Source - DGAP Regulatory

Thalassa Holdings Ltd (THAL)
Thalassa Holdings Ltd: Final Results For Year Ended 31 December 2022

10-Jul-2023 / 10:46 GMT/BST


Thalassa Holdings Ltd

 

Thalassa Holdings Ltd

("Thalassa" or the "Company")

(Reuters: THAL.L, Bloomberg: THAL:LN)

 

Final Results For Year Ended 31 December 2022

 

 

The information set out below is extracted from the Company's Report and Accounts for the year ended 31 December 2022, which will be published today on the Company's website. A copy will also be submitted to the National Storage Mechanism where it will be available for inspection.  Cross-references in the extracted information below refer to pages and sections in the Company's Report and Accounts for the year ended 31 December 2022.

Group Results 2022 versus 2021 GBP GBP

  • Profit /(Loss) after tax for the year                                                 (£1.45m) vs £0.46m
  • Group Earnings Per Share (basic and diluted)*1                (£0.18) vs £0.06
  • Book value per share*2                                                                   £1.30 vs £1.40
  • Investment Holdings                                                                      £8.4m vs £9.2m
  • Cash                                                                                             £0.6m vs £5.4m

*1 based on weighted average number of shares in issue of 7,945,838 (2021: 7,945,838)

*2 based on actual number of shares in issue as at 31 December 2022 of 7,945,838 (2021: 7,945,838)

 

2022 HIGHLIGHTS

  • £3m investment in Tappit written off.
  • Chairman has agreed to contribute up to £3m from sale of personal property.
  • Board still reviewing legal avenues to recover Tappit losses from Directors. Chairman had warned them in writing that the policies they were following would lead to financial disaster.
  • 2022 results benefitted from ~£471K contribution from realised hedging gains.
  • 2021, Chairman waived consultancy; 2022, Chairman’s consultancy accrued, pending performance review.
 

CHAIRMAN’S STATEMENT

 

 

Results

2022 results were negatively impacted by the previously announced write off of the Company’s investment in Tappit. As also previously announced, I take responsibility for the decision and have offered £3m from the proceeds of the sale of property I own.

The Company was fortunately well hedged during 2022 and realised gains of ~£471,000, somewhat reducing the Tappit loss.

Outlook - Weather Forecast

“Cloudy with a chance of Meatballs”

2023 got off to a flying start; investors parked their 2022 losses and piled straight back into equities, notwithstanding the fastest increase in US interest rates on record.

I have updated the table below to reflect 2022 and YTD 2023 performance.

  • NASDAQ 100 (NDX) registered

±39% gain thru 3 July 2023

± (33%) loss in 2022

± 27% gain in 2021

± 48% gain in 2020,

± 38% in 2019,

± (1%) loss in 2018,

± 32% in 2017,

± 6% in 2016,

±8% in 2015,

±18% in 2014,

±35% in 2013

± 17% in 2012

± 3% in 2011

± 19% in 2010

± 54% in 2009

± (42%) loss in 2008

The first half of 2023 saw the S&P 500, NASDAQ Composite (CCMP) and NASDAQ 100 (NDX) rally back into Bull Market territory (> 20%), this time led by Tech stocks, the six largest of which now represent ~50% of the NDX (weighted by mkt cap) and have accounted for most of the overall performance (± 80%) of this year’s NDX performance. Major performance contributions came from NVDA + 188.3% (Trailing 12M P/E 204.91x), TSLA +108.31% (Trailing 12M P/E 74.59x) and AMZN +53.96% (Trailing 12M P/E 139.42x)


I would refer to these stocks as

Buzz Lightyear Stocks “To infinity and Beyond,”

 

 

or

Wile E. Coyote Stocks

 

 

CHAIRMAN’S STATEMENT CONTINUED

 

 

 

Ignore the Bond Market at your Peril

It is key to note is that the bond market is the tail that wags the stock market’s dog — it leads…and it is screaming recession…again, as it did in 1990, 2000 and 2007. And with P/E ratios back in nose-bleed territory a recession will only increase P/E multiples which will portend earnings declines and the inevitable collapse in asset prices.

 

NASDAQ

P/E (TTM)

CAPE*1 Ratio

23.06.23

30.92

30.35

12.31.22

23.72

34.20

12.31.21

39.00

59.53

12.31.20

39.46

55.33

12.31.19

27.29

41.65

12.31.18

20.34

35.19

*1 Cape Ratio: the Cyclically Adjusted P/E ratio otherwise known as the Schiller CAPE ratio.

 

Whilst the market may currently look cheap, I would point out that in 2020, interest rates were hovering around 0%; today, short term Treasuries are yielding in excess of 5% and the Inverted Yield Curve is screaming recession.

For distracted readers, Jeremy Grantham provides the following summary of “bubble rules.” Sigma is how GMO measures deviation from the mean.

  1. All 2-sigma equity bubbles in developed equity markets have burst all the way back to trend.The U.S. reached the 2-sigma level in the summer of 2020.
  2. But some of them went to 3-sigma or more before they burst — producing longer and deeper pain. The

U.S. reached 3-sigma in late 2021.

  1. Timing is uncertain and when you get to 3-sigma superbubbles, such as we have now, there are few examples. Yet they have all shown certain characteristics before they broke:
    • A speculative investor frenzy that generated stories for distant decades;
    • A penultimate blow-off phase where stock gains accelerate, as we had in 2020 (and again in the first half of 2023, this time led by AI Tech Stocks);
    • And the ultimate narrowing phase unique to these few superbubbles — where a decreasing number of very large blue chips (or, as currently in 2023, Mega-Cap Tech Stocks masquerading as Blue Chips) go up as even riskier and more speculative stocks underperform or even decline, as they did in 1929 and 2000, and 2022.


For readers interested in Jeremy Grantham’s musings please follow the link below…

https://www.gmo.com/americas/research-library/after-a- timeout-back-to-the-meat-grinder_viewpoints/

 

 

Holdings

  • ARL

The Flying Node bespoke seismic sensor development project, supported by Net Zero Technology Centre (NZTC) and two major Energy Companies, was completed in 2022. Extensive field testing and analysis of the seismic data was performed which culminated in an offshore trial at Fort William in Scotland. During this trial, the Flying Node seismic sensor was benchmark tested against industry standard ocean bottom nodes and comparison of the resulting data sets concluded excellent performance of the ARL design.

The mechanical design of the Flying Node was also modified to optimise the seismic sensor performance and an updated battery system was also developed. This resulted in the build and test of a MK2 version of the Flying Node which was used for the trials.

The software team also progressed the development of the in-house node control and navigation software. Initial in water testing of the software will start in the 2nd quarter of 2023.

 

 

 

Duncan Soukup

Chairman

4 July 2023

 

FINANCIAL REVIEW

 

 

GROUP RESULTS

Continuing Operations

Total Revenue from continuing operations for the year to 31 December 2022 was £0.30m (2021: £0.14m) related to grant income for ARL and rental income in Switzerland.

Cost of Sales on continuing operations were £0.10m (2021: £0.06m), resulting in a Gross Profit of £0.20m (2021: Gross Profit £0.08m).

Administrative Expenses on continuing operations before exceptional costs were £0.5m (2021: £1.4m) and Depreciation £0.3m compared to £0.1m in 2021.

Operating Loss was therefore £0.6m (2021: loss £1.4m).

Net Financial Income/(Expense) of £0.2m included net foreign exchange income, net interest expense and net income from financial investments including fair value adjustments (2021: expense £(0.4)m).

Other Losses were £0.9m (2021: loss of £0.02m).

Share of Losses of Associated Entities was £0.24m (2021: £0.01).

Loss Before Tax on continuing operations was £1.5m (2021: £1.8m).

Tax on continuing operations for the period was a credit of

£0.05m relating a R&D tax credit (2021: credit £0.1m).

Loss for the year from Continuing Operations

was therefore £1.45m (2021: £1.7m).


Discontinued Operations

In 2021 id4 AG was sold to Anemoi International Ltd during the year. During 2022 there were no discontinued operations (2021: loss £0.3m), with a gain on disposal of nil (2021: £2.4m).

Profit/(Loss) for the year

This resulted in a Group loss for the year of £1.45m (2021: profit £0.5m).

Net Assets at 31 December 2022 amounted to £10.3m (2021: £11.2m) resulting in net assets per share of £1.30 based on 7,945,838 shares in issue versus £1.40 in 2021 including cash of £0.6m equivalent to £0.06 per share (2021:

£1m and £0.12 per share.

Net Cash Flow from operations amounted to an inflow of

£0.2m as compared to £1.9m outflow in 2021.

Net Cash from Investing Activities, amounted to an outflow of £1.2m (2021 £2.5m) relating to continuing operations in the purchase of available for sale investments.

Net Cash Outflow from Financing Activities amounted to £4.3m (2021: inflow £2.5m) relating to the settlement of the credit facility.

Net Decrease in Cash and Cash Equivalents was

£5.4m resulting in Cash and Cash Equivalents at 31 December 2022 of £0.6m (2021: £5.4m).

 

DIRECTORS’ REPORT

 

The Directors present their report and the audited financial statements for the year ended 31 December 2022.

RESULTS AND DIVIDENDS

The Group made a loss attributable to shareholders of the parent for the year ended 31 December 2022 of £1.4m (2021: profit £0.5m). The Directors do not recommend the payment of a dividend.

 

 

DIRECTORS AND DIRECTORS’ INTERESTS

The Directors of the Company who held office during the year and to date, including details of their interest in the share capital of the Company, are as follows:

 

Name

Executive Director

Date Appointed

Date Resigned

Shares held

Share options

C Duncan Soukup

26 September 2007

 

2,396,970

-

Non-Executive Directors

 

 

 

 

Graham Cole David M Thomas Kenneth Morgan

2 April 2008

2 April 2008

24 May 2022

 

39,870

-

-

-

-

-

DIRECTORS’ REMUNERATION

 

 

 

 

 

 

2022

 

2021

 

Director

Consultancy

Director

Consultancy

 

Fees

Fees

Fees

Fees

 

£

£

£

£

Executive Directors

 

 

 

 

Duncan Soukup

133,000

174,076

272,597

221,025

Non-Executive Directors

 

 

 

 

Graham Cole

10,307

-

18,419

-

David Thomas

20,635

-

18,419

-

Kenneth Morgan

5,091

-

-

-

Total remuneration

169,033

174,076

309,435

221,025

 

 

 

 

 

           
 

 

 

 

 

SUBSTANTIAL SHAREHOLDINGS

 

 

As of 31 December 2022, the Company had been advised of the following substantial

shareholders

Name

Holding

%

Duncan Soukup

2,396,970

30.2%

THAL Discretionary Trust*

2,042,720

25.7%

Mark Costar

530,807

6.7%

Interactive Investor Services Nominees Limited

396,732

5.0%

Vidacos Nominees Limited

303,074

3.8%

Lynchwood Nominees Limited

263,353

3.3%

Other

2,012,182

25.3%

Total number of voting shares in issue

7,945,838

100.0

 

 

 

* C.Duncan Soukup is a trustee of THAL Discretionary Trust

 

 

 

 

 

 

SHARE BUY-BACK

There were no share buy backs during the year ended 31 December 2022, nor for the year ended 31 December 2021.

RELATED PARTY TRANSACTIONS

Details of all related party transactions are set out in note 22 to the financial statements.

OPERATIONAL RISKS

The Company may acquire either less than whole voting control of, or less than a controlling equity interest in, an investment target, which may limit its operational strategies.

The Company is dependent upon the Directors, and in particular, Mr C. Duncan Soukup, who serves as the Executive Chairman, to identify potential acquisition opportunities and to execute any acquisition.The unexpected loss of the services of Mr Soukup or other Directors could have a material adverse effect on the Company’s ability to identify potential acquisition opportunities and to execute an acquisition.

The Company may invest in or acquire unquoted companies, joint ventures or projects which, amongst other things, may be leveraged, have limited operating histories, have limited financial resources or may require additional capital.


FINANCIAL RISKS

Details of the financial instrument risks and strategy of the Group are set out in note 23.

GLOBAL ECONOMIC RISK

Whilst the long term impact of Brexit is still currently uncertain and may have an impact on the Company’s investments, the Ukraine conflict has clouded the true effect. The Board continues to evaluate the effects of these impacts on the investments and will act accordingly to mitigate any potential loss.

 

DIRECTORS’ REPORT CONTINUED

 

RISKS AND UNCERTAINTIES

A summary of the key risks and mitigation strategies is below:

 

 

Risk

Mitigation

1.

Insufficient cash resources to meet liabilities, continue as a going concern and finance key projects.

Short term and annual business plans are prepared and are reviewed on an ongoing basis. Use of various hedging instruments in order to mitigate major financial risks.

2.

Loss of key management/staff resulting in failure to identify and secure potential investment opportunities and meet contractual requirements.

Regular review of both the Board’s and key management’s abilities. Review of salaries and benefits including long term incentives and ongoing communication with key individuals.

3.

Failure to maintain strong and effective relations with key stakeholders in investments resulting in loss of contracts or value.

The Board and senior management seek to establish and maintain an open and transparent dialogue with key stakeholders.

4.

Failure to comply with law and regulations in the jurisdictions in which we operate.

Key management are professionally qualified. In addition the Company appoints relevant professional advisers (legal, tax, accounting etc) in the jurisdictions in which we operate.

5.

Significant changes in the political environment, including the impact of Brexit, Covid-19 and the Ukraine conflict, results in loss of resources/market and/or business failure.

The Company’s current investments are not expected to be adversely impacted and Management is continuing to monitor the wider political environment to ensure that steps are taken to mitigate political risk.

 

 

DIRECTORS’ RESPONSIBILITIES

The Directors have elected to prepare the financial statements for the Group in accordance with UK Adopted International Accounting Standards (“IFRS”).

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group, for safeguarding the assets and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

International Accounting Standard 1 requires that financial statements present fairly for each financial period the Group’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable UK Adopted International Accounting Standards (“IFRS”). A fair presentation also requires the Directors to:

  • select and apply appropriate accounting policies;

 

  • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
  • provide additional disclosures when compliance with the specific requirements in IFRSs as applied by the UK is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information.The Directors are not aware of any relevant audit information of which the auditors are unaware.

The financial statements are published on the Group’s website. The maintenance and integrity of the Group’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein

 

 

 

 

AGM

The Annual General Meeting was held at Anjuna, 28 Avenue de la Liberté, 06360 Éze France on 29 June 2023 at 11.00 (CEST).

AUDITORS

A resolution to confirm the appointment RPG Crouch Chapman as the Company’s auditors was submitted to the shareholders at the Annual General Meeting.

Approved by the Board and signed on its behalf by

 

 

 

C.Duncan Soukup

Chairman

4 July 2023

 

CORPORATE GOVERNANCE STATEMENT

 

 

 

The Company’s shares are admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s Main Market. The Board recognises the importance and value for the Company and its shareholders of good corporate governance. The Company Statement on Corporate Governance is available at https:// thalassaholdingsltd.com/investor-relations/corporate- governance/ and repeated in full below.

 

BOARD OVERVIEW

In formulating the Company’s corporate governance framework, the Board of Directors have reviewed the principles of good governance set out in the QCA code (the Corporate Governance Code for Small and Mid- Sized Quoted Companies 2018 published by the Quoted Companies Alliance) so far as is practicable and to the extent they consider appropriate with regards to the Company’s size, stage of development and resources. However, given the modest size and simplicity of the Company, at present the Board of Directors do not consider it necessary to adopt the QCA code in its entirety.

The purpose of corporate governance is to create value and long-term success of the Group through entrepreneurism, innovation, development and exploration as well as provide accountability and control systems to mitigate risks involved.

 

COMPOSITION OF THE BOARD AND BOARD COMMITTEES

As at the date of this report, the Board of Thalassa Holdings Ltd comprises of one Executive Director and two Non- Executive Directors, which complies with the QCA Code.

On the 24 May 2022, Kenneth Morgan was appointed to the board as a further Non-executive Director.

BOARD BALANCE

The current Board membership provides a balance of industry and financial expertise which is well suited to the Group’s activities. This will be monitored and adjusted to meet the Group’s requirements. The Board is supported by the Audit Committee, Remuneration Committee and Regulatory Compliance Committee, all of which have the necessary character, skills and knowledge to discharge their duties and responsibilities effectively.

Further information about each Director may be found on the Company’s website at https://thalassaholdingsltd.com/ investor-relations/board-directors/.The Board seeks to ensure that its membership has the skills and experience that it requires for its present and future business needs.

 

All Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures and applicable rules and regulations are observed. The Board has a procedure allowing Directors to seek independent professional advice in furtherance of their duties, at the Company’s expense.

RE-ELECTION OF DIRECTORS

In line with the QCA code, all Directors are subject to re- election each year, subject to satisfactory performance.

BOARD AND COMMITTEE MEETINGS

The Board meets sufficiently regularly to discharge its duties effectively with a formal schedule of matters specifically reserved for its decision.

The Board held three full meetings for regular business during 2022, in addition to a number of informal ones. These included meetings of the Audit Committee, the Remuneration Committee and the Regulatory Compliance Committee as required.

 

Director

Meetings attended

Duncan Soukup

3

Graham Cole

2

David Thomas

3

Kenneth Morgan

1

 

AUDIT COMMITTEE

During the financial period to 31 December 2022, the Audit Committee consisted of Graham Cole and any other one director.

The key functions of the audit committee are for monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on and for reviewing reports from the Company’s auditors relating to the Company’s accounting and internal controls, in all cases having due regard to the interests of Shareholders. The Committee has formal terms of reference.

Former auditor, Jeffreys Henry LLP unexpectedly resigned in December 2022. In the first quarter of 2023 therefore, the Group experienced a delay in the audit process. New auditor, RPG Crouch Chapman, was appointed on 19 April 2023.The Company has indicated its independence to the Board.

At present, the Group does not have an internal audit function. However, the committee believes that management has been able to gain assurance as to the adequacy and effectiveness

 

of internal controls and risk management procedures. There is no policy held on auditor rotation.

REMUNERATION COMMITTEE

During the financial period to 31 December 2022, the Remuneration Committee consisted of David Thomas and any other one director. It is responsible for determining the remuneration and other benefits, including bonuses and share based payments, of the Executive Directors, and for reviewing and making recommendations on the Company’s framework of executive remuneration.The Committee has formal terms of reference.

The remuneration committee is a committee of the Board. It is primarily responsible for making recommendations to the Board on the terms and conditions of service of the executive Directors, including their remuneration and grant of options.

REGULATORY COMPLIANCE COMMITTEE

During the financial period to 31 December 2022, the Regulatory Compliance Committee consisted of Graham Cole and any other one director.The committee is responsible for ensuring that the Company’s obligations under the Listing Rules are discharged by the Board.The Committee has formal terms of reference.

STATEMENT ON CORPORATE GOVERNANCE

The corporate governance framework which Thalassa has implemented, including in relation to board leadership and effectiveness, remuneration and internal control, is based upon practices which the board believes are proportionate to the risks inherent to the size and complexity of Thalassa’s operations.

The Board considers it appropriate to adopt the principles of the Quoted Companies Alliance Corporate Governance Code (“the QCA Code”) published in April 2018.The extent of compliance with the ten principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and any steps taken or intended to move towards full compliance, are set out below:

 

  1. Establish a strategy and business model which promote long-term value for shareholders.

The Company is a Holding Company which has in the past and will in the future seek to acquire assets which in the opinion of the Board should generate long term gains for its shareholders.The current strategy and business operations of the Company are set out in the Chairman’s Statement on


page 6. Shareholders and potential investors must realise that the objectives set out in that document are simply that; “objectives” and that the Company may without prior notification change these objectives based upon opportunities presented to the Board or market conditions.

The Group’s strategy and business model and amendments thereto, are developed by the Executive Chairman and his senior management team and approved by the Board. The management team, led by the Executive Chairman, is responsible for implementing the strategy and overseeing management of the business at an operational level.

The Board is actively considering a number of opportunities and, ultimately, the Directors believe that this approach will deliver long-term value for shareholders. In executing the Group’s strategy, management will seek to mitigate/hedge risk whenever possible.

As a result of the Board’s view of the market, the Board has adopted a five-pronged approach to future investments:

  1. Opportunistic: where an acquisition or investment exists because of price dislocation (the price of a stock collapses but fundamentals are unaffected) or where the Board identifies a special “off market” opportunity;
  2. Finance: The Board is currently investigating opportunities in the FinTech sector;
  3. Property: The Company held a strategic stake in Alina Holdings Plc (formerly The Local Shopping REIT plc). The Company’s divestment is more comprehensively described in the Letter to Shareholders dated 28 September 2020 published in the Reports and Documents section of the Company’s website;
  4. Education:There are few businesses that offer the same longevity and predictability of earnings as Education; and
  5. R&D: Development situations such as ARL where the Board sees an opportunity to participate in disruptive, early-stage technology.

The above outlined strategy is subject to change depending on the Board’s findings and prevailing market conditions.

 

  1. Seek to understand and meet shareholder needs and expectations.

The Board believes that the Annual Report and Accounts, and the Interim Report published at the half-year, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects. All reports and press releases are published in the Investor Relations section of the Company’s website.

 

CORPORATE GOVERNANCE STATEMENT CONTINUED

 

 

  1. Take into account wider stakeholder and social responsibilities and their implications for long-term success.

The Group is aware of its corporate social responsibilities and the need to maintain effective working relationships across a range of stakeholder groups. These include the Group’s consultants, employees, partners, suppliers, regulatory authorities and entities with whom it has contracted. The Group’s operations and working methodologies take account of the need to balance the needs of all of these stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Group for the benefit of its members as a whole. The Group endeavours to take account of feedback received from stakeholders, making amendments where appropriate and where such amendments are consistent with the Group’s longer-term strategy.

The Group takes due account of any impact that its activities may have on the environment and seeks to minimise this impact wherever possible. Through the various procedures and systems it operates, the Group ensures full compliance with health and safety and environmental legislation relevant to its activities. The Group’s corporate social responsibility approach continues to meet these expectations.

 

  1. Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are designed to manage and whenever possible minimise or eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.

A budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, compared with the budget, are reported to the Board on a regular basis.

The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.

The senior management team meet regularly to consider new risks and opportunities presented to the Group, making recommendations to the Board and/or Audit Committee as appropriate.


The Board has an established Audit Committee, a summary of which is set out in the Board of Directors section of the Company’s website.

The Company receives comments from its external auditors on the state of its internal controls.

The more significant risks to the Group’s operations and the management of these have been disclosed in the Chairman’s statement on page 6.

 

  1. Maintain the Board as a well-functioning, balanced team led by the Chair.

The Board currently comprises two non-executive Directors and an Executive Chairman. Directors’ biographies are set out in the Board of Directors section of the Company’s website.

All of the Directors are subject to election by shareholders at the first Annual General Meeting after their appointment to the Board and will continue to seek re-election every year.

The Board is responsible to the shareholders for the proper management of the Group and, in normal circumstances, meets at least four times a year to set the overall direction and strategy of the Group, to review operational and financial performance and to advise on management appointments.

A summary of Board and Committee meetings held in the year ended 31 December 2022 is set out above.

The Board considers itself to be sufficiently independent.The QCA Code suggests that a board should have at least two independent Non-executive Directors. Both of the Non- executive Directors who currently sit on the Board of the Company are regarded as independent under the QCA Code’s guidance for determining such independence.

Non-executive Directors receive their fees in the form of a basic cash fee based on attendance at board calls and board meetings. Directors are eligible for bonuses. The current remuneration structure for the Board’s Non-executive Directors is deemed to be proportionate.

 

  1. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities.

The Board considers that the Non-executive Directors are of sufficient competence and calibre to add strength and objectivity to its activities, and bring considerable experience in technical, operational and financial matters.

The Company has put in place an Audit Committee as well as Remuneration and Listing Compliance Committees. The

 

 

 

responsibilities of each of these committees are described in the Board of Directors section of the Company’s website.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the on-going development of the Group.

The Chairman, in conjunction with the Company Secretary, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors received updates from the Company Secretary and various external advisers on a number of regulatory and corporate governance matters.

Directors’ service contracts or appointment letters make provision for a Director to seek personal advice in furtherance of his or her duties and responsibilities, normally via the Company Secretary.

 

  1. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.

The Board’s performance is measured by the success of the Company’s acquisitions and investments and the returns that they generate for shareholders and in comparison to peer group companies. This performance is presented in the Group’s monthly management accounts and reported, discussed and reviewed with the Board regularly.

 

  1. Promote a corporate culture that is based on ethical values and behaviours.

The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group’s operations. These values are enshrined in the written policies and working practices adopted by all employees in the Group. An open culture is encouraged within the Group. The management team regularly monitors the Group’s cultural environment and seeks to address any concerns than may arise, escalating these to Board level as necessary.

The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area.

Thalassa has a strong ethical culture, which is promoted by the actions of the Board and management team. The Group has an anti-bribery policy and would report any instances of non-compliance to the Board. The Group has undertaken a review of its requirements under the General Data Protection


Regulation, implementing appropriate policies, procedures and training to ensure it is compliant.

 

  1. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

The Board has overall responsibility for promoting the success of the Group. The Chairman has day-to-day responsibility for the operational management of the Group’s activities. The non-executive Directors are responsible for bringing independent and objective judgment to Board decisions. Matters reserved for the Board include strategy, investment decisions, corporate acquisitions and disposals.

There is a clear separation of the roles of Executive Chairman and Non-executive Directors. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-executive Directors are properly briefed on matters. Due to its current size, the Group does not require nor bear the cost of a chief executive. The Company’s subsidiary ARL is led by two directors.

The Chairman has overall responsibility for corporate governance matters in the Group but does not chair any of the Committees. The Chairman also has the responsibility for implementing strategy and managing the day-to-day business activities of the Group. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

The Audit Committee normally meets at least once a year and has responsibility for, amongst other things, planning and reviewing the annual report and accounts and interim statements involving, where appropriate, the external auditors.The Committee also approves external auditors’ fees and ensures the auditors’ independence as well as focusing on compliance with legal requirements and accounting standards. It is also responsible for ensuring that an effective system of internal control is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim statements remains with the Board.

A summary of the work of the Audit Committee undertaken in the year ended 31 December 2022 is set out above. The Committee has formal terms of reference, which are set out in the Board of Directors section of the Company’s website.

The Remuneration Committee, which meets as required, but at least once a year, has responsibility for making recommendations to the Board on the compensation of

 

CORPORATE GOVERNANCE STATEMENT CONTINUED

 

senior executives and determining, within agreed terms of reference, the specific remuneration packages for each of the Directors. It also supervises the Company’s share incentive schemes and sets performance conditions for share options granted under the schemes.

A summary of the work of the Remuneration Committee undertaken in the year ended 31 December 2022 is set out above.The Committee has formal terms of reference.

The Directors believe that the above disclosures constitute sufficient disclosure to meet the QCA Code’s requirement for a Remuneration Committee Report. Consequently, a separate Remuneration Committee Report is not presented in the Group’s Annual Report.

The Listing Compliance Committee, which meets as required, is responsible for ensuring that the Company’s obligations under the Listing Rules are discharged by the Board. The Committee has formal terms of reference set out in the Board of Directors section of the Company’s website.

 

  1. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The Board believes that the Annual Report and Accounts, and the Interim Report published at the half-year, play an important part in presenting all shareholders with an assessment of the Group’s position and prospects. The Annual Report includes a Corporate Governance Statement which refers to the activities of both the Audit Committee and Remuneration Committee. All reports and press releases are published in the Investor Relations section of the Group’s website.

The Group’s financial reports and notices of General Meetings of the Company can be found in the Reports and Documents section of the Company’s website. The results of voting on all resolutions in future general meetings will be posted to this website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

 

 

C.Duncan Soukup

Chairman

4 July 2023

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS’ OF THALASSA HOLDINGS LTD

 

 

 

OPINION

We have audited the financial statements of Thalassa Holdings Ltd and its subsidiaries (the ‘Group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Income, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards as adopted in the United Kingdom (IFRS).

In our opinion, the financial statements:

  • give a true and fair view of the state of the Group’s affairs as at 31 December 2022 and of the Group’s loss for the year then ended;
  • have been properly prepared in accordance with IFRS.

 

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting included review of the expected cashflows for a period of 12 months from the report date compared with the liquid assets held by the Group.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

OUR APPROACH TO THE AUDIT

In planning our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to issue an opinion on the financial statements as a whole, taking into account the structure of the group and the parent company, the accounting processes and controls, and the industry in which they operate.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement we identified (whether or not due to fraud), including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.The matter identified was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS’ OF THALASSA HOLDINGS LTD CONTINUED

 

 

Carrying value of loans receivable

The Group held £5.5m (£5.7m) of loans at the balance sheet date.

Loans should initially be held at amortised costs, plus accrued interest, less any provisions for bad debt identified.

Our work included:

 

  • Obtaining and reviewing loan agreements to ensure year end balances have been accurately reflected;
  • Assessing each loan for recoverability;
  • Reviewing provisions provided for bad debts; and
  • Recalculating interest receivable in the year via a proof in total by reference to the underlying loan agreement

OUR APPLICATION OF MATERIALITY

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

We consider gross assets to be the most significant determinant of the Group’s financial performance used by the users of the financial statements. We have based materiality on 1.5% of gross assets for each of the operating components. Overall materiality for the Group was therefore set at £0.2m. For each component, the materiality set was lower than the overall group materiality.

We agreed with the Audit Committee that we would report on all differences in excess of 5% of materiality relating to the Group financial statements. We also report to the Audit Committee on financial statement disclosure matters identified when assessing the overall consistency and presentation of the consolidated financial statements.

 

 

 

 

 

OTHER INFORMATION

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the directors’ responsibilities statement set out on page 15 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material


if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

  • We obtained an understanding of the legal and regulatory frameworks within which the Group operates focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements.
  • We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.

OTHER MATTERS THAT WE ARE REQUIRED TO ADDRESS

We were appointed on 19 April 2023, and this is the first year of our engagement as auditors for the Group.

We confirm that we are independent of the Group and have not provided any prohibited non-audit services, as defined by the Ethical Standard issued by the Financial Reporting Council.

Our audit report is consistent with our additional report to the Audit Committee explaining the results of our audit.

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS’ OF THALASSA HOLDINGS LTD CONTINUED

 

USE OF OUR REPORT

This report is made solely to the Group’s members, as a body. Our audit work has been undertaken so that we might state to the Group’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

 

(Senior Statutory Auditor)

For and on behalf of RPG Crouch Chapman LLP

Chartered Accountants Registered Auditors

5th Floor, 14-16 Dowgate Hill London

EC4R 2SU

4 July 2023

 

CONSOLIDATED STATEMENT OF INCOME

for the year ended 31 December 2022

 

 

 

 

Note

2022

GBP

2021

GBP

Continuing Operations

Revenue 3

 

295,968

 

138,656

Cost of sales

(95,925)

(55,125)

Gross profit / (loss)

200,043

83,531

Total administrative expenses

(531,024)

(1,406,048)

Operating loss before depreciation

(330,981)

(1,322,517)

Depreciation and Amortisation 9&10

(305,848)

(101,462)

Operating loss

(636,829)

(1,423,979)

Net financial income/(expense) 5

249,535

(355,204)

Other gains/(losses)

(881,118)

(22,380)

Share of losses of associated entities

(235,658)

(9,156)

Profit/(loss) before taxation

(1,504,070)

(1,810,719)

Taxation 7

54,167

132,240

Profit/(loss) for the year from continuing operations

(1,449,903)

(1,678,479)

Discontinued Operations

 

 

Profit/(loss) for the year from discontinued operations 6

-

(305,509)

Gain on disposal of subsidiary 6

-

2,440,728

Profit/(loss) for the year

(1,449,903)

456,740

Attributable to:

Equity shareholders of the parent

 

(1,449,903)

 

456,740

Non-controlling interest

-

-

 

456,740

681,892

Earnings per share - GBP (using weighted average number of shares)

Basic and Diluted - Continuing Operations

 

(0.18)

 

0.10

Basic and Diluted - Discontinued Operations

0.00

(0.04)

Basic and Diluted 8

(0.18)

0.06

 

The notes on pages 30 to 49 form an integral part of this consolidated financial information

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

for the year ended 31 December 2022

 

 

 

 

2022

 

2021

 

GBP

GBP

Profit/(loss) for the financial year

(1,449,903)

456,740

Other comprehensive income:

Exchange differences on re-translating foreign operations

 

594,684

 

134,698

Total comprehensive income

(855,219)

591,438

 

Attributable to:

Equity shareholders of the parent

 

 

(855,219)

 

 

591,438

Non-Controlling interest

-

-

Total Comprehensive income

(855,219)

591,438

 

The notes on pages 30 to 49 form an integral part of this consolidated financial information.

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2022

 

 

 

 

 

Note

2022

GBP

2021

GBP

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

9

1,319,695

907,531

Property, plant and equipment

10

2,030,733

1,661,081

Loans

12

5,571,412

5,705,273

Investments in associated entities

13

2,356,526

2,325,457

Total non-current assets

 

11,278,366

10,599,342

 

Current assets

 

 

 

Trade and other receivables

14

765,302

809,607

Available for sale financial assets

11

504,877

1,187,346

Cash and cash equivalents

 

629,215

5,398,208

Total current assets

 

1,899,394

7,395,161

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

15

1,210,810

1,113,289

Borrowings

16

158,473

4,475,560

Total current liabilities

 

1,369,283

5,588,849

 

 

 

 

Net current assets

 

530,111

1,806,312

 

Non-current liabilities

 

 

 

Long term debt

16

1,510,377

1,252,335

Total non-current liabilities

 

1,510,377

1,252,335

Net assets

 

10,298,100

11,153,319

 

Shareholders’ Equity

 

 

 

Share capital

19

128,977

128,977

Share premium

 

21,717,786

21,717,786

Treasury shares

19

(8,558,935)

(8,558,935)

Other reserves

 

(1,696,320)

(1,696,320)

Foreign exchange reserve

 

4,430,855

3,836,171

Retained earnings

 

(5,724,263)

(4,274,360)

Total shareholders’ equity

 

10,298,100

11,153,319

Total equity

 

10,298,100

11,153,319

 

The notes on pages 30 to 49 form an integral part of this consolidated financial information.

 

 

These financial statements were approved and authorised by the board on 4 July 2023.

 

 

Signed on behalf of the board by:

 

 

 

C. Duncan Soukup

 

 

Chairman

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

 

 

 

 

 

 

Notes

2022

GBP

2021

GBP

Operating profit/(loss) from:

Continuing operations

 

 

(636,829)

 

(1,435,978)

Discontinued operations

 

-

(285,509)

Operating profit/(loss) including discontinued operations

 

(636,829)

(1,721,487)

Adjustments for:

Impairment losses on goodwill

 

 

-

 

149,992

(Increase)/decrease in trade and other receivables

 

44,305

(311,077)

(Decrease)/increase in trade and other payables

 

97,521

347,870

Gain/(loss) on disposal of AFS investments

 

471,589

117,541

Net exchange differences

 

(19,253)

(93,995)

Other income

 

25,486

-

Depreciation and amortisation

9&10

306,497

210,401

Share of losses of associate/gain on disposal

 

(234,828)

(9,156)

Fair value movement on AFS financial assets

 

64,817

(704,554)

Cash generated by operations

 

119,306

(2,014,465)

Taxation

 

54,167

132,240

Net cash flow from operating activities

 

173,473

(1,882,225)

 

Sale/(purchase) of property, plant and equipment

 

 

(517,376)

 

(1,564,752)

Sale/(purchase) of intangible assets

 

(418,408)

(212,433)

Net (purchase)/sale of AFS financial assets

 

(245,899)

97,010

Investments in associated entities

 

(31,071)

(815,428)

Net cash flow in investing activities

 

(1,212,754)

(2,495,603)

 

Cash flows from financing activities

Proceeds from borrowings

 

 

 

33,133

 

 

354,229

Repayment of borrowings

 

(4,357,529)

2,167,225

Net cash flow from financing activities

 

(4,324,396)

2,521,454

 

Net increase in cash and cash equivalents

 

 

(5,363,677)

 

(1,856,374)

Cash and cash equivalents at the start of the year

 

5,398,208

7,116,110

Effects of exchange rate changes on cash and cash equivalents

 

594,684

138,472

Cash and cash equivalents at the end of the year

 

629,215

5,398,208

 

The notes on pages 30 to 49 form an integral part of this consolidated financial information.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

 

 

 

Attributable to owners of the Company

Foreign Non- Total

Share  Share Treasury Other Exchange  Retained  controlling Shareholders Capital              Premium                            Shares Reserves                            Reserve              Earnings              Total                            Interest              Equity

GBP GBP GBP GBP GBP GBP GBP GBP GBP

Balance as at

31 December 2020

 

128,977

 

21,717,786

 

(8,558,935)

 

78,716

 

3,697,697

 

(5,428,679)

 

11,635,562

 

(122,298)

 

11,513,264

Disposal of subsidiary with NCI

- - - (1,775,036)

-

697,579

(1,077,457)

122,298

(955,159)

Exchange on conversion to GBP

- - - -

3,776

-

3,776

-

3,776

Total comprehensive income

- - - -

134,698

456,740

591,438

-

591,438

Balance as at