N4 Pharma Plc
Annual Report 2015

Plain-text annual report

ULTIMA NETWORKS PLC Company Number 01435584 (England and Wales) ONZIMA VENTURES PLC (FORMERLY KNOWN AS ULTIMA NETWORKS PLC) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 ONZIMA VENTURES PLC CONTENTS Directors and advisors Page 1 Financial Highlights and Strategic report 3 Directors Report 10 Corporate governance statement Directors‘ remuneration report Report of the independent auditor Consolidated statement of comprehensive income Consolidated statement of financial position Company statement of financial position Consolidated cash flow statement Company cash flow statement Consolidated statement of changes in equity Company statement of changes in equity 16 18 20 22 23 25 27 28 29 30 Notes to the financial statements 31 ONZIMA VENTURES PLC DIRECTORS AND ADVISORS Gavin J Burnell Luke S Cairns Humayun A Mughal Page 1 Chief Executive Officer Non-Executive Director Non-Executive Director Lorraine Young Company Secretaries Limited Company Secretary Registered office Website Company number Auditors Accountants Solicitors Broker 190 High Street Tonbridge Kent TN9 1BE www.onzimaventures.com 01435584 Jeffreys Henry LLP Finsgate 5-7 Cranwood Street London EC1V 9EE Hills Jarrett LLP Gainsborough House Sheering Lower Road Herts CM21 9RG Edwin Coe 2 Stone Buildings Lincolns Inn London WC2A 3TH Peterhouse Corporate Finance Limited 3rd Floor New Liverpool House 15-17 Eldon St London EC2M 7LD Nominated advisor Cairn Financial Advisers LLP 61 Cheapside London EC2V 6AX ONZIMA VENTURES PLC DIRECTORS AND ADVISORS Page 2 Principal bankers Registrars National Westminster Bank Plc PO Box 113, Cavell House 2a Charing Cross Road London WC2H 0PD Neville Registrars Ltd Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA ONZIMA VENTURES PLC Page 3 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 The Directors present their Strategic Report on the Company for the year ended 31 December 2015. REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS Following the disposal of the historical subsidiaries in October 2015, the Company commenced seeking to implement its investing policy. INVESTMENTS On 7 December 2015, Onzima made its first investment acquiring 50,000,000 new ordinary shares in Glenwick plc at a price of 0.1 pence per share, for consideration of £50,000, amounting to 20% of their fundraise. As a result of the subscription Onzima held 3.63% of Glenwick's issued share capital as enlarged by the placing. Glenwick is an investing company seeking to acquire companies within the natural resources sector. Initially the geographical focus will be Australasia and North America but it may also consider other regions to the extent that its Board considers that valuable opportunities exist and positive returns can be achieved. Subsequent to the year-end Onzima disposed of the position receiving the sum of £75,500 net of all costs representing a 50% return on its investment in less than one month. Subsequent to the year-end Onzima has also made numerous other investments primarily in the natural resources sector. Some of those positions have been reduced or disposed of and in a number of cases the Company retains a warrant position. In addition, subsequent to the year end, Onzima has acquired a 49% equity stake in, and provided a £209,000 loan facility to, N4 Pharma Limited an exciting early stage company in the pharmaceutical drug reformulation space. The Company plans to continue implementing its investing policy and has a number of new opportunities under review. ONZIMA VENTURES PLC Page 4 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 CHIEF EXECUTIVE OFFICER’S STATEMENT The year ended 31 December 2015 was transformational for the Company whereby the historical subsidiaries were disposed of and the Company became an Investing Company. Simultaneous with the disposals and a fundraising of £750,000 before expenses, Luke Cairns and I joined the Board as Directors to seek to implement the investing policy of the Company adopted on 14 October 2015. We sought to immediately be active but selective in our investments and prior to the year-end we invested £50,000 in to Glenwick plc which we sold one month later at a 50% profit. During the first half of 2016 we have continued to build the investment portfolio in line with our investing policy, most notably with the acquisition of 49% of N4 Pharma Limited, a very exciting pharmaceutical drug reformulation company. In addition, we have made numerous investments in the natural resources sector including Alecto Minerals plc, Bushveld Minerals Limited, Ferrum Crescent Limited, Hummingbird Resources plc, Jubilee Platinum plc, MX Oil plc, Prospex Oil & Gas plc and Regency Mines plc. In a number of cases we have reduced or disposed of our holdings and retained warrant positions. We have now established an asset trading division and a business development division in order to separate our various positions. FINANCIAL During 2015, the Company made a loss from continuing operations of £151,000 (2014: profit of £88,000). The Company‘s assets at 31 December 2015 comprised primarily of an investment of £50,000 in Glenwick plc and cash balances amounting to £587,000 (2014: £347,000). REVIEW OF THE YEAR In October 2015, Onzima disposed of its subsidiaries and raised gross proceeds of £750,000 before expenses via a placing of new ordinary shares at a price of 0.7 pence per share simultaneously becoming an investing company under the AIM Rules. Onzima has since commenced implementation of its investing policy and the Board is pleased with progress made. The Company‘s share price has increased from 0.7p to 1.7p at the time of writing. ONZIMA VENTURES PLC Page 5 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 OUTLOOK AND STRATEGY Since the re-financing and disposal of the subsidiaries the Company has made good progress with establishing its portfolio of interesting and attractive investments. The Company also seeks to maintain a reasonable cash balance for the purpose of making new investments. Since Onzima was restructured in October 2015, the main focus has been on investing in opportunities within the natural resources sector that provide scope to make significant gains in financing their development. Though the sector remains difficult the strategy has to date been successful and has yielded some reasonable returns details of which shall be set out in the Company‘s 6 months results for the period ending 30 June 2016. In order to diversify the portfolio we have also taken a significant stake in N4 Pharma Limited, an early stage but very exciting company within the pharmaceutical space. The market has reacted well to this position and we plan in due course to increase our exposure to this sector. We believe that we are well placed to make some new and exciting investments and are already in discussions with a view to adding to the portfolio. Key Developments and Outlook Following difficult trading circumstances during 2014 and 2015 in which the Company made operating losses, the Company‘s previous management took action during 2015 to halt the losses through a series of actions, however these alone were not sufficient. Additionally, the cost of maintaining the Company‘s AIM listing outweighed the benefits. As a result the Board in place at the time came to the conclusion that the funds expended in maintaining the AIM listing would be more effectively utilised in the pursuit of growing the bottom line of the business. The Board negotiated a proposal, which was approved at an Extraordinary General Meeting of the Company on 14 October 2015, to dispose of the issued share capital of Cognito (the IT Services division) and UTN Solutions (the Green technology division). Following the disposal of the businesses, the company is now classified as an investing company under Rule 15 of the AIM Rules. It adopted an Investing Policy which is available to view in more detail on the Company‘s website, http://www.onzimaventures.com/. In line with the Investing Policy, the Board have been very active and sought suitable investments, these have included the acquisition in 2015 and subsequent disposal in early 2016 of equity in Glenwick plc in 2015, which resulted in a 50% return on the original investment of £50,000. Also subsequent to the year end a further investment the Board has made is N4 Pharma Limited. Onzima acquired a 49% stake in N4 Pharma for £41,000 cash together with the issue of 24,272,807 new ordinary shares in Onzima alongside the provision of a loan facility to N4 Pharma of £209,000. N4 Pharma is a private company that develops new versions of existing widely used drugs to provide an improved patient experience by reformulating them using their patent protected technology platforms Cocrys® and Nuvac®. They continue to make positive progress through research and developing technology that will, following further research, form the basis for discussions with potential partners. ONZIMA VENTURES PLC Page 6 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 Post that investment the Company has made investments in numerous natural resource companies including Alecto Minerals PLC, Bushveld Minerals Ltd, MX Oil plc, Ferrum Crescent Ltd, Hummingbird Resources plc and Prospex Oil & Gas plc. In some cases the company has reduced or disposed of its equity holding and retained a warrant position. This leaves the company well positioned with circa £400,000 of cash at bank for further new investments, supporting existing investments and for general working capital. It is the Board‘s intention to continue to seek suitable investments that are in line with investment policy. Principal risks and uncertainties Operational The principal risks and uncertainties facing the Company are identifying suitable investments. The Board have also identified that as investments are made, it may also require further funding, until such time as the Company is self- funding. Until such time as the Company has grown and diversified its investment portfolio sufficiently, there is a risk of over-exposure to any one investment. However, at this stage in the Company‘s life, the current investment portfolio is not considered to carry such risk given the level of investment made. The Group‘s financial instruments comprise cash and various items, such as trade receivables and trade payables that arise directly from its operations. The Group‘s exposure to its financial instruments is not material and therefore derivative financial instruments are not used to manage them. The main risk arising from the Group‘s financial instruments can be analysed as follows: Credit Risk The Group‘s credit risk is primarily attributable to its trade receivables. Exposure to credit risk is minimised by employing effective credit management policies and procedures. Only customers known to the Group are granted credit terms. Foreign currency risk Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the consolidated statement of comprehensive income for the period. Liquidity risk The Group has sufficient cash resources available to meet its short term liabilities. Cash flow Interest rate risk The Group has no borrowings and receives variable interest based on UK bank base rates on cash balances and bank deposits. Payment to creditors The Group does not follow any code or standard on payment practice and the terms and conditions for its business transactions are agreed with individual suppliers. Payment is then made in accordance with those terms, subject to ONZIMA VENTURES PLC Page 6 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 the other terms and conditions being met by the supplier. Creditor days at the end of the year for the group were 123 days (2014:54 days). ONZIMA VENTURES PLC Page 7 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 Key Performance Indicators & Financial Performance The Board intends to review key performance indicators as the business progresses, at this stage of the Company‘s life cycle, it is not yet able to measure key performance indicators in any meaningful way. The Board intend to publish key performance indicators in future years. In the meantime, the Board confirm that the historical decision to dispose of Cognito and UTN Solutions achieved the effect of loss of earnings per share to (2.27)pence per share ((0.86) pence per share: 2014). At the year end the Company had cash at bank is of £0.587m. The cash is the primary asset of the Company and enables it to select suitable investments. As identified as a risk, in time, further funding may be required which with careful and selective investment criteria should be possible to secure. Since the new Board members have joined the Company the share price has increased from a fundraising price of 0.7p in October 2015 to 1.7p at the time of writing. Key performance indicators Given the change in the business during the last year historical KPI‘s are not appropriate. The Board intends to put in place and review key performance indicators as the business progresses. The Board intend to publish key performance indicators in future years. ONZIMA VENTURES PLC Page 8 FINANCIAL HIGHLIGHTS AND STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 Principle risks and uncertainties The Company presently invests a significant proportion of its available capital in to natural resource companies and early stage companies generally. Some of these companies may also be unlisted or illiquid to trade. There is a risk that some of these investments may not produce a positive return for the Company and some of them may fail entirely. At this stage in its development the Company may be reliant upon raising further funds from investors to support its growth. There is no guarantee that these funds will be available to the Company. Environment The Company complies with all legal requirements relating to the environment in all areas of its operations and therefore, has not incurred any fines or penalties or has not been investigated for any breach of environmental regulations. Research and Development The Group does not directly invest in or carry out any research and development. Going Concern Accounting standards require the directors to consider the appropriateness of the going concern basis when preparing the financial statements. The Directors confirm that they consider that the going concern basis remains appropriate. The Directors regard the going concern basis as remaining appropriate as the Group has adequate resources to continue in operational existence for the foreseeable future, coupled with experienced Directors that are able to seek out additional funding if they believe that it is necessary. In closing, the Board would like to extend their thanks to all their shareholders for their continued support and look forward to a successful next year. ………………………………. G Burnell Chief Executive Officer 30 June 2016 ONZIMA VENTURES PLC Page 9 FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED 31 DECEMBER 2015 ONZIMA VENTURES PLC DIRECTORS REPORT FOR THE YEAR END 31 DECEMBER 2015 Page 10 The directors present their annual report and audited financial statements of Onzima Ventures plc for the year ended 31 December 2015. Business review and principle activities The principle activities of the Group during the year prior to disposal comprised of the marketing and support of computer application software, the wholesale and retail merchandising of electric bicycles and the development and deployment of renewable energy solutions. Following difficult trading circumstances during 2014 and 2015 in which the Company made operating losses, the Company‘s previous management took action during 2015 to halt the losses through a series of actions, however these alone were not sufficient. Additionally, the cost of maintaining the Company‘s AIM listing outweighed the benefits. As a result the Board in place at the time came to the conclusion that the funds expended in maintaining the AIM listing would be more effectively utilised in the pursuit of growing the bottom line of the business. The Board negotiated a proposal, which was approved at an Extraordinary General Meeting of the Company on 14 October 2015, to dispose of the issued share capital of Cognito (the IT Services division) and UTN Solutions (the Green technology division). It is important to recognise that the vast majority of these financial results relate to the historical subsidiaries which have now been disposed of. Following that disposal the business is now classified as an investing company under Rule 15 of the AIM Rules. It adopted an Investing Policy as set out below. Investing Policy The Company will seek to invest a minimum of 75 per cent. of its deployable capital in, and/or acquire companies or interests within, the natural resources sector - in which the new Directors have substantial experience as founders, investors and advisers. The Company will participate as investors in fundraisings for entities being admitted to trading on AIM, in secondary fundraisings, or where such entities plan to be admitted to trading on an Exchange within 18 months of investment by the Company. Investments are likely to be held for the short to medium term in the case of publicly-traded holdings and for the longer term in respect of private holdings until there is a liquidity event when the Company may seek to reduce its exposure. There will be no minimum or maximum limit on the length of time an investment is held. Initially the geographical focus will be Africa and North America but investments may be considered in other regions to the extent that the Board considers that an opportunity exists where significant returns can be made. The Company may also invest in assets, projects or joint ventures using equity or debt structures, gaining direct exposure. Investments will generally be made on a passive basis unless there is a requirement to provide management or other expertise to the investee entity in seeking to generate positive returns for the Company. In selecting investment opportunities, the Board will focus on companies, assets and/or projects that it believes are available at attractive valuations and where there is an opportunity to benefit from value uplift. The Company's equity holdings or interests may range from a minority position to 100 per cent. ownership. The Directors will conduct due diligence appraisals of potential investments, businesses or projects and, where they believe further diligence is required or warranted, intend to utilise appropriately qualified persons to assist. The Directors believe they have a network which is likely to provide various opportunities which may prove suitable. ONZIMA VENTURES PLC DIRECTORS REPORT FOR THE YEAR END 31 DECEMBER 2015 Page 10 The Company does not plan to have cross-holdings in entities save where there is a portfolio of related assets outside of the Company's control. The Board considers that as investments are made, and new investment opportunities arise, further funding of the Company may also be required which is likely to be in the form of equity, until such time as the Company is self- funding. It is intended that returns for Shareholders will initially be in the form of capital growth, subject to appreciation in the value of the investments made by the Company. In the longer term, if the Company becomes cash generative, then the plan will be to put in place an appropriate dividend policy as appropriate for a Company with its activities at that time. The Company plans to have a maximum of fifteen investments / interests at any one time. Though there will be no maximum exposure to any one investment, it will generally seek to diversify its portfolio holdings. The Company's financial resources may ultimately be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules requiring shareholder approval. The Company also intends to acquire over a period of time a diversified portfolio of royalties. These will consist, in varying proportions, of royalties over: - producing properties purchased at a discount to perceived value; - producing properties with enhanced production possibilities; and - non-producing properties where advanced exploration is likely. It is intended that over the longer term the royalty investments will provide cashflow to finance further investment opportunities, minimising dilution to Shareholders through reduced equity financing requirements. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate. The Board may also offer New Ordinary Shares in the capital of the Company by way of consideration as well as utilising cash, preserving the Company's cash for additional opportunities and working capital. Under the Company's investing policy the remaining 25 per cent. of the Company's deployable capital can be invested in to non-natural resource based interests that fit the same criteria as above. Directors The Directors during the year under review were: Gavin Burnell (appointed 14.10.2015) Luke Cairns (appointed 14.10.2015) Humayun Mughal Norren Imam (resigned 27.2.2015) Anthony Klein (resigned 14.10.2015) Biographies for each current director can be found on the Company‘s website. ONZIMA VENTURES PLC DIRECTORS REPORT (continued) FOR THE YEAR END 31 DECEMBER 2015 Page 11 Results and dividends The Group loss for the year before taxation amounted to £164,000 (2014: loss of £5,000), taxation refund for the year of £13,000 (2014: £93,000) and a loss after tax of £151,000 (2014: loss of £88,000). Total comprehensive income for the year was £(1,000,000) (2014:£(2,410,000)). The directors do not recommend the payment of a dividend for 2015. No dividends were paid or proposed or paid in 2014. Provision of information to auditor So far as each of the Directors is aware at the time the report is approved, there is no relevant information of which the Group auditor are unaware and the Directors have taken all steps that they ought to make themselves aware of any relevant audit information and to establish that the Group auditor are aware of that information. Financial Risk Management The Company‘s operations expose it to a variety of financial risks which are outlined within the Strategic Report. Environment and Social Community Issues The Directors consider the impact of the Company‘s business on the environment and community issues to be minimal due to the nature of the Company‘s business. The Directors consider that the Investment Policy provides for the Company to identify opportunities that will allow for enhancements to both the environment and the wider community. Employees The Company does not currently employ any staff. The Directors act for the Company in implementing its Investment Policy. ONZIMA VENTURES PLC DIRECTORS REPORT (continued) FOR THE YEAR END 31 DECEMBER 2015 Page 12 Substantial Interests At 27 June 2016 the following parties had notified the Company of a beneficial interest that represents 3% or more of the Company‘s issued ordinary share capital at that date: Number of shares % held Akhter Group Limited and related parties Barclayshare Nominees Limited Hargreaves Lansdown (Nominees) Limited Des:HLNOMM Hargreaves Lansdown (Nominees) Limited Des:VRA Hargreaves Lansdown (Nominees) Limited Des:15942 HSDL Nominees Limited HSDL Des:Build Pershing Des:MDCLT SVS (Nominees) Limited Des:Pool TD Direct Investing Nomineesa SMKTNOMS Mr Nigel Theobald Mr Myles McNulty (Europe) Limited Des: Nominees Nominees Limited Limited 11,232,517 7,189,733 14,220,466 8,454,651 10,511,392 6,922,135 5,811,268 6,430,571 7,016,861 6,021,853 25,072,807 9,000,000 6.17 3.95 7.82 4.65 5.78 3.80 3.19 3.53 3.86 3.31 13.78 4.95 Directors and Directors’ interest The Directors who are currently in office are shown on page 10. The emoluments, share interest and share options of the Directors are disclosed in the Directors Remuneration Report on pages 18 to 19. Employees It is Group policy that employees should be kept as fully informed as is feasible and practicable about the activities of the Group through consultative meetings. In addition, managers hold regular meetings with representatives of their staff in order to encourage employees to make their views known on matters that affect them. Pensions No contributions were paid in respect of the Directors. Events after reporting date There were no significant events after the reporting date. ONZIMA VENTURES PLC DIRECTORS REPORT(continued) FOR THE YEAR END 31 DECEMBER 2015 Page 13 Share Option schemes The Company‘s Microvitec 1994 Inland Revenue Approved Executive Share Option Scheme approved by the Company in the Annual General Meeting 1994 has now terminated (the ―Old Scheme‖). There are no options to acquire ordinary shares in the capital of the Company outstanding under the Old Scheme (2013: Nil). Ultima Networks Plc 2004 Share Option Scheme The scheme was approved by the AGM held on 28 May 2004. No options to subscribe for ordinary shares of 1p each have been granted to date. Ultima Networks Plc 2012 Share Option Scheme The scheme was approved by the AGM held on 26th June 2012. No options to subscribe for ordinary shares of 1p each have been granted to date. Options were issued to G Burnell and L Cairns. (For further details refer to note 26) Charitable and political contributions There were no donations to UK charitable organisations (2014: £Nil) and no political donations (2014: £Nil). ONZIMA VENTURES PLC DIRECTORS REPORT (continued) FOR THE YEAR END 31 DECEMBER 2015 Page 14 Directors’ responsibilities The directors are responsible for preparing the strategic report, directors‘ report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • • • state whether the group financial statements have been prepared in accordance with IFRS‘s as adopted by the European Union; state, with regard to the parent company financial statements, whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that company and the group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company‘s transactions that disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006 .They are also responsible for safeguarding the assets of the group 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 any corporate and financial information included on the company‘s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Statement of disclosure to auditors So far as each Director is aware, there is no relevant audit information of which the Group‘s auditors are unaware. Additionally the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group‘s auditors are aware of the information. Annual General Meeting The Annual General Meeting of the Company is to be held at Akhter House, Perry Road, Harlow, Essex CM18 7PN on Thursday 30 June 2016 at 8.30am. Details of the business to be considered at the meeting are given below. ONZIMA VENTURES PLC DIRECTORS REPORT (continued) FOR THE YEAR END 31 DECEMBER 2015 Appointment of Directors (Resolution 1 and 2) Page 15 Under the company‘s articles of association, following their appointment as directors, Gavin Burnell and Luke Cairns are required to have their appointment ratified, a resolution for the appointment of Gavin Burnell and Luke Cairns as Directors of the Company will be put to the annual general meeting. Re-election of a Director (Resolution 3) Under the company‘s articles of association, Professor Humayun Mughal retires by rotation and offers himself for re-election. Authority of Directors to allot shares (Resolution 4 and 5) The Directors seek authority to allot up to a maximum of 162,904,743 ordinary shares. Further, in order to retain some flexibility at this stage in the Company‘s development, the Directors seek power to allot 162,904,743 equity securities wholly for cash other than on a pre-emptive basis to current shareholders pro-rata to their existing holdings. This amount represents 100% of the issued ordinary share capital as at 1 June 2016. These authorities will continue in force until the AGM to be held in 2017 or 30 June 2017, whichever is the earlier. General Meeting A General Meeting of the Company is to be held at Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR Friday 19 August 2016 at 10.00am. Details of the business to be considered at the meeting are given below. Annual Report & Accounts (Resolution 1) It is a requirement of company law that the annual report and accounts is laid before shareholders in general meeting. Auditors (Resolution 2) A resolution for the reappointment Jeffreys Henry LLP as the company‘s auditor will be put to the annual general meeting, together with the usual practice of authorising the directors to set the auditor‘s fees. Approval The Report of the Directors was approved by the Board on 30 June 2016 and signed on its behalf by ……………………………………….. Gavin Burnell Chief Executive Officer ONZIMA VENTURES PLC Page 16 CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 As a company quoted on the AIM of the London Stock Exchange, the company is not required to comply with the provisions of the 2006 Financial Reporting Council‘s revised combined Code. However, the Board has sought to commit to ensuring that proper standards of corporate governance operate throughout the Group and has therefore followed the principles of the Code so far as is practicable and appropriate to the nature and size of the Group. One of the principles is that an explanation should be given where the Code is not complied with. A statement of the directors‘ responsibilities in respect of the financial statements is contained within the Report of the Directors above. The statement below describes the role of the Board and its committees, followed by a statement regarding the groups system of internal controls. The Board The activities of the Group are ultimately controlled by the Board of Directors, which at the year-end consisted of three directors. Biographical details of all three directors are available on the Company‘s website. All directors are equally accountable under law for the proper stewardship of the Company‘s affairs. The Non-executive director has a particular responsibility to ensure that the strategies proposed by the Executive director are fully discussed and critically examined. The Non-executive directors are Luke Cairns and Humayun Mughal and the Board considers Luke Cairns to be independent. The Board meets at least four times a year, and more as the need arises. The Board reviews performance of investments, its strategy, examines capital expenditure and acquisitions or disposals, operating budgets and material contracts. All directors have letters of appointment with the Company. Any director appointed during the year is required, under the Company‘s Articles of Association, to retire and seek re-election by the shareholders at the next Annual General Meeting and one third of the Board is required to retire each year and seek re-election. The directors are able to take independent professional advice at the expense of the company in the furtherance of their duties. Nominations committee The appointment of directors is a matter for the Board as a whole and therefore a nominations committee is considered unnecessary given the present number of Board members. Audit committee The Audit committee comprises of the two non-executive directors: Luke Cairns and Humayun Mughal. This committee assists the Board in its duties regarding the Group‘s financial statements and the maintenance of adequate internal financial controls. The Audit Committee‘s prime tasks are to receive reports from the Company‘s auditors, Jeffreys Henry LLP, and to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and compliance and areas of management judgements and estimates. There is no internal audit function for the Group, as the Board does not believe that this is appropriate given the size of the business. Remuneration committee The Remuneration Committee comprises of the two Non-executive directors Luke Cairns and Humayun Mughal. Details of the executive remuneration policy are set out in the separate Directors‘ Remuneration Report on pages 18 and 19. ONZIMA VENTURES PLC Page 17 CORPORATE GOVERNANCE STATEMENT (continued) FOR THE YEAR ENDED 31 DECEMBER 2015 Shareholder relations The Board has a policy of providing any reasonably requested historical information and explanations to shareholders on request. The Group‘s annual reports are sent to shareholders. These reports are also available from the company‘s website along with the Group‘s half yearly reports and all public announcements. All shareholders are encouraged to participate in the company‘s Annual General Meeting, which is attended by the directors. Internal control and financial reporting The Board is responsible for ensuring that there is a system of internal control for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Audit Committee has been delegated responsibility by the Board for discharging its internal control responsibilities. The Board has established an organisational structure with clearly defined levels of responsibility and delegation of authority. Control procedures include annual budget approval and monitoring of actual performance. The Board approves all investment and acquisition projects for all major acquisitions and major capital expenditure. The Board has a clear responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. As part of the annual budgeting process risks are formally assessed by the Board. There is a system of financial reporting and budget planning. On a monthly basis, actual results are reported and compared to budget with any significant adverse variances being examined and any remedial action taken as necessary. The directors believe that, taken as a whole, the systems of internal control are appropriate to the business for the year ended 31 December 2015. ONZIMA VENTURES PLC Page 18 DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 The directors present the Directors remuneration report for the financial year ended 31 December 2015. It should be noted that, as a company quoted on the AIM market of the London Stock Exchange, the company is not required to comply with the Remuneration Report regulations and therefore, not all elements of the regulations have been complied with. For example, a share price graph has been omitted. Remuneration committee The Remuneration committee consists of Non-executive directors Luke Cairns and Humayun Mughal having been appointed to the committee 14 October 2015. The Remuneration committee determines any remuneration and benefits packages of the executive directors and considers any service contracts, salaries, other benefits, including bonuses and participation in the company‘s share option plans, and any other terms and conditions of employment including any compensation payments on termination of office. Remuneration policy Any basic salaries and benefits in kind are set to be comparable with those of peer group companies. The Company operates historic share schemes but these do not form part of the current remuneration policy. It is planned to put in place a formal share option scheme in due course. Non-executive directors The Non-executive directors do not have a contract for services. The Non-executive directors have letters of appointment concerning, amongst other things, the initial terms for which he was appointed, a general statement of their role and duties, the fees they will receive as a director and any supplementary fees receivable for additional work, such as being a member of more than one Board committee. The fees of Non-executive directors are determined by the full Board within the limits set out in the Memorandum and Articles of Association. Service contracts and letters of appointment The company does not have service contracts in respect of the Executive Directors. The letters of appointment in respect of the Non-executive directors who served during the year ended 31 December 2015 is for a rolling 12 month period. The letters of appointment do not contain notice periods or provision for termination payments. Directors’ remuneration and interests Directors‘ remuneration payable for the year ended 31 December 2015 was as follows: Executive H A Mughal A P Klein G Burnell Non-Executive P J Barron L Cairns Basic Salary £000 Benefits in kind £000 Fees £000 - - - - - - - 9 - - - 9 45 - - - - 45 Share based payments Total £000 Total £000 Total £000 2015 2014 - - 25 - 6 31 45 9 25 - 6 85 60 12 - 12 - 84 ONZIMA VENTURES PLC Page 19 DIRECTORS’ REMUNERATION REPORT (continued) FOR THE YEAR ENDED 31 DECEMBER 2015 The beneficial interest in the share capital of the company of those persons, who were directors at the year end, as recorded in the register of the Director‘s interest, were as follows: H A Mughal G Burnell L Cairns 31 December 2015 Ordinary shares of 1p Ordinary share options 11,232,517 3,571,428 - - 10,804,840 2,701,210 31 December 2014 Ordinary shares of 1p Ordinary share options 112,325,176 - - - - - At 31 December 2015 no options were outstanding over shares granted to two directors: Gavin Burnell and Luke Cairns who were granted 10,804,840 and 2,701,210 share options respectively. No director has granted or exercised any share options during this or the previous year nor did any lapse. Directors’ remuneration and interests (continued) Beneficial holdings include the directors‘ personal holdings and those of their spouse and children as well as holdings in family trusts of which the directors‘ spouse or their children are beneficiaries or potential beneficiaries. The closing mid-market price at 31 December 2015 was 0.55p and the range during the year was 4.75p to 0.55p. Approval The Directors‘ Remuneration Report was approved by the Board on 30 June 2016 and signed on its behalf by: ………………………………………………………. Gavin Burnell Chief Executive Officer INDEPENDENT AUDITORS’ REPORT Page 20 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ONZIMA VENTURES PLC We have audited the financial statements of Onzima Ventures Plc for the year ended 31 December 2015, which comprise the Consolidated Statement of Comprehensive Income, Company Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Cash Flows, Company Statement of Cash Flows and the related notes on pages 22 to 59. 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. . 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 auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors' Responsibilities set out on page 14, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group‘s and Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Financial Highlights and Strategic Report and Directors‘ Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatement or inconsistencies we consider the implications for our report. Opinion on financial statements 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 state of affairs as at 31 December 2015 and of the group‘s loss and the group‘s and parent company‘s cash flow for the year then ended; the group financial statements have been properly prepared in accordance with IFRS‘s as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRS‘s 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 provisions of the Companies Act 2006. ONZIMA VENTURES PLC INDEPENDENT AUDITORS’ REPORT (continued…) Page 21 Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and Directors‘ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit - ………..have not been received from branches not visited by us; or - - - the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. David Warren (Senior Statutory Auditor) For and on behalf of Jeffreys Henry LLP, statutory auditor Finsgate 5-7 Cranwood Street London EC1V 9EE United Kingdom Date: 30 June 2016 ONZIMA VENTURES PLC Page 22 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AS AT 31 DECEMBER 2015 Revenue Cost of sales Gross profit Administration expenses Operating (loss)/profit Exceptional items Finance (expenditure)/income Profit/(loss) before taxation Taxation recovery Profit/(loss) for the year from continuing operations Discontinued operations Loss for the year from discontinued operations Profit/(loss) for the year Other comprehensive income: Exchange difference on translating foreign operations Total comprehensive income for the year attributable to equity holders of the parent Note 5 6 9 11 7 2015 £000 -) - -) (160) (160) (-) (4) (164) 13) (151) (902) (1,053) Restated 2014 £000 -))) (-) -))) (-) (-) (-) (5)) (5)) 93) 88) (2,482) (2,394) 53) (16) (1,000) (2,410) Basic and diluted loss per share – pence 12 (2.27)) (0.86) ONZIMA VENTURES PLC Page 23 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 ASSETS Non current assets Property, plant and equipment Intangible assets – development costs Investments Total non current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets LIABILITIES Current liabilities Trade and other payables Current tax liabilities Accruals and deferred income Total current liabilities Total liabilities Net assets Note 13a 13b 14 16 17 18 19 2015 £000 - - 50 50 - 21 587 608 658 -) -) 17 17 17 641 2014 £000 616 - - 616 347 539 347 1,233 1,849 503 76 228 807 807 1,042 ONZIMA VENTURES PLC Page 24 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) AS AT 31 DECEMBER 2015 EQUITY Capital and reserves attributable to equity holders of the parent Called up share capital Share premium account Other reserves Share option reserve Retained Earnings Translation of foreign operations Note 22 2015 £000 2014 £000 8,409) 6,503) -)) 31) (14,302) -)) 8,299) 5,843) 202) -) (13,249) (53) 641) 1,042) These financial statements were approved by the board of directors on 30 June 2016 and were signed on its behalf by: ........................................................................ Gavin Burnell Chief Executive Officer Company Registration Number 01435584 ONZIMA VENTURES PLC Page 25 COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 ASSETS Non current assets Property, plant and equipment Intangible assets – development costs Goodwill Investments Total non current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets LIABILITIES Current liabilities Trade and other payables Current tax liabilities Accruals and deferred income Total current liabilities Total liabilities Net assets Note 13a 13b 14 16 17 18 19 2015 £000 - - - 50 50 - 21 587 608 658 - - 17 17 17 641 2014 £000 344 - - 292 636 44 1,859 149 2,052 2,688 2,002 72 190 2,264 2,264 424 ONZIMA VENTURES PLC Page 26 COMPANY STATEMENT OF FINANCIAL POSITION (continued) AS AT 31 DECEMBER 2015 EQUITY Capital and reserves attributable to equity holders of the parent Called up share capital Share premium account Other reserves Share option reserve Retained Earnings Note 22 2015) £000) 2014) £000) 8409) 6,503) -) 31) (14,302) 8,299) 5,843) 202) -) (13,920) 641) 424) These financial statements were approved by the board of directors on 30 June 2016 and were signed on its behalf by: ........................................................................ Gavin Burnell Chief Executive Officer Company Registration Number 01435584 ONZIMA VENTURES PLC Page 27 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 Profit/(loss) for the financial year Taxation recoverable Interest Comprehensive income Movement in reserves Depreciation charges Amortisation of intangibles Operating profit before changes in working capital 2015) £000) (1,053) (13) 4) 53) (171) 230) -) (950) Decrease/(Increase) in inventories Decrease/(Increase) in trade and other receivables (Decrease)/increase in trade payables and other capital liabilities 347) ( 518) (790) Cash (used in)/generated from operations Taxation Net cash (used in)/generated from operating activities Cash flows from investing activities Movement in property, plant and equipment Development expenditure Other intangibles Movement in investments Net proceeds of ordinary shares issue Net cash used in investing activities Cash flows from financing activities Interest received Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period (875) 13) (862) 386) -) -) (50) 770) 1,106) (4) (4) 240) 347) 587) 2014) £000) (2,394) (93) 5) (16) -) 532) 1,207) (759)) 88) (333) (42) (380) 40) (340) 218) 289) -) -) -) 507) (5) (5) 162) 185) 347) ONZIMA VENTURES PLC Page 28 COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 Profit/(Loss) for the financial year Interest payable Disposal of investments Movement in reserves Depreciation charges Operating profit before changes in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables (Decrease)/increase in trade payables and other current liabilities Cash (used in)/generated from operations Taxation Net cash (used in)/generated from operating activities Cash flows from investing activities Movement in investments Net costs of ordinary shares issue Purchase of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Interest paid Written off investments Dividend received Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 2015) £000) (382) -) 292) (171) 232) (29) 44) 1,838) (2,247) (394) -)) (394) (50) 770) 112) 832) -) -) -) -) 438) 149) 587) 2014) £000) (1,329) -) -)) -)) 1,344) 15) (34) 123) (25) 79) 39)) 118) -)) -)) 576) 576) -) (611) -) (611) 83) 66) 149) ONZIMA VENTURES PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015 Page 29 GROUP Called up share capital Share premium Other reserves Share option reserve Retained earnings Translation of foreign operations Total Equity ) £000 £000 £000 £000 £000 £000 £000 Year ended 31 December 2015 As 1 January 2015 Share issue Movement in reserves Share option reserve Total comprehensive income for the year 8,299 110) -) -) 5,843 660 -) -) - - At 31 December 2015 8,409 6,503 Year ended 31 December 2014 As 1 January 2014 Share Issue Total comprehensive income for the year 8,299 - 5,843 - - - At 31 December 2014 8,299 5,843 202 -) (202) -) - -) 202 -) -) 202 - - - 31 (13,249) -) -) -) (53) -) -) -) 1,042) 770) (202) 31 (1,053) 53) (1,000) 31 (14,302) -) 641) (10,855) -) - - - (37) -) 3,452 -) (2,394)) (16) (2,410) - (13,249) (53) 1,042 ONZIMA VENTURES PLC Page 30 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015 COMPANY Year ended 31 December 2015 As 1 January 2015 Share issue Movement in reserves Share option reserve Profit for the period Called up share capital Share premium Other reserves Share option reserve Retained earnings Total Equity ) £000 £000 £000 £000 £000 8,299 110) -) -) -) 5,843 660 -) -) -) 202 -) (202) -) -) - - - 31 - (13,920) -) -) -) (382) £000 424) 770) (202) 31 (382) At 31 December 2015 8,409 6,503 -) 31 (14,302) 641) Year ended 31 December 2014 As 1 January 2014 Share Issue Total comprehensive income for the year 8,299 - 5,843 - - - At 31 December 2014 8,299 5,843 202 -) -) 202 - - - - (12,019) -) 2,325 -) (1,901) (1,901) (13,920) 424 ONZIMA VENTURES PLC Page 31 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 1. GENERAL INFORMATION Onzima Ventures Plc (―the company‖) and its subsidiaries (together ―the Group‖) were involved in the marketing and support of computer application software and the merchandising of various products, but primarily electric bicycles. The company sold the subsidiaries on 14 October 2015 and operates now as an investment holding company. The company is a public limited company, which is quoted on the AIM of The London Stock Exchange and is incorporated and domiciled in the United Kingdom. The address of its registered office is 190 High Street, Tonbridge, Kent, TN9 1BE. The Group‘s and company‘s financial statements for the year ended 31 December 2015 were authorised for issue by the Board of Directors on 30June 2016 and the balance sheets were signed on the Boards behalf by Gavin Burnell. 2. ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all years presented, unless otherwise stated. Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These financial statements have been prepared on the historic cost basis except where financial instruments are required to be carried at fair value under IFRS. A separate income statement for the parent company has not been presented as permitted by section 408(4) of the Companies Act 2006. The parent company had a loss of £382,000 (2014: Loss £1,938,000). The financial statements are presented in pounds sterling, being the functional currency of the parent and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated. Going concern Having reviewed the future plans and projections for the business, the directors are satisfied that the Group has adequate resources to continue to operate for the foreseeable future, a period not less than twelve months from the date of this report. This will also depend on the continuing support from the shareholders and directors. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements. Were the group unable to continue as a going concern, adjustments would have to be made to the statement of financial position of the group to reduce the value of assets to their recoverable amounts, to provide for future liabilities that might arise and to reclassify non-current assets and long-term liabilities as current assets and liabilities. Basis of consolidation The consolidated financial statements incorporate the results and net assets of Onzima Ventures Plc and its subsidiary undertakings (together referred to as ―the Group‖) for the year ended 31 December 2015. A subsidiary is an entity over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than 50% of the voting rights. The results of each subsidiary are included from the date that control transferred to the group and are adjusted to align accounting policies with the Group‘s accounting policies. Subsidiaries are no longer consolidated from the date that control ceases. Unrealised gains on transactions between the group and its subsidiaries are eliminated and unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. All intercompany balances and transactions are eliminated in full. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the group. ONZIMA VENTURES PLC Page 32 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 Company investment in subsidiaries In its separate financial statements, the company recognises its investments in subsidiaries at cost. Income is recognised from these investments only in relation to distributions received from post acquisition profits. 2. ACCOUNTING POLICIES (continued) Share-based payments For equity settled share based payment transactions the Group, in accordance with IFRS 2 ―Share Based Payments‖ measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at the grant date using the Black-Scholes method. The expense is apportioned over the vesting period of the financial instrument and is based on the number which is expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vested immediately, the expense is recognised in full. Goodwill Goodwill on acquisitions comprises the excess of the fair value of the purchase consideration over the fair value of indefinable assets and liabilities acquired. Goodwill is recognised as an asset on the Group‘s balance sheet in the year in which it arises. Goodwill is not amortised and is tested impairment at least annually and more frequently if events or changes indicate that the carrying value may be impaired and is carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to the cash generating units on which it arose. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not subsequently reversed. The Group has elected to take exemption not to apply IFRS 3 retrospectively to business combinations occurring prior to that date of transition to IFRS. Under IFRS 3 any goodwill arising on such acquisitions is not amortised, but is subject to impairment reviews. Other intangible assets Other intangible assets include technology platform and customer relationships. These are only recognised if acquired in a business combination. They are stated at fair value less accumulated amortisation. These assets are amortised over their estimated useful lives of 10 years and the charge is included in administration expenses. Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue consists of the fair value (excluding VAT) of consideration receivable for goods and services supplied to third parties. Revenue from the sale of software product licences is recognised at the time the software licence is granted at which point all obligations have been met. Revenue relating to hardware and software support is recognised proportionally over the period to which it relates. Revenue from the sale of other products is recognised when the Group has delivered the products and there is no unfulfilled obligation that could affect the customer‘s acceptance of the products. ONZIMA VENTURES PLC Page 33 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 2. ACCOUNTING POLICIES (continued) Research and development All research expenditure is written off in the year in which it is incurred. Unless certain conditions are met, all development expenditure is also written off in the year in which it is incurred. The Group incurs development costs that are design costs relating to the production of new or substantially improved devices and products for the Group‘s ‗Powacycle‘ and ‗Infineum‘ range of electric bicycles and development costs that relate to the production of new or substantially improved application software products for the legal profession. Development costs are capitalised only if the following conditions are met: the development is technically feasible of being completed so that it will be available for use or sale, the directors intend to complete the development and use or sell it, the Group has the ability to use or sell the product, the directors have assessed how the asset will generate probable future economic benefit, there is adequate technical, financial and other recourses available to complete development and the expenditure attributable to the development can be measured reliably. If all these conditions are met then the associated development costs are amortised on a straight line basis over the useful life of the asset, which is estimated to be 3 years. Amortisation begins only when the asset is ready for use. The amortisation charged during the year is included within administration expenses within the income statement. Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments and whose operating results are reviewed on a regular basis by the Group‘s board and for which discrete financial information is available. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different form those of segments operating in other economic environments. Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment in value. Cost comprises the aggregate amount paid to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended. All land and buildings are included at valuation. Valuations are kept up-to-date through periodic valuations carried out by external valuers. Depreciation is provided evenly on the cost (or valuation where appropriate) of the assets, to write them down to their estimated residual values over their expected useful lives. No depreciation is provided on freehold land. The principal annual rates used for the other assets are: Freehold buildings Office equipment Motor vans Computer equipment - 25 to 50 years - 3 to 5 years - 4 years - 3 years The assets‘ residual values, useful lives and methods of depreciation are reviewed, and adjusted, if appropriate, on an annual basis. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. A gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year that the asset is derecognised. ONZIMA VENTURES PLC Page 34 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 2. ACCOUNTING POLICIES (continued) Impairment of assets At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use, is estimated in order to determine the extent of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An impairment charge is recognised in the income statement in the year in which it occurs. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. The carrying amount of the asset is increased to the revised estimate of its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Inventories Inventories are valued at the lower of cost and net realisable value. Cost of raw materials, consumables and goods purchased for resale means actual price, including transport and handling and is determined using FIFO method. Net realisable value means estimated net selling price less estimated costs of disposal. Trade and other receivables Trade receivables are recognised initially stated at fair value and subsequently measured at amortised cost using the effective interest rate method. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the asset‘s carrying amount and the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within financial liabilities in current liabilities on the balance sheet. Trade and other payables Trade payables are not interest bearing and are initially stated at their fair value and then subsequently measured at amortised cost using the effective interest method. Foreign currencies Prior to the disposal transactions in foreign currencies are dealt with on the Group‘s behalf by Akhter Group Limited. Therefore, any transactions of the Group in foreign currencies are settled by Akhter Group Limited and were converted to pounds sterling at pre-agreed spot rates for reimbursement by the Group. For the consolidation purposes, the assets and liabilities of overseas subsidiary undertakings are translated at the closing exchange rates. Income statements of such undertakings are consolidated at the average rates of exchange during the year. Exchange adjustments arising are classified as equity and transferred to the Group‘s foreign currency translation reserve. Such translation differences are recognised as income or as expenses in the period in which the foreign undertaking is disposed of. ONZIMA VENTURES PLC Page 35 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 2. ACCOUNTING POLICIES (continued) Income taxes Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised using balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities. Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities are recognised for all temporary differences, except when deferred income tax liabilities arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and at the time of transaction, affects neither the accounting profit nor taxable profit or loss. Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred income tax assets and liabilities are offset against each other only when the Group has a legal enforceable right to do so. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised. Pensions The Group does not operate any pension schemes, but does contribute to the personal pension schemes (defined contribution) of certain staff. The contributions are charged as an expense as they fall due. Any contributions unpaid at the balance sheet date are included as an accrual at that date. The Group has no future payment obligations once the contributions have been paid. Leased assets – Group as lessee Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases. Assets leased under operating leases are not recorded on the balance sheet. Rentals payable are charged direct to the income statement. Lease incentives, for example, up-front cash payments or rent free periods, are capitalised and spread over the period of the leased term. Payments made to acquire operating leases are treated as prepaid lease expenses and amortised over the useful life of the lease. Leased asset - Group as lessor Assets leased out under operating leases are included in property, plant and equipment and depreciated over their useful lives. Rental income, including the effect of lease incentives, is recognised on a straight line basis over the lease term. Components of equity Equity comprises the following:  Share capital represents the nominal value of equity shares,  Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue,  Other reserves represents Merger Reserve and represents the difference between the value of the shares acquired and the nominal value where the shares have been issued as part of the consideration for acquisitions, and  Share options reserves relate to the charge for the share based payment in accordance with IFRS 2.  Profit and loss reserve represents retained profits. ONZIMA VENTURES PLC Page 36 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 2. ACCOUNTING POLICIES (continued) Use of assumptions and estimates The Group makes judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revisions and future periods if the revision affects both current and future periods. The estimate and assumptions that have a significant effect on the amounts recognised in the financial statements are:  Establish depreciation and amortisation periods for the Group,  Estimates in relation to future cash flows and discount rates utilised in impairment testing,  Whether development costs meet the capitalisation criteria in IAS 38,  Estimates of net realisable values of inventories under IAS 2, and  Management intentions for realisation of tax assets and liabilities under IAS 12. STATEMENT OF COMPLIANCE Issued International Financial Reposting Standards (IFRS) and Interpretations (IFRICS) relevant to the Group Operations There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Company. Standards, interpretations and amendments to published standards that are not yet effective There are no other IFRS and IFRIC interpretations that are not yet effective that would be expected to have a material impacts on the company. ONZIMA VENTURES PLC Page 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 3. SEGMENTAL REPORTING The Group operated in the United Kingdom, Italy and Spain until it was sold on 14 October 2015 Prior to disposal, the Group was organised into two principal business segments:  IT and related services (comprising legal and publishing application software)  Green technology (comprising electric bicycles, energy saving lamps, educational electronic kits and development of solar power parks) The company now operates as an investment holding company. The segmental results for the year ended 31 December 2015 are as follows: (Refer to Note 7) IT and related services UK £000 Green technology UK £000 579 311 - - - - - 4 Revenue Depreciation Amortisation Interest payable Operating profit/(loss) (21) (141) Unallocated Group £000 - 230 - - -) £000 890 230 - 4 (162) ONZIMA VENTURES PLC Page 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 3. SEGMENTAL REPORTING (continued) The segmental results for the year ended 31 December 2014 were as follows: IT and related services UK £000 Green technology UK £000 828 38 804 - 399 2 393 5 Unallocated Group £000 137 492 10 - £000 1,364 532 1,207 5 Revenue Depreciation Amortisation Interest payable Operating profit/(loss) (1,186) (352) (188) (1,726) The other information of the segments are as follows: 2015 Segment assets Segment liabilities Net assets IT and related services UK £000) Green technology UK £000) Unallocated Group £000) £000) -) -) -) -) -) -) 658) (17) 641) 658) (17) 641) ONZIMA VENTURES PLC Page 39 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 3. SEGMENTAL REPORTING (continued) The other information of the segments was as follows: 2014 IT and related) services) UK) £000) Green) technology) UK) £000) Unallocated) Group) £000) £000) Segment assets Segment liabilities Net assets 953) (420) 533) 896) (387) 509) -) -- -) 1,849) (807) 1,042) 4. PRESENTATIONAL ADJSTMENTS The prior year results have been restated to reflect the discontinued operation in 2015. Refer to note 7 for more details. 5. OPERATING PROFIT Operating profit is stated after charging: Depreciation plant and equipment Amortisation of intangible assets Operating leases – rent of building 6. EXCEPTIONAL ITEMS Legal provision Redundancy costs Legal costs Disposal of investments & impairment of development costs 2015 £000 230 -) 43 2015 £000 - - - - 2014 £000 532 1,207 79 2014 £000 -) -) -) 756) ONZIMA VENTURES PLC Page 40 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 7. DISCONTINUED OPERATIONS On the group entered into a sale agreement to dispose of Cognito Software Solutions Limited, UTN Solutions (North) Limited and Tre-Sol Italia srl, which carried out all of the group‘s operations. The disposal was completed on 14 October 2015 on which date control of Onzima Ventures PLC passed to the acquiror. The results of the discontinued operations, which have been included in the consolidated income statement, were as follows: (Refer to Note 3) Revenue Expenses Loss before tax Loss on disposal of discontinued operations Net loss attributable to discontinued operations (attributable to owner of the Company) 8. AUDITORS REMUNERATION Services provided by the Company’s auditor and its associates Group Fees payable to the company‘s auditor for the audit of the company and consolidated financial statements 9. FINANCE INCOME Finance income - Bank interest payable/(receivable) Net finance income Period ended 14 October 2015 Year Ended 31 December 2014 890 1,364 £000 £000 (1,760) (870) (32) (902) (3,090) (1,726) (756) (2,482) 2015 £000 8 8 2015 £000 4 4 2014) £000) 20) 20) 2014) £000) 5 5 ONZIMA VENTURES PLC Page 41 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 10. EMPLOYEES Employee costs including executive directors during the year amounted to: Wages and salaries Social security costs Other pension costs Share based payments The average number of persons employed during the year including executive directors analysed by category was made up as follows: Sales and marketing Product development and support Administration 2015 £000 394 34 3 31 462 2015 Number 2 12 4 18 2014) £000) 647 51 6 - 704 2014 Number 5 17 7 29 ONZIMA VENTURES PLC Page 42 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 10. EMPLOYEES (continued) The total remuneration of directors was as follows: Fees Remuneration as executives (including benefits in kind) Pension contributions Share based payments 2015 £000 9 45 - 31 85 2014 £000 24 60 - - 84 The fees payable in respect of services rendered by the finance director, Anthony P Klein, amounted to £9,000. These fees were paid to A Klein, a firm of which he is partner. No remuneration is paid directly by the Group for the services of the other executive director. There is currently no pension provision for any of the directors and therefore no pension is accrued to them. Details of the directors‘ interests in the share capital of the company together with further details of the directors‘ remuneration are contained in the Remuneration Report on pages 18 to 19. There are no amounts of compensation payable to key management. 11. TAXATION ON PROFIT a) Analysis of charge in the year Current taxation UK corporation tax on profits for the year Adjustments in respect of previous periods Total current taxation Deferred taxation Origination and reversal of temporary differences Taxation expense 2015 £000 -)) (13)) (13)) (-)) (13)) 2014 £000 -)) (40)) (40)) (53)) (93)) ONZIMA VENTURES PLC Page 43 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 11. TAXATION ON PROFIT (continued) b) Factors affecting charge in the year (Loss)/Profit on ordinary activities before taxation Tax at UK corporation tax rate 20% (2014:23%) Effect of: Depreciation in excess of capital allowances Utilisation of tax losses not recognised for deferred taxation Adjustments in respect of previous period Deferred tax movement 2015 £000 (1,066)) (213)) -)) 213) (13) (-) (13)) 2014 £000 (2,487)) (572)) 30) (542) (40) (53) (93)) The Group has estimated tax losses to carry forward of £4,569,000 (2014: £5,552,000) which may be available for offset against future profits. 12. EARNINGS PER SHARE The inputs to the earnings per share calculation are shown below: Weighted average ordinary shares in issue during the year Potentially diluted share options under the Group‘s share option schemes Weighted average ordinary shares for diluted earnings per share Loss attributable to shareholders Continuing operations Discontinued operations 2015 Number 46,370,034 - 46,370,034 £ 151,000 902,000 1,053,000 2014 Number 279,176,538 - 279,176,538 £ (88,000) 2,482,000 2,394,000 ONZIMA VENTURES PLC Page 44 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 12. EARNINGS PER SHARE (continued) The calculation of basic earnings per ordinary share is based on the profit for the period attributable to equity holders of the parent and the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive share options. In view of the group loss for the year, share warrants and options to subscribe for shares in the company are anti- dilutive and therefore diluted earnings per share is the same as basic loss per share. 13. a. PROPERTY, PLANT AND EQUIPMENT GROUP Cost At beginning of year Additions Disposals Foreign currency exchange difference Freehold land and buildings 2015 £000 392) -) (392) -) 2014 £000 645) -) (253) -) Plant, Office and computer equipment and motor vans 2014 £000 2015 £000 886) 226) (1,112)) -) 851) 35) -) -) 2015 £000 1,278) 226) (1,504) -) Total 2014 £000 1,496) 35) (253) -) At end of year -) 392) -) 886) -) 1,278) Depreciation At beginning of year Charge for the year Eliminated by disposals At end of year Net book value At end of year 43) 3) (46)) -) -) 39) 4) -) 43) 349) 619) 227) (846)) -) -) 91) 528) -) 619) 267) 662) 230) (892)) -) -) 130) 532) -) 662) 616) There are no restrictions on title and no assets above have been pledged as security. In addition, there were no contractual commitments for the acquisition of property or other assets. ONZIMA VENTURES PLC Page 45 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 13.a. PROPERTY, PLANT AND EQUIPMENT (continued) COMPANY Cost At beginning of year Additions Disposals At end of year Depreciation At beginning of year Charge for year Eliminated on disposal At end of year Net book value At end of year GROUP AND COMPANY Freehold land and buildings Plant and equipment 2015 £000 120) -) (120) -) 43) 3) (46) -) -) 2014 £000 120 - - 120 39 4 - 43 77 2015 £000 853)) 228)) (1,081)) -)) 586)) 229)) (815)) -)) -)) 2014 £000 820) 33) -) 853) 62) 524) -) 586) 267) 2015 £000 973)) 228)) (1,201)) -)) 629)) 232)) (861)) -)) -)) Total 2014 £000 940) 33) -) 973) 101) 528) -) 629) 344) The aggregate amounts at which freehold land and buildings would have been shown in the financial statements had they not been revalued is the same as historical cost. Freehold land and buildings include depreciable assets of £Nil (2014: £77,000). The freehold land and buildings owned by the company are located in Crediton, Devon and were revalued on the basis of market value and rental value. The valuation report, dated 20 September 2004, quotes a market value that agrees to the original cost of £120,000. The directors do not consider this valuation to be materially different as at 31 December 2014 and therefore that the carrying cost is not materially different from the fair value. ONZIMA VENTURES PLC Page 46 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 13 b. INTANGIBLE ASSETS – DEVELOPMENT COSTS GROUP Cost At beginning of year Additions Disposals Foreign currency exchange difference At end of year Amortisation At beginning of year Charge for the year Eliminated on disposal Foreign currency exchange difference At end of year Net book value At end of year At beginning of year 2015 £000 1,112) -) (-) -) 1,112 1,112 - (-) -) 1,112 -) -) 2014 £000 1,583) -) (471) -) 1,112 339 1,207 (434) -) 1,112 -) 1,244 The development costs in respect of the Cognito Software product (part of the IT and related services division). This asset was fully impaired at the year-end due to a sale of this division reaching the final stages of completion during the first quarter of 2015. With the product sale planned on completion within 2015, at the time, it was deemed that this income generating asset would be sold as part of the deal, and therefore would not yield a return for the group in future periods and should be fully impaired. Subsequently, this sale did not take place, however the directors are actively looking for a new buyer and have retained the full impairment to reflect this fact. 14. INVESTMENTS An investment was made on 7 December 2015 where 50,000,000 0.1p placing shares were purchased in Glenwick Plc for £50,000. This gives rise to a 3.63% holding in the company. ONZIMA VENTURES PLC Page 47 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 15. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS COMPANY Cost At beginning of year Disposals At end of year Impairment At beginning of year Disposals At end of year Net book value At end of year At beginning of year 2015 £000 2,918) (2,918) -) 2,626) (2,626) -) -) 292) ONZIMA VENTURES PLC Page 48 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 15. INVESTMENTS IN SUBSIDAIRY UNDERTAKINGS COMPANY(continued) The principal subsidiary undertakings are all wholly owned by the company, are consolidated and include the following: Subsidiary undertakings Principal activity Class of share Incorporated in England and Wales: UTN Solutions (North) Limited Merchandising of electric bicycles and other products Ordinary Cognito Software Limited Marketing and support of computer application software Ordinary Incorporated in Italy: Tre-Sol Italia srl Development of solar power park Ordinary The following undertakings, which are all wholly owned by Tre-Sol Italia srl and incorporated in Italy, are consolidated and include the following Ultima Italia srl Harlicon srl Leccesolar srl Development of solar power park Development of solar power park Development of solar power park The company disposed of all subsidiary undertakings on 14 October 2015. Ordinary Ordinary Ordinary 16. INVENTORY Finished goods GROUP 2015 £000 -) 2014 £000 347 COMPANY 2015 £000 -) 2014 £000 44 A total of £Nil (2014: £545,000) was included in the income statement as cost of sales. This includes £Nil (2014: £86,000) resulting from write down of inventories. ONZIMA VENTURES PLC Page 49 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 17. TRADE AND OTHER RECEIVABLES GROUP 2015 £000 2014 £000 COMPANY 2015 £000 Trade receivables Less provision for impairment Trade receivables – net Amounts owed by Group undertakings Owed by related party (see note 24) Other receivables Tax recoverable Prepayments and accrued income - - - - - 1 9 11 21 329 - 329 - 14 108 - 88 539 - - - - - 1 9 11 21 2014 £000 258 - 258 1,475 - 108 - 18 1,859 The directors do not consider there to be any material difference between the fair values of trade and other receivables and the amounts shown above. The trade and other receivables of the company and the Group are all denominated in pounds sterling. The Group‘s main credit risk relates to trade receivables. No collateral is held as security against these receivables and the carrying value approximates to the fair value. Trade receivables that are less than three months past due are not considered impaired. As of 31 December 2015, trade receivables of £Nil (2014: £220,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: Up to 3 months Over 3 months GROUP 2015 £000 -) -) -) 2014 £000 29 191 220 COMPANY 2015 £000 -) -) -) 2014 £000 29 141 170 ONZIMA VENTURES PLC Page 50 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 18. CASH AND CASH EQUIVALENTS Cash at bank and on hand Short-term bank deposits 19. TRADE AND OTHER PAYABLES Bank overdraft Trade payables Amounts due to Group undertakings Owed to related party (see note 24) GROUP 2015 £000 587 - 587 GROUP 2015 £000 - - - - - 2014 £000 347 - 347 2014 £000 294 183 - 26 503 COMPANY 2015 £000 587 - 587 COMPANY 2015 £000 -) - - - - 2014 £000 149 - 149 2014 £000 -) 133 1,843 26 2,002 The directors consider that the carrying value of trade and other payables approximates to their fair value. 20. FINANCIAL INSTRUMENTS The Group‘s financial instruments, from which financial instrument risk arises, comprise cash and cash equivalents, trade receivables and trade payables that arise directly from its operations. The main financial instrument risks arising from and impacted by, the financial assets and liabilities of the Group are credit risk, cash flow interest rate risk and liquidity risk. The Board reviews and agrees policies for managing these risks and they are summarised below. The Group does not hold any derivative financial instruments. The Group‘s financial assets and liabilities are measured at amortised cost. A debenture is in place for National Westminster Bank PLC on all monies due from the company to the chargee on any account whatsoever secured on a fixed and floating charges over the undertaking and all property and assets present and future including goodwill uncalled capital buildings fixtures plant and machinery. The principal financial assets of the Group are trade receivables and cash at bank. Cash is held in sterling only in either a current account or on short-term deposit. The amounts being as follows: ONZIMA VENTURES PLC Page 51 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 20. FINANCIAL INSTRUMENTS (continued) Financial assets by category GROUP 2015 Cash at bank Trade and other receivables Prepayments Tax recovery 2014 Cash at bank Trade and other receivables Prepayments Tax recovery Loans and receivables £000 Non-financial Assets £000 587 - - 10 597 347 451 - - 798 - - 11 - 11 - - 88 - 88 Balance sheet £000 587 - 11 10 608 347 451 88 - 886 Trade receivables arise directly from the Group‘s operations and do not carry any interest. All cash balances attract interest at floating rates that vary with United Kingdom bank base rates. The Group does not have any undrawn borrowing facilities. COMPANY 2015 Cash at bank Trade and other receivables Amounts owed by Group undertaking Prepayments 2014 Cash at bank Trade and other receivables Amounts owed by Group undertaking Prepayments Loans and receivables £000 Non-financial Assets £000 587 - - 10 597 149 366 1,475 - 1,990 - - 11 - 11 - - 18 18 Balance sheet £000 587 - 11 10 608 149 366 1,475 18 2,008 ONZIMA VENTURES PLC Page 52 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 20. FINANCIAL INSTRUMENTS (continued) GROUP 2015 Bank overdraft Trade payables Owed to related party VAT and tax payable Accruals and deferred income 2014 Bank overdraft Trade payables Owed to related party VAT and tax payable Accruals and deferred income COMPANY 2015 Bank overdraft Trade payables Amounts due to group undertakings Owed to related party VAT and tax payable Accruals 2014 Bank overdraft Trade payables Amounts due to group undertakings Owed to related party VAT and tax payable Accruals Other financial liabilities £000 Non-financial liabilities £000 Balance sheet £000 - - - - - - 294 183 26 - 119 622 - - - - - - - - 133 1,843 26 - 81 2,083 - - - - 48 48 - - - 76 109 185 - - - - - 48 48 - - - - 72 109 181 - - - - 48 48 294 183 26 76 228 807 - - - - - 48 48 - 133 1,843 26 72 190 2,264 ONZIMA VENTURES PLC Page 53 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 20. FINANCIAL INSTRUMENTS (continued) Credit risk The Group‘s credit risk is primarily attributable to its trade receivables. Exposures to credit risk are minimised by employing effective credit management policies and procedures. Only customers known to the Group are granted credit terms. Annual fees for software licences and support agreements are payable in advance and require a uniquely numbered ―valid licence key‖ to operate. Cash flow interest rate risk The Group is cash positive and places its balance on short-term deposits with National Westminster Bank Plc. Variable rate interest receivable is based on United Kingdom bank base rates and therefore changes in interest rates may affect the return on cash balances. No interest is received on any of the Group‘s other assets or receivables. The Group does not have any loans, bank borrowings or other interest bearing payables. Liquidity risk It is the Group‘s policy to maintain sufficient cash resources to meet its short-term liabilities. Foreign currency risk The Group is exposed to movements in exchange rates for both foreign currency transactions and the translation of net assets and income statement of foreign subsidiaries. The overseas subsidiary is regarded as long-term investment and manages its translational exposure through currency matching of assets and liabilities where applicable. The three currencies used by the Group are pounds sterling, euro and US dollars. In respect of the United Kingdom operations, the purchases from foreign suppliers are dealt with on the Group‘s behalf by Akhter Group Limited. These transactions are settled by Akhter Group Limited and are converted to pounds sterling at pre-agreed spot rates for reimbursement by the Group. The overseas subsidiary uses euro. The group will actively seek to source suppliers who deal in euro for this part of the operations of the Group to minimise the risk. The value of monetary assets and liabilities of the group not held in functional currency at the balance sheet date were as follows: Denominated in euros and US dollars Assets Liabilities Net assets 2015 £000 -) (-) (-) 2014 £000 -) (294) (294) ONZIMA VENTURES PLC Page 54 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 20. FINANCIAL INSTRUMENTS (continued) Price risk The Group does not hold any listed security investments and therefore has no exposure to securities price risk. Fair values The Directors consider that there is no material difference between the book value and the fair value of the financial instruments at 31 December 2015 and 31 December 2014. Capital risk management The Group considers its capital to comprise its ordinary and deferred share capital, share premium account and accumulated retained losses. The Group‘s objectives when managing capital are 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 to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group considers equity funding as the most appropriate form of capital for the Group, but keeps this under review taking into account the risks, costs and benefits to equity shareholders of introducing debt. ONZIMA VENTURES PLC Page 55 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 21. a. DEFERRED TAX ASSET GROUP Depreciation in excess of capital allowances Losses COMPANY Losses Provided 2015 £000 2014 £000 - - - - - - Provided 2015 £000 - 2014 £000 - Not provided 2015 £000 - - - Not provided 2015 £000 - 2014 £000 - 169 169 2014 £000 9 The Group has estimated tax losses of £4,5692,000 as at 31 December 2015 (2014: £5,552,000) which have not been recognised for deferred tax purposes as these may only be set against certain profits arising in future accounting periods. ONZIMA VENTURES PLC Page 56 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 22. CALLED UP SHARE CAPITAL Allotted, called up and fully paid 138,631,936 ordinary shares of 0.1p each 137,674,431 deferred shares of 4p each 279,176,540 placing shares of 0.99p each 2015 £000 138 5,507 2,764 8,409 2014 £000 2,792 5,507 - 8,299 The deferred shares have no right to dividends nor do the holders thereof have the right to receive notice of or to attend or vote at any General Meeting of the company. On a return of capital on a winding up of the company, the holders of the deferred shares shall only be entitled to receive the amount paid up on such shares after the holders of the ordinary shares have received the sum of £1,000,000 for each ordinary share held by them. Ultima Networks Plc 2004 Share Option Scheme The scheme was approved by the AGM held on 28 May 2004. No options to subscribe for ordinary shares of 1p each have been granted under this scheme. Ultima Networks Plc 2012 Share Option Scheme The scheme was approved by the AGM held on 26 June 2012, being the Ultima Networks Plc 2012 Share Option Scheme, but no options to subscribe for ordinary shares of 1p each have been granted to date. Executive Share Option Schemes Options to subscribe for ordinary shares of 1p each are exercisable in accordance with the 1994 Microvitec Inland Revenue Approved Executive Share Option Scheme. During the year ended 31 December 2014, no options were granted, no options were exercised and no options lapsed. 23. CAPITAL COMMITMENTS Contracted capital expenditure GROUP 2015 £000 - 2014 £000 - COMPANY 2015 £000 - 2014 £000 - 24. FUTURE OPERATING LEASE COMMITMENT There are no operating lease commitments at the balance sheet date. (2014: £Nil) ONZIMA VENTURES PLC Page 57 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 25. PENSIONS During the year the Group contributed to the personal pension schemes (defined contribution) of certain employees. No contributions were paid in respect of the directors. No amounts were accrued or prepaid at the year end (2014: £Nil) 26. RELATED PARTY TRANSACTION Gavin Burnell and Luke Cairns who were granted 10,804,840 and 2,701,210 share options respectively. No director has granted or exercised any share options during this or the previous year nor did any lapse. During the year the Group made purchases form Akhter Group Limited totalling £Nil (2014: £115,000) of this amount, £Nil (2014: £11,000) was payable to Akhter Group Limited as at 31 December 2015. The purchases can be analysed as follows: Group company Ultima Networks UTN Solutions (North) Cognito Software Total 2015 £000 2014 £000 Description of purchases - 43 - 43 10 Executive management services and project costs 105 Rent and carriage costs - Pensions and carriage costs 115 As stated above the treasury function is performed on behalf of the company by Akhter Group Limited and will always try to make the most beneficial use of available cash resources. During the year, no monies were loaned by the company to Akhter Group Limited (2014: £Nil) and no monies were borrowed by the company from Akhter Group Limited (2014: £Nil). During the year the Group made sales to Akhter Group Limited totalling £Nil (2014: £144,000l) of this amount, £Nil (2014: £Nil) was payable by Akhter Group Limited as at 31 December 2015. SHARE BASED PAYMENT CHARGES The Company has granted Ordinary Share options to its directors during the year that may be exercised within ten years in whole or in part from the date of the grant at an exercise price of 0.7p per share. The Black Scholes method was used to calculate the fair value of options at the date of grant. The table below lists the inputs to the model used for the options granted during the year: Weighted average share price at date of grant Weighted average exercise price Expected volatility Contractual life Risk free rate 0.9 pence 0.7 pence 50% 10 years 1% A total share based payment charge of £30,812 was expensed in 2015 in respect of the options granted to the directors. ONZIMA VENTURES PLC Page 58 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 The share options held as at 31 December 2015 are set out in the table below: Granted during the period Exercised during the period Outstanding at 31 December 2015 Option Price Exercisable on or before G Burnell L Cairns Total Options 10,804,840 2,701,210 13,506,050 — — — 10,804,840 2,701,210 13,506,050 0.7p 0.7p 25 Oct 2025 25 Oct 2025 Note: A detailed breakdown of directors‘ options is set out in the Report on Directors‘ Remuneration. Additionally, the company has issued 4,051,805 warrants to its brokers, Peterhouse Corporate Finance, for the subscription of Ordinary Shares which may be exercised at any time up to 22 August 2019 at a price of 0.7p per share. 24. RELATED PARTY TRANSACTION (continued) During the year the company recharged its administration expenses to all its subsidiaries as detailed below: Group company Ultima Networks UTN Solutions (North) Cognito Software Total 2015 £000 -) -) -) -)) Description 2014 £000 (190) Group recharge (receivable) 115) Group recharge payable 75) Group recharge payable -) During the year, the fees payable in respect of services rendered by the finance director, Anthony P Klein, amounted to £9,000. These fees were paid to A Klein, a firm in which he is a partner. 25. CONTINGENT LIABILITY The company had no contingent liabilities. 26. CONTROLLING PARTY In the opinion of the directors, there is no ultimate controlling party. 27. PROVISIONS No provisions have been made in these accounts. There is no deferred tax in the current year. ONZIMA VENTURES PLC Page 59 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 28. FAIR VALUES The Directors consider that there is no material difference between the book value and the fair value of the financial instruments at 31 December 2015 and 31 December 2014. 29. SUBSEQUENT EVENTS There have been no significant events after the balance sheet date, other than those disclosed in the Directors‘ Report and the Strategic Report. 

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