Dukemount Capital plc
Annual Report 2018

Plain-text annual report

DUKEMOUNT CAPITAL PLC REGISTERED NUMBER 07611240 ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018 DUKEMOUNT CAPITAL PLC CONTENTS Company Information Page 2 Chairman’s Statement 3 Board of Directors 4 Strategic Report Report of the Directors 5 8 Directors’ Remuneration Report 12 Report of the Independent Auditor Statement of Comprehensive Income Consolidated Statement of Financial Position Company Statement of Financial Position Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated Statement of Cash Flows Company Statement of Cash Flows Notes to the Financial Statements 16 20 21 22 23 24 25 26 27 DUKEMOUNT CAPITAL PLC COMPANY INFORMATION Directors Geoffrey Dart Timothy Le Druillenec Paul Gazzard Secretary Timothy Le Druillenec Registered Office Solicitors Independent Auditor Room 4, 1st Floor 50 Jermyn Street London SW1Y 6LX Charles Russell Speechlys 5 Fleet Place London EC4M 7RD PKF Littlejohn LLP Statutory Auditor 1 Westferry Circus Canary Wharf London E14 4HD Registered Number 07611240 2 DUKEMOUNT CAPITAL PLC CHAIRMAN’S STATEMENT I hereby present the annual financial statements for the year ended 30th April 2018. During the year the Group reported a loss of £285,968 (30 April 2017 – loss of £177,149). These losses arose in the course of the Group: pursuing transactions in its chosen sector; acquiring its first property; maintaining the Company’s listing on the Official List of the UK Listing Authority by way of a standard listing, and include: directors’ fees; consultancy fees; and professional fees. As at the Statement of Financial Position date the Company had £148,391 of cash balances. During the course of the year, through its subsidiary DKE (North West) Limited, a redevelopment project was acquired on 7th September 2017 which aims to build retail space of approximately 3,200 square feet and 17 residential apartments for supported living tenants. As part of that project a 50-year lease with a supported living housing association has been agreed which expects to generate around £234,000 of income per annum which is CPI-linked. On 11th June 2018, through its subsidiary DKE Wavertree Limited, the Company signed a 30 year CPI linked agreement-to-lease at £168,740 per annum with multi-award winning Inclusion Housing (Inclusion) and has agreed to exchange contracts with the vendor of the property subject to planning permission for additional rooms. The Group has explored numerous opportunities during the year and whilst progress has not been as fast moving as we would have liked we do consider that we are now working with the right parties on the right properties and look forward to moving ahead with our first two projects and using this model as a blueprint for future developments. As at the date of this report the Group continues to finalise plans to enhance both these projects and will make further announcements to the market on these properties as soon as appropriate. I would like to thank all those who have assisted and supported the Group during the year and look forward to a more positive year ahead. Geoffrey Dart Executive Chairman 16 August 2018 3 DUKEMOUNT CAPITAL PLC BOARD OF DIRECTORS Geoffrey Gilbert Dart - Executive Chairman Geoffrey is a merchant banker with over 35 years of experience of fund raising and listing transactions. In 1990 he was appointed to the board of Harrell Hospitality Inc, a hotel management and development company, after he structured and completed its reverse takeover by a US-listed shell company. In 2003, as chairman of Energy Technique Plc (a UK standard listed company) Geoffrey oversaw the re-structuring and re-capitalisation of the company. Also in 2003, as a Founder and an Executive Director of London and Boston Investments Plc (an AIM-listed company), Geoffrey was responsible for M&A activity. In 2010, Geoffrey joined the board of Hayward Tyler Limited, the specialist pump manufacturer and after raising equity and debt funding, completed the standard listing of the company and thereafter took on particular responsibility for the group’s Chinese operations and completed a successful re-structuring of those operations. Timothy Vincent Le Druillenec Timothy has been on the Board of various public and private companies over the years, mostly as Finance Director and Group Secretary. Several of those companies have been listed on the standard segment of the London Stock Exchange, AIM and NEX (previously ISDX). He is a Fellow of the Chartered Institute of Management Accountants. Paul Gazzard Paul has over 10 years’ experience of working across investing institutions in the City of London in his previous role as Fund Manager. He worked with the Panmure Gordon Asset Management team until August 2002 when he transitioned into the commercial financing sector. Between August 2002 and May 2010, Paul participated in the listing of companies on the AIM market of the London Stock Exchange, operating at the Senior Executive level within each of the companies. Since then Paul has worked as a consultant across various AIM listed companies, advising on corporate and financing related matters, in addition to working as an adviser to several high net worth individuals on specific corporate and management issues relating to their investment portfolios as well as founding a number of private companies in the financial services and other sectors. 4 DUKEMOUNT CAPITAL PLC STRATEGIC REPORT The Directors present their Strategic Report for the year ended 30 April 2018. Business Review and Future Developments On 29 March 2017 Dukemount Capital Plc was admitted to the Official List of the UK Listing Authority by way of a listing on to the standard segment of the London Stock Exchange. Since the standard listing, the Group’s principal aim has been to acquire, manage, develop and, where appropriate, on-sell real estate portfolios specialising mainly in the supported living and hotels sector. The following entities have been consolidated in to the Group financial statements for the first time in the year to 30 April 2018: DKE (North West) Limited, formerly Larch Housing (North West) Limited, incorporated 6 November 2014 in England, of which 100% of the £100 share capital was acquired on 7 September 2017 for £1. This company simultaneously acquired a property in North West England. During the year, DKE (North West) Limited acquired property in Liverpool on 7 September 2017. This is to be a redevelopment project which aims to build retail space of approximately 3,200 square feet and 17 residential apartments for supported living tenants. As part of that project a 50-year lease with a supported living housing association has been agreed which expects to generate around £234,000 of income per annum which is CPI-linked. DKE (Wavertree) Limited, incorporated 24 April 2016 in England, of which 100% of the £1 share capital was acquired on 6 October 2017. This company subsequently signed an option to acquire a property in North West England and on 11 June 2018 exchanged contracts, subject to planning permission, on the property. The company has signed a 30 year CPI linked agreement to lease with Inclusion Housing at a rent of £168,740 per annum. As at the date of this report the Group continues to finalise plans to enhance both these projects and will make further announcements to the market on these properties as soon as appropriate. The Group invested some of its funds during 2015 into Silver Falcon plc (now Hemogenyx Pharmaceuticals Plc) which is listed on the standard segment of the London Stock Exchange. This investment was sold during the year realising a profit of just over £75,000. During the year, the Group issued equity of £6,000 in settlement of a debt to WalbrookPR for PR services for the three months to 30 June 2017. Performance of the Business during the Year and the Position at the End of the Year The Group reported a loss of £285,968 (2017: £177,149) for the year ended 30 April 2018. The loss was primarily as a consequence of directors’ fees and professional fees in relation to the maintenance of the Company’s listing, pursuing transactions and achieving its acquisition of the investment properties referred to earlier. Net assets of the Company as at the year end were £353,356 (2017: £633,324). Cash balances as at the year end were £148,391 (2017: £593,406). Key Performance Indicators (‘KPIs’) The Board monitors the activities and performance of the Group on a regular basis. The primary performance indicator applicable to the Group at this stage of its development is the completion of transactions to acquire investments properties simultaneously with signing an agreement to lease with a Housing Association at a long term profitable rental and locating cost effective funding. As referred to above the Group has already acquired one property and exchanged contracts on a second property subject to planning permission. 5 DUKEMOUNT CAPITAL PLC STRATEGIC REPORT The Directors are also of the opinion that a key primary performance indicator applicable to the Group is the maintenance of cash reserves held in cash and short-term investments. Cash at bank Investment Properties Available for sale investments Principal Risks and Uncertainties 2018 2017 £148,391 £197,868 £ - ______ £593,406 £ - £ 25,000 ______ The Directors consider the principal risk for the Group to be the maintenance of its cash reserves whilst it focuses on its new development projects and targets further transactions in the property sector. The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors consider the following risk factors to be of particular relevance to the Group’s activities. It should be noted that the list is not exhaustive and other risk factors not presently known or currently deemed immaterial may apply. The risk factors are summarised below: Market conditions Market conditions, including general economic conditions and their effect on exchange rates, interest rates and inflation rates, may impact the ultimate value of the Group regardless of its operating performance. The Group also faces competition from other organisations, some of which may have greater resources or be more established in a particular territory in the property sector. In particular, the Group has to marry up properties that are suitable for supported living tenants, in areas where there is a shortfall in demand for such properties, with the best Housing Associations and Care Providers who in turn are acceptable to funders. This process is both time consuming and complex at times. Adverse global economic conditions could limit the demand for property and lead to developments being postponed. This fall in demand could result in the business’s operating results suffering in the future after any proposed transactions. The Board considers and reviews all market conditions to try and mitigate any risks that may arise from these. Government and Local Authority Support In circumstances where the Group might seek to sell the long term income from the leases of Supported Living properties, the ‘blue chip’ nature of this income would appear considerably less attractive to funds should the financial support from the State be perceived as not readily available in the case of a failed Housing Association. Development Costs and Timing Failure to estimate development and refurbishment costs accurately could result in the Group not meeting forecast profitability. Delays in the completion of a project could add to increased costs and a loss of credibility for future projects. Brexit The effect on the Group of Article 50 being triggered and the ongoing Brexit negotiations is unknown. There may be issues raising funds from investors in the short term, however investor markets in the UK have continued to be strong and it is too early to say if there will be any direct impact. The Directors continue to monitor events and as the Directors receive more information from the Government and the EU they will assess the impact to the Group and take appropriate steps as required. 6 DUKEMOUNT CAPITAL PLC STRATEGIC REPORT Financing and interest rate risk The Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce the scope of future transactions. Further, Shareholders’ holdings of Ordinary Shares may be materially diluted if debt financing is not available. For the planned development projects, it is expected that these will be funded through debt financing. The existing project will be funded through a financing agreement however no terms have been agreed at the date of this report. Risks relating to the Group’s business strategy The Group is dependent on the ability of the Directors to identify suitable transaction opportunities and to implement the Group’s strategy. There is no assurance that the Group’s activities will be successful in finding a suitable transaction that will ultimately be developed. Dependence on key personnel and management risks The Group’s business is dependent on retaining the services of a small management team and the loss of a key individual could have an adverse effect on the future of the Group’s business. The Group’s future success will also depend in large part upon its ability to attract and retain highly skilled personnel. This risk is managed by offering salaries that are competitive in the current market. In addition to the Board the company utilises the expertise of property professionals who have extensive experience and knowledge in their field and provide valuable assistance to the Board in locating suitable projects and negotiating contracts with Housing Associations and providers of finance. Environmental and other regulatory requirements The event of a breach with any environmental or regulatory requirements may give rise to reputational, financial of other sanctions against the Group, and therefore the Board considers these risks seriously and designs, maintains and reviews the policies and processes so as to mitigate or avoid these risks. Whilst the Board has a good record of compliance, there is no assurance that the Group’s activities will always be compliant. This Strategic Report was approved by the Board of Directors, on 16 August 2018. Timothy Le Druillenec Director & Group Secretary 7 DUKEMOUNT CAPITAL PLC REPORT OF THE DIRECTORS The Directors present the Annual Report and the audited consolidated financial statements for the year ended 30 April 2018. The Group’s Ordinary Shares were admitted to trading on the London Stock Exchange, on the Official List pursuant to chapter 14 of the Listing Rules, which sets out the requirements for Standard Listings, on 29 March 2017. During the year ended 30 April 2018, one subsidiary was acquired and one incorporated under Dukemount Capital Plc. See the Strategic Report for specific details. Principal Activities The Group’s principal activity is to acquire, manage, develop and, where appropriate on-sell, real estate portfolios specialising mainly in the supported living and hotels sector. Directors The Directors of the Company during the year ended 30 April 2018 were: Geoffrey Gilbert Dart Timothy Vincent Le Druillenec Paul Terence Gazzard (appointed 02 May 2017) Events after the End of the Reporting Period On 11th June 2018, through its subsidiary DKE Wavertree Limited, the Group signed a 30 year CPI linked agreement-to-lease at £168,740 per annum with multi-award winning Inclusion Housing (Inclusion) and has agreed to exchange contracts with the vendor of the property subject to planning permission for additional rooms. Future developments See the Strategic Report for anticipated future developments of the Group. Dividends The Directors do not propose a dividend in respect of the year ended 30 April 2018 (30 April 2017: Nil). Corporate Governance As a Group listed on the standard segment of the Official UK Listing Authority, the Group is not required to comply with the provisions of the UK Corporate Governance Code. The Group does not choose to voluntarily comply with the UK Corporate Governance Code. However, in the interests of observing best practice on corporate governance, the Group has regard to the provisions of the Corporate Governance Code insofar as is appropriate, except that: • Given the size of the Board and the Group’s current size, certain provisions of the Corporate Governance Code (in particular the provisions relating to the composition of the Board and the division of responsibilities between the Chairman and Chief Executive), are not being complied with by the Group as the Board considers these provisions to be inapplicable. • Until the Group has accumulated sufficient reserves and appointed two additional Non-Executive Directors it will not have separate audit and risk, nomination or remuneration committees. The Board as a whole will instead review audit and risk matters, as well as the Board’s size, structure and composition and the scale and structure of the Directors’ fees, taking into account the interests of shareholders and the performance of the Group. • The UK Corporate Governance Code recommends the submission of all Directors for re-election at annual intervals..At the last Annual General Meeting in November 2017 Timothy Le Druillenec and Paul Gazzard were re-elected and at this year’s meeting Geoffrey Dart will seek re-election. In future years all directors will seek re-election at annual intervals. 8 DUKEMOUNT CAPITAL PLC REPORT OF THE DIRECTORS • The Board do not consider an internal audit function to be necessary for the Group at this time due to the limited number of transactions. The Directors are responsible for internal control in the Group and for reviewing effectiveness. Due to the size of the Group, all key decisions are made by the Board. The Directors have reviewed the effectiveness of the Group’s systems during the period under review and consider that there have been no material losses, contingencies or uncertainties due to weaknesses in the controls. Carbon emissions The Group currently has no trade, no employees other than the Directors and uses a rented office. Therefore the Group has minimal carbon emissions and it is not practical to obtain emissions data at this stage. Directors and Directors’ Interests The Directors who held office during the period and to the date of approval of these Financial Statements had the following beneficial interests in the ordinary shares of the Group. Ordinary shares 30 April 2018 No. 75,000,000 4,000,000 4,000,000 Ordinary shares 30 April 2017 No. 75,000,000 4,000,000 4,000,000 Warrants interest 30 April 2018 No. 42,314,000 - - Warrant interest 30 April 2017 No. 42,314,000 - - Geoffrey Dart* Timothy Le Druillenec** Paul Gazzard*** * Geoffrey Dart is a Director of Chesterfield Capital Limited which holds the 75,000,000 shares and 42,314,000 warrants. Geoffrey Dart’s brother, Bryan Dart, holds warrants over 15,250,000 of the ordinary shares of the Group. Geoffrey Dart was appointed as a Director on 20 April 2011. ** Timothy Le Druillenec was appointed as a Director on 13 October 2016. *** Paul Gazzard was appointed as a Director on 2 May 2017. Going Concern The Directors, having made due and careful enquiry, are of the opinion that the Group has adequate working capital to meet its obligations over the next 12 months. The Directors therefore have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. As a result, the Directors have adopted the going concern basis of accounting in the preparation of the annual financial statements. See note 2(c) for further considerations made by the Directors in respect of going concern. Employees The Group has no employees other than the Directors. 9 DUKEMOUNT CAPITAL PLC REPORT OF THE DIRECTORS Substantial Interests As at 13th August 2018, the Directors were aware of the following shareholdings in excess of 3% of the Group’s issued share capital. Chesterfield Capital Limited Continental Natural Resources Limited Gary Ellis Carp Martin Gallagher Peter Redmond Financial Risk Management % Number of ordinary shares 22.09 16.79 15.00 4.12 3.68 75,000,000 57,000,000 50,932,000 14,000,000 12,500,000 The Group has a simple capital structure and its principal financial asset is cash. The Group has no material exposure to market risk or currency risk and the Directors manage its exposure to liquidity risk by maintaining adequate cash reserves and ensuring any debt financing is at a competitive interest rate which can be maintained within the group’s cash resources going forward. Further details regarding risks are detailed in note 2(o) to the financial statements. Statement of Directors’ responsibilities The Directors are responsible for preparing the Annual Report, the Remuneration Report and the consolidated financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that year. 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 as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group and Parent Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the consolidated financial statements may differ from legislation in other jurisdictions. 10 DUKEMOUNT CAPITAL PLC REPORT OF THE DIRECTORS Statement of Directors’ responsibilities (continued) The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company’s position, performance, business model and strategy. Each of the Directors, whose names and functions are listed on page 4 confirm that, to the best of their knowledge and belief: • The Group and Parent Company financial statements prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Parent Company; and the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that they face. • Provision of information to auditor So far as each of the Directors is aware at the time this report is approved: • • there is no relevant audit information of which the Group’s auditor is unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information. Auditors PKF Littlejohn LLP, the auditor, has indicated their willingness to continue in office as auditor. PKF Littlejohn LLP will be proposed for reappointment in accordance with Section 485 of the Companies Act 2006. Approved by the Board on 16 August 2018, and signed on its behalf by: Geoffrey Dart Director 11 DUKEMOUNT CAPITAL PLC DIRECTORS’ REMUNERATION REPORT This remuneration report sets out the Group’s policy on the remuneration of executive and non-executive Directors together with details of Directors' remuneration packages and service contracts for the financial year ended 30 April 2018. Until several transactions have been completed and until it has accumulated sufficient reserves to justify the appointment of two additional Non-Executive directors, the Group will not have a separate remuneration committee. The Board as a whole will instead review the scale and structure of the Directors' fees, taking into account the interests of shareholders and the performance of the Group and Directors. The items included in this report are unaudited unless otherwise stated. Audited information Directors’ emoluments and compensation Set out below are the emoluments of the Directors for the year ended 30 April 2018. Name of Director Salary and fees Geoffrey Dart Timothy Le Druillenec Paul Gazzard Peter Redmond Total 2018 £ 64,584 40,000 Total 2017 % change from 2017 £ 19,625 10,000 229% 300% £ 64,584 40,000 24,375 24,375 - 100% - - 10,000 (100%) TOTAL 128,959 128,959 39,625 It should be noted that the figures for 2017 represent part of the year as the Company was not listed on the London Stock Exchange until March 2017. Employment Contracts and Letters of Appointment The Directors who served during the year all have employment contracts. The Directors who held office at 30 April 2018 and who had beneficial interests in the Ordinary Shares of the Group and details of these beneficial interests can be found in the Directors’ Report. 12 DUKEMOUNT CAPITAL PLC DIRECTORS’ REMUNERATION REPORT Terms of appointment The services of the Directors, provided under the terms of agreement with the Group, are dated as follows: Director Geoffrey Dart Timothy Le Druillenec Paul Gazzard Year of appointment 2011 2016 2017 Number of years completed 6 2 1 Date of current engagement letter 16 March 2017 16 March 2017 29 June 2017 In accordance with the above agreements the Directors are subject to 6 months’ notice periods and an annual review. Other matters The Group does not have any pension plans for any of the Directors and does not pay pension amounts in relation to their remuneration. The Group has not paid out any excess retirement benefits to any Directors or past Directors. Unaudited information Performance Graph The following graph compares the total shareholder return of an ordinary share in Dukemount Capital plc against the total shareholder return of the FTSE All-share index. [Source:https://www.google.co.uk/search?q=INDEXFTSE:ASX&e=4112296&tbm=fin&biw=1920&bih=974# scso=uid_foEFW_waiLHSBc3DoIAC_5:0&smids=/m/02hl6w&wptab=COMPARE] 13 DUKEMOUNT CAPITAL PLC DIRECTORS’ REMUNERATION REPORT Remuneration Policy In setting the policy, the Board has taken the following into account: • The need to attract, retain and motivate individuals of a calibre who will ensure successful leadership and management of the Group; • The Group's general aim of seeking to reward all employees fairly according to the nature of their role and their performance; • Remuneration packages offered by similar companies within the same sector; • The need to align the interests of shareholders as a whole with the long-term growth of the Group; and • The need to be flexible and adjust with operational changes throughout the term of this policy. Remuneration Components The remuneration policy of the Group is outlined below. Future Policy Table Element Purpose Policy Operation Executive directors Base salary To award for services provided Paid monthly and will be reviewable annually. The remuneration of Directors is based on the recommendations of the Chairman and comparison with other companies of a similar size and sector. Any Director who serves on any committee, or who devotes special attention to the business of the Group, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration as the Directors may determine. Opportunity and performance conditions The total value of Directors' fees that may be paid is limited by the Group’s Articles of Association to £200,000 per annum. Pension Benefits Annual Bonus N/A Not awarded N/A Not awarded N/A Not awarded Share Options N/A As above N/A N/A N/A N/A N/A N/A N/A N/A 14 DUKEMOUNT CAPITAL PLC DIRECTORS’ REMUNERATION REPORT Non-executive directors Base salary To for award services provided Paid monthly and reviewable annually. The total value of Directors' fees that may be paid is limited by the Group’s Articles of Association to £200,000 per annum. The Board as a whole determines the remuneration of non-executive Directors based on the recommendations of the Chairman and comparison with other companies of a similar size and sector. There is no element of remuneration for performance. Any Director who serves on any committee, or who devotes special attention to the business of the Group, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Directors, may be paid such extra remuneration as the Directors may determine. Pension Benefits N/A Not awarded N/A There is no element of remuneration for performance. Share Options Notes to the Future Policy Table N/A Not awarded N/A N/A N/A N/A N/A N/A The Directors shall also be paid by the Group all travelling, hotel and other expenses as they may incur in attending meetings of the Directors or general meetings or otherwise in connection with the discharge of their duties. Consideration of shareholder views The Board will consider shareholder feedback received and guidance from shareholder bodies. This feedback, plus any additional feedback received from time to time, is considered as part of the Group’s annual policy on remuneration. Policy for new appointments Base salary levels will take into account market data for the relevant role, internal relativities, the individual’s experience and their current base salary. Where an individual is recruited at below market norms, they may be re-aligned over time (e.g. two to three years), subject to performance in the role. Benefits will generally be in accordance with the approved policy. For external and internal appointments, the Board may agree that the Group will meet certain relocation and/or incidental expenses as appropriate. Approved on behalf of the Board of Directors. Geoffrey Dart Director & Executive Chairman 16 August 2018 15 DUKEMOUNT CAPITAL PLC REPORT OF THE INDEPENDENT AUDITOR INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DUKEMOUNT CAPITAL PLC Opinion We have audited the financial statements of Dukemount Capital Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30 April 2018 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent 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 30 April 2018 and of the group’s 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 and as regards to the group financial statements, Article 4 of the IAS Regulation. 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 our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatement, we define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced. We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be material for the financial statements as a whole. We determined materiality for the Group to be £19,400, which is an average of 5% loss before tax and 5% gross assets. This is considered appropriate considering the principal driving force of the business is expenditure incurred and cash at bank. Our objective in adopting this approach is to ensure that total detected and undetected audit differences do not exceed our planning materiality of £19,400 for the financial statements as a whole. 16 DUKEMOUNT CAPITAL PLC REPORT OF THE INDEPENDENT AUDITOR An overview of the scope of our audit As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant uncertainty, estimates and judgement by the Directors and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. 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 Classification and valuation of property investment The Group purchased an investment property in the current period. There is a risk that the the presentation, disclosure and valuation of property is incorrect. We substantively tested the addition to investment property, ensuring costs had been correctly the classifications of capitalised and meet investment properties under IAS 40. We reviewed management’s assessment of the carrying value of the property and classification under IAS 40. We confirmed the ownership of the property through Land Registry searches. 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 the part of the directors’ remuneration report to be audited has been properly prepared in accordance with 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. 17 DUKEMOUNT CAPITAL PLC REPORT OF THE INDEPENDENT AUDITOR 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 and the part of the directors’ remuneration report to be audited 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. Other matters which we are required to address We were appointed by the Board on 27 April 2018 to audit the financial statements for the year ended 30 April 2018. Our total uninterrupted period of engagement is 7 years, covering the periods ended 30 April 2012 to 30 April 2018. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit. No non-audit services were provided to the Group during the year. We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussions with the directors. We considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items. We communicated identified laws and regulations throughout our audit team and remained alert to any indications of non-compliance throughout the audit. As with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit opinion is consistent with the additional report to the Board. 18 DUKEMOUNT CAPITAL PLC REPORT OF THE INDEPENDENT AUDITOR 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. Zahir Khaki (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 16 August 2018 1 Westferry Circus Canary Wharf London E14 4HD 19 DUKEMOUNT CAPITAL PLC STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED 30 APRIL 2018 Note 3 9 6 9 9 Continuing operations Revenue Administrative expenses Operating loss Interest received Profit/(loss) on disposal of available for sale financial asset Loss before taxation Income tax Loss for the year attributable to equity owners Other Comprehensive Income: Items that may be subsequently reclassified to profit or loss: Change in fair value of available for sale financial assets Reclassification of cumulative (gain)/loss on available for sale financial assets on disposal Total comprehensive income for the year attributable to the equity owners Earnings per share attributable to equity owners Group 2018 £ - Company 2017 £ - (363,110) _______ (167,470) _____ (363,110) (167,470) 188 76,954 _______ - (9,679) _____ (285,968) (177,149) - _______ (285,968) _______ - _____ (177,149) _____ 77,500 800 (77,500) _______ 17,200 _____ (285,968) (159,149) _______ _____ Basic and diluted (pence) 12 (0.084) _______ (0.099) _____ The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 20 DUKEMOUNT CAPITAL PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018 Note 30 April 2018 £ Assets Non current assets Investment properties Current Assets Trade and other receivables Cash and cash equivalents Total Assets Equity and Liabilities Equity Share capital Share premium Share based payments reserve Retained earnings Current Liabilities Trade and other payables Total Equity and Liabilities 7 10 13 14 16 197,868 32,847 148,391 _______ 379,106 _______ 339,500 736,337 30,499 (752,980) _______ 353,356 25,750 _______ 379,106 _______ These Consolidated Financial Statements were approved and authorised for issue by the Board of Directors and were signed on its behalf on 16 August 2018. Geoffrey G. Dart Director The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 21 DUKEMOUNT CAPITAL PLC COMPANY NUMBER: 07611240 COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018 Assets Non current assets Investment in Subsidiaries Current Assets Available for sale financial assets Trade and other receivables Cash and cash equivalents Total Assets Equity and Liabilities Equity Share capital Share premium Share based payments reserve Retained earnings Current Liabilities Trade and other payables Total Equity and Liabilities Note 30 April 2018 £ 30 April 2017 £ 8 9 10 13 14 16 101 - - 244,614 148,391 _______ 393,106 _______ 25,000 41,793 593,406 _______ 660,199 _______ 339,500 736,337 30,499 (731,480) _______ 338,300 731,537 30,499 (467,012) _______ 374,856 633,324 18,250 _______ 393,106 _______ 26,875 _______ 660,199 _______ The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Parent Company for the year was £264,468 (2017: £177,149) and the total comprehensive loss for the year was £264,468 (2017: £159,149). These Financial Statements were approved and authorised for issue by the Board of Directors and were signed on its behalf on 16 August 2018. Geoffrey G. Dart Director The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 22 DUKEMOUNT CAPITAL PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 30 APRIL 2018 Share Capital Share premium £ £ Share based payments reserve £ Retained earnings Total £ £ Balance as at 1 May 2017 338,300 ______ 731,537 _______ 30,499 ______ (467,012) _______ 633,324 _______ Loss for the year Other comprehensive Income Change in fair value of available for sale financial assets Reclassification of cumulative gain on available for sale financial assets on disposal Total comprehensive income for the year Transactions with equity owners Issue of ordinary shares Total transactions with owners - - - - - - - (285,968) (285,968) - - 77,750 77,500 (77,750) (77,500) ______ - ______ _______ - _______ _______ - _______ _______ (285,968) _______ _______ (285,968) _______ 1,200 ______ 1,200 ______ 4,800 _______ 4,800 _______ - _______ - _______ - _______ - _______ 6,000 _______ 6,000 _______ Balance as at 30 April 2018 339,500 ______ 736,337 _______ 30,499 _______ (752,980) _______ 353,356 _______ The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 23 DUKEMOUNT CAPITAL PLC COMPANY STATEMENT OF CHANGES IN EQUITY YEAR ENDED 30 APRIL 2018 Share Capital Share premium £ £ Share based payments reserve £ Retained earnings Total £ £ Balance as at 1 May 2016 152,500 ______ 196,500 _______ 23,308 _______ (307,863) _______ 64,445 _______ Loss for the year Other comprehensive income Change in fair value of available for sale financial assets Reclassification of cumulative loss on available for sale financial assets on disposal Total comprehensive income for the year - - - - - - - (177,149) (177,149) - - 800 800 17,200 17,200 ______ - ______ _______ - _______ ______ - ______ _______ (159,149) _______ _______ (159,149) _______ Issue of ordinary shares 185,800 623,200 Issue costs - (88,163) - - - - 809,000 (88,163) Share based payments Total transactions with owners - ______ 185,800 ______ - _______ 535,037 _______ 7,191 _______ 7,191 ______ - _______ - _______ 7,191 _______ 728,028 _______ Balance as at 30 April 2017 338,300 ______ 731,537 _______ 30,499 ______ (467,012) _______ 633,324 _______ At 1 May 2017 Loss for the year Other comprehensive Income Change in fair value of available for sale financial assets Reclassification of cumulative loss on available for sale financial assets on disposal Total comprehensive income for the year 338,300 731,537 30,499 (467,012) 633,324 - - - - - - - (264,468) (264,468) - - 77,750 77,500 (77,750) (77,500) ______ - ______ _______ - _______ _______ - _______ _______ (264,468) _______ _______ (264,468) _______ Issue of ordinary shares 1,200 4,800 - - Total transactions with owners ______ 1,200 ______ _______ 4,800 _______ _______ - _______ _______ - _______ 6,000 _______ 6,000 _______ Balance as at 30 April 2018 339,500 ______ 736,337 _______ 30,499 _______ (731,480) _______ 374,856 _______ The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 24 DUKEMOUNT CAPITAL PLC CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED 30 APRIL 2018 Note 2018 £ Cash Flows from Operating Activities Loss before taxation (285,968) Adjustments for: Profit on disposal of available for sale financial assets Share based payment 9 13 (76,954) 6,000 Changes in working capital: Decrease in trade and other receivables Decrease in trade and other payables Net Cash used in Operating Activities Cash Flows from Investing Activities Purchase of investment property Proceeds from sale of available for sale financial assets 7 9 Net Cash used in Investing Activities Net Decrease in Cash and Cash Equivalents Cash and cash equivalents at the beginning of the year Cash and Cash Equivalents at the End of the Year 8,946 (1,125) _____ (349,101) _______ (197,868) 101,954 _______ (95,914) _______ (445,015) 593,406 _______ 148,391 _______ The only non-cash transaction in the year was the issue of 1,200,000 ordinary shares to WalbrookPR for PR services. The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 25 DUKEMOUNT CAPITAL PLC COMPANY STATEMENT OF CASH FLOWS YEAR ENDED 30 APRIL 2018 Note 2018 £ 2017 £ Cash Flows from Operating Activities Loss before taxation (264,468) (177,149) Adjustments for: (Profit)/Loss on disposal of available for sale financial assets Share based payment 9 13 (76,954) 6,000 Changes in working capital: Increase in trade and other receivables (Decrease)Increase in trade and other payables Net Cash used in Operating Activities Cash Flows from Investing Activities Purchase of subsidiaries Proceeds from sale of available for sale financial assets 8 9 Net Cash generated from Investing Activities Cash Flows from Financing Activities Proceeds from issue of shares, net of issue costs Net Cash generated from Financing Activities (202,821) (8,625) _______ (546,868) _______ (101) 101,954 ______ 101,853 ______ - ______ - _______ 9,679 7,191 (37,867) 23,025 ______ (175,121) _______ - 10,321 ______ 10,321 ______ 720,837 ______ 720,837 _______ Net (Decrease)/Increase in Cash and Cash Equivalents (445,015) 556,037 Cash and cash equivalents at the beginning of the year Cash and Cash Equivalents at the End of the Year 593,406 _______ 148,391 _______ 37,369 _______ 593,406 _______ The only non-cash transaction in the year was the issue of 1,200,000 ordinary shares to WalbrookPR for PR services. The Accounting Policies and Notes on pages 27 to 45 form part of the financial statements. 26 DUKEMOUNT CAPITAL PLC 1. General Information NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 Dukemount Capital Plc was incorporated in the UK on 20 April 2011 as a public limited company with the name Black Lion Capital Plc. The Company subsequently changed its name to Black Eagle Capital Plc on 13 September 2011 and on 15 November 2016 changed its name to Dukemount Capital Plc. On 29 March 2017 the Company was admitted to the London Stock Exchange by way of a standard listing. The Group’s principal activity is to acquire, manage, develop and, where appropriate on-sell, real estate portfolios specialising mainly in the supported living and hotels sector. The parent company’s registered office is located at 50 Jermyn Street, London SW1Y 6LX. 2. Summary of Significant Accounting Policies The principal Accounting Policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. a) Basis of Preparation of Financial Statements The financial statements of Dukemount Capital Plc have been prepared in accordance with International Financial Reporting Standards (IFRSs) and IFRIC interpretations (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have also been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets at fair value. The financial statements are presented in Pound Sterling (£), rounded to the nearest pound. The consolidated entities include the wholly owned subsidiaries DKE (North West) Limited and DKE (Wavertree) Limited. Both subsidiaries were dormant in the previous period. The individual entity financial statements of each subsidiary were prepared in accordance with United Kingdom Generally Accepted Accounting Practice (FRS 101). b) Basis of consolidation Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. 27 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) b) Basis of consolidation (continued) The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquire and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquired companies on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the group’s accounting policies. c) Going Concern The preparation of consolidated financial statements requires an assessment on the validity of the going concern assumption. The Directors have reviewed projections for a period of at least 12 months from the date of approval of the Financial Statements. The Group has no revenues but significant cash resources were raised, following its listing, to finance its activities whilst it identifies and completes suitable transaction opportunities. Further development of the existing and new projects is reliant on further external funding. The Group are currently in negotiations with several parties to secure future funding for the development work. Furthermore, the Group is in advanced negotiations to enhance both of its existing projects with investment funds. In making their assessment of going concern, the Directors acknowledge that the Group has a very small cost base and can therefore confirm that they hold sufficient funds to ensure the Group continues to meet its obligations as they fall due for a period of at least one year from date of approval of these Financial Statements. The Group can enter in to significant cost cutting measures to ensure sufficient capital resources to continue as a going concern. Accordingly, the Board believes it is appropriate to adopt the going concern basis in the preparation of the Financial Statements. d) Changes in accounting policies and disclosure i) New and Amended Standards mandatory for the first time for the period beginning 1 May 2017 No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 May 2017 have had a material impact on the Group. ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the financial statements are listed below. The Group intends to adopt these standards, if applicable, when they become effective. 28 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) d) Changes in accounting policies and disclosure (continued) Standard Impact on initial application IFRS 9 (Amendments) Financial Instruments IFRS 15 IFRS 16 IFRS 2 (Amendments) Annual improvements IFRIC Interpretations 22 IAS 40 (Amendments) Revenue from contracts with customers Leases Share-based payments – classification and measurement 2014-2016 Cycle Foreign currency transactions and advanced consideration Transfers of Investment Property IFRIC 23 Uncertainty over Income Tax Treatments Annual improvements *Subject to EU endorsement 2015-2017 Cycle Effective date 1 January 2018 1 January 2018 1 January 2019 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2019 Not yet known The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group’s results or shareholders’ funds. There is not expected to be any significant impact from the introduction of IFRS 15 as the Group does not have any revenue from contracts with customers. Based on an analysis of the Group’s financial assets and financial liabilities as at 30 April 2018 on the basis of the facts and circumstances that exist at that date, the Directors of the Group do not expect there to be a significant impact on the adoption of IFRS 9. e) Segmental reporting Identifying and assessing investment projects is the only activity the Group is involved in and is therefore considered as the only operating/reportable segment. As the subsidiaries grow and acquire additional properties and projects, management will then consider them as separate reportable segments. Therefore the financial information of the single segment is the same as that set out in the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the Statement of Cashflows. f) Tangible Assets i. Investment properties Investment properties are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. ii. Investment properties not available for use Investment properties not available for use relate to properties that are being refurbished, and are stated at cost. These assets are not depreciated until they are available for use. iii. Impairment of tangible assets An asset’s carrying amount is written down immediately to its recoverable amount if it is greater than its estimated recoverable amount. 29 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) g) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand and current and deposit balances with banks and similar institutions. This definition is also used for the Statement of Cash Flows. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Group will only keep its holdings of cash and cash equivalents with institutions which have a minimum credit rating of ‘AA-’. The Group considers that it is not exposed to major concentrations of credit risk. h) Financial Instruments Financial assets Financial assets, comprising solely of other receivables and cash and cash equivalents, are classified as loans and receivables held at amortised cost. Other financial assets, being available for sale financial assets, are classified as available for sale. This classification is determined at initial recognition and depends on the purpose for which the financial assets were acquired. These assets are non-derivative financial assets either designated as such or not classifiable under any of the other categories. They are included under current assets as management intends to dispose of the investments within 12 months of the end of the reporting period, where it is in the Group’s best interests to do so. Available for sale financial assets are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership. Available for sale financial assets are subsequently carried at fair value unless the Group is precluded from doing so as, in the case of unlisted equity securities, the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed. In such circumstances available-for-sale financial assets are held at cost and reviewed annually for impairment. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair value of monetary and non-monetary non-derivative financial assets classified as available for sale are recognised in other comprehensive income. When such financial assets classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as net “gains/(losses) from disposal of available for sale financial assets.” Dividends on available-for-sale equity instruments are recognised in profit or loss as part of other income when the Group’s right to receive payments is established. The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include: • significant financial difficulty of the issuer or obligor; • a breach of contract, such as a default or delinquency in interest or principal repayments; 30 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) h) Financial Instruments (continued) the disappearance of an active market for that financial asset because of financial difficulties; • • observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio; or for assets classified as available-for-sale, a significant or prolonged decline in fair value of the security below its cost. • • For loans and receivables, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced, and the loss is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss. For assets classified as available-for-sale, the Group assesses at each reporting period whether there is objective evidence that a financial asset is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is one example that the asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on the financial previously recognised in profit or loss, is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss. i) Financial liabilities Financial liabilities, comprising trade and other payables, are held at amortised cost. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. 31 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) j) De-recognition of Financial Instruments i. Financial Assets A financial asset is derecognised where: • • • the right to receive cash flows from the asset has expired; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement; or the Group has transferred the rights to receive cash flows from the asset, and either has transferred substantially all the risks and rewards of the asset or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. ii. Financial Liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income. k) Taxation Current tax Current tax is based on the taxable profit or loss for the year. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or recognised in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted at the reporting date. Deferred tax Deferred tax is recognised using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are 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. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted at the Statement of Financial Position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 32 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) l) Equity Equity comprises the following: • Share capital representing the nominal value of the equity shares; • Share premium representing consideration less nominal value of issued shares and costs directly attributable to the issue of new shares; • Share based payments reserve representing the fair value of share based payments valued in accordance with IFRS 2; • Retained earnings representing retained profits and losses, and the accumulated fair value adjustments on available-for-sale financial assets that are not permanently impaired. m) Share Capital Ordinary shares are classified as equity. n) Share Based Payments The Group has issued warrants over the ordinary share capital as described in note 15. In accordance with IFRS 2, the total amount to be expensed over the vesting period for warrants issued for services is determined by reference to the fair value of the warrants granted, excluding non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of warrants that are expected to vest. For warrants issued relating to the raising of finance, the relevant expense is offset against the share premium account. The total amount to be expensed is determined by reference to the fair rate of the warrants granted, excluding non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of warrants that are expected to vest. o) Financial Risk Management Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (price risk), credit risk and liquidity risk. The Group’s overall risk management programme seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are hedged. The Group has no foreign currency transactions or borrowings, so is not exposed to market risk in terms of foreign exchange risk. The Group will require funding to acquire and develop and/or refurbish its properties and accordingly will be subject to interest rate risk. Risk management is undertaken by the Board of Directors. Market Risk – price risk The Group was exposed to equity securities price risk because of investments held by the Group, classified as available-for-sale financial assets. These assets were sold in the year, and therefore the carrying value at the year end is £Nil, which represents the maximum exposure for the Group. The Group is not exposed to commodity price risk. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. The Group previously held investments in equity of other entities which are publicly traded and are listed on the London Stock Exchange. These investments in Hemogenyx Pharmaceuticals Plc were valued in accordance with tier 3 of the fair value hierarchy in the previous period, as the shares were previously suspended. The shares started trading again in the current period, therefore because there was an active 33 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) o) Financial Risk Management (continued) market the investment has been classified as level 1 for the revaluation on disposal in the year ended 30 April 2018. There is a limited volume of shares traded in these companies and if a significant disposal of the shares was made by the Group, this could have a significant impact on the realisable value of their shares. The table below summarises the potential impact of increases/decreases in the market price on the Group’s results for the year and on equity. The analysis is based on the assumption that the share prices have increased/decreased by 5% with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation with the market: Potential impact on: Listed Investments (Level 1) Available-for-sale financial assets – 5% increase Available-for-sale financial assets – 5% decrease Profit/(Loss) for the year Other comprehensive income 2018 £ - - ____ 2017 £ - - ___ 2018 £ - - ____ 2017 £ 1,250 (1,250) ____ There is no impact at the year end as all level 1 investments had been disposed of in the year and fair value gains and losses recognised in profit or loss. Credit risk Credit risk arises from cash and cash equivalents as well as any outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk, which is stated under the cash and cash equivalents accounting policy. Liquidity risk Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The proceeds raised from the placing are being held as cash to enable the Group to fund a transaction as and when a suitable target is found. Controls over expenditure are carefully managed, in order to maintain its cash reserves whilst it targets a suitable transaction. Financial liabilities are all due within one year. Capital risk management The Group’s objectives when managing capital is to safeguard the Group’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure. The Group has no borrowings. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Group monitors capital on the basis of the total equity held by the Group, being £353,356 as at 30 April 2018 (2017: £633,324). 34 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) p) Fair Value Estimation The table below analyses financial instruments carried at fair value, by valuation method. The level at which a financial instrument can be defined is as follows: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); • Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). • The following table presents the Group’s financial assets that are measured at fair value. Assets Available-for-sale financial assets Total assets 2017 Level 3 £ Total £ 25,000 ______ 25,000 ______ 25,000 ______ 25,000 ______ The investment in Hemogenyx Pharmaceuticals Plc (formerly Silver Falcon Plc) is quoted and would be classified as Level 1. The investment, which was previously valued in accordance with level 3 of the fair value hierarchy when the listing was previously suspended, has been transferred to level 1 in the year ended 30 April 2018, as the shares commenced trading in an active market. The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The fair values of quoted investments are based on current bid prices. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available, and rely as little possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Specific valuation techniques used to value financial instruments include: • quoted market prices or dealer quotes for similar instruments; • other techniques, such as discounted cash flow analysis or the last available quoted market price are used to determine fair value for the remaining financial instruments. 35 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) p) Fair Value Estimation (continued) The following table presents the changes in Level 1 instruments for the period ended: Balance as at 1 May Transfer from Level 3 to Level 1 Fair value profit/(loss) Disposals of Level 1 Balance as at 30 April 2018 £ - 25,000 77,750 (102,750) ______ - ______ The following table presents the changes in Level 3 instruments for the period ended: Balance as at 1 May Transfer from Level 3 to Level 1 Balance as at 30 April 2018 £ 25,000 (25,000) ______ - ______ 2017 £ 2,000 - 800 (2,800) ______ - ______ 2017 £ 25,000 - ______ 25,000 ______ q) Critical Accounting Estimates and Judgements The Directors make estimates and assumptions concerning the future as required by the preparation of the financial statements in conformity with EU endorsed IFRSs. The resulting accounting estimates will, by definition, seldom equal the related actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. i. Share based payments In accordance with IFRS 2 ‘Share Based Payments’ the Group has recognised the fair value of warrants calculated using the Black-Scholes option pricing model. The Directors have made significant assumptions particularly regarding the volatility of the share price at the grant date in order to calculate a total fair value. Further information is disclosed in Note 15. 36 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2. Summary of Significant Accounting Policies (continued) q) Critical Accounting Estimates and Judgements (continued) ii. Impairment of investment property The Group makes an estimate of the recoverable value of investment property. When assessing impairment of investment properties, management considers factors including the condition of the property and expected rent yield. As asset’s carrying amount is written down immediately to its recoverable amount if it is greater than its estimated recoverable amount. See note 7 for the net carrying amount of the investment property. 3. Expenses by Nature Directors’ fees Social security and other taxation Establishment costs Legal and professional fees Listing/ regulatory costs Travel and accommodation Share option charge Other expenses Total Administrative Expenses 2018 £ 128,959 13,611 34,149 145,635 29,763 4,993 - 6,000 ______ 363,110 ______ 2017 £ 32,500 - 8,581 54,058 61,396 2,207 7,191 1,537 ______ 167,470 ______ 37 DUKEMOUNT CAPITAL PLC 4. Directors’ Remuneration Company Geoffrey Dart Timothy Le Druillenec Paul Gazzard (appointed 2 May 2017) Peter Redmond (resigned 26 April 2017) Total NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2018 £ 64,584 40,000 24,375 - _____ 2017 £ 12,500 10,000 - 10,000 _____ 128,959 ______ 32,500 ______ There are no other employees of the Group. 5. Services provided by the Company’s Auditors During the year, the Group obtained the following services from the Group’s auditors and its associates: 2018 £ 2017 £ 19,500 10,000 - - 1,000 10,000 ______ ______ Fees payable to the Company’s auditor and its associates for the audit of the Group and Company Financial Statements Fees payable to the Company’s auditor for tax compliance and other Services Fees payable to the Company’s auditor for corporate finance work in relation to the listing 6. Taxation Tax Charge for the Year No taxation arises on the result for the year due to taxable losses. Factors Affecting the Tax Charge for the Period The tax credit for the period does not equate to the loss for the period at the applicable rate of UK Corporation Tax of 19.00% (2017: 19.92%). The differences are explained below: 38 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 DUKEMOUNT CAPITAL PLC 6. Taxation (continued) Loss for the period before taxation Loss for the period before taxation multiplied by the standard rate of UK Corporation of 19.00% (2017: 19.92%) Expenses not deductible for tax purposes Income not taxable for tax purposes Losses carried forward on which no deferred tax asset is recognised 2018 £ 2017 £ (285,968) ______ (177,149) _____ (54,334) (35,284) 458 3,426 - (1,498) 53,876 ______ - ______ 33,356 _____ - _____ Factors Affecting the Tax Charge of Future Periods Tax losses available to be carried forward by the Group at 30 April 2018 against future profits are estimated at £663,000 (2017 - £371,000). Tax losses available to carry forward by the Company are estimated at £641,000 (2017 - £371,000). A deferred tax asset has not been recognised in respect of these losses in view of uncertainty as to the level of future taxable profits. 7. Investment properties Group Cost As at 1 May 2017 Additions As at 30 April 2018 Investment property £ - 197,868 197,868 Through its subsidiary DKE (North West) Limited, a redevelopment project was acquired on 7 September 2017 which aims to build retail space of approximately 3,200 square feet and 17 residential apartments for supported living tenants. As part of that project a 50-year lease with a supported living housing association has been agreed which expects to generate around £234,000 of income per annum which is CPI-linked. Due to the proximity of the purchase to the year-end, the Directors consider that the cost is equal to the fair value. 39 DUKEMOUNT CAPITAL PLC 8. Investment in subsidiaries Company Shares in Group Undertaking As at 1 May Additions in the year At 30 April 2018 Details of Subsidiaries NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 2018 £ - 101 101 2017 £ - - - Details of the subsidiaries at 30 April 2018 are as follows: Name of subsidiary Country of incorporation Share capital held by Parent DKE (North West Limited) DKE (Wavertree) Limited England 100 England 1 % share capital held 100% 100% Principal activities Property management and development Property management and development The registered office of all subsidiary undertakings is the same as the parent company. 9. Available for sale financial assets At beginning of period Disposals Fair value profit/(loss) At End of Period Less: non-current portion Current Portion 2018 £ 25,000 (102,750) 77,750 ______ - - ______ - ______ 2017 £ 27,000 (2,800) 800 ______ 25,000 - ______ 25,000 ______ As at 30 April 2018 all available for sale financial assets had been realised. 40 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 9. Available for sale financial assets (continued) The Group previously held 2,500,000 Ordinary share of 1p each at par in Hemogenyx Pharmaceuticals Plc (formerly Silver Falcon Plc). Silver Falcon was listed on the FTSE All Share Index of the London Stock Exchange on 9 November 2015. The Group sold its entire holding in Hemogenyx Pharmaceuticals Plc for £101,954 on 26 February 2018. On disposal, the gain of £77,750 previously recognised in other comprehensive income has been reclassified to profit or loss. This has given a net gain of £76,954 recognised in profit or loss in the year. 10. Trade and Other Receivables Other receivables, including prepayments Amounts owed by group undertakings Group 2018 £ Company 2018 £ Company 2017 £ 32,847 31,847 - _____ 32,847 _____ 212,767 _____ 244,614 _____ 41,793 - _____ 41,793 _____ The fair value of all receivables is the same as their carrying values stated above. At 30 April 2018 all receivables were fully performing, and therefore do not require impairment. The maximum exposure to credit risk at the reporting date is the carrying value mentioned above. The Group does not hold any collateral as security. DKE (Wavertree) Limited signed an option of £1,000 to acquire a property in North West England on a four month term and then a further two month extension. This is included within other receivables. Amounts due from group undertakings are unsecured, interest free, have no fixed date of repayment and repayable on demand. They have been advances to the subsidiaries in order to fund the redevelopment project. 11. Dividends No dividend has been declared or paid by the Company during the year ended 30 April 2018 (2017: Nil). 41 DUKEMOUNT CAPITAL PLC 12. Earnings per share NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year. In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise of the warrants would be to decrease the loss per share. 2018 2017 £ £ Loss attributable to equity holders of the Group Total Weighted average number of ordinary shares in issue (thousands) 285,968 ______ 177,149 ______ 285,968 ______ 177,149 ______ 339,497 ______ 179,687 _____ 13. Share Capital Group and Company Allotted, issued and fully paid 339,500,000 ordinary shares of £0.001 each 2018 No. (000’s) 2017 No ( 000’s) 339,500 _______ 338,300 _______ During the year, the Group issued 1,200,000 new ordinary shares in settlement of a debt of £6,000 to Walbrook PR for PR services. 14. Share Premium Group and Company Share Premium £ Less share issue costs £ At 1 May 2017 Issue of shares in settlement of adviser fees At 30 April 2018 731,537 4,800 736,337 - - - Net Share Premium £ 731,537 4,800 736,337 42 DUKEMOUNT CAPITAL PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 15. Share Based Payments Details of the warrants outstanding at 30 April 2018 are included below. The fair value of the warrants was determined using the Black Scholes valuation model. The parameters used are detailed below: Warrant granted on: Warrant life remaining (years) Warrants granted Risk free rate Expiry date Exercise price (£) Expected volatility Expected dividend yield Marketability discount Total fair value of warrants granted (£) Various dates between 8 September 2011 and 26 October 2011 4 years 25,925,000 2.2% 8 September 2021 0.005 20% - 20% At 29 March 2017 At 29 March 2017 2 years 27,064,000 0.5% 29 March 2020 0.005 20% - 20% 2 years 2,004,000 0.5% 29 March 2020 0.0075 20% - 20% 23,308 7,125 66 The expected volatility for the warrants granted is based on the historical share price volatility of similar listed entities from their date of admission to the market up to the completion of the first six months of trading. This is considered to be the most reasonable measure of expected volatility, given the relatively brief trading history of the Group. The warrants issued in 2011 have been modified in the prior year, with their expiry date being extended until 8 September 2021. The fair value adjustment as required under IFRS 2 as a result of this modification was immaterial and as such no change in the fair value has been reflected in the Financial Statements. The risk free rate of return is based on zero yield government bonds for a term consistent with the warrant life. A reconciliation of warrants in issue over the period to 30 April 2018 is shown below: As at 1 May 2017 Outstanding as at 30 April 2018 Exercisable at 30 April 2018 Number Weighted average exercise price (£) 0.005 0.005 54,993,000 54,993,000 54,993,000 _________ 0.005 _____ The weighted average contracted and expected life (years) for the above warrants is 3 years (2017 - 4 years). 43 DUKEMOUNT CAPITAL PLC 16. Trade and Other Payables Accruals NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 Group 2018 £ 25,750 ______ 25,750 ______ Company 2018 £ Company 2017 £ 18,250 ______ 18,250 ______ 26,875 ______ 26,875 ______ 17. Treasury Policy and Financial Instruments The Group operates an informal treasury policy which includes the ongoing assessments of interest rate management and borrowing policy. The Board approves all decisions on treasury policy. The Group has financed its activities by the raising of funds through the placing of shares in the previous period. There are no material differences between the book value and fair value of the financial instruments. 18. Capital Commitments There were no capital commitments authorised by the Directors or contracted for at 30 April 2018. 19. Related Party Transactions Silver Falcon Plc As disclosed in note 9, the Group previously held 2,500,000 Ordinary shares of 1p each at par in Hemogenyx Pharmaceuticals Plc (formerly Silver Falcon Plc), all of which were sold in the year. During the year, the Group charged an amount of £1,250 (2017: 19,561) to Silver Falcon Plc in respect of office space utilised on an ad hoc basis. As at the year end, £Nil (2017: £Nil) was owed by Silver Falcon in respect of rent. Geoffrey Dart was a director of Silver Falcon Plc at the time of the rental charge. Argo Blockchain Plc During the year, the Group charged an amount of £1,375 (2017: £Nil) to Argo Blockchain Plc in respect of office space utilised on an ad hoc basis. As at the year end, £Nil (2017: £Nil) was owed by Argo Blockchain Plc in respect of rent. Timothy Le Druillenec is a director of Argo Blockchain Plc. Briarmount Limited During the year, and prior to the establishment of a Group payroll, the Group paid £3,333 (2017: £55,000) to Briarmount Limited in respect of consultancy services, and £Nil (2017: £1,591) in respect of accountancy fees. As at the year-end, £Nil (2017: £Nil) was owed to Briarmount Limited. Timothy Le Druillenec is a director of Briarmount Limited. Chesterfield Capital Limited During the year, and prior to the establishment of a Group payroll, the Group paid £4,167 (2017: £12,500) to Chesterfield Capital Limited in respect of Director’s fees. As at the year end, £Nil (2017: £Nil) was owed to Chesterfield Capital Limited. Geoffrey Dart is a director of Chesterfield Capital Limited. 44 DUKEMOUNT CAPITAL PLC 20. Ultimate Controlling Party NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 APRIL 2018 The Directors believe there to be no ultimate controlling party. 21. Events after the reporting date On 11th June 2018, through its subsidiary DKE Wavertree Limited, the Company signed a 30 year CPI linked agreement-to-lease at £168,740 per annum with multi-award winning Inclusion Housing (Inclusion) and has agreed to exchange contracts with the vendor of the property subject to planning permission for additional rooms. 45 

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