NOTES TO THE FINANCIAL INFORMATION

1. STATUTORY INFORMATION

Folium Holdings Limited is a private company, limited by shares, registered in England and Wales and was incorporated on 13 December 2018. The address of its registered office is 160 Camden High Street, London, NW1 0NE.

2. ACCOUNTING POLICIES

Basis of preparation

This financial information has been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial information has been prepared under the historical cost convention.

This financial information of the Company has been prepared for the sole purpose of publication within this Admission Document. It has been prepared in accordance with the requirements of the Prospectus Rule and has been prepared in accordance with International Financial Reporting Standards and IFRS interpretations Committee (IFRS IC) interpretations as adopted by the European Union (“IFRS”) and the policies stated elsewhere within the Financial Information. The Financial Information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial information is prepared on a going concern basis. The directors consider that there are no material uncertainties about the company’s ability to continue as a going concern.

Critical accounting judgements and key sources of estimation uncertainty

In preparing this financial information, management has made judgements and estimates that affect the application of the company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised retrospectively.

The directors consider the discount rate used for the convertible loan notes to be a significant area of judgement. The rate used is considered to be at fair value (see note 14).

The company is required to make judgements over the carrying value of investments in unquoted companies. The carrying value of an investment and any subsequent impairment in an unquoted company can be difficult to establish as comparison with independent markets is not always possible.  Management’s judgement in this regard is that the value of the investment represents cost less previous impairment.

Foreign currencies

The company’s presentational and functional currency is pound sterling (£). Transactions in currencies other than the functional currency are recorded at a rate of exchange approximating to that prevailing at the date of transaction. At each statement of financial position date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated at the amounts prevailing at the balance sheet date and any gains or losses arising are recognised in the income statement.

Taxation

Current taxes are based on the results shown in the financial information and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

Investments

Investments are recognised at cost less any provision for impairment. Investments are impaired only when there is objective evidence that the estimated future cash flows have been affected. Impairment reviews are carried out on investments regularly but at least annually. Contractual obligations are recognised at fair value where the company have a contractual liability in respect on an investment.

Financial instruments

Financial Assets

Financial assets are recognised on the company’s statement of financial position when the company has become party to the contractual provisions of the instrument and are initially measured at fair value, expect for financial assets at fair value through the statement of comprehensive income, which are initially measured at fair value, excluding transaction costs. Financial assets include cash and cash equivalents and trade and other receivables. The carrying amount of trade receivables is considered to be the same as their fair value due to the short-term nature.

Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method less any impairment. Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cashflows of the investment have been affected.

Financial assets are only derecognised when the contractual rights to the cash flows from the asset expire or when the asset transfers and substantially all the risks and rewards of ownership to another entity.

Financial Liabilities

Financial liabilities are recognised on the company’s statement of financial position when the company has become party to the contractual provisions of the instrument and are initially measured at fair value. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement 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. Financial liabilities include trade and other payables and convertible debt instruments.

Financial liabilities are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption as well as any interest payable while the liability is outstanding.

Trade and other payables that are not interest-bearing are stated at nominal value at the statement of financial position date. Any interest charges or late payment penalties are recognised only when agreed with the supplying party or it is considered probable that they will be levied.

Financial liabilities are derecognised when, and only when. The company’s obligations are discharged, cancelled or they expire.

Convertible debt

The proceeds received on issue of the company’s convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using the market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the ‘Convertible debt option reserve’ within the shareholders’ equity, net of income tax effects.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the statement of profit or loss over the period of the borrowings using the effective interest rate method.

Share capital

The Company’s ordinary shares are classified as equity. Monies raised from the issue of shares in excess of par value are recorded as share premium. Costs associated with the raising of capital are deducted and charged against the share premium account.

Exceptional items

Exceptional items are recognised at cost.

Financial risk management

General objectives, policies and processes

The Board has overall responsibility for the determination of the company’s risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the company’s competitiveness and flexibility. Further details regarding these policies are set out below:

Foreign exchange risk

Foreign exchange risk arises when the company entities enter into transactions denominated in a currency other than their functional currency. It has no foreign currency denominated monetary assets or liabilities and does not make sales or purchases from overseas countries.

The company is only exposed to currency risk on investments in overseas markets based in Euro. The company aims to fund investments in the respective currency and to manage foreign exchange risk by hedging where possible.

Liquidity risk

Liquidity risk arises from the company’s management of working capital. It is the risk that the company will encounter difficulty in meeting its financial obligations as they fall due. The company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 45 days.

The Board receives regular information regarding cash balances. At the end of the financial year the company expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

The liquidity risk of the company is managed by the board.

Credit risk management

Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the company. Bank deposits are only with major reputable financial institutions. None of the company assets are secured by collateral or other credit enhancements.

3. EXPENSES BY NATURE

For Page 2, click HERE

For page 3, click HERE