TIDMHWC
RNS Number : 9011C
Highway Capital PLC
01 July 2016
Highway Capital Plc
Results for the year ended 29 February 2016
Chairman's statement
It is with satisfaction and a great sense of responsibility that
I address the shareholders and stakeholders of Highway Capital.
It comes at a time when Highway Capital has been undergoing
important changes.
The changes first of all relate to the Company's strategic
intentions, which have been reformulated.
Highway Capital continues to seriously consider all business
opportunities that might materialize, in particular from the use of
the Company's cash shell identity. In this sense, we remain a
globally oriented business undertaking, listed in one of the
world's first class financial centres. Yet, at the same time, an
enrichment of the business strategy has been introduced, which
consists of being much more focused on opportunities located in
Central Europe. It is our belief that "Central Europe" should, when
speaking about shareholders' value, include some of the investment
territories that used to be called, from a somewhat geopolitical
perspective, "Eastern Europe" or "Central and Eastern Europe". We
see Poland and a few other countries of the eastern European
markets, as a non-peripheric area, emulating developed economies,
such as Germany or Austria. The process of emulation can be seen in
the quality of corporate governance, modernized approach in
building up businesses, drive towards innovation and general
openness of the markets. This process usually offers to investors
higher rates of return than those in mature economies, tied up with
the better-than-European-average GDP growth in some countries of
the New Europe. Therefore, we see notable affinities uniting, in
the middle of Europe, established and advanced economies Germany
and Austria, with their prospective peers. We claim to be one of
those entities that will promote this process and the Highway
Capital shareholders' value will find one of the substantial
pillars there, supporting its growth.
Secondly, and consistently with its strategic intentions and
goals, Highway Capital has recently been equipped with a new team
of professionals, bringing into the Company real expertise,
experience and skills that underpin the orientation towards Central
Europe. I am referring here especially to Jacek lota a and Dariusz
Zych, whose individual accomplishments in the vast investment area
of Central Europe, and even beyond the boundaries of this region,
are already being utilized for the benefit of Highway Capital's
development. I am also using this opportunity to express thanks to
Dominic Wheatley, who stepped down from the Board of Directors, for
his excellent contribution to the functioning of the Company as a
listed organisation.
Thirdly, the period under review was marked by significant
financial operations, which signal that the redefinition of the
business orientation and the personal changes that are aligned with
it, are also confirmed by real deeds and deals. In that matter, it
is worth emphasizing the loan granted to Mylux, a Cyprus-based
Company (reported previously to the market), which is intended to
be translated into value creation for Highway Capital and of which
the Company will report in due course. We are also continuing
efforts to secure the financial resources of the Company, by
increasing the value of the program of convertible notes from GBP3
million to GBP5 million.
We expect the current financial year to be very active for the
Company and that the strategy reflecting the current and future
trends, the unique team of professionals spanning different
domains, and the increased financing, will generate new advantages
for our shareholders.
Ludwik Sobolewski
Chairman
30 June 2016
Strategic report
Highway Capital plc's core focus is to invest in or acquire
undervalued companies with either strong asset backing or
opportunities which possess high barriers to entry.
Since the balance sheet date, the company has received loan
funding of GBP284,000 to enable it to pursue its investment
strategy and for working capital purposes.
The company is currently exploring many opportunities in Poland.
The loans issued to Cypriot SPV Mylux gives us access to one of the
most promising of these. Furthermore, the loans issued give us
flexibility in terms of our future participation in that
company.
The principal risks and uncertainties that the company faces are
in identifying and acquiring suitable investments. The income of
the company fluctuates with movements in interest rates and
exchange rates.
The company currently has four male non-executive directors and
no other employees.
Ludwik Sobolewski
Chairman
30 June 2016
Directors' report
Your directors have pleasure in submitting their report and the
audited accounts for the year ended 29 February 2016, and consider
it to be fair, balanced and understandable.
Principal activity
Highway Capital plc's core focus is to invest in or acquire
undervalued companies with either strong asset backing or
opportunities which possess high barriers to entry.
Business review and management report
The loss on ordinary activities for the year before taxation was
GBP131,793 (2015: loss GBP124,290). After taxation and dividends,
the deficit of GBP131,793 (2015: deficit GBP124,290) has been
transferred to reserves.
The company continues to keep expenditure to a minimum in order
to preserve its cash resources. The company had cash at bank and in
hand of GBP685 at 29 February 2016.
The principal risks and uncertainties that the company faces are
in identifying and acquiring suitable investments. The income of
the company fluctuates with movements in interest rates.
Events that have occurred since the end of the financial year
are detailed in note 16 to the accounts. Details of future
developments can be found in the Chairman's statement.
Dividends
The directors do not recommend the payment of a final dividend
for the year.
Directors
The following directors served during the year to 29 February
2016:
L. Sobolewski (Chairman) - appointed 22 January 2016
D. M. D. A. Wheatley - resigned 20 April 2016
M. Szytko
D. Zych - appointed 11 December 2015
J. Slotala - appointed 11 December 2015
Details of directors' remuneration, service contracts and
interests in the ordinary shares of the company are included in the
directors' remuneration report below.
Mr Szytko retires by rotation, and Mr Sobolewski, Mr Zych and Mr
Slotala, retire as it is the first AGM since their appointment.
They all offer themselves for re-election at the AGM, and do not
have a service contract with the company. Following formal
performance evaluation, the board believes that the non-executive
directors have performed effectively and that they should be
re-elected.
Biographies of directors
Ludwik Sobolewski, 50, was appointed a non-executive director
and Chairman on 22 January 2016. Mr Sobolewski currently serves as
CEO of the Bucharest Stock Exchange, where he has been charged with
a mission to implement a deep reform of the infrastructure of the
Romanian capital market, in cooperation with the Government, the
National Bank of Romania, the Romanian Financial Services Authority
and market participants. Prior to joining the Bucharest Stock
Exchange, Mr Sobolewski served as the CEO and President of the
Management Board of the Warsaw Stock Exchange. Mr Sobolewski's
background also includes serving as President of the Association of
Polish Lawyers and Executive Vice-President of the National
Depository for Securities. Mr Sobolewski is currently on the
supervisory boards of ZE PAK, a company listed on the Warsaw Stock
Exchange, the Financial Revision Commission of the Sztuka Media
Film Foundation and he is a member of the Council of the Teraz
Polska (Poland Now) Foundation, promoting small and medium
entrepreneurship.
Maciej Szytko, 33, was appointed as a non-executive director on
19 September 2011. He is a Commercial Studies graduate from the
University of Westminster. Over the past 10 years, he has held a
number of managerial positions in the hospitality industry. He is
currently a self-employed adviser and active investor in public and
private companies with a focus on the Commonwealth of Independent
States (CIS) and the Warsaw Stock Exchange (WSE), where his first
financial successes occurred.
Darius Zych, 45, was appointed as a non-executive director on 11
December 2015, and has over 20 years experience in Capital Markets,
most recently with SCG S.A. working as Investment Director and Vice
Chairman. Mr Zych has extensive experience in the financial markets
gained through participation across a broad range of projects and
capital transactions, including running Private Equity/Venture
Capital projects as well as Equity and Debt Raising for both IPO
and SPO transactions.Throughout his career he served on a number of
Boards. Currently, he is a board member of Pragma Inkaso S.A.
Apanet S.A. CHP Energia Sp z o.o. Cezar 10 Sp z o.o.
Jacek Slotala, 62, was appointed as a non-executive director on
11 December 2015, and has over 30 years experience in the CEE
region. He currently serves as an Investment Director in CEE Equity
Partners. Mr lota a established and managed J.
Walter-Thompson-Parintex Poland, a joint venture with WPP, for
nearly 20 years. He also led the restructuring of the first
privatised sugar refinery in Poland, returning it to profitability
and completing its sale to Tate & Lyle. In addition, he has
been a strategic advisor to the Chairman of Daewoo Group on their
business development outside Asia and he consolidated the 114
cooperatives of TU Samopomoc into Samopomoc ycie, making it, within
four years, the fifth largest insurance group in Poland. Mr Slotala
spent nine years on the Supervisory Board of Bank Zachodni WBK, and
also sat on a number of other supervisory boards, including USAID
and the EBRD.
Substantial shareholdings
At 29 February 2016 the company had been notified, in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority, of the following notifiable interests in the
ordinary share capital of the company:
Number of Ordinary Shares Percentage
Holding
R. B. Rowan 2,375,745 27.18%
M. Szytko 2,622,060 29.99%
D. Wheatley 435,644 4.98%
P. Fellerman 1,100,000 12.59%
Sanchoria Investments Limited 271,090 3.1%
The only subsequent notified changes up to 28 June 2016, were
decreases in the shareholding of P. Fellerman down to 560,000
(6.4%).
Fixed assets
There have been no movements in fixed assets during the
year.
Payment of suppliers
It is the company's policy to pay suppliers in accordance with
the terms agreed for each transaction.
Audit information
The directors are satisfied that the auditors are aware of all
information relevant to the audit of the company's accounts for the
year to 29 February 2016 and that they have taken all steps that
they ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that the
company's auditors are aware of that information.
Auditors
A resolution proposing that Shipleys LLP they be re-appointed as
auditors of the company will be put to the annual general
meeting.
Share capital and voting rights
Throughout the year, the issued share capital has been
GBP174,804 divided into 8,740,201 ordinary shares of 2p each. Each
ordinary share has full voting rights. The restriction on the
authorised share capital to GBP1,000,000 divided into 50,000,000
ordinary shares of 2p each, was removed by special resolution on 9
December 2015. It is intended that resolutions to authorise the
directors to allot shares up to an aggregate nominal amount of
GBP1,043,701 and to dis-apply the pre-emption rights on allotments
of shares up to that aggregate nominal amount will be proposed at
the AGM.
Going concern
The company was until recently a "cash shell", and, apart from a
small amount of interest receivable, currently has no income
stream. Until the business investments start to generate income,
the company is dependent on its cash reserves to fund ongoing
costs. Since the balance sheet date, the company has received loan
funding of GBP284,000 to enable it to pursue its investment
strategy and for working capital purposes.
After reviewing the company's budget for 2016/2017 and its
medium term plans, the directors have a reasonable expectation
that, following the loans made to the company since the balance
sheet date, and the opportunities for additional funding as needed,
the company will have adequate resources to continue in operational
existence for the foreseeable future. For this reason, the
directors continue to adopt the going concern basis in preparing
the accounts.
Carbon emissions
The company is currently a non-trading "cash-shell" with no head
office and no employees other than its directors, and therefore has
minimal carbon emissions.
Financial risk management
The company's financial risk management objective is to
minimise, as far as possible, the company's exposure to such risk
as detailed in note 20 to the accounts.
By order of the board
Maciej Szytko Secretary
30 June 2016
Directors' remuneration report
Introduction
The information included in this report is not subject to audit
other than where specifically indicated.
Remuneration committee
The remuneration committee consists of the non-executive
directors, Ludwik Sobolewski and Maciej Szytko. This committee's
primary function is to review the performance of executive
directors and senior employees and set their remuneration and other
terms of employment. Since the disposal of its trading subsidiary
on 24 January 2001, the company has only had one executive director
and no senior employees. The committee is also responsible for
administering any share option scheme or bonus schemes.
The remuneration committee determines the company's policy for
the remuneration of directors, having regard to the UK Corporate
Governance Code and its provisions on directors' remuneration.
The remuneration policy
It is the aim of the committee to remunerate directors
competitively and to reward performance. Details of the
remuneration packages of individual directors are set out below.
There are currently no long term incentive plans, performance
bonuses or pension schemes in place. The only share options in
issue are to a former director, Dominic Wheatley. The views of the
shareholders have been considered in the formulation of the
remuneration policy, including through meeting at the AGM. At the
last AGM on 9 December 2015 a resolution was passed to approve the
directors' remuneration report and the percentage of votes cast for
was 99%. It is the intention to implement a similar directors'
remuneration policy in 2017 to that in 2016.
Service agreements and terms of appointment
None of the directors has a service contract with the
company.
Directors' interests
The directors' interests in the share capital of the company are
shown below. All interests are beneficial.
Number of ordinary
shares
------------------- ----------------------
29.2.2016 28.2.2015
------------------- ---------- ----------
M. D. A. Wheatley 435,644 435,644
------------------- ---------- ----------
M. Szytko 2,622,060 2,622060
------------------- ---------- ----------
There have been no notified changes in the interests of the
directors since the year end.
Mr Wheatley resigned on 20 April 2016.
Directors' emoluments (audited)
Directors' emoluments including amounts payable to third parties
in respect of directors' services are comprised as follows:
Non-executive Fees Basic Salary Compensation Taxable 2016 Total 2015 Total
directors: payment Benefits
L. Sobolewski 3,968 - - - 3,968 -
M. D. A.
Wheatley 20,000 - - - 20,000 20,000
M. Szytko 24,000 - - - 24,000 24,000
D. Zych - - - - - -
J Slotala - - - - - -
---------- ------------------------ ------------- ---------- ----------- -----------
GBP47,968 GBP47,968 GBP44,000
No pension contributions were made by the company on behalf of
its directors.
No director currently has share options, and no share options
were granted to or exercised by the directors during the period
under review. In connection with his resignation on 20 April 2016,
Mr Wheatley has been granted 150,000 options to subscribe for new
ordinary shares in Highway Capital plc at a price of 20 pence per
share at any time until 20 April 2021.
Approval by shareholders
At the next annual general meeting of the company a resolution
approving this report is to be proposed as an ordinary
resolution.
This report was approved by the board on 30 June 2016 and signed
on its behalf by:
Ludwik Sobolewski
Remuneration Committee Chairman
Corporate governance
The policy of the board is to manage the affairs of the company
with reference to the UK Corporate Governance Code, which is
publicly available from the Financial Reporting Council. In July
2013 the company changed from a Premium to a Standard listing.
Application of principles of good governance
Board of directors
The board currently comprises the four non-executive directors:
Ludwik Sobolewski, Maciej Szytko, Dariusz Zych and Jacek Slotala.
The articles of association require a third, but not greater than a
third, of the directors to retire by rotation each year. On 22
January 2016, Mr Sobolewski was appointed non-executive Chairman,
taking over from Dominic Wheatley. Since the disposal of the
company's trading subsidiary on 24 January 2001 the company has not
had a Chief Executive. The board intends to appoint a Chief
Executive when a new business is acquired.
There are regular board meetings each year and other meetings
are held as required to direct the overall company strategy and
operations. Board meetings follow a formal agenda covering matters
specifically reserved for decision by the board. These cover key
areas of the company's affairs including overall strategy,
acquisition policy, approval of budgets, major capital expenditure
and significant transactions and financing issues.
The board has delegated certain responsibilities, within defined
terms of reference, to the audit committee and the remuneration
committee as described below. The appointment of new directors is
made by the board as a whole.
During the year ended 29 February 2016, there were 12 board
meetings, 1 audit committee meeting and 1 remuneration committee
meeting. All meetings were fully attended.
The board undertakes a formal annual evaluation of its own
performance and that of its committees and individual directors,
through discussions and one-to-one reviews with the Chairman and
the senior independent director. The terms and conditions of
appointment of the non-excutive directors are available for
inspection at Eden House, Reynolds Road, Beaconsfield HP9 2FL.
Audit committee
The audit committee is currently headed by Ludwik Sobolewski,
the Chairman, and also comprises Maciej Szytko. The committee's
terms of reference are in accordance with the UK Corporate
Governance Code.
The committee reviews the company's financial and accounting
policies, interim and final results and annual report prior to
their submission to the board, together with management reports on
accounting matters and internal control and risk management
systems. It reviews the auditors' management letter and considers
any financial or other matters raised by both the auditors and
employees.
The committee considers the independence of the external
auditors and ensures that their objectivity and independence are
not impaired. During the year no non-audit services were provided
by the external auditors.
The committee has primary responsibility for making
recommendations to the board in respect of the appointment,
reappointment and removal of the external auditors.
Remuneration committee
The remuneration committee is currently headed by Ludwik
Sobolewski, the Chairman, and also comprises Maciej Szytko.
The committee's primary function is to review the performance of
directors and senior employees and to set their remuneration and
other terms of employment. It is also responsible for administering
any share option and bonus schemes.
Relations with shareholders
The company encourages two-way communication with both its
institutional and private investors and responds promptly to all
queries received. An understanding of the views of the major
shareholders of the company has been developed, including through
meeting at the AGM.
Internal controls
The directors are responsible for internal control in the
company and for reviewing its effectiveness. Procedures have been
designed for safeguarding assets against unauthorised use or
disposition; for maintaining proper accounting records; and for the
reliability of financial information used within the business or
for publication. Such procedures are designed to manage rather than
eliminate the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against
material error, losses or fraud. In addition, there is an ongoing
process in place for identifying, evaluating and managing the
significant risks faced by the company.
The key procedures that the directors have established are
designed to provide effective internal control within the company
and are regularly reviewed by the board. This is in accordance with
The Turnbull Guidance provided by the Institute of Chartered
Accountants in England and Wales. Such procedures have been in
place throughout the period under review and up to the date of
approval of the annual report and accounts.
Due to the size of the company, all key decisions are made by
the board and the assessment and management of risk is an integral
part of the board's decision-making process.
The company's organisational structure has clear lines of
responsibility and the board continues to review systems to monitor
and investigate the major business risks facing the company.
The board has established control procedures for all key
financial areas of the business, which enable the board to maintain
full and effective control. These controls include defined
procedures for seeking and obtaining approval for major
transactions and controls relating to the security of assets. The
company operates a comprehensive budgeting and financial reporting
system.
The directors have reviewed the effectiveness of the company's
systems of internal control as they operated during the period
under review and consider that there have been no material losses,
contingencies or uncertainties caused by weaknesses in internal
controls. The directors do not consider that an internal audit
function is presently necessary as the company is a "cash
shell".
Going concern
The company was until recently a "cash shell", and, apart from a
small amount of interest receivable, currently has no income
stream. Until the business investments start to generate income,
the company is dependent on its cash reserves to fund ongoing
costs. Since the balance sheet date, the company has received loan
funding of GBP284,000 to enable it to pursue its investment
strategy and for working capital purposes.
After reviewing the company's budget for 2016/2017 and its
medium term plans, the directors have a reasonable expectation
that, following the loans made to the company since the balance
sheet date, and the opportunities for additional funding as needed,
the company will have adequate resources to continue in operational
existence for the foreseeable future. For this reason, the
directors continue to adopt the going concern basis in preparing
the accounts.
Statement of compliance
In the opinion of the directors, the company has complied
throughout the year ended 29 February 2016 with all provisions
relevant to a company of its size set out in the UK Corporate
Governance Code, except for the items outlined below.
Code provision A.2.1 - Since the disposal of the company's
trading subsidiary on 24 January 2001 the company has not had a
Chief Executive. The board intends to appoint a Chief Executive
when a new business is acquired.
Code provision A.3.1 - The former Chairman, Dominic Wheatley,
who stood down on 22 January 2016, held 4.98% of the ordinary share
capital of the company, and therefore did not satisfy the Code's
independence criteria. However, major shareholders were consulted
prior to his appointment.
Code provision B.1.2 - Prior to the appointment of Dariusz Zych
and Jacek Slotala as non-executive directors on 11 December 2015,
the company did not have at least two independent non-executive
directors on the board, as Dominic Wheatley and Maciej Szytko were
both significant shareholders in the company.
Code provision B.2.1 - A nomination committee has not been set
up, as the directors consider that it is not appropriate while the
company is a "cash shell" without any employees. The board intends
to set up a nomination committee when a new business is
acquired.
Code provision C.3.1 - Since the appointment of Ludwik
Sobolewski as non-executive Chairman on 22 January 2016, the
company has had one rather than at least two independent
non-executive directors on the audit committee. Prior to that date,
the company did not have an independent non-executive director on
the audit committee.
Directors' responsibility statement
The directors are responsible for preparing the strategic report
and the directors' report and the accounts in accordance with
applicable law and regulations.
Company law requires the directors to prepare accounts for each
financial year which give a true and fair view of the state of
affairs of the company and of the profit or loss for that period.
In preparing those accounts, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK accounting standards, including
FRS 102 have been followed, subject to any material departures
disclosed and explained in the accounts;
-- notify its shareholders in writing about the use of
disclosure exemptions, if any, of FRS 102 used in the preparation
of accounts; and
-- prepare the accounts on the going concern basis unless it is
inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the accounts comply with the Companies Act 2006. They are also
responsible for the system of internal control, and for taking such
steps as are reasonably open to them to safeguard the assets of the
company and to prevent and detect fraud and other irregularities.
The directors are also responsible for ensuring that all
information relevant to the audit has been made available to the
auditors.
Under applicable law and regulations, the directors are also
responsible for preparing a strategic report, a directors' report,
directors' remuneration report and corporate governance statement
that comply with that law and those regulations.
The directors confirm that, to the best of their knowledge and
belief:
- the accounts in this document, prepared in accordance with
applicable UK law and accounting standards, give a true and fair
view of the assets, liabilities, financial position and loss of the
company; and
- the business review and management report in the directors'
report includes a fair review of the development and performance of
the business and the position of the company, together with a
description of the principal risks and uncertainties that it
faces.
By order of the board
Maciej Szytko
Secretary
30 June 2016
Independent Auditors' Report to the members of Highway Capital
plc
Opinion on Financial Statements of Highway Capital Plc
In our opinion:
-- The Financial Statements give a true and fair view of the
state of the Company's affairs at 29 February 2016 and of the
Company's loss for the year then ended;
-- The Financial Statements have been properly prepared in
accordance with UK Generally Accepted Accounting Practice (GAAP);
and
-- The Financial Statements have been prepared in accordance
with the requirements of the Companies Act 2006.
The Financial Statements comprise the Profit and Loss Account,
the Reconciliation of Equity Shareholders' Funds, the Balance
Sheet, the Cash Flow Statement and the related notes. The financial
reporting framework that has been applied in the preparation of the
Financial Statements is applicable law and United Kingdom
Accounting Standards (Generally Accepted Accounting Practice).
Going Concern
As required by the Listing Rules we have reviewed the Director's
statement above that the Company is a going concern. We confirm
that:
-- We have concluded that the Directors' use of the going
concern basis of accounting in the preparation of the Financial
Statements is appropriate; and
-- We have not identified any material uncertainties that may
cast significant doubt on the Company's ability to continue as a
going concern.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Company's
ability to continue as a going concern.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are
those that had the greatest effect on our audit strategy, the
allocation of resources in the audit and directing the efforts of
the engagement team.
Risk How the scope of our audit responded
to the risk
-------------------------------------- ---------------------------------------------
Management override of controls
Journals can be posted that We examined journals posted around
significantly alter the Financial the year end, specifically focusing
Statements of the entity. on areas which are more easily manipulated
such as accruals, prepayments and
the bank reconciliation.
-------------------------------------- ---------------------------------------------
Going Concern
There is a risk that the entity We made enquiries with the Directors
may not be a going concern regarding how the Company will continue
due to net liabilities and to fund expenditure over the coming
lack of revenue. year. Attention was focused on the
additional loans provided by shareholders
and third parties post year end.
-------------------------------------- ---------------------------------------------
Bank letter
The bank letter was not received We examined bank statements and
at the date of the audit, other supporting records to ensure
giving rise to the potential that balances agreed, and to look
for undisclosed liabilities. for evidence of any undisclosed
financial liabilities.
-------------------------------------- ---------------------------------------------
Company status and listing
rules We held discussions with management
Risk of non-compliance with together with
listed company status. review of correspondence with the
bank and LSE
documentation indicated no signs
of non-compliance.
-------------------------------------- ---------------------------------------------
Convertible loans
Risk that convertible loans The assumptions used around company
had not been calculated correctly. cost of capital for the purposes
of the calculation were reviewed
with comparisons to similar loans
with third parties. The calculations
were reviewed.
-------------------------------------- ---------------------------------------------
Accounting Estimates
Potential risk of inappropriate Accruals were agreed to expected
accounting estimates around costs and supporting documentation,
accruals giving rise to misstatement and other areas were examined to
in the accounts. identify any potential accounting
estimates.
-------------------------------------- ---------------------------------------------
Our audit procedures relating to these matters were designed in
the context of our audit of the Financial Statements as a whole,
and not to express an opinion on individual accounts or
disclosures. Our opinion on the Financial Statements is not
modified with respect to any of the risks described above, and we
do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the
Financial Statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning and in the scope of
our audit work and in evaluating the results of our work.
We determined materiality for the Company to be GBP4,367, which
is less than 4% of results before tax and less than 2% of net
liabilities. We agreed with the Audit Committee that we would
report to them all audit differences in excess of 10% of
materiality, as well as differences below that which would, in our
view, warrant reporting on a qualitative basis. We also report to
the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the Financial Statements.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- The part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006; and
-- The information given in the Strategic Report and the
Directors' Report for the financial year for which the statements
are prepared is consistent with the Financial Statements.
Matters which we are required to report on by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- We have not received all the information and explanations we require for our audit; or
-- Adequate accounting records have not been kept by the
Company, 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 or returns.
We have nothing to report in respect of the above matters.
Directors' Remuneration
Under the Companies Act 2006 we are also required to report in
our opinion certain disclosures of Directors' remuneration have not
been made or the part of the Directors' Remuneration report to be
audited is not in agreement with the accounting records and
returns. We have nothing to report arising from these matters
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we
are required to report to you if, in our opinion, information in
the Annual Report is materially inconsistent with the information
in the audited Financial Statements; or apparently materially
incorrect based on, or materially inconsistent with, our knowledge
of the Company acquired in the course of performing our audit.
In particular we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the Director's statement that they consider
the Annual Report is fair, balanced and understandable and whether
the Annual Report appropriately discloses those matters that were
communicated to the Audit Committee which we consider should have
been disclosed. We confirm that we have not identified any such
inconsistencies or misleading statements.
Other matters
Corporate Governance Statement
We reviewed the part of the Corporate Governance Statement
relating to the Company's compliance with the UK Corporate
Governance Code. We have nothing to report arising from our
review.
Respective Responsibilities of Directors and the 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.
We also comply with International Standard on Quality Control 1
(UK and Ireland). Our audit methodology and tools aim to ensure
that our quality control procedures are effective, understood and
applied. Our quality controls and systems include our independent
partner review processes.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and/or those further matters we have expressly
agreed to report to them on in our engagement letter and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company
and the Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Scope of the audit
An audit involves obtaining evidence about the amounts and
disclosures in the Financial Statements sufficient to give
reasonable assurance that the Financial Statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Directors; and the
overall presentation of the Financial Statements. In addition we
read all the financial and non-financial information in the Annual
Report to identify material inconsistencies with the audited
Financial Statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatement or inconsistencies we consider the implications for
our report.
Shane Moloney (Senior Statutory Auditor) 30 June 2016
For and on behalf of Shipleys LLP 10 Orange Street,
Haymarket
Chartered Accountants and Statutory Auditor London WC2H7DQ
Statement of comprehensive income
Year ended 29 February 2016
Notes 2016 2015
-------------------------------------------- ----- ---------- ----------
Management fees - -
Other income - -
Administrative expenses (131,802) (124,304)
-------------------------------------------- ----- ---------- ----------
Operating loss Interest receivable 2 (131,802) (124,304)
9 14
-------------------------------------------- ----- ---------- ----------
Loss on ordinary activities before taxation (131,793) (124,290)
Tax credit on loss on ordinary activities 5 - -
-------------------------------------------- ----- ---------- ----------
Loss for the financial period and total
comprehensive income (131,793) (124,290)
-------------------------------------------- ----- ---------- ----------
Basic and diluted loss per share 7 (1.51)p (1.42)p
-------------------------------------------- ----- ---------- ----------
Basic and diluted loss per share from
continuing operations 7 (1.51)p (1.42)p
Continuing operations
There are no acquired or discontinued operations in the above
two financial periods.
Statement of comprehensive income
The company has no items of other comprehensive income other
than the profit or loss for the above two financial periods.
Statement of financial position
at 29 February 2016
Notes 2016 2015
------------------------------------------- ----- ------------ ------------
Fixed assets
Investments 8 - -
------------------------------------------- ----- ------------ ------------
- -
Current assets
Debtors 10 3,798 5,855
Cash at bank and in hand 685 12,251
------------------------------------------- ----- ------------ ------------
4,483 18,106
Creditors: amounts falling due within
one year 11 (124,163) (125,993)
------------------------------------------- ----- ------------ ------------
Net current assets/(liabilities) (119,680) (107,887)
------------------------------------------- ----- ------------ ------------
Total assets less current liabilities (119,680) (107,887)
Creditors: amounts due after more
than one year 12 (150,000) (30,000)
Net assets/(liabilities) GBP(269,680) GBP(137,887)
------------------------------------------- ----- ------------ ------------
Capital and reserves
Share capital 14 174,804 174,804
Share premium account 17 368,621 368,621
Profit and loss account 17 (813,105) (681,312)
------------------------------------------- ----- ------------ ------------
Total equity shareholders' funds/(deficit) GBP(269,680) GBP(137,887)
------------------------------------------- ----- ------------ ------------
Approved by the board on 30 June 2016
Ludwik Sobolewski
Chairman
Company registration no. 02991159
Statement of changes in equity
Share Share Profit
capital Premium and loss Total
account account
------------------------------- ---------- ---------- ------------ ------------
Balance at 1 March 2014 174,804 368,621 (557,022) (13,597)
-------------------------------- ---------- ---------- ------------ ------------
Period ended 28 February 2015:
Loss and total comprehensive
income for the year - - (124,290) (124,290)
-------------------------------- ---------- ---------- ------------ ------------
Balance at 28 February 2015 174,804 368,621 (681,312) (137,887)
-------------------------------- ---------- ---------- ------------ ------------
Period ended 29 February 2016:
Loss and total comprehensive
income for the year - - (131,793) (131,793)
-------------------------------- ---------- ---------- ------------ ------------
Balance at 29 February 2016 GBP174,804 GBP368,621 GBP(813,105) GBP(269,680)
-------------------------------- ---------- ---------- ------------ ------------
Statement of cash flows
Year ended 29 February 2016
2016 2015
---------------------------------------- ---- ---------- ----------
Cash flows from operating activities
Loss for the financial period (131,793) (124,290)
Adjustments for:
Interest receivable (9) (14)
Changes in:
Trade and other debtors 2,057 (2,275)
Trade and other creditors (1,830) 94,473
---------------------------------------------- ---------- ----------
Cash generated from operations (131,575) (32,106)
Interest received 9 14
---------------------------------------------- ---------- ----------
Net cash from operating activities (131,566) (32,092)
---------------------------------------------- ---------- ----------
Cash flows from financing activities
Proceeds from loans 120,000 -
---------------------------------------- ---- ---------- ----------
Net cash from financing activities 120,000 -
---------------------------------------- ---- ---------- ----------
Net increase/(decrease) in cash
and cash equivalents (11,566) (32,092)
Cash and cash equivalents at beginning
of period 12,251 44,343
---------------------------------------------- ---------- ----------
Cash and cash equivalents at end GBP685 GBP12,251
of period
---------------------------------------------- ---------- ----------
Notes to the accounts
Year ended 29 February 2016
1. Accounting policies
Statement of compliance
These financial statements have been prepared in compliance with
FRS 102, "The Financial Reporting Standard applicable in the UK and
the Republic of Ireland".
Basis of accounting
The accounts have been prepared under the historical cost
convention and in accordance with applicable accounting
standards.
Highway Capital plc does not prepare consolidated accounts and
the directors have therefore continued to prepare its accounts in
accordance with FRS 102 rather than international accounting
standards, as permitted under BC Regulation 1606/2002.
The financial statements are prepared in sterling, which is the
functional currency of the entity.
Transition to FRS 102
The entity transitioned from previous UK GAAP to FRS 102 as at 1
March 2014. Details of how FRS 102 has affected the reported
financial position and financial performance are given in note
21.
Going concern
The company was until recently a "cash shell", and, apart from a
small amount of interest receivable, currently has no income
stream. Until the business investments start to generate income,
the company is dependent on its cash reserves to fund ongoing
costs. Since the balance sheet date, the company has received loan
funding of GBP284,000 to enable it to pursue its investment
strategy and for working capital purposes.
After reviewing the company's budget for 2016/2017 and its
medium term plans, the directors have a reasonable expectation
that, following the loans made to the company since the balance
sheet date, and the opportunities for additional funding as needed,
the company will have adequate resources to continue in operational
existence for the foreseeable future. For this reason, the
directors continue to adopt the going concern basis in preparing
the accounts.
The accounts do not include any adjustments that would result if
the company were unable to continue as a going concern.
Consolidation
At 29 February 2016, Highway Capital plc was a stand-alone
company and is therefore not required to prepare consolidated
accounts.
Deferred taxation
Deferred tax is provided in full at appropriate rates in respect
of taxation deferred by timing differences between the treatment of
certain items for taxation and accounting purposes, if those timing
differences are not permanent and have originated but not reversed
by the balance sheet date. The deferred tax balance has not been
discounted.
Foreign currencies
Profit and loss account transactions denominated in foreign
currencies are translated into sterling and recorded at the rate of
exchange 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. All differences are taken to the profit and
loss account.
Turnover
It is anticipated that going forward turnover will be
represented by management fees receivable. Currently, other than
interest receivable, there is no income stream. Revenue from
interest receivable is recognised as income in the period on the
effective income basis. Turnover is stated net of VAT and trade
discounts.
Judgements and key sources of estimation uncertainty
In the application of the company's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised where the revision
affects only that period, or in the period of the revision and
future periods where the revision affects both current and future
periods.
2. Operating loss
This is stated after charging:
2016 2015
Directors' remuneration - Salaries and fees 47,968 44,000
Auditors' remuneration - Audit services 10,000 10,000
- Taxation and other related compliance services - -
--------- ---------
3. Employees
The average number of employees during the year
was made up as follows:
2016 2015
Directors 2 2
Other - -
--------- ---------
2 2
--------- ---------
Employee costs including directors during the
year amounted to:
Salaries and fees 47,968 44,000
--------- ---------
GBP47,968 GBP44,000
--------- ---------
4. Directors' remuneration
Information relating to directors' emoluments is included in the
directors' remuneration report above.
5. Taxation
Based on the loss for the year:
2016 2015
U.K. corporation tax at 20% (2015: 20%) - -
Under/(over) provision in previous years - -
------------ ------------
GBP- GBP-
------------ ------------
Factors affecting the tax charge/(credit) for
the year
Loss on ordinary activities before taxation GBP(131,793) GBP(124,290)
------------ ------------
Loss on ordinary activities before taxation
multiplied by the small company rate of UK
corporation tax of 20% (2014: 20%) GBP(26,359) GBP(24,858)
------------ ------------
Effects of:
Current period tax losses not utilised 26,050 24,858
Disallowed expenditure/(income) 309 -
Adjustments to tax charge in respect of previous - -
periods
------------ ------------
GBP26,359 GBP24,858
------------ ------------
Current tax charge/(credit) GBP- GBP-
------------ ------------
The company has estimated losses of GBP1,370,000 (2015:
GBP1,240,000) that may be available for carry forward against
future profits, and estimated capital losses of GBP1,460,000 (2015:
GBP1,460,000) that may be available for carry forward against
future chargeable gains. No deferred tax asset has been recognised
in the accounts in respect of these unrelieved losses.
6. Dividends
2016 2015
Interim paid nil per share (2015: nil) - -
GBP- GBP-
7. Loss per share
The loss per ordinary share calculation has been based on the
loss attributable to ordinary shareholders of GBP131,793 (2015:
loss GBP124,490), divided by 8,740,201 (2015: 8,740,201), being the
weighted average number of ordinary shares in issue during the
year. There is no difference between the basic and the diluted loss
per ordinary share.
There are no discontinued operations in either period and,
therefore, the basic and the diluted loss per ordinary share from
continuing operations are the same as the basic and the diluted
loss per ordinary share.
8. Investments
The company currently has no investments.
9. Capital commitments
At 29 February 2016 the company had no capital
commitments.
10. Debtors
2016 2015
Other debtors 1,674 3,795
Prepayments 2,124 2,060
---------- ----------
GBP3,798 GBP5,855
---------- ----------
11. Creditors: amounts falling due within one
year
2016 2015
Trade creditors 44,249 71,030
Accruals 79,914 54,963
---------- ----------
GBP124,163 GBP125,993
---------- ----------
12. Creditors: amounts due after more than
one year
The creditor due after more than one year of GBP150,000 (2015:
GBP30,000), is made up of two loans from M Szytko, a director and
shareholder, as follows: (a) GBP30,000 unsecured loan repayable
after two years and bearing interest at a rate of 5% per annum (if
it so wishes, the company can repay the loan or part thereof at any
time within the two year period), and (b) GBP120,000 unsecured loan
repayable after five years, convertible at the holder's request
into new ordinary shares in the company at a price of 10 pence per
share; in the event that the loan is not repaid or converted prior
to its maturity date then it will attract accrued interest at a
rate of 5% per annum.
13. Deferred taxation
The estimated deferred tax asset not recognised in the accounts,
based on a 20% rate of tax, amounts to GBP566,000 (2015: based on a
20% rate of tax GBP540,000). Of this amount, GBP292,000 may be
recoverable by the company against future chargeable gains, and
GBP274,000 may be recoverable against future profits.
14. Share capital Number Nominal Number of Nominal
of Shares Value Shares Value
2016 2016 2015 2015
Allotted, called-up and fully
paid:
Ordinary shares of 2p each 8,740,201 GBP174,804 8,740,201 GBP174,804
------------------------------ ------------ ------------ ------------- ------------
15. Related party transactions
As at the balance sheet date, there are loans of GBP150,000 to
the company from M Szytko, a director and shareholder. The terms of
these loans are set out in note 12 above. No other transactions are
required to be disclosed under FRS 102.
16. Post balance sheet events
Since the year end date, Highway Capital has received aggregate
loans of GBP284,000, including GBP34,000 from directors of the
company, to ensure that the company continues to have adequate
resources.
Loans of GBP88,000 and GBP162,000 have been received from an
institutional investor in the form of two year loans attracting 5%
interest per annum. In addition, GBP27,000 has been received from D
Zych and GBP7,000 from M Szytko, directors of the company, in the
form of convertible loan notes which attract 5% interest per annum
and are convertible into new ordinary shares in the company at a
price of 10p per share.
The Company has invested GBP89,000 (500,000 Polish Zloty) by way
of a two year loan attracting 8% interest to Mylux, a Cypriot SPV
which is acquiring a 48% interest in Multipay. Multipay is a newly
formed company looking to offer comprehensive payment services in
Poland, including POS devices. Despite being an advanced economy,
the payment infrastructure in Poland significantly lags other
members of the EU and the founders of Multipay, who have extensive
sector experience, believe there to be a significant opportunity as
a result.
The Company intends to make a further loan to Mylux of
GBP120,000, which will be used to make a minority investment in a
medical technology company. The loan will attract interest at a
rate of 8% per annum and be repayable in 3 months.
17. Reserves
Share premium account - This reserve records the amount above
the nominal value received for shares sold, less transaction
costs.
Profit and loss account - This reserve records retained earnings
and accumulated losses.
18. Other financial commitments
At 29 February 2016 the company had no commitments for the year
ending 28 February 2017 under non-cancellable operating leases.
19. Financial instruments
The Company's financial instruments comprise cash, trade debtors
and trade creditors that arise directly from its operations. The
Company's policy has been, and continues to be, that no speculative
trading in financial derivatives shall be undertaken.
20. Financial assets
The cash is held in bank current and premium accounts and on
treasury deposit, which receive varying rates of interest that is
recognised on a receivable basis. All financial assets and
liabilities are denominated in Sterling.
Fair value of financial assets and liabilities
The fair value of financial assets and liabilities, calculated
by discounting expected future cash flows at prevailing interest
rates, is not materially different from their book value, and is as
follows:
2016 2015
Financial assets
Receivables 3,798 5,855
Cash at bank 685 12,251
GBP4,483 GBP18,106
Financial liabilities
Payables GBP124,163 GBP155,993
Hedging
The Company makes no use of forward currency contracts, other
financial derivatives or hedging.
Interest rate risk
The Company does not have an interest rate policy in isolation
but regularly reviews the interest rates being received on
deposits.
Liquidity risk
The principal policy of the Company in managing liquidity risk
is to align the anticipated timing of expenditure with the
availability of its cash balances.
21. Transition to FRS 102
These are the first financial statements that comply with FRS
102. The group and the company transitioned to FRS 102 on 1 March
2014.
No transitional adjustments were required in equity or profit or
loss for the period.
Company information
Directors Ludwik Sobolewski (non-executive
Chairman)*
Maciej Szytko (non-executive
director)*
Dariusz Zych (non-executive director)
Jacek Slotala (non-executive
director)
* member of the remuneration
& audit committees
Secretary and registered office Maciej Szytko
Eden House, Reynolds Road
Beaconsfield HP9 2FL
Registrars and share transfer Neville Registrars Limited
office
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA
Share price information Information about the day-to-day
movement of the Company's share
price can be obtained from the
London Stock Exchange: Code HWC
Auditors Shipleys LLP
Chartered Accountants
10 Orange Street
London WC2H 7DQ
Bankers Barclays Bank Plc
The Lea Valley Group
78 Turners Hill
Cheshunt
Herts EN8 9BW
Solicitors Gowling WLG
4 More London Riverside London
SE1 2AU
Stockbrokers Northland Capital Partners Limited
60 Gresham Street
London EC2V 7BB
-------------------------------- --------------------------------------
Financial review
Year to Year to Year to Year to Year to
29.2.2016 28.2.2015 28.2.2014 28.2.2013 29.2.2012
---------------------------- ------------ ------------ ------------ ------------ -----------
Management fees - - - - -
Other income - - - - -
Administrative expenses (131,802) (124,304) (103,810) (116,772) (93,802)
---------------------------- ------------ ------------ ------------ ------------ -----------
Operating profit/(loss) (131,802) (124,304) (103,810) (116,772) (93,802)
Profit on disposal of - - - - -
subsidiaries
Income from fixed asset - - - - -
investments
Interest receivable 9 14 113 279 697
---------------------------- ------------ ------------ ------------ ------------ -----------
Profit/(loss) on ordinary
activities before taxation (131,793) (124,290) (103,697) (116,493) (93,105)
Taxation - - - - -
---------------------------- ------------ ------------ ------------ ------------ -----------
Profit/(loss) on ordinary
activities after taxation GBP(131,793) GBP(124,290) GBP(103,697) GBP(116,493) GBP(93,105)
---------------------------- ------------ ------------ ------------ ------------ -----------
Earnings/(loss) per
share (1.51)p (1.42)p (1.25)p (1.47)p (1.17)p
Dividend per share nil nil nil nil nil
The basic and the diluted earnings/(loss) per share figures are
the same.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKKDDDBKBFAN
(END) Dow Jones Newswires
July 01, 2016 02:00 ET (06:00 GMT)
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