PPHP.L Regulatory News (PPHP)

Papillon Holdings plc / Index: LSE / Epic: PPHP / Sector: Investment

25 September 2019

Papillon Holdings Plc

('Papillon' or the 'Company')

Half yearly report for the period ended 30 June 2019

Chairman's Report

Papillon Holdings PLC ("the Company") is an investment company incorporated on 19 October 2015, with the original primary objective of undertaking a single acquisition of a target company, business or asset in the industrial or service sector.

In our interim report published last year we reported that, on 18 May 2018, we had reached agreement via a non-binding head of terms to make an investment in 50% of the issued share capital of a fintech company focussed on the used car market, Pace Cloud Limited, trading as CarCloudÒ.

Car Cloud has developed innovative technology that bridges the gap between private and retail vehicle sales and delivers consistently high values for the user. It has an aggressive growth strategy, utilising its unique technology to expand its offering to an, as yet, underexploited area of the private car sale market; currently +200,000 private cars are sold and brought every month in the UK. The app has been launched, is being marketed "live" and beta tested, and can be searched and downloaded in App stores under the name, "CarCloud". The service had not yet been launched nationally but the KPIs continue to be very promising and Car Cloud has negotiated some potentially lucrative contracts with various service provider suppliers and is in the process of negotiating other contracts to provide the ultimate "total ownership" motor vehicle app on the market dealing with every aspect of owning a car from purchase to sale, from finance to insurance; and including roadside recovery, MOT, service and all other vehicle requirements.

The transaction is progressing well, and we have executed a Share Purchase Agreement to acquire a 50% interest in Pace Cloud Limited. Additionally, Papillon has raised a further £300,000 during the period which together with the previous £200,000, Papillon has now issued £500,000 of convertible loan notes ('Loan Notes') during the past twelve months. The Loan Notes carry an interest coupon of 10 per cent pa over their minimum term of 12 months, with a conversion price of 1.25 pence per new Papillon ordinary share.

The proceeds from the issue of the Loan Notes will be used, in conjunction with existing resources, to continue to finance the costs of developing the CarCloud App and business together with the expenses of Papillon Holdings PLC. The directors continue to believe that the investment in Car Cloud has enormous potential in a very large market and that the proposed investment should add significant shareholder value and the directors continue to investigate routes to enhancing the offering, the valuation and the route to market of CarCloud which are progressing well.

The investment proposes to break new ground in the market in which it operates, and the business model is a completely new solution in the way that individuals own and protect their vehicles, as described above it is a complete ownership solution from purchase and finance, through maintenance and on to the ultimate sale of a vehicle.

The Company has submitted a full information memorandum to the UK Listing Authority ('UKLA'), which the directors anticipate will be published in the near future in order that the placing and re-admission of the shares of your company to trading on the standard segment of the LSE may take place. The Investment is subject, inter alia, to the completion of due diligence, documentation and compliance with all regulatory requirements.

I would personally like to thank our shareholders again for their patience during this process and the extended time in which the shares of your company have been suspended from trading and we look forward to a successful future post the completion of our investment in Car Cloud.

Results for the period

For the period from 1 January 2019 to 30 June 2019, the Company's results included the ongoing running costs of the Company including listing fees on the London Stock Exchange and other advisory costs.

Risks and uncertainties

The Company is a relatively new entity, with only a brief operating history, and therefore, investors have no basis on which to evaluate the Company's ability to achieve its objective of identifying, acquiring and operating one or more companies or businesses.

Whilst the company has executed a Share Purchase Agreement to acquire a 50% interest in Pace Cloud Limited, the directors are unable to offer assurance that the relisting of Papillon Holdings PLC will complete and /or that we will be able to raise the necessary funds vi a placing upon re-listing to enable Car Cloud to fulfil its short term plans.

Going Concern

As stated in Note 1 to the condensed financial statements, the directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Post Balance Sheet Events

On 15 August 2019 the board was pleased to announce that it has appointed Lord Nicholas Monson to the Board of Directors (the 'Board') as Non-Executive Chairman to the Company. Additionally, Papillon is pleased to announce that Mr. Anthony Eastman has been appointed to the Board as a Non-Executive Director.

Lord Monson has 35 years of experience in the City where has advised financial houses and quoted companies in different sectors on investor relations. Most recently he has served as a director of AIM-listed Legendary Investments and continues to serve the company under its new name, Eight Peaks Group plc.

Mr. Eastman is a Chartered Accountant (Australian qualified) with a number of years' experience in financial management and corporate advisory services, primarily in the natural resources sector, along with extensive experience in the public company environment, having been a director and company secretary of a number of ASX and AIM junior mining and oil and gas focused companies. He has previously worked with Ernst & Young and CalEnergy Gas Ltd, a subsidiary of the Berkshire Hathaway Group of Companies in both Australia and the UK.

Responsibility Statement

We confirm that to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year; and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

James Longley

Chairman

25 September 2019 

PAPILLON HOLDINGS PLC

INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME

PAPILLON HOLDINGS PLC

INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY

PAPILLON HOLDINGS PLC

INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION

PAPILLON HOLDINGS PLC

INTERIM CONDENSED CASH FLOW STATEMENT

NOTES TO THE UNAUDITED INTERIM CONDENSED REPORT

1. General Information

Papillon Holdings Plc ('the company') is an investment company incorporated in the United Kingdom. The address of the registered office is 27-28 Eastcastle Street London W1E 8DN. The Company was incorporated and registered in England and Wales on 19 October 2015 as a private limited company and re-registered on 24 June 2016 as a public limited company.

2. Basis of preparation

This announcement was approved and authorised to issue by the Board of directors on XX September 2019.

The financial information in this interim report has been prepared in accordance with the International Financial Reporting Standards. IFRS comprises standards issued by the International Accounting Standards Board (IASB) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union (EU).

There are no IFRS, or IFRIC interpretations that are effective for the first time in this period that would be expected to have a material impact on the company.

The financial information has been prepared under the historical cost convention, as modified by the accounting standard for financial instruments at fair value.

The Directors are of the opinion that the financial information should be prepared on a going concern basis, in the light of the Company's financial resources.

The accounting policies applied by the Company in these unaudited condensed interim financial statements are the same as those applied by the Company in its audited financial statements for the period ended 31 December 2018 except as detailed below.

These condensed interim financial statements for the six months ended 30 June 2019 and 30 June 2018 have been prepared in accordance with International Accounting Standard No. 34, 'Interim Financial Reporting', are unaudited and do not constitute full accounts. The comparative figures for the period ended 31 December 2018 are extracted from the 2018 audited financial statements. The independent auditor's report on the 2018 financial statements was not qualified.

No taxation charge has arisen for the period and the Directors have not declared an interim dividend.

Copies of the interim report can be found on the Company's website at www.papillonholdingsplc.com.

Going concern

The directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

3. Prepayments and other receivables

4. Loss per share

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

The calculation of basic and diluted earnings per share is based on the following figures:-

The basic and diluted earnings per share are the same, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation.

5. Share Capital

6. Convertible loan notes

On 26 October 2018 the Company issued £100,000 convertible loan notes, repayable on 25 October 2019 if not converted into shares prior to that date, and bearing interest at 10% p.a, payable quarterly in arrears. On 28 November 2018 the Company also issued £100,000 convertible loan notes, repayable on 27 November 2019 if not converted into shares prior to that date, and bearing interest at 10% p.a, payable quarterly in arrears. On 16th May 2019 the Company also issued £300,000 convertible loan notes, repayable on 15th May 2020 if not converted into shares prior to that date, and bearing interest at 10% p.a, payable quarterly in arrears.

The net proceeds from the three separate issues of the loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Company.

The Directors estimate the fair value of the liability component of the loan notes at 30 June 2019 to be approximately £486,905. This fair value has been calculated by discounting the future cash flows at the deemed market rate of 12%.

7. Reports

A copy of this announcement will be mailed to shareholders and copies will be available for members of the public at the Company's Registered Office 27-28 Eastcastle Street London W1E 8DN