AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
The Company announces its audited final results for the year ended 31 December 2015. The Company’s shares remain suspended from trading on ISDX pending release of the Company’s interim results for the period ended 30 June 2016. The Company is anticipating release of its interim results in the week commencing 10 October 2016 at which stage the Directors expect that the suspension will be lifted and its shares will resume trading on ISDX.
Phillip Pryor, FT8 plc +61 419 342 457
Sean McShane, FT8 plc +1 817 271 8169
Katy Mitchell, WH Ireland Limited +44 161 832 2174
The decision by the Directors of FT8 Plc (Company) in the first quarter of 2015 to terminate the Company’s long-standing relationship with its legacy technology vendor, Ezybonds Inc, was executed for a myriad of reasons. The Company’s inability to derive meaningful and sustainable income via EzyPromotions Limited’s Royalty of 60% of the net income generated by the Ezybonds Payment Platform was a significant contributing factor together with the inability to earn income from activities outside of the Ezybonds Inc group without the permission of the latter. The termination of the relationship with Ezybonds Inc created a need to redefine the Company’s identity, develop a complete and holistic prepaid payments ecosystem, identify and enact strategic partnerships, develop commercial opportunities, and execute a capital-raising initiative.
Investment Company Status
Pursuant to the ICAP Securities and Derivatives Exchange (ISDX) rules, the Company was deemed to be an Investment Company as a result of the Company’s decision to terminate its legacy relationship with Ezybonds Inc. This new trading status resulted in an appreciable change as to how the Company structures business opportunities. The Company’s stated investment strategy, set out on 19 March 2015, is to progress a strategy of executing partnership agreements that are aligned with the Company’s current experience and expertise. Additionally, it was agreed that the Directors would investigate and discuss potential business acquisitions within the current and related business sectors that will include the raising of adequate capital to facilitate such plans.
As an Investment Company, the Company is able to make investments in companies consistent with its strategic focus.
2015 Annual General Meeting
At the Company’s 2015 Annual General Meeting held on 30 June 2015 in East Melbourne, Australia, the Company’s presentation thematically focused on “Corporate Restructuring and Turnaround.” Within the context of this presentation, the following four key priorities were enumerated:
1. Evaluation and Assessment
The Company’s activities have since been aligned with these priorities.
Prepaid Processing Investment
One of the first tasks undertaken was to establish an investment opportunity in the finance technology (FinTech) sector, primarily one involving a company that was serviced by reputable counterparties. As announced on 22 January 2016, the Company’s first major investment was in BIPS Technologies LLC, a company that is serviced by a major international prepaid card processor and program manager, integral components of a holistic prepaid payments system. This prepaid card processor and program manager is a next-generation integrated payments processor that processes more than 500 million transactions annually across 215+ countries and territories. Services offered include loyalty and marketing solutions, settlement and reconciliation, mobile solutions, acquiring capabilities, and program and portfolio optimisation services. Prepaid program capabilities support a broad array of use cases and sectors including reloadable multi-currency wallets that combine loyalty with payments, travel, transportation, and general purpose reloadable (GPR) cards.
Prepaid Issuing Bank
Similarly, the Company sought to make sure that its investment in BIPS Technologies LLC involved a company that was serviced by a reputable prepaid issuing bank to complement the Company’s vision of being invested in a holistic payments ecosystem.
The typical profile of the banks chosen from included prepaid financial institutions that have issued tens of millions or hundreds of millions of card products in their portfolios.
The Company rendered a recommendation to the management of its first major portfolio investment company regarding the proposed banking counterparty. This particular prepaid issuing banking partner was identified and selected after significant review because the bank is a U.S. industry leader with more than 100 prepaid card programs under its administration. Furthermore, the prepaid issuing banking partner was chosen due to its existing relationship with the newly-chosen prepaid card processor and program manager that service the Company’s first major portfolio investment company.
First Principal Investment Opportunity
At the Annual General Meeting held on 30 June 2015, the Company noted that it is seeking to invest in a company that is able to develop and bring to market a commercial product with a “late Q3/ early Q4 rollout.” The Company accordingly commenced an investment review process from July 2015. As announced on 22 January 2016, the Company made an investment in BIPS Technologies LLC, which has developed a prepaid solution to effect the disbursement from payroll of voluntary health care premia with onward distribution and remittance to insurance carriers, a product designed to serve companies in conformity with federal and state regulations.
The first major portfolio commercial product developed by BIPS Technologies LLC was launched in November 2015.
The Company’s first major portfolio investment company, BIPS Technologies LLC, has a commercial agreement with its first commercial client, a licensed and regulated Third Party Administrator (TPA) of employee benefits programs with operations across the United States. The agreement includes provisions regarding a required minimum number of program enrollees by the end of calendar year 2016, calendar year 2017, and calendar year 2018.
Establishment of Wholly-Owned Subsidiary
The Company has established in 2015 a wholly-owned U.S. subsidiary called FT8 LLC through which it is empowered to make investments.
BIPS Technologies LLC
As announced on 22 January 2016, FT8 LLC acquired a 40% interest in BIPS Technologies LLC. This is the operating company that services the licensed and regulated Third Party Administrator in the U.S. health care sector.
Second Investment Opportunity
As a result of the Company’s first major investment through FT8 LLC, the Company has been invited to consider an additional investment that would service another commercial client in the United States. This other commercial client involves one of the largest health care discount networks in the United States. The Company is conducting due diligence on the opportunity and additional details will be provided in due course.
Additional Prepaid Card Program Investment Opportunities
The Company has identified additional investment opportunities involving prepaid card program opportunities in other jurisdictions including opportunities in Southeast Asia and Australia. At the time of writing, the Company is earnestly conducting due diligence on a couple of investment opportunities in these regions. If the Company completes this proposed investment(s), it would provide the Company with portfolio diversification in a region of the world where the Company is not currently invested.
Consistent with the stated investment objectives, the Company’s proposed investment(s) would involve a service provider that is a major global industry participant.
Mobile Investment Initiatives
The Company strongly anticipates that the future of payments transactions will increasingly revolve around mobile devices. To this end, the Company was introduced to a company in 2015 that is recognised as a pioneer and global industry leader in mobile payments processing and digital enablement.
The global industry leader provides digital enablement and related mobile payments processing to hundreds of banks through unique proprietary software and hardware solutions. Moreover, the global industry leader develops host card emulation, tokenization, and near field communication solutions for some of the largest telecommunications companies in the world.
The Company is reviewing investment opportunities involving companies that would service financial institutions and telecommunications companies through unique mobile technology. At the time of writing, these involve multiple financial institutions and telecommunications companies
Capital Markets Transaction Processing
Another strategic investment opportunity being evaluated by the Company includes transaction processing in the capital markets. Typically, these unique digital assets are traded and intermediated on decentralised trading exchanges. There is scope and potential for the Company to invest in the development of these initiatives.
The Company’s core strategic priorities relate to investment opportunities in prepaid payments, mobile payments, digital enablement, and transaction intermediation in the capital markets. The investment opportunities are significant and appreciable and in some cases involve global industry leaders for the provision of services. The investment opportunities are also geographically-distributed with an emphasis on the North American and Asian markets.
The sufficiency of investment capital and working capital is the key determinant as to whether – and to what extent – the Company will be able to participate in these unique investment opportunities. However, there can be no guarantee that any proposed transaction outlined in this announcement will complete. Further updates will be provided in due course.
Phillip J Pryor
Date: 3 October 2016
FOR THE YEAR ENDED 31 DECEMBER 2015
|Impairment of investment in subsidiaries||7||-||(25,407,873)|
|Provision against loans to subsidiaries||7||-||(22,569,469)|
|Interest receivable and similar income||4||4||-|
|Interest payable and similar charges||8||34,432||-|
|LOSS BEFORE TAXATION||(918,915)||(48,429,033)|
|Tax on loss||9||-||-|
|LOSS FOR THE FINANCIAL YEAR||(918,915)||(48,429,033)|
|Earnings per share expressed in pence per share|
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
|LOSS FOR THE YEAR||(918,915)||(48,429,033)|
|OTHER COMPREHENSIVE INCOME||-||-|
|TOTAL COMPREHENSIVE LOSS FOR THE YEAR||(918,915)||(48,429,033)|
STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2015
|Debtors: amounts falling due within one year||13||13,613||20,700|
|Cash at bank||1,126||344,089|
|Amounts falling due within one year||13||597,379||28,445|
|NET CURRENT (LIABILITIES)/ASSETS||(582,640)||336,344|
|CAPITAL AND RESERVES|
|Called up share capital||14||39,351,061||39,351,061|
The financial statements were approved by the Board of Directors on 3 October 2016 and were signed on its behalf by:
P J Pryor - Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
|Called up share capital||Retained earnings||Share premium||Other reserves||Total equity|
|Balance at 1 January 2014||37,115,687||6,634,702||2,160,467||17,400||45,928,256|
|Changes in equity|
|Issue of share capital||2,235,374||-||601,747||-||2,837,121|
|Total comprehensive loss||-||(48,429,033)||-||-||(48,429,033)|
|Balance at 31 December 2014||39,351,061||(41,794,331)||2,762,214||17,400||336,344|
|Changes in equity|
|Total comprehensive loss||-||(918,915)||-||-||(918,915)|
|Balance at 31 December 2015||39,351,061||(42,713,246)||2,762,214||17,400||(582,571)|
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
|Cash flows from operating activities|
|Cash generated from operations||1||(308,535)||(618,290)|
|Net cash from operating activities||(342,967)||(618,290)|
|Cash flows from investing activities|
|Net cash from investing activities||4||-|
|Cash flows from financing activities|
|Movement in capital and reserves||-||(1,359,883)|
|Net cash from financing activities||-||875,491|
|(Decrease)/increase in cash and cash equivalents||(342,963)||257,201|
|Cash and cash equivalents at beginning of year||2||344,089||86,888|
|Cash and cash equivalents at end of year||2||1,126||344,089|
NOTES TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS
|Loss before taxation||(918,915)||(48,429,033)|
|Impairment of goodwill||-||47,977,342|
|Decrease/(increase) in trade and other debtors||7,087||(13,216)|
|Increase/(decrease) in trade and other creditors||568,865||(45,962)|
|Cash generated from operations||(308,535)||(618,290)|
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:
|Year ended 31 December 2015|
|Cash and cash equivalents||1,126||344,089|
|Year ended 31 December 2014|
|Cash and cash equivalents||344,089||86,888|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. STATUTORY INFORMATION
FT8 Plc is a publicly listed company limited by shares and registered in England and Wales. The company's registered number, registered office and principal place of business can be found on the Company Information page.
2. STATEMENT OF COMPLIANCE
These statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. This is the first year of adoption and there are no transitional adjustments.
3. ACCOUNTING POLICIES
Basis of preparing the financial statements
The financial statements have been prepared under the historical cost convention.
The company incurred a net loss of £918,915 during the year ended 31 December 2015 and, at that date, the company’s current liabilities exceeded its current assets by £582,640. The company has received capital from investors in 2016 in the amount of £301,574 which together with further capital from investors during the remainder of 2016 and the expectation of cash flow positive trading in the first quarter of 2017 will enable the company to fund existing and future investing activities over the forthcoming 12 months.
Having considered any associated uncertainties, the directors have a reasonable expectation that the company has adequate resources to continue in investment existence for a period of 12 months from the date the financial statements are signed and as such have prepared the accounts on the going concern basis.
Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Changes in accounting estimates
The transition to FRS 102 has not resulted in any changes to accounting policies.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The company did not make any significant judgements that have a significant effect on the amounts recognised in the financial statements.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the
balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:
provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold;
provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable;
deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are taken to the profit and loss account. Exchange differences arising on non-monetary items, carried at fair value, are included in the profit and loss account, except for the differences arising on the retranslation of nonmonetary items in respect of which gains and losses are recorded in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.
Development expenditure is written off in the year in which it is incurred.
Basic financial assets, including trade and other receivables, cash and bank balances and investments in commercial paper, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is decrease in the impairment loss arising from an event occurring after the impairment was recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade and other debtors
Trade and other debtors are recognised and carried forward at invoiced amounts less provisions for any doubtful debts. Bad debts are written off when identified.
Cash and cash equivalents
Cash and cash equivalents are included in the balance sheet at cost. Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity of three months or less.
Interest-bearing loans and borrowings
All loans and borrowings are recognised initially at cost, which is the fair value of the consideration received, net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the
effective interest method. Gains or losses are recognised in the profit and loss account when liabilities are
derecognised or impaired, as well as through the amortisation process.
Derivative financial instruments
The company does not use derivative financial instruments such as foreign currency contracts and interest rate
swaps to hedge its risks associated with interest rate and currency fluctuation risk.
Fixed asset investments
Fixed asset investments are initially recorded at cost, and subsequently restated at cost less any accumulated impairment losses.
In the year ended 31 December 2014 FT8 Plc prepared consolidated financial statements. In the year ended 31 December 2015 this was no longer required as the subsidiaries were immaterial to the company. The figures in these financial statements are individual company figures only.
The revenue and loss before taxation are attributable to the one principal activity of the company.
An analysis of revenue by geographical market is given below:
5. ADMINISTRATIVE PERSONNEL (INCLUDING DIRECTORS)
The average monthly number of personnel during the year was as follows:
|Directors and Company Officers||4||3|
The above fees are made up of:
A Director, Philip Pryor, £90,000 of which £37,500 has been paid and £52,500 is to be taken by way of 7,500,000 shares issued at the rate of 0.7 pence per share.
A Director, Sean McShane, £86,000 of which £58,000 has been paid and £28,000 is to be taken by way of 4,000,000 shares issued at the rate of 0.7 pence per share.
The Chief Executive Officer, Blair Baker, £49,000 of which £17,500 has been paid and £31,500 is to be taken by way of 4,500,000 shares issued at the rate of 0.7 pence per share.
The Company Secretary, Anthony Hedges, £38,500 of which £21,000 has been paid and £17,500 is to be taken by way of 2,500,000 shares issued at the rate of 0.7 pence per share.
6. OPERATING LOSS
The operating loss is stated after charging:
|Auditors’ remuneration for audit services||20,350||13,000|
|Auditors’ remuneration for taxation services||6,025||-|
|Auditors’ remuneration for company secretarial services||2,940||-|
|Auditors’ remuneration for other consultancy work||3,972||-|
|Foreign exchange difference||40,125||37,816|
7. EXCEPTIONAL ITEMS
|Impairment of investment in subsidiary||-||(25,407,873)|
|Provision against loans to subsidiaries||-||(22,569,469)|
8. INTEREST PAYABLE AND SIMILAR EXPENSES
This relates to loans received from H Pryor and another individual.
Analysis of the tax charge
No liability to UK corporation tax arose for the year ended 31 December 2015 nor for the year ended 31 December 2014.
Factors affecting current tax charge
Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:
|Loss before tax||(918,915)||(48,429,033)|
|Loss multiplied by the standard rate of corporation tax in the UK of 20% (2014 – 20%)||(183,783)||(9,685,807)|
|Expenses not deductible for tax purposes||40,000||84,991|
|Unrelieved tax losses||143,783||9,600,816|
|Total tax charge||-||-|
Factors that may affect future tax charges
The company has excess management costs of £3,504,760 (2014 - £2,785,845) that are available to carry forward against future taxable profits of the company.
No deferred tax asset has been recognised in respect of the above losses because their utilisation is not considered sufficiently certain.
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.
Reconciliations are set out below.
|Earnings £||Weighted average number of shares||Per-share amount pence|
|Earnings attributable to ordinary shareholders||(918,915)||737,338,591||-0.12|
|Effect of dilutive securities||250,000,000||0.03|
|Earnings £||Weighted average number of shares||Per-share amount pence|
|Earnings attributable to ordinary shareholders||(48,429,033)||143,150,685||-9.24|
|Effect of dilutive securities||143,150,685||1.98|
11. FIXED ASSET INVESTMENTS
|At 1 January 2015||25,856,373|
|At 31 December 2015||448,569|
|AMOUNTS WRITTEN OFF|
|At 1 January 2015|
|At 31 December 2015|
|NET BOOK VALUE|
|At 31 December 2015||69|
|At 1 January 2015||-|
Details of the investments in which the company has an interest of 20% or more are as follows:
Subsidiary Ezymarketing Limited
Year 2015 Country of incorporation UK Class of Share Ordinary Percentage of shares held 100% Profit/(loss) for year – Aggregate Capital & Reserves £2
Year 2014 Country of incorporation UK Class of Share Ordinary Percentage of shares held 100% Profit/(loss) for year £(14,957) Aggregate Cpital & Reserves £2
Subsidiary FT8 llc
Year 2015 Country of incorporation USA Class of Share Ordinary Percentage of shares held 100% Profit/(loss) for year Aggregate Capital & Reserves $100
Subsidiary EzyPromotions Limited Country of incorporation Cook Islands Class of share Ordinary Percentage of shares held 100% Profit/(loss) for year £(22,522,994) Aggregate Capital & Reserves £(22,496,643) FT8 LLC was incorporated on 24 December 2015.
During the year ended 31 December 2014 the Directors conducted an impairment review of the value of the investment in EzyPromotions Limited and royalty entitlements. The Directors carefully considered the royalty agreement secured by EzyPromotions Limited with Ezybonds Inc. The Directors concluded that they did not have sufficient confidence that the income expected to be generated under this agreement supported any value in the investment and thus considered the full investment value to be impaired.
On 2 November 2015 EzyPromotions Limited was struck off the companies register in the Cook Islands. Accordingly, the cost and amounts written off relating to this investment have been written out in the note above.
Also during the year 31 December 2014, included within the investment cost brought forward, £448,500 related to Ezymarketing Limited, a wholly owned subsidiary, which was acquired in December 2000 and is incorporated in Great Britain. In light of the fact that Ezymarketing Limited was no longer trading and had no immediate intentions to return to a trading position, full provision was made against the asset in that year.
12. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
|Prepayments and accrued income||10,122||-|
13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Included in loans above is an amount of £200,960. This amount is due to be repaid on 8 October 2016. As part of the loan agreement a facility fee of $50,000 is payable to the lender.
14. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid up
|Ordinary shares of £0.01 each||737,338,591||7,373,387||737,338,591||7,373,387|
|Ordinary shares of £0.01 each||3,198,056,139||31,980,561||3,197,767,437||31,977,674|
Share options and warrants
At 31 December 2015 there were 250,000,000 (2014 - 250,000,000) outstanding share warrants exercisable at 3.5p at any time before 15 June 2016. Each warrant permits the holder to subscribe for one Ordinary 1p share at the specified exercise price and before the stated expiration date.
No additional share options or warrants were issued during the year ended 31 December 2015 and the 250,000,000 warrants outstanding at 31 December 2015 expired on 15 June 2016 and were not exercised.
The 250,000,000 warrants in issue at the year end were issued on 5 June 2014 as part of the settlement agreement with Ezybonds Inc and accordingly were valued using the Black Scholes pricing model and included as an additional to the group goodwill in the year.
The inputs in the model were as follows:
Share warrants granted during the year ended 31 December 2014
|Weighted average exercise price||£0.035|
|Expected life||1.5 years|
|Risk free rate||2.08%|
There has been no change in the valuation at the year end as the information used to calculate this has not changed from the previous year as above.
|Retained earnings||Share premium||Other reserves||Totals|
|At 1 January 2015||(41,794,331)||2,762,214||17,400||(39,014,717)|
|Deficit for the year||(897,915)||(897,915)|
|At 31 December 2015||(42,692,246)||2,762,214||17,400||(39,912,632)|
Retained earnings records retained earnings and accumulated losses.
Share premium records the amount above the nominal value received for shares issued.
16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The company's financial instruments comprise cash, liquid resources and various items, such as debtors and
creditors that arise directly from its investment activities. It is, and has been throughout the year of review, the company's policy that financial derivatives shall not be used. As a result, the company has not used interest rate hedges and currency swaps during the year.
Short term and debtors and creditors
Short term debtors and creditors have been excluded from the following disclosures.
Interest rate risk
The company finances its operations through shareholder equity and working capital. Throughout the period the company's exposure to interest rate fluctuations was on its cash deposits which are held at variable rates of interest.
Foreign currency risk
The company enters into certain transactions in US dollars and Australian Dollars. The risk of currency fluctuations was not considered sufficiently significant to take specific steps to mitigate the risk.
17. CAPITAL COMMITMENTS
There were no capital commitments as at 31 December 2015 (2014 – none).
18. CONTINGENT LIABILITIES
There were no contingent liabilities as at 31 December 2015 (2014 – none).
19. POST BALANCE SHEET DATE EVENTS
FT8 Plc became reclassified as an "Investment Company" from an "Operating Company" by Icap Securities and Derivatives Exchange (ISDX) in March 2015 following the Directors' decision to terminate the Company's relationship with its legacy technology partner, Ezybonds Inc. This reclassification by ISDX resulted in a marked change as to how the Company structures business opportunities. As an Investment Company, the Company is able to make investments in Companies consistent with its strategic focus, as opposed to transacting business as an Operating Company. As an Investment Company, FT8 and its subsidiaries can make investments totalling less than 50% of the shareholding capital in companies.
The Company established a wholly-owned subsidiary in 2015 named FT8 LLC. Pursuant to the Company's reclassification, FT8 LLC assumed a 40% equity interest in a U.S. company named BIPS Technologies LLC whose President introduced FT8 Plc's first commercial development opportunity. This is the special purpose investment vehicle through which the Company is participating in its first commercial transaction. FT8 LLC's responsibilities include the provision of capital required to finance the development and maintenance of this first commercial transaction. In exchange, FT8 LLC is to receive a dividend equivalent to 40% of the net profits in BIPS Technologies LLC. The directors are unable to estimate the financial effect at the present time since this will be dependent upon the future development of the commercial transactions.
20. RELATED PARTY DISCLOSURES
During the year H. Pryor provided a loan of US $80,000 to FT8 Plc at an interest rate of 10%. At the year ended 31 December 2015 the balance was £56,683 which includes accrued interest. The loan is considered repayable on demand. Helen Pryor is the wife of Philip Pryor, a Director of FT8 Plc.
During the year ended 31 December 2015 EzyPromotions Limited, a company incorporated in the Cook Islands of which FT8 Plc owned 100% of the share capital, was struck off the companies register. Accordingly, the cost and amounts written off relating to this investment have been written out as per note 11. As at 31 December 2014 FT8 Plc was owed £22,584,428 by EzyPromotions Limited. This amount was fully provided against during the year ended 31 December 2014 since it was not considered recoverable.
During the year ended 31 December 2015 Ezymarketing Limited, a company incorporated in the UK of which FT8 Plc owned 100% of the share capital, did not trade. After the year end the Director of Ezymarketing Limited has applied for the company to be struck off the register. At the year end the cost was showing as £448,500 which has been fully provided against. During the year ended 31 December 2014 an amount owed by FT8 plc to Ezymarketing Limited of £14,957 was written off.
During the year ended 31 December 2015, FT8 LLC was set up in the USA. FT8 Plc owns 100% of the share capital. There were no other transactions during the year.
The Directors and Company Officers received remuneration from the company during the year as disclosed in Note 5.
21. ULTIMATE CONTROLLING PARTY
The ultimate controlling party cannot be determined as no one party has sufficient interest in the company’s share capital to be able to control the actions of the company.
22. FINANCIAL INSTRUMENTS
The carrying amount for each category of financial instrument is as follows:
|Financial assets measured at fair value through profit or loss||4,617||364,789|
|Financial liabilities measured at fair value through profit or loss||403,335||-|
23. TRANSITION TO FRS 102
These are the first financial statements that comply with FRS 102. The company transitioned to FRS 102 on 1 January 2014. No transitional adjustments were required to equity or profit or loss for the current or prior years.
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
We have audited the financial statements of FT8 Plc for the year ended 31 December 2015, on pages 10 to 24. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 ''The Financial Reporting Standard applicable in the UK and Republic of Ireland''.
This report is made solely to the company's shareholders, 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 shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the directors’ responsibilities statement, 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 and express an opinion on 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
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs as at 31 December 2015 and of its loss for the year then ended;
· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of Matter – Going Concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made at note 3 of the financial statements concerning the company’s ability to continue as a going concern. The company incurred a net loss of £918,915 during the year ended 31 December 2015 and, at that date, the company’s current liabilities exceeded its current assets by £582,640.
As explained in note 3, the company has continued to meet its financial obligations and develop investment opportunities since the year end, utilising short term loan arrangements. The directors’ have recently received undertakings for further funding to enable the company to continue to meet its financial obligations in the short term and expect to be able to successfully raise additional capital from investors during 2016 to enable it to continue to pursue its investment opportunities and meet financial obligations arising. In addition, in forming their conclusion on going concern, the directors have forecast commencement of cash flow positive investment activities in the first quarter of 2017. This forecast is based upon expected satisfaction of an enrolment commitment under the agreement executed with a Third Party Administrator and therefore subject to commercial trading risk.
The conditions explained above, along with those explained in note 3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern. The financial statements do not include adjustments that would result if the company was unable to continue as a going concern.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
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, or returns adequate for our audit have not been received from branches not visited by us; or
· the 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.
Andrew Cook FCA (Senior Statutory Auditor)
For and on behalf of
Chartered Accountants & statutory auditor
Date: 3 October 2016