Company registration no, 08044838 Sovereign Global (UK) Limited Annual Report and Financial Statements For the year ended 31 December 2018 sen son272019 COMPANIES HOUSE WM ae toa eer i! 8Sovereign Global (UK) Limited Annual Report and Financial Statements Contents For the year ended 31 December 2018 Swategie Report Direstor’ Report Directors Responsibiliies Statement Independent Auditor's Report Statement of Comprehensive Income Statement of Financia Position Statement of Changes in Equity [Notes to the Financial Statements Page er)Sovereign Global (UK) d Annual Report and Financial Statements Strategic report For the year ended 31 December 2018 ‘The directors present their report and financial statements for the year ended 31* December 2018, ‘Company information Sovereign Global (UK) Limited (the Company) is an incorporated company registered in England and ‘Wales with the company registration number 08044838. 1s registered office is at Tower Bridge House, St Katharine’s Way London E1W IDD, UK. The principle activity of the Company is to provide maritime support to sovereign nation-states, as well as training and assisting them in protecting and maintaining their sovereign interests at sea in their Exclusive Economie Zone (EEZ). ‘At sea, the Company is a provider of logistics support services and training to the government of Angola in their EEZ: Review of the business ‘The Company had renewed until December 31", 2019 a significant maritime contract in Angola, initially signed at the end of 2013. At this date there are’no reasons that this contract would not be renewed next year. This activity is managed and operated from two major Company offices located in the UAE and Djibouti. Operations and finances are supervised directly by the Sovereign Global maritime operations ditecior and by its sister subsidiary Sovereign Global Switzerland, respectively Since the end of 2014, the Company's goals are to develop businesses with the UK Government (the MOD ‘and the FCO). The Company has won an important tender to support the British High Commission in Kinshasa (Democratic republic of Congo)with a Deputy Defence attaché which has ended in March 2019. Early 2019, the company has signed a new training contract forthe Nigerian Maritime Administration and Safely Agency (NIMASA) forthe protection of their EEZ. ‘The Company observes 1$0 9001:2008, furthering the work started in 2013 on compliance and HSE. Key Performance Indicators Given the unique nature of the business, the main key performance indicators monitored by management are revenue and the result before tax. These ate disclosed in the income statement. Principal risks and uncert nties Due to the transfer of our maritime logistics business to its sister subsidiary Sovereign Global Middle East, LLC, with the Company only retsining its maritime contracts in West Africa, operational risks have significanily decreased. ‘The Company charters the vessel to it sister subsidiary, Sovereign Global Middle East LLC, which secures the use and the maintenance of the vessel for the Angola contract The change of the Angola President and government in 2018 having had no effect on the ongoing contract with Sovereign Global (UK), this shows the resilience of the business and the customer's overall satisfaction with the services redered. Financial Risk Managem a ‘The Company's operations expose it to limited financial risks typical for service organisations including interest rate risk, credit rsk, liquidity risk, cash low risk and foreign currency risk. ‘On-going close and direct control by the directors is maintained through not delegating the responsibility for monitoring financial risk to others at this stage ofthe development of the Company. Policies are set by the directors and implemented by the sister subsidiary Sovereign Global Switzerland's finance departmentSovereign Global (UK) Limited Annual Report and Financial Statements Strategic report For the year ended 31 December 2018 Liguiiy risk “The Company actively mainisns a mielure of long-term and short-term debt finance designed to ensure it ‘has sufficient available funds for operations and planned expansions. These debis were financed by shareholders, the Company has no bank debis. Cash flow risk Due to the fact thatthe main cash Mow is provided hy one contract, the Company is subject to cash Now pressures if uny delay of payment from our client, Weve decreased the Company overheads to avoid any possible court case duc to delay of payment Foreign currency risk he Company necessarily conducts business in many currencies 0 reflect the principal sovereign clients and local supply chains but mainly wades in US dollar. Because only oflice overhead expenses are in Sterling, the management deem the risk of Financial impact ifthe US dollar loses against the Euro and Sterling as low Creit risk Celt risk can arise from cush and eash equivalents held on deposit with banks and financial institutions, and specifically through credit exposures with customer, including outstanding rcecivables and committed transactions For hanks and financial insiutions only independently rated parties with « minimum rating of “A? are accepted, ‘Customers are vik assessed for their ereit quality aking into account their current finan position, past ‘experience and other factors. Individual risk limits ae then set by the board. The uilsation of ered limits is mandatory, and levels are egularly monitored. The amount of exposure o any individual counterpary is, subject toa limit, which is reassessed regulary by the boa. Interest rate risk Sovertign Global (UK) has both interest-earing assels and interes-incusting labiliies. Interes-earing asses include eash balances at hank which earn interest a a fixed rate, Inires-incurring lables include shareholders loans, which earn interest ua fixed rate determined by the directors. The directors will review the appropriatoness of this policy as Sovercign Global UK's operations change in size or nature. Bresit Due to the uncertainty surrounding Brexit itis aot currently possible t fully evaluate all its potential implications on the Conypany's trade, customers and suppliers. However, the directors have performed an inital impact assessment und atthe moment do not believe it will have a material impact on the Company. The direciors will continue to monitor this as the situation evolves, ‘This report was approved by the board oa 24 October 2019. Mr. J. Paolini DirectorSovereign Global (UK) Limited ‘Annual Report and Financial Statements Directors’ report For the year ended 31 December 2018 ‘The directors present their report and the financial statements for the year ended 31 December 2018 Results and dividends ‘The prot forthe year, after taxation, amounted o $1,749,261 (2017: loss alter taxation $ 5,254,886). ‘The Company has not paid any interim dividends inthe year. The directors do not recommend the payment of Final dividends AAs permiied by Paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 cerain matters which are required to be diselosed in the Direciors* Report have been omitted as they ar included inthe Sieategic Report on page 3. These matters relate to the principal activity and financial risks. Directors The following directors have held office since 25% April 2012. MrJ Paolini Appointed 25" April 2012 Mr B Pardigon ‘Appointed 25" Apuil 2012 Going concern ‘As detailed in note 2.1 the Company is dependent on the continuing suppor of the SG Group's sharcholders together with fature sources of income to meet iis working expital requirements. The direcwrsare confident that new major cantracts will be signed inthe near Tuture that, together withthe ongoing suppor of the shareholder, wil yeneratesuicent working capital forthe Company to continue forthe foreseeable future and so accordingly the financial statements have been prepared on a going concern basis. However, these ‘matters indicate that there is a material uncertainty whieh may east significant doubt about the Company's ability 1 continue as a going concern should new eoniracts or continued support fom the shareholders not be fortheoming, Future developments The directors expect the Company to retum to profitability in the fture, based on the curent strategies. Auditors Mazars were contirmed auditors to the company and will be re-appointed in accordance with section 485 ‘of the Companies Act 2006, © Statement of disclosure to auditors So far asthe directors are aware, there is no relevant audit information of which the company’s wuditors are unaware. Additionally, the directors have taken all the necessary sleps that they ought wo have taken as directors in order to make themselves aware of all relevant audit information and to establish thet the ‘company’s auditors are aware of that information, ‘This report was approved by the board on 24 October 2019. iors Me. 4, Paolini DirectorSoversign Global (UK) Limited Annual Report and Financial Statements Directors’ Responsibilities Statement For the year ended 31 December 2018 The Directors are responsible for preparing the Swtegic Report, Directors’ Report and the financial saements in accordance with applicable law and regulation, ‘Company law requires the Directors to prepare Financial statement foreach financial year. Under hat law ‘he Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting standards (United Kingdom Generally Accepted Accounting Practice), including, Financial Reporting Standard 101 “Reduced Disclosure Frumework", Under company law, Drseiors must ot approve the financial statements unless they ae satisfied that they give a rue and fair view ofthe state of alfairs of the company and of the profit or loss ofthe company fr that period. In preparing these financial statements, the Ditectors are required 1 Seleut suitable aecounting policies and then apply them consistently; ‘+ Make judgments 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 inthe Financial statements; ‘+ Prepare the ‘inancial statements on the going concer basis unless itis inappropriate 1 presume that the company will continue in business The Directors are responsible for keeping adequate necounting records that are suTicient wo show and cexplin the eonypany's wansaetions and dislose with resonable accuracy at any time the nancial position ‘ofthe company and enable them to ensure that the financial statements comply with the Company Act 2006, They are also responsible for safeguarding the assets ofthe eompany and hence for taking reasonable scps {or the prevention und detection of fraud and other ieregularies,Sovereign Global (UK) Limited Annual Report and Financial Statements Independent auditors’ report to the members of Sovereign Global (UK) Limited ‘We have audited the financial statements of Sovereign Global (UK) Limited forthe year ended 31 December 2018 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the ‘Statement of Changes in Equity and the notes to the Financial Statement. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including Financial Reporting Standard 101 “Reduced Disclosure Framework”, In our opinion the financial statements: + give a true and fair view of the state of the company's affairs as at 31 December 2018 and of profit forthe year then ended; ‘+ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ‘+ have been prepated in accordance with the requirements ofthe Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standafds 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 auelt evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty with respect to going concern In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2.1 tothe financial statements concerning the company’s ability to continue 1s a going concer, The company has a net profit of £1,749,261 during the year ended 31st December 2017 ‘and, at that date, the company had a net liability of £5,381,651. These conditions, along with the other matters explained in note 2.1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concem. The financial statements do not include the adjustments that would result if the company was unable to continue as a ‘going concer. Other information ‘The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Qur opinion on the financial statements does not cover the other information and, except (othe extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.Sovereign Global (UK) Limited Annual Report and Financial Statements Independent auditors’ report to the members of Sovereign Global (UK) Limited {mn connection with our audit ofthe financial statements, our responsibilily isto read the other information and, in doing so, consider whether the ether information is materially inconsistent with the financial statements or our knowledge abiained in the auditor otherwise appeats to be materially missiated. If we identify such material inconsistencies or apparent material missiatements, we are required to determine whether there i & material misstatement inthe Financial statements oF & material misstatement ofthe other information. If, based onthe work we have performed, we conclude that there isa material misstatement of {his other information, we are required to report that fac We have nothing to report inthis regerd, Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken inthe course ofthe aut: the information given in the Strategic Report und Directors? Report fr the financial yeaé 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 upplisale legal requirements Matters on which we are required to report by exception In tight of the knowledge and understanding of the company and its environment obtained inthe course of ‘the audit, we have not idemiied material misstatements inthe Strategic Repost or the Directors’ Report. We have nothing to report in respect ofthe following matters where the Companies Act 2006 roquves us to report to you if in ou opinion + adequate accounting records have not been kept, or retums adequate for our audit have not been received from branches not visited by us; oF ‘+ the financial statements ae not in agreement with the accounting records and retums; oF ‘© curtain disclosures o directors’ remuneration specified by law are not made; oF 1+ "Wwe have not received all the information and explanations we requite for our audit Responsibilities of Directors ‘As explained more fully in the directors* responsibilities sttement set out on page 5, the directors are esponsile forthe preparation of the financial statements and for being Saisie that they give a rue and Tair view, and for such intemal contol as the directors determine is necessary to enable the preparation of Financial statements that are fee from material misstatement, whether due t fraud or eo In preparing the financial statements, the directors are responsible for assessing the company’s ability 10 continue as a going concer, disclosing, as applicable, matters eclacd 1 going concern and using the going concern busis of accounting unless the directors either intend to liquidate the company or 10 cease ‘operations, or have no realistic alternative but to do so.Sovereign Global (UK) Limited Annual Report and Financial Statements Independent auditors’ report to the members of Sovereign Global (UK) Limited ‘The impact of uncertainties due to Britain exiting the European Union on our audit “The Directors view on the impact oF Brexit is disclosed on page 3. The teins on which the United Kingdom ‘may withdraw from the European Union are not clear and it is therefore not curently possible o evaluate all potential implications tothe Group's and eampany's trade, customers, suppliers and the wider economy. We consider the impuct of Brexit on the Group and Company as part Four audit procedures, applying 2 standard finm wide approach in response to the uncertainty associated with the Group's and company's fuure prospects and performance, However, no audit should be expected to predict the unknowable factors or all possible implications forthe Company and ths is particularly the casein elation to Brexit. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance ubout whether the financial statements as a whole are free fom material misstatement, whether due to fad or eror, and to issue an avdior’s report that includes out ‘opinion. Reasonable assurance isa high level of assurance, but isnot a guaranice 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 (0 influence the economic decisions of users taken om the basis of these financial statements ‘A furthée description of our responsibilities for the audit of the Financial statements i located on the Financial Reporting Council's website at wwww fie orp. uk/auditorsesnonsbilitics. This description forms part of our auditor's report. Use of the audit report, “This report is made solely tothe 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 stale to them in an auditor's report and for no other purpose. To ‘the (atest extent permitted by lav, we do not accept or assume responsibilty to anyone other than the ‘company and the company’s members as a body for our audit work, fr this report, or forthe opinions we Ihave formed, Rowe (Senior Statutory Auditor) for and on bohalf of Mazars LLP Chartered Accountants and Statutory Auditor Tower Bridge House StKatharine's Way London EIW Ibp Paci A Decelew Zor}Sovereign Global (UK) Limited Annual Report and Financial Statements Statement of Comprehensive Income For the year ended 31 December 2018 Notes 31 December 31 December 2018 2017 s s Revenue 3 5148231 5,324,510 Cost of sales (34620,651) 14,975,695) Gross profit 1528 Sh sas ‘Administaive expenses 1,930,294) (2,192,640) [Net charges to provision 2,019,081 (3,669,865) ‘Operating profiti(ioss) 4 1.613367, ,690) Finance income 7 BIKE 195,000 Finance costs 8 @2z79, (229,578) Profit/toss) before taxation T7087 (5548-368) Income Tax (expense) / credit 9 45.559 293,383, Total comprehensive incomel(loss) for the year Tio aaSovereign Global (UK) Limited Annual Report and Financial Statements Statement of Financial Position As at 31 December 2018 Notes 31 December 2018 31 December 2017 s 8 Property, plant and equipment u 4,590 3.890) Current assets Sinden ter ceva 2 4.716 213055 Cath and ch equiva pt W691 T6310 Tota assets nasi 1201209 Luapuuiries Corven abies Tras and oe payables is 3882 astosts Borge fs a SE Ta | Non-curcen abies Borovwings “a sous 5.60.64 Deed tx ities 5 1551 iat 3069378 Tats .x53130 sgs2m Net ibis 381650 ams equity Share capil 6 4,300 2,10 Copal conbuted 3smn39 257219 eines caings (903,09) (10355850) Tetley S380 f.30311 The financial statements were approved by the Board of Diretors and authorised for ise on 31 October 2019 and signed by Me. J, Paolini DirectorSovereign Global (UK) Limited Annual Report and Financial Statements Statement of Changes in Equity ‘As at 31 December 2018 ACL Janvary 2017 Loss forthe year Total comprehensive loss Capital contributed At 31 December 2017 Profit forthe year Total compreh AL31 December 2018 Share apical s 4,100 Capital contributed 3 3,143,563 433,376 SET ID Retained earnings 5 (6,500,264) (5:254,886) (5.234,886) (10,755,150) 49,261, 789,261 (00% 9) ‘Total equity 5 (2,309,601) (5,254,886) (7,5G4.487) 453,576 Cs09iH) 1,749,261 1.749.261 (381,650)Sovercign Global (UK) Limited ‘Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 Corporate information Sovereign Global (UK) Limited is a Company incorporated in the United Kingdom, The registered uddress ‘oF the Company is given on page 2. The principal operations of the Company are ineluded in the Strategic reporton page 2. 2 2 Significant accou ing policies Basis of preparation ‘Statement of compliance Taese financial satemens have been prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework" ("FRS 101") and in acenrdance with the applicable provisions of the Companies Act 2006. Excopt for cerain disclasure exemptions deailed below, the recognition ‘measurement and disclosure equirements of Intemational Financial Reporting Standards as adopted by the EU (EU-adopted IF RSs) have been applied to these financial statements and, where necessary, amendments have been made in order to comply with the Companies Aet 2006 and The Large and Medium-sized Companies and Groups Regulations 2008/410 (‘Regulations’), Basis of measurement The financial statements have been prepared on the historical cost bass. Amendments to FRS 101 In July 2015, amendments were made 10 FRS 101 a8 a coniequenee of changes made to EU-adoped IFRS and w mainiain consistency with Company lave, The Company has adopted these amendments early as permisted by the standard, The amendments applied are detailed as Follows “ ) ‘The amendments to paragraphs 5, 7A and &(j) of the sanded arising from the 2014/2015 eyele allows the Company to take advantage a the exemption from the requirement to present an opening statement of financial position at the date of wansition and dhe requirement to disclose key ‘management personnel compensation. The amendmen The Companies, Partnerships and Groups (accounts and Reports) Regulations 2015(S1 2015/980) which permits a qualifying emity choosing © apply 1A(1) and 1A) of Schedule | to The Large and Medium-sized Companies and Groups (Accounts and Repost) (SI 2008/410) tne option 19 apply the relevant presentation requirements of IAS 1 Prescalation of Financial Statements Disclosure exemptions applied The Company has taken advantage of the following disclosure exemptions in preparing these financial statement, as permitted by FRSIO1 paragraph 8 0 « ay ww) co wi The requirement of IFRS 7 “Financial Instruments: Disclosures’ relating 1o the diselosure of financial instruments und the nature and extent of risks arising from such instruments; The requirement of IFRS 13 ‘Fair Value Measurement’ paragraphs 91 to 99 relating to the fir vvalue measurement disclosures of Financial assets and financial liabilities that are measured at fair valu, such a the available for sale investments and derivative financial insiruments; The applicable requirements of IAS 36 ‘Impairment of Asses’ relating wo the disclosures of estimates used to measure recoverable amounts; ‘The applicable requirements of LAS | “Presentation of Financial Statements’ relating w the disclosure of comparative information in respeet of the number of shares outstanding al the beginning and end of the year (IAS 1.79(aXiv)), the reconciliation of the earrying amount of propery, plant and equipment (IAS 16.73(6)) and the reconciliation of the carrying amount of intangible esis (IAS 18(118Xc)) The requirement of IAS 1 “Presentation of Financial Stalements’ paragraphs 136 to 136 relating to the disclosure of capital management policies and objectives The requirements of IAS 7 "Statement af Cash Flows’ and IAS | “Presentation of Financial Statements" paragraph 1(d), 111 relating to the presentation of a Cash Flow Statement;Sovereign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 (vil) The requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors paragraphs 30 and 31 relating to the disclosure of standards, amendments and interpretations io Isque but not yet effective; and (willy The requirements of IAS 24 “Related Party Disclosures’ relating to the disclosure of key management personnel compensation and relating tothe disclosure of related party tansactions ‘enered into beuveen the Company and other wholly-owned subsidiates ofthe group For the disclosure exemptions listed in points (i) 10 (li), the equivalent disclosures are included in the consolidated financial statements ofthe group Sovereign Global Solutions Limited which the Company is consolidated into. Going concern The company has a net profit of USD 1,749,261 during the year ended 31* December 2018 and at that date the company had net liabilities of USD 5,381,651. The Company meets is day to day working capital requirements through various sources of short and mediumterm finance. The directors recognise the {eantnuing operations ofthe Company are dependent upon continued suppor rom dhe Group's shareholders together with future source oF income. At the end ofthe year 2018, a sister of the Group has signed « major contract in the maritime sector will allow the Group to face its dcbts and will pu the Group back on the track with the cashflow. The directors believe that new ether major contracts will be signed in Uhe near ‘ure that will gcnerate sulTciont working capital forthe Company to continue fr the foreseeable Future and so the financial statements have been prepared gn a going concem basis. However, should new contracts not be forthcoming there is a material uncertainty which may cast significant doubt about the Company's ability © continue as going concern 22, Foreign currency The Company's finaneal statements are presented in US dollar, whichis also the Company's functional ‘currency, Transactions in foreign cufrencies are translated ino the fespectve functional curencies of the operations atthe spot exchange rates atthe dates ofthe transactiuns, Monetary assets and liabilities denominated ia foreign currencies at each reporting date are wanslated into the functional currency at the spot exchange rales as a that date [Nonmonetary assets und lables denominated in foreign currencies that are measured at fair value are rearanslated into the functional currency at the spot exchange rate at the date thatthe fir value ws etemined, Non-monetary asets and Viabilties that are measured in terms of historical cost in @ forwign ccureney are translate using the exchange rate atthe dae ofthe transaction 23, Revenue Revenue represents the amount receivable for the provision of serves and the sile of goods during the year, excluding VAT and ade discounts. Revenue is reeugnised to the extent that itis probable that Ceeariamic benefits will ow to the Company and the revenue ean be measured reliably. Revenue alvibutable to maritime logistical services is eeengnised-when the servie has been completed. Deferred income arses where services are invoiced in advance of performance, The smount is released to the proit or las in subsequent periods in relerence to the stage of completion ofthe (ansaetion atthe reporting date 24, Income tax ‘Current income tax assets and/or abilities comprise obligations to, or claims rom, fiscal authorities relating ‘o the curent or prior eperting periods, Una are unpaid/due atthe reporting date. Current ta is payable on taxable profits, which may differ Irom profit or loss inthe financial statements, Calculation of eurrent tax is bused on the tax rates and tax laws that have been enacted or substantively enacted atthe reporting date Deferred taxes are calculated using the liability method on temporary dillerences between the carrying ‘amouns of assets and lisbiltes and their ax bases. {A deferred tax asset is recognised for all deductible emporary differences to the extent tha iti probable ‘that wxable profit will be available against which the deducuble tempacary difference ean be utilisSovereign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 Deferred ts asses und liabilities ute messured a the tax rates that are expected Io apply tothe period when the asst is realised or the liability is setled, based on tax rates and tax laws that have beon enacted oF substantively enacted by the end ofthe reporting pris. 25. Property plant and equipment ther property plant and equipment Other property, plant und equipment are recognised as an asset only if itis probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. After recognition, all other property. plant and. equipment are carried at evst fess any subsequent tccumulated depreciation ané subsequent accurmulted impairment losses Depreciation is provided at rates calculated wo write down the cast oF assets ess estimated residual value iver their expected useful lives using the straight-line method. The useful lives of other property, plant and equipment range fiom 3 to 5 years. ‘The residual value and the useful life of an asset is reviewed at least at each Financial yeaé-end and if ‘expectations differ fiom previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS & Accounting Policies. Changes in Accounting Estimates and Errors, Gains or losses arising on the disposal of propery, plant and equipment are determined as the difference ‘beween the disposal proceeds and the carrying value of the asset and are recognised in pent or loss 26. Financial instruments A financial instrument is any contract that gives rise toa financial asset oF one entity and. financial Liability or equity instrument of another entity Financial assets Financial assets ae initially recognised at fat value plus directly atibutable transaction costs All financial assets ure classified as loans and receivables; these comprise wade and other receivables and ceash and cash equivalents. Loans and receivables ate’ non-devivatve financial assets with Fixed or deserminable payments that ere not quoted in an active market. The designation of financial asses is re- evaluated at every reporting date at which a choice of classiication or accounting treatment is available ‘After initial recognition, loans and receivables are measured at amortsed cost using the effective interest ‘method, Discounting is omitted where the elfect af discounting is immaterial If here is objective evidence that there is an impalement lass on loans and receivables, the amount of the Joss is measured as the difference heaween the asset's carrying amount and the present value of estimated {ature eash flows discounted at the financial asses original effctive interes rate (i. te effective interest rate computed st iniis recognition). The earying amount of he asset is reduced either divecily or through use of an allowance aecaunt AA Financial asset is derceognised when the contractual rights to the cash flows from the Financ asset expire, or when the financial asset and all substantial risks and reward are transferred Financial Hades Financiel liabilities include borrowings and tade and other payables. Financial liabilities are initially ecognised a fair value adjusted for any directly aitebutable ansaction costs ‘After intial recogaition, financial liabilities are measured at amortised cust using the eflective interest ‘method, with interestreiated charges recognised as an expense in finance costs. Discounting is omitted ‘where the effeet of discounting is immaterial. ‘A financial labiliy is derecognised only when the cuntracwal obligation is extinguished, that i, when the obligation is discharged, cancelled or expires.| i Sovereign Global (UK) Limited | Annual Report and Financial Statements i Notes to the Financial Statements for the year ended 31 December 2018 2.7. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposis, together with other short tr, highly liquid invesiments that are readily convertible into known amounts of eash and are subject to an insigaifican isk of changes in value 28. Equity and reserves, Share capital represents the nominal value of shares that have been issued Retained earnings inelude all current and prior period retined profits Capital contributions inelude the present value of loan interesisallocied on interest five loans in order to present them at fir value 29. Significant management judgements in applying accounting policies and estimation uncertainty. ‘The preparation of the financial statements in conformity with FRS 101 requires management to make judgments, estimates and assumptions that alfect the application of palices and vepared amounts af assis and liabilities, income and expenses. The estimates and associated assumptions are based on historical ‘experience and various other factors that are believed to be reasonable under the circumstances, the esuls (of which form the bass of making the judgments about earring values of assets and liabilities that ore not readily apparent ftom other sources. Actual results may der from dese estimates, [Estimates and underlying assumptions ae eeviewed on an ongoing basis. Revisions to accounting estimates are recognise in the period in which the estimate is revised and in any future periods affected. ‘When preparing the consolidated financial statements, management makes # number of judgements, estimates and assumptions about the recognition and measurement of assis, liabilities, income. and expenses. ‘Significant management judgements The following are signticant management judgements in applying the accounting policies ofthe Company that have the most effet on she financial statements Recognition of deferred tax assets ‘The extent to whieh deferred tax assets can be recognised is hased on an assessment of the probability oF the Company's future wxable income against which the deductible temporary differences can be utilised Going concern Management have assessed the Company as being a going concern. Disclosure of the rationale for this, assessment has been made ia Note 2.1 Estimates and assumptions Information about estimates nd assumption that have the most significant effect on the reeagnition of asses, iaiitie, income and expenses is provided below. Actual results may be substantially eierent, Inppairment of non-financial assets In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and where applicable, using an interest rate to discount them: Estimation uncertainty relates to the assumptions about future operating results and the determination of @ suitable discount rate | | | | i | | | | | | | | | | | |Sovereign Global (UK) Limited ‘Annual Report and Financial Statements, Notes to the Financial Statements. for the year ended 31 December 2018 2.10. Adoption of new and revised standards The following standards and interpretations have been adapted in the Financtal statements as they are ‘mandatory forthe year ended 31 December 2018 EU effective date Periods beginning on rafter | Concephial framework for Financial Reporting 2018 1 March 2018 Amendment regarding the interaction of IPRS 4 and IERS9 1 January 2018 Annual Improvements 10 value measurements) Ss 2014 — 2016 Cyele (clarifying certain fair 1 Janwory 2018 JPRS 15 Revenue from convacts with Customers 1 Jenuary 2018 IFRS 9 Financial instruments (IFRS 9) January 2018 Te adoption ofthe standards and interpretations above has not had @ material impact on the Company's Financial statements, 16Sovercign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 3. Revenue The analysis of the Company's revenue is se out below: 31 December 2018 31 December 2017 s s Sale of maritime serviees 4,822,228 4,908,984 Other services 323.003, 419,366 5.145.231 5324510 4. Operating profit(toss) 31 December 2018 31 December 2017 s s (Operating profiv(loss) i stated after charging: Vessels management 3,375,559 4,659,697 Net charge to bad debt provision(veversl) (2.019.081) 3,669,865 Group management fees 1,628,522 1,584,725 Differences on forsign exchange transactions 78 255.501 5. Directors? vemmune Bt December 2018 31 December 2017 s s Remuneration for qualifying services here were no 10S accruing retirement benefits atthe end ofthe reporting period, ‘6° Employees Number oF employees The average monihly numberof employees (including directors) daring the year was: 3B December 2018 31 December 2017 Management 2 2 2 2 Employment costs Bt December 2018-31 December 2017 s s Wages and salaries 132,793, 188,114 Social security costs 20,046 1327 39 201,391 ”Sovereign Global (UK) ‘Annual Report and Finan Notes to the Financial Statements for the year ended 31 December 2018 7. Finance income Inverest on loans receivable fom group companies 8. Finance costs Interest on amounts payable to group companies Interest on other loans payable and bunk averdrats 9. Income tax UK corporation tax Prior year adjustment Total current tax expense Deferred tax expense /(eréit) Total tax expense / (edit) Bt December 2018 31 December 2017 s s 318131 195,000 3H 35,000, 31 December 201831 December 2017 s 5 : 49,000 _ 227,797, 180.378 227,797 229,574 31 December 2018 31 December 2017 s s : 190 942) : (190,942) 45,442 ton44t) 45.482) 293,383) The tx expense (ered) used for the reconciliation is he corporate ax rate of 19% (2017: 19.25%) payable by the Company in the UK on taxable profits under UK ta The tax credit forthe year canbe reconciled to the profit forthe year as follows 31 December 2018 31 December 2017 3 s Profiu(.oss) before taxation 1,703,702 5,548,268) Income tx/{eredit) caleulated at 1996 (2017: 323,703 (1,068,042) 19.25%) Erect of incomes that are not taxable (460,317) 47,462 ming differences not recognised in the (45,402) computation Effect of change in tax rate : 0,645 year adjustmenss and losses eatied back : (8385) Deferted tas not recognised 136.614 654,849 Total ax expense / (credit) aa 255,385) 10. Dividends No dividends were declared nor paid atthe end ofthe reporting period (2017: SNil). 8Sovereign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 11, Property, plant and equipment Fixtures, Fietings & equipment s Cost ‘Asa | January 2017 oa ‘Additions : Disposals : ‘As at31 December 2017 Oia Additions Disposals As at 31 December 2018 Depreciation ‘Asa t January 2017 4254 Charge 2 Disposals — As at 31 December 2017 ee charge 2 Disposal As at 31 December 2018, Carrying amount As.at31 December 2018 4,890) 4,890 ‘As.at 31 December 2017 4,890) 4,890) ‘Ast {January 2017 2,890) 4.890) nm ot 31 December 2018 31 December 2017 s s “Trade receivables 229.568 7897 Amousts owed by purent and fellow subsidiaries 234,191 : Other receivables 7 Prepayments and accrued income : Total 3148 31a Trade redvivables ae stated net of impairment for estimated irrecoverable amounts which is anil amount jn 2018 (2017: $468,026), This impairment has been determined by reference to past default experience and known issues. Write offs are made when the irrecoverable amount hecomes certain, The directors consider thatthe carrying amount of wade and other receivables approximates to their fae value 9Sovereign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 Movements on the allowance For irecoveruble amounts on rade recivables ae as follows 2018 2017 s 8 ‘ACL January 468,026 458,026 Release of provision (utilised) (468,025) Provision for had debis _ a AC 3H December : ams ‘Asat 31 December, the ageing analysis of wade receivables are as follows: Neither past Past due but not impaired. ‘Total ‘due nor Tessthan 60 ¢0120 ‘Move thaw paired 60-days days 120 days 3 s $ s 2ni8 229,568 : 229,568 : 2017 727,397 : : : 723,897, 13. Trade and other payables 31 December 2018 31 December 2017 s 8 Trade payables 15,686, 124,874 ‘Amounts owed to parent undertaking : 1,611,109 ‘Acervals and deferred income 60,543 ‘96,999 Other payables 700,000 700:000 Tax payable 7.663 a5 {All amounts are short-term. The directors consider thatthe carrying amount of rade and other payables approximates to thei fir values, Included in other payebles is & loan from che parent company of $700,000 (2017: $700,000), earying 279% annual inwrest 14. Borrowings 31 December 2018 31 December 2017 s s ‘Amounts falling due within one year: {Loan interests acerued A Amounts faling duc after more than one year: (Other and shareholder loans 4,983,527 5,960,164 Tecluded in other loans is an unsecured loan of § 5,871,346 (2017: $5,871,346) given by a relate party This amount is drawn an total loan of $8,000,000 in which the whole umount had ta be taken within 3 years of 8 June 2012 and any amount borrowed has to be repaid in full within $ years from the date of the ‘money being wvanced. The loa i interest fee. In oeder to state the loan at fae value, a market rate of 5% ‘vas established. This loan was extended for another period of years on B June 2017 20Sovereign Global (UK) Limited ‘Annual Report and Financial Statements Notes to the Financial Statements for the year ended 34 December 2018 15. Deferred tax Habilities Accelerated Total capital allowances s s s Balance as at | January 2017 Debideredit) to profit or loss (115.657) (116,488) 15,654) Lag23 Balance as at 31 December 2017. = (13H) (BEST) Debitferedit to profit or loss _ 45,559 45,559 Balance as at 31 December 2018 = SS (85.750) ‘Analysis of deferred tax balances for financial reporting purposes: 31 December 2018 31 December 2017 Deferred tax assets Deferred tax ibilities 16. Shave capital 31 December 2018 31 December 2017 s s Authorised 30,000 Ordinary shares of $1.57 each 47,100 42,100 Allocated, called up and fully paid 30,000 Ordinary shares of $1.57 cach For the purpose of the Company’s capital management, capital includes issued capital, The primary ‘objective of the Company"s capital management is lo maximise shareholder value 2| | i | | | | | i | | Sovereign Global (UK) Limited Annual Report and Financial Statements Notes to the Financial Statements for the year ended 31 December 2018 17. Contingent liabilities ‘ALI December 2018, the Company had no contingent liabilities. 18, Financial commitments ‘The Company has no finance leases and no other financial commitments 19, Ulimate controlling party “The Company's parent company is Sovereign Global Solutions Limited, a company incorporated in England and Weles. The resulls of the Company are consolidted within the group Financial statements which ave prepared by the Company's registered office address, vercign Global Solutions Limited. Group financial statements are available on request from Its the Directors' view that no single shareholder coateolled Sovereign ilobal Solutions Limited as at 31 December 2018, 22