TIDMFBDU
RNS Number : 6281M
Flying Brands Limited
30 April 2018
Flying Brands Limited
("Flying Brands" or the "Company")
Final Audited Results
Flying Brands announces today its audited financial results for
the year ended 31 December 2017.
For further information, please contact:
Flying Brands Limited 0207 469 0930
Trevor Brown
Peterhouse Corporate Finance Limited 0207 220 9797
Lucy Williams/ Heena Karani
Chief Executive's Statement
It is with pleasure that I present the annual financial
statements to shareholders for the year ended 31 December 2017.
This year has been one of transition and we have made considerable
progress in implementing our plans:
-- In June 2017, we raised GBP550,000, completed the acquisition
of Stone Checker Software(R) Ltd ("Stone Checker") and the Company
was readmitted to trading on the standard segment of the Main
Market;
-- In October 2017, we announced that the prototype testing and
evaluation by the StoneChecker team of its StoneChecker(R) Kidney
Stone analysis software ("StoneChecker Software") had been
successfully completed; and
-- In December 2017, StoneChecker announced that it had affixed
a CE mark to 'StoneChecker', thereby confirming that the software
now meets the requirements of the Medical Device Directive
(MDD-93/42EEC) and satisfies the quality, safety and performance
standards for medical devices in the European Union (EU), paving
the way for the commercial application of StoneChecker
Software.
Outlook
Post the year-end, the Company announced that Stone Checker
signed an exclusive marketing and distribution agreement with Korea
Computer Motion ISG, for sales and distribution of its StoneChecker
Software.
In addition, the Company acquired Imaging Biometrics ("IB") a
Wisconsin-based company advancing the field of medical imaging by
specialising in the design and manufacture of advanced
visualisation software solutions using quantitative imaging
endpoints/biomarkers. IB are specialists in research, manufacturing
and clinical evaluation of software products in radiology and have
successfully developed products from the discovery phase through to
full FDA regulatory approval.
The acquisition of IB represents the first step in the execution
of our vision to become a significant participant in the field of
medical imaging diagnostics and the application of artificial
intelligence in medical imaging.
We look forward to the future with confidence and
excitement.
Trevor Brown
Chief Executive Officer
27 April 2018
Principal activities
The principal activity in the year ended 31 December 2017 is the
provision of convenient, cost-effective and clinical treatment to
patients based on proven technologies.
Strategy
The Company is the holding company of Stone Checker Ltd and
Imaging Biometrics LLC and is operating in the radiology software
and Artificial Intelligence ("AI") market.
The Group has developed the following technology solutions;
- The StoneChecker Software aims to be the standardised medical
imaging software for urolithiasis that analyses and presents all
relevant / important stone metrics including stone size, volume,
density, skin to stone distance, novel stone architecture via
TexRAD texture analysis in a seamless manner and integrated within
healthcare IT systems.
The StoneChecker Software will assist physicians to understand
about the stone composition (uric-acid vs non-uric-acid stones
etc.) non-invasively and make an informed decision about patient
management and selection of optimal treatment (non-invasive
shockwave lithotripsy, invasive procedures such as Ureteroscopy and
Percutaneous NephroLithotomy (PCNL) in advance. PCNL is the
preferred invasive technique for treating larger kidney stones
(over 2cm in diameter) located within the kidney and involves
keyhole surgery that is performed through a 1cm incision in the
skin but physicians have no way of reliably identifying which
patients are likely to be most successful with Lithotripsy or
Surgery. Future applications could also be guiding surgical
interventions on routinely acquired scans (e.g. delineating the
collection-system to have an idea on the stone location in relation
to the collection-system); and
- Imaging Biometrics, LLC based in Wisconsin, specialises in the
design and manufacture of advanced visualisation tools, the
application of machine learning and AI software solutions and the
invention, development and clinical testing of quantitative imaging
endpoints and biomarkers. The Imaging Biometrics portfolio consists
of FDA cleared and CE marked products such as IB Neuro and IB
Diffusion that are being used clinically around the world to aide
physicians in treating patients with brain tumors, stroke, and
other soft tissue cancers and pathologies. Specific to brain
tumours, Imaging Biometric's portfolio has evolved into, and is
recognised as, a highly specialized platform for grading brain
tumours, guiding biopsies, distinguishing actual tumour progression
from pseudo - progression, and assessing treatment response and
volumetric changes over time.
The principle objectives of the Group, are as follows:
- Create a new company to support product maintenance and development, regulatory clearances, commercialisation including international sales channel management
- Recruit a high quality hands-on Chief Operations Officer to
further refine the business plan, drive commercial sales and
oversee recruitment. In particular, the COO will be responsible for
increasing sales of Imaging Biometrics' products in the US and
launching these products in India, China and Europe (Q3 2018)
- Recruit one administrative support worker and marketing staff (Q4 2018)
- Obtain FDA clearance for StoneChecker Software (Q2/Q3 2018)
and then market StoneChecker Software commercially in the US, India
and China (completion: Q3/Q4 2018)
- Appoint a second person to the Business Development team to be
responsible for the US and other North American markets.
- Design and manufacture a commercial version of the cloud-based
interface for StoneChecker Software (completion: Q3 2018)
- Commercial sales of StoneChecker Software in the UK (completion: Q4 2018)
- Create a network of distributors worldwide (Ongoing)
- Setting up reference centres across important research centres
in association with key opinion leaders;
- Setting up a clinical case registry to collect anonymised case
data, to be used to develop Artificially Intelligent products at a
future date;
- Supporting the conduct of investigator led studies at renowned
academic institutions globally;
- Setting up cloud services platform and innovative licensing
models (e.g. subscription-model, pay per use etc and having the
necessary infrastructure and payment portal, tracking customer
usage) for the Products;
- Developing next generation/improved versions of StoneChecker
Software and Imaging Biometrics' products;
- Applying for and maintaining regulatory clearances with the
appropriate national competent authorities.
Event since the year end
In March 2018, the Company acquired 100% of the membership
interests in Imaging Biometrics, LLC ("IB") (the "Acquisition").
The consideration comprises cash of $68,134 and 11,000,000 ordinary
shares in Flying Brands at GBP0.04 per share ("Shares"), with an
option for Flying Brands to pay a cash equivalent rather than
issuing Shares. An initial tranche of 4,800,000 Shares in Flying
Brands was issued to the shareholders of IB immediately (the
"Initial Tranche") and it is intended that the remaining 6,200,000
Shares will be issued before 30 September 2018. The consideration
must be satisfied in full on or before 30 September 2018. In
addition, Flying Brands is paying an additional $75,000 to settle
certain of IB's debt obligations.
IB, a privately held Wisconsin-based company established in
January 2007, is advancing the field of medical imaging by
specialising in the design and manufacture of advanced
visualisation software solutions using quantitative imaging
endpoints/biomarkers. IB are specialists in research, manufacturing
and clinical evaluation of software products in radiology and have
successfully developed products from the discovery phase through to
full FDA regulatory approval. In the USA, IB have commercialised
the premier perfusion software solution IB Neuro(TM) which is able
to provide biologic information about tumours not available with
current medical imaging platforms. Over the past decade, they have
installed IB Neuro and other IB-branded software in numerous sites
where it has been integrated into routine clinical practice. For
example, IB Rad Tech(TM) streamlines a perfusion MRI ("pMRI") based
method called Fractional Tumour Burden ("FTB"). Based on recent
published data, the underlying technology in IB's solutions has
demonstrated the ability of FTB to more accurately distinguish
tumour from Post-Treatment Radiation Effect over conventional
methods and is now gaining trust by clinicians for the evaluation
and monitoring of brain tumour patients.
IB have been managing the CE marking and FDA clearance process
for StoneChecker(R) software and FDA clearance is expected by the
end of Q2 2018. The launch of StoneChecker in the USA will include
targeting of the existing luminary sites which IB have established
for their IB Clinic product, and marketing resources will be
combined to target the same customer group of Board-certified
Radiologists at both tertiary and regional hospitals. Initially,
Flying Brands will focus on the commercialisation of artificial
intelligence ("AI") software for the management of kidney and brain
diseases which both share similar patient management and
reimbursement pathways and affect large numbers of patients each
year.
IB is also involved in the rapidly growing radiology AI market
by offering a full range of services, including medical discovery,
proof of concept testing, contract manufacturing, clinical
evaluation of biomarkers, regulatory clearance and full
commercialisation of approved products. This provides Flying Brands
with multiple opportunities to facilitate the growing interest in
AI solutions in radiology and positions it well for future industry
consolidation
Prior year adjustment
In 2015, the Company issued two Convertible Loan Notes ("CLNs"),
with a total nominal value of GBP400,000 and interest accruing at
the rate of 6.75% per annum. The CLNs plus the accruing interest
are wholly repayable by the issue of shares in the Company at a
price of 1.1p per ordinary share. As the repayment of both capital
and interest is mandated by the issue of shares, the CLNs have no
liability component as previously reported. The impact of this
change in accounting for the CLNs is disclosed in note 2 to the
financial statements.
Results for the 2017 financial period
The summary results are found in the primary statements of the
Group, primarily being the Statement of Comprehensive Income.
In summary:
-- The net interest cost for the Group for the period was
GBP23,000 (2016: as restated - GBP25,000).
-- Administrative expenses from continuing operations fell to GBP0.26m (2016: GBP0.27m)
-- Group loss after tax from continuing operations was GBP0.28m (2016: as restated - GBP0.30m).
-- Taxation charge was GBPnil for the period (2016: GBPnil).
-- Basic and diluted loss per share from continuing operations was 0.56p (2016: 1.01p loss).
-- As at 31 December 2017, the Group had cash and cash equivalents of GBP0.39m (2016: GBP0.07m)
Financial Position
-- The summary position is found in the primary statements of
the Group, being the Statement of Financial Position, found
below.
-- The main movements in net assets during the period were as follows:
Capital structure
The Group has no bank debt (2016: GBPnil). At the present time,
the Group retains clearing facilities with the bank.
Full details of the movement in share capital are given in note
19 to the financial statements.
Capital expenditure
During the period, the Group did not invest in any capital
expenditure (2016: GBPnil). The Group made an investment in product
development during the period of GBP47,000 (2016: GBPnil).
During the period, the Company acquired the whole of the issued
share capital of Stone Checker Software Limited by the issue of 8m
shares in Flying Brand at a price of 3p per ordinary share.
Ratio of men to women
At 31 December 2017 there was 1 woman (2016: 1) employed across
the Group making 16% (2016: 50%) of our Group-wide employee base.
She is a Non-Executive director on the Group Board.
The Board is satisfied that it has the appropriate balance of
skills, experience and expertise necessary, and will give due
regard to diversity in the event of further changes to both its own
membership and/or the membership of the senior management team.
Cash flow
Net cash inflow for 2017 was GBP0.32m (2016: GBP0.26m
outflow).
Liquidity and investments
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Board receives forward looking cash flow projections at
periodic intervals during the year as well as information regarding
cash balances. At the balance sheet date, the Group had cash
balances of GBP387,000 (2016: GBP66,000) and the financial
forecasts indicated that the Group expected to have sufficient
liquid resources to meet its obligations under all reasonably
expected circumstances and will not need to establish overdraft or
other borrowing facilities.
Principal risks and uncertainties
This section describes the principal risk factors that the
Directors believe could materially affect the Group Risk and
Performance.
Interest rate risk
The Group has Convertible Loan Notes totalling GBP369,000,
including accrued interest, outstanding as at 31 December 2017
(2016: GBP410,000). The Notes accrue interest at a fixed rate of
6.75%p.a. and, as such, it only has limited interest rate risk. The
impact is on income and operating cash flow and arises from changes
in market interest rates. Cash resources are held in current,
floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future
valuations of financial instruments held in accordance with the
Group's investment objectives. These future valuations are
determined by many factors but include the operational and
financial performance of the underlying investee companies, as well
as market perceptions of the future of the economy and its impact
upon the economic environment in which these companies operate.
Risk Table
The following table, whilst not an exhaustive list as other
risks may arise or existing risks my materially increase in the
future, sets out the risks and uncertainties to the continuing
Group. These are listed in no order of priority, and beneath the
description of each risk is a note of the main mitigating factors
and actions the Group is taking to address that risk.
Risks/uncertainties to the continuing Group
------------------------------------------------------------------------------------------
Issue Risk/Uncertainty Mitigation
-------------------- ------------------------------------ ------------------------------
Unproven Stone Checker has not CE Mark has been
business yet commenced trading. awarded. The
model The Net Proceeds of the Board of Stone
placing in June 2017 Checker has identified
was used to continue methods on how
developing StoneChecker's to penetrate
Software with a view the market as
to commencing sales. well as appropriate
This has yet to happen. third parties
to build the
company's product
to specifications
to meet the needs
of the targeted
end user.
Stone Checker The medical sector is The StoneChecker
may be subject heavily regulated and Software has
to medical the compliance burden been successfully
regulatory is likely to increase. manufactured
risk Non-compliance with such and has received
regulations could lead a CE Mark. Through
to fines, public reprimands, the acquisition
damage to reputation, of Imagining
increased regulatory Biometrics, in-house
requirements, enforced regulatory expertise
suspension of operations has been acquired
or, in extreme cases, and FDA clearance
withdrawal of authorisations is expected.
to operate.
If the proposed manufacturer
of the StoneChecker Software
loses approved status,
the Company will be required
to seek new manufacturers.
This could result in
a delay in producing
the StoneChecker Software
which would have an adverse
effect on the Company's
results of operations.
In addition, any future
regulatory changes within
the medical technology
sector may potentially
restrict the operations
of the Company and impose
increased compliance
and regulatory capital
costs, restrict leverage/borrowing
and dividend payments,
reduce investment returns
or increase associated
fees, restrict the ability
to hedge or off-set investment
exposure, increase corporate
governance/supervision
costs, reduce the competitiveness
of any business of the
Company, reduce the ability
of the Company to hire
and retain key personnel
or impose restrictions
on whether individuals
may be appointed or retained
as directors of the Company
and impose other restrictions
and obligations which
could adversely affect
the Company's profitability.
Intellectual The Group's success depends, The Group invests
property in part, on its ability in maintaining
to obtain and maintain and protecting
protection for its intellectual this intellectual
and proprietary information, property to reduce
so that it can stop others risks over the
from making, using or enforceability
selling its inventions and validity
or proprietary rights. of the Group's
The Group's patent applications patents. The
may not be granted and Group works
its existing patent rights closely with
may be successfully challenged its legal advisors
and revoked. and obtains where
necessary opinions
on the intellectual
property landscape
relevant to the
Group's programmes
and activities.
TexRAD Limited Stone Checker's ability Balaji Ganeshan
- use of to exploit its StoneChecker of TexRAD works
Intellectual Software is reliant upon closely with
Property the terms of an exclusive Stone Checker
licence from TexRAD Limited in the development
which grants Stone Checker of the software.
the right to use the
TexRAD's Patents in the
field of urolithiasis
and to research, develop
or have developed, make
or have made, keep, use,
import, export, sell
and supply products based
upon the TexRAD Plug-in
pursuant to the terms
of a licence agreement
dated 20 August 2015.
TexRAD may terminate
this agreement under
a number of circumstances,
which would prevent Stone
Checker being able to
develop and sell its
software.
Identifying The Group is dependent The Group has
further upon the ability of the formal investment
suitable Directors to identify criteria to identity
investments suitable investment opportunities suitable, earnings-enhancing
and to implement its acquisition targets
investing policy. The and employs experienced
Directors are continuing professionals
their search to identify to drive the
further opportunities acquisition process.
in line with the Company's
investing policy for
creating value.
The Directors may be
unable to identify further
targets and thus the
Company may not be able
to invest its cash in
a manner which accomplishes
its objectives.
There is no guarantee
that the Company will
be able to acquire further
identified opportunities,
or indeed complete the
investment.
The Group's ability to
ascertain the merits
or risks of the operations
of a target company or
business.
The Group's ability to
deploy the net proceeds
on a timely basis.
The availability and
cost of equity or debt
capital for future transactions.
Raising In the event of a significant The Group monitors
emergency issue arising for which its cash requirements
funding the Group is required carefully and
to access substantial in the need of
liquid funds in excess significant additional
of its available cash funds would look
balances, it may not to increase its
be easy to obtain additional financing.
funds as and when required.
Loss of The Group comprises a The Group has
key personnel few key individuals. a continuity
Any unforeseen loss of program in place
these key personnel would to ensure that
be damaging to the Group Directors would
be able to minimise
the disruption
of the loss of
key personnel.
The Group Compliance with various The Group monitors
may be adversely laws and regulations legislative and
affected does impose compliance regulatory changes
by the enforcement costs and restrictions and alters its
of and changes on the Group, with fines business practices
in legislation and/or sanctions for where appropriate.
and regulation non-compliance.
affecting
its business
The Group The successful management The Group offers
relies on and operations of the incentives in
the experience Group are reliant upon the form of share
and talent the contributions of options or Warrants
of its senior senior management and to incentivise
management directors. In addition, its Directors.
and on its the Group's future success
ability depends in part on its
to recruit ability to continue to
and retain recruit, motivate and
key employees retain highly experienced
and qualified management
and directors.
-------------------- ------------------------------------ ------------------------------
Key performance indicators
The main KPI for the Group is achieving its cash flow forecasts
whilst efforts continue to implement the new investing policy.
The Board monitors its cash flow carefully to ensure that it has
the funds necessary to meet its on-going requirements. Detailed
forecasts are produced and reported against on a regular basis.
Future developments
With the encouraging results from the patient clinical studies,
and with the recent acquisition of Imaging Biometrics LLC, the
Company is in an excellent position to deliver benefits to
patients, as well as generate value for stakeholders.
Going concern basis
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in this review. The financial position of the Group,
its cash flows and liquidity position are described in this
business review. In addition, notes 3 and 25 to the financial
statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments; and its exposure to credit
risk and liquidity risk. As highlighted in note 1 to the financial
statements, the Group meets its day to day working capital
requirements through its on-going cash flows.
The Directors have prepared Group forecasts and projections,
which show that the Group has a reasonable expectation of
maintaining sufficient working capital to enable the Group to meet
its liabilities as they fall due for the foreseeable future, being
a period of not less than 12 months from the date of approval of
this report.
After making appropriate enquiries, the Directors' continue to
adopt the going concern basis in preparing the annual report and
accounts.
By order of the Board
Mr T Brown
Director
27 April 2018
Flying Brands Limited,
P. O. Box 264, Forum 4
Grenville Street
St Helier, Jersey
Channel Islands, JE4 8TQ
The Directors present their annual report on the affairs of the
Group, together with the financial statements and auditor's report,
for the year ended 31 December 2017.
Business review
The Directors are required by Company Law to set out a fair
review of the business, its position at the year-end and a
description of the principal risks and uncertainties facing the
Group and to prepare the financial statements in accordance with
applicable law and International Financial Reporting Standards
("IFRS"). The strategic report on pages 3 to 10 provides this
review and financial position.
Results and dividends
The audited financial statements for the year for the Group and
Company are set out on pages 27 to 50.
No dividends will be distributed for the year ended 31 December
2017 (2016: GBPnil).
Financial instruments
Information about the use of financial instruments is given in
note 25 to the financial statements.
Events since the end of the year
Details of significant events after the reporting period are
contained in note 27 to the financial statements.
Incorporation
The Company is incorporated in Jersey, Channel Islands.
Future prospects
A commentary on the Group's future prospects and a description
of principal risks and uncertainties are set out in the Chief
Executive Officer's statement and business review.
Capital structure
During 1996, the Group created a twinned share structure with
Flying Brands Holdings (UK) plc to enable UK based shareholders to
receive a UK dividend and thereby avoid being double taxed on the
Jersey dividend.
As a result of a General Meeting held in June 2017, the twinned
share structure has been discontinued. Shareholders now only hold
shares in Flying Brands Limited, which are listed on the London
Stock Exchange.
In January 2018, Flying Brands Holdings (UK) plc was dissolved
and removed from the register at Companies House in the UK.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report
and the Group financial statements in accordance with applicable
law and regulations. Company law requires the Directors to prepare
Group financial statements for each financial year. Under UK
listing rules, the Directors are required to prepare the Group
financial statements in accordance with IFRSs as adopted by the EU.
The Group financial statements are required by law and IFRSs as
adopted by the EU to present fairly the state of affairs of the
Group and the profit or loss for that period.
In preparing these financial statements the directors are
required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgements and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- 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 accounting records
that are sufficient to show and explain the Group's and Company's
transactions. These records must disclose with reasonable accuracy
at any time the financial position of the Company and to enable the
Directors to ensure that any financial statements prepared comply
with the Companies (Jersey) Law 1991, as amended. They are also
responsible for safeguarding the assets of the Company and Group
and hence for taking reasonable steps for the prevention and
detection of fraud, error, non-compliance with law and regulations
and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic report, Directors' report,
Directors' remuneration report and corporate governance statement
that comply with that law and those regulations.
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 Jersey 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.
The Directors of the Company prior to the audit report date were
as listed below:
Mr T Brown Chief Executive Officer
Dr Qu Li Non-Executive Chairman
Non-Executive Director - appointed 20
Mr V Kaushal January 2017
Biographical details of the Directors are given on page 19.
The interests of the Directors in the shares of the company and
their service contracts are noted in the Remuneration Committee
report on pages 20 to 23. There are no Directors' interests in
share options and awards.
Free Association Books Limited ("FAB"), a company with which
Trevor Brown is connected, owned 50% of the issued share capital of
Stone Checker Software Limited. As a consequence of the purchase of
this company by Flying Brands, FAB was issued 4,000,000 ordinary
shares in Flying Brands.
V Kaushal retires at the AGM and, being eligible, offers himself
for re-election.
Although an overseas Company, the Directors have sought to
ensure that the financial statements of the Company and the Group
comply with the disclosure requirements of Jersey Company Law and
the listing requirements of the UK Listing Authority.
Share capital
Details of the authorised and issued share capital, together
with details of the movements in the Company's issued share capital
during the year are shown in note 19. The Company has one class of
ordinary shares of which 452,323 are held in Treasury (note 22).
Each share carries the right to one vote at general meetings of the
Company and carries no right to fixed income.
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. No person has any
special rights of control over the Company's share capital and all
issued shares are fully paid.
The Company has set up an Employee Share Option Trust for the
settlement of awards that may vest in future periods. The trustees
of this trust exercise the voting rights and these shares do not
attract dividends.
Charitable and political donations
The Company did not make any political or charitable donation
during the financial period (2016: GBPnil).
Substantial shareholdings
As at 13 March 2018, other than the Directors' holdings, the
Company has been advised of the following interests in 3% or more
of its issued share capital:
Percentage
Number of of Issued
Shareholder shares Share Capital
---------------------------- ---------- ---------------
West Coast Capital Trading
Limited 7,559,934 10.45%
Kathleen Schmainda 3,974,575 5.49%
----------------------------- ---------- ---------------
Significant agreements/takeovers directive
There are a number of agreements that take effect, alter or
terminate upon a change of control of the Group such as commercial
contracts and employee share option/award schemes. None of these
are deemed to be significant in terms of their potential impact on
the business of the Group as a whole.
Memorandum and Articles of Association
The Company's Articles of Association (the Articles) give the
Board the power to appoint Directors, but require Directors to
retire and submit themselves for election at the first AGM
following their appointment.
The Board of Directors may exercise all the powers of the
Company subject to the provisions of relevant statutes, the
Company's Memorandum of Association and the Articles. The Articles,
for instance, contain specific provisions and restrictions
regarding the Company's power to borrow money. Powers relating to
the issuing and buying back of shares are also included in the
Articles and such authorities are renewed by shareholders each year
at the AGM.
Memorandum
The Company's capacity
There is no doctrine of ultra vires in Jersey law and
accordingly the memorandum confirms that the capacity of the
Company is not limited by anything in its memorandum and articles
or by any act of its members.
Par value company
The memorandum states that the Company is a par value company
under Jersey law.
Liability of members limited
The memorandum confirms that the liability of each member in
respect of their holding of a share is limited to the amount (if
any) unpaid on it.
Articles
Issue of shares
Subject to the provisions of Jersey law and the pre-emption
rights described below, the Directors are generally authorised to
allot or otherwise dispose of shares in the Company as they think
fit (including the grant of options over and warrants in respect
of, shares). The Company may issue redeemable shares and may pay
commissions either in cash or by the allotment of shares or the
grant of options or warrants.
The Company shall not allot any shares unless they are first
offered to members (on the same or more favourable terms as the
proposed allotment) in proportion to their existing shareholdings.
Such an offer must state a period of not less than 21 days during
which it may be accepted. These pre-emption rights shall not apply
where shares are paid otherwise than in cash or if they are
allotted or issued pursuant to an employee share scheme.
Notwithstanding these pre-emption rights, the Directors may be
given by special resolution (passed by a majority of not less than
two-thirds of the members who vote at a general meeting) the power
to allot shares either generally or specifically so that the
pre-emption provisions do not apply, or apply with such
modifications as the Directors may determine.
Un-certificated shares
The articles allow full advantage to be taken of Jersey
legislation permitting shares to be held in un-certificated
form.
Disclosure of interests in shares
The articles also require that the Company and its members
comply with the UK Listing Authority's Disclosure and Transparency
Rule 5 (Vote Holder and Issuer Notification Rules) as if the
Company were a UK company.
Electronic communications
Notices may be served by the Company on a member by means of
electronic communication to an address notified by the member to
the Company for that purpose, in accordance with Jersey law.
Proxies may be appointed by electronic communication as permitted
by Jersey law.
Directors' fees
The limit on the aggregate fees payable to Directors each year
is still set at GBP300,000, to allow for the appointment and
remuneration of a sufficient number of non-executive directors. The
limit does not apply to the remuneration payable to executive
directors.
Directors' service contracts
The maximum length a service contract may be granted to a
director without the approval of members in general meeting is two
years.
Age limit for Directors
There no requirements for a director to retire based upon
age.
Employees
The Company's policy is to provide equal opportunities to all
present and potential employees, including, where practical, those
who are disabled.
The Group believes in respecting individuals and their rights in
the workplace. With this in mind, specific policies are in place
covering harassment and bullying, whistle blowing, equal
opportunities and data protection.
Health and safety
The Group is committed to providing a safe place of work for
employees. Group policies are reviewed on a regular basis to ensure
that policies regarding training, risk assessment, safe working and
accident management are appropriate. There are designated officers
responsible for health and safety and issues are reported at each
board and executive meeting.
Greenhouse gas emissions
The Group is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, given the very limited nature of its operations
during the year under review, it has not been practical to measure
its carbon footprint.
In the future, the Group will only measure the impact of its
direct activities, as the full impact of the entire supply chain of
its suppliers cannot be measured practically.
Statement of disclosure to independent auditors
Each of the persons who is a Director at the date of approval of
this annual report confirms that:
-- so far as the Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- the Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
Independent auditor
A resolution to re-appoint Welbeck Associates as auditor of the
Company will be proposed at the AGM.
Corporate governance
Flying Brands has a standard listing on the London Stock
Exchange and is thus not required to comply with the requirements
of the 2016 U.K. Corporate Governance Code ("the Code") as issued
by the Financial Reporting Council. The disclosures below are
required by Disclosure and Transparency Rule 7.
The Board is committed to ensuring the highest standards of
corporate governance, and complies with, subject to a small number
of exceptions listed below, the supporting principles and
provisions set out in the Code.
In order to implement its business strategy, the Company has
adopted a corporate governance structure whereby the key features
is a board of directors comprising at present one executive and two
non-executives, where despite the Company's early stage of
development, and its registration being in Jersey, the board
strives to observe the Quoted Companies Alliance revised Corporate
Governance Code for Small and Mid-Size Quoted Companies (' the QCA
Code') which the Company has voluntarily adopted. The voluntary
adoption of the QCA Code is over and above the requirements of
Jersey law.
The Company regularly updates its corporate governance policies
and procedures to reflect the changes made to corporate governance
guidelines in the last few years. The following describes the ways
in which the Company complies with the detailed provisions of the
Code. It includes full disclosure of the limited number of areas in
which the Company is non-compliant and explanations why this is
so.
The two areas of non-compliance with the Code are;
-- neither the Chairman, nor the other member of the Audit
Committee has any relevant accounting experience; and
-- the Audit Committee is made up of only two members and not at
least three independent non-executive Directors.
Annual general meeting
The Directors consider that all the resolutions to be put to the
AGM to be held in May/June 2018 are in the best interests of the
Company and its shareholders as a whole. The Board will be voting
in favour of them and unanimously recommends that shareholders do
also.
Meetings of the Board of Directors
4 Board meetings were held during the year. The Directors'
attendance record during the year are as follows:
Attendance
at Board Meetings
---------- ------------------
T Brown 4
Dr Q Li 4
V Kaushal 3
----------- ------------------
The terms of appointment of the Non-Executive Directors is made
available for inspection at the AGM, along with the service
contracts for the Executive Director. The Non-Executives do not
have a fixed term of office in her letter of appointment.
Re-election
The articles of association require each director to retire and
submit himself for re-election every three years, but also that at
least one third of the Directors must be submitted for re-election
every year.
On an annual basis, the Chairman considers the performance of
the Board and discusses with the Company Secretary the re-election
process. Given the performance of the Company, the Chairman has
confirmed that the Directors being submitted for election in 2018
continue to be highly effective, qualified and committed to their
respective roles.
Insurance cover
The Company maintains insurance with a limit of GBP5m to cover
its Directors and officers against the cost of defending themselves
against civil legal proceedings taken against them. To the extent
permitted by law the Company also indemnifies its Directors and
officers. Neither protection applies in the event of fraud or
dishonesty.
Board objectives and operation
The key objectives of the Board are as follows:
-- The agreement of strategy.
-- The agreement of the detailed set of objectives and policies
that facilitate the achievement of strategy.
-- Monitoring the performance of executive management in the
delivery of objectives and strategy.
-- Monitoring and safeguarding the financial position of the
Company and Group to ensure that objectives and strategy can be
delivered.
-- Approval of major capital expenditure and other expenditure
that is not part of the defined objectives or strategic plan.
-- Approving corporate transactions - this includes any potential acquisition or disposal.
-- Delegating clear levels of authority to the Executive
management team. This is represented by the defined system of
internal controls which is reviewed by the Audit Committee.
-- Providing the appropriate framework of support and
remuneration structures to encourage and enable Executive
management to deliver the objectives and strategies of the
Company.
-- Monitoring the risks being entered into by the Company and
ensuring that all of these are properly evaluated.
-- Approval of all external announcements.
A schedule is maintained of matters reserved to the Board for
decision.
The Board formally met four times in 2017 (2016: 4), the
Executive Director attended every meeting during the year while in
office and the Non-Executive Directors' attendance is summarised on
page 15.
For each Board meeting, each Board member receives a pack of
information, including financial reports, project updates and a
formal agenda together with any relevant documentation.
Nominations Committee
The committee consists of the Chairman and the Chief Executive.
The committee meets as required to fulfil its duties of reviewing
the Board structure and composition and identifying and nominating
candidates to fill Board vacancies as they arise.
No formal induction process exists for new Directors, but the
Chairman ensures that each individual is given a tailored
introduction to the Company and fully understands the requirements
of the role.
Appraisal of Executive Directors
The Chief Executive normally carries out an annual formal
appraisal of the performance of the other Executive Director which
takes into account the objectives set in the previous year and the
individual's performance in the fulfilment of these objectives.
However, given the CEO is the only Executive Director, a formal
annual appraisal of the Chief Executive is carried out by the
Non-Executive Chairman. All the appraisals of the Executive
Directors are provided to the Remuneration Committee.
Remuneration Committee
The report of the Remuneration Committee is included in this
annual report. Formal terms of reference for the Remuneration
Committee have been documented and are made available for review at
the AGM.
Audit Committee
Formal terms of reference for the committee have been documented
and are made available for review at the AGM.
The terms of reference of the Audit Committee include the
following requirements:
-- To monitor the integrity of financial statements and of any
formal announcements relating to the Company's financial
performance.
-- To review the Company's internal controls and risk management systems.
-- To make recommendations to the Board in relation to internal
control matters that require improvement or modification.
-- To make recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditor and
to approve remuneration.
-- To review and monitor the external auditor's independence and
objectivity and the effectiveness of the audit process.
-- To establish and monitor whistle blowing procedures.
No internal audit function exists due to the size of the Group.
This is reviewed annually by the Audit Committee which reflects on
any increased risk or regulatory changes in the period under review
in making their recommendation to the Board.
The Audit Committee met three times during the year and after
the year end. Matters considered at these meetings included:
reviewing and approving the report and financial statements for the
year ended 31 December 2017, the half year results to 30 June 2017
and the report and financial statements for the year ended 31
December 2017; discussion with the external auditors to confirm
their independence and scope for audit work; considering the
reports from external auditors identifying any accounting or
judgemental issues requiring the board's attention and the
auditors' assessment of internal controls; reviewing the company's
risk register and business continuity procedures; and considering
the adequacy of the whistle-blowing facility, the anti-bribery
training and monitoring and data protection policy and
procedures.
The Audit Committee chairman has maintained dialogue with the
auditors outside of the scheduled meetings and meets with the
auditors without the presence of executive directors and members of
the finance team.
During the financial year ended 2016 and 2017 the audit
committee approved non audit services to the auditor being
Reporting Accountant on the StoneChecker acquisition which was
concluded in May 2017. The company did not engage its auditor for
any other services, this has safeguarded the Auditor's objectivity
and independence.
The Audit Committee considers independence from a number of
perspectives, not only the materiality of fee income to the audit
firm in question. It is only after considering all these aspects
(along with a report on independence from the external auditor)
does it conclude and make recommendations to the Board.
None of the members of the Audit Committee have a formal
accounting qualification though all have operated at the highest
levels of businesses. The Board is content that the overall level
of qualification within the Audit Committee is sufficient to enable
it to discharge satisfactorily its obligations.
In addition to the Non-Executive Director and the Chief
Executive, the external auditor was invited to attend part of the
meetings where relevant.
Internal controls
The Board is responsible for the Group and Company's system of
internal control and for reviewing its effectiveness. Given the
size of the organisation and the level of transactions involved
there are limited controls documented and in operation which is
appropriate for the Group in its current state.
The Audit Committee consider each year if the current level of
internal control is appropriate. On advice from the Audit
Committee, the Board does not consider any additional independent
verification of the system of internal control to be required,
based on the size of the Company and the Group, and the non-complex
nature of both its management systems and financial structure.
The Group operates certain controls specifically relating to the
production of consolidated financial information, covering
operational procedures, validation and review.
The above procedures reflect the Group's commitment to ensuring
it has policies in place that ensure high standards of integrity
and transparency throughout its operations. Further, when these
procedures detect unauthorised practises, the Group is committed to
correction of such events. The Group is committed to analysing its
internal controls to make them more robust and further limit the
risk of such incidents. The Board believes such action properly
reflects the Company's commitment to financial discipline and
integrity at all levels. The Board has reviewed the effectiveness
of internal control systems in operation during the financial
period in accordance with the guidelines set out in the Turnbull
report, through the processes set out above and no weaknesses or
failings were identified.
Dialogue with major shareholders
The Company places considerable importance on communications
with shareholders. Discussions take place with major shareholders
with the Company delegating authority to the Chairman and Chief
Executive to present the strategy and financial results of the
Group.
Annual general meeting
At its AGM the Company complies with the provisions of the Code
relating to the disclosure of proxy votes, the separation of
resolutions and attendance of Directors, particularly committee
chairpersons. The timing of the despatch of the formal notice of
the AGM also complies with the Code.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
(i) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
(ii) the Directors' report includes a fair review of the
development and performance of the business and the position of the
issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
Mr T Brown
Director
27 April 2018
Flying Brands Limited,
P. O. Box 264, Forum 4
Grenville Street
St Helier, Jersey
Channel Islands, JE4 8TQ
Trevor Brown
Trevor has been a strategic investor in equities and real estate
for more than 30 years. He is currently a Non-Executive Director of
Braveheart Group plc. Until recently, Trevor was a director of
Feedback plc, Peterhouse Corporate Finance Limited and Advanced
Oncotherapy plc where he was involved in the strategy of transition
to the provision of advanced cancer treatment services.
Dr. Qu Li
Qu Li has been appointed Non-Executive Director of Flying Brands
Limited. With over 25 years of experience in international mergers,
acquisitions and joint ventures, Dr. Li has completed turnkey
transactions ranging from $5m-$200m and raised more than $300
million over the last 10 years. Dr. Li is the founder and Chairman
of China Ventures Ltd, a leading consultancy and venture capital
company, specialising in Sino/Western business and offering a wide
range of skills associated with international business
transactions. Dr. Li relocated to the UK over 20 years ago, where
she obtained her Doctorate of Philosophy at Leeds University and
then established her business base. She is a qualified engineer and
a successful business entrepreneur who has worked on activities
related to government, industry and commerce in China, South East
Asia, South America, Europe and the US for over 20 years.
Apart from her business commitments, Dr. Li devotes great
effort, interest and financial support to the development of young
entrepreneurs across the globe. She sits on the advisory board of
the Business School of Leeds University and is one of the Leaders
in Resident for the post graduates.
Vinod Kaushal
Vinod is a non-executive director on the board of Flying Brands
Limited. Vinod is a well-seasoned healthcare industry executive
with nearly 30 years' experience in predominantly commercial and
general management roles. He has worked nationally, regionally and
globally for a number of blue chip and SME companies.
Having been a member of the team which orchestrated the
international launch of Losec(R)/Prilosec(R) at Astra to its place
as the global No. 1 selling pharmaceutical, Vinod was Head of
Global Marketing at Novo Nordisk, Senior Vice President Fresenius
Kabi, Vice President of Amersham/GE Health's Neurology business,
Vice President at Royal Numico/Danone and CEO of SPL amongst other
pivotal roles.
Since leaving Big Pharma, Vinod has recently been focused on
entrepreneurial activities with a number of successful SMEs in the
Pharma/Healthcare space. With an impressive deal sheet to his name,
Vinod has been involved in various IP and business acquisitions.
His career has seen him relate to investors on several global stock
exchanges and he is an accomplished external speaker. Vinod holds a
BSc (Hons) in Biochemistry from Warwick University and a MBA from
Henley Business School.
The Remuneration Committee presents its report for the year
ended 31 December 2017.
Membership of the Remuneration Committee
The Remuneration Committee is currently comprised of Dr Li and V
Kaushal.
Subject to what appears below, no other third parties have
provided advice that materially assisted the Remuneration Committee
during the period.
Compliance
The Company has complied materially with The United Kingdom
Directors' Remuneration Report Regulations 2002 (the Regulations).
In accordance with the Regulations, a resolution to approve this
report will be proposed at the AGM of the Company. The vote will
have advisory status, will be in respect of the remuneration policy
and overall remuneration packages and will not be specific to
individual levels of remuneration.
Remuneration policy
The Group's current and future policy is to retain and motivate
its staff and rewards linked to performance, results and the
interest of shareholders. Bonus award for employees are assessed
annually taking in to account the Group results.
Policy Table:
Objective Operation Maximum potential Performance
and link value conditions
to the and
strategy assessment
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Base Reflects Base salary Broadly pitched N/A
salary level is set annually around the
of on 1 January median level
responsibility Salary levels for comparable
and are reviewed positions without
achievement on an annual tracking it
of individual basis by reference mechanistically.
to the median
for comparable When considering
positions in any increases
Main Market to base salaries
companies of in the normal
a similar market course (as
capitalisation opposed to
and with similar a change in
revenues to role or responsibility),
the Company. the Board will
Broadly the take into consideration:
Company seeks * Reference to the increases provided to executives in
to pitch base the comparator group.
salary around
the median
level for such * Pay and employment conditions of employees throughout
comparable the Company, including increases provided to the
positions without employee population
tracking it
mechanistically.
* Inflation
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Annual The annual Bonus awards Maximum 100 Bonus
Bonus bonus for employees per cent of performance
aligns are assessed base salary. conditions:
reward annually taking At threshold
to key into account levels of performance, Company
Company the Company 0 per cent profit
strategic results. of base salary
objectives can be earned, Company
and drives with a straight-line cash
short-term pro-rate allocation
performance between threshold Personal
and maximum. objectives
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Other To provide Futures benefits Cost of providing N/A
benefits competitive may include: life assurance
levels * Private medical insurance. private medical
of employment insurance and
benefits. permanent health
* Permanent health insurance. insurance.
* Life assurance of two times base salary.
The level of
benefits provided
is reviewed
annually to
ensure they
remain market
competitive.
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Shareholding To ensure Requirement N/A N/A
policy that to build and
Executive maintain a
Directors' holding of
and other at least 100,000
senior Flying Brands
executives' Limited units.
interests Executive Directors
are aligned may be required
with to forfeit
those up to 20 per
of cent of their
shareholders base salary
over if the shareholding
a longer requirement
time is not met
horizon. within 3 years
of appointment.
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Non-Executive To attract Fee levels Fee levels N/A
Directors Non-Executive are set at are set by
- Fees Directors the level paid reference to
with for comparable the median
the requisite roles at companies of this peer
skills of a similar group. Fee
and experience size and complexity levels are
to perform to Flying Brands reviewed annually
the role. Limited within in January.
the Main Market. When considering
The Non-Executive any increases
Director fee to fee levels
structure is in the normal
a matter for course, the
the full Board. Board will
take into consideration:
* Increases provided to comparable roles in the
comparator group;
* Pay and employment conditions of employees throughout
the Company, including increases provided to the
employee population; and
* Inflation.
-------------- --------------- ------------------------------------------------- -------------------------------------------------------------- ------------
Share options
No share option scheme is provided nor is any long-term
incentive scheme in place.
Directors' pensions
The Company does not provide a pension scheme. No dependent
pensions or benefits are provided.
Performance
The market value of the Company's shares at 31 December 2017 was
4.50p and the high and low share prices during the period were
5.50p and 2.61p respectively.
Remuneration policy for Executive Directors
The Remuneration Committee seeks to provide the remuneration
packages necessary to attract, retain and motivate Executive
Directors of the quality required to manage the business of the
Group and seeks to avoid paying more than is necessary for this
purpose. In establishing the level of remuneration of each director
the committee has regard to packages offered by similar
companies.
Consistent with this policy, the benefit packages awarded to
Executive Directors comprise a mix of performance and
non-performance elements. During 2017, 0% of the Executive
Directors' pay was based on the Group achieving financial
targets.
Directors' interests (held directly or indirectly) in the
Company's shares
2017 2016
Number Number
----------- ----------- --------
T Brown* 16,180,788 483,364
Dr Q Li - -
V Kaushal - -
----------- ----------- --------
*Includes shares held by Free Association Books Limited.
AUDITED INFORMATION
Directors' emoluments
The following table summarises the emoluments of Directors
during the year.
Salary 2017 2016
and
fees Pension Benefits Total Total
GBP GBP GBP GBP GBP
------------ ------- -------- --------- ------- -------
T Brown 22,500 - - 22,500 12,000
V Kaushal* 14,000 - - 14,000 1,000
Dr Q Li** 14,000 - - 14,000 12,000
------------ ------- -------- --------- ------- -------
TOTAL 50,500 - - 50,500 25,000
------------ ------- -------- --------- ------- -------
* Whilst V Kaushal was formally appointed in January 2017 he did
undertake certain work prior to his appointment and thus was
remunerated for the month of December 2016.
**Dr Qu Li's services were invoiced by China Ventures
Limited.
The Group is not party to any arrangements whereby Directors or
their families may acquire interests in the Company or any other
Group Company
Mr Vinod Kaushal
Chairman of the Remuneration Committee
27 April 2018
We have audited the Group and Parent Company's financial
statements (the "financial statements") of Flying Brands Limited
for the year ended 31 December 2017 which comprise the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated statement of financial position, the
consolidated statement of changes in equity, the consolidated
statement of cash flows and the related notes 1 to 27. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by European Union.
This report is made solely to the Company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
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.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group and
Parent Company's affairs as at 31 December 2017 and of the Group's
loss for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by European Union; and
-- have been properly prepared in accordance with the Companies (Jersey) Law 1991.
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 Group'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 and to identify any information that appears materially
inconsistent with the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Respective responsibilities of directors and auditor
As explained more fully in the statement of Directors'
responsibilities set out on pages 11 and 12, 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 Ethical Standards for
Auditors.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
We determined materiality for the Group to be GBP21,500, which
is not greater than 10% of normalised pre-tax loss.
We agreed with the Audit committee that we would report to the
Committee all audit differences in excess of GBP5,000, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that
we identified when assessing the overall presentation of the
financial statements.
The Scope of our audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as greatest
complexity, risk and size.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are
those that had the greatest effect on our audit strategy, the
allocation of resources in the audit and direct the efforts of the
engagement team.
The procedures described in our response to each risk below are
not exhaustive and we have focused on those procedures that we
consider address areas of judgement or subjectivity. As part of our
audit of the Group, in addition to substantive tests, we also test
the design and implementation of internal controls over financial
reporting in each of the risk areas:
Going Concern
Risk
The Flying Brands Group had no revenue stream during the period
under review. As a result, the Group may not be able to continue as
a going concern unless the Company is either able to start
generating a revenue stream or raise further external funding. We
have therefore considered whether the directors' assertion, that
the Group represents a going concern, is a significant risk of
material misstatement. The directors' assertions are supported by
the disclosures in the Going Concern note on page 8 of the
Strategic Report and on page 33, the Going Concern note included in
Summary of significant accounting policies. If funding is required
in the next 12 months in excess any revenues generated a then there
is a risk the Company may be unsuccessful in raising the such funds
and this could have a significant impact on the Group's ability to
continue as a going concern.
How the scope of our audit responded to the risk
We have challenged management's going concern model including
the liquidity position at year end and the projected cash flows. We
assessed and challenged the accuracy of anticipated funding,
reduction in debt and the timing of suitable investments.
Management override of controls
Risk
The directors are required to make a number of significant
accounting estimates and judgements that are relevant to the
financial statements, with reference to the estimation of the fair
value of the Group's assets and liabilities. As with other groups
of similar size and structure there are no effective procedures to
review estimates and judgements made. We have concluded that there
is a risk that management may manipulate accounting records. We
have therefore concluded that there is a risk that management may
override controls that otherwise appear to be operating
effectively.
How the scope of our audit responded to the risk
We assessed whether there was evidence of bias by the Directors
in the significant accounting estimates and judgements relevant to
the financial statements. We tested manual and automated journal
entries and included a selection of journals, with a focus on those
journal entries that may impact the fair value of assets, related
to other significant risks identified as part of the audit
engagement. In addition, as part of our audit procedures to address
this fraud risk, we assessed the overall control environment and
reviewed whether there had been any reported actual or alleged
instances of fraudulent activity during the year.
Other matters
In our opinion, based on the work undertaken in the course of
the audit:
-- the part of the Directors' remuneration report to be audited
has been properly prepared in accordance with the provisions of the
Companies (Jersey) Law 1991.
-- The information given in the Strategic Report and the
Directors' 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:
Under the Companies (Jersey) Law 1991 we are required to report
to you if, in our opinion:
-- proper accounting records have not been kept by the parent
Company, or proper 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
-- we have not received all the information and explanations we require for our audit.
Corporate governance
Under the Listing Rules we are required to review the part of
the Corporate Governance Statement relating to the Company's
compliance with the ten provisions of the UK Corporate Governance
Code specified for our review. Our review and findings are noted in
the Directors' and Corporate Governance Report.
Directors' remuneration
Under the Companies (Jersey) Law 1991 we are also required to
report if in our opinion certain disclosures of directors'
remuneration have not been made or the part of the Directors'
Remuneration Report to be audited is not in agreement with the
accounting records and returns. We have nothing to report arising
from these matters.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland); we
are required to report to you if, in our opinion, information in
the Annual Report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group acquired in the
course of performing our audit; or
-- otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the Directors' report that they consider the
Annual Report is fair, balanced and understandable and whether the
Annual Report appropriately discloses those matters that we
communicated to the Audit Committee which we consider should have
been disclosed. We confirm that we have not identified any such
inconsistencies or misleading statements.
Jonathan Bradley-Hoare (Senior Statutory Auditor)
for and on behalf of Welbeck Associates
Chartered Accountants and Statutory Auditor
30 Percy Street
London
W1T 2DB
April 2018
Consolidated Income Statement
Year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Notes As restated
Continuing operations
Administrative expenses (258) (272)
Operating loss 7 (258) (272)
Finance costs 6 (23) (25)
Loss before income tax (281) (297)
Income tax expense 9 - -
Loss for the year attributable
to owners of the Company (281) (297)
Loss per share attributable Pence Pence
to owners of the Company per share per share
From continuing operations:
Basic & diluted 10 (0.56) (1.01)
Consolidated Statement of Comprehensive Income
Year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Loss for the period (281) (297)
Sale of treasury shares (840) -
Total comprehensive loss for
the year attributable to the
Group (1,121) (297)
The accompanying accounting policies and notes are an integral
part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2017
2017 2016
GBP'000 GBP'000
Notes As restated
Non-current assets
Goodwill 12 248 -
Intangible assets 13 47
------------------------------- ------ --------- ------------
Total non-current assets 295 -
------------------------------- ------ --------- ------------
Current assets
Trade and other receivables 15 11 14
Cash and cash equivalents 387 66
Total current assets 398 80
------------------------------- ------ --------- ------------
Current liabilities
Trade and other payables 16 103 52
Total current liabilities 103 52
------------------------------- ------ --------- ------------
Net current assets 295 28
------------------------------- ------ --------- ------------
NET ASSETS 590 28
------------------------------- ------ --------- ------------
Equity
Share capital 19 676 310
Share premium account 18,418 18,062
Capital redemption reserve 24 22
Merger reserve 160 -
Convertible loan note reserve 20 369 410
Warrant reserve 21 - 13
Treasury shares 22 - (840)
Retained losses (19,057) (17,949)
------------------------------- ------ --------- ------------
Equity attributable to owners
of the Company 590 28
TOTAL EQUITY 590 28
------------------------------- ------ --------- ------------
Company Statement of Financial Position
As at 31 December 2017
2017 2016
GBP'000 GBP'000
Notes As restated
Non-current assets
Investments 14 240 -
------------------------------- ------ --------- ------------
Total non-current assets 240 -
------------------------------- ------ --------- ------------
Current assets
Trade and other receivables 15 112 14
Cash and cash equivalents 358 66
Total current assets 470 80
------------------------------- ------ --------- ------------
Current liabilities
Trade and other payables 16 60 52
Total current liabilities 60 52
------------------------------- ------ --------- ------------
Net current assets 410 28
------------------------------- ------ --------- ------------
NET ASSETS 650 28
------------------------------- ------ --------- ------------
Equity
Share capital 19 676 310
Share premium account 18,418 18,062
Capital redemption reserve 24 22
Merger reserve 160 -
Convertible loan note reserve 20 369 410
Warrant reserve 21 - 13
Treasury shares 22 - (840)
Retained losses (18,997) (17,949)
------------------------------- ------ --------- ------------
Equity attributable to owners
of the Company 650 28
TOTAL EQUITY 650 28
------------------------------- ------ --------- ------------
Consolidated Statement of Changes in Equity
Year ended 31 December 2017
Capital Merger Convertible
Share Share Redemption Reserve Loan Note Warrant Treasury Retained
capital premium reserve Reserve reserve shares losses TOTAL EQUITY
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------- -------- --------------- --------- ----------- -------- -------- -------- ------------
Balance at I
January 2016
- as
previously
reported 310 18,062 22 - 53 13 (840) (17,664) (44)
Prior period
adjustment -
correction
of error - - - - 332 - - 12 344
------------- -------- -------- --------------- --------- ----------- -------- -------- -------- ------------
Balance at I
January 2016
- as
restated 310 18,062 22 - 385 13 (840) (17,652) 300
Loss for the
period - as
previously
reported - - - - - - - (303) (303)
Prior period
adjustment -
correction
of error - - - - 25 - - 6 31
Unclaimed -
dividends - - - - - - - -
------------- -------- -------- --------------- --------- ----------- -------- -------- -------- ------------
Balance at 31
December
2016 - as
restated 310 18,062 22 - 410 13 (840) (17,949) 28
Loss for the
period - - - - - - - (281) (281)
Shares
redeemed (2) - 2 - - - - - -
Warrants
exercised - - - - - (13) - 13 -
Shares issued 368 409 - 160 - - - - 937
Cost of
shares
issued - (53) - - - - - - (53)
Sale of
treasury
shares - - - - - - 840 (840) -
Movement in
the year - - - - (41) - - - (41)
------------- -------- -------- --------------- --------- ----------- -------- -------- -------- ------------
Balance at 31
December
2017 676 18,418 24 160 369 - - (19,057) 590
------------- -------- -------- --------------- --------- ----------- -------- -------- -------- ------------
The accompanying accounting policies and notes are an integral
part of these financial statements.
Share capital - Represents the nominal value of the issued share
capital.
Share premium account - Represents amounts received in excess of
the nominal value on the issue of share capital less any costs
associated with the issue of shares.
Capital redemption reserve - Reserve created on the redemption
of the Company's shares
Merger reserve - Represents the difference between the nominal
value of the share capital issued by the Company and the fair value
of Stone Checker Software Limited at the date of acquisition.
Convertible loan note reserve - Represents the equity portion of
the Convertible Loan Notes issued by the Company.
Warrant reserve - Represents the fair value of the share-based
payment, determined at the grant date, and expensed over the
vesting period.
Treasury shares - Represents shares the Company has repurchased
but not cancelled.
Retained earnings - Represents accumulated comprehensive income
for the year and prior periods.
Company Statement of Changes in Equity
Year ended 31 December 2017
Capital Merger Convertible
Share Share Redemption Reserve Loan Note Warrant Treasury Retained
capital premium reserve Reserve reserve shares losses TOTAL EQUITY
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------- -------- -------------- --------- ----------- -------- -------- -------- ------------
Balance at I
January 2016
- as
previously
reported 310 18,062 22 - 53 13 (840) (17,664) (44)
Prior period
adjustment -
correction
of error - - - - 332 - - 12 344
-------------- -------- -------- -------------- --------- ----------- -------- -------- -------- ------------
Balance at I
January 2016
- as restated 310 18,062 22 - 385 13 (840) (17,652) 300
Loss for the
period - as
previously
reported - - - - - - - (303) (303)
Prior period
adjustment -
correction
of error - - - - 25 - - 6 31
Unclaimed -
dividends - - - - - - - -
-------------- -------- -------- -------------- --------- ----------- -------- -------- -------- ------------
Balance at 31
December 2016
- as restated 310 18,062 22 - 410 13 (840) (17,949) 28
Loss for the
period - - - - - - - (221) (221)
Shares
redeemed (2) - 2 - - - - - -
Warrants
exercised - - - - - (13) - 13 -
Shares issued 368 409 - 160 - - - - 937
Cost of shares
issued - (53) - - - - - - (53)
Sale of
treasury
shares - - - - - - 840 (840) -
Movement in
the year - - - - (41) - - - (41)
-------------- -------- -------- -------------- --------- ----------- -------- -------- -------- ------------
Balance at 31
December 2017 676 18,418 24 160 369 - - (18,997) 650
-------------- -------- -------- -------------- --------- ----------- -------- -------- -------- ------------
The accompanying accounting policies and notes are an integral
part of these financial statements.
Consolidated Statement of Cash Flows
Year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Notes As restated
Operating loss (258) (272)
Adjustment for:
Share based payment charge 21 - -
Decrease/(increase) in receivables 3 (10)
Increase in payables 44 26
Finance costs - -
------------------------------------ ------- -------- ----------------------------
Net cash used in operating
activities (211) (256)
--------------------------------------------- -------- ----------------------------
Cash flows from investing
activities:
Purchase of intangible assets (47) -
-
Net cash from investing activities (47) -
------------------------------------ ------- -------- ----------------------------
Cash flows from financing
activities
Shares issued 580 -
Costs of shares issued (1)
Net cash from financing activities 579 -
------------------------------------ ------- -------- ----------------------------
Net increase/(decrease) in
cash and cash equivalents 321 (256)
Cash and cash equivalents
brought forward 66 322
--------------------------------------------- -------- ----------------------------
Cash and cash equivalents
carried forward 387 66
--------------------------------------------- -------- ----------------------------
The accompanying accounting policies and notes are an integral
part of these financial statements.
1. Summary of significant accounting policies
Flying Brands Limited (the "Company") is a limited liability
company incorporated and domiciled in Jersey. The address of the
registered office is given on page 51. The financial statements are
presented in pounds sterling (GBP) since that is the currency in
which the majority of the Group's transactions are denominated.
Basis of preparation
These consolidated financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the European Union
(adopted IFRS).
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are set out
on the following pages.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in these financial statements. The financial position
of the Group and the Company, their cash flows and liquidity
positions are described in this business review. In addition, notes
3 and 25 to the financial statements include the Group's
objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial
instruments; and its exposure to credit risk and liquidity risk. As
highlighted in note 25 to the financial statements, the Group and
the Company meet their day to day working capital requirements
through its ability to raise capital.
Taking in to account the comments above, the Directors have, at
the time of approving the financial statements, a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Therefore, they continue to adopt the going concern basis of
accounting in preparing the financial statements
Basis of consolidation
The Group financial statements consolidate the financial
statements of the Company and all its subsidiaries ("the Group").
Subsidiaries include all entities over which the Group has the
power to govern financial and operating policies. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are consolidated from the
date on which control commences until the date that control ceases.
Intra-group balances and any unrealised gains and losses on income
or expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
The acquisition method of accounting is used to account for
business combinations. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair value at
the acquisition date, irrespective of the extent of any minority
interest.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of
the cost of acquisition over the fair value of the Group's share of
the identifiable net assets and contingent liabilities acquired.
Identifiable assets are those which can be sold separately or which
arise from legal rights regardless of whether those rights are
separable. Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill is not amortised but is tested
annually, or when trigger events occur, for impairment and is
carried at cost less accumulated impairment losses.
Segment reporting
An operating segment is a component of the Group that engages in
business activity from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with and of the Group's other components. All
operating segments' operating results, for which discrete financial
information is available, are reviewed regularly by the Group's
Board to make decisions about resources to be allocated to the
segment and assess its performance. As a result of the acquisition
during the year, the Group reports on a two-segment basis - holding
company expenses and medical software.
1. Summary of significant accounting policies (continued)
Impairment (continued)
Financial assets
A financial asset is assessed at each reporting date to
determine whether there is any evidence that it is impaired. A
financial asset is considered impaired if objective evidence
indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset. Individual significant
financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics. All impairment
losses are recognised in the consolidated income statement.
Non-financial assets
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets, including Goodwill,
to determine whether there is any indication that these assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any). Provision is made for any
impairment and immediately expensed in the period.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease
Research and development
Research expenditure is recognised as an expense and is charged
to the income statement in the year in which it is incurred.
Development expenditure is recognised as an expense in the same
way unless it meets the recognition criteria of IAS 38 "Intangible
Assets". Regulatory and other uncertainties generally mean that
such criteria are not met. Where, however, the recognition criteria
are met, intangible assets are capitalised and amortised over their
useful economic lives from product launch.
Investments
Investments in subsidiaries are held at cost less any
impairment.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are initially measured at fair value, net of
transaction costs except for those financial assets classified as
fair value through profit or loss which are initially measured at
fair value. Other financial assets are classified into the
following specified categories: financial assets as "at fair value
through profit and loss" 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.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The
principal financial assets of the Company are loans and
receivables, which arise principally through the provision of goods
and services to customers (e.g. trade receivables) but also
incorporate other types of contractual monetary assets. They are
included in current assets, except for maturities greater than
twelve months after the balance sheet date. These are classified as
non-current assets.
The Group's loans and receivables are recognised and carried at
the lower of their original amount less an allowance for any
doubtful amounts. An allowance is made when collection of the full
amount is no longer considered possible.
1. Summary of significant accounting policies (continued)
The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the Consolidated
Statement of Financial Position
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with maturities of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash
management are included as a component of cash and cash equivalents
in the consolidated cash flow statement.
Financial liabilities and equity instruments issued by the
group
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments issued by the Group are
recorded at the proceeds received, net of direct issued costs.
Convertible loan notes
The convertible loan note ("CLN") is a compound financial
instrument that can be converted to share capital at the option of
the holder. As the CLN, and the accrued interest, can only be
repaid by the issue of shares, it has been recognised in equity
only, with no liability component. Interest is accounted for on an
accruals basis and charged to the Consolidated Income Statement and
added to the carrying amount of the equity component of the
CLN.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised costs, using the effective
interest rate method.
Other financial liabilities
Other financial liabilities are initially measured at fair
value, net of transaction costs. Other financial liabilities are
subsequently measured at amortised cost using the effective
interest method, as set out above, with interest expense recognised
on an effective yield basis.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of Ordinary shares and share
options are recognised as a deduction from equity, net of any tax
effects.
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the
amount of the consideration paid, including directly attributable
costs, net of any tax effects, is recognised as a deduction from
equity. Repurchased shares are classified as treasury shares and
are presented as a deduction from total equity. When treasury
shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and the resulting surplus or
deficit on the transaction is transferred to/from retained
earnings.
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved.
Taxation
The taxation charge represents the sum of current tax and
deferred tax.
The tax currently payable is based on the taxable profit for the
period using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Taxable profit differs from the
net profit as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Group financial
statements. Deferred tax is determined using tax rates that have
been enacted or substantially enacted at the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent that it is
probable that future taxable profit will be available against which
the asset can be utilised.
Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited to equity, in
which case the deferred tax is also dealt with in equity.
Adoption of new and revised International Financial Reporting
Standards (IFRSs)
Standards and interpretations adopted in the current year
The following new and revised Standards and Interpretations have
been adopted in the current period by the Group for the first time
and do not have a material impact on the Group.
IFRS 10 Consolidated financial
statements
IFRS 12 Disclosures of interests
in other entities
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and not
early adopted. None of these are expected to have a significant
effect on the consolidated financial statements of the Group.
Effective
date
(period)
beginning
on or
after
IFRS 1 Amendments resulting from Annual Improvements 01/01/2018
2014-2016 Cycle (removing short-term
exemptions)
IFRS 2 Amendments - Classification and measurement 01/01/2018
of share-based payments transactions
IFRS 3, IFRS Amendments resulting from Annual Improvements 01/01/2019
11, IAS 12, 2015-2017 Cycle
IAS 23
IFRS 4 Amendment - applying IFRS 9 "Financial 01/01/2018
Instruments" with IFRS 4 "Insurance
Contracts"
IFRS 9 Financial instruments - incorporating
requirements for classification and
measurement,
impairment, general hedge accounting 01/01/2018
and de-recognition.
IFRS 9 Amendment - Prepayment features with 01/01/2019
negative compensation
IFRS 10/ Amendments - Sale or contribution of 01/01/2018
IAS 28 assets between an investor and its
associate or joint venture
IFRS 15 Revenue from contracts with customers, 01/01/2018
and the related clarifications
IFRS 16 Leases - recognition, measurement, 01/01/2019
presentation and disclosure
IFRS 17 Insurance contracts 01/01/2021
IAS 19 Amendment - Plan Amendment, Curtailment 01/01/2019
or Settlement
IAS 28 Amendments resulting from Annual Improvements 01/01/2018
2014-2016 Cycle (clarifying certain
fair value measurements)
IAS 28 Amendment - Long term interests in 01/01/2019
Associates and Joint Ventures
IAS 40 Amendment - Transfers of investment 01/01/2018
property
------------ ---------------------------------------------- ----------
2. Prior period adjustment
In 2015, the Company issued two Convertible Loan Notes ("CLNs"),
with a total nominal value of GBP400,000 and interest accruing at
the rate of 6.75% per annum on the outstanding balance. The CLNs
plus the accruing interest are wholly repayable by the issue of
shares in the Company at a price of 1.1p per ordinary share. As the
repayment of both capital and interest is mandated by the issue of
shares, the CLNs have no liability component as previously
reported. The impact of this change in accounting for the CLNs is
as follows:
2016
Impact on Statement of
Comprehensive Income GBP'000 GBP'000
------------------------------- -------- --------
Loss for the year - as
previously reported (303)
Prior period adjustment
Interest - as previously
reported 31
Interest - as restated 25
--------------------------------- --------
6
Loss for the year as restated (297)
--------------------------------- -------- --------
2016
Impact on Statement of
Financial Position GBP'000
----------------------------- ----------------------
Total equity- as previously
reported (347)
Prior period adjustment
Interest - adjustment
as above 6
Interest - adjustment
to 2015 12
Transfer of liability
portion of CLN to equity 357
Total equity - as restated 28
-------------------------------- ----------------------
3. Financial risk and credit management
The Group has exposure to the following risks from its use of
financial instruments:
(a) Credit risk
(b) Liquidity risk
(c) Market risk
(d) Currency risk
(e) Interest rate risk
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risks and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's
activities.
The Group Audit Committee oversees how management monitors
compliance with the Group's risk management policies and procedures
and reviews the adequacy of the risk management framework in
relation to the risks faced by the Group.
(28) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer fails to meet its contractual obligations. The Group's
current activities do not generate revenue and hence there is
minimal credit risk.
Trade and other receivables
The Group's exposure to credit risk is influenced by the type of
customer the Group contracts with. The Group has minimal trade
debtors.
3. Financial risk and credit management
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation. The Group does not have committed banking
facilities. The strategy of the Directors (outlined earlier) is
designed to address the risk that the Group has insufficient liquid
resources to satisfy its requirements.
(c) Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return. Given the lack of revenue generating
operations the market risk at present, and during the year, is
minimal.
(d) Currency risk
The Group is not presently as its operations during the year
were dealt with in GBPGBP. Thus, the risks in the years ended 31
December 2016 and 2017 were minimal.
(28) (c)Interest rate risk
The Group has no floating rate loans. Therefore, the Group has
no exposure to interest rate risk.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. The Directors monitor the
return on capital, which the Group defines as net operating income
divided by total shareholders' equity. The Board also monitors the
level of dividends to ordinary shareholders.
From time to time the Group purchases its own shares on the
market; the timing of these purchases depends on market prices.
Primarily the shares are intended to be used for issuing shares
under the Group's share option programme. Buy and sell decisions
are made on a specific transaction basis by the Board of Directors;
the Group does not have a defined share buy-back plan. There were
no changes in the Group's approach to capital management during the
period. Neither the Company nor any of its subsidiaries are subject
to externally imposed capital requirements
4. Critical accounting estimates and judgements
The preparation of financial statements in conformity with
adopted IFRSs requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of sales and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
action, actual results ultimately may differ from those
estimates.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial period are discussed below.
(28) Going concern basis of preparation
The adoption of the going concern basis by the Directors is
following a review of the current position of the Company and the
forecasts for the next 18 months from the date of approving these
financial statements.
The Group's continuing activities did not generate any revenue
in 2017 or 2016 and incurred a loss of GBP281,000 during the year
(2016: GBP297,000 loss). In addition, as at 31 December 2017 there
was a cash balance of GBP387,000.
4. Critical accounting estimates and judgements (continued)
(a) Going concern basis of preparation (continued)
However, after making enquiries, the Directors have formed a
judgement that there is a reasonable expectation that the Company
can secure further adequate resources, to enable it to continue in
operational existence for the foreseeable future. Thus, 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.
(b) Impairment of assets
The Company is required to test, on an annual basis, whether its
non-current assets have suffered any impairment. Determining
whether these assets are impaired requires an estimation of the
value in use of the cash-generating units to which the assets have
been allocated. The value in use calculation requires the Directors
to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate to calculate the
present value. Subsequent changes to the cash generating unit
allocation or to the timing of cash flows could impact on the
carrying value of the respective assets.
(c) Accounting for provisions
The Directors consider the nature of any outstanding legal or
constructive claims on the Group to determine the accounting
treatment required in accordance with note above.
5. Segmental analysis
The Directors are of the opinion that under IAS 14 - "Segmental
Information" the Group operated in two primary business segments in
2017, being holding company expenses and medical software. However,
in 2016, it only operated in holding company expenses. The
secondary segment is geographic. The Group's losses and net assets
by primary business segments are shown below.
Segmentation by continuing businesses
Segment results
2017 2016
GBP'000 GBP'000
Loss before income
tax As restated
-------------------- -------- -----------------------
Holding company (221) (297)
Medical software (60) -
(281) (297)
-------------------- -------- -----------------------
2017 2016
GBP'000 GBP'000
Net assets As restated
-------------------- -------- -----------------------
Holding company 650 28
Medical software -
net liabilities (60) -
590 28
-------------------- -------- -----------------------
Segmentation by geographical area:
An analysis of segments by geographical area has not been
provided as all of the operations are based in the UK and
Jersey.
6. Finance costs
2017 2016
GBP'000 GBP'000
As restated
------------------------------------------ ------- -----------
Interest payable on unsecured convertible
loan notes 23 25
------------------------------------------ ------- -----------
7. Operating loss
2017 2016
GBP'000 GBP'000
As restated
----------------------------------------- ------- -----------
The following items have been included
in arriving at operating loss
Staff costs 83 25
Auditor's remuneration has been
included in arriving at operating
loss as follows:
Fees payable to the Company's auditor
and their associates for the audit
of the Company's annual accounts 14 11
Fees payable to the Company's current
auditor and their associates for
the audit of the Company's subsidiaries 1 1
----------------------------------------- ------- -----------
Non audit services 25 -
----------------------------------------- ------- -----------
Total audit fees payable to the
Group auditor 40 12
8. Employee information
The average monthly number of employees (including Executive
Directors) was:
2017 2016
Number Number
As restated
-------------------------------------- ------- -----------
Administration 6 2
GBP'000 GBP'000
-------------------------------------- ------- -----------
Staff costs (for the above employees)
Wages and salaries 82 25
Social security costs and pension
contributions 1 -
83 25
-------------------------------------- ------- -----------
Directors' remuneration and transactions
2017 2016
GBP'000 GBP'000
As restated
Directors' remuneration
Emoluments and fees 53 25
GBP'000 GBP'000
--------------------------------- ------- -----------
Remuneration of the highest paid
director:
Emoluments and fees 53 12
Benefits and other fees - -
--------------------------------- ------- -----------
53 12
--------------------------------- ------- -----------
The highest paid director did not exercise any share options in
the year.
9. Income tax expense
2017 2016
GBP'000 GBP'000
As restated
------------------------------ ------- -----------
Current tax
Jersey income tax - ---
Total current tax - ---
Deferred tax
Charge to the income statement - ---
Total tax on loss - ---
2017 2016
The tax assessed for the period GBP'000
is different from the standard
rate of income tax, as GBP'000
explained below: As restated
Loss before tax on continuing operations (281) (297)
Loss before tax multiplied by the
standard rate of Jersey income
tax of 0% - -
Adjustments to tax in respect of
prior periods - -
Tax (credit)/charge for period - -
----------------------------------------- ------- -----------
10. Earnings per share
Basic and diluted
Earnings per share is calculated by dividing the loss
attributable to the equity holders of the Company by the weighted
average number of Ordinary shares in issue during the period,
excluding Ordinary shares purchased by the Company and held as
treasury shares.
2017 2016
Continuing operations: As restated
------------------------------------ ------ -----------
Loss attributable to equity holders
of the Company (GBP'000) (281) (297)
Weighted average number of shares
in issue (Number '000) 49,860 29,476
Loss per share (pence) (0.56) (1.01)
------------------------------------ ------ -----------
There was no dilutive effect from the warrants outstanding
during the period.
11. Acquisition
On 16 June 2017, the Company acquired the entire issued share
capital of Stone Checker Software Limited ("Stone Checker") by
means of a share-for-share exchange. The consideration for the
Acquisition was the issue and allotment of 8,000,000 Ordinary
Shares of GBP0.01 each in the capital of the Company at a price of
3p per ordinary share. As a result of this transaction, the former
shareholders of Stone Checker did not become the majority
shareholders of the Company.
In accordance with IFRS 3 'Business Combinations', this
transaction has been accounted for using the acquisition method of
accounting. The consolidated income statement for the year ended 31
December 2017 includes the results of the Company for the year
ended 31 December 2017 and of Stone Checker from 16 June 2017, the
date of the acquisition. The assets and liabilities of Stone
Checker have been consolidated from the date of the acquisition
using the fair value of their assets and liabilities at that date.
The recognised value of assets purchased were as follows. There was
no difference between the recognised value and the fair value of
the assets acquired.
GBP
Cash and cash
equivalents 20
Trade and other
payables (7,900)
---------------------- --------------
(7,880)
Shares issued 240,000
Goodwill acquired 247,880
---------------------- --------------
The Company incurred GBP83,000 of costs in connection with the
acquisition which has been expensed.
From the date of Acquisition, Stone Checker Software Limited
contributed GBP60,000 to loss before taxation from continuing
operations of the Group. If the combination had taken place at the
beginning of the year, loss before taxation from continuing
operations for the Group would have been GBP290,000.
12. Goodwill
Group GBP'000
Cost
At 1 January and 31
December 2016 -
Additions 248
------------------------ -------------------
At 31 December 2017 248
------------------------ -------------------
Net book value
At 31 December 2017 248
------------------------ -------------------
At 31 December 2016 -
------------------------ -------------------
The goodwill arising on the purchase of Stone Checker is not
being amortised but will be reviewed on an annual basis for
impairment, or more frequently if there are indications that
goodwill might be impaired. The impairment review comprises a
comparison of the carrying amount of the goodwill with its
recoverable amount (the higher of fair value less costs to sell and
value in use).
13. Intangible Assets
Development costs
Group GBP'000
Cost
At 1 January and 31 -
December 2016
Additions 47
------------------------ -------------------
At 31 December 2017 47
------------------------ -------------------
Accumulated amortisation
At 1 January and 31 -
December 2016
Charge for the year -
-------------------------- -------------------
At 31 December 2017 -
-------------------------- -------------------
Net book value
At 31 December 2017 47
----------------------------- -------------------
At 31 December 2016 -
----------------------------- -------------------
14. Investments
Shares
in group
Company undertakings
GBP'000
Cost
At 1 January and 31
December 2016 -
Additions 240
------------------------ -------------------------
At 31 December 2017 240
------------------------ -------------------------
Net book value
At 31 December 2017 240
------------------------ -------------------------
At 31 December 2016 -
------------------------ -------------------------
The Company's investments at the Statement of Financial Position
date in the share capital of companies include the following:
Subsidiaries
Stone Checker Software Limited
Registered: England & Wales
Nature of business: supplier of technology
solutions in the field of kidney stone
analysis and kidney stone prevention.
%
-------------------------------------------- ------------------
Class of share Holding
Ordinary shares 100
-------------------------------------------- ------------------
Flying Brands Holdings (UK) plc
Registered: England & Wales
Nature of business: Dormant - dissolved
from the register at Companies House
UK, on 02/01/2018
%
----------------------------------------- ------------------------
Class of share Holding
Ordinary shares 100
----------------------------------------- ------------------------
15. Trade and other receivables
Group Company
---------------------------------------------- --------------------------------------------
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
As restated As restated
Amounts owed by group
undertakings - - 101 -
Prepayments 11 14 11 14
11 14 112 14
---------------------- ---------------------- ---------------------- -------------------- ----------------------
In the Directors' opinion, the carrying amounts of receivables
is considered a reasonable approximation of fair value. The Group
monitors on a monthly basis the receivable balance and makes
impairment provisions when debt reaches a certain age. There are no
significant known risks as at 31 December 2017 (nor any at 31
December 2016).
16. Trade and other payables
Group Company
----------------------------------------- ---------------------------------------
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
As restated As restated
Trade payables 32 - - -
Social security and
other taxes 1 - - -
Other payables 4 - - -
Accruals and deferred
income 53 52 47 52
Dividends payable 13 - 13 -
103 52 60 52
----------------------- -------------------- ------------------- ------------------ -------------------
In the Directors' opinion, the carrying amount of payable is
considered a reasonable approximation of fair value.
17. Provisions
There are no provisions in the year or as at year end.
18. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of between 0% and 25%
(31 December 2016: 0-25%) dependent on the locality of the future
charges/credits.
The Directors have not recognised any deferred tax asset in
respect of further unutilised estimated UK tax losses of
GBP2,201,000 (31 December 2016: GBP1,901,000), or connected party
capital losses of GBP8,041,000 (31 December 2016:
GBP8,041,000).
19. Share capital
2017 2016 2017 2016
Number Number GBP'000 GBP'000
As restated As restated
---------------------------- ----------------------- -------------- ----------------------- ------------
Allotted, called up
and fully paid
Ordinary shares of
1p each 67,559,434 30,880,963 676 309
Ordinary "A" Shares
in Flying Brands Holdings
(UK) plc of 0.005p
each - 30,880,963 - 1
---------------------------- ----------------------- -------------- ----------------------- ------------
676 310
---------------------------- ----------------------- -------------- ----------------------- ------------
Number
of shares
issued
---------------------------------------------- ------------------------
In June 2017, shares were issued to
acquire the whole of the issued share
capital of Stone Checker Software Limited,
at a price of 3p per ordinary share. 8,000,000
In June 2017, the Company raised GBP550,000,
before expenses, by issuing shares at
a price of 3p per share. The proceeds
were used to provide working capital
to the enlarged Group and to assist
Stone Checker to continue developing
its products. 18,333,334
In June 2017, shares were issued to
settle fees owed to Peterhouse Corporate
Finance in respect of the placing, at
a price of 3p per share. 1,708,333
In July 2017, the Company issued shares
in respect of the conversion of GBP56,000
of Convertible Loan Notes, plus accrued
interest of GBP8,505, at a price of
1.1p per ordinary share. 5,864,091
In September 2017, shares were issued
on the exercise of share warrants, at
a price of 1.1p per ordinary share. 2,772,713
---------------------------------------------- ------------------------
During 1996, the Group created a twinned share structure with
Flying Brands Holdings (UK) plc to enable UK based shareholders to
receive a UK dividend and thereby avoid being double taxed on the
Jersey dividend.
As a result of a General Meeting held in June 2017, the twinned
share structure was discontinued. Shareholders now only hold shares
in Flying Brands Limited, which are listed on the London Stock
Exchange. The Ordinary 'A' Shares in flying Brands Holdings (UK)
plc were cancelled and their value transferred to the Capital
Redemption Reserve.
20. Convertible loan note reserve
2017 2016
GBP'000 GBP'000
As restated
----------------------------------- -------- ------------
At the beginning of the year - as
previously reported 410 53
Prior period adjustment - 332
----------------------------------- -------- ------------
At the beginning of the year - as
restated 410 385
Interest charge for the year 23 25
Loan notes converted (64)
----------------------------------- -------- ------------
369 410
----------------------------------- -------- ------------
The above reserve was created on the issue of the following
Convertible Loan Notes ("CLNs"). The above amount relates to the
equity portion of the CLNs. The capital and accrued interest are
wholly repayable by the issue of shares in the Company.
On 11 March 2015, the Company raised GBP300,000 by the way of
the issue of unsecured CLNs. The CLNs are convertible into Ordinary
Shares at a price of 1.1p per Share. The CLNs accrue interest at a
rate of 6.75% against the balance outstanding. These notes were due
to be repaid by 11 March 2018. However, the Holders of the CLNs and
the Company have agreed to extend the repayment date to 11 March
2020.
20. Convertible loan note reserve
On 18 November 2015, the Company raised GBP100,000 by the way of
the issue of unsecured CLNs. The CLNs are convertible into Ordinary
Shares at a price of 1.5p per Share. The CLNs accrue interest at a
rate of 6.75% against the balance outstanding. These notes were due
to be repaid by 18 November 2018. However, the Holders of the CLNs
and the Company have agreed to extend the repayment date to 18
November 2020.
21. Warrant reserve
On 11 March 2015, the Company issued warrants to Peterhouse
Corporate Finance Limited exercisable at 1.1p per Unit anytime
during the three years from the date of issue. The warrant is
exercisable over 3 per cent of the Company's fully enlarged unit
capital from time to time.
The fair value of the warrants issued during the current and
prior years was determined using the Black-Scholes pricing model.
The significant inputs to the model in respect of the warrants were
as follows:
11 March
Date of issue 2015
Share price at date of grant 2.03p
Exercise price per share 1.1p
Estimated no. of warrants 842,212
Risk free rate 0.6%
Expected volatility 111%
Life of warrant 3 years
Calculated fair value per share
warrant 1.54p
The fair value of Warrants outstanding at 31 December 2017 and
their weighted average exercise price are as follows the warrants
issued during the year was determined using the Black-Scholes
pricing model. The significant inputs to the model in respect of
the warrants were as follows:
2017 2017 2016 2016
Weighted Weighted
average average
exercise exercise
price price
(pence) Number (pence) Number
------------------------------ ---------- ------------ ---------- --------
Outstanding at the beginning
of the year 1.1 842,212 1.1 842,212
Expired during the year - - -
Granted during the year 1.1 1,930,501 - -
Exercised during the
year 1.1 (2,772,713) - -
------------------------------ ---------- ------------ ---------- --------
Outstanding at the end
of the year - - 1.1 842,212
------------------------------ ---------- ------------ ---------- --------
The total share-based expense recognised in the income statement
for the year ended 31 December 2017 in respect of the warrants
issued was GBPnil (2016: GBPnil).
22. Treasury shares
2017 2016
GBP'000 GBP'000
As restated
------------------------------------ --------- ------------
Investment at cost - own shares
452,323 Ordinary shares of 1p each
in Flying Brands Limited - 840
------------------------------------ --------- ------------
During the year, all the treasury shares were sold. These shares
are held in an ESOP trust. All dividends are waived whilst the
shares are held in the ESOP trust. The shares are netted off
against shareholders' equity. These shares continue to have voting
rights whilst held in trust.
23. Operating lease commitments
Financial commitments
At 31 December 2017 the Group had total commitments under
non-cancellable operating leases as follows:
The group as lessee
The Group had no contracts in respect of lessee arrangements.
The registered office is provided by the Company Secretary as part
of their services. The contract has a cancellation policy of 3
months.
24. Contingent liability
All Jersey and UK based Group companies have given unlimited
guarantees to Barclays Bank plc or its subsidiaries where
appropriate (the "Bank") in respect of facilities provided to the
Group. At the year end, the Group has no direct obligation to the
Bank.
25. Financial instruments
Financial risk management
The Group has exposure to the following risks from its use of
financial instruments:
-- Capital risk management
-- Market risk
-- Credit risk
-- Liquidity risk
This note presents information about the Group's exposure to
each of the above risks, the Group's management of capital, and the
Group's objectives, policies and procedures for measuring and
managing risk.
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders as well as sustaining the future
development of the business. In order to maintain or adjust the
capital structure, the Group may adjust dividends paid to
shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt.
The capital structure of the Group consists of net debt, which
includes loans, cash and cash equivalents, and equity attributable
to equity holders of the parent, comprising issued capital,
reserves and retained earnings.
25. Financial instruments (continued)
Fair value of financial assets and liabilities
Fair Book value Fair
Valuation, Book value value value
methodology 2017 2017 2016 2016
and hierarchy GBP'000 GBP'000 GBP'000 GBP'000
As restated As restated
Financial assets
Cash and cash equivalents (a) 387 387 66 66
Loans and receivables,
net of impairment (a) 6 6 14 14
Total at amortised
cost 393 393 80 80
Financial liabilities
Trade and other payables (a) 112 112 51 51
Borrowings and provisions (a) - - - -
Total at amortised
cost 112 112 51 51
------------------------------------------ ---------- ------- ----------- -----------
Valuation, methodology and hierarchy
(a) The carrying amounts of cash and cash equivalents, trade and
other receivables, trade and other payables and deferred income,
and Borrowings are all stated at book value. All have the same fair
value due to their short-term nature.
Market risk
Market price risk arises from uncertainty about the future
valuations of financial instruments held in accordance with the
Group's investment objectives. These future valuations are
determined by many factors but include the operational and
financial performance of the underlying investee companies, as well
as market perceptions of the future of the economy and its impact
upon the economic environment in which these companies operate.
Credit risk
Credit risk is the risk that counterparties to financial
instruments do not perform their obligations according to the terms
of the contract or instrument. The Group is exposed to counterparty
credit risk when dealing with its customers and certain financing
activities.
The immediate credit exposure of financial instruments is
represented by those financial instruments that have a net positive
fair value by counterparty at 31 December 2017. The Group considers
its maximum exposure to be:
2017 2016
GBP'000 GBP'000
As restated
----------------------------------------- ------- -----------
Financial assets
Cash and cash equivalents 387 66
Loans and receivables, net of impairment 6 14
----------------------------------------- ------- -----------
393 80
----------------------------------------- ------- -----------
All cash balances and short-term deposits are held with an
investment grade bank who is our principal banker (Barclays Bank
PLC). Although the Group has seen no direct evidence of changes to
the credit risk of its counterparties, the current focus on
financial liquidity in all markets has introduced increased
financial volatility. The Group continues to monitor the changes to
its counterparties' credit risk.
25. Financial instruments (continued)
Liquidity risk
Liquidity risk is the risk the Group will encounter difficulty
in meeting its obligations associated with financial liabilities as
they fall due. The Board are jointly responsible for monitoring and
managing liquidity and ensures that the Group has sufficient liquid
resources to meet unforeseen and abnormal requirements. The current
forecast suggests that the Group has sufficient liquid
resources.
Available liquid resources and cash requirements are monitored
using detailed cash flow and profit forecasts these are reviewed at
least quarterly, or more often as required. The Directors decision
to prepare these accounts on a going concern basis is based on
assumptions which are discussed in the going concern note
above.
The following are the contractual maturities of financial
liabilities:
6 to 1 to 2 to
Carrying Contractual 6 months 12 2 5
amount cash flows or less months years years
31 December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative
financial liabilities
Trade and other
payables 95 - 95 - - -
Borrowings - - - - - -
95 - 95 - - -
6 to 1 to 2 to
Carrying Contractual 6 months 12 2 5
Amount cash flows or less months years years
31 December 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative
financial liabilities
Trade and other - - - - - -
payables
Borrowings - - - - - -
- - - - - -
----------------------- -------- ----------- -------- ------- ------- -------
Cash flow management
The Group produces an annual budget which it updates quarterly
with actual results and forecasts for future periods for profit and
loss, financial position and cash flows. The Group uses these
forecasts to report against and monitor its cash position. If the
Group becomes aware of a situation in which it would exceed its
current available liquid resources it would apply mitigating
actions involving reduction of its cost base. The Group would also
employ working capital management techniques to manage the cash
flow in periods of peak usage.
Currency risk
The Group currently has minimal exposure to foreign currency and
thus does not engage in any hedging activity. The Group liquidated
its overseas subsidiaries during 2010 and therefore has no exposure
to foreign exchange gains or losses.
Interest rate risk
31.12.17 31.12.16
GBP'000 GBP'000
-------------------------- -------- --------
Variable rate instruments
Financial liabilities - -
Cash 387 66
-------------------------- -------- --------
The impact on loss and equity of a 100 basis points increase in
the interest rates would be GBPnil as the Group has no variable
rate instruments (2016: GBPnil).
26. Related party transactions
During the year the Company was charged GBP51,250 (2016:
GBP15,000) by Peterhouse Corporate Finance Limited ("Peterhouse")
for the provision of corporate advisory services, which was
satisfied by the issue of 1,708,333 (2016: nil) ordinary shares in
the Company at a price of 3p per share. The Company is connected to
Peterhouse in that both Trevor Brown and Qu Li were both directors
and shareholders of Peterhouse during the year. During 2017, Trevor
Brown disposed of his entire holding in Peterhouse and resigned as
a Director of Peterhouse. The balance outstanding at the year-end
in respect of the fees was GBPnil (2016: GBPnil).
Non-Executive Chairman, Qu Li, is also a Director and major
shareholder of China Ventures Limited. During the year China
Ventures Limited charged the Company a total of GBP15,342 (2016:
GBP12,000) in respect of services provided by Dr Li. The balance
outstanding at year end was GBP15,000 (2016: GBP13,000).
During the year, the Company acquired the whole of the issued
share capital of Stone Checker Software Limited, a company in which
Free Association Books Limited ("FAB"), in which Trevor Brown was
also a Director during the period and is interested in 100 per cent
of the shares by way of his immediate family, owned 50% of the
issued shares. As a result of the acquisition, 4,000,000 ordinary
shares in Flying Brand were issued to FAB at a price of 3p in
consideration for its shares held in stone Checker.
In July 2017, the Company issued to Trevor Brown 5,864,091
ordinary shares in respect of the conversion of GBP56,000 of
Convertible Loan Notes, plus accrued interest of GBP8,505, at a
price of 1.1p per ordinary share.
At the year end, T Brown held Convertible Loan Notes totalling
GBP71,926 (2016: GBP144,800) plus accrued interest.
27. Events after the reporting period
In March 2018, the Company acquired 100% of the membership
interests in Imaging Biometrics, LLC ("IB") (the "Acquisition").
The consideration comprised cash of $68,134 and 11,000,000 ordinary
shares in Flying Brands at GBP0.04 per share ("Shares"), with an
option for Flying Brands to pay a cash equivalent rather than
issuing Shares. An initial tranche of 4,800,000 Shares in Flying
Brands were issued to the shareholders of IB immediately (the
"Initial Tranche") and it is intended that the remaining 6,200,000
Shares will be issued before 30 September 2018. The consideration
must be satisfied in full on or before 30 September 2018. In
addition, Flying Brands is paying an additional $75,000 to settle
certain of IB's debt obligations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IMMATMBTJBBP
(END) Dow Jones Newswires
April 30, 2018 11:25 ET (15:25 GMT)
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