REG - Fragrant Prosperity - Final Results
28/03/2024 07:15
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RNS Number : 6709I Fragrant Prosperity Holdings Ltd 28 March 2024
28 March 2024
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FRAGRANT PROSPERITY HOLDINGS LIMITED
("FPP" or "the Company")
Fragrant Prosperity Holdings Limited (LSE: FPP) announces its audited annual
financial results for the financial year ended 31 March 2023.
I have pleasure in presenting the financial statements of Fragrant Prosperity
Holdings Limited (the "Company" or "FPP") for the financial year ended 31
March 2023.
During the year the Company entered into nonbinding heads of terms with Hi 55
Ventures Ltd ("Hi") a UK based fintech business in relation to the potential
refinancing of FPP and acquisition of Hi by FPP. The consideration was
expected to be approximately £47m to be satisfied in newly issued shares in
the Company. Unfortunately, due to adverse market conditions, the intended
acquisition was not completed and negotiations ceased after the year end.
The Board continued to review a number of potential acquisition opportunities
across the sector but none of which met the necessary criteria for selection
as at the end of the year.
During the financial year, the Company reported a net loss of £126,237 (2022:
£697,706) which represents ongoing administrative expenses and due diligence
costs regarding the intended acquisition of Hi as well as identifying other
potential targets. As at 31 March 2023, the Company had cash in bank balance
of £195,395 (2022: £281,448).
The Board would provide further updates to shareholders in due course.
Chairman
Enquires:
Optiva Securities Ltd (Financial Adviser)
Vishal Balasingham +44 (0) 20 3137 1902
FRAGRANT PROSPERITY HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023
Directors' report
The Directors present their report together with the audited financial
statements, for the financial year ended 31 March 2023.
The Company was incorporated on 28 January 2016 in the British Virgin Islands,
as a company limited by shares under the BVI Business Companies Act, 2004. The
registered office of the Company is at Vistra Corporate Services Centre,
Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
Its issued share capital, consisting of Ordinary Shares, are currently
admitted to a Standard Listing on the Official List in accordance with Chapter
14 of the Listing Rules and to trading on the London Stock Exchange's main
market for listed securities.
On 12 December 2017 the company changed its name from Vale International Group
Ltd to Fragrant Prosperity Holdings Ltd.
The Company's nature of operations is to act as a special purpose acquisition
company.
Results and dividends
The results for the year are set out in the Statement of Comprehensive Income
on page 15. The Directors do not recommend the payment of a dividend on the
ordinary shares.
Company objective and future developments
The Company was formed to undertake an acquisition of a target company or
business. The Company does not have any specific acquisition under
consideration and does not expect to engage in substantive negotiations with
any target company or business in the immediate future. The Directors believe
that their network, and the Company's cash resources and profile following
Admission, mean that the Company will target an Acquisition where the target
company has a value of up to £100 million. The Company expects that
consideration for the Acquisition will primarily be satisfied by issue of new
Shares to a vendor (or vendors), but that some cash may also be payable by the
Company. Any funds not used in connection with the Acquisition will be used
for future acquisitions, internal or external growth and expansion, and
working capital in relation to the acquired company or business.
Following completion of the Acquisition, the objective of the Company will be
to operate the acquired business and implement an operating strategy with a
view to generating value for its Shareholders through operational improvements
as well as potentially through additional complementary acquisitions following
the Acquisition. Following the Acquisition, the Company intends to seek
re-admission of the enlarged group to listing on the Official List and trading
on the London Stock Exchange or admission to another stock exchange.
The Company's efforts in identifying a prospective target company or business
will not be limited to a
particular industry or geographic region. However, given the experience of the
Directors, the Company expects to focus on acquiring a company or business in
the technology sector (in particular focussing on technology and/or
intellectual property that is used in the financial services industry) or the
medicinal cannabis and CBD Wellness sector with either all or a substantial
portion of its operations in Europe or Asia. The Directors' initial search
will focus on businesses based in or with operations in Hong Kong, Malaysia,
or the United Kingdom.
Principal risks and uncertainties
Currently the principal risks relate to the completion of the Acquisition, and
whether, if unsuccessful, the Company could find sufficient suitable
investments to ensure compliance with the requirements of its continued
listing on the standard market.
An explanation of the Company's financial risk management objectives, policies
and strategies is set out in note 8.
Key events
At the year end the Company had cash of approximately £195,395 and continues
to keep administrative costs to a minimum so that the majority of funds can be
dedicated to the review of and potentially investment in, suitable projects.
The company is likely to receive additional funds in order to continue its
activities.
Directors
The Directors of the Company during the year were:
Mahesh s/o Pulandaran
Simon James Retter
Craig Marshak (resigned 10 November 2021)
Richard Samuel
Daniel Reshef
Director's interest
Mahesh s/o Pulandaran holds 1 share of the Company
Stonedale Management and Investments Ltd (a company which is under control of
Simon James Retter), holds an option to subscribe for 2,500,000 shares for nil
consideration.
Craig Marshak holds options to subscribe for 2,500,000 shares for nil
consideration.
Substantial shareholders
The Company has been notified of the following interests of 3 per cent or more
in its issued share capital as at 20 March 2024.
Number of Ordinary Shares % of
Shareholder Share Capital
Hargreaves Lansdown Nominees Ltd 13,917,721 23.1%
Interactive Investor Services 10,002,290 16.6%
Vidacos Nominees Ltd 5,960,249 9.9%
Peel Hunt Partnerhsip 5,177,182 8.6%
Barclays Direct Investing 3,955,124 6.6%
JIM Nominees Ltd 3,333,333 5.5%
Winterflood Securities Ltd 2,996,755 5.0%
James Brearly 2,725,297 4.5%
Bank of New York Nominees 1,925,000 3.2%
Joh Berenberg Gossler & Co 1,879,306 3.1%
Capital and returns management
The Directors believe that, following an acquisition, further equity capital
raisings may be required by the Company for working capital purposes as the
Company pursues its objectives. The amount of any such additional equity to be
raised, which could be substantial, will depend on the nature of the
acquisition opportunities which arise and the form of consideration the
Company uses to make the acquisition and cannot be determined at this time.
The Company expects that any returns for Shareholders would derive primarily
from capital appreciation of the Ordinary Shares and any dividends paid
pursuant to the Company's dividend policy.
Dividend policy
The Company is primarily seeking to achieve capital growth for its
Shareholders.
It is the Board's intention during the current phase of the Company's
development to retain future distributable profits from the business, to the
extent any are generated. As a holding company, the Company will be dependent
on dividends paid to it by its subsidiaries.
The Board does not anticipate declaring any dividends in the foreseeable
future but may recommend dividends at some future date after the completion of
the Acquisition and depending upon the generation of sustainable profits and
the Company's financial position.
The Board can give no assurance that it will pay any dividends in the future,
nor, if a dividend is paid, what the amount of such dividend will be.
The Company will only pay dividends to the extent that to do so is in
accordance with all applicable laws.
Section 172 Statement
The Directors of the Company, as those of all UK compa-nies, must act in
accordance with a set of general duties. These duties are detailed in section
172 of the UK Compa-nies Act 2006 which is summarized as follows:
"A director of a company must act in the way he consid-ers, in good faith,
would be most likely to promote the success of the company for the benefit of
its stakehold-ers as a whole, and in doing so have regard (amongst other
matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the company's employees;
(c) the need to foster the company's business relation-ships with suppliers,
customers and others;
(d) the impact of the company's operations on the com-munity and the
environment;
(e) the desirability of the company maintaining a reputa-tion for high
standards of business conduct; and
(f) the need to act fairly as between stakeholders of the Company"
As part of their induction, all Directors are briefed on their duties and they
can access professional advice on these, either from the Company Secretary or,
if they judge it necessary, from an independent adviser. The Directors fulfil
their duties partly through a governance framework that delegates day-to-day
decision-making to employees of the Company and details of this can be found
in our Governance section of the Directors Report.
The following paragraphs summarise how the Directors fulfil their duties:
Risk Management
The Company is currently undertaking due diligence and working towards
executing an acquisition of a target. It is therefore vital that we
effectively identify, evaluate, manage and mitigate the risks we face, and
that we continue to evolve our approach to risk management.
For details of our principal risks and uncertainties and how we manage our
risk environment, please see page 4.
Our People
Our Company is committed to being a responsible business. Our behaviour is
aligned with the expectations of our people, clients, investors, communities
and society as a whole. We must also ensure we share common values that inform
and guide our behaviour so we achieve our goals in the right way. The only
employees are currently the Directors of the company, who strive to adhere to
the highest ethical standards.
Shareholders
The Board is committed to openly engaging with our shareholders, as we
recognize the importance of contin-uing effective dialogue. It is important to
us that share-holders understand our strategy and objectives, so these must be
explained clearly, feedback heard and any issues or questions raised properly
considered. Our board members, especially Simon Retter, holds a series of
shareholders meetings several times a year on the back of financial and
operational reporting.
Community and Environment
The Company's approach is to use our strengths to cre-ate positive change for
the people and communities with which we interact. We want to leverage our
expertise and enable colleagues to support the communities around us.
Corporate governance
As a company with a Standard Listing, the Company is not required to comply
with the provisions of the UK Corporate Governance Code. Although the Company
does not comply with the UK Corporate Governance Code, the Company intends to
adopt corporate governance procedures as are appropriate for the size and
nature of the Company and the size and composition of the Board. These
corporate governance procedures have been selected with due regard to the
provision of the UK Corporate Governance Code insofar as is appropriate. A
description of these procedure is set out below:
· until an Acquisition is made, the Company will not have nominations,
remuneration, audit or risk committees. The Board as a whole will instead
review its size, structure and composition, the scale and structure of the
Directors' fees (taking into account the interests of Shareholders and the
performance of the Company), take responsibility for the appointment of
auditors and payment of their audit fee, monitor and review the integrity of
the Company's financial statements and take responsibility for any formal
announcements on the Company's financial performance. Following the
Acquisition, the Board intends to put in place nomination, remuneration, audit
and risk committees;
· the Board has adopted a share dealing code that complies with the
requirements of the Market Abuse Regulations. All persons discharging
management responsibilities shall comply with the share dealing code since the
date of Admission; and
· Following the Acquisition and subject to eligibility, the Directors
may, in future, seek to transfer the Company from a Standard Listing to either
a Premium Listing or other appropriate listing venue, based on the track
record of the company or business it acquires, subject to fulfilling the
relevant eligibility criteria at the time. However, in addition to or in lieu
of a Premium Listing, the Company may determine to seek a listing on another
stock exchange. Following such a Premium Listing, the Company would comply
with the continuing obligations contained within the Listing Rules and the
Disclosure and Transparency Rules in the same manner as any other company with
a Premium Listing.
The Company has not chosen to apply a particular corporate governance code, as
the directors consider that the most widely recognised codes are not
appropriate for companies with limited board resources.
The Directors are responsible for internal control in the Company and for
reviewing its effectiveness. Due to the size of the Company, all key decisions
are made by the Board in full. The Directors have reviewed the effectiveness
of the Company's systems during the period under review and consider that
there have been no material losses, contingencies or uncertainties due to the
weakness in the controls. The Board will be responsible for taking all proper
and reasonable steps to ensure compliance with the Model Code by the
Directors.
Emissions, Environmental & Social matters
The Company currently is not responsible for any emissions other than
indirectly through travel for undertaking due diligence on target businesses.
It is therefore not practical to quantify the total emissions of the Company.
Likewise, as the nature of the Company is an acquisition company, it is the
opinion of the Directors that it has no direct social, community and human
rights issues are environmental matters on which it should disclose
information. Presently all of the Directors of the Company are male, the
Directors are actively seeking to balance the board with some female
representation although this would likely occur upon a change in the board
composition upon the completion of an acquisition.
Responsibility Statement
The directors are responsible for preparing the annual report and the
non-statutory financial statements. The directors are required to prepare
financial statements for the Company in accordance with International
Financial Reporting Standards (IFRS) as adopted by the United Kingdom.
International Accounting Standard 1 requires that financial statements present
fairly for each financial period the Company's financial position, financial
performance and cash flows. This requires the faithful representation of
transactions, other events and conditions in accordance with the definitions
and recognition criteria for the 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 representation will be achieved by compliance with all
IFRS as adopted by the United Kingdom. Directors are also required to:
- select suitable accounting policies and then apply them
consistently;
- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information; and
- provide additional disclosures when compliance with the specific
requirements in IFRS as adopted by the United Kingdom is insufficient to
enable users to understand the impact of particular transactions, other events
and conditions on the Company's financial position and financial performance.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time, the financial position of the
Company. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The maintenance and integrity of the Fragrant Prosperity Holdings Ltd website
(http://www.fragrantprosperityholdings.com/) is the responsibility of the
Directors; work carried out by the auditors does not involve the consideration
of these matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred in the accounts since they were initially
presented on the website.
Legislation in the British Virgin Islands governing the preparation and
dissemination of the financial statements and the other information included
in annual reports may differ from legislation in other jurisdictions.
The Directors are responsible for preparing the Financial Statements in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority ('DTR') and with International Financial Reporting
Standards as adopted by the United Kingdom.
The directors confirm, to the best of their knowledge that:
· the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and
· the Chairman's Statement and Directors' Report include a fair review
of the development and performance of the business and the financial position
of the Company, together with a description of the principal risks and
uncertainties that it faces.
Auditors and disclosure of information
The directors confirm that:
· there is no relevant audit information of which the Company's
non-statutory auditor is unaware; and
· each Director has taken all the necessary steps he ought to have
taken as a Director in order to make himself aware of any relevant audit
information and to establish that the Company's non-statutory auditor is aware
of that information.
Going Concern
During the year the Company worked on acquiring the entire share capital of a
business that led to significant expenditure on legal, due diligence and other
associated costs. The acquisition was due to be completed alongside a capital
raise to provide working capital for the enlarged group, due to adverse market
conditions the capital raise was unsuccessful and the result was the deletion
of the Companies existing cash reserves. As well as the unsuccessful reverse
takeover significant additional expenditure was incurred as a result of a
dispute that arose during the period with a convertible loan note holder,
which was subsequently settled placing further strain on the cash resources of
the Company. Due to the limited cash balance as at the period end the
Company is in the process of seeking additional funding in order to purse its
strategy of making an acquisition to seek re-admission of the enlarged group
to listing on the Official List and trading on the London Stock Exchange or
admission to another stock exchange.
Should the raising of new capital be unsuccessful then the Company faces
significant uncertainty over its ability to continue as a going concern. The
Company has reduced its cash expenditure to a minimum whilst it works on the
recapitalisation of the business.
Climate risk management
The Board oversees and has ultimate responsibility for the Company's
sustainability initiatives, disclosures, and reporting. This includes, but is
not limited to, climate risks and opportunities. As a shell company, the
Company is exempt from providing the disclosures required by the Taskforce on
Climate-related Financial Disclosures ("TCFD"). However, this section provides
an overview of the Company's approach to managing the very limited climate
risks it currently faces.
The executive management team have day-to-day responsibility for assessing and
managing climate-related risks and opportunities. We are committed to
minimising the Company's impact on the environment. As it is presently
constituted, the Company's environmental impact is minimal and climate-related
risks and opportunities are extremely limited until it acquires another
business. At present, the Company has no operating investments, and its only
employees are the directors. These employees perform largely information-based
roles, and they all work from home as the Company no longer maintains business
premises.
The only environmental impact currently is from business travel, which has
been extremely limited in the past two years and is expected to continue to be
lower than previously as a result of the post-pandemic shift towards virtual
tools. The Company's overall environmental impact is therefore minimal The
Company's approach is therefore to seek to maintain lean working arrangements,
use technology to minimise business travel and encourage employees to recycle,
minimise energy wastage, and do their part to ensure that the Company acts
responsibly. If the Company continues to operate as it is presently
constituted it is therefore difficult to identify any climate related risks in
the short, medium or long term that could significantly impact the business.
For this reason, the Company does not presently feel it is appropriate or
necessary to apply metrics or targets to assess climate related risks beyond
the Greenhouse gas reporting presented below.
Clearly, the Company does not intend to continue operating in its present form
indefinitely, we intend to make acquisitions that will profoundly change the
scale and climate-related risk profile of the business and the process for
identifying and managing them. It is not possible to reach any sensible
conclusions today about which risks the Company may be exposed to in the)
future without knowing what businesses it will acquire.
While it is not possible to know today what climate related risks it will
inherent, the Company is conscious that such risks and opportunities will
exist in any potential acquisition and considers that the most important
objective is to ensure these are properly understood in the due diligence
phase of any transaction so appropriate decisions can be taken on risk
mitigation tools. The Company's Board have concluded that the most appropriate
way to address this is to ensure that climate-related risks are specifically
scoped in when undertaking due diligence on acquisition targets.
Greenhouse gas emissions
Considering the non-material environmental impacts of the Company's business
as described in this report, management takes the view that greenhouse gas
emissions are the most important metric to track and against which future
targets may be set. We have compiled our greenhouse gas ("GHG") emissions in
accordance with the Companies Act 2006 (Strategic Report and Directors'
Report) Regulations 2013 ("SECR").
Calculations follow the GHG Protocol Corporate Accounting and Reporting
Standard (revised edition). The GHG reporting period aligns with the financial
statements and boundaries are defined using the financial control approach.
GHG emissions are broken down into three categories; reporting is required
only on scope 1 and 2: Scope 1 emissions: Direct emissions from sources owned
or controlled by the Company. Scope 2 emissions: Indirect emissions
attributable to the Company due to its consumption of purchased electricity.
Scope 3 emissions: Other indirect emissions associated with activities that
support or supply the Company's operations.
The Company has no Scope 1 emissions. The Company's Scope 2 and Scope 3
emissions for the year to 31 December 2023 or the prior period. No further
energy and carbon information is disclosed as the Company is exempt on the
grounds of being a low energy user within the meaning of SECR. At the present
time, the Company does not consider it appropriate to set emissions reduction
targets, particularly given the low levels of emissions already achieved.
The Company does not currently hold any investments. When investments are
held, the Company will keep under review whether it would be appropriate to
support investee companies in tracking metrics and setting targets.
Events after the reporting date
Subsequent to the year end the Company ceased its exclusivity period with Hi
55 Ventures and the intended refinancing and acquisition did not proceed.
Events after the reporting date have been disclosed in note 13 to the
financial statements.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FRAGRANT PROSPERITY HOLDINGS
LTD
Opinion
We have audited the financial statements of Fragrant Prosperity Holdings
Limited (the 'Company') for the year ended 31 March 2023 which comprise the
statement of comprehensive income, statement of financial position, statement
of changes in equity, statement of cash flows and the related notes, including
a summary of significant accounting policies. The financial reporting
framework that has been applied in the preparation of the financial statements
is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the United Kingdom.
In our opinion, the financial statements:
· give a true and fair view of the state of the Company's affairs as at
31 March 2023 and of its loss for the year then ended;
· have been properly prepared in accordance with international
accounting standards in conformity with International Financial Reporting
Standards ("IFRSs") adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the United Kingdom ("UK");
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 believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Independence
We are independent of the Company 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 public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services
prohibited by the FRC's Ethical Standard were not provided and that we have
not provided any non-audit services to the Company in the period under audit.
Material uncertainty relating to going concern
In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosures made in note 2 of the
financial statements concerning the Company's ability to continue as a going
concern. The conditions described in note 2 indicate the existence of material
uncertainties which may cast significant doubt about the Company's ability to
continue as going concern. The financial statements do not include the
adjustments that would result if the Company was unable to continue as a 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 carrying out a risk assessment which covered the
nature of the Company, its business model and related risks including where
relevant the impact of Coronavirus, the requirements of the applicable
financial reporting framework and the system of internal control. We evaluated
the directors' assessment of the group's ability to continue as a going
concern, including challenging the underlying data and key assumptions used to
make the assessment, and evaluated the directors' plans for future actions in
relation to their going concern assessment.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance on our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, 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.
These matters were 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.
Risk Our response to the risk Our response and observation
Revenue recognition We reviewed the Company's revenue recognition policies and how they are No revenue was recognised in the year and this was in accordance with the
applied. Company's accounting policy and we concluded that no evidence of fraud or
There is a risk that revenue is materially understated due to fraud. other understatement was identified.
Management override of controls We examined journals posted around the year end, specifically focusing on We identified no evidence of management override in respect of inappropriate
areas which are more easily manipulated. manual journals recorded in any section of the financial statements.
Journals can be posted that significantly alter the financial statements of
the entity.
In addition to the above identified key audit matters, Going Concern has been
identified as a key risk area within the financial statements and the matter
has been addressed within the "Material uncertainty related to going concern"
section of the audit report above.
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 charged or influenced. We use materiality both
in planning and in the scope of our audit work and in evaluating the results
of our work.
Based on our professional judgement we determine materiality for the Company
to be £6,312 and this financial benchmark, which has been used throughout the
audit, is based on approximately 4% of the Company's net assets at the year
end. Where considered relevant the materiality is adjusted to suit the
specific risk profile of the Company.
Performance materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality. Performance materiality was set at £4,734
(75%) of the above materiality level. We agreed with the board that we would
report to the committee all individual audit differences identified during the
course of our audit in excess of £316 (5% materiality). Errors below the
threshold would also be reported, if in our opinion the error warranted
reporting on qualitative grounds.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its
environment, including the system of internal control, and assessing the risks
of material misstatement in the financial statements. The audit work is
conducted centrally by one audit team, led by the Senior Statutory Auditor.
Other Information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. 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 course of the audit, or otherwise appears to be
materially m
isstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. 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.
In this context, matters that we are specifically required to report to you as
uncorrected material misstatements of the other information include where we
conclude that:
· Fair, balanced and understandable - the statement given by the
directors that they consider the annual report and financial statements taken
as a whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
We have nothing to report in respect of these matters.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of Company and its environment
obtained in the course of the audit, we have not identified material
misstatements in the chairman's statement or the directors' report.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on page 7, 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 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 Company or
to cease operations, or have no realistic alternative but to do so.
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 an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a 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 the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor's report.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
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. Our approach was as follows:
· We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Coup and determined the most significant are those
that relate to the reporting framework (IFRS) and the relevant tax compliance
regulations in the jurisdictions in which the Company operates.
· We understood how the Company is complying with those frameworks by
making enquiries of management, the Company Secretary, and those responsible
for legal and compliance procedures. We corroborated our enquiries through our
review of board minutes, papers provided to the board, discussion with the
board and any correspondence received from regulatory bodies.
· We assessed the susceptibility of the Company's financial statements
to material misstatement, including how fraud might occur by enquiring with
management and the board during the planning and execution phase of our audit.
We considered the programs and controls that the Company has established to
address risks identified, or that otherwise prevent, deter and detect fraud
and how senior management monitors those programs and controls. Where the risk
was considered to be higher, we performed audit procedures to address each
identified fraud risk including revenue recognition as discussed above. These
procedures included testing manual journals and were designed to provide
reasonable assurance that the financial statements were free from fraud or
error.
· Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations. Our procedures
involved journal entry testing, with a focus on manual journals and journals
indicating large or unusual transactions based on our understanding of the
business; enquiries of the Company Secretary and management; and focused
testing, as referred to in the key audit matters section above.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances on non-compliance with laws and
regulations that are not closely related to events and transactions reflected
in the non-statutory financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain
transactions and balances. However, it typically involves selecting a limited
number of items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the sample is selected.
Other matters which we are required to address
We were appointed by the board on 25 June 2021 to audit the financial
statements for the period ending 31 March 2021. Our total uninterrupted period
of engagement is 3 years, covering the period ending 31 March 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Company and we remain independent of the Company in conducting
our audit.
Our audit opinion is consistent with the additional report to the board.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with our engagement letter dated 4 February 2024. 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 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.
BENJAMIN BIDNELL (Senior Statutory Auditor)
For and on behalf of SHIPLEYS LLP,
Chartered Accountants and Statutory Auditor
10 Orange Street, Haymarket, London, WC2H 7DQ
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL ENDED 31 MARCH 2023
Year ended 31 March 2023 Year ended 31 March 2022
Notes £ £
Other operating expenses (98,689) (673,033)
Interest charge (27,548) (24,673)
OPERATING LOSS BEFORE TAXATION (126,237) (697,706)
Income tax expense 3 - -
LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (126,237) (697,706)
OTHER COMPREHENSIVE INCOME
Other comprehensive income - -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (126,237) (697,706)
Basic and diluted loss per share (pence) 5 (0.20) (1.12)
The notes to the financial statements form an integral part of these financial
statement
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
As at As at
31 March 2023 31 March 2022
Notes £ £
CURRENT ASSETS
Cash and cash equivalents 195,395 281,448
Prepayments 15,750 -
TOTAL ASSETS 211,145 281,448
CURRENT LIABILITIES
Trade Creditors (187,578) (189,192)
Accruals (54,079) (24,079)
Convertible loan note (506,351) (478,803)
TOTAL LIABILITIES (748,008) (692,074)
NET ASSETS (536,863) (410,626)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 6 1,492,146 1,492,146
Retained earnings (2,080,552) (1,954,315)
Convertible loan note Reserve 51,543 51,543
TOTAL EQUITY (536,863) (410,626)
The notes to the financial statements form an integral part of these financial
statements
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023
Year ended Year ended
31 March 2023
31 March 2022
£ £
Loss before tax (126,237) (697,706)
Interest charge 27,548 (22,855)
Share based payment - 24,677
Cash flow from operating activities (98,689) (695,884)
Changes in working capital
Movement in other payables 28,386 162,852
Movement in prepayments and other debtor (15,750) 47,276
Net cash outflow from operating activities (86,053) (485,756)
Issue of equity - -
Issue costs - -
Repayment of convertible loan note - (310,000)
Issue of convertible loan note - 515,000
Net cash flow from investing activities - 205,000
Net decrease in cash and cash equivalents (86,053) (280,756)
Cash and cash equivalents at beginning of period 281,448 562,204
Cash and cash equivalents at end of period 195,395 281,448
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023
Share capital Convertible Loan Note Reserve Retained earnings Total
£ £ £ £
As at 31 March 2021 1,492,146 50,397 (1,281,286) 261,257
Issue of equity - - - -
Issues of equity costs - - - -
Derecognition of Convertible Loan - (50,397) - (50,397)
Recognition of Convertible Loan - 51,543 - 51,543
Loss for the year - - (697,706) (697,706)
Share based payment charge - - 24,677 24,677
Total comprehensive loss for the year - - (673,029) (673,029)
As at 31 March 2022 1,492,146 51,543 (1,954,315) (410,626)
Issue of equity - - - -
Issues of equity costs - - - -
Derecognition of Convertible Loan - - - -
Recognition of Convertible Loan - - - -
Loss for the year - - (126,237) (126,237)
Share based payment charge - - - -
Total comprehensive loss for the year - - (126,237) (126,237)
As at 31 March 2022 1,492,146 51,543 (2,080,552) (536,863)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023
1. GENERAL INFORMATION
The Company was incorporated in the British Virgin Islands on 28 January 2016
as an exempted company with limited liability.
The Company's Ordinary shares are currently admitted to a standard listing on
the Official List and to trading on the London Stock Exchange.
On the 12 December 2017 the company changed its name from Vale International
Group Ltd to Fragrant Prosperity Holdings Ltd.
The Company's nature of operations is to act as a special purpose acquisition
company.
2. ACCOUNTING POLICIES
The Board has reviewed the accounting policies set out below and considers
them to be the most appropriate to the Company's business activities.
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the United Kingdom and
IFRIC interpretations applicable to companies reporting under IFRS. The
financial statements have been prepared under the historical cost convention
as modified for financial assets carried at fair value.
The financial information of the Company is presented in British Pound
Sterling ("£").
Standards and interpretations issued but not yet applied
At the date of authorisation of this financial information, the Directors have
reviewed the Standards in issue by the International Accounting Standards
Board ("IASB") and IFRIC, which are effective for accounting periods beginning
on or after the stated effective date. In their view, none of these standards
would have a material impact on the financial reporting of the Company.
Going concern
Until such time as the Company makes a significant investment it will meet its
day to day working capital requirements from its existing cash reserves and by
raising new equity finance.
In the year ended 31 March 2023 the Company recorded a loss after tax of
£126,237 (2022: £697,706) and a net cash outflow from operating activities
of £86,053 (2022: £485,756).
The directors have prepared cash flow forecasts covering a period of at least
12 months from the date of approval of the financial statements which assume
that no significant investment activity is undertaken unless sufficient
funding is in place.
The Company had cash of £195,395 at 31 March 2023 which the directors believe
is insufficient to undertake the required steps to make an investment and
fulfil its investment mandate and the Company is therefore seeking to raise
additional capital to proceed with its strategy.
During the year the Company incurred predominantly ongoing administrative
costs, the majority of the work undertaken on acquiring the entire share
capital of a business that led to some minor expenditure on legal, due
diligence and other associated costs occurred after the year end. The
acquisition was due to be completed alongside a capital raise to provide
working capital for the enlarged group, due to the intended acquisition not
proceeding the result was the deletion of the Companies existing cash reserves
further following the year end. Due to the limited cash balance as at the
period end the Company is in the process of seeking additional funding in
order to purse its strategy of making an acquisition to seek re-admission of
the enlarged group to listing on the Official List and trading on the London
Stock Exchange or admission to another stock exchange.
The Should the raising of new capital be unsuccessful then the Company faces
significant uncertainty over its ability to continue as a going concern. The
Company has reduced its cash expenditure to a minimum whilst it works on the
recapitalisation of the business.
Cash and cash equivalents
The Company considers any cash on short-term deposits and other short term
investments to be cash equivalents.
Taxation
The tax currently payable is based on the taxable profit for the period.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other periods and it further excludes items that are never taxable or
deductible. The Company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred income tax is provided for using the liability method on temporary
timing differences at the reporting date between the tax basis of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised in full for all temporary
differences. Deferred income tax assets are recognised for all deductible
temporary differences carried forward of unused tax credits and unused tax
losses to the extent that it is probable that taxable profits will be
available against which the deductible temporary differences and carry-forward
of unused tax credits and unused losses can be utilised.
The carrying amount of deferred income tax assets is assessed at each
reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised deferred income tax
assets are reassessed at each reporting date and are recognised to the extent
that is probable that future taxable profits will allow the deferred income
tax asset to be recovered.
Financial instruments
Financial assets and financial liabilities are recognised on the statement of
financial position when the company becomes a party to the contractual
provisions of the instrument.
Financial assets
Financial assets are classified, at initial recognition, as subsequently
measured at amortised cost, fair value through other comprehensive income
(OCI), and fair value through profit or loss. The classification of financial
assets at initial recognition depends on the financial asset's contractual
cash flow characteristics and the Group's business model for managing them.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition and re-evaluates this classification at every reporting
date.
As at the reporting date, the Group did not have any financial assets
subsequently measured at fair value.
Operating segments
The directors are of the opinion that the business of the Company comprises a
single activity, that of an investment company. Consequently, all activities
relate to this segment.
Critical accounting estimates and judgements
The preparation of financial statements in compliance with IFRS as adopted for
use by the United Kingdom requires the use of certain critical accounting
estimates or judgements. The directors do not consider there to be any key
estimation uncertainty. In respect of critical judgements, the only key
judgement is the adoption of going concern on the basis for preparing the
financial statements, details of which are set out in note 2.
Share based payments
The Company operates equity-settled, share-based compensation plans, under
which the entity receives services from employees as consideration for equity
instruments (options) of the Company. The fair value of employee services
received in exchange for the grant of share options are recognised as an
expense. The total expense to be apportioned over the vesting period is
determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and
non-market performance vesting conditions; and
· including the impact of any non-vesting
conditions.
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period the Company revises its estimate of the number of options that are
expected to vest.
It recognises the impact of the revision of original estimates, if any, in
profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is
recognised as an expense.
3. INCOME TAX EXPENSE
The Company is regarded as resident for the tax purposes in British Virgin
Islands.
No tax is applicable to the Company for the year ended 31 March 2023 and 2022.
Consequently no deferred tax is recognised as all timing differences are
permanent.
4. LOSS BEFORE TAXATION
The loss before income tax is stated after charging:
Year ended Year ended
31 March 2023 31 March 2022
£ £
Staff costs (note 7) 25,000 77,500
Auditors' remuneration:
Fees payable to the Company's auditor for the audit of the Company's annual 14,000 7,500
accounts
LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss attributable
to equity holders of the Company by the weighted average number of ordinary
shares in issue during the period. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. There are currently no
dilutive potential ordinary shares.
Loss per share attributed to ordinary shareholders
Year ended Year ended
31 March 2023 31 March 2022
Loss for the period (£) (126,237) (697,706)
Weighted average number of shares (Unit) 62,223,386 62,223,386
Loss per share (pence) (0.20) (1.12)
5. SHARE CAPITAL
Number £
of shares
Balance at 31 March 2021, 2022 and 2023 62,223,386 1,492,146
On 3 March 2021 the Company issued 10,360,564 new ordinary shares in the
company at a price of 5.25 pence per share.
On the 6 December 2021 the company issued 17,500,000 options with an exercise
price of 2 pence per share as part of a settlement of an ongoing dispute. The
options were valued using a Black Scholes model and resulted in a share based
payment charge of £24,677 during the year.
6. STAFF COSTS
Year ended Year ended
31 March 2023 31 March 2022
£ £
Staff costs - -
Director fees 23,500 72,500
23,500 72,500
The average numbers of person employed by the Company (including directors)
during the reporting period was 4 (2022: 4).
7. CAPITAL MANAGEMENT POLICY
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The capital structure of the
Company consists of equity attributable to equity holders of the Company,
comprising issued share capital and reserves.
8. FINANCIAL RISK MANAGEMENT
The Company uses a limited number of financial instruments, comprising cash
and other payables, which arise directly from operations. The Company does not
trade in financial instruments.
Financial risk factors
The Company's activities expose it to a variety of financial risks: currency
risk, credit risk, liquidity risk and cash flow interest rate risk. The
Company's overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the
Company's financial performance.
a) Currency risk
The Company does not operate internationally and its exposure to foreign
exchange risk is limited to the transactions and balances that are denominated
in currencies other than Pounds Sterling.
b) Credit risk
The Company does not have any major concentrations of credit risk related to
any individual customer or counterparty. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions. The Group has
taken necessary steps and precautions in minimising the credit risk by lodging
cash and cash equivalents only with reputable licensed banks.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the
Company ensures it has adequate resource to discharge all its liabilities. The
directors have considered the liquidity risk as part of their going concern
assessment. (See note 2). At the date of approval of the financial statements
there was a material uncertainty in relation to liquidity risk.
d) Cash flow interest rate risk
The Company has no significant interest-bearing liabilities and assets. The
Company monitors the interest rate on its interest bearing assets closely to
ensure favourable rates are secured.
Fair values
Management assessed that the fair values of cash and short-term deposits,
trade receivables, trade payables, bank overdrafts and other current
liabilities approximate their carrying amounts largely due to the short-term
maturities of these instruments.
9. FINANCIAL INSTRUMENTS
The Company's principal financial instruments comprise cash and cash
equivalents and other payable. The Company's accounting policies and method
adopted, including the criteria for recognition, the basis on which income and
expenses are recognised in respect of each class of financial assets,
financial liability and equity instrument are set out in Note 2. The Company
do not use financial instruments for speculative purposes.
The principal financial instruments used by the Company, from which financial
instrument risk arises, are as follows:
As at As at
31 March 2023 31 March 2022
£ £
Financial assets
Loans and receivables
Cash and cash equivalents 195,395 281,448
-------------------------- --------------------------
Total financial assets 195,395 281,448
================== ==================
Financial liabilities measured at amortised cost
Other payables 187,578 189,192
Convertible loan note 506,351 478,803
-------------------------- --------------------------
Total financial liabilities 693,929 667,995
================== ==================
On 29(th) July 2021 the Company repaid the existing convertible loan notes
with a value of £310,000 plus interest and issued a new convertible loan note
for £400,000 which carries interest at 5% per annum with an average exercise
price of 3 pence per share.
The Company currently has convertible loan notes with a principle amount of
£515,000 that have either matured as at the end of the year or subsequent to
the year end. The Company will seek to renegotiate the terms of these loan
notes either in advance of or as part of an acquisition.
There are no financial assets that are either past due or impaired.
10. RELATED PARTY TRANSACTIONS
Key management are considered to be the directors and the key management
personnel compensation as follow:
Year ended Year ended
31 March 2023 31 March 2022
£ £
Simon James Retter* - -
Craig Marshak - 35,000
Richard Samuel - 7,500
Mahesh Pulandaran - -
- 42,500
*In 2023 £23,500 of fees were incurred to Stonedale Management &
Investments Ltd a company controlled by Simon Retter regarding work undertaken
on the financial investment undertaken during the year. In 2022 this was
£30,000.
*In 2021 £15,200 of fees were paid to Stonedale Management & Investments
Ltd a company controlled by Simon Retter regarding work undertaken on the
financial investment undertaken during the year.
In addition Stonedale management holds an option over 2,500,000 shares with an
exercise price of 0p.
Craig marshak holds options over 2,500,000 shares with an exercise price of
0p.
No pension contributions were made on behalf of the Directors by the Company.
No share options were granted to or exercised by a Director in the reporting
period.
During the reporting period, other than those noted above the Company did not
enter into any material transactions with related parties. As at reporting
date, the there was an amount of £40,079 accrued due the directors.
11. CONTROL
The Directors consider there is no ultimate controlling party.
12. DESCRIPTION OF RESERVES
Retained Earnings comprises accumulated gains and losses incurred to date.
Convertible Loan Note reserve comprises the fair value of the equity component
of the convertible loan notes held by the Company.
13. SUBSEQUENT EVENTS
The nonbinding heads of terms entered into between the Company and Hi 55
Ventures Ltd in respect of an intending acquisition and refinancing of FPP was
terminated following the expiry of the exclusivity period.
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