TIDMOCT
RNS Number : 9260I
Octagonal PLC
17 December 2020
7.00am 17 December 2020
Octagonal plc
("Octagonal", the "Group" or the "Company")
ANNUAL REPORT AND ACCOUNTS FOR THE YEARED 31 MARCH 2020
DECLARATION OF DIVID
PROPOSED CANCELLATION TO TRADING ON AIM
The Company has today published its audited Report and Accounts
for the year ended 31 March 2020, a copy of which will be posted to
Shareholders and will be made available on the Company's website,
www.octagonalplc.com.
The Company has declared and will pay a dividend of 0.1 pence
per ordinary share as per the timetable below:
-- Ex-Dividend Date: 24 December 2020
-- Record Date: 29 December 2020
-- Payment Date: 12 January 2021
The Company also announces that it is taking advantage of the
one-month extension granted by AIM Regulation to the deadline for
publishing interim accounts and therefore will publish its interim
accounts for the six months ended 30 September 2020 by 31 January
2021.
The Company also wishes to advise that it is finalising
proposals to seek Shareholder's approval to de-list the Company
from AIM pursuant to AIM Rule 41 (the "Cancellation"). The
Directors have conducted a review of the various benefits and
drawbacks to the Company and its Shareholders in relation to
retaining its listing on AIM. The Directors unanimously believe
that a potential Cancellation is in the best interest of the
Company and its Shareholders, and have considered the following key
factors (amongst others) in reaching a decision:
-- the regulatory burden, management time and considerable costs
associated with maintaining admission of the Ordinary Shares to
trading on AIM (including professional, legal, accounting, broker
and nominated adviser costs and fees of the London Stock Exchange)
are now disproportionate to the value provided by admission of the
ordinary shares to trading on AIM;
-- the supporting of the growth potential of the business
through the re-focussing of management resources thereby providing
long-term benefit to all stakeholders; and
-- the Company does not foresee an immediate need to raise
additional funds by utilising the equity capital markets and,
therefore, there does not seem to be a compelling reason to
maintain its status as an AIM traded company.
Therefore, the Company will shortly be posting a Circular to
Shareholders seeking approval for the Cancellation along with
certain other proposals and a further announcement will be made at
that stage.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please visit www.octagonalplc.com or
contact:
Octagonal Plc +44 (0) 20 7048 9400
John Gunn, Chairman
Beaumont Cornish (Nominated Adviser and Broker)
James Biddle / Roland Cornish +44 (0) 20 7628 3396
CHAIRMAN'S STATEMENT
YEAR TO 31 March 2020
We are pleased to present the annual report and accounts for the
year ended 31 March 2020.
It has been another challenging year for Octagonal Plc
("Octagonal" or the "Company ") incorporating its wholly owned
subsidiaries Global Investment Strategy UK Ltd ("GIS") and Global
Investment Strategy HK Limited ( "GIS HK"). and majority owned
subsidiary Synergis Capital Plc ("Synergis") ( "the Group")
Some of the key highlights for the Group during the year:
-- Group revenues up by 8.3% to GBP5.75m (2019: GBP5.31m),
-- Core operating margin remained the same at 12.7% (*2019: 12.7%)
-- Core pre-tax profits decreased by 10% to GBP0.594m (*2019: GBP0.660m)
-- Cash balance GBP5.5m (2019: GBP5.5m)
-- Declared and paid a dividend of 0.1pence per share, totalling
GBP568,575, on 18 October 2019
-- The Company declares a dividend of 0.1 pence per share
payable to Shareholders on 12 January 2021
* Prior year adjustments - see note 4 in the notes to the group
financial statements
Business overview
Our business's core focus is on providing global settlement and
safe custody services to investors worldwide, priding ourselves on
customer satisfaction through personalised service delivered by
experienced industry individuals. Additionally, the business looks
to leverage off its operational capabilities to increase its
product offerings and services to new and existing clients.
Our business model has maintained its focus on driving
profitability and longer-term shareholder value through several key
areas:
(i) growing revenues organically through seeking new clients and
identifying and implementing new services to existing and new
clients,
(ii) improving margins through investing in technology, creating
efficiencies and a drive to reduce operating costs.
During the last six months for the financial year, we have seen
increased market volatility and uncertainty as a result of the
impact of Covid-19. This has been the greatest challenge to the
financial service industry since the financial crisis of 2008.
During these periods of increased volatility, the board of GIS took
steps to limit client exposure to riskier assets and strengthen our
liquidity resources. The strategy in which we chose to navigate the
period, given the conditions, is a testament to the strength of our
business model. Our investments in technology has enabled us to
continue to serve our clients around the world, with all employees
working from home, offering clients a seamless 24-hour 5 day a week
service from London, Mumbai and Hong Kong. I am proud of the hard
work and conscientiousness of the team, with many facing personal
challenges given the impact of the Covid-19 lockdown. Whilst
largely relating to the pre-crisis period, the 2020 results
demonstrate the stability of our business model and protection of
our stakeholders' interests. Our balance sheet, capital and
liquidity position remain strong and we remain well positioned to
facilitate client activity during these uncertain times. For now,
our focus remains on the welfare of our employees and the financial
soundness of the business .
Discussions continue with the FCA as regards Synergis'
activity.
We continue to undergo an evaluation process with our regulator,
and we believe we've made good progress in demonstrating the
businesses' robust processes and controls that are essential for
intended specialist lending activity. In light of the current
challenging conditions within the lending sector, GIS will need to
consider these conditions with the launch of Synergis delayed until
we see normal market conditions restored.
GIS has, in the period, become a CREST participant and we will
shortly launch our service offering in the UK to regulated entities
and professional clients.
We have recently seen an increase in requests for our services
from UK and European regulated entities, who are seeking to reduce
their operational costs by engaging with GIS as their global
settlement and custody partner. We are encouraged by this trend and
we will be developing a modest advertising campaign over the year
ahead to increase the awareness of our global service offering.
GIS HK is fully operational and has established an impressive
network of Asia Pacific relationships to offer service to both its
London based parent and regional clients. The HK office has
contributed attributable income to its London parent, but we hope
the year ahead will see it demonstrate its fiscal autonomy as a
stand-alone entity, working in cooperation with its parent, but
also servicing Asia based clients looking for a global service
offering.
CHAIRMAN'S STATEMENT (continued)
YEAR TO 31 March 2020
Financial review
The 2020 financial results reflect geopolitical uncertainty in
the current market that impacted volatility and market volumes.
Against this backdrop of challenging externalities, the core
business within the group delivered an increase in revenues by 8.3%
to GBP5.75m (2019: GBP5.31m), However although there was a 10%
decrease in profit before tax to GBP0.594m (2019: GBP0.660m),
included in the current year, there were exceptional impairments on
investments totalling GBP135,000.
The core business operating profit includes the consolidation of
both Synergis and GIS HK administration costs totalling GBP574,000
for the period (2019: GBP590,000). Whilst the investments in both
are seen as significant, the Board expects positive contributions
from both within the next financial year and beyond.
Group cash reserves remained at GBP5.5m (2019: GBP5.5m) despite
expenditure of the following: payment of a dividend to shareholders
totalling GBP 568,575 , investment of GBP50,000 in Synergis and
Investment of GBP310,000 in GIS HK. The cash resources represent
more than adequate cash reserves for our current operations with
Net Assets of GBP8.3 million (2019: GBP8.5 million).
We remain very optimistic that the measures we have put in place
will see this business grow further this year and increase
profitability.
Future Developments
Global Investment Strategy UK Limited (GIS)
GIS, delivered strong earnings for the half year as markets
remained active through the summer months against traditional
trends, and our balanced business model continued to deliver
consistent returns. GIS reported unaudited revenues of GBP4.794m
and profits of GBP2.082m for the 6 months to 30 September 2020.
This was an increase of 42.7% in revenue and 41.2% in profit
compared with the corresponding period last year (revenue of
GBP3.359m and profits of GBP1.475m for the 6 months to 30 September
2019).
Synergis Capital Plc (Synergis)
Discussions continue with the FCA as regards Synergis' activity
and the business is undergoing an evaluation process with our
regulator and we believe we've made good progress in demonstrating
the business' robust processes and controls that are essential for
intended specialist lending activity.
Global Investment Strategy HK Limited (GIS HK)
Our HK subsidiary remains fully operational and continues to
build on its network of Asia Pacific relationships to offer service
to both its London based parent and regional clients. The HK office
has contributed income to GIS, but we hope the year ahead will see
it demonstrate its fiscal autonomy as a stand-alone entity, working
in cooperation with its parent, but also servicing Asia based
clients looking for a global service offering.
John Gunn
Chairman
16 December 2020
STRATEGIC REPORT
For the year ended 31 March 2020
The Directors present their strategic report for the Group for
the year ended 31 March 2020.
PRINCIPAL ACTIVITIES
The principal activity of Octagonal is as a Financial Services
group through its subsidiary Global Investment Strategy UK Ltd
("GIS") which provides global settlement and safe custody services
to investors, hedge funds, institutions, family offices and high
net worth individuals, along with other ancillary services. GIS is
the trading entity of the Group, authorised and regulated by the
Financial Conduct Authority, and is a member of The London Stock
Exchange.
Global Investment Strategy HK Ltd was granted from the
Securities and Futures Commission of Hong Kong ("SFC") in 2019 that
it has approval to carry on Type 1 regulated activity(ies) for
professional clients under the Securities and Futures Ordinance
(SFO). Type 1 regulated activity(ies) include the provision of
dealing in securities, stock options, and bonds, but also includes
the provision of other additional GIS core services such as safe
custody and trade settlement. Synergis Capital plc, which it is
intended will provide commercial asset backed lending, financed by
an investment bond which will be issued in tranches and distributed
by GIS.
RESULTS AND DIVIDS
Group revenue from continuing operations during the year was
GBP5.75million (2019: GBP.5.31 million) resulting in a pre-tax
profit of GBP594,000 (2019: GBP660,000 restated) a 10% decrease
pre-tax profit. Attributable profit for the year after tax was
GBP292 (2019: GBP661,000 restated). Core group business activities
resulted in an increase of 15.63% in profit before taxation.
The Directors propose a dividend of GBP568,575 (2019:
GBP568,575). The dividend will be paid in one amount, representing
0.1 pence per Ordinary Share, to shareholders with the record date
of 29(th) December 2020 (with an ex-date of 24 December 2020) and
will be paid on 12 January 2021.
KEY PERFORMANCE INDICATORS
The Group seeks to grow both the top and bottom lines through
organic growth, the development of new business lines, cost
controls and financial conservatism. These factors have enabled it
to improve margins and seek higher margin revenues, while offering
competitive services to its clients .
The key performance indicators are set out below:
GROUP STATISTICS 2020 2019 Change %
(Including non-core Corporate finance income) restated
------------------------------------------------- ------------- ------------- ----------
Turnover GBP5,752,000 GBP5,311,000 8.30%
Group profit before tax GBP594,000 GBP660,000 -10.00%
Non-core finance income GBP17,000 GBP129,000
CORE BUSINESS ACTIVITY ANALYSIS
CORE OPERATING 2020 2019 Change %
(Excluding non-core Corporate finance income)
------------------------------------------------- ------------- ------------- ----------
Turnover GBP5,735,000 GBP5,182,000 10.67%
Group profit before tax GBP577,000 GBP531,000 8.66%
Gross Margin 74.77% 74.76% 0%
STRATEGIC REPORT
For the year ended 31 March 2020 (continued)
KEY RISKS AND UNCERTAINTIES AND RISK MANAGEMENT
The Group is exposed to a number of business risks. The risk
appetite of the Group is determined by the Board with input from
the Risk Committee.
.
The Group has identified the following as the key risks and
their mitigation:
MARKET RISK
The Group has limited market risk as its services are
principally settlement and custody which have minimal market risk.
Market exposure arising from unsettled trades is closely monitored
and managed during each trading day. In respect of its trading as
agent in equities and debt instruments, its execution services are
minimal and are only carried out under strict criteria. Market risk
also gives rise to variations in asset values and thus management
fees, and variations in the value of investments held by GIS.
COUNTERPARTY RISK
The Group does have counterparty risk, primarily with large
agent banks, but we do not see this as significant given the high
level of regulation in our industry. Where there is counterparty
risk with clients, it is largely offset by collateral or risk
margin deposited with the Group.
STOCK MARKET CONDITIONS
The Group's business is highly dependent on stock market
conditions, especially volumes of equities and other financial
products traded. Adverse market conditions resulting in reducing
volumes of trading may have a significant negative effect on
revenues and profitability.
CURRENCY RISK
A large proportion of the Group's income and expenses are
incurred in foreign currency, particularly US Dollar. As a result,
fluctuations in currency exchange rates could have an adverse
effect on the financial condition, results of operation or cash
flow of the Group.
CREDIT RISK
The Company is exposed to immaterial credit risk which is
disclosed in Note 21.
OPERATIONAL RISK
There is a range of operational risks to which the Group is
exposed, including, but not limited to, systems risks, outsourcing
risks, reputational risks and fraud/cybersecurity risks. The Group
seeks to mitigate these operational risk to acceptable residual
levels, in accordance with its risk appetite policy, by maintenance
of its control environment, which is managed through the Group's
operational risk management framework. The Group's controls include
appropriate segregation of duties and supervision of employees;
ensuring the suitability and capability of the employees; relevant
training programmes that enable employees to attain and maintain
competence; and, identifying risks that arise from inadequacies or
failures in processes and systems.
The Group has a business continuity plan which provides
contingency measures to ensure smooth continued operations in the
event of a disruption and is reviewed regularly.
LOSS OF STAFF
Staff are a key asset in the business and retaining the services
of key staff is essential to ongoing revenue generation and
development of the business.
CHANGES IN REGULATION OR LEGISLATION
The regulatory regime applicable to companies such as Octagonal,
and more specifically its trading subsidiary, GIS, is under regular
review and future changes made by a regulatory body could impose a
greater burden on the Group with consequential additional costs. As
GIS is a regulated business, it relies on continuing to be
authorised under the Financial Conduct Authority ("FCA") to be able
to undertake certain roles and operations.
The Group's business is subject to substantial regulation both
in the UK, US and other jurisdictions. Adverse regulatory
developments could have a material, adverse effect on the Group's
operating results, financial condition and prospects.
The Group conducts its businesses subject to ongoing regulation
and associated regulatory risks, including the effects of changes
in the laws, regulations, policies, voluntary codes of practice and
interpretations in the UK and the other markets
STRATEGIC REPORT
For the year ended 31 March 2020 (continued)
KEY RISKS AND UNCERTAINTIES AND RISK MANAGEMENT (continued)
where it operates. Future changes in regulation, fiscal or other
policies are unpredictable and beyond the control of the Directors
and could materially adversely affect the Group's business.
Areas where changes could have an adverse impact include, but
are not limited to:
-- other general changes in regulatory requirements, such as
prudential rules relating to the capital adequacy or liquidity
frameworks;
-- further developments in financial reporting, corporate
governance, conduct of business and employee compensation
regulations; and
-- other unfavourable political, military or diplomatic
developments producing social instability or legal uncertainty
which, in turn, may affect demand for the Group's products and
services.
INFLUENCE OF CONTROLLING SHAREHOLDER
John Gunn has an interest in approximately 52.89 per cent. of
the Company's issued share capital. John Gunn consequently is in a
position to exert significant influence over the Company, its
strategy, directors and operations. In order to partially mitigate
this risk, the Company and John Gunn have agreed a Relationship
Agreement governing his behaviour as the majority shareholder in
the Company.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Group's financial risk management objectives and
policies are set out in Note 21 to these financial statements.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A
WHOLE
The Director's believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long term,
-- Act fairly between the members of the Company,
-- Maintain a reputation for high standards of business conduct,
-- Consider the interests of the Company's employees,
-- Foster the Company's relationships with suppliers, customers and others, and
-- Consider the impact of the Company's operations on the community and the environment.
The Company is quoted on AIM and its members will be fully
aware, through detailed announcements, shareholder meetings and
financial communications, of the Board's broad and specific
intentions and the rationale for its decisions.
When selecting investments, issues such as the impact on the
community and the environment have actively been taken into
consideration.
The Company pays its employees and creditors promptly and keeps
its costs to a minimum to protect shareholders funds.
GOING CONCERN
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operation or existence for the
foreseeable future thus we continue to adopt the going concern
basis in preparing the financial statements. Further details
regarding the adoption of the going concern basis can be found in
Note 2 of the financial statements.
The Company's employees carry out their duties remotely, via the
network infrastructure in place. As a result, there was no
disruption to the operational activities of the Company during the
COVID-19 social distancing and working from home restrictions. All
key business functions continue to operate at normal capacity.
This report was approved by the board of directors and signed on
behalf of the board by:
Samantha Esqulant
Director
16 December 2020
DIRECTORS' REPORT
For the year ended 31 March 2020
The Directors present their annual report and the audited
financial statements of the Group for the year ended 31 March
2020.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
This information is now included within the Strategic Report
above, as part of the 'Review of the Business' under the Amendment
to the Companies Act 2006 of s.414c(2a).
DIRECTORS
The Board comprised the following directors who served
throughout the year and up to the date of this report save where
disclosed otherwise:
Director Position
------------------ -------------------------
John Gunn Executive Chairman
Samantha Esqulant Chief Executive Officer
Nilesh Jagatia Chief Financial Officer
/ Secretary
Anthony Binnie Non-Executive Director
The Group has qualifying third party indemnity provisions for
the benefit of its Directors which remain in force at the date of
this report.
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at
31 March 2020, held either directly or through related parties,
were as follows:
Name of director Number of ordinary shares % of ordinary share capital and voting rights
------------------- --------------------------- -----------------------------------------------
John Gunn 300,744,931 52.89%
Samantha Esqulant 1,687,500 0.3%
Nilesh Jagatia 562,500 0.1%
Details of the Directors' share options are shown below:
Number outstanding at Exercise Vesting Expiry
Name of Director 31 March 2020 Price Date Date
------------------- ----------------------- ---------- --------- ---------
J Gunn 5,250,000 3p Various 6.09.2021
S Esqulant 3,750,000 3p Various 6.09.2021
N Jagatia 3,000,000 3p Various 6.09.2021
12,000,000
------------------- ----------------------- ---------- --------- ---------
DONATIONS
The Group made charitable donations during the year of GBP34,560
(2019: GBP9,475).
EMPLOYEE CONSULTATION
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on various factors affecting the
performance of the Group. This is achieved through formal and
informal meetings. Equal opportunity is given to all employees
regardless of their sex, age, colour, race, religion or ethnic
origin.
DIRECTORS' REPORT
For the year ended 31 March 2020 (continued)
SIGNIFICANT SHAREHOLDINGS
On 30 November 2020 the following were interested in 3 percent.
or more of the Company's share capital (including Directors, whose
interests are also shown above):
% of ordinary share capital and voting
Number of ordinary shares rights
Name of shareholder
-------------------------------------------- -------------------------- --------------------------------------------
John Gunn 300,744,931 52.89%
Roger Barby 52,500,436 9.23%
Interactive Investors Services Nominees
Limited 33,211,533 5.84%
Jim Nominees 32,240,509 5.67%
Vidacos Nominees Limited 24,118,614 4.24%
POST YEAR EVENTS
Post year-end GIS, has seen increased market volatility and
uncertainty as a result of the impact of Covid-19. This has been
the greatest challenge to the financial service industry since the
financial crisis of 2008. During these periods of increased
volatility, the board of GIS took steps to limit client exposure to
riskier assets and strengthen our liquidity resources. The strategy
in which we chose to navigate the period, given the conditions, is
a testament to the strength of our business model. Our investments
in technology has enabled us to continue to serve our clients
around the World, with all employees working from home, offering
clients a seamless 24-hour 5 day a week service from London, Mumbai
and Hong Kong. The Board is proud of the hard work and
conscientiousness of the team, with many facing personal challenges
given the impact of the Covid-19 lockdown. Whilst largely relating
to the pre-crisis period, the 2020 results demonstrate the
stability of our business model and protection of our stakeholders'
interests. Our balance sheet, capital and liquidity position remain
strong and we remain well positioned to facilitate client activity
during these uncertain times. For now, our focus remains on the
welfare of our employees and the financial soundness of the
business.
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each of the persons who are directors of the
Company at the date when this report is approved:
-- So far as each director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- Each of the directors has taken all steps that they ought to
have taken as a director to make themselves aware of any relevant
audit information and to establish that the auditors are aware of
the information.
This information is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
AUDITOR
PKF Littlejohn LLP have expressed their willingness to continue
in office as auditor and it is expected that a resolution to
reappoint them will be proposed at the next annual general
meeting.
CORPORATE GOVERNANCE
The Directors recognise the importance of sound corporate
governance while considering the Group's size and stage of
development. The Company formally adopted the Quoted Companies
Alliance Code ("QCA Code") on 28 September 2018.
The corporate governance disclosures need to be reviewed
annually, and the company will also need to state the date on which
these disclosures were last reviewed. The QCA code adopted by the
Company is disclosed after the Statement of Director's
Responsibilities.
The Board meets regularly and is responsible for formulating,
reviewing and approving the Group's strategy, budgets, performance,
major capital expenditure and corporate actions.
DIRECTORS' REPORT
For the year ended 31 March 2020 (continued)
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading
and controlling the Company. The Board of Directors is responsible
for approving Company policy and strategy. It meets regularly and
has a schedule of matters specifically reserved to it for decision.
All Directors have access to advice from independent professionals
at the Company's expense. Training is available for new and
existing Directors as necessary.
Matters which would normally be referred to other than the
appointed committees are dealt with by the Board as a whole.
AUDIT COMMITTEE
The Audit Committee is chaired by Anthony Binnie and its other
member is Nilesh Jagatia the Chief Financial Officer. It is
expected that they will be joined by the second independent
Non-Executive Director following their appointment. The Audit
Committee acts independently to ensure that the interests of the
Company and its Group are properly protected in relation to
financial reporting and internal controls.
The directors have established the Audit Committee to ensure
that appropriate financial reporting procedures are properly
monitored, controlled and reported on at a minimum by IFRS approved
foreign exchange accounting policies, and rules governed by the FCA
and AIM employing general accepted account practices.
The Audit Committee provides a forum for reporting by the
Group's external auditors. The Committee is also responsible for
reviewing a wide range of matters, including half-year and annual
results before their submission to the Board, and for monitoring
the controls that are in force to ensure the integrity of
information reported to shareholders. The Audit Committee will
advise the Board on the appointment of external auditors and on
their remuneration for both audit and non-audit work, and will
discuss the nature, scope and results of the audit with the
external auditors. The Committee will keep under review the cost
effectiveness and the independence and objectivity of the external
auditors.
The Audit Committee meets not less than twice in each financial
year.
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for making
recommendations to the Board, within agreed terms of reference, on
the Company's framework of executive remuneration and its cost. The
Remuneration Committee also determines and reviews the performance
and the terms of service of the directors, including salary,
incentives and benefits, and makes recommendations to the Board.
The Board itself determines the remuneration of the Executive
Directors.
The Remuneration Committee comprises of the Chief Executive
Director Samantha Esqulant and is chaired by the Independent
Non-Executive Director Anthony Binnie. It is expected that they
will be joined by the second independent Non-Executive Director
following their appointment. The Committee meets as often as it
deems necessary and at least annually to discharge its
responsibilities and to support good decision making by the
Board.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority by
the management. In addition to the publication of an annual report
and an interim report, there is regular dialogue with shareholders
and analysts. The Annual General Meeting is viewed as a forum for
communicating with shareholders, particularly private investors.
Shareholders may question the Chief Executive Officer and other
members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's
system of internal control and for reviewing the effectiveness of
these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of
the Group failing to achieve its strategic objectives. It should be
recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss. The Group
has well established procedures which are considered adequate given
the size of the business.
DIRECTORS' REPORT
For the year ended 31 March 2020 (continued)
REMUNERATION
The remuneration of the directors has been fixed by the Board as
a whole. The Board seeks to provide appropriate reward for the
skill and time commitment required so as to retain the right
calibre of director at a cost to the Company which reflects current
market rates.
Details of directors' fees and of payments made for professional
services rendered are set out in Note 10 to the financial
statements and details of the directors' share options are set out
in the Directors' Report.
This report was approved by the board of directors and signed on
behalf of the board by:
Samantha Esqulant
Director
16 December 2020
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the report of the
directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have also elected to prepare the Company financial
statements in accordance with IFRS as adopted by the EU. Under
company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs and profit or loss of the Company and Group
for that period. In preparing these financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently
-- make judgments and accounting estimates that are reasonable and prudent
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and Group
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's and
Group's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and Group and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for the maintenance and
integrity of the corporate, financial and investor information
contained on the Company's website. Legislation in the UK
concerning the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions. The
Company is compliant with AIM Rule 26 regarding the Company's
website.
John Gunn
Executive Chairman
16 December 2020
CORPORATE GOVERNANCE REPORT
(AIM Rules for Companies (effective 30 March 2018, as updated 30
November 2020))
Octagonal Plc
Quoted Companies Alliance Code ("QCA Code")
Principles: Application:
------------------------------------------------------------------------------------------
This section complies with the requirements
1) Strategy of the QCA Code.
and business The Board has concluded that the highest medium-
model to promote and long-term value can be delivered to its
long-term values shareholders by the adoption of a single strategy
for shareholders for the Group and Company. The principal activity
of the Group is a Financial Services group through
its subsidiary Global Investment Strategy UK
Ltd ("GIS") which provides global settlement
and safe custody services to investors, hedge
funds, institutions, family offices and high
net worth individuals, along with other ancillary
services. GIS is the trading entity of the Group,
authorised and regulated by the Financial Conduct
Authority, and is a member of The London Stock
Exchange.
The board implements this strategy by developing
a business model focused on driving profitability
and longer-term shareholder value through several
key areas:
(iii) growing revenues organically through seeking
new clients and identifying and implementing
new services to existing and new clients,
(iv) improving margins through investing in
technology, creating efficiencies and a drive
to reduce frictional costs etc. This focus is
continuing to bear fruit with revenue improvements
and margin gains and expanding GIS's FCA regulatory
permissions to enhance group revenues and profitability
through developing new business lines.
------------------------------------------------------------------------------------------
This section complies with the requirements
2) Meeting and of the QCA Code.
understanding The Board is committed to maintaining good communication
shareholders' and having constructive dialogue with its shareholders.
needs and Furthermore, Octagonal plc's shareholders and
expectations investors can keep themselves updated about
the current Company's position by visiting the
Octagonal plc's website https://octagonalplc.com/
.
------------------------------------------------------------------------------------------
This section complies with the requirements
3) Considering of the QCA Code.
stakeholders Octagonal plc's Board recognises that the long-term
and social success of the Company is reliant on efforts
responsibilities of its employees, consultants, suppliers, regulators
and their and stakeholders.
implications Employees: In order to support employees' growth
for long term and enforce social responsibilities Octagonal
success plc's Board has implemented systems to monitor
and evaluate employees' performance and to encourage
well performing employees to progress further
by supporting them to attend courses. Employees'
performance is monitored through a process designed
to encourage open and confidential communication
between the management and the employees on
a regular basis.
Consultants: The Board recognises that it may
need industry specific consultants as they bring
knowledge and expertise for specific areas,
and in some instances, they also provide training
for existing staff.
Suppliers: Octagonal plc maintains a good working
relationship with its suppliers to provide for
its growing business and to support its existing
needs.
Regulators: The Board monitors and implements
any legal or regulatory changes where possible
both domestically and overseas and is fully
committed to compliance.
Stakeholders: Octagonal plc encourages its shareholders
to actively participate in meetings and shareholders
are provided with the opportunity to give feedback
on a regular basis.
------------------------------------------------------------------------------------------
This section complies with the requirements
4) Risk Management of the QCA Code.
Octagonal plc's Board is responsible for determining
the nature and the extent of the risks it is
willing to take in achieving the Company's strategic
objectives. The Board manages the risks through
implementation of internal controls systems.
Octagonal plc has robust controls and procedures
in place to manage internal controls of the
Company and these are considered appropriate
to the size and complexity of the organisation.
Additionally, the audit committee has been set
up to evaluate and manage significant risks
faced by the Company.
Control is established mainly through the Company's
directors who monitor and support the day to
day running of the Company and where possible
comply with the Board's and shareholders concerns
and requirements.
Octagonal plc has identified and implemented
the following risks and controls to mitigate
risks: Activity: Risk Impact Control(s)
Market risk Limited market Trades not The Board
risk in respect settled does not see
of its trading by 3(rd) this as significant
as agent in party banks given the
equities and high level
debt instruments of regulation
as its services in this industry.
are principally Market exposure
settlement arising from
and custody. unsettled
However, the trades is
Company and closely monitored
its Group does and managed
have counterparty during each
risk. trading day.
--------------------- --------------------- ----------------------
Counterparty Counterparty Negative For agent
Risk risk is primarily financial banks, not
with large impact if seen as significant
agent banks there is given the
and clients. failure high level
to deliver of regulation
on obligations. in our industry.
With clients,
it is largely
offset by
collateral
or risk margin
deposited
with the Group.
--------------------- --------------------- ----------------------
Stock market The Group's Adverse This is a
conditions business is market conditions general sector
highly dependent resulting risk and applies
on stock market in reducing to all organisations
conditions, volumes in the industry.
especially of trading
volumes of may have
equities and a significant
other financial negative
products traded. effect on
revenues
and profitability.
--------------------- --------------------- ----------------------
Management High turnover Operational Recognition
and loss of staff and and reputational and support
of key personnel other recruitment impact. for well performing
/ staff issues. existing employees
and promotion
of an open
culture and
meritocracy.
Implementation
of training
and development
to maintain
and enhance
skillset to
meet operational
requirements.
--------------------- --------------------- ----------------------
Regulatory As GIS and The Group's Robust policies
/ legal GIS Hong Kong business and procedures
adherence are regulated is subject to be followed.
businesses, to substantial
they rely heavily regulation External FCA
on continuing both in and SFC compliance
to be authorised the UK, auditors involved
under the Financial Hong Kong, and updated
Conduct Authority USA and in all aspects
("FCA") and other jurisdictions. of the business.
the Securities Adverse
and Futures regulatory Operating
Commission developments best practices
of Hong Kong could have in the industry
("SFC") a material and oversight
respectively, adverse by directors
to be able effect on and management.
to undertake the Group's
certain roles operating Maintaining
and operations. results, effective
financial communication
condition with the Company's
and prospects. Auditors and
NOMAD on regular
basis.
--------------------- --------------------- ----------------------
Operational Failure of Loss of Disaster recovery
systems and key data and business
controls. and inability continuity
to operate policies to
effectively. be followed
in case of
crisis.
Maintaining
strong IT
systems and
controls in
place.
--------------------- --------------------- ----------------------
Financial Internal: Inadequate Loss of The Board
systems and business. regularly
controls of reviews operating
accounting Inability and strategic
in place and to continue risks.
liquidity risk. trading
as a going The audit
External: concern. committee
Market and provides adequate
credit crisis and sufficient
Short term information
liquidity freezes to the Company's
Commercialisation external auditors.
Brexit.
Robust capital
and liquidity
levels in
place alongside
effective
accounting
systems and
controls.
--------------------- --------------------- ----------------------
The above matrix is kept up to date and regularly
reviewed as changes arise in order to mitigate
risks.
------------------------------------------------------------------------------------------
This section does not comply with the requirements
5) Maintain of the QCA Code as the board composition does
the board as not include a Non-Executive Chairman and two
a well-functioning Non-Executive Directors.
and balanced The Company notes that the recommendation under
team led by the QCA code is for the role of the Chairman
the chair to hold a Non-Executive position. The Company's
current Executive Chairman (John Gunn) is the
founder of the main operating subsidiary and
is currently driving the strategies for the
two new divisions (Synergis and GIS Hong Kong).
Given the current investment and growth phase
of the company, the Company feels that it is
appropriate for the Chairman to hold an Executive
role. The Chairman is conscious of his role
in running the Board as opposed to the Company
and regularly consults with the Nomad and Company
lawyers to ensure that appropriate Board protocol
is maintained. In addition, at the date of this
report, the company has one Non-Executive Director
and is currently seeking an additional Non-Executive
director that has substantial experience in
the new divisions.
At the date of this publication the Board comprises
of the Executive Chairman (John Gunn), the Chief
Executive Officer (Samantha Esqulant), the Chief
Financial Officer (Nilesh Jagatia) and the independent
Non-Executive Director (Anthony Binnie). Further
detail about the skills and capabilities of
these directors are set out in principle six
below.
The letter of appointment of the Company's Directors
and Secretary are available for inspection at
the Company's registered office and all directors
are subject to re-election at intervals no more
than three years.
The Board is responsible for strategy and performance
of major capital projects and the framework
of internal controls. All directors have access
to seek independent advice should they feel
that their knowledge of the given task is insufficient.
There is a clear balance between the executive
directors and the non-executive director.
Furthermore, the directors liaise with the Company
Secretary (Nilesh Jagatia), who is responsible
for compliance with the Board procedures and
that applicable rules and regulations are complied
with.
The Board meets monthly. The Board established
the following committees; Audit Committee and
Remuneration Committee. All Directors are encouraged
to participate and attend meetings on a regular
basis and the attendance is closely monitored.
Despite the QCA recommendation of having two
independent directors Octagonal plc has opted
to have only one non-executive director as it
feels that this is appropriate to the current
size and complexity of the organisation. At
the date of this report, the Company is looking
to appoint an additional non-executive director
to provide a balance of the non-executive directors
and executive-directors as per the QCA Code.
------------------------------------------------------------------------------------------
This section complies with the requirements
6) Directors' of the QCA Code.
experience, The Chairman: John Gunn
skills and Mr Gunn is currently the Chairman of Octagonal
capabilities Plc, and Chairman of GIS, having founded the
business in 2002. With a career spanning over
30 years in the financial services industry,
Mr Gunn began his career in Hoare Govett and
has since worked at Carr Sheppards Limited,
Assicurazioni Generali and Williams de Broe
Plc, where he was a senior investment manager
until 2002. From 2004, he has also worked within
the renewable energy sector. He is currently
the Chairman and CEO of AIM traded Inspirit
Energy Holdings Plc. Mr Gunn holds 52.89% of
issued share capital and is the majority shareholder
of Octagonal PLC.
Chief Executive Officer: Samantha Dru Esqulant
Ms Esqulant has been in the financial services
industry for over sixteen years and has experience
of working in both boutique and large corporate
organisations including LCF Rothschilds and
Barclays Capital. She was employed at Bank of
New York Mellon for over 7 years working on
a variety of matters including overseeing the
settlements team and implementing controls within
the department to decrease risk and exposure.
Ms Esqulant joined the team at GIS to assist
with risk management and embedding control procedures.
She is also a director of GIS.
Chief Financial Officer: Nilesh Jagatia
Mr Jagatia currently serves as Finance Director
at Octagonal plc and also currently holds the
Finance Director position with AIM quoted Inspirit
Energy Holdings Plc and Limitless Earth Plc
(LME). Nilesh has been involved with several
IPO's and was previously Group Finance Director
of an AIM quoted companies including: Online
Media and Publishing Company, Real estate, and
Fintech. Nilesh has over 20 years' experience,
including senior financial roles in divisions
of both Universal Music Group and Sanctuary
Group plc. He served as a Finance Director for
an independent record label that expanded into
the US. Nilesh is a qualified accountant and
holds a degree in finance.
Non-Executive Director: Anthony Binnie
Anthony Binnie has founded and served as a director
on several property development companies focused
on development opportunities in London and the
South East. Having graduated from Bristol University
with a degree in Economics, Anthony commenced
training as an accountant with Baker Tilly before
moving into their Corporate Finance department.
Within this department he worked on private
and public company corporate finance and due
diligence mandates. Having left Baker Tilly,
Anthony moved into property development and
is currently a Founder and Director of the Brockwell
Group Ltd. Anthony serves on the Company's Audit
and Remuneration Committees.
In addition to the Board directors above Octagonal
plc uses Beaumont Cornish Limited as its nominated
adviser (NOMAD) and Hill Dickinson LLP to assist
with legal and regulatory matters and FTB ITC
Services Ltd to support the IT systems.
------------------------------------------------------------------------------------------
This section complies with the requirements
7) Evaluation of the QCA Code.
of the Board's Octagonal plc is fully committed to uphold Directors
performance independence and to regularly evaluate their
performance.
Where appropriate, Octagonal plc sets targets
which the Directors have to adhere to. Each
Director is assigned with an individual target
which is linked to the corporate and financial
targets of the Company. Career support, development
and training may also be provided to the Directors
where necessary.
------------------------------------------------------------------------------------------
This section complies with the requirements
8) Promoting of the QCA Code.
corporate culture, Octagonal plc is committed to ethical conduct
ethical values and to the governance structures that ensure
and behaviours that the Company delivers long term value and
earns the trust of its shareholders. The shareholders
are encouraged at General Meetings to express
their views and expectations in an open and
respectful dialogue.
The Board is fully aware that its conduct impacts
the corporate culture of the Company as a whole
and that this will impact the future performance
of the Company. The Directors are invited to
provide an open comprehensive dialogue and constructive
feedback to the employees, and to promote ethical
values and behaviours within the Company.
Octagonal plc also believes that doing business
honestly, ethically, with integrity helps to
build long-term, trusting relationships with
our employees, customers, suppliers and stakeholders.
Our Code of business Conduct means that our
employees understand that we pride ourselves
on having high ethical standards. Octagonal
plc has zero tolerance for bribery and corruption
amongst our employees.
------------------------------------------------------------------------------------------
This section complies with the requirements
9) Maintenance of the QCA Code.
of governance The Board is responsible for the ultimate decision
structures and making, the structures and processes adopted
processes to by Octagonal plc. The Board is headed by the
support good Chairman. In order to comply with the Companies
decision making Act 2006 the Board recognises that it must comply
by the board with the following principles set out by the
Act:
* duty to exercise independent judgement;
* duty to exercise reasonable care, skill and
diligence;
* duty to avoid conflicts of interest;
* duty not to accept benefits from third parties; and
* duty to declare interest in a proposed transaction or
arrangement.
The Chairman is responsible for leading the
Board, sets the agenda and ensures it is an
effective working group at the head of the Company.
The Chairman is also responsible for promoting
a culture of openness and effective communication
with shareholders and to ensure that all board
members receive accurate, timely and clear information.
The Executive Directors are responsible for
day to day running of the Company and effective
communications with the Board and the Shareholders.
They represent the Company to ensure quality
of information provision, they challenge and
monitor performance of the teams, and they set
business plans and targets for the Company.
Non-Executive Director Octagonal plc has one
Non-Executive Director who is an independent
director. This is to reinforce the Company's
commitment to a transparent and effective governance
structure which encourages and provides ample
opportunity for challenge and deliberation.
The Non-Executive Director's objective is to
scrutinise the performance of the Board and
senior management as well as to monitor performance,
agree goals and objectives. They will satisfy
themselves on the integrity of financial information
and that financial controls and systems of risk
management are robust and fit for purpose. The
Non-Executive Director is also closely working
with Remuneration Committee as it is responsible
for determining appropriate levels of remuneration
of Executive Directors and have a prime role
in appointing / removing senior management.
The Company established the following committees
to help with processes, structures and support
good decision making by the Board.
Audit Committee - The Audit Committee is currently
chaired by Anthony Binnie and its other member
is Nilesh Jagatia. The Committee provides a
forum for reporting by the Group's external
auditors. The committee is also responsible
for reviewing a wider range of matters, including
half-year and annual results before their submission
to the board, as well as monitoring the controls
that are in force to ensure the integrity of
information reported to shareholders. The Audit
Committee advises the Board on the appointment
of external auditors and on their remuneration
for both audit and non-audit work, and it also
discusses the nature, scope and results of the
audit with the external auditors. The committee
keeps under review the cost effectiveness, the
independence and objectivity of the external
auditors.
Remuneration Committee - The Remuneration Committee
is currently chaired by Anthony Binnie and its
other member isSamantha Esqulant. The Committee
is responsible for making recommendations to
the Board, within agreed terms of reference,
on the Company's framework of executive remuneration
and costs. The Remuneration Committee determines
the contract terms, remuneration and other benefits
for the Executive Directors, including performance
related bonus schemes and compensation payments.
The Board itself determines the remuneration
of the non-executive directors.
It is recognised that if the Company grows,
it may be necessary to review the current structure
in order to provide better segregation of the
responsibilities and clear lines of reporting,
that are consistent with industry standards.
------------------------------------------------------------------------------------------
This section complies with the requirements
10) Shareholders of the QCA Code.
communication The Company recognises that its shareholders
are imperative for future growth and prosperity
of the Company. The shareholders are treated
equally both in relation to participation at
meetings and in the exercising of voting rights.
Octagonal plc's shareholders are encouraged
to attend its annual general meetings and the
Company provides regulatory news updates and
any other matters the Board feels fit. The Company
maintains the following website https://octagonalplc.com/
for investor relations.
------------------------------------------------------------------------------------------
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF OCTAGONAL PLC
Opinion
We have audited the financial statements of Octagonal Plc (the
'parent company') and its subsidiaries (the 'group') for the year
ended 31 March 2020 which comprise the Group Statement of Profit
and Loss, the Group Statement of Comprehensive Income, the Group
and Company Statements of Financial Position, the Group Statement
of Changes in Equity, the Company Statement of Changes in Equity,
the Group and Company Statements of Cash Flows and notes to the
financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and as
regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
March 2020 and of the group's profit and parent company's loss for
the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Our application of materiality
We apply the concept of materiality both in planning and
performing of our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. Misstatements below these levels will not
necessarily be evaluated as immaterial as we also take into account
the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole. The materiality for the Group
financial statements as a whole was set at GBP55,000 (2019:
GBP73,000) and is based on 8% of profit before tax (2019: 7% of
profit before tax) which we consider to be an appropriate benchmark
given the key performance indicators of the entity relate to profit
before tax.
We set performance materiality at 80%, (2019: 80%) of
materiality for the financial statements as a whole. Performance
materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. For each component in the
scope of our group audit, we allocated a materiality that was less
than our overall group materiality.
We agreed with the board that we would report to the committee
all individual differences identified during the course of our
audit in excess of GBP2,750, (2019 GBP4,200). We also agreed to
report differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
We determined the materiality for the parent company to be
GBP37,000, with a performance materiality of GBP29,600. We agreed
with the board. We agreed with the board that we would report to
the committee all individual differences identified during our
audit in excess of GBP1,850. Materiality is based on 8% of profit
before tax which we consider to be an appropriate benchmark given
the key performance indicators of the entity relate to profit
before tax.
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF OCTAGONAL PLC
(continued)
An overview of the scope of our audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as greatest
complexity, risk and size.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How the scope of our audit responded
to the key audit matter
====================================== ========================================================================
Revenue recognition (refer to
note 6)
========================================================================
Revenue is a significant item The Group entity Global Investment
in the income statement and impacts Strategy Limited generates revenue
on a number of management's key for the group. As this entity is audited
performance and strategic indicators. by a component auditor, we have performed
the following: We reviewed the
component auditor
working paper file.
Our review included:
* A review of the substantive revenue testing performed
which included reviewing a sample of transactions.
* A sample of revenue transactions were reviewed prior
to and after the year end to ensure that revenue was
recognised in the correct period.
* Ensured that revenue is recognised in accordance with
IFRS 15.
From our review,
there were no issues
noted in regard
to revenue recognition.
Intangible Asset (refer to note
14)
Synergis Capital Plc is developing The recognition of the capitalised
a website platform and as such development costs as an Intangible
is capitalising development costs asset and the review of impairment
relating to the development of thereon has been identified as a Key
this asset. Audit Matter (KAM) for the group.
The Company has not completed Our work in this area included:
the listing of the bond and as * Substantive testing of additions to supporting
such has not yet commenced trading. documentation. Testing the existence, ownership and
The Directors need to consider rights to the assets
whether there are any indicators
of impairment relating to the
intangible asset and capitalised
costs. In addition, it is necessary * We reviewed the costs capitalised throughout the
to review whether the development period to ensure they their treatment is in line with
costs have been recognised in IFRSs
accordance with IAS 38.
* We reviewed and challenged management's assessment of
impairment and consider whether there have been any
impairment indicators triggered during the period
We verified eligibility for recognition
of development costs in accordance
with the criteria required to be demonstrated
under IAS 38, including in particular:
* Technical feasibility (including regulatory or market
approval);
* Ability to use or sell the intangible asset;
* Availability of technical, financial and other
resources to complete the development.
From our review, there were no issues
with either the recognition of the
capitalised costs or impairment thereon
========================================================================
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF OCTAGONAL PLC
(continued)
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the group and parent company
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
group and parent company financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements,
the directors are responsible for assessing the group's and the
parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF OCTAGONAL PLC
(continued)
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Jonathan Bradley-Hoare (Senior Statutory Auditor) 15 Westferry
Circus
For and on behalf of PKF Littlejohn LLP
C anary Wharf
Statutory Auditor
London
E14 4HD
16 December 2020
GROUP STATEMENT OF PROFIT AND LOSS
For the year ended 31 MARCH 2020
Notes 2020 2019
------------------------------------------------------------------------------- ------
restated
------------------------------------------------------------------------------- ------
GBP'000 GBP'000
------------------------------------------------------------------------------- ------ -------- ----------------
Revenue 6 5,752 5,311
Cost of sales (1,447) (1,308)
Gross profit 4,305 4,003
Administrative expenses 4 (3,576) (3,264)
Share based payment expense - (63)
Operating profit 7 729 676
Other gains and losses 9 (135) (16)
Profit before tax 594 660
Tax 11 (302) 1
Profit for the year 292 661
Attributable to:
Shareholders in the parent company 343 807
Non-controlling interests (51) (146)
-------------------------------------------------------------------------------- ------ -------- ----------------
292 661
------------------------------------------------------------------------------- ------ -------- ----------------
Earnings per share attributable to owners of the parent company from
continuing operations
Basic and diluted (pence per share) 12
Basic 0.06 0.14
Fully diluted 0.06 0.13
-------------------------------------------------------------------------------- ------ -------- ----------------
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent company pro t
and loss account. The total comprehensive profit for the parent
company for the year was GBP312,000 (2019: loss GBP496,000
restated).
The accounting policies and notes are an integral part of these
financial statements.
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 MARCH 2020
2020 2019
---------------------------------------------------------------
GBP'000 GBP'000
--------------------------------------------------------------- -------- --------
Profit for the year attributable to
Shareholders in the parent company 343 807
Non-controlling interests (51) (146)
---------------------------------------------------------------- -------- --------
292 661
Other comprehensive income
--------------------------------------------------------------- -------- --------
Items that may be subsequently reclassified as profit or loss
Exchange differences on translation of foreign operations 45 -
--------------------------------------------------------------- -------- --------
45 -
--------------------------------------------------------------- -------- --------
Total comprehensive income for the year attributable to
Shareholders in the parent company 388 807
Non-controlling interests (51) (146)
---------------------------------------------------------------- -------- --------
337 661
--------------------------------------------------------------- -------- --------
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
As at 31 MARCH 2020
GROUP COMPANY
------------------- -------------------
Notes 2020 2019 2020 2019
--------------------------------------------------------- ------
restated restated
--------------------------------------------------------- ------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ------ -------- --------- -------- ---------
Non-Current assets
Goodwill 13 2,869 2,869 - -
Other intangible assets 14 805 657 - -
Property, plant and equipment 15 39 40 - -
Investment in subsidiaries 16 - - 9,137 9,137
3,713 3,566 9,137 9,137
--------------------------------------------------------- ------ -------- --------- -------- ---------
Current assets
Investments held at fair value through profit and loss 17 225 266 - -
Trade and other receivables 18 489 533 17 42
Cash and cash equivalents 19 5,463 5,466 1 3
6,177 6,265 18 45
--------
Current liabilities
Trade and other payables 20 942 722 2,342 2,112
Current tax liabilities 632 561 - -
1,574 1,283 2,342 2,112
--------------------------------------------------------- ------ -------- --------- -------- ---------
Net assets 8,316 8,548 6,813 7,070
--------------------------------------------------------- ------ -------- --------- -------- ---------
Equity
Share capital 22 285 285 285 285
Share premium account 22 171 171 171 171
Reverse acquisition reserve 679 679 - -
Merger reserve - - 6,555 6,555
Investment reserve - - 110 110
Foreign currency reserve 45 - - -
Share option and warrant reserve 162 162 162 162
Retained earnings 6,979 7,205 (470) (213)
--------------------------------------------------------- ------ -------- --------- -------- ---------
Equity attributable to owners of the Company 8,321 8,502 6,813 7,070
Non-controlling interests (5) 46 - -
--------------------------------------------------------- ------ -------- --------- -------- ---------
Total equity 8,316 8,548 6,813 7,070
--------------------------------------------------------- ------ -------- --------- -------- ---------
These financial statements were approved by the Board of
Directors on 16 December 2020 and signed on their behalf by:
Samantha Esqulant Nilesh Jagatia
Director Director
Company number: 06214926
The accounting policies and notes are an integral part of these
financial statements
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 MARCH 2020
Share Share Reverse Share Foreign Retained Equity Non-Controlling Total
Capital Premium Acquisition Option Currency Earnings Attributable Interests Equity
Reserve Reserve Reserve to Owners
of the
Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- ------------ -------- --------- --------- ------------- ---------------- --------
Balance at 1
April 2018 284 171 679 99 - 6,972 8,205 208 8,413
Total
comprehensive
income
for the year - - - - - 807 807 (146) 661
Dividend paid - - - - - (568) (568) - (568)
Transactions
with owners - - - - - (100) (100) - (100)
Share issues 1 - - - - 1 - 1
Share based
payment expense - - - 63 - - 63 - 63
Adjustment
arising from
change
in
non-controlling
interest - - - - - 94 94 (16) 78
Balance at 31
March 2019 285 171 679 162 - 7,205 8,502 46 8,548
----------------- -------- -------- ------------ -------- --------- --------- ------------- ---------------- --------
Balance at 1
April 2019 285 171 679 162 - 7,558 8,855 58 8,913
Prior year
adjustment
(note
4 (i)) - - - - - (191) (191) - (191)
Prior year
adjustment
(note
4 (iii)(iv)) - - - - - (162) (162) (12) (174)
Balance at 1
April 2019
restated 285 171 679 162 - 7,205 8,502 46 8,548
----------------- -------- -------- ------------ -------- --------- --------- ------------- ---------------- --------
Profit for the
year - - - - - 343 343 (51) 292
Exchange
differences on
translation
of foreign
operations - - - - 45 - 45 - 45
----------------- -------- -------- ------------ -------- --------- --------- ------------- ---------------- --------
Total
comprehensive
income
for the year 45 343 388 (51) 337
----------------- -------- -------- ------------ -------- --------- --------- ------------- ---------------- --------
Dividend paid - - - - - (569) (569) - (569)
Share based - - - - - - - - -
payment expense
Balance at 31
March 2020 285 171 679 162 45 6,979 8,321 (5) 8,316
The accounting policies and notes are an integral part of these
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 MARCH 2020
Share Share Merger Reserve Investment Share Option & Retained Total
Capital Premium Reserve Warrant Earnings
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- --------- --------------- ---------------- --------------- ---------- --------
Balance at 1
April 2018 284 171 6,555 110 99 850 8,069
Total
comprehensive
expense for
the year - - - - - (496) (496)
Dividend paid - - - - - (567) (567)
Share issues 1 - - - 1
Share based
payment
expense - - - - 63 - 63
Balance at 31
March 2019 285 171 6,555 110 162 (213) 7,070
---------------- --------- --------- --------------- ---------------- --------------- ---------- --------
Balance at 1
April 2019 285 171 6,555 110 162 109 7,392
Prior year
adjustment
(note 4 (i)) - - - - - (191) (191)
Prior year
adjustment
(note 4 (iii)) - - - - - (131) (131)
---------------- --------- --------- --------------- ---------------- --------------- ---------- --------
Balance at 1
April 2019
restated 285 171 6,555 110 162 (213) 7,070
---------------- --------- --------- --------------- ---------------- --------------- ---------- --------
Total
comprehensive
expense for
the year - - - - - 312 312
Dividend paid - - - - - (569) (569)
Balance at 31
March 2020 285 171 6,555 110 162 (470) 6,813
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
For the year ended 31 MARCH 2020
GROUP COMPANY
2020 2019 2020 2019
restated restated
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- -------- ----------------- -------- ---------
OPERATING ACTIVITIES
Profit/(loss) for the year before taxation 594 660 312* (322)
Adjusted for:
Depreciation 14 31 - -
Amortisation of intangibles 27 - - -
Share based payment expense - 63 - 63
Investment impairment 135 15 - -
Operating cash flows before movements in working capital 770 769 312 (259)
(Increase)/ decrease in trade and other receivables 44 (33) 25 (40)
Increase in trade and other payables 407 336 230 191
Other movement 22 - - -
---------------------------------------------------------- -------- ----------------- -------- ---------
Net cash from / (used in) operations 1,242 1,072 567 (108)
Tax paid (191) - - -
Net cash from / (used in) operating activities 1,051 1,072 567 (108)
---------------------------------------------------------- -------- ----------------- -------- ---------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (13) - - -
Development costs (174) (248) - -
Purchase of investments (302) (250) - -
Loan to a related party (9) (14) - -
Net cash used in investing activities (498) (512) - -
---------------------------------------------------------- -------- ----------------- -------- ---------
FINANCING ACTIVITIES
Non-controlling interest investment 14 150 - -
Increase in inter-company loan - - - 679
Dividend paid to Company's shareholders (569) (568) (569) (568)
Net cash from financing activities (555) (418) (569) 111
---------------------------------------------------------- -------- ----------------- -------- ---------
Net increase/(decrease) in cash and cash equivalents (3) 142 (2) 3
Cash and cash equivalents at beginning of year 5,466 5,324 3 -
Cash and cash equivalents at end of year 5,463 5,466 1 3
---------------------------------------------------------- -------- ----------------- -------- ---------
* Included within the Company profit is an amount of GBP600,000
which represents a dividend received from its subsidiary.
The accounting policies and notes are an integral part of these
financial statements .
NOTES TO THE GROUP FINANCIAL STATEMENTS
For the year ended 31 MARCH 2020
1. GENERAL INFORMATION
The Company is incorporated and domiciled in England and Wales
as a public limited company and operates from its registered office
2nd Floor 2 London Wall Buildings, London, England, EC2M 5PP.
Octagonal plc's shares are listed on the AIM of the London Stock
Exchange. The Group's main activity is that of a financial services
business offering a wide range of services to institutional, family
office and high net worth clients.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements of Octagonal plc (the "Company") and
its subsidiaries (the "Group") have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
for use in the European Union ("EU") applied in accordance with the
provisions of the Companies Act 2006.
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board ("IASB") and the
International Financial Standards Interpretations Committee ("IFRS
IC") and there is an ongoing process of review and endorsement by
the European Commission. The consolidated financial statements have
been prepared on the historical cost basis except for certain
financial instruments that are measured at fair value at the end of
each reporting period, as explained in the accounting policies
below.
In accordance with reverse acquisition accounting convention the
comparative information for the group for 2015 relates to the
business of GIS.
The principal accounting policies adopted and applied in the
preparation of the Group and Company Financial statements are set
out below.
These have been consistently applied to all the years presented
unless otherwise stated.
PRIOR YEAR ADJUSTMENTS
The 2019 balances have been restated in the 2020 financial
statements as PKF Littlejohn LLP noted an error in the accounting
treatment of the start-up costs in relation to GIS Hong Kong
incurred by the Group.
The 2019 balances were also restated to account for the dividend
in specie payment made in Synergis Capital, which was not accounted
for at 31 March 2019.
A third adjustment was made to the 2019 balances to write-off
prior year tax assets in the parent and subsidiary companies.
Further details are included in Note 4 to the financial
statements.
GOING CONCERN
Any consideration of the foreseeable future involves making a
judgement, at a particular point in time, about future events which
are inherently uncertain. The ability of the Group to carry out its
planned business objectives is dependent on its continuing ability
to raise adequate financing from equity investors and/or the
achievement of profitable operations.
Nevertheless, at the time of approving these Financial
Statements and after making due enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue operating for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
Financial Statements.
The Company's employees carry out their duties remotely, via the
network infrastructure in place. As a result, there was no
disruption to the operational activities of the Company during the
COVID-19 social distancing and working from home restrictions. All
key business functions continue to operate at normal capacity.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
NEW STANDARDS, AMMENTS AND INTERPRETATIONS ADOPTED BY THE GROUP
AND COMPANY
The Group and Company have applied the following new and amended
standards for the first time for its annual reporting period
commencing 1 April 2019:
-- IFRS 16, 'Leases';
-- Prepayment Features with Negative Compensation - Amendments to IFRS 9;
-- Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28;
-- Annual Improvements to IFRS Standards 2015-2017 Cycle;
-- Plan Amendments, Curtailment or Settlement - Amendments to IAS 19;
-- Interpretation 23 'Uncertainty over Income Tax Treatments'; and
-- Definition of Material - Amendments to IAS 1 and IAS 8.
These new and amended standards have not had a material effect
on the Group and Company financial statements.
NEW STANDARDS, AMMENTS AND INTERPRETATIONS NOT YET ADOPTED
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
April 2019 and have not been applied in preparing these
consolidated financial statements. None of these is expected to
have a significant effect on the consolidated financial statements
of the Group.
BASIS OF CONSOLIDATION
The Group's consolidated financial statements incorporate the
financial statements of Octagonal Plc (the "Company") and entities
controlled by the Company (its subsidiaries). Subsidiaries are
entities over which the Group has the power to govern the financial
and operating policies generally accompanying a shareholding of
more than one half of the voting rights. The existence and effect
of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The Company acquired Global Investment Strategy UK Limited on 30
June 2015 through both cash consideration and a share-for-share
exchange. As the shareholders of GIS have control of the legal
parent, Octagonal plc, the transaction has been accounted for as a
reverse acquisition in accordance with IFRS 3 "Business
Combinations".
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
BUSINESS COMBINATIONS
The acquisition of subsidiaries is accounted for using the
acquisition method under IFRS 3. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of
exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of
the acquiree, plus any costs directly attributable to the business
combination. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition
under IFRS 3 are recognised at their fair value at the acquisition
date, except for non-current assets (or disposal groups) that are
classified as held for resale in accordance with IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations, which are
recognised and measured at fair value less costs to sell.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
GOODWILL
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group's interest in the fair value of
the identifiable assets and liabilities of a subsidiary at the date
of acquisition and is included as a non-current asset.
Goodwill is tested annually, or more regularly should the need
arise, for impairment and is carried at cost less accumulated
impairment losses. Any impairment is recognised immediately in the
income statement and is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose
of impairment testing.
On disposal of a subsidiary the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
In accordance with IAS 36 the Group values goodwill at the lower
of its carrying value or its recoverable amount, where the
recoverable amount is the higher of the value if sold and its value
in use. In addition, IAS 38 requires intangible assets with finite
useful lives to follow the same impairment testing as Goodwill
including the use of value in use calculations.
REVERSE ACQUISITION
The acquisition of Global Investment Strategy UK Limited on 30
June 2015 was accounted for using the reverse acquisition method.
The following accounting treatment was applied in respect of the
reverse acquisition:
-- The assets and liabilities of the legal subsidiary were
recognised and measured in the consolidated financial statements at
their pre-combination carrying amounts without restatement to fair
value;
-- The identifiable assets and liabilities of the legal parent
(the accounting acquiree) are recognised in accordance with IFRS 3
at the acquisition date. Goodwill is recognised in accordance with
IFRS 3;
-- The retained earnings and other equity balances recognised in
the consolidated financial statements are those of the legal
subsidiary (the accounting acquirer) immediately before the
business combination.
The amount recognised as issued equity instruments in the
consolidated financial statements is determined by adding the fair
value of the legal parent (which is based on the number of equity
interests deemed to have been issued by the legal subsidiary)
determined in accordance with IFRS 3 to the legal subsidiary's
issued equity immediately before the business combination. However,
the equity structure (that is, the number and type of equity
instruments issued) shown in the consolidated financial statements
reflects the legal parent's equity structure, including the equity
instruments issued by the legal parent to affect the combination.
The equity structure of the legal subsidiary (accounting acquirer)
is restated using the exchange ratio established in the acquisition
agreement to reflect the number of shares issued by the legal
parent (the accounting acquiree) in the reverse acquisition.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost, less
depreciation, less adjustments for impairment, if any.
Significant improvements are capitalised, provided they qualify
for recognition as assets. The costs of maintenance, repairs and
minor improvements are expensed when incurred.
Tangible assets retired or withdrawn from service are removed
from the balance sheet together with the related accumulated
depreciation. Any profit or loss resulting from such an operation
is included in the income statement.
Tangible assets are depreciated on straight-line method based on
the estimated useful lives from the time they are put into
operations, so that the cost is diminished over the lifetime of
consideration to estimated residual value as follows:
-- Office equipment - Over 5 years
-- Other Fixtures & Fittings - Over 10 years
-- Leasehold property - Over period of the lease
-- Other Motor Vehicles - Over 4 years
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
INTANGIBLES
Expenditure on internally developed intangible asset is
capitalised if it can be demonstrated that:
- there is an intention to complete the development,
- adequate resources are available to complete the
development,
- it is probable that the asset will generate future economic
benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the
group expects to benefit from using the asset developed. The
amortisation expense is included within the cost of sales line in
the consolidated Statement of Comprehensive Income.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in the consolidated Statement of Comprehensive Income as
incurred.
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE
ASSETS EXCLUDING GOODWILL
At each financial year end date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss, if any. Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
If the recoverable amount of an asset or cash-generating unit is
estimated to be less than its carrying amount, the carrying amount
of the asset or cash-generating unit is reduced to its recoverable
amount and the impairment loss is recognised as an expense
immediately.
When an impairment loss subsequently reverses, the carrying
amount of the asset or cash-generating unit is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
FOREIGN CURRENCIES
At each year-end date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the year-end date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
the income statement. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period, except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS
The Company's financial assets comprise investments, cash and
cash equivalents and loans and receivables, and are recognised in
the Company's statement of financial position when the Company
becomes a party to the contractual provisions of the
instrument.
Changes in the fair value of investments held at fair value
through profit or loss and gains and losses on disposal are
recognised in the Statement of Comprehensive Income as "Net change
in fair value of investments".
Financial asset investments
Classification of financial assets
The Company holds financial assets including equities and debt
securities. On 1 April 2018, the Company adopted IFRS 9 Financial
Instruments (IFRS 9). IFRS 9 replaces the classification and
measurement models previously contained in IAS 39 Financial
Instruments: Recognition and Measurement. The classification and
measurement of financial assets at 31 March 2020 and 2019 are in
accordance with IFRS 9.
On the initial recognition, the Company classifies financial
assets as measured at amortised cost or fair value through profit
or loss("FVTPL"). A financial asset is measured at amortised cost
if it meets both of the following conditions and is not designated
as at FVTPL:
-- It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specific dates to cash
flows that are Solely Payments of Principal and Interest
(SPPI).
All other financial assets of the Company are measured at
FVTPL.
Business model assessment
In making an assessment of the objective of the business model
in which a financial asset is held, the Company considers all of
the relevant information on how the business is managed,
including:
-- the documented investment strategy and the execution of this
strategy in practice. This includes whether the investment strategy
focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the
financial assets to the duration of any related liabilities or
expected cash outflows or realised cash flows through the sale of
the assets;
-- how the performance of the portfolio is evaluated and
reported to the Company's management;
-- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
-- how the investment advisor is compensated e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cashflows collected.
-- IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective
of the entity's business model is not based on management's
intentions with respect to an individual instrument, but rather
determined at a higher level of aggregation. The assessment needs
to reflect the way that an entity manages its business.
The company has determined that it has two business models.
-- Held-to-collect business model: this includes cash and cash
equivalents, balances due from brokers and other receivables. These
financial assets are held to collect contractual cash flows.
-- Other Business model: this includes structured finance
products, equity investments, investments in unlisted private
equities and derivatives. These financial assets are managed and
their performance is evaluated, on a fair value basis with frequent
sales taking place in respect to equity holdings.
Valuation of financial asset investments
Investment transactions are accounted for on a trade date basis.
Assets are de-recognised at the trade date of the disposal. Assets
are sold at their fair value, which comprises the proceeds of sale
less any transaction cost. The valuations in respect of unquoted
investments (Level 3 financial assets) are explained in note 17.
Changes in the fair value of investments held at fair value through
profit or loss and gains and losses on disposal are recognised in
the consolidated statement of comprehensive income as "Net
gains/(losses) on investments". Investments are initially measured
at fair value plus incidental acquisition costs. Subsequently, they
are measured at fair value. This is either the bid price or the
last traded price, depending on the convention of the exchange on
which the investment is quoted.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
TRADE RECEIVABLES, LOANS AND OTHER RECEIVABLES
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified under "loans and receivables". Loans and receivables
are initially measured at fair value and subsequently measured at
amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective
interest rate, except for short term receivables when the
recognition of interest would be immaterial.
Other receivables, that do not carry any interest, are measured
at their nominal value as reduced by any appropriate allowances for
irrecoverable amounts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash
management are included as a component of cash and cash
equivalents.
FINANCIAL LIABILITIES
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Financial liabilities are classified as either financial
liabilities at fair value through profit or loss ("FVTPL") or
'other financial liabilities'.
There were no financial liabilities 'at FVTPL' during the
current, or preceding, period.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities.
OTHER FINANCIAL LIABILTIES, BANK AND SHORT-TERM BORROWINGS
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges are
accounted for on an accruals basis in profit or loss using the
effective interest rate method and are added to the carrying amount
of the instrument to the extent that they are not settled in the
period in which they arise. Other short-term borrowings being
intercompany loans and unsecured convertible loan notes issued in
the year are recognised at amortised cost net of any financing or
arrangement fees.
TRADE PAYABLES
Trade payables are initially measured at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL
Equity instruments issued by the Company are recorded at the
proceeds received, net of incremental costs attributable to the
issue of new shares.
An equity instrument is any contract that evidences a residual
interest in the assets of a company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received net of direct issue costs.
Share capital represents the amount subscribed for shares at
nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits. Any bonus issues
are also deducted from share premium.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL (continued)
The merger reserve represents the premium on the shares issued
less the nominal value of the shares, being the difference between
the fair value of the consideration and the nominal value of the
shares.
The reverse acquisition reserve arises from the acquisition of
Global Investment Strategy UK Limited by the Company and represents
the total amount by which the fair value of the shares issued in
respect of the acquisition exceed their total nominal value.
The investment reserve represents the fair value adjustment to
the investment in subsidiary in connection with the reverse
acquisition.
The warrant reserve represents the fair value, calculated at the
date of grant, of warrants unexercised at the balance sheet
date.
Retained earnings include all current and prior period results
as disclosed in the statement of comprehensive income.
SHARE-BASED PAYMENTS
All share-based payments are accounted for in accordance with
IFRS 2 - "Share-based payments". The Company issues equity-settled
share-based payments in the form of share options to certain
directors and employees. Equity settled share-based payments are
measured at fair value at the date of grant. The fair value
determined at the grant date of equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based
on the Company's estimate of shares that will eventually vest.
Fair value is estimated using the Black-Scholes valuation model.
The expected life used in the model has been adjusted, on the basis
of management's best estimate for the effects of
non-transferability, exercise restrictions and behavioural
considerations. At each balance sheet date, the Company revises its
estimate of the number of equity instruments expected to vest as a
result of the effect of non-market based vesting conditions. The
impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
retained earnings.
REVENUE RECOGNITION
Under IFRS 15, Revenue from Contracts with Customers, five key
points to recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the
contracts;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
The Group's revenue includes commission income, corporate
advisory fees and other ancillary fees.
Revenue is measured at the fair value of the consideration
received or receivable.
Fees for advisory engagements for which the work is
substantially complete or which are at a stage where work for which
separate payment is due is substantially complete, and which will
become due but are not yet invoiced are recorded on a right to
consideration basis. Where such fees are contingent on the outcome
of a transaction they are only accounted for after the transaction
has completed.
Management fees and interest are credited to income in the
period in which they relate.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
TAXATION
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the year end date.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
year-end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and where they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
In the application of the Group's accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period. Judgements and estimates that may affect future periods
are as follows:
GOING CONCERN
The Directors consider that, based upon financial projections,
the Company will be a going concern for the next twelve months. For
this reason, the directors have, at the time of approving the
financial statements, a reasonable expectation that the Company has
adequate resources to continue in existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of
accounting in preparing the financial statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group holds investments that have been designated as
available for sale on initial recognition. Where practicable the
Group determines the fair value of these financial instruments that
are not quoted (Level 3), using the most recent bid price at which
a transaction has been carried out. These techniques are
significantly affected by certain key assumptions, such as market
liquidity. Other valuation methodologies such as discounted cash
flow analysis assess estimates of future cash flows and it is
important to recognise that in that regard, the derived fair value
estimates cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being
realised immediately.
4. PRIOR YEAR ADJUSTMENT
The 2019 statement of consolidated comprehensive income has been
restated as follows:
CONSOLIDATED STATEMENT OF Note Signed 2019 Decrease in profit Restated for the year ended
COMPREHENSIVE INCOME (extract) accounts 31 March 2019
GBP'000 GBP'000 GBP'000
============= =================== ============================
Expenses from continuing operations:
Administration and office start-up
costs (i) - (191) (191)
Write-off unrecoverable group
taxation- Parent (ii) - (131) (131)
Write-off unrecoverable group
taxation- Subsidiary (iii) (44) (44)
------------------- ----------------------------
(366) (366)
------------------------------------------------------------ ------------------- ----------------------------
(i) The prior year adjustment of GBP191,000 represents start-up
costs in relation to GIS Hong Kong incurred by the parent company
which were not accounted for in 2019.
(ii) and (iii) The prior year adjustments of GBP131,000 and
GBP44,000 represent the write-offs of the unrecoverable taxation
assets accounted for in the parent and subsidiary company
respectively.
Basic and diluted earnings per share for the prior year have
also been restated.
The amount of the correction for both basic and diluted earnings
per share was a decrease of GBP0.04 per share.
4. PRIOR YEAR ADJUSTMENT (continued)
GROUP STATEMENT OF FINANCIAL Note Signed Adjustments Restated
POSITION accounts as at 31
at March 2019
31 March
2019
GBP'000 GBP'000 GBP'000
---------- ------------ ------------
Non-current assets
Goodwill 2,869 - 2,869
Other intangible assets 657 - 657
Property, plant and equipment 40 - 40
Total non-current assets 3,566 - 3,566
---------------------------------------- ---------- ------------ ------------
Current assets
Investments held at fair
value through profit and
loss 266 - 266
Trade and other receivables (i) 708 (175) 533
Cash and cash equivalents 5,466 - 5,466
Total current assets 6,440 (175) 6,265
---------------------------------------- ---------- ------------ ------------
Current liabilities
Trade and other payables (ii) 532 190 722
Current tax liabilities 561 - 561
Total current liabilities 1,093 190 1,283
---------------------------------------- ---------- ------------ ------------
Net assets 8,913 (365) 8,548
---------------------------------------- ---------- ------------ ------------
Equity
Share capital 285 - 285
Share premium 171 - 171
Reverse acquisition reserve 679 - 679
Share option and warrant
reserve 162 - 162
Retained earnings (iii) 7,558 (353) 7,205
---------- ------------ ------------
Equity attributable to the
owners of the Company 8,855 (353) 8,502
Non-controlling interests 58 (12) 46
---------- ------------ ------------
Total equity 8,913 (365) 8,548
---------- ------------ ------------
(i) The prior year adjustment to other receivables of GBP175,000
comprises of the write-offs of the unrecoverable taxation assets of
GBP131,000 and GBP44,000 in the parent and subsidiary companies
respectively.
(ii) The prior year adjustment to other payables of GBP190,000
represents the start-up costs incurred by the parent company which
were not accounted for in 2019.
(iii) The prior year adjustment to retained earnings of
GBP353,000 comprises of:
a) GBP191,000 being start-up costs incurred by the parent
company which were not accounted for in 2019, and
b) GBP131,000 and GBP44,000 being the write-offs of the
unrecoverable taxation assets accounted for in the parent and
subsidiary company respectively, with the corresponding effect on
the non-controlling interest of GBP12,000.
These restatements have no overall impact on the equity brought
forward as at 1 April 2018
4. PRIOR YEAR ADJUSTMENT (continued)
COMPANY STATEMENT OF FINANCIAL Note Signed Adjustments Restated
POSITION accounts as at 31
at March 2019
31 March
2019
GBP'000 GBP'000 GBP'000
---------- ------------ ------------
Non-current assets
Investment in subsidiaries 9,137 - 9,137
Total non-current assets 9,137 - 9,137
------------------------------------------- ---------- ------------ ------------
Current assets
Trade and other receivables (i) 173 (131) 42
Cash and cash equivalents 3 - 3
Total current assets 175 (131) 45
------------------------------------------- ---------- ------------ ------------
Current liabilities
Trade and other payables (ii) 1,921 191 2,112
Total current liabilities 1,921 191 2,112
------------------------------------------- ---------- ------------ ------------
Net assets 7,392 (322) 7,070
------------------------------------------- ---------- ------------ ------------
Equity
Share capital 285 - 285
Share premium 171 - 171
Merger reserve 6,555 - 6,555
Investment reserve 110 - 110
Share option and warrant reserve 162 - 162
Retained earnings (iii) 109 (322) (213)
---------- ------------ ------------
Total equity 7,261 (322) 7,070
(i) The prior year adjustment to other receivables of GBP131,000
represents the write-off of the unrecoverable taxation assets of
GBP131,000 in the parent company.
(ii) The prior year adjustment to other payables of GBP191,000
represents the start-up costs incurred by the parent company which
were not accounted for in 2019.
(iii) The prior year adjustment to retained earnings of
GBP322,000 comprises of:
a) GBP191,000 being start-up costs incurred by the parent
company which were not accounted for in 2019, and
b) GBP131,000 being the write-offs of the unrecoverable taxation
assets accounted for in the parent and subsidiary company
respectively, with the corresponding effect on the non-controlling
interest of GBP12,000.
5. SEGMENTAL INFORMATION
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, during the year was the collective Board of Octagonal
Plc. No individual director carries out this role, instead it is
the Board that makes these decisions collectively.
All operations and information are reviewed together so that at
present there is only one reportable operating segment this year,
but with the Group's change of focus and activities, that situation
may be different in future years.
6. ANALYSIS OF TURNOVER
An analysis of turnover by class of business is as follows:
2020 2019
GBP'000 GBP'000
-------------------------------- -------- --------
Commissions 4,000 3,624
Share sales -
Corporate finance and advisory 17 130
Special charges and recharges 1,734 1,557
-------------------------------- -------- --------
5,752 5,311
-------------------------------- -------- --------
7. OPERATING PROFIT
2020 2019
GBP'000 GBP'000
----------------------------------------------- -------- --------
Operating loss is stated after charging: -
Staff costs as per Note 9 below 1,323 1,254
Depreciation of property, plant and equipment 14 14
Operating lease rentals 239 142
1,586 1,410
----------------------------------------------- -------- --------
8. AUDITOR'S REMUNERATION
The analysis of auditors' remuneration is as follows:
2020 2019
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Fees payable to the Group's auditors for:
The audit of the Group's annual financial statements 29 20
29 20
------------------------------------------------------- -------- --------
9. OTHER GAINS AND LOSSES
2020 2019
GBP'000 GBP'000
--------------------------- -------- --------
Impairment of investments (135) (16)
(135) (16)
--------------------------- -------- --------
10. STAFF COSTS
The average monthly number of employees (including executive directors) for the continuing
operations was:
2020 2019
Number Number
------------------------------------------------------ ------------------- -------------------
Group total staff 18 18
------------------------------------------------------ ------------------- -------------------
2020 2019
GBP'000 GBP'000
------------------------------------------------------ ------------------- -------------------
Wages and salaries 1,182 1,127
Pension contributions 24 12
Social security costs 117 115
------------------------------------------------------ ------------------- -------------------
1,323 1,254
------------------------------------------------------ ------------------- -------------------
Directors' emoluments were as follows:
2020 2020 2020 2020 2019
Directors Bonus Other emoluments
fees Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- -------- ----------------- -------- --------
John Gunn 12 190 299 501 530
Samantha Esqulant 12 70 94 176 186
Nilesh Jagatia 12 40 88 140 78
Anthony Binnie 12 - - 12 12
48 300 457 829 806
------------------- ---------- -------- ----------------- -------- --------
With the exception of Samantha Esqulant and Nilesh Jagatia the
fees for all the current directors were invoiced by companies of
which they were directors and controlling shareholders.
11. TAXATION
2020 2019
GBP'000 GBP'000
------------------------------------------------------------------------------- ----------- -----------
Current tax charge 258 300
Adjustment in respect of previous year - (302)
------------------------------------------------------------------------------- ----------- -----------
Deferred tax (release) / charge 44 1
------------------------------------------------------------------------------- ----------- -----------
302 (1)
------------------------------------------------------------------------------- ----------- -----------
Reconciliation of tax charge: Continuing Operations
------------------------
2020 2019
GBP'000 GBP'000
------------------------------------------------------------------------------- ----------- -----------
Profit before tax 531 676
Tax at the UK corporation tax rate of 19% (2019: 19%) 101 128
Effects of:
Tax effect of expenses that are not deductible in determining taxable profit: -
Prior year adjustments 137 (265)
Disallowable expenses 69 -
Permanent differences 29 29
Additional deduction for R&D expenditure (83) (32)
Deferred tax not recognised 49 141
Unutilised tax losses - -
Tax charge for period 302 1
------------------------------------------------------------------------------- ----------- -----------
The total taxation charge in future periods will be affected by
any changes to the corporation tax rates in force in the countries
in which the Group operates.
12. EARNINGS PER SHARE
The basic earnings per share is based on the profit/(loss) for
the year divided by the weighted average number of shares in issue
during the year. The weighted average number of ordinary shares for
the year ended 31 March 2020 assumes that all shares have been
included in the computation based on the weighted average number of
days since issue.
2020 2019
Profit attributable to the equity owners of the parent GBP343,000 GBP807,000
Weighted average number of ordinary shares in issue for basic earnings 568,576,886 567,866,749
Weighted average number of ordinary shares in issue for fully diluted earnings 581,880,940 581,616,749
-------------------------------------------------------------------------------- ------------ ------------
Earnings per share (pence per share)
Basic 0.06p 0.14p
Fully diluted 0.06p 0.14p
-------------------------------------------------------------------------------- ------------ ------------
13. GOODWILL
2020 2019
GBP'000 GBP'000
------------- -------- --------
At 1 April 2,869 2,869
At 31 March 2,869 2,869
------------- -------- --------
The amount of GBP2,869,000 of Goodwill relates to the Goodwill
arising on the reverse acquisition of GIS in 2015.
Goodwill is monitored by management at the level of the
operating segment. The recoverable amount is determined based on
value-in-use calculations which uses cash flow projections based on
financial budgets approved by the Directors covering a five-year
period, and a discount rate of 12% per annum.
Cash flows beyond the five-year period are extrapolated using
the estimated growth rates of 10% which is based on the average
growth for 5 years covered by the projections. The Directors
believe that any reasonably possible change in key assumptions on
which recoverable amount is based would not cause the aggregate
carrying amount to exceed the aggregate recoverable amount of the
cash-generating unit.
The Directors have reviewed the carrying value of Goodwill as at
31 March 2020 and consider that no impairment provision is
required. The Directors continue to review Goodwill on an on-going
basis and where necessary in future periods will request external
valuations to further support the valuation basis.
14. OTHER INTANGIBLE ASSETS
Group System
development costs
Cost GBP'000
--------------------- ------------------
As at 1 April 2018 409
Additions 265
--------------------- ------------------
At 31 March 2019 674
Additions 175
--------------------- ------------------
At 31 March 2020 849
--------------------- ------------------
Amortisation
--------------------- ------------------
As at 31 March 2018 -
Charge for the year 17
As at 31 March 2019 17
Charge for the year 27
As at 31 March 2020 44
--------------------- ------------------
Net book Value
--------------------- ------------------
As at 31 March 2020 805
--------------------- ------------------
As at 31 March 2019 657
--------------------- ------------------
15. PROPERTY, PLANT AND EQUIPMENT
Group Office Equipment Fixtures Short term Motor Group
and fittings leasehold Vehicles Total
property
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----------------- -------------- ----------- ---------- --------
As at 31 March 2018 74 15 6 63 158
Additions 10 - - - 10
Disposal - - - (63) (63)
As at 31 March 2019 84 15 6 - 105
Additions 13 - - - 13
As at 31 March 2020 97 15 6 - 118
---------------------- ----------------- -------------- ----------- ---------- --------
Depreciation
---------------------- ----------------- -------------- ----------- ---------- --------
As at 31 March 2018 37 13 6 42 98
Charge for the year 8 1 - 5 14
Disposal - - - (47) (47)
As at 31 March 2019 45 14 6 - 65
Charge for the year 13 1 - - 14
As at 31 March 2020 58 15 6 - 79
---------------------- ----------------- -------------- ----------- ---------- --------
Net book value
---------------------- ----------------- -------------- ----------- ---------- --------
As at 31 March 2020 39 - - - 39
---------------------- ----------------- -------------- ----------- ---------- --------
As at 31 March 2019 39 1 - - 40
---------------------- ----------------- -------------- ----------- ---------- --------
16. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
The Company's investments in its subsidiary undertakings are as
follows:
Company 2020 2019
GBP'000 GBP'000
------------------------- -------- --------
Cost and net book value
At 1 April 9,137 9,137
------------------------- -------- --------
As at 31 March 9,137 9,137
------------------------- -------- --------
All principal subsidiaries of the Group are consolidated into
the financial statements. At 31 March 2020 the subsidiaries were as
follows:
Subsidiary undertakings Principal activity Holding Holding %
-------------------------------------------------------------- --------------------- ------------------ -----------
*Global Investment Strategy UK Limited
Registered Office: 2(nd) Floor, Solar House, 915 High Road,
London, England, N12 8QJ Financial services Ordinary shares 100%
-------------------------------------------------------------- --------------------- ------------------ -----------
**Synergis Capital Plc
Registered Office: 2(nd) Floor, Solar House, 915 High Road,
London, England, N12 8QJ Financial services Ordinary shares 77.5%
-------------------------------------------------------------- --------------------- ------------------ -----------
**Global Investment Strategy HK Limited
Registered Office: Room 4469, 44/F, Champion Tower, 3
Garden Road, Central, Hong Kong Financial Services Ordinary shares 100%
-------------------------------------------------------------- --------------------- ------------------ -----------
** Global Investment Strategy Nominees Limited
Registered Office: 2(nd) Floor, Solar House, 915 High Road,
London, England, N12 8QJ Financial Services Ordinary shares 100%
-------------------------------------------------------------- --------------------- ------------------ -----------
*Directly held **Indirectly held
17. AVAILABLE-FOR-SALE INVESTMENTS
Group 2020 2019
GBP'000 GBP'000
-------- --------
Investments at fair value at 1 April 266 31
Purchases 94 250
Impairment of investments (135) (15)
Gain on disposals - -
Disposals - -
Fair value of investments at 31 March 225 266
-------------------------------------- -------- --------
Categorised as:
Level 1 Investments 225 266
Level 3 Investments - -
-------------------------------------- -------- --------
225 266
-------------------------------------- -------- --------
Classed as:
Non-current assets - -
Current assets 225 266
-------------------------------------- -------- --------
225 266
-------------------------------------- -------- --------
The table above sets out the fair value measurements using the
IFRS 7 fair value hierarchy. Categorisation within the hierarchy
has been determined on the basis of the lowest level of input that
is significant to the fair value measurement of the relevant asset
as follows:
Level 1 - valued using quoted prices in active markets for
identical assets.
Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted prices included within Level
1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
There were no transfers between Level 1, Level 2 and Level 3 in
either 2020 or 2019.
18. TRADE AND OTHER RECEIVABLES
GROUP COMPANY
---------------- ----------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- ------- -------
Prepayments and accrued income 83 25 11 5
Trade receivables 31 88 - -
Other receivables 289 326 6 37
Loans receivable 86 94 - -
------------------------------- ------- ------- ------- -------
489 533 17 42
------------------------------- ------- ------- ------- -------
Balances with the related parties are disclosed in note 27.
Included in loans receivable is an amount of GBP85,800 (2019:
GBP93,000) being the balance of an amount due from Amisud S.A. In
March 2015 GIS agreed to convert a prior investment in Amisud S.A,
an Argentinian based agriculture company, into a debt owed to GIS
totalling approximately US$215,000. Amisud S.A is required to repay
the debt to GIS in instalments, two of which were received on
schedule. As such the Directors feel no impairment charge is
required.
No receivables were past due or provided for at the year-end or
at the previous year end.
The Directors consider the carrying amount of intercompany loans
and other receivables approximates to their fair value.
19. CASH AND CASH EQUIVALENTS
GROUP COMPANY
---------------- ----------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------- ------- ------- -------
Cash and cash equivalents 5,463 5,466 1 3
5,463 5,466 1 3
-------------------------- ------- ------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
20. TRADE AND OTHER PAYABLES
GROUP COMPANY
---------------- ----------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------- ------- ------- -------
Trade payables 281 103 39 10
Intercompany loan - - 2,268 2,068
Other payables 427 498 - -
Accrued expenses 234 121 35 34
------------------ ------- ------- ------- -------
942 722 2,342 2,112
------------------ ------- ------- ------- -------
Balances with the related parties are disclosed in note 27.
21. FINANCIAL INSTRUMENTS
FINANCIAL ASSETS BY CATEGORY
The IFRS 9 categories of financial assets included in the
Statement of Financial Position and the headings in which they are
included are as follows:
2020 2019
GBP'000 GBP'000
-------------------------------- -------- --------
Financial assets:
Cash and cash equivalents 5,463 5,466
Available for sale investments 225 266
Loans and receivables 406 508
-------------------------------- -------- --------
6,094 6,240
-------------------------------- -------- --------
FINANCIAL LIABILITIES BY CATEGORY
The IFRS 9 categories of financial liability included in the
Statement of Financial Position and the headings in which they are
included are as follows:
2020 2019
GBP'000 GBP'000
------------------------------------------ -------- --------
Financial liabilities at amortised cost:
Trade and other payables 281 103
Short term borrowings - -
281 103
------------------------------------------ -------- --------
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, (previously includes the borrowings) cash and cash
equivalents and equity attributable to equity holders of the Parent
Company, comprising issued capital, reserves and retained earnings,
all as disclosed in the Statement of Financial Position.
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group is exposed to a variety of financial risks which
result from both its operating and investing activities. The
Group's risk management is coordinated by the board of directors,
and focuses on actively securing the Group's short to medium term
cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial
instruments are credit risk and liquidity risk.
21. FINANCIAL INSTRUMENTS (continued)
CURRENCY RISK MANAGEMENT
The Group undertakes transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy
parameters. The Group does not enter into forward exchange
contracts to mitigate the exposure to foreign currency risk as
amounts paid and received in specific currencies are expected to
largely offset one another and the currencies most widely traded
are relatively stable. The Directors consider the balances most
susceptible to foreign currency movements to be the Cash and cash
equivalents.
The carrying amount of the Group's foreign currency denominated
monetary assets and monetary liabilities at the end of the
reporting period are as follow:
2020 2019
GBP'000 GBP'000
------- -------- --------
USD 265 -
AUD 243 -
HKD 568 625
CAD - 43
Other 13 12
------- -------- --------
Sensitivity analysis
The Group is mainly exposed to USD / GBP and EUR / GBP exchange
rates. The following table shows the Group's sensitivity to a 5%
increase and decrease in the GBP against these foreign currencies.
The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the
yearend for a 5% in foreign currency rates:
Profit/(loss) Exchange rate
2020 2019 At 31 March
Effect of 5% decrease in value of GBP GBP'000 GBP'000 2020 2019
---------------------------------------- --------- --------- -------- -------
USD 11 1.243 -
AUD 7 - 2.020 -
HKD 3 27 9.634 1.162
CAD - 2 - 1.304
Effect of 5% increase in value of GBP
USD (11) - 1.243 -
AUD (7) - 2.020 -
HKD (3) (27) 9.634 1.162
CAD - (2) - 1.304
---------------------------------------- --------- --------- -------- -------
In the Directors' opinion, the sensitivity analysis is
unrepresentative of the inherent exchange risk because the exposure
at the end of the reporting period does not reflect the exposure
during the year.
21. FINANCIAL INSTRUMENTS (continued)
CREDIT RISK MANAGEMENT
The Company's financial instruments, which are subject to credit
risk, are considered to be cash and cash equivalents and trade and
other receivables, and its exposure to credit risk is not material.
The credit risk for cash and cash equivalents is considered
negligible since the counterparties are reputable banks.
The Group's maximum exposure to credit risk is GBP5,952,000
(2019: GBP5,845,000) comprising trade and other receivables of
GBP489,000 (2019: GBP533,000) and cash of GBP5,463,000 (2019:
GBP5,466,000).
LIQUIDITY RISK MANAGEMENT
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which monitors the Group's short, medium
and long-term funding and liquidity management requirements on an
appropriate basis. The Group manages liquidity risk by maintaining
adequate reserves and banking facilities.
22. CALLED UP SHARE CAPITAL
Deferred shares of 0.5p Ordinary shares of 0.05p
------------------------------------- -----------------------------------
Number of shares Nominal value Number of shares Nominal value Share premium
GBP'000 GBP'000 GBP'000
ISSUED AND FULLY
PAID:
At 31 March 2018 - - 567,226,886 284 171
----------------------- ------------------- ---------------- ------------------ --------------- ---------------
Share issues 1,350,000 1 -
At 31 March 2019 - - 568,576,886 285 171
Shares issues - - - - -
At 31 March 2020 - - 568,576,886 285 171
----------------------- ------------------- ---------------- ------------------ --------------- ---------------
The Company has one class of ordinary shares, which carry no
right of fixed income.
23. SHARE BASED PAYMENTS
EQUITY-SETTLED SHARE OPTION SCHEME
On 6 September 2017, a total of 12,000,000 options were granted to three directors of the
Company, exercisable at 3p per share. Half of the options vested immediately and the other
half vested on the 1(st) anniversary of the date of grant. The options expire on the fourth
anniversary of the date of grant.
On 28 September 2017, 1,750,000 options were granted on the same terms to a fourth director.
The fair value of the options was determined using the Black-Scholes option pricing model.
The significant inputs to the model in respect of the options granted were as follows:
6 Sep 2017 28 Sep 2017
----------------------------- ------------------------------
Grant date share price 2.575p 2.825p
Exercise share price 3p 3p
No. of share options 12,000,000 1,750,000
Risk free rate 1% 1%
Expected volatility 50% 50%
Option life 4 years 4 years
Calculated fair value per share 0.89714p 1.06409p
The total share-based payment expense recognised in the income statement for the year ended
31 March 2020 in respect of the share options granted was GBPnil (2019: GBP63,000).
Number of Granted Exercised Cancelled in Number of Average Vesting Expiry
options at in the year in the year the year options at exercise Date date
1 Apr 2017 31 Mar 2018 price
-------------- -------------- -------------- ------------- -------------- -------------- ----------- ----------
- 6,875,000 - - 6,875,000 0.92p 6.09.2017 6.09.2021
- 6,875,000 - - 6,875,000 0.92p 6.09.2018 6.09.2021
- 13,750,000 - - 13,750,000 0.92p
-------------- -------------- -------------- ------------- -------------- -------------- ----------- ----------
24. EVENTS AFTER THE REPORTING PERIOD
Post year-end GIS, has seen increased market volatility and
uncertainty as a result of the impact of Covid-19. This has been
the greatest challenge to the financial service industry since the
financial crisis of 2008. During these periods of increased
volatility, the board of GIS took steps to limit client exposure to
riskier assets and strengthen our liquidity resources. The strategy
in which we chose to navigate the period, given the conditions, is
a testament to the strength of our business model. Our investments
in technology has enabled us to continue to serve our clients
around the World, with all employees working from home, offering
clients a seamless 24-hour 5 day a week service from London, Mumbai
and Hong Kong. The Board is proud of the hard work and
conscientiousness of the team, with many facing personal challenges
given the impact of the Covid-19 lockdown. Whilst largely relating
to the pre-crisis period, the 2020 results demonstrate the
stability of our business model and protection of our stakeholders'
interests. Our balance sheet, capital and liquidity position remain
strong and we remain well positioned to facilitate client activity
during these uncertain times. For now, our focus remains on the
welfare of our employees and the financial soundness of the
business.
In December 2020, GIS declared and paid a dividend of
GBP1,200,000 to its parent Company Octagonal plc. This dividend
received by Octagonal plc created sufficient distributable reserves
for Octagonal Plc to pay the interim dividend to its members in
January 2021.
25. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The Group had no capital commitments or contingent liabilities
as at the year-end (2019: GBPnil).
26. CONTRACTUAL OBLIGATIONS
The Group's future minimum lease payments in respect of
non-cancellable operating leases are as follows:
2020 2019
GBP'000 GBP'000
------------------------------------ ---------- ----------
Payable within 1 year 150 168
Payable within 2-5 years - 42
150 210
------------------------------------ ---------- ----------
27. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries which are
related parties have been eliminated on consolidation and are not
disclosed in these financial statements.
KEY MANAGEMENT PERSONNEL
The remuneration of the directors and other key management
personnel of the Group is set out below in aggregate for each of
the categories specified in IAS 24 Related Party Disclosures.
Further information about the remuneration of individual directors
of the Company is provided in Note 10.
2020 2019
GBP'000 GBP'000
---------------------------------------- ---------- --------------------
Short term employee benefits 741 819
741 819
---------------------------------------- ---------- --------------------
Short term employee benefits include payments made to personal
service companies of key management during the year totalled
GBP543,000 (2017: GBP543,000).
Balances with the directors at the year-end are:
2020 2019
GBP'000 GBP'000
-------------------------------------------------------------------------- ---------- --------------------
Loan receivable from John Gunn (included in other receivables) 71 29
71 29
-------------------------------------------------------------------------- ---------- --------------------
T he amount due from John Gunn was repaid in full on 10 July 2020.
During the year, Brockwell Group (Holdings) Limited, a company
in which Anthony Binnie is a Non Executive Director, charged
consultancy fees of GBP12,000 (2019: GBP12,000).
TRANSACTIONS WITH OTHER RELATED PARTIES
In previous years the Group charged rent and administration
services to Inspirit Energy Holdings Limited ("Inspirit"), a
Company connected to the Group, by way of John Gunn being a
director and substantial shareholder in Inspirit. The amount due
from Inspirit in respect of rent and services is summarised as
follows:
2020 2019
GBP'000 GBP'000
------------------------------------------------------------------------------------ ---------- --------------------
Amount due from Inspirit at 31 March (included in trade and other
receivables) 9 95
9 95
------------------------------------------------------------------------------------ ---------- --------------------
The amount owed by Inspirit at 31 March 2019 was settled by the
issue to GIS of GBP95,000 convertible loan notes.
All balances with related parties are unsecured, interest free
and do not have fixed terms of repayment
28. ULTIMATE CONTROLLING PARTY
The Directors regard Mr. J Gunn as being the ultimate
controlling party, by way of his controlling interest in the issued
share capital of the Company.
29. SUBSEQUENT EVENTS
The Board have concluded that there is no need to continue with
the cost, management time and the legal and regulatory obligations
associated with maintaining the Company's listing as long as
Shareholders interests are protected and that there is no risk of
Shareholders losing any tax advantages. The company has not raised
any funds since the listing in 2015. Should the Company need to
raise funds in the future, the Board believe that the Private
Equity market would value the Company based on enterprise
value.
The Company has published an announcement today stating that it
will shortly distribute to shareholders a circular containing
details of the proposed cancellation and to seek the approval of
shareholders to the proposed cancellation of the admission of its
ordinary shares to trading on AIM at a General Meeting.
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END
FR BCBDDRDBDGGL
(END) Dow Jones Newswires
December 17, 2020 02:00 ET (07:00 GMT)
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