TIDMDUKE
RNS Number : 0419F
Duke Royalty Limited
25 July 2016
25 July 2016
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Final Results for the year ended 31 March 2016
Update on Investment Pipeline
Duke Royalty (AIM: DUKE) announces its final results for the
year ended 31 March 2016 together with an update on its investment
pipeline.
Over the financial year, Duke Royalty generated a loss after
taxation of GBP4.0 million, comprised of GBP1.1 million of cash
items and GBP2.9 million of non-cash items (primarily reflecting
losses on disposals of investment interests from the previous
investment strategy).
During the period under review, Duke actively progressed its
royalty pipeline. The Company is currently evaluating six late
stage royalty opportunities with an aggregate value of
approximately GBP70 million, all of which are private businesses
with strong positive cash flow characteristics. Duke's overall
royalty pipeline has also been significantly expanded to date, with
over 25 royalty opportunities under varying stages of investigation
having an aggregate value of approximately GBP450 million.
The Company is also currently considering all options to raise
additional capital, either in the form of equity or debt, to
execute its investing policy and acquire a portfolio of long term,
stable, and diversified royalty streams.
Further information in regard to the investment pipeline can be
found in the Company's current investor presentation via the
following link:
http://www.dukeroyalty.com/our-investors/documentation/yr-2016.aspx
Notice of Annual General Meeting
The Company announces that its Annual General Meeting ("AGM")
will be held at Trafalgar Court, 4th Floor, West Wing, Admiral
Park, St Peter Port, Guernsey GY1 2JA on 1 September 2016 at 11:00
BST.
The full annual report and accounts, including the audit report
and the notice of the Company's AGM, will soon be posted to
applicable shareholders and will be available on the Company's
website: www.dukeroyalty.com
For further information:
Duke Royalty Limited
Neil Johnson
Charlie Cannon-Brookes
+44 (0) 1481 741 240
Peel Hunt LLP (Nominated Adviser)
Edward Knight
Jock Maxwell Macdonald
+44 (0)20 7418 8900
Buchanan (Financial PR)
Bobby Morse
Mark Court
Sophie Cowles
+44 (0)20 7466 500
About Duke Royalty
Headquartered in Guernsey, Duke Royalty Limited is a team of
experienced financial executives dedicated to providing royalty
financing solutions to a diversified number of well-managed
businesses in Europe and abroad. Duke Royalty intends to reinvent
the royalty financing model for European public markets by lowering
costs through an efficient structure and entering into exclusive
alliances that leverage deal flow and expertise. A $75 billion
sector in North America, Duke Royalty plans to bring royalty
investing to the European market by leveraging the management
team's North American experience and success with royalty
investing. These investments are intended to provide robust,
stable, and long-term returns for Duke Royalty's shareholders.
Duke Royalty is listed on the AIM market under the ticker DUKE.
For more information, visit www.dukeroyalty.com.
Report and Audited Financial Statements
For the year ended 31 March 2016
Chairman's Report
The financial year ending 31 March 2016 has been one of
substantial activity and change for the Company.
In June 2015, shareholders voted to change the Company's
investment policy to become the first UK quoted diversified royalty
investment company, at which time the Company changed its name to
Duke Royalty Limited and appointed a new and highly experienced
Board of Directors. Since then, the Company has announced an
exclusive collaboration with Oliver Wyman Limited ("Oliver Wyman"),
a division of a Fortune 250 company, in which Oliver Wyman has
agreed to provide Duke with deal origination and due diligence
services. Oliver Wyman has also provided two experienced royalty
experts to Duke's newly formed investment committee. In May and
September 2015, the Company closed two rounds of equity funding
securing GBP2.45m of new capital and in January 2016 appointed Peel
Hunt LLP as its Nomad and Broker.
As referenced in an announcement made by the Company on 7 March
2016, Duke has been actively progressing its royalty pipeline. In
that regard, I am pleased to announce that at the current time the
Company is evaluating six late stage royalty opportunities with an
aggregate value of approximately GBP70 million. All of these
businesses have strong positive cash flow characteristics.
Furthermore, the overall royalty pipeline has been significantly
expanded to date, with over 25 royalty opportunities at varying
stages of investigation which have an aggregate value of
approximately GBP450 million. Shareholders should be aware that the
process with each prospective investee company mentioned in this
statement remains subject to satisfactory diligence and funding,
are subject to execution risk and there is no certainty that these
royalty investment agreements will be entered into.
The Company is also currently considering its options to raise
additional capital, either in the form of equity or debt, to
execute its investing policy and acquire a portfolio of long term,
stable, and diversified royalty streams.
As the Company's inaugural royalty transactions draw nearer the
Board looks forward to providing shareholders with further updates
on what I hope will be a transformational year for the Company.
Nigel Birrell
Chairman
Directors
Mr Nigel Birrell (Chairman)
Nigel Birrell is a Non-Executive Director of the Company and
works with the Executive Directors on deal origination and
structuring. He has extensive public company experience and
expertise in the gaming, media and financial services sectors. Mr
Birrell is CEO of the Lottoland Group, a Gibraltar regulated fast
growing gaming group. He is also a Non-Executive Director of the
Gibraltar FSC regulated insurance group Southern Rock insurance
Limited and sits on its audit and remuneration committee and its
risk, compliance and investment committee.
Mr Birrell was until 2013 Group Director on the Executive Board
at bwin.party digital entertainment plc, a global on-line gaming
business, where he was responsible for all its mergers and
acquisitions, business development and managing its investment
portfolio. While at bwin.party Mr Birrell led the acquisitions of
Gamebookers, Empire On-line and IOG's casino operations, Cashcade,
the World Poker Tour and Orneon. He was instrumental in devising,
negotiating and transacting the merger between PartyGaming and Bwin
which, at the time, created the largest online gaming business in
history. He has also led all its disposals including Ongame's sale
to Amaya. Prior to bwin.party, Mr Birrell was a director of the
FTSE 250 media group HIT Entertainment plc. He also worked as an
investment banker with Donaldson, Lufkin & Jenrette and
Dresdner Kleinwort Benson.
Mr Birrell holds a LLB from the University of London (Queen Mary
College) and qualified as a solicitor of the Supreme Court.
Mr Neil Johnson
Neil Johnson is an Executive Director and Duke Royalty's Chief
Executive Officer with responsibility for the overall strategic
direction and performance of the Company. Working closely with the
other members of the Management team, Board members and the
Investment Committee, he leads all deal origination, due diligence
and structuring.
Mr Johnson has over 20 years of experience in investment
banking, merchant banking, and research analysis in both the
Canadian and UK capital markets. In 2012 he co-founded and became
Chief Executive Officer of Difference Capital Financial, a Canadian
publicly listed merchant bank. For the previous 19 years he worked
for Canaccord Genuity, first in Canada and later at the London
Office of Canaccord where he held the positions of Head of
Corporate Finance (Europe), Global Head of Technology, and a member
of the Global Executive Committee. Mr Johnson was instrumental in
the firm becoming authorised as a nominated adviser for AIM and
regulated in the UK and London Stock Exchange Main Market listings.
He spearheaded the firm's diversification into the technology
industry, and led Canaccord's initiative to attract North American
firms to list in London.
Mr Johnson is a graduate of the Richard Ivey School of Business
at the University of Western Ontario and holds the designation of
Chartered Financial Analyst Charterholder.
Mr Charles Cannon-Brookes
Charlie Cannon-Brookes is an Executive Director of the Company
and works alongside the CEO on deal origination, due diligence and
structuring. In addition, Mr Cannon-Brookes is Duke Royalty's
liaison with UK institutions / advisors and has oversight of Duke
Royalty's corporate governance policies and regulatory compliance
with AIM rules.
Mr Cannon-Brookes has over 15 years investment experience. He is
the Investment Director of FCA authorised and regulated Arlington
Group Asset Management Limited ("AGAM") having jointly acquired the
business in October 2004. Through AGAM, Mr Cannon-Brookes has been
active in a variety of different investment management mandates and
corporate finance transactions. In addition, he has successfully
led a number of IPO and RTO transactions on the London markets.
Prior to AGAM he worked for Arlington Group plc, an AIM quoted
investment company where he managed all of its public equity
portfolio. Mr Cannon-Brookes has also worked for Jupiter Asset
Management, ABN Amro and Barclays de Zoete Wedd.
He has extensive fund management experience and has advised and
sat on the board of a number of different funds, trusts and other
operating public companies.
Mr Cannon-Brookes holds a BA Hons in Economics & Politics
from the University of Exeter.
Mr Jim Ryan
Jim Ryan is a Non-Executive director of the Company and works
with the Executive Directors on deal origination and structuring.
He has extensive public company experience and expertise in the
gaming and technology sectors. Mr Ryan is Chairman of the Company's
audit committee.
Mr Ryan joined Pala Interactive, LLC in July 2013 as Chief
Executive Officer. Prior to joining Pala Interactive, LLC, Mr Ryan
served as a Co-Chief Executive Officer of bwin.party digital
entertainment plc from March, 2011 to January, 2013. Prior to the
merger of PartyGaming plc and bwin.party, he served as the Chief
Executive Officer of PartyGaming plc from May, 2008 to March, 2011.
He has also held executive positions with a number of online gaming
companies which include Chief Executive Officer of St. Minver
Limited, Chief Executive Officer of Excapsa Software Limited and
Chief Financial Officer of Cryptologic Software Limited. In
addition to his role of CEO and director of Pala Interactive, LLC,
Mr Ryan also currently is a director of Gaming Realms plc.
Mr Ryan holds a degree in business from the Goodman School of
Business at Brock University and is a Chartered Accountant and a
Chartered Professional Accountant (Chartered Professional
Accountants of Canada).
Mr Mark Le Tissier
Mark Le Tissier is a Non-Executive Director of the Company. He
is responsible for the oversight of the Company's corporate
obligations in Guernsey.
Mr. Le Tissier is the European Regional Director of Trident
Trust with oversight over five offices, as well as the Managing
Director of Trident Trust Company (Guernsey) Limited and has worked
for Trident for over twenty years. He has extensive board-level
experience and has an in-depth knowledge of Guernsey and other
jurisdictions' corporate and investment regulations. Mr. Le Tissier
is a Trust & Estate Practitioner who has also completed the IOD
Programme in company direction and is resident in Guernsey.
Directors' Report
The Directors present their Annual Report and the Audited
Consolidated Financial Statements of the Group for the year ended
31 March 2016.
Status and activity
The Company is an investment holding company incorporated on 22
February 2012 with limited liability in Guernsey under the
Companies (Guernsey) Law, 2008.
The Company's shares were admitted to trading on the London
Stock Exchange's Alternative Investment Market ("AIM") on 9 July
2012. The Company on 16 June 2015 undertook a share consolidation
of 1 new ordinary share of no par value in the Company for every 20
existing ordinary shares of no par value in the Company. As a
result of the share consolidation the Company had a total of
6,794,126 New Ordinary Shares which were admitted for trading on
AIM on 17 June 2015. The Subscription Shares, of which there were
23,205,393 quoted on AIM, were cancelled from trading on AIM with
effect from 26 June 2015. The Company also cancelled its unlisted
warrants during the year. During the year the Company issued a
further 750,000 Ordinary Shares as share based payments amounting
to GBP400,000 and 333,333 Ordinary Shares to new investors raising
GBP200,000 in additional working capital. The number of shares in
issue as at 31 March 2016 was 7,877,459.
The Company's initial investment objective was to build a
focused natural resource investment vehicle in order to generate
positive returns to shareholders. As detailed in the Investment
Policy section on page 2 following the result of the EGM on 16 June
2015 the Company's Articles of Incorporation and Investment Policy
were changed to that of investment in a diversified portfolio of
royalty finance and related opportunities.
Results and dividends
The Company's performance during the year is discussed in the
Chairman's Report on pages 2 and 3. The results for the year are
set out in the Consolidated Statement of Comprehensive Income on
page 15. The Directors do not recommend the payment of a dividend
for the year ended 31 March 2016 (2015: GBPnil)
At the year end the net assets attributable to the ordinary
shareholders were GBP2,070,315 (2015: GBP3,136,344) and the net
asset value per Ordinary Share was 27 pence (2015: 137 pence).
Prior year net asset value per Ordinary Share has been adjusted to
reflect the share consolidation on 16 June 2015.
Taxation
The Company has been granted exemption from Guernsey taxation
and is charged an annual exemption fee of GBP1,200. The Directors
intend to conduct the Company's affairs such that it continues to
remain eligible for exemption from Guernsey tax.
Shareholder information
Up to date information regarding the Company, including its net
asset value, can be found on the Company's website, which is
www.dukeroyalty.com.
Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report
and the Consolidated Financial Statements in accordance with
applicable law and regulations.
Company law allows the Directors to prepare Consolidated
Financial Statements for each financial year. Under that law the
Directors have elected to prepare the Consolidated Financial
Statements in accordance with International Financial Reporting
Standards ("IFRS").
The Directors are permitted by the Companies (Guernsey) Law,
2008 to prepare Consolidated Financial Statements for each
financial period which gives a true and fair view of the state of
affairs of the Group and of the surplus or deficit of the Group for
that period.
In preparing those Consolidated 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 Consolidated Financial Statements; and
-- prepare the Consolidated Financial Statements on a going
concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the Consolidated Financial
Statements.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the Financial Statements comply with the Companies (Guernsey) Law,
2008. The Directors 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 and other
irregularities.
The Directors who held office at the date of approval of this
report confirm that, so far as each of the Directors is aware,
there is no relevant audit information of which the Company's
auditor is unaware, having taken all the steps the Directors ought
to have taken to make themselves aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
Directors
The Directors of the Company, who served during the year, and
subsequently, are shown below:
Director Appointed Resigned
----------------------- ----------- ---------
Nigel Birrell 16 June -
2015
Charles Cannon-Brookes 16 June -
2015
Kaare Foy 9 June 16 June
2014 2015
Neil Johnson 16 June -
2015
Robert King 16 October 3 March
2006 2016
James Ryan 16 June -
2015
Nathan Steinberg 9 June 16 June
2014 2015
Mark Le Tissier 4 March -
2016
----------------------- ----------- ---------
The Directors held the following interest in the share capital
of the Company either directly or beneficially.
Ordinary Ordinary
Shares Shares
Director 2016 2015 *
------------------ --------- ---------
N Johnson 910,000 400,000
C Cannon-Brookes 453,517 148,517
N Birrell 400,000 400,000
J Ryan 400,000 400,000
M Le Tissier - -
------------------ --------- ---------
* The number of Ordinary Shares held in the previous year has
been adjusted to reflect the share consolidation.
The Directors who served in the year received the following
remuneration during the year:
Director Entitlement 2016 2015
per annum GBP GBP
-------------------- ------------ -------- -------
R King ^^^ 27,500 25,208 20,000
K Foy ^ - - 5,000
N Steinberg ^ - - 10,000
R Lockwood ^^ - - 20,750
M Hohnen ^^ - - 20,750
N Johnson ^^^^ 100,000 81,167 -
C Cannon-Brookes
^^^^ 70,000 55,377 -
N Birrell* ^^^^ 24,000 18,921 -
J Ryan ^^^^ 24,000 18,921 -
M Le Tissier^^^^^ _ _ _
Total remuneration 199,594 76,500
-------------------- ------------ -------- -------
* Chairman.
^ Mr Foy and Mr Steinberg were appointed to the Board on 9 June
2014 and resigned on 16 June 2015.
^^ Mr Lockwood and Mr Hohnen retired from the Board on 9 June
2014.
^^^ Mr King resigned from the Board on 3 March 2016.
^^^^ Mr Johnson, Mr Cannon-Brookes, Mr Birrell and Mr Ryan were
appointed to the Board on 16 June 2015.
^^^^^ Mr Le Tissier was appointed to the Board on 4 March
2016.
Directors' authority to buy back shares
A shareholder resolution, which took effect upon Admission to
AIM, has been passed granting the Board authority to make market
purchases of up to 14.99 per cent of the Ordinary Shares and 14.99
per cent of the Subscription Shares in issue during any twelve
month period. Any repurchase of Ordinary Shares or Subscription
Shares will be made in accordance with the Articles of Association
of the Company and the Companies (Guernsey) Law, 2008, as amended,
and within guidelines established from time to time by the Board
and will be at the absolute discretion of the Board, and not at the
option of the Shareholders.
This authority will lapse on the date of the Company's next
annual general meeting. Subject to Shareholder authority for
proposed repurchases, general purchases of up to 14.99 per cent of
the Ordinary Shares in issue and up to 14.99 per cent of the
Subscription Shares in issue will only be made through the
market.
The minimum price (exclusive of expenses) which may be paid for
an Ordinary Share or a Subscription Share is GBP0.01 per share and
the maximum price (exclusive of expenses) which may be paid for an
Ordinary Share or a Subscription Share shall be not more than five
per cent above the average of the middle market quotation for the
Ordinary Shares or the Subscription Shares (as appropriate) for the
five business days before the purchase is made.
Any repurchase by the Company of 15 per cent or more of any
class of its shares (excluding shares of that class held in
treasury) will be effected by way of a tender offer to all
Shareholders of that class.
When Ordinary Shares trade at a substantial discount to the NAV
per Ordinary Share and do not coincide with trading volumes in the
market, the Directors may feel that it is appropriate to make such
purchases.
Shareholders' significant interests
The following shareholders had a substantial interest either
directly or beneficially of 3% or more of the Company's issued
share capital as at 31 March 2016.
Ordinary % of the
shares Ordinary
Shareholder/ Nominee Account held Share capital
Neil Johnson 910,000 11.55%
Artemis Investment Management
Plc 455,543 5.78%
Jim Ryan 400,000 5.08%
Nigel Birrell 400,000 5.08%
Richard Lockwood 383,550 4.87%
Justin Cochrane 315,000 4.00%
Arlington Group Asset Management
Limited* 295,000 3.74%
Malcolm Burne 260,116 3.43%
APAC Resources Limited 260,911 3.31%
Ravenscroft Ltd 250,000 3.17%
* Mr. Cannon Brookes is a director of Arlington Group Asset
Management Limited and holds 50 per cent. of the voting shares of
Arlington.
Relations with Shareholders
The Directors place a great deal of importance on communication
with shareholders. The Annual Report and Consolidated Financial
Statements are widely distributed to other parties who have an
interest in the Company's performance. Shareholders and investors
may obtain up to date information on the Company through the
Company's website.
The Notice of the Annual General Meeting included within the
Annual Report and Consolidated Financial Statements is sent out 20
working days in advance of the meeting. All shareholders have the
opportunity to put questions to the Board, either formally at the
Company's Annual General Meeting or at the subsequent buffet
luncheon for shareholders. The Company Secretary and
representatives from Arlington Group Asset Management Limited and
Abingdon Capital Corporation are available to answer general
queries.
Corporate governance
The Board of Directors is responsible for the corporate
governance of the Company. As a Guernsey incorporated company and
under the AIM rules for companies, the Company is not required to
comply with The UK Corporate Governance Code published by the
Financial Reporting Council ("UK Code"). However, the Directors
place a high degree of importance on ensuring that high standards
of Corporate Governance are maintained and as such the Company is
committed to complying with the corporate governance obligations
appropriate to the Company's size and nature of business. The
Company does not, nor does it intend to, adopt the UK Code.
As a Guernsey incorporated company, the Company is required to
comply with the Finance Sector Code of Corporate Governance issued
by the Guernsey Financial Services Commission ("GFSC Code")
introduced on 1 January 2012. During the year the Board has
continued the process of reviewing the elements of the GFSC Code
that it deems to be practical and relevant to a Company of this
size and nature.
The Directors continue to review and assess the most appropriate
Corporate Governance processes, while at all times maintaining high
standards of, and generally accepted best practices of, Corporate
Governance.
The Board
The Board, whose membership, and where relevant independence, is
disclosed above, meets at least four times a year. Between the
formal meetings there was regular contact with the Advisory and
Execution Team/Support Services Providers, the Company Secretary
and the Investment Committee. The Directors are kept fully informed
of investment and financial controls, and other matters that are
relevant to the business of the Company and should be brought to
the attention of the Directors. The Directors also have access to
the Administrator and, where necessary in the furtherance of their
duties, to independent professional advice at the expense of the
Company. The Board is responsible for the appointment and
monitoring of all service providers to the Company.
The Board has engaged specific individuals and external
companies to undertake the investment management, administrative
and custodial activities of the Company. Clear documented
contractual arrangements are in place with these individuals and
firms, which define the areas where the Board has delegated
responsibility to them.
It remains the responsibility of the Board to assess whether the
outsourced activities are being performed adequately, to ensure
that the Company has adequate resources and to establish
procedures, including compliance plans, to be able to monitor the
performance of third parties performing the outsourced activities.
The Directors believe that the Board has a balance of skills and
experience which enables it to perform these assessments, to
provide effective strategic leadership and proper governance of the
Company. The Board has considered non-financial areas of risk such
as disaster recovery and staffing levels within service providers
and considers adequate arrangements to be in place.
At the quarterly Board Meetings going forward the Board will
meet regularly with the Investment Committee to review strategy and
deal flows.
The Company maintains insurance in respect of directors' and
officers' liability in relation to their acts on behalf of the
Company. Suitable insurance is in place and has been renewed for
the period until 24 June 2016.
As part of the restructuring, Nathan Steinberg and Kaare Foy
both resigned with effect from 16 June 2015 and Neil Johnson,
Charles Cannon-Brookes, Nigel Birrell and James Ryan joined the
Board on 16 June 2015. Rob King resigned with effect from 3 March
2016 and Mark Le Tissier joined the Board on 4 March 2016.
Audit Committee
An Audit Committee had been established with written terms of
reference and comprised of all of the Board members until 16 June
2015. The Audit Committee members had recent and relevant financial
experience. The terms of reference of the Audit Committee were
reviewed and re-assessed for their adequacy on an annual basis. The
Audit Committee was disbanded following restructuring and was
re-established commencing 27 July 2015 and comprises all board
members and is chaired by James Ryan.
Role of the Audit Committee
A summary of the Committee's main audit review functions is
shown below:
-- to review the half year and annual results;
-- to review the contract with the key advisers;
-- to review and monitor the effectiveness of the internal
control systems and risk management systems on which the Group is
reliant;
-- to review and monitor the effectiveness of the Company's
other third party service providers;
-- overseeing the Company's relationship with the external
auditor, BDO Limited, and to review their proposed audit programme
of work and their findings;
-- approval of the remuneration and terms of engagement of the external auditor;
-- to develop and implement policy on the engagement of the
external auditor to supply non-audit services; and
-- to monitor and review annually the external auditor's
independence, objectivity, effectiveness, resources and
qualification.
Annual Report and Financial Statements
The Board of Directors are responsible for preparing the Annual
Report and Financial Statements. The Audit Committee advises the
Board on the form and content of the Annual Report and Financial
Statements, any issues which may arise and any specific areas which
require judgement.
Internal control and financial reporting
The Board is responsible for establishing and maintaining the
Group's system of internal controls. Internal control systems are
designed to meet the specific needs of the Group and the risks to
which it is exposed, and, by their very nature, provide reasonable,
but not absolute, assurance against material misstatement or
loss.
The key components designed to provide effective internal
control are outlined below:
-- R&H Fund Services (Guernsey) Limited ("R&H") was
responsible for the provision of administration and company
secretarial duties for the period under review;
-- The duties of investment management, accounting and the
custody of assets are segregated. The procedures are designed to
complement one another;
-- The Audit Committee clearly defines the duties and
responsibilities of the Group's agents and advisers in the terms of
their contracts; and
-- The Board reviews financial information and compliance
reports produced by the Administrator on a regular basis.
The Audit Committee reviews the Group's risk management and
internal control systems quarterly and believes that the controls
are satisfactory, given the size and nature of the Group.
Anti-bribery and corruption
The Board acknowledges that the Group's international operations
may give rise to possible claims of bribery and corruption. In
consideration of the UK Bribery Act the Board reviews the perceived
risks to the Group arising from bribery and corruption to identify
aspects of the business which may be improved to mitigate such
risk. The Board has adopted a zero tolerance policy toward bribery
and has reiterated its commitment to carry out business fairly,
honestly and openly.
Financial risk profile
The Group's main financial instruments comprise investments and
cash. The main purpose of these instruments is the investment of
Shareholders' funds. The most significant risks that these
instruments are subject to are discussed in note 18 to the
Consolidated Financial Statements.
Environment
The Group seeks to conduct its affairs responsibly and
environmental factors are, where appropriate, taken into
consideration with regard to investment decisions taken on behalf
of the Company.
Going Concern
After making all reasonable enquires the Directors believe that
it is appropriate to continue to adopt the going concern basis in
preparing the Consolidated Financial Statements as the Company has
adequate financial resources to continue in operational existence
for the foreseeable future. No financial commitments will be made
until further capital has been raised by the Company.
Independent Auditor
The auditor, BDO Limited, has indicated its willingness to
continue in office. Accordingly, a resolution for its reappointment
will be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors on 22 July 2016 and signed on
behalf of the Board by:
Nigel Birrell Mark Le Tissier
Director Director
Independent Auditor's Report to the Members of Duke Royalty
Limited
We have audited the consolidated financial statements of Duke
Royalty Limited for the year ended 31 March 2016 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of
Financial Position, the Consolidated Statement of Cash Flows and
the related notes 1 to 20. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards as endorsed by the
European Union (IFRS).
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work is undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of the directors and auditor
As explained more fully in the Directors' Responsibilities
Statement within the Directors' Report, the directors are
responsible for the preparation of the consolidated 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
consolidated financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the 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 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 misstatements or inconsistencies we
consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2016 and of the group's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the parent company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
CHARTERED ACCOUNTANTS
Place du Pré
Rue du Pré
St Peter Port
Guernsey
22 July 2016
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2016
Year ended Year ended
31 March 2016 31 March 2015
Notes GBP GBP
Income
Net capital loss on financial assets at fair value through profit or loss 4 (2,402,040) (6,059,722)
Investment income 4 - 8,085
Net investment losses 4 (2,402,040) (6,051,637)
--------------- ---------------
Expenses
Support services administration fees 5a (692,333) (290,000)
Directors' fees 16 (255,252) (76,500)
Restructuring costs (137,569) -
Consultancy fees (101,139) -
Directors' expenses 16 (63,439) (2,085)
Investment advisory committee fees 16 (44,425) -
Administration fees 5b (36,000) (60,547)
Marketing costs (33,029) -
Audit fees (32,250) (13,667)
Other expenses 6 (30,876) (31,178)
Broker fees 5d (26,055) (20,000)
Nomad fees 5e (17,773) (26,922)
Registrar fees 5f (17,604) (5,500)
Custodian fees 5c (4,121) (5,292)
Foreign currency loss (291) (358)
Advisory and execution team fees 16 - (120,645)
Legal and professional fees - (16,102)
Total expenses (1,492,156) (668,796)
--------------- ---------------
Operating loss (3,894,196) (6,720,433)
Finance income 646 185
Finance costs 14 (153,066) (207,121)
Loss for the financial year (4,046,616) (6,927,369)
Other comprehensive income - -
--------------- ---------------
Total comprehensive expense for the year (4,046,616) (6,927,369)
=============== ===============
Basic and diluted deficit per share (pence) (restated) 8 (0.65) (3.03)
=============== ===============
All activities derive from continuing operations. All income is
attributable to the holders of the Ordinary Shares of the
Company.
The notes form an integral part of these Consolidated Financial
Statements
Consolidated Statement of Changes in Equity
For the year ended 31 March 2016
Shares Warrants Share Option
Issued Issued Treasury Shares Retained Earnings Reserve Total Equity
GBP GBP GBP GBP GBP GBP
At 1 April 2015 24,208,640 72,454 - (21,144,750) - 3,136,344
Total
comprehensive
expense for the
year - - - (4,046,616) - (4,046,616)
Transactions with
owners
Shares issued
- Share based
payments 400,000 - - - - 400,000
- Issued for cash 2,456,175 - - - - 2,456,175
Share options - - - - 124,412 124,412
Total transactions
with owners 2,856,175 - - - 124,412 2,980,587
----------- --------- ---------------- ------------------ ------------------ -------------
At 31 March 2016 27,064,815 72,454 - (25,191,366) 124,412 2,070,315
=========== ========= ================ ================== ================== =============
At 1 April 2014 24,677,936 72,454 (310,655) (14,217,381) - 10,222,354
Total
comprehensive
expense for the
year - - - (6,927,369) - (6,927,369)
Transactions with
owners
Shares issued
- Share based
payments 470,000 - - - - 470,000
Shares bought back
and cancelled (939,296) - - - - (939,296)
Treasury shares
cancelled - - 310,655 - - 310,655
Total transactions
with owners (469,296) - 310,655 - - (158,641)
----------- --------- ---------------- ------------------ ------------------ -------------
At 31 March 2015 24,208,640 72,454 - (21,144,750) - 3,136,344
=========== ========= ================ ================== ================== =============
The notes on pages 20 to 43 form an integral part of these
Consolidated Financial Statements
Consolidated Statement of Financial Position
As at 31 March 2016
31 March 2016 31 March 2015
Notes GBP GBP
ASSETS
Non-Current Assets
Investments at fair value through profit or loss 4 - 4,083,733
Total non-current assets - 4,083,733
Current Assets
Trade and other receivables 13 519,737 7,280
Cash and cash equivalents 1,625,749 517,597
Restricted cash - 257,080
Total current assets 2,145,486 781,957
Total Assets 2,145,486 4,865,690
============== ==============
EQUITY AND LIABILITIES
Equity
Shares issued 10 27,064,815 24,208,640
Warrants issued 10/14 72,454 72,454
Share options 10/11 124,412 -
Retained earnings (25,191,366) (21,144,750)
Total Equity 2,070,315 3,136,344
Liabilities
Non-Current Liabilities
Loan payable 14 - 1,688,133
------------- -------------
Total non-current liabilities - 1,688,133
Current Liabilities
Trade and other payables 15 75,171 41,213
Total current liabilities 75,171 41,213
Total Equity and Liabilities 2,145,486 4,865,690
============= =============
Net asset value per Ordinary Share (excluding
shares held in Treasury) (Restated) 17 0.27 1.37
----- -----
The Consolidated Financial Statements were approved and
authorised for issue by the Board of Directors on 22 July 2016 and
were signed on its behalf by:
Nigel Birrell Mark Le Tissier
Director Director
The notes form an integral part of these Consolidated Financial
Statements.
Consolidated Statement of Cash Flows
For the year ended 31 March 2016
Year ended Year ended
31 March 2016 31 March 2015
Notes GBP GBP
Cash flows from operating activities
Purchase of investments 4 - (431,337)
Proceeds from sale of investments 4 1,165,158 1,101,514
Interest and investment income 646 8,270
Operating expenses paid (929,708) (319,943)
Net cash inflow from operating activities 236,096 358,504
Cash flows from financing activities
Proceeds from issue of shares 10 2,456,175 -
Share buybacks 10 - (628,641)
Repayment of loan 14 (1,688,133) -
Finance costs paid (153,066) -
Escrow payments under loan agreement 257,080 (257,080)
Net cash inflow/(outflow) from financing activities 872,056 (885,721)
Net change in cash and cash equivalents 1,108,152 (527,217)
Cash and cash equivalents at beginning of year 517,597 1,044,814
Cash and cash equivalents at end of year 1,625,749 517,597
=============== ===============
The notes form an integral part of these Consolidated Financial
Statements.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2016
1. GENERAL INFORMATION
Duke Royalty Limited (the "Company") is a closed-ended
investment company with limited liability formed under the
Companies (Guernsey) Law, 2008. The Company was incorporated in
Guernsey on 22 February 2012 and its shares were admitted to
trading on the London Stock Exchange's AIM on 9 July 2012. The
Company's registered office is shown on page 44.
Following the results of an Extraordinary Meeting (the "EGM")
held on 16 June 2015 the Company changed its name to Duke Royalty
Limited. At the same EGM the Company changed its Investment Policy
and Articles of Incorporation.
The Company's initial investment objective was to build a
focused natural resource investment vehicle in order to generate
positive returns to shareholders. As detailed in the investment
policy on page 2 following the result of the EGM on 16 June 2015
the Company's Articles of Incorporation and Investment Policy were
changed to that of investment in a diversified portfolio of royalty
finance and related opportunities.
The Company's shares are traded on AIM, a market operated by the
London Stock Exchange.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The Consolidated Financial Statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") to the extent that they have been adopted by the
European Union, and reflect the following policies, which have been
adopted and applied consistently.
b) Basis of consolidation
Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
The "Group" is defined as the Company and its former
subsidiaries Praetorian Portfolio Holding L.P., Praetorian
Resources (GP) Limited and Praetorian ZDP Limited. During the year
the assets and liabilities of the subsidiaries were transferred to
the Company and the remaining subsidiaries were put into member's
voluntary liquidation on 23 October 2015.
As at 31 March 2016 the Company no longer has any subsidiaries,
however in accordance with IFRS 10 the Company has prepared
consolidated financial statements of the Group for the year.
(c) New and amended standards and interpretations
The accounting policies adopted in the year are consistent with
those of the previous financial period, with the exception of new
standards that have become effective during the year. Although
there were a number of new standards and interpretations that apply
for the first time for this year end, none of these had any
significant impact on the Consolidated Financial Statements.
At the date of authorisation of these Consolidated Financial
Statements, the following standards and interpretations, which will
become relevant to the Group but have not been applied in these
Consolidated Financial Statements, were in issue but not yet
effective:
IFRS 9, "Financial Instruments - Classification and Measurement"
(effective 1 January 2018 as set by IASB).
IFRS 7, Financial Instruments Disclosures - Amendments regarding
initial application of IFRS 9* - effective for when IFRS 9 is
applied.
IFRS 15, Revenue from contracts with customers - effective for
periods commencing on or after 1 January 2017.*
*still to be endorsed by the EU.
These standards will be adopted by the Group when they become
effective. The Directors anticipate that, with the exception of
IFRS 9, the adoption of these standards and interpretations in
future periods will not have a material impact on the Consolidated
Financial Statements of the Group.
Following the restructure and change in objective the Board are
undertaking a full review of the impact of IFRS, including those
standards not yet effective.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
(d) Foreign currency
Items included in the Consolidated Financial Statements of the
Group are measured using the currency of the primary economic
environment in which the entity operated ("the functional
currency"). The Consolidated Financial Statements are presented in
Pounds Sterling (GBP), which is the Group's functional and
presentation currency.
Transactions in currencies other than Sterling are translated at
the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the date of the Consolidated Statement of Financial Position are
retranslated into Sterling at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the Consolidated Statement of Comprehensive
Income.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
rate of exchange at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated into Sterling at foreign
exchange rates ruling at the dates the fair value was
determined.
(e) Financial instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument. Financial
assets and financial liabilities are only offset and the net amount
reported in the Consolidated Statement of Financial Position and
Consolidated Statement of Comprehensive Income when there is a
currently enforceable legal right to offset the recognised amounts
and the Group intends to settle on a net basis or realise the asset
and liability simultaneously.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics. All financial assets are initially
recognised at fair value. All purchases of financial assets are
recorded at trade date, being the date on which the Group became
party to the contractual requirements of the financial assets. The
Group has not classified any of its financial assets as Held to
Maturity or as Available for Sale. The Group's financial assets
comprise loans and receivables and investments held at fair value
through profit or loss.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
principally comprise other receivables and cash and cash
equivalents. They are initially recognised at fair value on
acquisition, and subsequently carried at amortised cost using the
effective interest rate method, less provisions for impairment. The
effect of discounting on these financial instruments is not
considered to be material.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments with an
original maturity of three months or less that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Restricted cash
Restricted cash comprised of the Escrow account and does not
form part of Cash or Cash Equivalents.
Financial assets at fair value
Classification
The Group classifies its investments as "financial assets at
fair value". These financial assets are designated by the Group at
fair value through profit or loss at inception.
Recognition
Purchases and sales of investments are recognised on the trade
date, the date on which the Group commits to purchase or sell the
investment.
Measurement
Financial assets at fair value are initially recognised at cost,
being the fair value of consideration given. Subsequent to initial
recognition, all financial assets at fair value through profit or
loss are measured at fair value. Gains and losses arising from
changes in the fair value of the 'financial assets at fair value'
category are presented in the Statement of Comprehensive Income in
the period in which they arise.
Fair value estimation
Marketable (Listed) Securities - where an active market exists
for the securities, the value is stated at the bid price on the
last trading day in the period. Marketability discounts are not
applied unless there is some contractual, governmental or other
legally enforceable restriction preventing realisation at the
reporting date.
Unlisted Investments - are carried at such fair value as the
Directors consider appropriate given the performance of each
investee company and after considering the financial position of
the entity, latest news and developments.
Fair value hierarchy
IFRS 13 requires disclosure of fair value measurements by level
of the following fair value hierarchy.
Level 1 - inputs are quoted prices (unadjusted) in active
markets for identical assets and liabilities that the entity can
readily observe.
Level 2 - inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset, either directly
or indirectly.
Level 3 - inputs that are not based on observable market date
(unobservable inputs).
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised either
(i) when the Group has transferred substantially all the risks and
rewards of ownership; or (ii) when it has neither transferred nor
retained substantially all the risks and rewards and when it no
longer has control over the assets or a portion of the asset; or
(iii) when the contractual right to receive cash flow has expired.
Any gain or loss on derecognition is taken to the Consolidated
Statement of Comprehensive Income as appropriate.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All financial liabilities are initially recognised at fair
value. All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of any financial
liability measured at amortised cost.
Financial liabilities measured at amortised cost
These include loans and borrowings, payables and other
short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost using the
effective interest rate method.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Capital
Financial instruments issued by the Group are treated as equity
if the holder has only a residual interest in the assets of the
Group after the deduction of all liabilities. The Company's
Ordinary Shares and Warrants are classified as equity
instruments.
The Group considers its capital to comprise its Ordinary Share
Capital, Warrants and retained earnings.
Equity instruments
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction from proceeds.
Where the Company purchases its own share capital, the
consideration paid, which includes any directly attributable costs,
is recognised as a deduction from equity shareholders' funds
through the Company's reserves. If such shares are subsequently
sold or re-issued to the market, any consideration received, net of
any directly attributable incremental transactions costs, is
recognised as an increase in equity shareholders' funds through the
Share Capital account.
(f) Income
Interest income is recognised on a time apportioned basis using
the effective interest method. Investment income is recognised on
an accrual basis in the Consolidated Statement of Comprehensive
Income.
(g) Expenses
Expenses are accounted for on an accrual basis.
(h) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Group's performance and to allocate resources is the total
return on the Group's net asset value, as calculated under IFRS,
and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in these
Financial Statements.
For management purposes, due to the Company's restructure and
change in investment policy, the Company is now focused on one main
operating segment, which is to investment in a diversified
portfolio of royalty finance and related opportunities. At the year
end the Company has no investments into this segment and has
derived no income from it. All of the Group's income was derived
from its previous investment policy and main operating segment
which was to invest in natural resources stocks, which are located
in various jurisdictions. Due to the Group's nature it has no
customers.
(i) Share based payments
The Group operates an equity settled Share Option Plan for its
directors and key advisers. As the shares issued vest immediately
the Group recognises the full expense within the Statement of
Comprehensive Income with the corresponding amount recognised in a
share option reserve. The key inputs into the model are disclosed
in note 11.
The group also settles a portion of expenses by way of share
based payments, these expenses are settled based on the fair value
of the service received as an expense with the corresponding amount
increasing equity.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Consolidated Financial Statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies
and the reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision
affects only that period, or in the period of revision and future
periods, if the revision affects both current and future
periods.
Fair value of unlisted investments
In the process of applying the Group's accounting policies,
management has made the following judgements, which had the most
significant effects on the amounts recognised in the Consolidated
Financial Statements:
The Group uses valuation techniques that include inputs that are
not based on the observable market data to estimate the fair value
its unlisted investments. Significant judgement has been applied by
the directors when valuing these investments.
For one investment the directors have applied a full discount to
unaudited NAV of US$ 484,455. In forming this conclusion, the
Directors have taken into account all available information
including; the NAV includes significant projects that have not been
valued since 2011, the decline in the market since the latest
audited NAV values of 2012, Projects not being able to be realised
despite efforts to secure sales, the illiquidity of the investment
and restriction over sale from the debenture holder. In addition
the projects are not income generating and there is a significant
interest payable on the loan.
Two of the Company's other unlisted investments were listed on
the Toronto Stock exchange until 17 September 2014 and 25 September
2015 respectively after which the investments were suspended. The
final investment is an unlisted warrant that after using the Black
Scholes valuation method is carried at nil value. The directors
have applied a 100% discount to the latest traded prices of both
investments. The last traded price of the holdings were GBP176,652
and GBP50,970 respectively.
The Directors believe that the applied valuation techniques and
assumptions used are appropriate in determining the fair value of
unlisted investments. Further details are provided in Note 4.
Fair value of share options
In applying the Group's accounting policies, management has made
judgements in respect of volatility, dividend yield and estimated
exercise date which are not based on observable data. See note 11
for details of inputs used in which the Directors believe to be
appropriate.
4. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
For the year ended 31 March 2016 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Opening Cost 17,631,398 82,119 3,094,348 20,807,865
Cost change 161,355 - - 161,355
Transfer to level 3 (1,470,445) - 1,470,445 -
Disposals proceeds (1,599,574) (82,119) - (1,681,693)
Net realised loss on disposal of investments (14,722,734) - - (14,722,734)
------------- --------- ------------ -------------
Closing portfolio cost - - 4,564,793 4,564,793
Net accumulated unrealised loss on investments (4,564,793) (4,564,793)
Closing valuation - - - -
============= ========= ============ =============
Movement in net unrealised gain/(loss) on investments 13,877,198 2,267 (1,558,771) 12,320,694
Net realised loss on disposal of investments (14,722,734) - - (14,722,734)
------------- --------- ------------ -------------
Net capital (loss)/gain on fair value of financial assets
designated at fair value through
profit or loss (845,536) 2,267 (1,558,771) (2,402,040)
Investment income - - - -
------------- --------- ------------ -------------
Total (losses)/gains on financial assets at fair value
through profit or loss (845,536) 2,267 (1,558,771) (2,402,040)
============= ========= ============ =============
For the year ended 31 March 2015 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Opening Cost 21,235,890 108,679 339,499 21,684,068
Transfer to level 3 (2,754,849) - 2,754,849 -
Additions at cost 321,845 109,492 - 431,337
Disposals proceeds (929,562) (171,952) - (1,101,514)
Net realised (loss)/gain on disposal of investments (241,926) 35,900 - (206,026)
------------- ---------- ------------ -------------
Closing portfolio cost 17,631,398 82,119 3,094,348 20,807,865
Net accumulated unrealised loss on investments (13,715,843) (2,267) (3,006,022) (16,724,132)
Closing valuation 3,915,555 79,852 88,326 4,083,733
============= ========== ============ =============
Movement in net unrealised loss on investments (2,380,770) (487,248) (2,985,678) (5,853,696)
Net realised (loss)/gain on disposal of investments (241,926) 35,900 - (206,026)
------------- ---------- ------------ -------------
Net capital loss on fair value of financial assets
designated at fair value through profit
or loss (2,622,696) (451,348) (2,985,678) (6,059,722)
Investment income 8,085 - - 8,085
------------- ---------- ------------ -------------
Total losses on financial assets at fair value through
profit or loss (2,614,611) (451,348) (2,985,678) (6,051,637)
============= ========== ============ =============
Financial assets designated at fair value through profit or loss
("financial assets"), are analysed by using a fair value hierarchy
that reflects the significance of inputs. Valuation techniques used
in the determination of fair values, including the key inputs used,
are as follows:
Fair value hierarchy level Valuation techniques
Level 1 Fair value is the quoted price.
Level 2 In the prior year, the debenture was valued based on a
precedent transaction in the prior year on the same investment for
the same debenture. The level 2 investment was sold during the year
under review.
Level 3 The fair value of investments in the three unlisted
entities is derived by applying a discount rate, as deemed
appropriate by the Board.
The significant unobservable input used in arriving at the fair
value is the discount rate applied by the Board. The discount rate
used is the best estimate of the measure of the impact of the
illiquid nature of the investments together with the certain issues
each investment is facing.
If the discount rates used in the valuation of financial assets
classified as Level 3 under the fair value hierarchy were to
decrease by 10%, with all other variables held constant, the NAV
would have increased by GBP17,584 (2015: GBP17,003) being 0.82%
(2015: 0.35%).
For financial instruments that are recognised at fair value on a
recurring basis, the Board determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period.
During the year to 31 March 2016 there was a transfer from Level
1 to Level 3. The investment was previously listed with quoted
prices on an active market. At the year end the investments did not
have an active market and were therefore valued by the Board using
the Company's valuation policy for unquoted investments. This
change caused the Company to reclassify the investments from Level
1 to Level 3.
5. MATERIAL AGREEMENTS
(a) Support services
A Support Service Agreement with Abingdon Capital Corporation
("Abingdon") was signed on 16 June 2015. The services to be
provided by Abingdon include global deal origination, vertical
partner relationships and on-going investment management, including
preparation of investment reports, performance data and compliance
with the Company's investing policy. Abingdon is entitled to an
annual service fee of GBP120,000 annually from 16 June 2015, this
annual fee increased to GBP280,000 per annum with effective from 23
October 2015. In addition to the Service Fee, Abingdon shall have
the right from time to time to be issued and allotted up to
1,500,000 ordinary shares of no par value in the Company following
the conditions noted below.
-- each time an investment originating from Abingdon is
completed, Abingdon shall be entitled to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 5% x A/B
-- to the extent that an investment does not originate from
Abingdon but Abingdon assists the Company in the negotiation and
completion of such investment, Abingdon shall be entitled, upon
completion of such Investment, to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 2.5% x A/B.
For the purposes of the calculation "A" is the gross value of
the investment and "B" is either: (i) if the Investment is financed
(in whole or in part) through an offering of ordinary shares of no
par value in the capital of the Company, the price per share at
which such ordinary shares are offered, or (ii) if the Investment
is financed by any other means, the weighted average closing price
on AIM of the ordinary shares for the 20 Business Days immediately
preceding the completion of the Investment. As there have been no
investments during the year the clause has had no impact on this
year's financial statements.
The total charge to the Consolidated Statement of Comprehensive
Income for Abingdon was GBP168,853 (2015: GBPnil). There were no
outstanding amounts at the end of the year (2015: GBPnil).
For their significant contributions of efforts in and incurred
costs and expenses towards the elaboration, development and
implementation of the Company's new investment policy and
underlying business model, Abinvest Corporation, a wholly owned
subsidiary of Abingdon, received an allotment of 500,000 Ordinary
Shares of no par value in the Company as bonus shares, equating to
a value of GBP250,000. This is accounted for in the Consolidated
Statement of Comprehensive Income under expenses / support services
fees (GBP250,000 of the total support service fee of GBP692,333).
There were no amounts outstanding at the end of the year.
Justin Cochrane, a current member of the Company's Healthcare
Investment Committee, has agreed to join Abingdon Capital
Corporation ("Abingdon") as Executive Vice President, Corporate
Development on a full time basis. On 23 October 2015, the Board
approved the issue of 250,000 new Ordinary Shares of 60 pence each
in the Company to Mr Cochrane as a signing bonus, equating to a
value of GBP150,000. This is accounting for in the Consolidated
Statement of Comprehensive Income under expenses / support services
fees (GBP150,000 of the total support service fee of
GBP692,333).
A Support Service Agreement with Arlington Group Asset
Management Limited ("Arlington") was signed on 16 June 2015. The
services to be provided by Arlington include global deal
origination, vertical partner relationships and on-going investment
management, including preparation of investment reports,
performance data and compliance with the Company's investing
policy. Arlington is entitled to an annual service fee of GBP95,000
per annum.
The total charge to the Consolidated Statement of Comprehensive
Income for Arlington was GBP112,021 of which GBP17,021 comprises of
disbursed costs (2015: GBP290,000). There were no outstanding
amounts at the end of the year. In the prior year all outstanding
fees due under the term of the previous service agreement were
settled by the issuance of 2,400,000 Ordinary Shares see note 11
for details.
(b) Administration fees
R&H Fund Services (Guernsey) Limited were appointed as
Administrator on 1 November 2014. They were entitled to receive a
fixed fee of GBP36,000 per annum, quarterly in arrears, for
administration of the Group, as set out in the Administration
Agreement. The total charge to the Consolidated Statement of
Comprehensive Income was GBP36,000 (2015: GBP14,893), of which
GBP9,000 (2015: GBP9,310) was outstanding at the end of the year.
R&H Fund Services (Guernsey) Limited resigned on 31 March
2016.
In the prior year Legis Fund Services Limited was the
Administrator up to 31 October 2014. They were entitled to receive
a fixed fee of GBP67,000 per annum, monthly in arrears, for
administration of the Group, as set out in the Administration
Agreement. The total charge to the Consolidated Statement of
Comprehensive Income was GBPnil (2015: GBP45,654) of which GBPnil
was outstanding at the end of the year (2015: GBPnil).
(c) Custodian fees
The custodian, ABN AMRO (Guernsey) Limited, was entitled to
receive a fee from the Group at the rate of 0.08 per cent of the
net asset value of Praetorian Portfolio Holdings L.P, payable
monthly in arrears commencing 26 June 2012, as set out in the
Custodian Agreement. ABN AMRO (Guernsey) Limited resigned on 30
September 2015. The total charge to the Consolidated Statement of
Comprehensive Income was GBP1,881 (2015: GBP5,292), of which GBPnil
was outstanding at the end of the year (2015: GBP903). The total
charge of GBP4,121 includes GBP2,240 of custodian fees payable to
Ravenscroft Limited whom became custodian and broker dealer during
the year.
(d) Corporate broker fees
On 4 July 2012 Pareto Securities Limited (previously Ocean
Equities Limited) was appointed to act as the Company's Broker. The
Broker was entitled to receive GBP20,000 per annum calculated from
the date of Admission payable quarterly in advance. The total
charge to the Consolidated Statement of Comprehensive Income was
GBP26,055 (2015: GBP20,000) of which GBP6,055 was payable to Peel
Hunt LLP. There were no outstanding fees at the end of the year
(2015: GBPnil). Pareto Securities Limited resigned as broker
effective 18 January 2016 and Peel Hunt LLP was appointed as the
Company's new Broker and Nominated Advisor and will receive a
combined fee of GBP30,000 per annum.
(e) Nominated adviser fees
On 9 June 2014 Grant Thornton UK LLP ("Grant Thornton") was
appointed by the Company to act as Nominated Adviser to the Company
for the purpose of the AIM listing. Grant Thornton was entitled to
an annual fee of GBP20,000, payable quarterly in advance. The total
charge to the Consolidated Statement of Comprehensive Income was
GBP17,773 (2015: GBP26,922) there were no outstanding fees at the
end of the year. Grant Thornton resigned as Nominated Advisor
effective 18 January 2016 and Peel Hunt LLP was appointed as the
Company's new Broker and Nominated Advisor.
(f) Registrar fees
The Company is party to an Offshore Registrar Agreement with
Computershare Investor Services (Guernsey) Limited (the
"Registrar") dated 30 March 2012, pursuant to which the Registrar
will provide registration services to the Company which will
entail, among other things, the Registrar having responsibility for
the transfer of shares, maintenance of the share register and
acting as transfer and paying agent. For the provision of such
services, the Registrar is entitled to receive a minimum annual fee
of GBP5,500. The total charge to the Consolidated Statement of
Comprehensive Income was GBP17,604 (2015: GBP5,500), there were no
amount outstanding at the end of the year (2015: GBPnil).
(g) Performance fee
Praetorian (Special Limited Partner) L.P. ("PSLP") was a special
limited partner under the terms of the Limited Partnership
Agreement of Praetorian Portfolio Holding L.P. PSLP was established
in order that the Advisory and Execution team may receive interests
in any performance incentive fee.
Under the terms of the Limited Partnership Agreement, for any
financial year (a "Performance Period"), PSLP was entitled to
receive from Praetorian Portfolio Holding L.P. a performance
incentive payment equal to 20 per cent of the aggregate return over
the full or pro-rata (in the case of partial realisations) cost of
investment (including all pro-rata-out-of-pocket costs relating to
such investment) received by Praetorian Portfolio Holding L.P. and
Praetorian Resources (GP) Limited following the full or partial
cash realisation of an investment.
The payment of a performance incentive payment was conditional
upon the net asset value per Ordinary Share of the Company at the
end of the relevant Performance Period (as adjusted, inter alia, to
add back the value of any distributions and accrued but unpaid
performance incentive payments) being greater than the net asset
value per Ordinary Share at Admission or, if a performance
incentive payment has previously been paid, the net asset value per
Ordinary Share when a performance incentive payment was last
paid.
No such fee was payable for the current year (2015: GBPnil). The
Performance Fee arrangement was cancelled pursuant to the change of
Investment Policy on 16 June 2015 and PSLP has been placed into
voluntary liquidation.
6. OTHER EXPENSES
Year ended Year ended
31 March 2016 31 March 2015
GBP GBP
Sundry expenses 10,677 16,999
Insurance premiums 10,718 9,193
Listing fees 9,481 4,986
30,876 31,178
=============== ===============
7. TAXATION
The Company has been granted exemption from Guernsey taxation
and is charged an annual exemption fee of GBP1,200.
8. DEFICIT PER SHARE
Year ended Year ended
Basic and diluted deficit per ordinary share 31 March 2016 31 March 2015
GBP GBP
Loss for the year (4,046,616) (6,927,369)
Weighted average number of Ordinary Shares in issue 6,188,379 2,287,398
--------------- ---------------
Deficit Per Share (pence) (0.65) (3.03)
=============== ===============
The deficit per share is based on the Group loss for the year
and on the weighted average number of Ordinary Shares in issue for
the year. The weighted average number of shares in the previous
year has been adjusted to reflect the share consolidation (note
10). The share options and warrants in issue are not dilutive at
the year end but could become dilutive in future periods. For more
details on the share options and warrants see note 11 and 14.
9. DIVIDS
No dividend was declared or paid in respect of the year ended 31
March 2016 (2015: GBPnil).
10. SHARES ISSUED
Number of subscription Number of ordinary Shares
Number of Warrants shares in issue GBP
Authorised
Unlimited number of
shares of no par value - - - -
------------------- --------------------------- -------------------------- -----------
Allotted, called up
and fully paid:
As at 1 April 2015 7,263,922 23,205,393 45,635,936 24,281,094
Shares issued before
consolidation - - 90,247,000 2,256,175
Share consolidation (6,900,726) - (129,088,810) -
Cancellation of
subscription shares - (23,205,393) - -
Shares issued after
consolidation
- Share based payments - - 750,000 400,000
- Issued for cash - - 333,333 200,000
As at 31 March 2016 363,196 - 7,877,459 27,137,269
=================== =========================== ========================== ===========
On 20 May 2015 the Company announced that 90,247,000 new
ordinary shares had been issued at 2.5 pence per ordinary share
enlarging the issued share capital of the Company to 135,882,936
Ordinary Shares. The proceeds of GBP2,256,175 from the issuance of
these new ordinary shares provided additional working capital for
the Company.
On 16 June 2015 the Company undertook a share consolidation of 1
new ordinary share of no par value in the Company for every 20
existing ordinary shares of no par value in the Company. At the
time the Company had a total of 7,294,126 New Ordinary Shares which
were admitted for trading on AIM on 17 June 2015.
Of this total, 6,794,126 Ordinary Shares were issued in respect
of the share consolidation and 500,000 Ordinary Shares were issued
to Abinvest Corporation a wholly owned subsidiary of Abingdon
Capital Corporation (see note 5a for further details). The New
Ordinary Shares have been allocated stock identification codes as
follows: SEDOL code BYZSSY6 and ISIN code GG00BYZSSY63.
On 7 September 2015 the Company announced that 333,333 new
Ordinary Shares had been issued to new investors at sixty pence per
Ordinary Share enlarging the issued share capital of the Company to
7,627,459 Ordinary Shares. The proceeds of GBP200,000 from the
issuance of these new ordinary shares provided additional working
capital for the Company.
On 23 October 2015, the Board approved the issue of 250,000 new
Ordinary Shares of 60 pence each in the Company to Mr Cochrane as a
signing bonus, further cementing his alignment with shareholders.
Following this issue, the total number of shares with voting rights
in the Company is 7,877,459.
The Company had a line of AIM quoted subscription shares of no
par value in the capital of the Company (the "Subscription
Shares"). As set out in its announcement on 28 May 2015, the final
subscription date of the Company's Subscription Shares was 16 June
2015. Following which, all outstanding Subscription Shares (that
is, those that have not converted into ordinary shares following
the exercise of a subscription right) were cancelled.
Following the passage of the resolutions at the EGM, the
Subscription Shares, of which there were 1,160,270 quoted on AIM,
were cancelled from trading on AIM with effect from 8.00 am on 26
June 2015.
In addition the Company consolidated the 7,263,922 unlisted
warrants at a price of GBP0.2065 per warrant to 363,196 unlisted
warrants at a price of GBP4.13 per warrant. The warrants were
cancelled on 22 May 2015.
11. SHARE BASED PAYMENTS
a) Share Options
On 7 September 2015 the Company announced that a new share
option scheme ("the Scheme") has been adopted by the Board of the
Company, together with the initial grants made under the share
option scheme.
The Scheme has been established to incentivise directors, staff
and certain key advisers and consultants to deliver long-term value
creation for shareholders.
Under the Scheme, the Board of the Company will award, at its
sole discretion, options to subscribe for Ordinary Shares of the
Company on terms and at exercise prices and with vesting and
exercise periods to be determined at the time. However, the Board
of the Company has agreed not to grant options such that the total
number of unexercised options represents more than 10 per cent of
the Company's Ordinary Shares in issue from time to time.
The Company also operates an equity settled share based scheme
for directors and specified consultants. Options vest immediately
and will lapse 5 years from the date of grant of 7 September
2015.
Weighted
average exercise
price in
pence Number
Outstanding 1 April 2015 - -
Granted during the year 75 760,000
Forfeited during the year - -
Exercised during the year - -
Lapsed during the year - -
Outstanding at 31 March 2016 75 760,000
The exercise price of options outstanding at 31 March 2016 was
75 pence and their weighted average contractual life was 5 years
(2015: Nil).
Of the total number of options outstanding at 31 March 2016,
760,000 (2015: nil) had vested and were exercisable.
The following information is relevant in the determination of
the fair value of options granted during the year under the
equity-settled share based remuneration schemes operated by the
Company.
Equity settled share based payment
Option pricing model used Black Scholes
Weighted average share price at grant 58.50 Pence
Weighted average contractual life in
days 1,619
Expected volatility 40%
Dividends growth rate 0%
Risk free rate 1.27%
The volatility assumption, measured at the standard deviation of
expected share price returns, is based on a statistical analysis of
daily share prices for comparable companies over the last three
years.
The total share based remuneration expenses charged to the
Consolidated Statement of Comprehensive Income statement is as
follows:
31 March 2016 31 March 2015
GBP GBP
Directors' fees 55,658 -
Consultancy fees 34,377 -
Investment advisory committee fees 22,918 -
Support services administration fees 11,459 -
Total 124,412 -
============== ==============
b) Other Share Based Payments
31 March 2016 31 March 2015
GBP GBP
Abington 250,000 -
Justin Cochrane 150,000 -
Alington - 210,000
Mark Hohnen - 11,750
Malcolm Burne - 35,583
Richard Lockwood - 23,833
Charles Cannon-Brooks - 23,834
400,000 305,000
============== ==============
Of the total GBP470,000 shares issued in the prior year per note
10, GBP165,000 was paying previous accrued expenses.
Other share based payments are charged to the Consolidated
Statement of Comprehensive Income as follows:
31 March 2016 31 March 2015
GBP GBP
Directors' fees - 23,500
Consultancy fees - 71,500
Support services administration fees 400,000 210,000
Total 400,000 305,000
============== ==============
The total share based payments expenses charged to the
Consolidated Statement of Comprehensive Income comprise of:
31 March 2016 31 March 2015
GBP GBP
Directors' fees 55,658 23,500
Consultancy fees 34,377 71,500
Investment advisory committee fees 22,918 -
Support services administration fees 411,459 210,000
Total 524,412 305,000
============== ==============
12. RETAINED EARNINGS
Pursuant to the Companies (Guernsey) Law, 2008 (as amended), all
reserves (including share capital) can be designated as
distributable. However, in accordance with the Admission Document,
the Company shall not make any distribution of capital profits or
capital reserves except by means of capitalisation issues in the
form of fully paid Ordinary Shares or issue securities by way of
capitalisation of profits or reserves except fully paid Ordinary
Shares issued to the holders of its Ordinary Shares.
13. TRADE AND OTHER RECEIVABLES
31 March 2016 31 March 2015
GBP GBP
Prepayments and accrued income 3,202 7,280
Unsettled trades 516,535 -
519,737 7,280
============== ==============
The unsettled trades are in respect of an investment which was
sold on 23 March 2016 and the proceeds were received in cash on 6
April 2016.
14. LOAN
On 22 May 2015, the Company repaid its 1,500,000, unlisted, zero
dividend GBP1 preference shares issued to Damille Investments II
Limited. The total amount paid to Damille Investments II Limited
was GBP1,841,199 which included all accrued interest and redemption
charges. As a result, the Company has no loans outstanding.
As part of the Agreement with Damille, the Company issued
7,263,922 unlisted warrants to Damille with an exercise price of
GBP0.2065 per warrant (to subscribe for Ordinary Shares in the
Company on a 1:1 basis). Following the 20:1 Share Consolidation on
16 June 2015 there were 363,196 unlisted warrants with an exercise
price of GBP4.13 (to subscribe for Ordinary Shares in the Company
on a 1:1 basis). These warrants remain outstanding and expire on 30
September 2016.
15. TRADE AND OTHER PAYABLES
31 March 2016 31 March 2015
GBP GBP
Audit fees 25,000 21,000
Administration fees (note 5b) 9,000 9,310
Directors fees (note 16) 31,171 10,000
Custodian fees (note 5c) - 903
Investment committee fees (note 16) 10,000 -
75,171 41,213
============== ==============
16. RELATED PARTIES
Robert King has waived his entitlement to a fee in relation to
Praetorian Resources (GP) Limited with effect from 1 April
2013.
Mr John Butler Gareth Smith, a Director of R&H Fund Services
(Guernsey) Limited was appointed as Director of Praetorian
Resources (GP) Limited on 1 November 2014. Mr Smith has waived his
entitlement to a fee in relation to Praetorian Resources (GP)
Limited.
Praetorian Resources (GP) Limited was put into voluntary
liquidation on 23 October 2015.
Directors were entitled to the following remuneration during the
year;
Charge for Charge for Outstanding at Outstanding
Entitlement year to year to year end at year end
per annum 31/03/2016 31/03/2015 31/03/2016 31/03/2015
GBP GBP GBP GBP GBP
Robert King 27,500 25,208 20,000 4,583 5,000
Kaare Foy - - 5,000 - 5,000
Nathan
Steinberg - - 10,000 - -
Richard
Lockwood - - 20,750 - -
Mark Hohnen - - 20,750 - -
Neil Johnson 100,000 81,167 - 8,755 -
Charles
Cannon-Brookes 70,000 55,377 - 5,833 -
Nigel Birrell 24,000 18,921 - 6,000 -
James Ryan 24,000 18,921 - 6,000 -
Mark Le Tissier - - - - -
199,594 76,500 31,171 10,000
-------------- --------------- -------------- ---------------
Within the charge of GBP255,252 for directors fees within the
Consolidated Statement of Comprehensive Income is GBP55,658 in
respect of the value of share options issued (See note 11).
Directors were also reimbursed for GBP63,439 (2015: GBP2,085) of
expenses incurred on business on behalf of the Company.
On 4 July 2012 the Company had entered into service agreements
with the Advisory and Execution team members, to provide investment
advice for the Board to consider, and general investment assistance
to the
Board as and when requested. The agreement was terminated on 16
June 2015 following the change in the Company's Investment
Policy.
Prior to the termination of the Advisory and Execution team
agreements on 16 June 2015 the members of the Advisory and
Execution team were entitled to receive fees monthly in arrears as
per below.
Outstanding at Outstanding at
Entitlement per Charge for year Charge for year year end year end
annum to 31/03/2016 to 31/03/2015 31/03/2016 31/03/2015
Richard
Lockwood 30,500 - 14,654 - -
Malcolm Burne 50,000 - 24,423 - -
Charles
Cannon-Brookes 50,000 - 81,568 - -
---------------- ---------------- ---------------- ----------------
- 120,645 - -
---------------- ---------------- ---------------- ----------------
As disclosed in the 2013 Annual Report with effect from 1 April
2013 all such fees were deferred until further notice. On 30 June
2014 the Company announced the issuance of 2,000,000 Ordinary
shares at a price of GBP0.13 per share, equating to a value of
GBP260,000 in lieu of director and consultancy fees due to Messrs
Lockwood, Burne and Cannon-Brookes and director fees due to Mr
Hohnen. Charles Cannon Brookes was paid an additional GBP50,000
plus travel of GBP7,145 in respect of additional work undertaken
for the sale of the Company's investments.
Praetorian (Special Limited Partner) L.P. ("PSLP") was a special
limited partner under the terms of the Limited Partnership
Agreement of Praetorian Portfolio Holding L.P. PSLP had been
established in order that the Advisory and Execution team may
receive interests in any performance incentive fee. The basis of
the performance incentive fee is laid out in the AIM admission
document and in note 5 above. No such fee was payable during the
year (2015: GBPnil). PSLP has been put into voluntary
liquidation.
During the year the Company announced the formation of its
Healthcare Investment Committee who will assist the Company in
analysing and recommending potential healthcare royalty
transactions. Along with Neil Johnson the Investment Committee is
made up of members of Oliver Wyman and independent representatives.
During the year GBP21,507 was paid to the committee members, of
which GBP10,000 was outstanding at the year end. Neil Johnson does
not earn a fee for his role on the Investment Committee. The fees
were paid as follows:
Outstanding at Outstanding at
Entitlement per Charge for year Charge for year year end year end
annum to 31/03/2016 to 31/03/2015 31/03/2016 31/03/2015
GBP GBP GBP GBP GBP
A Carragher 20,000 22,213 - 5,000 -
J Webster 20,000 22,212 - 5,000 -
44,425 - 10,000 -
---------------- ---------------- --------------- -----------------
Included in the charge above is GBP22,918 in respect of share
options issued to Messer Carragher and Webster.
The related parties' interests in the share capital of the
Company are as follows:
Holding
after
share
Pre-issue Participation consolidation Holding Percentage
holding in Placing on 16 Additional at of enlarged
at 31March On 20 June shareholdings 31 March share
Name 2015 May 2015 2015 in year 2016 capital
Charles
Cannon-Brookes 970,335 2,000,000 148,517 10,000 158,517 2.01%
Malcolm
Burne 1,395,228 3,000,000 219,761 40,355 260,116 3.30%
Richard
Lockwood 3,471,000 4,000,000 373,550 10,000 383,550 4.87%
N Johnson - 8,000,000 400,000 - 400,000 5.08%
N Birrell - 8,000,000 400,000 - 400,000 5.08%
J Ryan - 8,000,000 400,000 - 400,000 5.08%
J Cochrane - - - 315,000 315,000 4.00%
Arlington
Group Asset
Management
Limited 5,000,000 - 250,000 45,000 295,000 3.74%
Holding
after
share
Pre-issue Participation consolidation Holding Percentage
holding in Placing on 16 Additional at of enlarged
at 31March On 20 June shareholdings 31 March share
Name 2015 May 2015 2015 in year 2016 capital
Issued
pursuant
to EGM
/ consolidation
Abinvest
Corporation - 500,000 500,000 - 500,000 6.35%
Charles Cannon-Brookes is a Director and shareholder of
Arlington Group Asset Management Limited which owns 295,000
Ordinary Shares and is therefore interested in 453,517 Ordinary
Shares representing 5.76 per cent of the total voting rights.
Neil Johnson is a Director of Abinvest Corporation and Abingdon
Capital Corporation. Abinvest Corporation is a wholly owned
subsidiary of Abingdon Capital Corporation. He owns 500,000
Ordinary Shares through Abinvest Corporation and 10,000 Ordinary
Shares through RBK&C Trust and therefore has an overall
interest in the 910,000 Ordinary Shares of the Company representing
11.55 per cent of the total voting rights.
Justin Cochrane, a current member of the Company's Healthcare
Investment Committee, has agreed to join Abingdon Capital
Corporation ("Abingdon") as Executive Vice President, Corporate
Development on a full time basis. On 23 October 2015, the Board
approved the issue of 250,000 new Ordinary Shares of 60 pence each
in the Company to Mr Cochrane as a signing bonus, further cementing
his alignment with shareholders. Mr Cochrane overall interest in
the Ordinary Shares of the Company is 315,000 Ordinary Shares
representing 4.00 per cent of the total voting rights.
As detailed in note 11 the Company has adopted a new share
option scheme ("the Scheme") to incentivise Directors, staff and
certain key advisers and consultants to deliver long-term value
creation for shareholders.
The Company also operates an equity settled share based scheme
for directors and specified consultants. Options vest immediately
and will lapse 5 years from the date of grant of 7 September 2015.
Included in the change to the Consolidated Statement of
Comprehensive Income is GBP55,658 in relation to share options as
detailed in note 11.
Support Service Agreements with Abingdon Capital Corporation
("Abingdon") and Arlington Group Asset Management Limited
("Arlington") were signed on 16 June 2015. The services to be
provided by both Abingdon and Arlington include global deal
origination, vertical partner relationships and on-going investment
management, including preparation of investment reports,
performance data and compliance with the Company's investing
policy. See note 5a for additional information.
The Directors are not aware of any ultimate controlling
party.
17. NET ASSET VALUE PER SHARE
31 March 2016 31 March 2015
GBP GBP
Net asset value attributable to Ordinary Shares
per Consolidated Financial Statements 2,070,315 3,136,344
============== ==============
Shares in issue at year end 7,877,459 2,281,797*
NAV per share - Consolidated Financial Statements 0.2628 1.3745
* The shares in issue in the previous year have been adjusted to
reflect the share consolidation (note 10).
18. FINANCIAL RISK MANAGEMENT
The Group's investing activities expose it to various types of
risk that are associated with the investee companies in which it
invests. The most important types of financial risk to which the
Group is exposed are market risk, liquidity risk and credit risk.
Market risk includes price risk, foreign currency risk and interest
rate risk. The Board of Directors has overall responsibility for
risk management and the policies adopted to minimise potential
adverse effects on the Group's financial performance.
The policies and processes for measuring and mitigating each of
the main risks are described below.
Market Risk
Market risk
Market risk is the risk that the value of investment holdings
will fluctuate as a result of changes in market prices caused by
factors other than interest rate or currency rate movements. As the
Group's investments are carried at fair value with changes
recognised in the Consolidated Statement of Comprehensive Income,
all changes in market conditions ultimately affect net assets.
The Company's financial assets comprise of four illiquid
investments at GBPnil value. A sensitivity in respect of these
assets is presented in note 4.
Currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign currency exchange rates. The presentation currency of
the Company is Sterling.
The Group does not have any financial assets or other financial
instruments in foreign currencies other than those illiquid
investments noted in note 4. Accordingly no sensitivity has been
prepared. The prior year currency sensitivity is presented
below.
Listed Investments Unlisted Investments Cash Other Net Assets
As at 31 March 2015 GBP GBP GBP GBP
Australian Dollar (AUD) 983,862 70,380 3,596 -
Canadian Dollar (CAD) 2,107,694 97,798 34,040 1,613
3,091,556 168,178 37,636 1,613
------------------- --------------------- -------- -----------------
Listed Unlisted
Investments Investments Cash
31/03/2015 31/03/2015 31/03/2015
GBP GBP GBP
Increase in FX rate
Australian Dollar (AUD) (89,442) (6,398) (327)
Canadian Dollar (CAD) (191,609) (8,891) (3,095)
Decrease in FX rate
Australian Dollar (AUD) 109,318 7,820 400
Canadian Dollar (CAD) 234,188 10,866 3,782
Interest rate risk
The interest rate profile of the Group's financial assets and
liabilities as at the Consolidated Statement of Financial Position
date is as follows:
Variable rate
Variable rate financial Fixed rate financial Fixed rate financial
financial assets liabilities assets liabilities
GBP GBP GBP GBP
As at 31 March
2016 1,223,678 - - -
--------------------- --------------------- --------------------- ---------------------
As at 31 March 2015 774,677 - 110,011 1,688,133
--------------------- --------------------- --------------------- ---------------------
The Group finances its operations through Shareholders' capital,
loans and reserves. During the year the Group received only minimal
interest on its cash and cash equivalents, GBP646 (2015: GBP185).
It also accrued interest income of GBPnil (2015: GBP8,085) in
relation to fixed interest accrued on an investment. The Company
has accrued GBPnil (2015: GBP267,115) of interest on the loan,
disclosed in note 14, which was drawndown during the year ended 31
March 2014 and repaid on 22 May 2015. This was accrued at a fixed
rate of interest of 11% over the term of the loan. Where the
interest rates are fixed the risk is mitigated as the Group's cash
flows are not subject to fluctuation. All other assets and
liabilities of the Group are non-interest bearing.
At 31 March 2016 cash and cash equivalents of GBP1,625,749
(2015: GBP517,597) were potentially exposed to movements in
interest rates. At the current time any movement in interest rates
would not have a material financial impact on the Group. Therefore,
the Group does not hedge against the interest rate risk to which it
is exposed.
Liquidity risk
Liquidity risk is the risk that the Group will encounter in
realising assets or otherwise raising funds to meet financial
commitments.
The Group maintains sufficient cash to pay accounts payable and
accrued expenses as they fall due. The Group's overall liquidity
risks are monitored on a quarterly basis by the Board.
Currently the value of the residual portfolio of unlisted
investments totals GBPnil. The Board considers the portfolio of
unlisted investments to be illiquid due to the investments being
delisted, suspended or being in liquidation. The Company may not be
able to liquidate these positions in the near term or at all and as
such has marked the valuation to zero on each. The write down of
these assets to GBPnil includes other factors as discussed in note
4.
The contractual, undiscounted cash flows of the Group's current
liabilities, which are equal to the fair value of the Group's
current liabilities, consisting of trade and other payables and
loans payable, are all payable within three months and total
GBP75,171 (2015: GBP41,213).
The following illustrates the maturity analysis of the Group's
undiscounted contractual cash flows for liabilities.
Due < 3 months Due 3 - 12 months Due > 12 months Due within 1 - 5 years Total
As at 31 March
2016 GBP GBP GBP GBP GBP
Trade and other
payables 75,171 - - - 75,171
Total 75,171 - - - 75,171
--------------- ------------------ ---------------- ----------------------- ----------
Due < 3 months Due 3 - 12 months Due > 12 months Due within 1 - 5 years Total
As at 31 March
2015 GBP GBP GBP GBP GBP
Loan ^ - - - 2,051,447 2,051,447
Trade and other
payables 41,213 - - - 41,213
Total 41,213 - - 2,051,447 2,092,660
--------------- ------------------ ---------------- ----------------------- ----------
^ The loan was repaid in full on 22 May 2015.
Given that the operating costs of the Group are generally known,
contractually fixed costs, the Board is of the opinion that the
Group is not exposed to any undue liquidity risk.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group. It is the opinion of the Board
of Directors that the carrying amounts of financial assets best
represent the maximum credit risk exposure at the financial
reporting date.
At the financial reporting date the only financial assets which
are subject to credit risk are cash and cash equivalents totalling
GBP1,625,749 (2015: GBP517,597) and the unsettled trade of
GBP516,535 which has been received in cash on 4 April 2016 and so
are now part of the credit risk of Barclays as shown below.
All of the cash and cash equivalents held by the Group are with
Barclays Bank Plc ("Barclays"). Cash held with Ravenscroft at the
year end was transferred into Barclays on 11 April 2016.
Accordingly the Group is only exposed to credit risk at Barclays.
Insolvency of Barclays may cause the Group's rights with respect of
the cash and cash equivalents held by it to be delayed or limited.
The Group monitors this risk by reviewing the credit rating of
Barclays at the time of setting up accounts and on an ad hoc basis.
Moody's bank financial strength rating for Barclays is A2 (2015:
A2) as at the date of signing these Consolidated Financial
Statements. The Board considers that the risk of holding cash and
cash equivalents with Barclays is acceptable.
As at 31 March 2016 there were no financial assets which were
past due or impaired (2015: GBPnil).
Capital management
The Board manages the Company's capital with the objective of
being able to continue as a going concern while maximising the
return to shareholders through the capital appreciation of its
investments. The capital structure of the Company consists of
equity as disclosed in the Consolidated Statement of Financial
Position.
It is stated within the Company's Articles that the Company may
borrow money. During the prior year the Company utilised its
borrowing powers, to allow it to actively continue to pursue the
Groups investment objectives and manage its cash flow. The
outstanding debt was repaid in full on 22 May 2015.
19. CONTINGENT LIABILITIES
At 31 March 2016 there were no contingent liabilities (2015:
GBPnil).
20. EVENTS AFTER THE FINANCIAL REPORTING DATE
Trident Trust Company (Guernsey) Limited was appointed as
Secretary and Administrator on 1 April 2016. Per the Administration
Agreement they are entitled to an annual fixed fee of GBP36,000 per
annum.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
July 25, 2016 02:00 ET (06:00 GMT)