Final Results

RNS Number : 5057L

Papillon Holdings PLC

30 April 2020

 

Papillon Holdings plc / Index: LSE / Epic: PPHP / Sector: Investment

30 April 2020

Papillon Holdings PLC

('Papillon' or 'the Company')

Results for the year ended 31 December 2019

Chief Executive's Report

Appointment of Directors and new Chairman

On 15 August 2019 the board was pleased to announce that it had appointed Lord Nicholas Monson to the Board of Directors (the 'Board') as Non-Executive Chairman to the Company. Additionally, Papillon is pleased to announce that Mr. Anthony Eastman has been appointed to the Board as a Non-Executive Director.

Lord Monson has 35 years of experience in the City where he has advised financial institutions and quoted companies in different sectors on investor relations. Most recently he has served as a director of AIM-listed Legendary Investments and continues to serve the company under its new name, Eight Peaks Group plc.

Mr. Eastman is a Chartered Accountant (Australian qualified) with a number of years' experience in financial management and corporate advisory services, primarily in the natural resources sector, along with extensive experience in the public company environment, having been a director and company secretary of a number of ASX and AIM junior mining and oil and gas focused companies. He has previously worked with Ernst & Young and CalEnergy Gas Ltd, a subsidiary of the Berkshire Hathaway Group of Companies in both Australia and the UK.

On 18 May 2018, we reached agreement via a non-binding head of terms to make an investment in 50% of the issued share capital of a fintech company, Pace Cloud Limited, focussed on the used car market. Pace Cloud has developed innovative technology that bridges the gap between private and retail vehicle sales and delivers consistently high values for the user. It has an aggressive growth strategy, utilising its unique technology to expand its offering to an, as yet, underexploited area of the private car sale market; currently +200,000 private cars are sold and brought every month in the UK. The app has been launched and can be searched and downloaded under the name, "CarCloud". The service had not yet been launched nationally as yet but the metrics continue to be very promising.

The transaction is progressing well, albeit slower than we would have liked, due to certain matters that have delayed progress and more recently the Covid-19 Pandemic outbreak. We have executed a Share Purchase Agreement to acquire a 50% interest in Pace Cloud Limited. Additionally, Papillon has, to date, raised £500,000 via the issue of 10% convertible loan notes.

The proceeds from the issue of the Loan Notes have been used, in conjunction with existing resources, to continue to finance the costs of developing the CarCloud App and business together with the day-to-day running expenses of Papillon Holdings PLC.  The directors believe that the investment in Car Cloud has enormous potential in a very large market, despite the current reduced economic activity but that it will be well placed to take advantage of the pick-up in economic activity expected later this year. The proposed investment should therefore add significant shareholder value and the directors of Pace Cloud and Papillon continue to investigate routes to enhance the offering, the valuation and the route to market of CarCloud. The investment proposes to break new ground in the market in which it operates, and the business model is a completely new solution in the way that individuals own and protect their vehicles, it is a complete ownership solution from purchase and finance, through maintenance and on to the ultimate sale of a vehicle.

The Company has submitted a full prospectus to the UK Listing Authority ('UKLA'), which has already been approved twice and which will be published in due course. However, we have to make a re-submission to include these accounts of Papillon Holdings PLC for the year ended 31 December 2019 as more recent financial information is required therein. We also have to update indebtedness statements but we do not expect this to result in many queries from UKLA and we expect this to be agreed in the relatively near future in order that the placing and re-admission of the shares of your company to trading on the standard segment of the LSE may take place. The Investment is subject, inter alia, to the completion of due diligence, documentation and compliance with all regulatory requirements.

Losses have increased from £582,000 for the year ended 31 December 2019 (2018: £397,000) due largely to higher provisions for listing costs and higher administrative expenses and interest payable. Administration costs have increased to £443,000 (2018: £369,000) and interest costs have increased to £122,000 (2018: £23,000). These are likely to be substantially lower in the ensuing period. Certain creditors in the balance sheet will be converted to equity upon re-listing.

Risks and uncertainties

The Company is a relatively new entity, with only a brief operating history, and therefore, investors have no basis on which to evaluate the Company's ability to achieve its objective of identifying, acquiring and operating one or more companies or businesses.

Whilst the company has executed a Share Purchase Agreement to acquire a 50% interest in Pace Cloud Limited, the directors are unable to offer assurance that the relisting of Papillon Holdings PLC will complete and /or that we will be able to raise the necessary funds via a placing upon re-listing to enable Car Cloud to fulfil its short-term plans.

I would personally like to thank very much our shareholders again for their patience during this process and the extended time in which the shares of your company have been suspended from trading and we look forward to a successful future post the completion of our investment in Car Cloud.

__________________

James Longley

Director

29 April 2020

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

		Year ended 31 December 2019		Year ended 31 December 2018
		£ '000		£ '000
	Notes
Continuing operations
Listing costs	5	(33)		(12)
Administrative expenses	5	(443)		(369)
Finance costs		(122)		(23)
Other Income: Interest received	21	16		7
Loss before taxation		(582)		(397)
Taxation	7	-		-
Loss and comprehensive loss for the period		(582)		(397)
Basic and diluted loss per share	8	(0.508p)		(0.299p)

Since there is no other comprehensive loss, the loss for the period is the same as the total comprehensive loss for the period attributable to the owners of the Company.

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019

		As at 31 December
		2019		2018
	Notes	£ '000		£ '000
Assets
Current assets
Other receivables	10	23		169
Cash and cash equivalents	12	-		31
Non-current asset
Other receivables	11	457		-
Total Assets		480		200
Equity and liabilities
Current liabilities
Trade and other payables	13	789		227
Convertible loan notes	14	478		194
Total Liabilities		1,267		421
Equity attributable to equity holders of the company
Share Capital - Ordinary shares	15	132		132
Share Premium account	15	602		602
Loan Notes Equity Reserve	14	22		6
Accumulated Deficit	16	(1,543)		(961)
Total Equity		(787)		(221)
Total Equity and liabilities		480		200

The Statement of Financial Position of the Company is stated below:

Approved by the Board and authorised for issue on 29 April 2020

James Longley

Director

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019

			31 December		31 December
			2019		2018
	Notes
			£'000		£'000
Cash flows from operating activities
Operating loss	5		(582)		(397)
(Increase)/decrease in receivables			(311)		(45)
Increase/(decrease) in payables			562		204
Cash flow from operating activities			(331)		(238)
Cash flows from financing activities
Issue of 10% Convertible Loan Notes	14		300		200
Net cash from/(used in) financing activities			300		200
Net increase/decrease in cash and cash equivalents			(31)		(38)
Cash and cash equivalents at the beginning of the period			31		69
Cash and cash equivalents at end of period			-		31
Represented by:  Bank balances and cash			-		31

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019

	Notes	Share capital	Share premium		Loan Note Equity reserve		Accumulated deficit		Total  equity
		£'000	£'000				£'000		£'000
As at 31 December 2017		132	602		-		(564)		170
Equity element of the issue of 10% convertible loan notes		-	-		6		-		6
Loss for the year		-	-		-		(397)		(397)
As at 31 December 2018		132	602		6		(961)		(221)
Equity element of the issue of 10% convertible loan notes		-	-		16		-		16
Loss for the year		-	-		-		(582)		(582)
As at 31 December 2019		132	602		22		(1,543)		(787)

Accumulated deficit represents the cumulative loss of the company attributable to equity shareholders.

** ENDS **

For further information visit  http://papillonholdingsplc.com  or contact the following:

Charles Tatnall                                     Papillon Holdings plc     [e-mail]

Isabel de Salis    St Brides Partners Limited   [e-mail]

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

1  General information  

Papillon Holdings Plc ('the company') is an investment company incorporated in the United Kingdom. The address of the registered office is disclosed on the company information page at the front of the annual report.  The Company was incorporated and registered in England and Wales on 19 October 2015 as a private limited company and re-registered on 24 June 2016 as a public limited company when listed on London Stock Exchange.

2  Accounting policies  

2.1  Basis of Accounting

This financial information has been prepared in accordance with International Financial Reporting Standards (IFRS), including IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below. 

These policies have been consistently applied. 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Although these estimates are based on management's experience and knowledge of current events and actions, actual results may ultimately differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a)  Going concern

These financial statements have been prepared on the assumption that the Company is a going concern. When assessing the foreseeable future, the Directors have looked at a period of at least twelve months from the date of approval of this report and the working capital requirements of the Company.

After making enquiries, the Directors firmly believe that together with their support the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

The Directors have considered the available cash resources of the Company and its current forecasts and has a reasonable expectation that the Company have adequate resources and support to continue in operational existence for the foreseeable future, considered to be at least 12 months for the date of approval from the financial statements. Further details of the Directors' assessment are provided in the Strategic Report. The Directors draw attention to the current uncertainty in respect of the Covid-19 global pandemic.

b)  Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Company

The Company has applied any applicable new standards, amendments to standards and interpretations that are mandatory for the financial year beginning on or after 1 January 2019 including IFRS 16. The company has no leases therefore IFRS 16 has no impact.  

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, lAS 18 Revenue and related Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with its customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

(b) New, amended standards, interpretations not adopted by the Company

A number of new standards, amendments to standards and interpretations to existing standards have been published that are mandatory for the Company's accounting periods beginning after 1 January 2018, or later periods, where the Company intends to adopt these standards, if applicable, when they become effective. The Company has disclosed below those standards that are likely to be applicable to the Company and is currently assessing the impact of these standards.

· IFRS 16 Lease, effective date 1 January 2019 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor'). IFRS 16 completes the IASB's project to improve the financial reporting of leases and replaces the previous leases Standard, IAS 17 Leases, and related Interpretations.

· IFRIC 23 "Uncertainty over Income Tax Treatments", effective date 1 January 2019 clarifies application of recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments.

Management has fully assessed the impact of these standards but does not believe they have a material impact on the financial statements.

2.2  Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. In the opinion of the director, the company has one class of business, being that of an investment Company. The company's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is the UK. All costs are derived from the single segment.

2.3  Cash and cash equivalents

    Cash and cash equivalents comprised of cash at bank and in hand.

2.4  Equity

Equity comprises the following:

· Share capital: the nominal value of equity shares

· Share premium

· Loan notes equity reserve and

· Accumulated deficit.

Equity instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. 

Financial assets 

On initial recognition, financial assets are classified as either financial assets at fair value through the statement of profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate. 

Loans and receivables

The Company classifies all its financial assets as trade and other receivables. The classification depends on the purpose for which the financial assets were acquired. 

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 

The Company's loans and receivables financial assets comprise other receivables (excluding prepayments) and cash and cash equivalents included in the Statement of Financial Position.

Financial liabilities

Financial liabilities are recognised when, and only when, the Group becomes a party to the contracts which give rise to them and are classified as financial liabilities at fair value through the profit and loss or loans and payables as appropriate. When financial liabilities are recognised initially, they are measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through income statement. 

Fair value through the income statement category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. There were no financial liabilities classified under this category.

The Company determines the classification of its financial liabilities at initial recognition and re-evaluate the designation at each financial year end.

A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires. 

When an existing financial liability is replaced by another from the same party on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

Convertible loan notes and derivative financial instruments

The presentation and measurement of loan notes for accounting purposes is governed by IAS 32 and IAS 39. These standards require the loan notes to be separated into two components:

-  A derivative liability, and

-  A debt host liability.

This is because the loan notes are convertible into an unknown number of shares, therefore failing the 'fixed-for-fixed' criterion under IAS 32. This requires the 'underlying option component' of the loan note to be valued first (as an embedded derivative), with the residual of the face value being allocated to the debt host liability (refer financial liabilities policy above).

Compound financial instruments issued by the Group comprise convertible notes denominated in British pounds that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognised in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.

The Group's financial liabilities include amounts due to a director, trade payables and accrued liabilities. These financial liabilities are classified as FVTPL are stated at fair value with any gains or losses arising on re-measurement recognised in profit or loss. Other financial liabilities, including borrowings are initially measured at fair value, net of transaction costs.

2.5  Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

There is no tax currently payable based on the Company making a loss for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of the each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current or deferred tax for the year is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

3  Critical accounting estimates and judgments

The company makes certain judgements and estimates which affect the reported amount of assets and liabilities. Critical judgements and the assumptions used in calculating estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the  process  of  applying  the  Company's  accounting  policies,  which  are  described  above,  the  Directors  do  not  believe  that  they  have  had  to  make any  assumptions  or  judgements  that  would have a material effect on the amounts recognised in the financial information.

Impairment of receivables

The company's management reviews receivables on a regular basis to determine if any provision for impairment is necessary. The policy for the impairment of receivables of the company is based on, where appropriate, the evaluation of collectability and ageing analysis of the receivables and on management's judgement. A considerable amount of judgement is required in assessing the ultimate realisation of these outstanding amounts, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of debtors of the company were to deteriorate, resulting in an impairment of their ability to make payments, provision for impairment may be required.

4  Financial risk management

The Company's activities may expose it to some financial risks. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company's financial performance.

a)  Liquidity risk

 Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The responsibility for liquidity risks management rest

with the Board of Directors, which has established appropriate liquidity risk management framework for the management of the company's short term and long-term funding risks management requirements. During the period under review, the Company has not utilised any borrowing facilities. The Company manages liquidity risks by maintaining adequate reserves by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

b)  Capital risk

The Company takes great care to protect its capital investments. Significant due diligence is undertaken prior to making any investment. The investment is closely monitored.

 Financial Risk Management Financial instruments by category

Financial assets   31 December 2019  31 December 2018 

              £'000    '000

Other receivables    457  148

Prepayments and Accrued interest      23    21

Cash and cash equivalents      -__    31

Total current financial assets    480  200

Financial liabilities   31 December 2019  31 December 2018 

     '000                                     '000

Trade and other payables  789   227

Convertible Loan notes   478    194

Total current financial liabilities                 1,267  421

Fair value hierarchy All the financial assets and financial liabilities recognised in the financial statements which are short-term in nature are shown at the carrying value which also approximates the fair values of those financial instruments. Therefore, no separate disclosure for fair value hierarchy is required. 

The Company's activities expose it to a variety of financial risks, mainly credit risk and liquidity risk.

Market risk Market risk is defined as the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Company's market risks arise from open positions in (a) interest bearing assets and liabilities, and (b) foreign currencies; to the extent that these are exposed to general and specific market movements (see details below).

(i)  Interest rate risk The Company's interest-bearing assets comprise of only cash and cash equivalents. As Papillon Holdings' interest-bearing assets do not generate significant amounts of interest; changes in market interest rates do not have any significant direct effect on its income.

(ii)  Currency risk The Company is exposed to movement in foreign currency exchange rates arising from normal trading transactions that are denominated in currencies other than the respective functional currencies of the entity, primarily with respect to GBP. The Company does not have a policy to hedge its exposure to foreign currency exchange risk as the Company has both revenue and exposures denominated in GBP such that the net exposure is declining as the Company moves towards being naturally hedged.

Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash balances (including bank deposits, cash and cash equivalents) and credit exposures to trade receivables. The Company's maximum exposure to credit risk is represented by the carrying value of cash and cash equivalents and trade receivables.

Liquidity risk: Trade and other payables are monitored as part of normal management routine.

Borrowings and other liabilities mature according to the following schedule: 

 2019  2018

Within 1 year Within 1 year   £'000   £'000 

Trade and other payables      789    227

Convertible Loan notes       478    194

5  Operating loss, expenses by nature and personnel

		Year to 31 December 2019		Year to 31  December 2018
		£'000		£'000
Operating loss is stated after charging:
Directors Remuneration		-		2
Consulting and advisory fees		72		116
Consulting and advisory fees (reverse costs)		200		-
Premises		18		35
Legal and professional fees		111		56
Listing costs		33		12
Audit fees		10		9
Non-audit fees		10		-
Other administrative expenses		33		154
Total administrative expenses		487		384

6  Personnel

The average monthly number of employees during the period was two, being the directors.
 

There were no benefits, emoluments or remuneration payable during the period for key management personnel including the two directors other than the information disclosed in note 20.

7  Taxation

	Year ended 31 December 2019		Year to 31 December 2018
	£'000		£'000
Total current tax	-		-
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation	(582)		(397)
Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 19% (2018: 19%)	(110)		(75)
Effects of:
Non-deductible expenses	46		26
Tax losses carried forward	64		49
Current tax charge for the period	-		-

No liability to UK corporation tax arose on ordinary activities for the current period.

The company has estimated excess management expenses of £848,000 available for carry forward against future trading profits.

The tax losses have resulted in a deferred tax asset of approximately £161,000 (2018: £109,000) which has not been recognised in the financial statements due to the uncertainty of the recoverability of the amount.

8  Earnings per share

		Year to 31 December 2019		Year to 31 December 2018
Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period:
Loss after tax attributable to equity holders of the company		(£582,404)		(£396,749)
Weighted average number of ordinary shares		132,400,000		132,400,000
Basic and diluted loss per share		(0.440p)		(0.299p)

  There were no potential dilutive shares in issue during the period.

9  Capital risk management

The Directors' objectives when managing capital are to  safeguard  the  Company'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. At the date of this financial information, the Company had been financed by the introduction of capital. In the future, the capital structure  of  the  Company  is  expected  to  consist  of  borrowings  and  equity attributable to equity holders of the Company, comprising issued share capital and reserves.

10  Trade and other receivables

		2019		2018
		£'000		£'000
Other receivables		-		148
Prepayments and accrued interest		23		21
		23		169

11  Receivables due after one year

		2019		2018
		£'000		£'000
Other receivables		457		-
		457		-

Other receivables represent a loan advanced to Pace Cloud Limited, a company which is still at the development stage and pre-revenue and in which Papillon are acquiring 50% of upon re-listing. This loan will be converted in full, together with further advances and interest accrued to that date, to a maximum of £800,000 in return for an investment in the ordinary equity of Pace Cloud Limited of 50% upon which no further dilution is permitted. Any further investments in Pace Cloud Limited, to a maximum of £2,000,000, will be by way of a five-year 5% Cumulative Preference Shares. The maximum may be reviewed in the future depending on the performance of the investment in Pace Cloud Limited.  The Directors have undertaken a full impairment review and have concluded no write down of the loan is required. The forecasts have been reviewed for Pace Cloud Limited to determine the recoverability by the Directors.

The interest on the loan is 5% per annum. The loan advanced and interest accrued is repayable in equal monthly instalments over 48 months commencing on the third anniversary of the first draw down of the loan. 

Pace Cloud Limited is subject to numerous risks and uncertainties, including the following key risks:

Risks associated with Pace Cloud's short operating history

Pace Cloud is a recently formed entity and is still at an early stage of establishing its commercial development and has no revenues to date. There is accordingly no guarantee that the business will be successful, nor can there be any certainty that the Group will achieve the projected revenues from its operations.

Competition may limit Pace Cloud's operation and profits

Risk of competition and the company suffers the risk that it may not grow its user base sufficiently or otherwise reach a critical mass of users.

The company will be reliant on software developers and programmers for operational support

Pace Cloud relies on sole third-party supplier to develop, design and launch technology.

12  Cash and cash equivalents

	2019		2018
	£'000		£'000
Cash at bank	-		31
	-		31

13  Trade and other payables

		2019		2018
		£'000		£'000
Trade payables		457		166
Accruals		332		61
		789		227

14  Borrowings

Convertible loans

On 26 October 2018 the Company issued £100,000 convertible loan notes, repayable on 25 October 2019 if not converted into shares prior to that date, and bearing interest at 10% p.a. payable quarterly in arrears. On 28 November 2018 the Company also issued £100,000 convertible loan notes, due for repayment on 27 November 2019 if not converted into shares prior to that date, and bearing interest at 10% p.a.  payable quarterly in arrears. Neither of the loan note issues were converted on or by the due dates and both continue to attract interest on the same terms at 10% pa payable quarterly in arrears.

On 16 May 2019 the Company issued £300,000 convertible loan notes, repayable on 15 May 2020 if not converted into shares prior to that date, and bearing interest at 10% p.a. payable quarterly in arrears.

The net proceeds from the issue of the loan notes issued have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Company:

The Directors estimate the fair value of the liability component of the loan notes at 31 December 2019 to be approximately £478,000. This fair value has been calculated by discounting the future cash flows at the deemed market rate of 12%.

15  Share capital

	2019		2018
	£'000		£'000
Allotted, called up and fully paid
132,400,000 Ordinary shares of £0.001 each	132		132
	132		132

The ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.

The Company has issued Placing warrants to the Placees to subscribe at 1.5 pence per Ordinary share for up to 41,200,000 Ordinary shares each on the basis of one Placing warrant for every two Placing shares subscribed for by each Placee. The Placing warrants are unlisted and are exercisable up to the second anniversary of Admission in whole or in a minimum aggregate amount of 50,000 Placing warrants.

The Company has issued Founder warrants to James Longley and Charles Tatnall, to subscribe at 1.25 pence per Ordinary share for up to 10 million Ordinary shares each, they also hold placee warrants of 5 million each.  The Founder warrants are unlisted and are exercisable up to the third anniversary of Admission in whole or in a minimum aggregate amount of 50,000 Founder warrants.

The Company has issued Broker warrants to JIM Nominees Limited to subscribe at the Placing Price for up to 10,300,000 Ordinary Shares. The Broker warrants are unlisted and are exercisable up to the fifth anniversary of Admission in whole or in a minimum aggregate amount of 50,000 Broker warrants.

16  Accumulated deficit

	2019		2018
	£'000		£'000
At start of period	(961)		(564)
Loss for the period	(582)		(397)
As at 31 December	(1,543)		(961)

17  Contingent liabilities

The company has no contingent liabilities in respect of legal claims arising from the ordinary course of business.

18  Capital commitments

There was no capital expenditure contracted for at the end of the reporting period but not yet incurred.

19  Ultimate controlling party

As at 31 December 2019 the ultimate controlling parties of the Company are the Directors, Charles Tatnall and James Longley, who have a combined shareholding of more than 50% of the ordinary share capital of the company. 

20   Events after the reporting period

A non-adjusting post balance sheet event has been recognised with the anticipated financial effect of more widespread coronavirus infection having significant impact on the Group in relation to the following accounting treatments:

Going concern and funding:

Management have to make judgements on various uncertain future outcomes of events or conditions, consideration when determing whether or not the Company can prepare its financial statements on the going concern bases:

The degree of uncertainty associated with the outcome of Coronavirus increases significantly the further into the future. Management will assess all available information and will continually assess the situation.

21  Related party transactions

During the year ended 31 December 2019 the Directors received consultancy fees through the following companies:

Director		Company		2019 Fees paid			2018 Fees paid
					£		£
James Longley		James Longley Limited			57,600		56,400
Charles Tatnall		Tatbels Limited			57,600		56,400
					115,200		112,800

During the year ended 31 December 2019 neither of the Directors were any paid fees

Director					2019 Fees paid		2018 Fees paid
					£		£
James Longley					-		-
Charles Tatnall					-		2,578
					-		2,578

During the year ended 31 December 2019 the Company paid rent of £17,700 (2018: £35,400) in respect of rental of offices. The head lease on these offices is owned by James Longley.

During the year ended 31 December 2019 the Company received a loan of £8,915 from Fandango Holdings PLC at a rate of 5% per month payable upon demand. Charles Tatnall is a director of Fandango Holdings PLC.

During the year ended 31 December 2019 the Company made loans of £57,000 to Stranger Holdings PLC at an interest rate of 5% per month. The loan amount was fully repaid by 17 December 2018. Both Charles Tatnall and James Longley are directors of Stranger Holdings PLC.

Assignment of Loan and Transfer of Litigation Rights

On 18 April 2018, James Longley assigned to the Company all of James Longley' s legal and beneficial right, title and interest in a £100,000 loan that James Longley had made to an individual, namely James Thorpe, between 5 February 2016 and 20 September 2017, to fund two new ventures started by Mr Thorpe ("New Ventures" ). James Longley' s interests in bringing claims against Mr Thorpe and the New Ventures in respect of James Longley' s £100,000 loan are aligned with the interests of the Company, which had also loaned monies to Mr Thorpe and the New Ventures in anticipation of a possible reverse takeover by the Company of the New Ventures. In exchange for making this assignment, James Longley is to receive £ 90,000 from the Company. The amount due to James Longley is included in 'Other payables' and an impairment of £90,000 has been booked against claims receivable from Mr Thorpe and New Ventures.

Separately, on 18 April 2018, James Longley transferred to the company rights to bring a claim against Mr Thorpe arising out of an arrangement between James Longley, individually, and Mr Thorpe, individually, for James Longley to have business opportunities in respect of New Ventures. In exchange for making this transfer, James Longley is to receive £95,000 from the Company. Accordingly, by virtue of James Longley's loan assignment and litigation- rights transfer, the Company has a contingent liability to James Longley and a contingent asset on the recovery from Mr Thorpe and New Ventures.

 

END

 

 

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