INNATE_INVESTMENTS_PLC - Accounts

The directors present the strategic report for the year ended 30 September 2020.

The principal activity of the company continued to be that of an investment company.

The strategy of the company continues to be to seek out and research potential investments which meet the criteria set by the board. There has been a significant negative impact upon the only two significant investments from the Covid 19 pandemic as follows:

Rail Sidings Limited

The rail industry has been severely affected with traffic numbers reducing dramatically which has resulted in huge uncertainty about the future. As a result the company still has no carriages in storage. No significant positive results are envisaged for at least the next three months.

BookBarn International Limited

The company has had to close their shop and cafe resulting in a significant loss in income. The company will make significant losses in the two years ended 31 August 2021.

The result of these serious problems in the company's two main investments is the future survival of the business cannot be guaranteed. However, the directors still believe that the future prospects of both these investments is positive and therefore do not consider any impairment to the carrying value of these investments is needed at this stage.

In addition there is the added significant uncertainty as to whether a deal can be reached with the two outstanding loan creditors created by the failure of UK Industrial Supplies Limited in the previous year. There are no immediate expectations of sufficient cash availability to make a worthwhile proposal to these creditors.

As reported in the prior year a partial holding in one of the company's investments was exchanged for shares in a company that was at the time listed on the Vienna MTF Direct Market. At the time of the transaction this indicated an uplift in value of some £41,000 on book value. The transaction was reversible and the directors have given notice that they intend to cancel the exchange given the uncertainty and risks in relation to the investment.

The directors still continue to look to acquire investments from associated parties at discounted rates.

For the year ended 30 September 2020 operating costs were maintained at minimum levels relating solely to the costs of running a private Public Limited Company.

The directors continually monitor the key risks facing the company. At the present time the directors feel the principal risk facing the company is the refinancing of loans and funding of the business whilst seeking out potential investments and the funding of any investments thereafter.

At the present time the only key performance indicators used by the company are its net asset value which is largely a reflection of its investments together with its projected bank balance, both of which are key to enabling the company to continue to fund its overheads.

On behalf of the board

The directors present their annual report and financial statements for the year ended 30 September 2020.

The principal activity of the company continued to be that of an investment company.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 6. A review of the business and future developments are included in the Strategic Report.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors manage the borrowing requirements of the company through the issue of loans which are the principle financial instruments of the company. The company is therefore exposed to fair value interest rate risk on these fixed rate borrowings. The company has no other significant financial instruments.

The directors do not have any current material exposure to foreign currency risk or credit risk.

In accordance with the company's articles, a resolution proposing that Alwyns LLP be reappointed as auditor of the company will be put at a General Meeting.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements 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 financial statements comply with the Companies Act 2006. 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.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

We have audited the financial statements of Innate Investments Plc (the 'company') for the year ended 30 September 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 30 September 2020 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

Material uncertainty related to going concern

We draw your attention to note 1 of the financial statements relating to the current discussion the directors are having with certain creditors of the company which indicates that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. In addition, as also detailed in note 1 of the financial statements, the Covid 19 pandemic has had a significant adverse impact on the company's main two investments which casts significant doubt over the future viability of the company.

Our opinion is not modified in respect of this matter.

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. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•     adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of directors' remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

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, 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.

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.

Use of our report

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 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.

Innate Investments Plc is a public company limited by shares and incorporated in England and Wales. The registered office is 4th Floor, 36 Spital Square, London, E1 6DY.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

These financial statements are prepared on the going concern basis. Whilst the directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern.

During the previous year UK Industrial Supplies Limited entered administration owing Innate Investments Plc £323,000. No significant proceeds are expected from the administration. The impact of the administration is that Innate Investments Plc is now unable to pay outstanding loans and the directors are in discussions with those loan creditors. Whilst the directors are confident of a successful outcome if they are unsuccessful in the negotiations and they are unable to find alternative funding if necessary then the company may not be able to continue trading.

At the current time the directors plan to continue to fund the company's operations however the only two significant investments have both been severely impacted by the Covid 19 pandemic. Whilst the directors consider the impact to be short term if there was no potential of future recovery from these investments there is material uncertainty as to if the company would continue.

Cash and cash equivalents are basic financial assets and include cash at bank and in hand.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

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.

The only significant judgement is the impairment review that is conducted each year on the carrying value of the company's holdings in unquoted companies.

The average monthly number of persons (which comprised solely of the directors) employed by the company during the year was:

No director received any remuneration or accrued pension benefits from the company in either year.

The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

The company has estimated capital losses of £1,448,000 (2019 - £1,448,000) and other tax losses of £1,985,000 (2019 - £1,981,000) which may be available for offset against future profits. No deferred tax has been recognised in respect of these losses as the level of future profits cannot be reasonably forseen.

The unlisted investments include small minority interests in unlisted equities. The directors do not believe their fair value can be measured reliably and the investments are stated at transaction price less any impairment.

The deferred shares have no voting or dividend rights and only are entitled to participate in a distribution on winding up after payment of £100 to the holders of each and every ordinary share.

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date: