Page 3

14. SHARE CAPITAL

     Issued allotted & Paid share capital

Background - Ordinary shares, warrants and loan notes

On 10 June 2022, 133,333,333 ordinary shares of 0.1p each were issued under a placing at 0.3p each (at a premium of 0.2p per share) to raise £400,000 before costs of £32,000.

On the 31 July 2022 the Company agreed with Mr C C Johnson a consolidation and variation of terms of the two unsecured convertible loan notes and direct debt held by him. The conversion of the total amount owed to him by the Company (£905,000) has resulted in the issue to Mr C C Johnson of a new unsecured conversation loan note for an aggregate amount of £905,000, expiring 31 July 2024. This has replaced:

1. The £ 600,000 unsecured convertible loan notes issued in July 2020 which would have been redeemable on 31 July 2022 and which were convertible at 2p per share (following the share consolidation in December 2020) and carried the right upon a conversion of the loan notes, to the grant of warrants to subscribe for ordinary shares on a one to one basis, exercisable at the conversion price of 2p for a period of two years from the date of grant;
2. The £ 200,000 unsecured convertible loan notes comprised in the loan facility entered into in November 2021, which would have been redeemable on 30 November 2022, and which were convertible at 0.7p per share;
3. £ 105,0000 owed to him by the Company on directors’ loan account.

The new unsecured convertible loan note is convertible in full into 226,250,000 ordinary shares of 0.4p per ordinary share and can be converted by Mr Johnson, subject inter alia to his entire holding being less than 29.99 per cent of the voting rights in issue in the Company.

The new unsecured convertible loan note carried the right upon a conversion, to the grant of warrants to subscribe for ordinary shares on a one for one basis, exercisable at the conversion price for a period of two year from the date of grant.

Loan note equity reserve is the amount that has been provided for in respect of the difference between the cash value and liability element of the loan notes.

The convertible loan notes have been accounted for as having both a debt and an equity element. This results in the creation of a loan note equity reserve at the point of issue. This loan note equity reserve is the difference between the loan note value received by the company of £ 905,000 (31 3 22: £800,000) and the fair value of a debt only instrument with a 10% imputed interest rate and a final settlement figure of £905,000 in July 2024. This 10% imputed interest rate of £80,165 (2022: £33,058), is managements' best estimate as to the interest rate that would be expected from the market for an unsecured loan of £905,000 without a conversion element.

Deferred shares do not entitle the holder to receive notice of and to attend or vote at any general meeting of the Company or to receive dividends or other distributions. Upon winding up or dissolution of the Company the holders of deferred shares shall be entitled to receive an amount equal to the nominal amount paid up thereon, but only after holders of ordinary shares have received £100,000 per ordinary share. Holders of deferred shares are not entitled to any further rights of participation in the assets of the Company. The Company has the right to purchase the deferred shares in issue at any time for no consideration.

For the purpose of preparing the consolidated financial statement of the Group, share capital represents the nominal value of the issued share capital of 0.1p per share (2022: 0.1p per share). Share premium represents the excess over nominal value of the fair value consideration received for equity shares net of expenses plus deferred shares of 0.9p after issued share capital of 1p.

The weighted average interest rates paid on the bank loans were as follows: Bank loans: 3.4 % (2022: 3.4%)

All of the Directors’ loans are repayable after more than 1 year with the exception of loan notes amounting to £797,796 relating to Mr C C Johnson.. All loans are interest bearing and charged accordingly. However Mr C C Johnson has waived his right to interest in the year with the exception of the first £ 500,000 (2022: first £500,0000). Interest of nil (2022: £25,000) has been accrued in the year. Interest of £1,559 (2022: £12,000) was paid to Mr J Dubois at the rate of 12% pa (2022: 12% pa).

Directors’ loans included a sum of £nil (2022: £100,000) advanced by the DFM Pension Scheme of which Mr J Dubois was the principal beneficiary, which had been repaid during the year. This loan bore interest at 12% per annum (2022: 12% per annum).

Historic loan notes with a nominal value of £600,000 and £200,000 respectively were rolled up in to a new convertible loan note agreement in the year along with related party loans of £105,000 to create a new convertible loan note with a nominal value of £905,000. The liability in respect of this transaction is disclosed within directors loans above with a present value as at 31st March 2023 of £797,796 (2022: £769,697). Refer to note 14 for further details. As a financial instrument with both debt and equity components, an amount was recognised directly into a Loan Note Equity Reserve on issue, as explained further in note 14, with the debt element being unwound at an implied interest rate of 10% and the interest recognized through profit and loss.

The remaining balance is disclosed in note 15.

Included in other loans is £560,000 (2022: £600,000) advanced by Mr G Howard (son-in-law to Mr C C Johnson to the Company at rates of 10% & 5% per annum (2022: 10% & 5% pa) together with £nil (2022: £90,000) has been advanced by C Rowe, a former employee of the Group, at a rate of 5% per annum. The balance relates to the Covid Loan. Details of the negotiated loan interest reduction with Mr G Howard for accrued interest are given in note 17.

Mrs S Johnson, wife of Mr C C Johnson has a legal charge on flats 3 & 5 Burnside Court Sandhurst Road, Tunbridge Wells Kent of £nil (2022: £33,255) in connection with her loan to Selmat. During the year the sum of £33,255 was repaid.

Selmat has also granted to Paragon Mortgages a legal charge over the freehold property at Hildenborough. The mortgage was interest only, for a term of seven years with a fixed interest rate for the first five years. The property property had been rented out but was sold after the year end.  

The bank borrowings are repayable as follows:

13. BORROWINGS

For Page 1, click HERE

For Page 2, click HERE

For page 4, click HERE

For page 5, click HERE