to the loan
would be reduced to and capped at GBP50,000. This reduction in the
Company's obligations under the loan has resulted in a large
credit, representing the release of the Company's obligation, to
the income statement.
16 FINANCIAL INSTRUMENTS
The Company uses financial instruments, other than derivatives,
comprising borrowings, cash, and various items such as other
receivables and trade and other payables that arise directly from
its operations. The main purpose of these financial instruments is
to raise finance for the Company's operations.
Capital risk management
The Company aims to manage its capital to ensure that entities
in the Company will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of
the debt and equity balance.
During the year the Company entered into a CVA. As a result of
the CVA, it was agreed that all creditors would be settled in full
with the exception of the MCM loan (see Note 15). Further details
of the CVA are included the Chairman's statement and Strategic
report.
The capital structure of the Company consists of borrowings less
cash and cash equivalents and equity attributable to equity holders
of the parent, comprising issued capital and reserves as disclosed
in the statement of changes in equity.
16
The Company's Audit Committee reviews the capital structure as
part of its risk analysis. As part of this review, the committee
considers the cost of capital and the risks associated with each
class of capital.
The Company is not subject to externally imposed capital
requirements, other than the minimum capital requirements and
duties regarding reduction of capital, as imposed by the Companies
Act 2006 on all public limited companies.
On 30 September 2013, Company completed a share placing which
generated GBP350,000. Further details of the Placing are included
in note 12 and in the Chairman's Statement. In addition, the
Company undertook a share capital reorganisation on 30 September
2013.
The Company's Ordinary Shares were consolidated on the basis
that every 100 existing Ordinary Shares has become 1 Consolidated
Share. Each of the Consolidated Shares has been subdivided into one
New Ordinary Share of GBP0.05 each and one deferred share of
GBP0.95 each. Further details of the rights to these shares are
included in note 17 of these financial statements.
The Directors recognise that the net assets of the Company are
less than half its paid up share capital. Consequently the Board
will consider at the annual general meeting what steps should be
taken to deal with the Company's financial position.
Categories of financial instruments
Financial assets 2013 2012 2011
GBP'000 GBP'000 GBP'000
Classified as loans and receivables
- Trade and other receivables 351 19 -
- Cash and cash equivalents - 20 41
- Restricted Cash 109 - -
460 39 41
======= ======= =======
Financial Liabilities 2013 2012 2011
GBP'000 GBP'000 GBP'000
Carried at amortised cost
- Trade and other payables 125 31 219
- Accruals 152 74 65
- Borrowings 50 700 950
327 805 1,234
======= ======= =======
Financial risk management objectives
Management monitor and manage the financial risks relating to
the operations of the Company through internal risk reports. During
the year these risks included currency risk, interest rate risk,
credit risk, liquidity risk and cash flow risk.
The Directors review and agree policies for managing these
risks. It is and has been in the period under review the Company's
policy that no trading in derivative financial instruments shall be
undertaken.
Liquidity risk
The Company seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. As explained in the Chairman's
statement and Strategic Report the Company is currently in a CVA
and has secured short term flexibility through new funds. The
Directors consider that this funding will provide adequate
liquidity, to allow the Company to meet its working capital needs.
See further details regarding going concern in note 1c.
Interest rate risk
During the year the Company was exposed to interest on the loan
from Medical Consultant Management Limited ("MCM"). An interest
rate of 2% was calculated on the outstanding balance each month on
a pro rata basis and was payable monthly. The Company manages
interest rate risk therefore through a fixed interest rate agreed
with the lender.
Since the year end the total amount payable in relation to the
loan is limited to a maximum of GBP50,000 due to the terms of the
CVA and settlement arrangement in place.
17 SHARE CAPITAL
2013 2012 2011
GBP'000 GBP'000 GBP'000
Authorised
2,750,000 Ordinary Shares of GBP0.05 each
and 2,750,000 Deferred Shares of GBP0.95
each (2012 and 2011: 275,000,000 Ordinary
shares of 1p each) 2,750 2,750 2,750
========= ======== ========
Allotted, called up and fully paid
1,674,260 Ordinary shares of GBP.05 each
and 1,674,260 Deferred Shares of GBP0.95
each (2012 and 2011: 167,426,002 of 1p
each) 1,674 1,674 1,674
========= ======== ========
On 30 September 2013, the Company undertook a share capital
reorganisation.
The Company's Ordinary Shares have been consolidated on the
basis that every 100 existing Ordinary Shares has become 1
Consolidated Share. Each of the Consolidated Shares has been
subdivided into one New Ordinary Share of GBP0.05 each and one
deferred share of GBP0.95 each. The New Ordinary Shares carry the
same rights as the existing Ordinary Shares. The deferred shares
will not entitle the holder thereof to receive notice of or attend
and vote at any general meeting of the Company or to receive a
dividend or other distribution or to participate in any return on
capital on a winding up other than the nominal amount paid on such
shares following a substantial distribution to holders of ordinary
shares in the Company. The Company has the right to purchase all of
the issued Deferred Shares from all Shareholders for an aggregate
consideration of GBP0.01. As such, the Deferred Shares effectively
have negligible value and have not been admitted to trading on AIM.
Share certificates have not been issued in respect of the Deferred
Shares.
18 SHARE BASED PAYMENTS
Equity-settled share-based payments
The Company had a share option scheme for directors and senior
employees. Options were exercisable at a price equal to the average
market price of the Company's shares on the date of the grant. The
vesting period was over 3 years. None of the options from any of
the schemes have performance conditions attached and none have been
exercised. The options are settled in equity once exercised.
If the options remained unexercised after a period of 10 years
from the date of the grant, the options expire. Options are
forfeited if the employee leaves the company before the options
vest.
There were no share options issued during the year. All
Directors and employees who were issued share options under the
Company's Approved and Unnaproved share option schemes signed
waiver deeds during the year cancelling any rights to the option
shares issued following the appointment of the CVA Administrators
and as a requirement of the restructuring.
As at 30 September 2013 there were no share options which have
been granted that remained outstanding.
Equity-settled share-based payments
Details of the number of share options and the weighted average
exercise price (WAEP) outstanding during the year are as
follows:
2013 2012
WAEP WAEP
No. No.
Outstanding at the beginning of
the year 10,425,000 5.1p 9,375,000 14.0p
Granted during the year - - 9,725,000 3.4p
Forfeited in the year - - (1,000,000) 12.9p
Cancelled in the year (10,425,000) 5.1p (7,675,000) 12.9p
------------- ----- ------------ ------
Outstanding at the end of the
year - - 10,425,000 5.1p
============= ===== ============ ======
Exercisable at the year end - - 1,700,000 7.4p
============= ===== ============ ======
Equity-settled share-based payments
The fair values were calculated using the Black-Scholes Pricing
Model. The significant inputs into the model were as follows:
-- Volatility - 32-61% (2010 to 2012)
- 50-80% (2007 to 2009)
-- Risk free interest rate - 1.71%-7.5%
Expected volatility was determined by calculating the historical
volatility of the Company's share price. The expected life used in
the model was adjusted, based on Management's best estimate, for
the effects of non-transferability, exercise restrictions and
behavioural considerations.
As detailed in note 17 following the share reorganisation all of
the Existing Share Options have been cancelled.
19 leasing commitments
The total future minimum lease payments are as follows:
Land and Land and
buildings buildings
2013 2012
GBP'000 GBP'000
Within one year - 11
2-5 years - 33
- 44
========== ==========
There are no ongoing lease commitments following approval of the
CVA on 30 September 2013.
20 CAPITAL COMMITMENTS
The Company has no capital commitments (2012: GBPnil).
21 Pensions
The Company operates a defined contribution pension scheme. The
assets of the scheme are administered by trustees in a fund
independent from those of the Company. The contributions amounted
to nil (2012: nil) for the year ended 30 September 2013. There were
no outstanding contributions payable.
22 related party transactions AND ULTIMATE CONTROLLING PARTY
During the year the Company had a loan facility of GBP1 million
with Imagination Holdings Limited ("Imagination"). The facility
expired on 31 January 2013. An interest rate of 2% was calculated
on the outstanding balance each month on a pro rata basis and was
payable monthly. The loan was secured against Croco Worldwide
(Asia) Limited's trade receivables. Imagination has a 4.1% interest
in the issued share capital of the Company and is a charitable
trust registered in the Isle of Man. David Wong and Pritesh Desai
are Directors of Imagination but they do not have any beneficial
interest in the trust.
On 31 January 2013 the balance of the loan from Imagination of
GBP400,000 was transferred to Medical Consultant Management Limited
("MCM"). A new loan facility was provided up to GBP500,000 secured
against certain licensing agreements totalling US$1.2m payable in
stages over the next eighteen months for a number of products
licensed to an existing customer. The facility was for a term
expiring on 15 January 2014. The maximum amount outstanding on the
loan could not exceed 87.5% of the balance outstanding on the above
licensing agreements. An interest rate of 2% calculated on the
outstanding balance each month, on a pro rata basis, was payable
monthly. An arrangement fee of GBP20,000 was payable to MCM with
GBP10,000 payable immediately and the remaining GBP10,000 payable
on 31 July 2013. Following approval of all resolutions at the GM on
30 September 2013, an agreement with MCM limits any claim by MCM
for monies owed from this facility to a maximum of GBP50,000. David
Wong was a director of the Company and Imagination and his family
are the beneficiaries of MCM, which is a trust. Pritesh Desai was a
director of Galleon and Imagination.
Subsequent to the year end, the Company has successfully
concluded the sale of its trading investments (Croco Worldwide Asia
Limited) to MCM.
During the year, the Company entered into intercompany
transactions of GBP776,000 (2012: GBP273,000) within the Group,
principally with Croco Worldwide (Asia) Limited and Croco Worldwide
(UK) Limited. The trade and assets of both have been disposed of
during the year. All intercompany balances as at 30 September 2013
were accordingly written down to the nil.
The immediate and ultimate controlling party of the Company is Q
Holdings Limited, who hold 70% of the issued ordinary share
capital. Q Holdings Limited is owned and controlled by Ashar
Qureshi.
23. POST REPORTING DATE EVENTS
On 12 November 2013 the Company announced it had reached
agreement in principle with a consortium of sellers represented by
Iron Extraction Corporation Hungary KFT("the Seller") regarding the
potential acquisition of at least 85% of the issued share capital
of Aktobe Steel Production LLP which if consummated would represent
a reverse takeover under the AIM rules. The Company entered into a
loan agreement with the Seller, whereby the Seller agreed to extend
a loan of up to GBP400,000 to the Company for the sole purpose of
funding transaction costs relating to the proposed transaction.
Due to the use of funds drawn from the loan being tied to the
proposed transaction the Company requested the suspension of
trading in its ordinary shares on AIM in accordance with AIM Rule
14, until such time as the Company publishes an admission document
relating to the proposed transaction or otherwise ceases discussion
with the Seller. Trading in the Company's ordinary shares on AIM
was suspended on 12 November 2013.
On 12 May the Company announced that it had terminated
discussions regarding this potential acquisition and the loan
agreement with the Seller. The suspension to trading is therefore
expected to be lifted pending the publication of this annual
report. The Company will continue to explore investment
opportunities over the coming months.
Subsequent to the year end, the Company has successfully
concluded the sale of its trading investments (Croco Worldwide
(Asia) Limited) and is in the process of liquidating Croco
Worldwide UK Limited. The Company has historically been funded by
the trading operations within its Group. Given these operations
were either disposed or liquidated during the year under review or
subsequent to the year end, any remaining inter-company balances
with the disposed of entities were written down to nil. All
investments, property, plant and equipment and intangible assets
were fully written down in the prior year.
24. CONTINGENT ASSETS
Further to the Company entering into a CVA, the Company entered
into litigation to realise the value of certain assets. These
assets principally consisted of a single car parking space in Hong
Kong. Angela Wang & Co. were appointed solicitors in respect of
seeking possession over the car parking space. As at 28 October
2013, all legal hearings were concluded in the Company's favour and
on 14 February 2014, possession was delivered to the Company. The
Company's administrators are currently in the process of concluding
a sale of the car parking space. The car parking space was valued
professionally at 28 February 2014 and is expected to have a
minimum value of HK$ 1,120,000 (GBP85,000). As at the date of the
financial statements, the Company remains engaged in negotiation in
relation to its investments in Galleon Holdings (USA) Inc and the
Skunk Fu product line. Any monies realised from these assets will
be restricted assets and will only be used for the purposes of the
CVA.
25. POSTING OF ACCOUNTS
The Report and Accounts for the year ended 30 September 2013
have been posted to Shareholders, together with a notice convening
an AGM pf the Company for 6 June 2014, and are available on the
Company's website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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