TIDMPLMO
RNS Number : 7345S
Polemos PLC
27 June 2018
27 June 2018
Polemos plc
("Polemos" or the "Company")
Final Results for the Year to 31 December 2017 and Notice of
AGM
Financial Overview
The Company incurred a loss before taxation of GBP1,471,000
during the year ended 31 December 2017 (2016: loss before taxation
GBP269,000) and, as of that date, the Company's current liabilities
exceeded its current assets by GBP113,000 (2016: net assets
GBP184,000). The majority of the losses arise from the decision to
make a provision against the value of the unlisted convertible
loans notes issued during 2017.
As at 31 December 2017 the Company had cash and cash equivalents
of GBP46,000 (2016: GBP175,000) and no borrowings (2016: nil). In
the period March to June 2018 the Company raised GBP565,435 through
the issue of further equity capital and at the date of this
announcement the Company has a cash position of approximately
GBP400,000.
The Company has minimal contractual expenditure commitments and
the Board considers the present funds sufficient to maintain the
working capital of the Company for a period of at least 12 months
from the date of signing the Annual Report and Financial
Statements.
Outlook
The Board is focused on examining opportunities for a suitable
acquisition or acquisitions which constitute a reverse takeover
under AIM Rule 14.
Annual Report
The Annual Report and Accounts for the year ended 31 December
2017 ("Annual Report") will be sent to shareholders today and will
also be available on the website at www.polemos.co.uk. Extracts are
contained below.
Notice of AGM
Concurrent with the posting of the Annual Report, the Company
has also posted the Notice of Annual General Meeting ("AGM") to
Shareholders convening the AGM for 11am on 27 July 2018 at the
offices of Hill Dickinson LLP, The Broadgate Tower, 8th Floor, 20
Primrose Street, London, EC2A 2EW.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information, please contact:
Polemos plc
Dr Nigel Burton, Chairman
Tel: +44 (0) 77 8523 4447
Beaumont Cornish Limited (Nomad)
Roland Cornish/ James Biddle
Tel: +44 (0) 20 7628 3396
www.beaumontcornish.com
Peterhouse Corporate Finance Limited (Broker)
Lucy Williams
Tel: +44 (0) 20 7469 0930
Novum Securities Limited (Joint Broker)
Colin Rowbury
Tel: +44 (0) 20 7399 9400
POLEMOS PLC
STRATEGIC REPORT
The Directors are pleased to present the Strategic Report on the
Company for the year ended 31 December 2017, including a summary of
subsequent events.
Since the 2017 year-end there have been significant changes to
the Company, including the Company's categorisation as an AIM Rule
15 company, a Placing, Open Offer and Placing and a complete change
of the Board.
The termination of the proposed Reverse Takeover ("RTO") of
SecurLinx announced on 8 March 2018 resulted in the Company being
classified as an AIM Rule 15 cash shell. As explained in more
detail below, the principal effect of this is that the Company will
be required to make an acquisition or acquisitions which constitute
an RTO under AIM Rule 14 on or before 9 September (or raise at
least GBP6million in cash via an equity fundraising to be
re-admitted to trading on AIM as an investing company under AIM
Rule 8), failing which the Company's Ordinary Shares would then be
suspended from trading on AIM, pursuant to AIM Rule 40, with
Admission to trading on AIM cancelled six months thereafter
pursuant to AIM Rule 41. Whilst this does not change the strategy
of seeking an RTO, the deadline creates added urgency to do so as
soon as possible.
Activities, Business Review and Strategy
1. Update on investments
Oyster
In June 2017, the Company made a loan to TSXV listed Oyster Oil
and Gas Ltd ("Oyster"), an African focused frontier oil and gas
exploration company by way of a 10% convertible loan debenture for
a principal amount of CAD867,500 (being GBP500,000 at the date of
transfer) ("Loan"). The Loan is expressed to be convertible at the
lesser of CAD0.30 per Oyster common share (an "Oyster Share") or at
a 20% discount to the first offering price of Oyster's Shares on
AIM, subject to compliance with the rules of the TSX-V. The Loan is
repayable either one year from issue or five days following the
admission of Oyster's Shares to AIM. Polemos also holds 433,750
warrants, whereby each warrant entitles Polemos to subscribe for a
new common share for a period of one year from issue at a price of
CAD0.55 per Oyster Share. Further information on Oyster can be
found at www.oysteroil.com. The Company has included a full
provision of GBP500,000 against the carrying value of the loan
note, as a result of the uncertain nature of recoverability in full
by the repayment date. Given the forthcoming repayment date the
Company is in discussions with Oyster regarding how to proceed and
will update investors as and when it has reached agreement.
SecurLinx
On 8 September 2017 the Company announced that it has entered
into an agreement (the "Agreement") assigning to the Company the
benefit of a binding term sheet to acquire 100% of the issued share
capital of SecurLinx Corporation ("SecurLinx"), a US based cyber
security company.
As part of this Agreement the Company became the registered
holder of US$464,000 of 2% convertible loan notes issued by
SecurLinx, convertible at the IPO price for that company and
otherwise repayable on 31 December 2018. The Company has included a
full provision of GBP379,000 against the carrying value of the loan
note, as a result of the uncertain nature of recoverability in full
by the repayment date.
As the Acquisition would have constituted a Reverse Takeover
pursuant to AIM Rule 14, the Directors requested that trading in
the Company's shares be suspended with immediate effect pending the
publication of the required AIM Admission Document.
The Acquisition was subject, inter alia, to the completion of
due diligence, documentation, shareholder approval and compliance
with all regulatory requirements, including the AIM Rules and
Takeover Code.
The Company announced on 8 March 2018 that it had terminated by
mutual consent the binding term sheet agreement previously
announced on 8 September 2017 and will not, therefore, be
proceeding with the reverse acquisition of SecurLinx Corporation.
As a result, Suspension from trading on AIM was lifted on 9 March
2018.
The Company understands that both Securlinx and Oyster continue
to look at London Listing options.
2. Convertible loan debentures
On 31 January 2018, Polemos issued convertible loan debentures
for a principal amount of GBP50,000, which accrue interest at 5%
per annum and are convertible into Polemos Ordinary Shares at a
price of 0.01p per Ordinary Share (pre-Consolidation) or were
repayable in 6 months and include a 1:1 warrant exercisable at the
same price for a period of 12 months post issue. The loan was
specifically to fund the Securlinx RTO and as this was terminated
the Company and investor mutually agreed to the early repayment of
the loan on 10 May 2018, though without any interest being
payable.
3. Classification as cash shell
As outlined above, as a result of the termination of the
SecurLinx transaction, the Company is with effect from 9 March 2018
classified under the AIM Rules as an AIM Rule 15 cash shell and as
such will be required to make an acquisition or acquisitions which
constitutes a reverse takeover under AIM Rule 14 (including seeking
re-admission as an investing company (as defined under the AIM
Rules)) on or before the date falling six months from 9 March 2018
or be re-admitted to trading on AIM as an investing company under
AIM Rule 8 (which requires the raising of at least GBP6 million in
cash via an equity fundraising on, or immediately before,
re-admission) failing which, the Company's Ordinary Shares would
then be suspended from trading on AIM pursuant to AIM Rule 40.
Admission to trading on AIM would be cancelled six months from the
date of suspension should the reason for the suspension not have
been rectified pursuant to AIM Rule 41.
4. Placing and appointment of Joint Broker
The Company also announced on 8 March 2018 a placing (the
"Placing") of 2,700,000,000 new Ordinary Shares of 0.01 pence each
(the "Placing Shares") at a price of 0.01 pence per Placing Share
(Placing Price") to raise in aggregate gross proceeds of
GBP270,000.
The Placing was undertaken with Novum Securities Limited and
Turner Pope Investments (TPI) Limited ("Turner Pope") on behalf of
certain private investors and was conditional, inter alia, on
admission of the Placing Shares to trading on AIM which occurred on
14 March 2018. For the avoidance of doubt, the Placing was done on
a pre-Consolidation basis (as described further below) and within
the Company's then existing authorities to issue shares.
Novum Securities Limited was appointed as Joint Broker to the
Company with immediate effect from 8 March 2018.
At the same time a Conditional Placing of a further
1,400,000,000 new Ordinary Shares of 0.01 pence each on a
pre-Consolidation basis (the "Conditional Placing") at a price of
0.01 pence per Placing Share (Placing Price") to raise in aggregate
gross proceeds of GBP270,000 was announced.
5. Withdrawal of Proposals at proposed General Meeting
The Company announced on 29 March that, following discussions
with certain Shareholders, it had withdrawn all resolutions to be
put to the General Meeting on 3 April and that as a result the
proposed Conditional Placing, issue of warrants in connection with
both the Placing and Conditional Placing would not proceed.
6. Open Offer, Share Consolidation and Placing
The Company announced on 18 April 2018 that a circular (the
"Circular") would be posted to Qualifying Shareholders convening a
General Meeting (a "GM") regarding an Open Offer (instead of the
Conditional Placing) and Share Consolidation. In addition,
resolutions were proposed seeking Shareholder approval for the
grant of the Placing Warrants and a general authority to issue new
Ordinary Shares up to a nominal value of GBP150,000 following the
GM. The GM was adjourned until 18 May following discussions with a
number of shareholders.
Following the GM on 18 May, which approved the Open Offer,
general authority and Consolidation but rejected the Placing
Warrants and Open Offer Warrants, a Placing in Lieu of the Excess
Application Facility was undertaken at a 10% premium to the Open
Offer price, raising GBP280,000.
The Company wrote to Qualifying Shareholders to confirm their
wish to take up the Basic Entitlements under the Open Offer without
the anticipated Open Offer Warrants, following which 14,015,394
Shares at the Open Offer Price of 1p were issued, raising
GBP140,153, and admitted to trading on AIM on 5 June.
The Consolidation, which brings the Company's share capital into
line with the size of the Company, resulted in every 100 Existing
Ordinary Share of 0.01p each being consolidated into 1 New Ordinary
Share of 1p each. Such New Ordinary Shares have the same rights and
are subject to the same restrictions (save as to par value) as the
then Existing Ordinary Shares. The Shares began trading on the
post-Consolidation basis on 21 May 2018.
The overall effect of the changes made to the initial fund
raising proposals announced on 8 March and 18 April is that the
funds required by the Company have been raised with significantly
lower dilution than initially envisaged.
The Directors intend to use the proceeds of the Open Offer and
Placing to:
- provide working capital; and
- fund the costs associated with securing and undertaking (in
part or in full) an acquisition in accordance with AIM Rule 14.
7. Board changes
Dr Nigel Burton was appointed as Chairman on 15 May 2018, with
Hamish Harris resigning with immediate effect.
On 18 May 2018, John Treacy joined the Board as a Non-Executive
Director, and Non-Executive Directors Spencer Wilson and Daniel
Maling have both stepped down from the Board.
The new Board is working with the Company's advisers and brokers
to identify a suitable acquisition or acquisitions which constitute
a reverse takeover under AIM Rule 14.
Financial Review
During the year, the Company made a comprehensive loss of
GBP1,254,000 (2016: GBP231,000). There was a weighted loss per
share from continuing operations of 4.0p (2016: loss per share of
2.0p). The loss includes the provision of GBP879,000 against the
Company's two convertible loan note investments.
Cash and cash equivalents at 31 December 2017 amounted to
GBP46,000 (31 December 2016: GBP175,000).
Subsequent to year end the Company has announced the
following:
- On 8 March 2018 a placing (the "Placing") of 2,700,000,000 new
Ordinary Shares of 0.01 pence each (the "Placing Shares") at a
price of 0.01 pence per Placing Share (Placing Price") to raise in
aggregate gross proceeds of GBP270,000.
- On 18 May 2018 a placing (the "Placing in Lieu of Excess
Application Facility") of 28,000,000 new Ordinary Shares of 1.0
pence each (the "Placing in Lieu Shares") at a price of 1.1 pence
per Placing in Lieu Share (Placing Price") to raise in aggregate
gross proceeds of GBP280,000.
- On 4 June 2018 confirmation of the issue of 14,015,394 new
Ordinary Shares of 1.0 pence each (the "Open Offer Shares") at a
price of 1.0 pence per Open Offer Share (open Offer Price") to
raise in aggregate gross proceeds of GBP140,153.
Outlook
The Company is required to complete a reverse takeover within 6
months of becoming a rule 15 company and the board continues to
look for a suitable investment to achieve this.
Nigel Burton
Chairman
27 June 2018
REPORT OF THE DIRECTORS
The Directors present their report and the audited Financial
Statements for the year ended 31 December 2017.
Principal Activities and Investment Policy
On 8 March 2018 the Company became an AIM Rule 15 cash shell and
as such will be required to make an acquisition or acquisitions
which constitutes a reverse takeover under AIM Rule 14 (including
seeking re-admission as an investing company (as defined under the
AIM Rules)) on or before the date falling six months from that date
or be re-admitted to trading on AIM as an investing company under
AIM Rule 8 (which requires the raising of at least GBP6 million in
cash via an equity fundraising on, or immediately before,
re-admission) failing which, the Company's Ordinary Shares would
then be suspended from trading on AIM pursuant to AIM Rule 40.
Admission to trading on AIM would be cancelled six months from the
date of suspension should the reason for the suspension not have
been rectified pursuant to AIM Rule 41.
Business Review and Future Developments
A full review of the Company's performance, financial position
and future prospects is given in the Strategic Report.
Results and Dividends
The Statement of Comprehensive Income has been prepared in
Sterling, the functional and reporting currency of the Company.
The Company's loss after taxation attributable to equity holders
of the Company for the period was GBP1,471,000 (2016 - GBP269,000
loss).
No dividends have been paid or proposed.
Key Performance Indicators ("KPIs")
The Board monitors the activities and performance of the Company
on a regular basis. Given the current Investing Policy there were
no relevant KPIs during the accounting period or at the year
end.
Substantial Shareholdings
At 27 June 2018, the following had notified the Company of
disclosable interests in 3% or more of the nominal value of the
Company's shares:
Shareholder Number of % of Issued
Shares Capital
JIM Nominees Limited 12,582,564 10.7%
Hargreaves Lansdowne (Nominees)
Limited 9,297,229 7.9%
Mr Kavi Narendra Dhana 8,641,450 7.3%
Nigel Burton 8,248,660 7.0%
Barclays Direct Investing
Nominees Limited 7,886,285 6.7%
Alliance Trust Savings
Nominees Limited 6,819,258 5.8%
Peel Hunt Holdings Limited 4,883,390 4.1%
Neil Scott 4,750,000 4.0%
Vidacos Nominees Limited 4,546,238 3.9%
Fiske Nominees Limited 3,775,000 3.2%
Winterflood Securities
Limited 3,673,737 3.1%
Interactive Investor Services
Nominees Limited 3,610,882 3.1%
Interactive Investor Services
Nominees Limited 3,586,209 3.0%
Directors' Remuneration and interests
The Company remunerates the Directors at a level commensurate
with the size of the Company and the experience of its Directors.
The Remuneration Committee has reviewed the Directors' remuneration
and believes it upholds the objectives of the Company with regard
to this issue. Details of the Directors' emoluments and payments
made for professional services rendered are set out in note 7 to
the Financial Statements.
All the directors below served during throughout the period
unless otherwise stated;
Hamish Harris (resigned 15 May
2018)
Spencer Wilson (resigned 18 May
2018)
Daniel Maling (appointed 15 February
2017 & resigned 18 May 2018)
Nicholas Lee (appointed 15 February
2017 & resigned 31 January 2018)
Each of the directors at 31 December 2017, held fully vested
options ordinary shares each which are exercisable at 4.5p each up
until 31 December 2018. H Harris held 500,000, S Wilson 100,000, D
Maling 300,000, and N Lee 300,000, total options held by directors
is 1,200,000 (all stated on a post-Consolidation basis).
Corporate Governance
A statement on Corporate Governance is set out below.
Annual General Meeting ("AGM")
This report and financial statements will be presented to
shareholders for their approval at an AGM. The Notice of the AGM
will be distributed to shareholders with this Annual Report.
Employees
The Company has no directly employed personnel, apart from the
Directors.
Creditor Payment Policy
The policy of the Company is to:
-- Agree the terms of payment with suppliers when settling the terms of each transaction;
-- Ensure that suppliers are made aware of the terms of payment
by inclusion of the relevant terms in contracts; and
-- Pay in accordance with its contractual and other legal
obligations provided suppliers comply with the terms and conditions
of supply.
Trade payables at the year end all relate to sundry
administrative overheads and disclosure of the number of days'
purchases represented by year end payables is therefore not
meaningful.
Charitable Donations
The Company made no charitable donations during the year (2016 -
GBPNil).
Financial Reporting
The Board has ultimate responsibility for the preparation of the
annual audited Financial Statements. A detailed review of the
performance of the Company is contained in the Strategic Report.
With the Strategic Report, the Board seeks to present a balanced
and understandable assessment of the Company's position,
performance and prospects.
Going Concern
The Directors note the losses of GBP1,471,000 that the Company
has made for the Year Ended 31 December 2017. The Directors have
prepared cash flow forecasts for the period ending 30 June 2019
which take account of the current cost and operational structure of
the Company.
The cost structure of the Company comprises a high proportion of
discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the
Company to operate within its available funding.
These forecasts and the completion of a successful open offer,
as detailed below, demonstrate that the Company has sufficient cash
funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial
statements. Accordingly, the financial statements have been
prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the
Company remains a going concern. As at 31 December 2017 the Company
had cash and cash equivalents of GBP46,000 and no borrowings. The
Company has minimal contractual expenditure commitments and the
Board considers the present funds sufficient to maintain the
working capital of the Company for a period of at least 12 months
from the date of signing the Annual Report and Financial
Statements.
In the period March to June 2018 the Company raised GBP565,435
through the issue of further equity capital and the Directors are
confident of raising further equity capital should the need arise.
The Directors consider this funding demonstrates the Company's
capacity to continue as a going concern despite the Net Liabilities
position of GBP113,000 as at 31 December 2017.
For these reasons the Directors adopt the going concern basis in
the preparation of the Financial Statements.
Risks and Uncertainties
The principal risks facing the Company are set out below. Risk
assessment and evaluation is an essential part of the Company's
planning and an important aspect of the Company's internal control
system.
Financial Risk
The risks faced by the Company include interest rate, credit
risk and liquidity risk. Directors have in place a process of
regularly reviewing risks to the business and monitoring associated
controls, actions and contingency plans. The Company's financial
risk management policies are set out in note 3.
Business Risk
The Board regularly evaluates and reviews all business risks
when reviewing project timelines. The types of risks reviewed also
include:
-- Regulatory and compliance obligations
-- Legal risks relating to contracts, licenses and agreements
-- Insurance risks.
Internal Control
A key objective of the Directors is to safeguard the value of
the business and assets of the Company. This requires the
development of relevant policies and appropriate internal controls
to ensure proper management of the Company's resources and the
identification and mitigation of risks which might serve to
undermine them. The Directors are responsible for the Company's
system of internal control and for reviewing its effectiveness. It
should, however, be recognised that such a system can provide only
reasonable and not absolute assurance against material misstatement
or loss.
Provision of Information to Auditors
So far as each of the Directors is aware at the time this report
is approved:
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
Auditors
Chapman Davis LLP has signified its willingness to continue in
office as auditors, and a resolution that they be reappointed will
be proposed at the annual general meeting.
This report was approved by the board on 27 June 2018 and signed
on its behalf.
Nigel Burton
Director
CORPORATE GOVERNANCE
The Directors recognise the importance of sound corporate
governance. The Company's corporate governance procedures take due
regard of the principles of Good Governance set out in the UK
Corporate Governance Code proportionate to the size and the stage
of development of the Company.
From 28 September 2018 as an AIM company, the Company is
required to maintain on its website details of a recognised
corporate governance code, how the Company complies with this code
and an explanation of any departure from the code. The information
will need to be reviewed annually and the website should include
the date on which the information was last reviewed.
The Directors have sought to address these new requirements in a
timely manner and the Board has concluded that it will seek to
comply with the Quoted Companies Alliance's Corporate Governance
Code ("the QCA Code").
Board of Directors
The Board of Directors currently comprises one Executive
Director (who is the Chairman) and one Non-Executive Director. The
Directors are of the opinion that the Board comprises a suitable
balance and that the recommendations of the UK Corporate Governance
Code have been implemented to an appropriate level. The Board
maintains regular contact with its advisers and major shareholders
in order to ensure that the Board maintains an understanding of
their views about the Company.
Board meetings
The Board meets regularly throughout the year in relation to
normal operational matters. The Board is responsible for
formulating, reviewing and approving the Company's strategy,
financial activities and operating performance.
All Directors have access to the advice of the Company's
solicitors and the Company Secretary ensures necessary information
is supplied to the Directors on a timely basis to enable them to
discharge their duties effectively, and all Directors have access
to independent professional advice, at the Company's expense, as
and when required.
Board Committees
The Board has established the following committees, each which
has its own terms of reference:
Audit Committee
The Audit Committee is responsible for overseeing the Company's
financial reporting disclosure process; this also includes the
choice of appropriate accounting policies. It also monitors
internal financial controls as well as overseeing the hiring and
performance of the external auditors. The Audit Committee comprises
all of the Directors with Nigel Burton as Chairman.
Remuneration Committee
The Remuneration Committee is responsible for making
recommendations to the Board on the remuneration for Directors. It
comprises all of the Directors with John Treacy as Chairman.
Financial packages for Directors are established by reference to
those prevailing in the employment market for executives of
equivalent status both in terms of level of responsibility of the
position and their achievement of recognised job qualifications and
skills. The Committee will also have regard to the terms which may
be required to attract an equivalent experienced Director to join
the Board from another company.
Nomination Committee
The Directors do not consider that, given the size of the Board,
it is appropriate to have a Nomination Committee. The
appropriateness of such a committee will however, be kept under
regular review by the Board.
Internal Controls
The Directors acknowledge their responsibility for the Company's
systems of internal controls and for reviewing their effectiveness.
These internal controls are designed to safeguard the assets of the
Company and to ensure the reliability of financial information for
both internal use and external publication. Whilst they are aware
that no system can provide absolute assurance against material
misstatement or loss, in light of increased activity and further
development of the Company, continuing reviews of internal controls
will be undertaken to ensure that they are adequate and
effective.
Risk Management
The Board considers risk assessment to be important in achieving
its strategic objectives. There is a process of evaluation of
performance targets through regular reviews of actual performance
against forecasts. Project milestones and timelines are regularly
reviewed.
Insurance
The Company maintains insurance in respect of its Directors
against liabilities in relation to the Company.
Treasury Policy
The Company finances its operations through equity and holds its
cash as a liquid resource to fund the obligations of the Company.
Decisions regarding the management of these assets are approved by
the Board.
Securities Trading
The Board has adopted a Share Dealing Code that applies to
Directors, senior management and any employee who is in possession
of 'inside information'. All such persons are prohibited from
trading in the Company's securities if they are in possession of
'inside information'. Subject to this condition and trading
prohibitions applying to certain periods, trading can occur
provided the relevant individual has received the appropriate
prescribed clearance.
Relations with Shareholders
The Board is committed to providing effective communication with
the shareholders of the Company. Significant developments are
disseminated through stock exchange announcements and regular
updates of the Company website. The Board views the AGM as a forum
for communication between the Company and its shareholders and
encourages their participation.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the Directors must not
approve the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss for that period.
In preparing these Financial Statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether the Financial Statements comply with IFRSs as
adopted by the European Union, subject to any material departures
disclosed and explained in the Financial Statements;
-- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the Financial Statements.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the Financial Statements may
differ from legislation in other jurisdictions.
The Company is compliant with AIM Rule 26 regarding the
Company's website.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF POLEMOS PLC
OPINION
We have audited the financial statements of Polemos plc (the
'Company') for the year ended 31 December 2017 which comprise the
statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash
flows and notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the company financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Company's affairs as at 31 December 2017 and of the
Company's profits for the year then ended;
-- the Company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
We draw attention to Note 2 in the financial statements, which
indicates that the Company incurred a net loss of GBP1,471,000
during the year ended 31 December, 2017 and, as of that date, the
Company's current liabilities exceeded its current assets by
GBP113,000. As stated in Note 2, these events or conditions, along
with other matters as set forth in Note 2, indicate that a material
uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters. This is not a complete list of all risks
identified by our audit. Our audit procedures in relation to these
matters were designed in the context of our audit opinion as a
whole. They were not designed to enable us to express an opinion on
these matters individually and we express no such opinion.
In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matters
described below to be the key audit matters to be communicated in
our report.
CARRYING VALUE OF AVAILABLE FOR SALE INVESTMENTS
The Company's Available for Sale Investment assets ('AFS
assets') represent the most significant asset on its statement of
financial position totalling GBP879,000 as at 31 December 2017
(prior to impairment provisions), all of which are unlisted
investments.
The carrying value of AFS assets represents significant assets
of the company and assessing whether facts or circumstances exist
to suggest that impairment indicators were present, and if present,
whether the carrying amount of these asset may exceed its
recoverable amount was considered key to the audit. This assessment
involves significant judgement applied by management to the
Company's unlisted investments.
We considered it necessary to assess whether facts and
circumstances existed to suggest that impairment indicators were
present, and if present, whether the carrying amount of these
assets may exceed its recoverable amount.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and
evaluating management's assessment of whether any impairment
indicators have been identified across the Company's AFS assets,
the indicators being:
-- Expiring, or imminently expiring, rights to licences held by the investee Companies
-- A lack of flow of information in regards to the investee
companies trading or exploration activities and/or production
-- Discontinuation of, or a plan to discontinue trading or
exploration activities in the areas of interest by the Investee
Companies
-- Sufficient data exists to suggest carrying value of
exploration and evaluation assets is unlikely be recovered in full
through successful development or sale by the Investee
Companies.
-- Sufficient future or current orders exist for a trading
company to continue to generate positive income.
We also reviewed Stock Exchange RNS announcements and Board
meeting minutes for the year and subsequent to year end for
activity to identify any indicators of impairment. The Board, as a
result of the factors considered in relation to these assets, has
made an impairment provision in full against the GBP879,000
acquisition cost of the AFS assets.
We also assessed the disclosures included in the financial
statements.
MATERIALITY
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified. Based on professional judgement, we determined overall
materiality for the financial statements as a whole to be
GBP29,000, based on a 5% percentage consideration of the company's
adjusted loss for the year (adjustment being that of the AFS asset
impairment provision).
OTHER INFORMATION
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- 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; and
-- the Strategic Report and the Directors' report have been
prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic report or
the Directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
--
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors' responsibilities
statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) or ISA IAASB will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Keith Fulton
(Senior Statutory Auditor)
For and on behalf of Chapman Davis LLP, Statutory Auditor
London
Chapman Davis LLP is a limited liability partnership registered
in England and Wales (with registered number OC306037).
27 June 2018
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME YEARED 31 DECEMBER 2017
Year ended Year ended
31 December 2017 31 December 2016
Note GBP'000 GBP'000
Revenue - -
Administrative expenses (319) (269)
Investment income 8 1 -
Operating (Loss) 9 (318) (269)
Realised (loss) on available for sale assets 12 (244) -
Impairment provision on available for sale assets 12 (879) -
Share based payment (30) -
(Loss) before Taxation (1,471) (269)
Taxation 10 - -
------------------- -------------------
(Loss) for the Year attributable to equity holders of the Company (1,471) (269)
=================== ===================
Other Comprehensive Income:
Other comprehensive income Items that may be subsequently
reclassified to profit or loss:
Increase in value of available for sale assets - 38
Transfer to income statement 217 -
------------------- -------------------
Total other comprehensive income 217 38
Total Comprehensive (loss) for the Year attributable to equity
holders of the Company (1,254) (231)
=================== ===================
Earnings per Share
Attributable to the Equity Holders of the Company during the
Year
Note Pence Pence
Earnings per share - Basic and diluted 11 (4.0) (2.0)
------- -------
The accounting policies and notes form an integral part of these
Financial Statements.
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
31 December 2017 31 December 2016
Note GBP'000 GBP'000
Assets
Non-Current Assets
Available-for-sale financial assets 12 - 94
------------------ ------------------
- 94
Current Assets
Available-for-sale financial assets 12 - -
Trade and other receivables 13 49 41
Cash and cash equivalents 14 46 175
------------------ ------------------
95 216
Total Assets 95 310
------------------ ------------------
Current Liabilities
Trade and other payables 15 (208) (126)
------------------ ------------------
Net (Liabilities)/Assets (113) 184
================== ==================
Equity attributable to shareholders
Share capital 16 19,823 19,459
Share premium 16 19,181 18,618
Share based payment reserve 62 63
Available-for-sale asset reserve - (217)
Retained earnings (39,179) (37,739)
------------------ ------------------
Total Equity (113) 184
================== ==================
The Financial Statements were approved and authorised for issue
by the board of Directors on 27 June 2018 and were signed on its
behalf by:
Nigel Burton John Treacy
Director Director
The accounting policies and notes form an integral part of these
Financial Statements.
STATEMENT OF CHANGES IN EQUITY YEARED 31 DECEMBER 2017
Attributable to equity shareholders
Share Share Share based Available for sale asset Retained
Capital Premium Payment reserve Earnings Total
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2015 19,395 18,441 63 (255) (37,470) 174
========== ========== ============= ========================== =========== =========
Shares issued 64 191 - - - 255
Share issue costs - (14) - - - (14)
---------- ---------- ------------- -------------------------- ----------- ---------
Total contributions by
and distributions to
owners of the Company 64 177 - - - 241
---------- ---------- ------------- -------------------------- ----------- ---------
Increase in value of
available for sale
assets - - - 38 - 38
(Loss) for the year - - - - (269) (269)
---------- ---------- ------------- -------------------------- ----------- ---------
Total Comprehensive
Income for the Year - - - 38 (269) (231)
At 31 December 2016 19,459 18,618 63 (217) (37,739) 184
========== ========== ============= ========================== =========== =========
Shares issued 364 631 - - - 995
Share issue costs - (68) - - - (68)
Share options issued - - 30 - - 30
Share options cancelled - - (31) - 31 -
Total contributions by
and distributions to
owners of the Company 364 563 (1) - 31 957
Transfer to income
statement - - - 217 - 217
(Loss) for the year - - - - (1,471) (1,471)
---------- ---------- ------------- -------------------------- ----------- ---------
Total Comprehensive
Income for the Year - - - 217 (1,471) (1,254)
---------- ---------- ------------- -------------------------- ----------- ---------
At 31 December 2017 19,823 19,181 62 - (39,179) (113)
========== ========== ============= ========================== =========== =========
The accounting policies and notes form an integral part of these
Financial Statements.
STATEMENT OF CASH FLOWS YEARED 31 DECEMBER 2017
Note 31 December 2017 31 December 2016
GBP'000 GBP'000
Cash Flows from Operating Activities
Operating loss (318) (269)
Adjustments for non-cash items:
Bad debts written-off - 1
Operating cash flows before movements in working capital (318) (268)
(Increase) in trade and other receivables (8) (28)
Increase in trade and other payables 82 29
------------------ ------------------
Net Cash Used in Operating Activities (244) (267)
------------------ ------------------
Cash Flows from Investing Activities
Purchases of available-for-sale financial assets (879) (4)
Sales of available for sale financial assets 67
Net Cash Used in Investing Activities (812) (4)
------------------ ------------------
Cash Flows from Financing Activities
Proceeds from share issues 995 255
Share issue costs (68) (16)
------------------ ------------------
Net cash generated from Financing Activities 927 239
------------------ ------------------
Net (Decrease) in Cash and Cash Equivalents (129) (32)
Cash and cash equivalents at beginning of year 14 175 207
------------------ ------------------
Cash and Cash Equivalents at End of Year 14 46 175
------------------ ------------------
The accounting policies and notes form an integral part of these
Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2017
1. General Information
Polemos plc is a public limited company which is quoted on the
AIM Market, and incorporated and domiciled in the UK. The business
of Polemos plc remains that of an Investment Company, in accordance
with the AIM Rules.
The Company's Investing Policy is to invest in any sector which
the Directors consider may potentially create value for its
Shareholders. The Directors intend initially to seek to acquire a
direct or an indirect interest in projects and assets in the
natural resources sector, however, they will consider other sectors
as, and when, opportunities arise.
This investment may be in either quoted or unquoted companies;
be made by direct acquisition or through farm-ins; may be in
companies, partnerships, joint ventures; or direct interests in
particular assets or projects. The Company's equity interest in a
proposed investment may range from a minority position to 100
percent ownership and may comprise one investment or multiple
investments.
Investments in early stage and exploration assets are expected
to be mainly in the form of equity, with debt being raised later to
fund the development of such assets. Investments in later stage
assets are more likely to include an element of debt to equity
gearing.
The Company intends to deliver Shareholder returns principally
through capital growth rather than income distribution via
dividends, although it may become appropriate to distribute funds
to Shareholders once the investment portfolio matures.
The Company may be both an active and a passive investor
depending on the nature of the individual investments in its
portfolio. Although the Company intends to be a long-term investor,
the Directors will place no minimum or maximum limit on the length
of time that any investment may be held.
There is no limit on the number of projects into which the
Company may invest or the proportion of the Company's gross assets
that any investment may represent at any time and the Company will
consider possible opportunities anywhere in the world.
The Directors may offer new Ordinary Shares by way of
consideration as well as cash, thereby helping to preserve the
Company's cash for working capital and as a reserve against
unforeseen contingencies including by way of example, and without
limit, delays in collecting accounts receivable, unexpected changes
in the economic environment and unforeseen operational problems.
The Company may, in appropriate circumstances, issue debt
securities or otherwise borrow money to complete an investment.
There are no borrowing limits in the Company's Articles of
Association. The Directors do not intend to acquire any
cross-holdings in other corporate entities that have an interest in
the Existing Ordinary Shares.
There are no restrictions in the type of investment that the
Company might make nor on the type of opportunity that may be
considered.
Authorisation of financial statements
The financial statements of Polemos plc for the year ended 31
December 2017 were authorised for issue by the Board on 27 June
2018 and the balance sheets signed on the Board's behalf by Nigel
Burton and John Treacy.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these Financial Statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Basis of Preparation
The Financial Statements of Polemos plc have been prepared under
the historical cost convention and in accordance with International
Financial Reporting Standards (IFRS) and IFRS Interpretations
Committee (IFRSIC) as adopted by the European Union and the
Companies Act 2006 applicable to companies reporting under
IFRS.
The preparation of Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Company's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant in the Financial
Statements are disclosed in Note 4.
Going Concern
The Directors noted the losses of GBP1,471,000 that the Company
has made for the Year Ended 31 December 2017. The Directors have
prepared cash flow forecasts for the period ending 30 June 2019
which take account of the current cost and operational structure of
the Company.
The cost structure of the Company comprises a high proportion of
discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the
Company to operate within its available funding.
These forecasts and the completion of a successful open offer,
as detailed below, demonstrate that the Company has sufficient cash
funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial
statements. Accordingly, the financial statements have been
prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the
Company remains a going concern. As at 31 December 2017 the Company
had cash and cash equivalents of GBP46,000 and no borrowings. The
Company has minimal contractual expenditure commitments and the
Board considers the present funds sufficient to maintain the
working capital of the Company for a period of at least 12 months
from the date of signing the Annual Report and Financial
Statements.
In the period March to June 2018 the Company raised GBP565,435
through the issue of further equity capital and the Directors are
confident of raising further equity capital should the need arise.
The Directors consider this funding demonstrates the Company's
capacity to continue as a going concern despite the Net Liabilities
position of GBP113,000 as at 31 December 2017.
For these reasons the Directors adopt the going concern basis in
the preparation of the Financial Statements.
Accounting Policies
New standards, amendments and interpretations adopted by the
Company
New and/or revised Standards and Interpretations that have been
required to be adopted, and/or are applicable in the current year
by/to the Company, as standards, amendments and interpretations
which are effective for the financial year beginning on 1 January
2017 do not have a material effect on the Company financial
statements.
New standards, amendments and interpretations not yet
adopted
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements, were in issue but not yet effective
for the year presented:
- IFRS 9 in respect of Financial Instruments which will be
effective for the accounting periods beginning on or after 1
January 2018.
- IFRS 15 in respect of Revenue from Contracts with Customers
which will be effective for accounting periods beginning on or
after 1 January 2018.
- IFRS 16 in respect of Leases which will be effective for
accounting periods beginning on or after 1 January 2019.
- IFRS 17 Insurance Contracts (effective date 1 January
2021).
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Company.
Financial Instruments
The Company determines the classification of its financial
assets at initial recognition. The subsequent measurement of
financial assets depends on their classification as described
below.
Available-for-sale financial assets
Available-for-sale financial assets are included in non-current
assets unless the investment matures or management intends to
dispose of it within 12 months of the end of the reporting period.
Available-for-sale financial assets carried at fair value through
profit or loss are initially recognised at fair value, and
transaction costs are expensed in the income statement.
The Company assesses at the end of each reporting period whether
there is objective evidence that a financial asset is impaired. If
any such evidence exists for available-for-sale financial assets,
the cumulative loss - measured as the difference between the
acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognized in profit or
loss - is recognised in equity.
Trade and Other Receivables
Trade and other receivables are initially measured at fair
value, based on their invoice value and subsequently measured at
amortised cost using the effective interest method. Appropriate
allowances for estimated irrecoverable amounts are recognised in
the Statement of Comprehensive Income when there is objective
evidence that the asset is impaired. The allowance recognised is
measured as the difference between the asset's carrying amount and
the estimated recoverable amount.
Trade and Other Payables
Trade and other payables are initially measured at fair value
and are subsequently measured at amortised cost using the effective
interest method.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits.
Foreign Currency Translation
(a) Functional and Presentation Currency
Items included in the Financial Statements of the Company are
measured using the currency of the primary economic environment in
which the entity operates ("functional currency"). The Financial
Statements are presented in Pounds Sterling (GBP), which is the
Company's functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement.
Share Capital
Ordinary Shares are classified as equity. Share premium is shown
as an additional incremental cost directly attributable to the
issue of new shares are shown as a deduction, net of tax, in equity
from the proceeds.
Taxation
The tax expense represents the sum of the tax payable for the
current period and deferred tax.
Tax is recognised in the income statement, except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the company and its subsidiaries operate and
generate taxable income.
Deferred income tax is recognised on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated nancial statements. However,
deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill; deferred income tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable pro t or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by
the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable pro t will be available
against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Share Based Payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The fair value excludes the
effect of non market-based vesting conditions. Details regarding
the determination of the fair value of equity-settled share-based
transactions are set out in note 6.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Company's estimate of
equity instruments that will eventually vest. At each Statement of
Financial Position date, the Company revises its estimate of the
number of equity instruments expected to vest as a result of the
effect of non market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in the
Income Statement such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the
equity-settled employee benefits reserve.
Fair value is measured by use of the Black Scholes Model. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
3. Financial Risk Management
Financial Risk Factors
The Company's activities expose it to a variety of financial
risks: market risk (including exchange rate risk and interest rate
risk), credit risk and liquidity risk. The Company's overall risk
management programme focuses on the unpredictability of financial
markets, and seeks to minimise potential adverse effects on the
Company's financial performance.
Risk management is carried out by the Directors under policies
approved by the Board of Directors which include continuous
assessments of interest rate, credit risk and liquidity risk.
(a) Market Risk
(i) Foreign Exchange Risk
The Company operates mainly in the UK, and has limited exposure
to foreign exchange risk. Following the new strategies post
re-structure, the Company may have greater currency risk should it
develop an international investment portfolio.
(ii) Interest Rate Risk
The Company does not have any borrowing at the year end and
hence has limited exposure to interest rate risk. Should borrowing
become necessary, the Directors will assess the instruments
required to meet the Company's financing needs.
(b) Credit Risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions. The Company considers the
credit ratings of banks in which it holds funds in order to reduce
exposure to credit risk. The Company will only bank with financial
institutes that have a credit rate of A- or better.
(c) Liquidity Risk
The Company seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. Cash is invested in commercial call
accounts which provide a modest return on the cash resources whilst
ensuring there is limited risk of loss.
There is no difference between the carrying values and fair
values of the financial instruments in the current year or prior
year.
(d) Market/Price Risk
The Company is exposed to equity securities market/price risk
because of investments held by the Company and classified on the
Statement of Financial Position as available-for-sale assets. To
manage this risk, the Company diversified its portfolio.
Capital Risk Management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, in order to
provide returns for shareholders and benefits for other
stakeholders, and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares, or sell assets to
reduce debt.
4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of the financial information in conformity with
IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
(i) Critical Accounting Estimates and Assumptions
Share Based Payments
The Company awarded 1,200,000 options (restated on a
post-Consolidation basis) over its unissued share capital to the
directors during the year to 31 December 2017 (2016: nil share
options issued) and 160,000 options (restated on a
post-Consolidation basis) were cancelled (2016: nil share options
cancelled).
The fair value of share based payments is calculated by
reference to a Black Scholes model. Inputs into the model are based
on management's best estimates of appropriate volatility, dividend
yields, discount rate and share price growth.
During the year, the Company incurred a GBP30,000 share based
payment charge (2016: GBPnil charge), and GBP31,000 (2016: GBPnil)
was transferred via equity to retained earnings on the cancelling
of options during the year.
5. Segment Information
The Company is operating as a single UK based segment with a
single primary activity to invest in businesses so as to generate a
return for the shareholders. No segmental analysis has been
disclosed as the Company has no operating segments. The Directors
will review the segmental analysis on a regular basis, and update
accordingly.
6. Share Based Payments (stated on a post-Consolidation basis)
The Company awarded 1,200,000 options over its unissued share capital to the then directors
during the year to 31 December 2017 (2016: nil share options issued) and 160,000 options were
cancelled (2016: nil share options cancelled)
During the year, the Company incurred a GBP30,000 share based payment charge (2016: GBPnil
charge), and GBP31,000 (2016: GBPnil) was transferred via equity to retained earnings on the
cancelling of options during the year.
2017
No. of
share Weighted average 2016 Weighted average
options exercise price No. of share options exercise price
Outstanding at
beginning of year 320,000 20.0p 320,000 20.0p
Granted during the
year 1,200,000 4.5p - -
Cancelled during the
year (160,000) 20.0p - -
------------ ----------------------- ------------------------ ------------------------
Outstanding at the
end of the year 1,360,000 6.3p 320,000 20.0p
------------ ----------------------- ------------------------ ------------------------
Exercisable at the
end of the year 1,360,000 6.3p 320,000 20.0p
------------ ----------------------- ------------------------ ------------------------
160,000 options are exercisable at 20.0p and expire on 31 December 2020.1,200,000 options
exercisable at 4.5p and expire on 31 December 2018.
6. Share Based Payments (continued)
A modified Black-Scholes model has been used to determine the
fair value of the share options on the date of grant. The fair
value is expensed to the income statement on a straight-line basis
over the vesting period, which is determined annually. The model
assesses a number of factors in calculating the fair value. These
include the market price on the date of grant, the exercise price
of the share options, the expected share price volatility of the
Company's share price, the expected life of the options, the
risk-free rate of interest and the expected level of dividends in
future periods.
For those options granted where IFRS 2 "Share-Based Payment" is
applicable, the fair values were calculated using the Black-Scholes
model. The inputs into the model were as follows:
Risk free Share price Expected Share price
rate volatility life at date
of grant
15 February
2017 0.49% 135.8% 1.87 years GBP0.0004
Expected volatility was determined by calculating the historical
volatility of the Company's share price for 12 months prior to the
date of grant. The expected life used in the model is the term of
the options.
7. Directors and Employees
2017 2016
Average number of employees No. No.
Average number of employees (who are all Directors)
during the year was: 4 3
--------------------------------- ---------
GBP'000 GBP'000
Emoluments of the Directors 74 36
--------------------------------- ---------
Salary Share based payments 2017 2016
Directors' Emoluments and fees Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Hamish Harris (1) 12 13 25 12
Spencer Wilson (2) 12 3 15 12
Daniel Maling (3) 10 7 17 -
Nicholas Lee (4) 10 7 17 -
Donald Strang (5) - - - 1
Jason Berry (6) - - - 11
44 30 74 36
----------------- ---------------------- --------- ---------
The Company operates only the basic pension plan required under UK legislation, contributions
thereto during the year amounted to GBP91 (2016: GBPnil).
(1) resigned 15 May 2018
(2) resigned 18 May 2018
(3) appointed 15 February 2017 and resigned 18 May 2018
(4) appointed 15 February 2017 and resigned 31 January 2018
(5) resigned on 18 January 2016
(6) ceased on 16 November 2016
8. Investment income
2017 2016
GBP'000 GBP'000
Interest receivable on convertible loan notes 1 -
--------- ---------
1 -
--------- ---------
9. Operating Loss
2017 2016
GBP'000 GBP'000
Included within the results of operating activities are the following;
Staff costs (including director's) 74 36
Audit fees 8 8
Foreign exchange (gains) (3) -
Bad debt written-off - 1
Auditor's remuneration:
- Fees payable for the audit of the Company 8 8
- Audit related assurance services - -
--------- ---------
10. Income Tax
2017 2016
GBP'000 GBP'000
UK Corporation Tax at standard rate of UK companies
Corporation Tax rate of 19/20% (2016 - 20%) - -
--------- ---------
Deferred tax:
Origination and reversal of temporary differences - -
--------- ---------
The tax on the Company's loss before tax differs from the theoretical amount that would
arise
using the weighted average tax rate applicable to loss of the Company as follows:
Loss on ordinary activities before tax (1,471) (269)
--------- ---------
Current tax at 19/20% (2016 - 20%) (283) (54)
Tax effects of:
- Expenses not deductible for tax purposes 6 -
- Tax losses for which no deferred income tax asset is recognised 277 54
--------- ---------
Tax charge/(credit) - -
--------- ---------
11. Earnings per Share
Basic (loss) per share is calculated by dividing the loss attributable to equity holders of
the Company by the weighted average number of ordinary shares in issue during the year. This
is calculated below on the post share consolidated basis as detailed in Notes 16 & 19.
2017 2016
(Loss) attributable to equity holders of the Company (GBP'000) (1,471) (269)
Weighted average number of ordinary shares in issue 36,919,613 13,757,053
Basic and diluted (loss) per share (pence) (4.0) (2.0)
------------ ------------
The impact of the share options is considered to be anti-dilutive.
12. Available-for-sale financial assets - Listed & Unlisted Investments
2017 2016
GBP'000 GBP'000
Opening balance at 1 January 94 51
Purchase of investments 879 4
Disposal of investments (67) -
(Loss) on disposal of investments (244) -
Impairment provision against unlisted convertible loan notes (879) -
Foreign exchange gains on translation - 1
Transfers to income statement 217 -
Movement in market value during the year - 38
---------- ----------
Closing balance at 31 December - 94
---------- ----------
The available for sale investments splits are as below:
Non-current assets - listed - at market value - 94
Current assets - unlisted convertible loan notes at cost 879 -
Impairment provision against unlisted convertible loan notes (879) -
---------- ----------
- 94
---------- ----------
Available-for-sale assets comprise investments in listed and unlisted securities which if
listed are traded on stock markets throughout the world, and are held by the Company as a
mix of strategic and short term investments
13. Trade and Other Receivables
2017 2016
GBP'000 GBP'000
Other receivables - 10
VAT recoverable 23 24
Prepayments 26 7
--------- ---------
49 41
--------- ---------
14. Cash and Cash Equivalents
2017 2016
GBP'000 GBP'000
Cash at bank and in hand 46 175
--------- ---------
15. Trade and Other Payables
2017 2016
GBP'000 GBP'000
Trade payables 127 50
Other payables 8 22
Social security and other taxes 1 -
Accruals 72 54
--------- ---------
208 126
--------- ---------
16. Share Capital (stated on a pre-Consolidation basis) and Premium
Number of Share Share
shares capital premium Total
(thousands) GBP'000 GBP'000 GBP'000
At 1 January 2016- Ordinary shares 886,907 88 18,441 18,529
Shares issued during the year;
On 18 February 2016, placing for cash at 0.04p per share 200,000 20 60 80
On 11 April 2016, placing for cash at 0.04p per share 437,500 44 131 175
Costs of share issues - - (14) (14)
------------- --------- --------- ---------
- ordinary shares 1,524,407 152 18,618 18,770
- deferred shares 386,907 19,307 - 19,307
------------- --------- --------- ---------
Totals at 31 December 2016 1,911,314 19,459 18,618 38,091
------------- --------- --------- ---------
On 15 February 2017, placing for cash at 0.04p per share 1,414,286 142 353 495
On 31 July 2017, placing for cash at 0.02p per share 2,222,222 222 278 500
Costs of share issues - - (68) (68)
------------- --------- --------- ---------
- ordinary shares 5,160,915 516 19,181 19,697
- deferred shares 386,907 19,307 - 19,307
------------- --------- --------- ---------
Totals at 31 December 2017 5,547,822 19,823 19,181 39,004
------------- --------- --------- ---------
The issued share capital at 31 December 2017 consisted of 5,160,915,400 ordinary shares of
0.01p each and 386,907,464 deferred shares of 4.99p each.
3,636,507,936 shares were issued during the year ended 31 December 2017 (2016: 637,500,000
shares issued).
The deferred shares do not entitle their holders to receive dividends or other distributions,
receive notice of or to attend and vote at any general meeting or receive a return of capital
on a winding up. The deferred shares are redeemable at the option of the Company at any time
on giving 7 days written prior notice.
136 million share options were outstanding at 31 December 2017 (2016 - 32 million). The Company
has no warrants in issue at 31 December 2017 (2016: nil). (See Note 6 for details on the Share
Options).
On 18 May 2018 a 1:100 share Consolidation was approved by Shareholders. The figures above
in this note 16 are stated prior to this Consolidation.
17. Operating Lease Commitments and capital commitments
The Company has no current lease or capital commitments as at 31 December 2017.
18. Related Party Transactions
During the year, consultancy fees of GBP48,000 (2016 - GBP36,000) were charged to the Company
by Marlin Atlantic Finance Limited, a company of which Mr Harris is the sole director. GBP30,000
was outstanding at the year end (2016: GBP36,000).
Key Management Personnel
The only key management personnel are the directors, whose remuneration is detailed in Note
7.
19. Events after the Reporting Period
On 31 January 2018, the Company announced the following:
-- The issue of convertible loan debentures for a total principal amount of GBP50,000.
-- The Loans will accrue interest at 5% per annum.
-- The Loans are convertible into Polemos ordinary shares at a price of 0.01p per ordinary
share in Polemos or are repayable in 6 months.
-- The Loans include a 1:1 warrant exercisable at the same price for a period of 12 months
post issue.
-- Nicholas Lee, Non-Executive Director, resigned from the Board of Directors.
-- The Convertible Loans above were repaid in full on 10 May 2018.
On 8 March 2018, the Company announced:
* A placing of 2,700,000,000 new Ordinary Shares of
0.01 pence each at a price of 0.01 pence per Share
and raised in aggregate gross proceeds of GBP270,000.
* The termination of the proposed reverse acquisition
of SecurLinx.
* The restoration of trading of its shares on AIM.
On 18 April 2018, the Company announced the issue of an Open Offer Circular to raise up to
GBP787,000 from existing qualifying shareholders, and a share consolidation, subject to approval
at a General Meeting scheduled for 11 May 2018, subsequently adjourned to 18 May.
On 15 May 2018, the Company announced Dr Nigel Burton was appointed as Chairman and a Director
of the Company. On the same day Hamish Harris resigned as a Director of the Company.
On 18 May 2018, the Company announced that the General Meeting had approved the Open Offer,
general authority and 1:100 ordinary share Consolidation, but rejected the Placing Warrants
and Open Offer Warrants. A Placing in Lieu of the Excess Application Facility was undertaken
at a 10% premium to the Open Offer price, raising GBP280,000 at 1.1p per share on a post-Consolidation
basis. These Shares were admitted to trading on AIM on 21 May.
On 18 May 2018, the Company announced that John Treacy had joined the Board as a Non-Executive
Director, and that Non-Executive Directors Spencer Wilson and Daniel Maling have both stepped
down from the Board.
On 4 June 2018, following confirmation by Qualifying Shareholders of their wish to take up
the Basic Entitlements under the Open Offer without the anticipated Open Offer Warrants, 14,015,394
Shares at the Open Offer Price of 1.0p were issued, raising GBP140,153. These Shares were
admitted to trading on AIM on 5 June.
20. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
Auditors' Report
The comparative figures for the financial year ended 31 December
2017 are not the Company's statutory accounts for that financial
year but the consolidated accounts. Those accounts have been
reported on by the Company's auditors and delivered to the
registrar of companies. The report of the auditors was (i)
unqualified, (ii) did not give any reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under sections 498 (2) or (3) of the Companies Act 2006, relating
to the accounting records of the company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FKODKFBKKCAB
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June 27, 2018 04:17 ET (08:17 GMT)
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