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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Flying Brand | LSE:FBDU | London | Ordinary Share | JE00BD4H0R42 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.50 | 2.40 | 2.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
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.
Hot Features
Premium
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
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