KOOVS PLC...catwalks, street style picks from key cities and global events, how to wear videos, celebrity ‘in the style of’ guides and user generated content, have established

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CONTENTS

KOOVS PLC REPORT AND FINANCIAL STATEMENTS 2017

1 CORPORATE INFORMATION

2 CHAIRMAN’S STATEMENT

5 STRATEGIC REPORT

16 BOARD OF DIRECTORS

17 CORPORATE GOVERNANCE REPORT

19 DIRECTORS’ REPORT

22 DIRECTORS’ REMUNERATION REPORT

27 STATEMENT OF DIRECTORS’ RESPONSIBILITIES

28 INDEPENDENT AUDITOR’S REPORT

30 CONSOLIDATED INCOME STATEMENT

31 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

32 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

33 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

34 CONSOLIDATED STATEMENT OF CASH FLOWS

35 COMPANY STATEMENT OF FINANCIAL POSITION

36 COMPANY STATEMENT OF CHANGES IN EQUITY

37 COMPANY STATEMENT OF CASH FLOWS

38 NOTES TO THE FINANCIAL STATEMENTS

1


CORPORATE INFORMATION

DirectorsLord Waheed Alli Chairman

Mary Turner Chief Executive Officer Robert Bready Chief Creative Officer Robert Pursell Chief Financial Officer

Anant Nahata Non-executive Director

Baroness Gail Rebuck DBE Non-executive Director

Emily Sheffield Non-executive Director

Nominated advisorPeel Hunt LLP

Moor House

120 London Wall

London EC2Y 5ET

AuditorsBDO LLP

55 Baker Street

London W1U 7EU

BankersBarclays Bank PLC

27 Soho Square

London W1D 3QR

SolicitorsFoot Anstey LLP

Salt Quay House

4 North East Quay

Sutton Harbour

Plymouth PL4 0BN

Registered officeYork House

23 Kingsway

London WC2B 6UJ

Registered in England number: 08166410

Corporate informationFurther information, including the AIM Admission document, is available on the Koovs plc corporate website at:

www.KOOVS.COM/corporate

CORPORATE INFORMATION

2


CHAIRMAN’S STATEMENT

2


Dear Shareholders,

I am pleased to report that the financial year ended

31 March 2017 has been a year of significant growth

and continued strategic progress towards our goals.

FY17 has delivered gross order value growth of 87% to

INR 1616m (£18.6m) and a year-on-year increase of

100% in both units shipped and repeat customers. This

growth is also underlined by a continued and

consistent improvement in our gross margin position.

Importantly, we have delivered these strong results

during a challenging period in the Indian market

following demonetisation, announced on 8 November

2016. This impacted the whole Indian economy

including e-commerce and Koovs rapid response and

proactive approach to mitigate the initial impact of

demonetisation, along with a strong Christmas trading

period, has meant that the Company has been able to

deliver growth significantly above (more than 5x) the

Indian e-commerce market as a whole.

The market for online western fashion is forecast to

grow rapidly to $3.5 billion by 2020 and with the

continued growth of India’s digitally connected,

aspirational middle class, Koovs is extremely well

positioned to benefit from this impetus.

In FY17 Koovs successfully raised capital of £39.1m and

added two new strategic investors, The Times of India

Group and The Hindustan Times, two of the largest

media Groups in India.

This funding has enabled Koovs to continue to build

the brand efficiently through hyper-targeted marketing

that is connecting and resonating with the young,

urban and style-conscious customer and has

established Koovs as the leading brand in its category

for customer engagement across social media.

Furthermore, our continued focus on customer

operations has also delivered rewards, with Koovs now

independently rated as number one for customer

satisfaction in our sector (Redseer Net Promoter

Score). In addition, we have completed the deployment

of a new microservices technology platform which is

spearheading our ‘mobile first’ strategy and is already

providing innovative operational benefits, enabling

the business to tap into new technology tools such

as automated visual merchandising and

promotions engine.

This has been a year of significant progress towards

our objectives to increase our share of the youth

fashion market in India from 4% to over 10% and to

build Koovs into India's number one Western fashion

destination by 2020.

I am extremely excited about the Group’s prospects for

the new financial year, remaining resolutely focused on

our strategic objectives. We recognise that our growth

must be sustainable, and have set targets for continued

improvement in gross margin and a reduction in

operational costs in FY18, leading to our goal of

profitability and positive cash flow in FY20.

I would like to take this opportunity to thank all our

colleagues in the UK and India for their continuing hard

work, dedication and enthusiasm.

Waheed Alli Chairman

6 September 2017

CHAIRMAN’S STATEMENT

3


PLACE HOLDER

OUR AMBITION IS TO BE THE NUMBER ONE WESTERN FASHION DESTINATION IN INDIA BY 2020

4


5


STRATEGIC REPORT

OPERATING REVIEW

KOOVS is the leading online western fashion destination for 20-somethings in India,

the world’s fastest-growing major economy.

The Market

India - the right place at the right time

Demographic Dividend

With a 1.3bn population and 65% under the age of

35, India’s demographics position is compelling.

A growing middle class with spending power and the

increasing concentration in urban areas are fuelling a

forecast growth in GDP of 6-7% a year.

Middle Class Doubling by 2020

160m to 325m 100%

Urban Middle Class

35% of Urban Population

Young Population

43% Aged 15-39

Digital investment

India is undergoing a digital transformation with

$3bn government investment in fibre, $34bn in 4G

mobile networks. In addition, the $16bn Digital India

programme will transform the economy, with the

aim to create a digital identity for every citizen.

India is also adopting technology at a significant

pace with 385 million people connected on

broadband and over 250 million smartphone users

in 2016 and predicted to rise by 40% and 60%

respectively by 2020.

Networks

$3bn Fibre Networks

Mobile

$34bn 4G

Digital India

$16bn Transformation

Internet Users

430m 600m 40% by 2020

STRATEGIC REPORT

"India is on the cusp of a massive digital transformation"

ARUN JATLEY, FINANCE MINISTER

6


STRATEGIC REPORTCONTINUED

STRATEGIC REPORT

CONTINUED

E-commerceWith this as a backdrop, e-commerce, lifestyle and

online western fashion are sectors that are gathering

significant pace with e-tail forecast to grow 300% to

$60bn by 2020, online Lifestyle up 400% to $15bn and

Online Western Fashion up 500% to $3bn in the

same time frame.

E-tail acceleration

$15bn $60bn 300%

Retail market

$0.6tn $1.1tn 85%

Lifestyle share of e-tail

$3bn $15bn 400%

(2016) (2020)

Retail & E-tail Growth Lifestyle & Western Fashion Online Growth

2020201920182017201620152014

Etail

Retail

$15bn

$0.6tn

$1.1tn

$60bn

2020201920182017201620152014

E-Western

E-Lifestyle

$0.6bn

$15bn

$3.5bn

Koovs CustomersFor KOOVS customers this means providing affordable

and aspirational, design-led online western fashion,

curated for the style-conscious 18-34 Indian customer

from an authentic fashion authority they respect, with

extensive credentials in the western and global

fashion markets.

18%

27-30 Years

62%20%

FEMALE 61%

SETTLED IN JOB

>30 Years

SETTLED IN JOB

15-26 Years

STUDENT & EARLY JOBBERS

17%

27-30 Years

SETTLED IN JOB

13%>30

Years

SETTLED IN JOB

70%

MALE 39%

15-26 Years

STUDENT & EARLY JOBBERS

7


KOOVS INSTAGRAM TEAM BOLLYWOOD – NEMA SHARMA

EXPAND > PRODUCT RANGE• 40% of sales is currently Koovs Private Label and

together with selected edits from famous brands

that are exclusive to Koovs, 70% of lines are now

unique to Koovs across the site.

• Koovs continues to demonstrate our fashion

credentials and leadership with high-profile designer

collaborations. Four exclusive collections were

launched during FY17 with Manish Arora, Hattie

Stewart, Gauri & Nainika and Masaba. These highly

successful, standout collections have further

amplified Koovs clear position as the affordable

fashion authority in India.

ENGAGE > CONTENT• Content browsing sessions are 25% more likely to

convert to sales, and KOOVS.COM now generates

approximately 1.5 million content browsing sessions a

year. Our exclusive reports from the top fashion

catwalks, street style picks from key cities and global

events, how to wear videos, celebrity ‘in the style of’

guides and user generated content, have established

Koovs as the leading brand in our peer group for

social customer engagement with over two million

followers and over one million logging in to participate

in a single campaign.

• Investment in the customer experience and care

means Koovs is now rated No.1 for customer

satisfaction in our peer group, with the leading

average Net Promoter Score in our category

(RedSeer).

UGC CUSTOMER POST

MANISH ARORA HATTIE STEWART GAURI & NAINIKA MASABA

OBJECTIVES & STRATEGYKOOVS strategy is focused on four pillars to achieve scalable growth. During FY17 we have already attained

significant milestones against these objectives:

8



EXTEND > TERRITORY• Our focus remains on the considerable growth

opportunity in our home market India. However,

we have identified a number of territories with

significant growth potential and these include the

Middle East and Asia-Pacific. Koovs will be piloting

projects to cost-effectively enter these markets

leveraging local partners and expertise. The first

international distribution agreement is with Amazon-

owned SOUQ.com to launch the Koovs Private Label

Collection in the Middle East during the Summer 2017.

AMPLIFY > BRAND• Koovs brand awareness among its core 18 to

34-year-olds in India has increased from less than

1% in 2015 to 15% in FY17. In March 2017 phase three

of the ‘Step Into Koovs’ brand campaign

commenced, lifting web traffic by 50% and peaking

for the first time at two million in a single week.

• KOOVS.COM was also named 'The Most Popular

Fashion Portal with Youth' by the Global Youth

Marketing Forum in February 2017.

• Koovs now has over two million social followers,

including 400,000 on Instagram and industry-

leading engagement of more than 3x the nearest

competitor in our category. We are innovating and

leading in the use of social media, such as Koovs

pioneering use of platforms like Facebook Live.

STRATEGIC REPORT

CONTINUED

9


> PRODUCT Koovs provides affordable, design-led and exclusive

western fashion for the young, aspirational, style-conscious

Indian consumer. Underpinning this product promise is our

fashion authority and depth of experience in the design and

buying team gained from world famous fashion brands such

as Topshop, Asos, River Island, Miss Selfridge, Puma,

Arcadia, Tommy Hilfiger and Misguided.

Our product architecture is a successful blend of 40%

Koovs Private Label and 60% brands and we are now

achieving intake margins of 54% and 46% respectively. Our

strategy is to continue to improve intake margins, with

targets to reach 70% for Private Label and 50% on brands.

40%PRIVATE LABEL

Designed in London 100% exclusive

Intake Margin 54%>target 70%

Intake Margin 46%>target 50%

60%

PRODUCT MIX

BRANDInternational + Local

50% + exclusive

> TECHNOLOGY Koovs target youth market in India is technology savvy and

avid smartphone users – living life on the go. Over 75% of

Koovs traffic and transactions are delivered via our app and

mobile site, so delivering a Mobile First approach is a key

cornerstone of our technology strategy.

Over the last 12 months, the Company has focused on

rebuilding our technology platform, adopting the latest

modular microservices architecture. The new platform,

which has already delivered Koovs new high-performance

App for iOS and Android, will enable the Company to

deliver scalable performance, rapid technology

development and innovation throughout the business,

including fast, flexible and cost-effective operational tools

such as Automated Visual Merchandising for product and a

Promotions Engine for marketing.

As a Mobile First operation, Koovs has already integrated

with the leading digital and m-commerce payment

gateways, and new strategic technology milestones

underway, including Augmented Reality, Voice Control

and Automated Personalisation, are designed to improve

customer engagement and conversion.

10



STRATEGIC REPORT

CONTINUED

11


Trading Performance and KPIsThe business achieved strong growth during the financial

year, supported by cost efficient marketing and

improved operational efficiency.

Our overall aim is to increase our share of the youth

fashion market from 4% to over 10% by 2020 and to do

this we will continue to invest in strong, targeted and

efficient marketing campaigns.

• Registered customer base is now up to 1.8m.

• Total active customers (those who have purchased

in the last 12 months) has increased to 0.5m.

• Repeat customers and web traffic have both

increased by c.100%.

Traffic (m)

FY17FY16FY15

CAGR +97%

Customers (m)

FY17FY16FY15

CAGR +118%

Gross Order Value (£m)

FY17FY16FY15

CAGR +129%

Over the past year, compared with the previous year, we have achieved the following:

Definition Year ended March 2017 Year ended March 2016 Growth

Gross order value* Value of orders placed INR1,616m/£18.6m INR981m/£10.0m +65%/+87%

Net sales* Gross order value less returns, less

tax

INR1,086m/£12.5m INR687m/£7.0m +58%/+78%

Visits to the site* Website traffic 78.5m 43.8m +79%

Conversion* % of website visits that place an

order

1.6% 1.5% +7%

Trading margin* See note below INR43m/£0.5m (INR40m)/(£0.4m) –

Trading margin %* Trading margin as % of net sales 4% –6% +167%

Revenue Wholesale revenue of Koovs plc INR761m INR512.4m +49%

Loss before tax Reported loss INR1,691.3m INR1,650.4m +2%

*in relation to the KOOVS.COM website

Note: The Group gross margin reported in these financial statements is the margin generated on sales of product to Marble, the operator of the KOOVS.COM website.

Due to foreign direct investment rules Koovs India cannot currently ship directly to the end consumer. Trading margin is the implied gross margin that would be

reported in the companies accounts if Koovs India were able to ship products directly to the end consumer, and is a key performance indicator of the Company.

To assist UK-based readers of the financial statements, translations into Sterling have been supplied on a

memorandum basis to allow a clear understanding of the results and financial position of the business. The

memorandum information has not been audited and does not form part of the financial reporting of the Group

representing, as they do, simple translations of the Indian Rupee information. The exchange rates used are

detailed in Note 2 in the notes to the financial statements.

12



StructureThe Group supplies branded fashion garments and accessories for exclusive distribution through the KOOVS.COM

website including international fashion brands, iconic British high street brands and Koovs own-label product

designed by a talented team based in London.

We monitor the Group’s performance in a number of ways including assessing the performance of KOOVS.COM,

which, although it is operated by Marble E-retail Private Limited (“Marble”), an independently owned and

managed company, reflects the performance of the products and marketing managed by the Group.

OutlookIn FY18 the focus will remain on delivering positive Trading Margin to improve the profitability of the Company.

We will continue to cost effectively build the Koovs brand and distinctive product range through our own

exclusive Private Label and collaborations that set us apart from the discounting and marketplace players in the

Indian market.

We will build on the deployment of the new microservices technology platform with the roll-out of a new ERP

system, which will reduce operational costs and increase efficiency and we will further extend our distribution

strategy following deployment with SOUQ.COM.

Funding will still be a requirement in FY18 with the Company announcing a £15m requirement in May 2017, of

which £8.9m has already been secured through the issue of convertible loan notes and we will be seeking to

complete the capital raise in due course.

Combined, we expect that these progressive steps will provide the foundation for profitable growth and positive

cash flows by FY20.

STRATEGIC REPORT

CONTINUED

13


FINANCE REVIEWThe financial results of the Koovs plc Group in this

report cover the year ended 31 March 2017.

The Group’s principal activity is that of supplying

branded fashion garments and accessories for sale by

a third party through a branded website principally in

the Republic of India.

Financial resultsThe Group achieved revenue of INR760.9m/£8,680k

(2016: INR512.4m/£5,198k) during the year from the

wholesale of fashion garments and accessories to its

sole customer for onward sale to consumers. In these

early days of development and relatively low volumes,

together with the impact of demonetisation on the

market as a whole, gross margins are low and therefore

the Group generated a gross loss of INR294.0m/

£3,354k (2016: INR235.0m/£2,383k).

Overhead costs comprise the costs of the design and

merchandising team in the UK, the creative, content,

marketing and IT teams in India, infrastructure costs,

marketing expenditure and corporate costs. Altogether

this amounted to INR1,425.3m/£16,258k (2016:

INR1,452.8m/£14,738k) during the year to give an

operating loss of INR1,719.3m/£19,612k (2016:

INR1,687.8m/£17,121k).

Interest income arising mainly in India, net of finance

expenses, amounted to INR28.0m/£319k (2016:

INR37.4m/£380k) to give a loss before tax of

INR1,691.3m/£19,293k (2016: INR1,650.4m/£16,741k).

TaxationDue to the losses generated in the period, and the

likelihood that it will be some time before tax losses

can be utilised, no deferred tax has been accounted for

and therefore there is no tax charge or credit in the

current or prior period.

Loss for the yearThe loss for the year was INR1,691.3m/£19,293k (2016:

INR1,650.4m/£16,741k). The Indian e-commerce market

is still in a nascent stage with only 18m out of 430m

internet users regularly purchasing online. The current

scale of the business means that minimum order

quantities for manufactures are in excess of what is

required. This together with the impact of

demonetisation led to high levels of discounting

creating a gross margin loss. Operating costs include

INR730.9m/£8,338k of marketing expenses, which

increased Koovs brand awareness from 8% to 15%

during the financial year.

Basic and diluted earnings per shareEarnings per share amounted to a loss of 11.2 rupees/

12.8 pence per share based on the loss attributable to

equity holders of INR1,662.5m/£18,965k and weighted

shares in issue of 148,479,033. The loss per share in the

previous period was 36.7 rupees/37.2 pence based on

the weighted shares in issue of 28,482,540.

Cash flow and fundsDuring the year to 31 March 2017 the Group utilised

INR2,232.6m/£25,468k (2016: INR1,537.2m/£15,594k) in

operations mainly funding the operating losses of

INR1,691.3m/£19,293k, and prepaying marketing

expenses of INR558.2/£6,881km, which will be utilised

over the next three years.

Investing activities utilised INR1,183.7m/£13,503k mainly

due to the INR869.8m/£9,921k acquisition of shares in

Koovs India, increasing Koovs plc ownership from

60.2% to 100%, and INR340.3m/£3,882k of funds put

on interest bearing deposits.

Operating and investing activities utilised a total of

INR3,416.3m/£38,971k.

Financing activities in the year, primarily through the

issue of new equity shares, raised INR3,467.9m/

£39,559k.

As a result of these movements, the net increase in

cash and cash equivalents was INR51.6m/£794k (2016:

net increase of INR191.8m/£1,962k). The closing net

cash and cash equivalents was INR151.8m/£1,732k

(2016: INR127.6m/£1,340k).

Taken along with the bank deposits the Group had

access to INR606.0m/£7,471k (2016: INR241.5m/

£2,536k) at the end of the financial period as described

in Note 17.

Financial positionAt the end of the financial period the net assets of the

Group amounted to INR1,828.8m/£22,545k (2016:

INR844.2m/£8,865k). This included INR621.2m/£7,658k

of goodwill relating to Koovs India, and INR710.8m/

£8,762k (2016: INR62.5m/£656k) in trade receivables,

other receivables, prepayments and other assets. The

increase in trade receivables, other receivables,

prepayments and other assets is due to a prepayment

for media expenses of INR558m/£6,880k (2016:

INR0m/£0k). The prepayment is to secure future

advertising services from HT Media Group and Times of

India Group on favourable terms. Further information

on the funding position of the Group is given in the

Directors’ Report and in the next section of this report.

14



Principal risks and uncertaintiesThere are a number of market and business risks that

could affect the Company and the Group. We set out

below the Group’s view of the main risks which, should

any materialise, could materially adversely affect the

Group’s business, financial condition and returns to

shareholders. Further risks and uncertainties which are

not presently known to the Directors at the date of this

document, or that the Directors currently deem less

significant, may also have an adverse effect on the

business, financial condition or results of the Group.

FundingThe Group’s business plan envisages a period of

investment in marketing and product in order to grow

the business to significant scale over the next three

years and through to profitability.

In April, June and July 2016, INR2,534.0m/£26,200k

was raised, including a INR290.2m/£3,000k strategic

investment from Hindustan Times Media Limited. Of

this, INR869.8m/£9,039k was utilised in May 2016 to

acquire the remaining portion of Koovs India not

already owned by the Company. In November 2016 a

further INR1,090.0m/£12,850k was raised, including a

INR325.4m/£3,850k strategic investment from the

Times of India Group.

The capital raising process in the year has therefore

secured a total of INR3,624.0m/£39,050k for the

funding of the business. In May 2017 the Board

announced a requirement for an additional £15m of

funding. By the date of this report £8.9m has been

secured in convertible loan notes (see Note 33), of

which £7.4m was subscribed for by Waheed Alli. The

Board is confident that additional funding will be

secured in due course.

Market and Economic Risks

Economic outlookThe Group’s revenue is dependent on the sales by

Koovs India to Marble which, in turn, is dependent on

the retail sales Marble achieves, so the Group is

sensitive to the impacts of the general economic

climate in India and on the population’s propensity to

spend on fashion clothing and accessories. Global

economic factors may impact the costs of inputs such

as cotton and fuel and the Group’s ability to pass on

such cost increases may be limited. The Board monitors

projections for the Indian economy on a regular basis

and amends plans based on the expected growth.

Market and competitionThe retail fashion industry and market is subject to

changing customer tastes. The Group’s performance is

dependent upon effectively predicting and quickly

responding to changing consumer demands and

translating market trends into saleable merchandise.

Internet fashion retailing is global and highly

competitive. Any failure by KOOVS.COM to compete

effectively with bricks and mortar retailers and other

internet retailers may affect the Group’s revenue. The

Group uses third parties to provide assessments of the

developments of fashion in the global markets and

designers attend international trade shows to provide

direction and inspiration.

SuppliersThe Group makes arrangements with manufacturers for

the supply of products designed by the Group. The

ability to source products promptly at competitive

prices and at appropriate quality is key to the success

of the business and while there is a broad range of

potential suppliers and well-developed competition in

the market, the Group is dependent on being able to

find appropriate manufacturing capability for its

products in order to meet delivery, quality and price

expectations. The Group uses a broad range of

suppliers within the Indian market and also

internationally and ensures that there is no

concentration of supply. The employment of

experienced sourcing experts ensures access to a

broad range of manufacturing capability.

Foreign country and political riskMost of the Group’s personnel, operations and other

assets including Koovs India’s warehouse, all inventory

and computer servers are located in India and,

consequently, the Group is subject to changes in

regulations or market conditions in that country. With

the majority of operations located in India, local

management maintain close monitoring of local

developments and amend plans as necessary.

Financial risks

Interest rate riskThe Group’s exposure to interest rate risk arises from

the fluctuations in the rate of interest income or

charges on cash and cash equivalent balances. In the

period under review, the Group has operated in a net

cash position. UK interest rates continue to be very low

and therefore the potential adverse interest rate risk in

the UK is very low. Interest rates in India are in the

region of 6.0% and the majority of the Group’s cash is

held in Indian Rupees in India. There is therefore a

potential adverse interest rate risk affecting the

interest income generated in India. No interest rate

hedging is in place. The bank deposits are made for

a variety of tenures to balance liquidity and security

of interest generation.

Currency riskThe Group operates in the United Kingdom and India.

Following the acquisition of Koovs India, all revenues

and the majority of costs are denominated in Indian

STRATEGIC REPORT

CONTINUED

15


Rupees. However, around 25% of the Group’s

overheads are incurred in Sterling and therefore the

Group results are susceptible to fluctuations as a result

of changes in exchange rates. No foreign currency

hedging is in place to mitigate this risk.

Credit and customer riskThe Group’s revenues arise predominately from

invoices for goods to a single customer. As Marble is

currently the only channel through which Koovs India’s

products are sold to consumers, the Group’s revenue is

dependent upon the relationship with Marble and upon

the success of Marble in servicing its customers,

delivering products as promised, recovering payment

from its customers and maintaining high levels of

customer service. The Group has considered the credit

risk associated with the customer and has assessed the

credit worthiness of the customer to be good. The

Group minimises the risk through a requirement for

prompt, monthly payment of invoices issued to which

the customer is committed and has demonstrated

consistent adherence.

Liquidity riskLiquidity risk is managed through the assessment of

short, medium and long-term cash flow forecasts to

ensure the adequacy of funding in order to meet the

Group’s working capital requirements. Where a

shortfall in funding is identified the Company will look

to meet this shortfall though a variety of funding

options including but not limited to the issuing of

new equity.

Other risks

Technological risksThe Group is dependent on its IT infrastructure and any

system performance issues (for example system or

infrastructure failure, damage or denial of access) could

seriously affect our ability to trade. The infrastructure

has been designed specifically for robustness, flexibility

and scalability and these objectives form a core part of

the IT development strategy.

Warehouse disruptionAny disruption to the Group’s warehousing facility due

to physical property damage, breakdown in warehouse

systems, capacity shortages or poor logistics

management could lead to significant operational

difficulties in order fulfilment, which may have a

consequent adverse effect on the Group’s business.

The Group has recruited an experienced logistics

manager to oversee these operations.

Intellectual property and content liability The business of the Group carries with it the risk of

intellectual property right infringement. The Group may

need to engage in litigation to enforce its intellectual

property rights, or to protect itself from third party

claims. Our designers are professionally trained to

ensure that intellectual property rights are

appropriately handled. Competitors’ products are

regularly monitored and any infringement brought to

managements’ attention.

Key personnelThe Group depends on the services of its key technical,

marketing and management personnel. The Group

personnel structure is being developed as the business

grows to provide appropriate quality, depth of

experience and succession planning.

On behalf of the Board of Directors

Mary Turner Robert PursellDirector Director

6 September 2017 6 September 2017

16


BOARD OF DIRECTORS

Waheed Alli, aged 52 – Executive Chairman Waheed founded the Company in 2012. He was previously Chairman of ASOS plc between 2000 and 2012. He has extensive knowledge of international fashion, coupled with a keen eye for innovation. Waheed’s vision is to develop KOOVS.COM as the fashion destination of choice in India. Waheed was appointed to the House of Lords in 1998 and is currently Chairman of Silvergate Media Holdings Limited, part of a group of media companies which specialise in children’s television, publishing and merchandising.

Mary Turner, aged 59 – Chief Executive Mary joined the Board in July 2014 when she was CEO of AlertMe.com, a pioneer in the ‘Internet of Things’ technology, which powers the UK’s leading smart homes solution, Hive Active Heating, recently acquired by British Gas. Prior to that, Mary has over 20 years’ experience in the Internet & Telecommunications markets and was previously CEO of broadband company, Tiscali UK, leading a series of acquisitions, including companies like Video Networks, Dellnet and Pipex broadband, growing the Company to become the third largest Internet Service Provider in the UK with over 1.8m customers and revenues of over ¤600m. She started her career in the Internet sector as part the leadership team that established CompuServe/AOL, Europe’s leader in dial-up Internet service in the mid-nineties, Mary also has extensive consumer retail experience through senior management roles in sales and marketing at Elizabeth Arden, Avon Cosmetics, Innovations Catalogue and as a Non-executive Director at ASOS, UK’s leading online fashion store. Mary was appointed Chief Executive in October 2015.

Robert Bready, aged 49 – Chief Creative Officer Robert joined the Board in 2012. He leads the creative team at Koovs, supported by design and buying teams based in London and Delhi. Robert began his career at River Island, holding a variety of merchandising roles in womenswear and menswear. In 1997, he moved to the Arcadia Group, spending eight years working across young fashion retailers including Miss Selfridge and TopMan, eventually becoming Senior Executive for the

Miss Selfridge brand. Robert was the Product Director of ASOS plc between 2006 and 2012.

Roy Naismith, aged 55 – Group Chief Financial Officer Roy joined the Board in 2013 and stepped down from the Board on 1 July 2016. He was Group Finance Director of French Connection Group plc between 2001 and 2013. Roy trained as a chartered accountant with KPMG and has held senior finance positions at Capital Radio plc and the Starbucks Coffee Company.

Robert Pursell, aged 45 – Chief Financial Officer Robert was appointed to the Board on 1 July 2016. Rob was previously CFO role at Eviivo Limited, a software development business. He is a Chartered Accountant (ICAEW in 2000) and is a graduate of Sheffield University.

Anant Nahata, aged 33 – Non-executive Director Anant joined the Board in 2013. He represents the Nahata family interests in Koovs and is also Managing Director of Exicom, a leading telecom infrastructure business in India. Anant has investment banking experience with Credit Suisse, having worked in Singapore and New York. He holds an Economics degree from the University of Pennsylvania, USA.

Baroness Gail Rebuck, DBE, aged 65 – Non-executive Director Gail joined the Board in 2014. Gail was Chair and CEO of Random House from 1991 to 2013. Since the

merger with Penguin, creating Penguin Random House, she sits on the Global Board of Representatives

and the Group Management Committee of the Board of Bertelsmann. Gail was Non-executive Director of

BSkyB from 2002 to 2012. Currently, she sits on the boards of Belmond Ltd and the Guardian Media Group

where she is Senior Independent Director. Gail chairs the Council of the Royal College of Art, the leading

college of art and design in the world and takes a particular interest in their fashion department. Gail is

also involved in several literacy and book charities. She was appointed to the House of Lords in 2014.

Emily Sheffield, aged 44 – Non-executive Director Emily joined the Board in 2014. From 2008 to 2017 she was the Deputy Editor of British Vogue, working on a wide range of projects in the magazine and oversaw all of British Vogue's digital content, including Vogue video and Vogue.co.uk. She also launched and was the editor of Miss Vogue, a biannual magazine and digital brand for teenagers, including film, online and social media. Emily began her career as a journalist at the Guardian newspaper after winning the Guardian student journalism award and then worked for a variety of publications. She was a Consultant Creative Director at Jigsaw and has been attending international fashion shows regularly for over ten years. Emily now works as a fashion and digital creative consultant for global brands as well as taking on a number of public speaking engagements.

BOARD OF DIRECTORS

CORPORATE GOVERNANCE REPORT

17




Corporate Governance standards The Directors recognise the value and importance

of high standards of corporate governance and

intend, where practicable given the Company’s size and

the constitution of the Board, to comply with

appropriate standards.

Independence of DirectorsBased on the UK Corporate Governance Code, the

following interests have an impact on the

independence of the Directors:

Waheed Alli, Executive Chairman, is interested, both

personally and through Silvergate Investments Limited,

in a substantial portion of the share capital of Koovs

plc. The Board believes that Waheed Alli’s appointment

as Executive Chairman benefits the Group given that

he is the founder of the Company and his knowledge of

the fashion business is important to the future

development of Koovs.

Emily Sheffield, Non-executive Director, has been

granted share options and provides fashion

consultancy services to the Company, further

details of which are set out in the Directors’

Remuneration Report.

Gail Rebuck has also been granted share options.

Anant Nahata, Non-executive Director, represents the

Nahata family which, through various family-owned

investments, is interested in the share capital of

Koovs plc.

Further details of share options granted to Directors is

given in the Directors’ Remuneration Report.

Board compositionThe Board of Directors at the date of this report

comprises three Executive Directors and four

Non-executive Directors.

During the year to 31 March 2017 there were ten

Board meetings. The Directors’ attendance at those

meetings was:

Waheed Alli 10

Mary Turner 10

Gail Rebuck 10

Emily Sheffield 10

Robert Bready 8

Anant Nahata 7

Robert Pursell 7

Roy Naismith 3

The Company’s Articles of Association give power to the

Board to appoint Directors, but require Directors to

submit themselves for election at the first AGM following

their appointment. Further, at least one third (rounded

down to the nearest whole number) of the Directors in

office are required to retire annually. All Directors are

required to retire and, if appropriate, offer themselves for

re-election every three years. All Directors will retire at

the Annual General Meeting and will offer themselves for

re-election.

The Board reserves to itself certain key matters to

approve or monitor on behalf of the shareholders

including the strategic direction, development and

control of the Group. It approves strategic plans and

annual capital and revenue budgets. It reviews significant

investment proposals and the performance of past

investments and maintains an overview and control of

the Group’s operating and financial performance. It

monitors the Group’s overall system of internal controls,

governance and compliance and ensures that the

necessary financial and human resources are in place for

the Company to meet its objectives.

The Board delegates responsibility for the day-to-day

operation of the business to the Executive Directors

within the framework of agreed prudent and effective

controls.

The Directors comply, and procure compliance with,

Rule 21 of the AIM Rules for companies relating to

dealings by Directors and other applicable employees in

the Company’s securities and, to this end, the Company

has adopted an appropriate share dealing code.

All Directors are briefed by the use of comprehensive

papers circulated in advance of Board meetings and by

presentations at the meetings in addition to receiving

minutes of previous meetings. The training needs of

Directors are formally considered on an annual basis and

are also monitored throughout the year with appropriate

training being provided if required.

Any member of the Board may take independent

professional advice at the Company’s expense. All

Directors have access to the advice and services of the

Company Secretary.

The Company Secretary’s responsibilities include

ensuring good information flows to the Board and

between senior management and the Non-executive

Directors. The appointment and removal of the Company

Secretary is a matter reserved for the Board. The

Company Secretary is responsible, through the

Chairman, for advising the Board on all corporate

governance matters and for assisting the Directors with

their professional development.

All Directors of the Company are covered by a

comprehensive Directors and Officers insurance policy.

The Company intends to appoint at least one further

Non-executive Director, with recent, relevant financial

experience by March 2018.

18


CORPORATE GOVERNANCE REPORTCONTINUED

Board committeesThe Board has concluded that with the limited number of

Non-executive Directors, it would be ineffective to

appoint sub-committees delegated responsibilities. Until

such time as further Non-executive Directors are

recruited and the Audit, Remuneration and Nomination

committees are convened, the full Board takes

responsibility for the matters which will in due course be

considered by the committees.

The Audit Committee will have primary responsibility for

monitoring the quality of internal controls and ensuring

that the financial performance of the Company is

properly measured and reported on. It will receive and

review reports from the Company’s management and

auditors relating to the interim and annual financial

statements and the accounting and internal control

systems in use throughout the Group. The Audit

Committee will meet at least twice a year and will have

unrestricted access to the Company’s auditors.

The Remuneration Committee will review the

performance of the Executive Directors and make

recommendations to the Board on matters relating to

their remuneration and terms of employment. The

Remuneration Committee will also make

recommendations to the Board on proposals for the

granting of share options and other equity incentives

pursuant to any share option scheme or equity incentive

scheme in operation from time to time. The remuneration

and terms and conditions of appointment of the

Non-executive Directors of the Company will be set by

the Board.

The Nomination Committee will be responsible for

ensuring that the Board has a formal and transparent

appointment procedure and will have primary

responsibility for reviewing the balance and effectiveness

of the Board and identifying the skills needed on

the Board and those individuals who might best

provide them.

Membership of the Audit Committee, Remuneration

Committee and Nomination Committee and the

chairmanship of each of the committees will be finalised

prior to March 2018 once the Company has appointed

a Non-executive Director with recent, relevant

financial experience.

Codes of conductThe Board has adopted a Code of Business Conduct and

Ethics for its Board and Senior Management Personnel in

order to ensure adoption and maintenance of appropriate

standards within the business. Further, the Board has

adopted Anti-bribery and Whistleblower policies.

Internal control and risk management The Board recognises the importance of robust

procedures for identifying, evaluating and managing

significant risks faced by the Group and is committed to

ensuring that appropriate procedures are in place.

The culture and size of the business results in the

Executive Directors being closely involved in managing

the business at a detailed level. This provides a high

degree of direct monitoring of risks and control

processes, conducted against the background

of a culture of integrity, quality and high levels

of communication.

This is supported by reviews of weekly and monthly

detailed analyses of the performance of the business,

the key performance indicators associated with

the trading risks facing the Company and the detailed

operational results.

Tax Board level oversight of tax matters is part of the

Company’s tax risk governance process. All significant

tax matters are reported to the Board by the CFO.

By order of the Board

Robert PursellCompany Secretary

6 September 2017


CONTINUEDDIRECTORS’ REPORT

19


DIRECTORS’ REPORT

DIRECTORS’ REPORT

The Directors of Koovs plc (registered in England &

Wales number 08166410, “the Company”), present their

Report together with the audited financial statements of

Koovs plc and its subsidiary (“the Group”) for the year

ended 31 March 2017. The purpose of the Report is to

provide information to members of the Company.

The Report contains certain forward looking statements

with respect to the operations, performance and

financial condition of the Group. By their nature, these

statements involve uncertainty since future events and

circumstances can cause results to differ from those

anticipated. Nothing in this Report should be construed

as a profit forecast.

Composition of the Group and principal activities The Koovs Group comprises Koovs plc and its

wholly owned subsidiary Koovs Marketing Consulting

Private Ltd (“Koovs India”).

The Group’s principal activity is that of supplying

branded fashion garments and accessories for sale by a

third party through a branded website principally in the

Republic of India. Prior to the acquisition of Koovs India

the Company’s principal activity was that of providing

proprietary design and merchandising services to Koovs

India in connection with the development of its online

fashion business in India.

Business ReviewThe Companies Act 2006 requires the Company to set

out in this Report a fair review of the business of the

Group during the period under review including an

analysis of the position of the Group at the end of the

financial period. The information that fulfils these

requirements can be found in the following sections

of the Report which are incorporated into this report

by reference:

• Chairman’s Statement

• Strategic Report

This Directors’ Report (together with the sections of the

Report incorporated by reference) has been drawn up

and presented in accordance with, and reliant upon,

applicable English law and the liabilities of the Directors

in connection with that report shall be subject to the

limitations and restrictions provided by such law.

Capital Raising and Going ConcernThe Company’s business activities, together with the

factors likely to affect its future development, financial

position, financial risk management objectives, details of

its financial instruments and its exposures to price, credit,

liquidity and cash flow risk are described in the

Chairman’s Statement and the Strategic Report.

These financial statements have been prepared on the

assumption that the business is a going concern.

The Board identified in May 2017 that approximately

INR13,200.0m/ £15m of additional funding would be

required over the next three years.

The Board and its advisors have therefore been engaged

in a staged capital raising process which has secured

additional equity funding amounting to INR7,832.0m/

£8.9m by the date of this report.

The success of the recently completed capital raising and

the on-going support from existing shareholders give the

Board a high level of confidence that further funding will

be secured in due course and therefore the Board has

reasonable expectation that the Group and Company will

have adequate resources to continue in operational

existence for the foreseeable future.

The Directors therefore consider it appropriate for these

financial statements to be prepared on a going concern

basis.

Results and dividend The results for the year ended 31 March 2017 after

taxation, was a loss of INR1,691.3m/£19,293k (2016: loss

of INR1,650.4m/£16,741k). The Directors have not

recommended payment of a dividend in the current or

prior periods. Given the Company’s early stage of

development, the Directors do not envisage that the

Company will pay dividends in the foreseeable future.

Future developmentsIt is expected that the warehouse operations will be fully

outsourced in the year and that the purchase supply

chain will be rationalised, reducing costs and lead times.

New markets will be opened up though distribution

deals, the first being in the UAE though a deal with Souk.

com, one of the largest e-commerce platforms in the

middle east, recently acquired by Amazon.

Post balance sheet eventsOn 14 August, the shareholders approved the Company

to raise up to £18.9m through a convertible loan note.

At the time of this report INR738.7m/£8,900k of notes

have been issued. The loan notes are for a term of

24 months, secured by a debenture constituting a

first-ranking fixed and floating charge over all assets

of the Company, and with a conversion price of 40p.

There are no covenants attached to the loan notes

and interest of 6% + LIBOR is payable at the end of

the term.

Directors of the CompanyThe current Directors are shown on Page 1 with

biographies on Page 16.

20


DIRECTORS’ REPORTCONTINUED

Committees of the BoardOnce an appropriate Non-executive Director has been recruited to the Board, the Board intends to establish an

Audit Committee, a Remuneration Committee and a Nomination Committee each with formally delegated

responsibilities. The terms of reference of these committees are available on the Group’s corporate website.

Significant shareholdersAs at 6 September 2017 the Company has been notified of the following shareholders who were interested in the

issued share capital of the Company:

Shareholder Shares

Proportion of

issued share capital

Waheed Alli 33,699,218 19.2%

Dragon Asia Pvt Ltd 28,500,000 16.3%

Michinoko Limited 19,617,805 11.2%

Ruffer LLP 19,125,000 10.9%

HT Media Ltd 9,990,000 5.7%

Nextwave Ventures Pvt Ltd 9,200,000 5.2%

Anant Nahata, Non-executive Director, is interested in the following shareholdings of Koovs plc:

Shareholder Nature of interest Shares

Proportion of

issued share capital

Exicom Telesystems (Singapore) Pvt Ltd Shareholder and Director 2,909,688 1.7%

Nextwave Ventures Pvt Ltd Director 9,200,000 5.2%

Dragon Asia Pvt Ltd

Connected through common

Directors with Nextwave Ventures

Pvt Ltd 28,000,000 16.3%

Total 40,109,688 23.2%

Capital managementThe primary objective of the Group and Company’s capital management policy is to safeguard the Group’s ability

to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders

over the longer term.

The Group operates with cash balances derived from equity investment and convertible loan notes. During this

period of initial investment in the business, the Group manages its capital by monitoring net cash balances and

through the use of detailed funds flow forecasts. The cash resources are managed in the light of changes in

trading conditions and expectations over the medium term. In order to maintain or adjust the capital structure,

the Group may amend expenditure budgets, issue new shares or loan notes or seek short-term bank funding. As

described in the Strategic Report, the Board has achieved additional equity funding to support its operational

plans and expects to raise further funding in due course.

No changes were made in the capital management objectives or policies during the year.

Directors’ powers to issue sharesAt the General Meeting of the Company on 14 August 2017, the Directors were authorised to issue and allot new

ordinary shares in the Company or to grant rights to subscribe for or convert any security into shares in the

Company up to an aggregate nominal value of £1,117,416, all on a non-pre-emptive basis. The authority represents

53.2% of the share capital of the Company (on a fully diluted basis) as at 6 September 2017 (being the latest

practicable date prior to the date of this report).

DIRECTORS’ REPORT

CONTINUED

21


Financial instrumentsThe Group finances its activities with cash generated equity investment from shareholders, convertible loan notes

and cash generated from trading. Other financial assets and liabilities, such as trade debtors and trade creditors,

arise directly from the Group’s operating activities. In relation to our financial risk management objectives and

policies and the extent of price, credit, liquidity and cash flow risk, refer to Note 23 in the financial statements.

Employee involvementThe Group operates a framework for employee information and consultation which complies with the

requirements of the Information and Consultation of Employees Regulations 2005. During the period, the policy

of providing employees with information, including information relating to the economic and financial factors

affecting the performance of the Group, has been enacted through staff meetings in which employees have also

been encouraged to present their suggestions and views on the Group’s performance. These meetings are held

between management and employees regularly to allow a free flow of information and ideas. The Group operates

a share option scheme which extends to a range of management positions.

Disabled employeesThe Group gives full consideration to applications for employment from disabled persons where the candidate’s

particular aptitudes and abilities are consistent with adequately meeting the requirements of the job.

Opportunities are available to disabled employees for training, career development and promotion.

Where existing employees become disabled, it is the Group’s policy to provide continuing employment wherever

practicable in the same or an alternative position and to provide appropriate training to achieve this aim.

Directors’ liabilitiesAt the date of signing these financial statements, the Company does not have any indemnity provisions to or in

favour of one or more of its directors against liability in respect of proceedings brought by third parties, subject to

the conditions set out in the Companies Act 2006.

AuditorsA resolution to reappoint BDO LLP as auditors will be put to the members at the Annual General Meeting.

Directors’ statement as to disclosure of information to auditorsThe directors who were members of the Board at the time of approving the Directors’ Report are listed on Page 1.

Having made enquiries of fellow directors and of the Company’s auditors, each of these directors confirms that:

• to the best of each director’s knowledge and belief, there is no information (that is, information needed by the

Group’s auditors in connection with preparing their report) of which the Company’s auditors are unaware; and

• each director has taken all the steps a director might reasonably be expected to have taken to be aware of

relevant audit information and to establish that the Group’s auditors are aware of that information.

By order of the board

Robert PursellDirector

6 September 2017

22


DIRECTORS’ REMUNERATION REPORT


This report is presented by the Board of Directors. All the duties of the Remuneration Committee discussed below

are conducted by the Board until such time as the committee is convened. Although not required to do so by

Company law, the Directors of the Company have opted to include certain disclosures in relation to the

remuneration of the Directors of the Company as set out below.

Directors’ remuneration policy

FrameworkThe Board’s policy objective on directors’ remuneration is to align executive directors’ remuneration packages to

support the Group’s core business strategy while ensuring that rewards are competitive in the market. In the early

stages of the development of the Company, the remuneration packages have been limited to basic salary,

insurance benefits, pension contributions and limited share option grants. The Board recognises that further

elements of remuneration may be appropriate and also expects to grant further share option awards. Once

convened, the Remuneration Committee will consider the policy and framework further and will make proposals

for the approval of members at an appropriate General Meeting.

Remuneration policy table, executive directorsThe table below summarises the existing remuneration policy for executive directors.

Component of remuneration package, purpose and link to strategy Operation

Framework used to assess performance and provisions for the recovery of sums paid

Basic Salary

The level of basic salary is set with the

purpose of attracting and retaining

individuals with the appropriate

knowledge, skills and experience to lead

the Group.

Salaries are reviewed annually and fixed

for 12 months from 1 April. Salaries are

paid monthly in arrears in cash.

In setting salary levels the Board

considered each director’s skills and

experience and took account of relevant

comparators within companies in a

similar sector.

There are no proposed salary increases

for any executive directors.

Benefits

The level of benefits is set with the

purpose of attracting and retaining

individuals with the appropriate

knowledge, skills and experience to lead

the Group.

R Bready, R Pursell and M Turner receive

private health insurance for themselves

and their family and income protection

insurance.

The value of private health insurance is

dependent on the individual’s

circumstances.

Directors may not elect to receive cash

allowances in place of these benefits.

Pensions

Pension arrangements help recruit and

retain key executives and reward their

on-going contribution during their

career with the business.

No pensions were paid in the period. Not applicable.

Share options

Share option awards are designed to

incentivise executive performance over

the longer term and encourage retention

of executives over the performance

period.

R Pursell was awarded share options on

his appointment to the Board. M Turner

had additional share options granted in

the year and existing options modified

to reduce the exercise price from 150p

to 53.5p

Under normal circumstances the options

are capable of exercise only after expiry

of five years from the grant date.

23


Changes to executive remunerationThere were no changes to executive remuneration during the period

Ms Turner has voluntarily waived £200,000 of her salary, Waheed Alli voluntarily waived his entitlement to his

salary, Robert Bready voluntarily waived £100,000 of his salary and Anant Nahata voluntarily waived £50,000 of

his salary. The full salaries will be reinstated at the request of the individuals.

Recruitment remunerationThe remuneration package for a newly recruited executive director will be determined by the remuneration

committee once it is constituted using the approved remuneration policy. The Board reserves the discretion to

depart from the policy where necessary due to significantly unusual circumstances.

Loss of officeThe entitlement of a director can depend on whether the director is designated as a “good leaver”. A leaver is

defined as a “good leaver” where the reason for leaving is retirement, ill health, disability or redundancy. A leaver

who resigns voluntarily is not defined as a “good leaver” unless so designated by the Board.

The Company’s policy is for all executive directors to have contracts of service with a rolling notice period of

six months by either party. Payments on termination are restricted to the value of salary for the notice period

payable on termination by the Company.

Share options will lapse on the date of termination of employment except that a director who was in office for the

whole of the performance period will receive the share options at the same vesting date as would be the case if

the director had not left provided the termination was not for cause. “Good leavers” who leave in the course of a

performance period will be entitled to a pro rata vesting of share options for the period worked as a proportion of

the respective performance period, such awards to vest at the same date as would be the case if the director had

not left.

Other appointmentsThe executive directors are permitted to serve as Non-executive Directors of other companies provided that their

appointment is first approved by the remuneration committee or the Board. Directors are allowed to retain their

fees for such appointments.

24


DIRECTORS’ REMUNERATION REPORTCONTINUED

Non-executive DirectorsThe remuneration policy for Non-executive Directors is set out in the table below.

Component of remuneration package, purpose and link to strategy Operation

Fees

The basic fee is a fixed annual fee commensurate with the

time each director is expected to spend on the Company’s

affairs and with the responsibility assumed as director of

the Company.

Fees are set at a level to attract and retain individuals with

appropriate expertise by reference to similar companies.

The remuneration of the Non-executive Directors comprises an

annual fee set annually by the Board. There are no separate

travel and attendance allowances nor additional fees in relation

to committee membership.

The current annual fee is set at £50,000. A Nahata’s fee is

£100,000 of which he has waived 50% since 1 October 2015.

Share options

Share options are granted to Non-executive Directors at the

discretion of the Board of Directors. Share option awards are

designed to incentivise performance over the longer term and

encourage retention of directors over the performance period.

G Rebuck, E Sheffield had additional share options granted in

the year and existing options modified to reduce the exercise

price from 150p to 53.5p.

Consultancy

Consultancy contracts may be considered in areas where the

Non-executive Director has specific expertise.

E Sheffield is retained under a consultancy contract to supply

guidance and insight into emerging fashion trends.

Each of the Non-executive Directors has a letter of appointment. These letters are dated 5 February 2014 in the

case of A Nahata and G Rebuck and 11 December 2013 in the case of E Sheffield. The letters of appointment allow

for an initial period of three years and may be terminated by the Company or the director on three months’ notice.

New non-executive appointmentsThe same principles as above will be applied in setting the remuneration of any new Non-executive Director.

Remuneration will comprise fees, paid at prevailing rates for the existing Non-executive Directors, and the grant of

share options at the discretion of the Board of Directors

Retirement and re-election of directorsAll directors are required, under the Articles of Association, to be elected by the shareholders at the AGM

following appointment and to retire and be subject to re-election at the AGM at intervals of not more than three

years. Non-executive Directors who have served for more than nine years are subject to annual re-election.

Statement of consideration of employment conditions elsewhere in the Group and others’ viewsThe majority of the Group’s employees are based in the Republic of India where remuneration levels are

significantly different to those in the UK. In setting directors’ remuneration, consideration is given to pay and

employment conditions of employees of the Company and policies throughout the Group. The Company has not

formally consulted with employees when drawing up the directors’ remuneration policy nor has it had any input

from shareholders, although any such input would be taken seriously.


CONTINUED

25


Total level of expenditure on employeesThe following table sets out details of the remuneration paid to all employees of the Group. Further details are

shown in Note 6.

Year to

31 March

2017

INRm

Year to

31 March

2016

INRm

Remuneration to all Group employees 387.5 381.3

Annual Report on Remuneration

Remuneration tableThe Directors’ remuneration is denominated and paid in Sterling and therefore the information in the following

table is shown in Sterling and translated to Rupees at the average rate for the period.

Year to 31 March 2017

Executive Directors

Period in office Salary Health insurance Pension Total

Year to

31 March 2016

£ £ £ £ £

W Alli 12 months – – – – 100,000

M Turner 12 months 50,000 4,920 – 54,920 26,920

R Bready 12 months 150,000 1,836 – 151,836 201,581

R Pursell 9 months 131,250 1,694 – 132,944 –

R Naismith 3 months 202,575 3,421 – 205,996 248,569

Total 533,825 11,241 – 545,066 577,070

Non-executive Directors

Fees Consultancy Total

Year to

31 March 2016

£ £ £

W Alli 12 months – – – –

A Nahata 12 months 50,000 – 50,000 75,000

G Rebuck 12 months 50,000 – 50,000 50,000

E Sheffield 12 months 50,000 25,000 75,000 75,000

M Turner 12 months – – – 25,000

Total 150,000 25,000 175,000 225,000

Total 638,825 11,241 25,000 720,066 802,070

Total: INR 63,124,291 79,083,122

Mary Turner is the Chief Executive Officer. There was no structured variable element of remuneration for any

director during the period.

Waheed Alli has voluntarily waived his entitlement to his salary, Mary Turner voluntarily waived £200,000 of her


his salary. The full salaries will be reinstated at the request of the individuals. The table above shows the salaries

actually paid, having been reduced by the waivers noted above.

26


DIRECTORS’ REMUNERATION REPORTCONTINUED

Directors’ beneficial interest in sharesAt 28 July

2017

At 31 March

2017

Chairman Ordinary shares Ordinary shares

W Alli 32,699,218 32,699,218

Executive Directors

M Turner 270,270 270,270

R Bready 1,108,365 1,108,365


A Nahata 2,909,688 2,909,688

G Rebuck 1,100,000 800,000

No other directors had any beneficial interest in shares in the Company at 31 March 2017 or on their date of

appointment other than the share options disclosed below. The Board has not set any guidelines for directors to

own shares in the Company. W Alli is interested in the shares held by Silvergate Investments Ltd through his

ownership of that company. A Nahata is interested in the shares held by Exicom Tele-systems (Singapore) Private

Limited through his control of that company.

Interests in options Date of grant Exercise price

No. at

31 March 2017

Executive Directors

M Turner 1 July 2017 53.5p 7,428,111

R Pursell 1 July 2017 53.5p 2,189,181


G Rebuck 1 July 2017 53.5p 347,210

E Sheffield 1 July 2017 53.5p 347,210

The options issued to R Pursell and M Turner have been issued under the Koovs plc Unapproved Share Option

Plan. The options issued to the Non-executive Directors were made by way of separate deeds of option on terms

equivalent to the Unapproved Share Option Scheme. The options may be exercised between 5 years and 10 years

following date of grant. During the period the Company’s share price varied between 17.1 pence and 83.0 pence.

By order of the board

Robert PursellDirector

6 September 2017


CONTINUED

27


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the Annual Reports and the Group and Parent Company Financial

Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company Financial Statements for each

financial year. Under that law, and as required by the AIM Rules of the London Stock Exchange, the Directors have

elected to prepare Group and Parent Company Financial Statements under International Financial Reporting

Standards (IFRSs) as adopted by the European Union.

Under Company Law the Directors must not approve the Group and Parent Company Financial Statements unless

they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and

of the profit or loss of the Group for that period. In preparing the Group and Parent Company Financial

Statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

In preparing the Group and Parent Company Financial Statements the Directors are required to:

• present fairly the financial position, financial performance and cash flows of the Group and Parent Company;

• select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting

Estimates and Errors and then apply them consistently;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and

understandable information;

• make judgements and estimates that are reasonable and prudent;

• provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the

European Union is insufficient to enable users to understand the impact of particular transactions, other events

and conditions on the Group‘s and the Company’s financial position and financial performance;

• prepare the Group and Company Financial Statements on the going concern basis unless it is inappropriate to

presume that the Group or Company will continue in business; and

• state whether the Group and Parent Company Financial Statements have been prepared in accordance with

IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the

financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

Group‘s and Parent Company’s transactions and disclose with reasonable accuracy at any time the financial

position of the Group and Parent Company and enable them to ensure that the Group and Parent Company

Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets

of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

28


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF KOOVS PLC

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF KOOVS PLC

We have audited the financial statements of Koovs plc for the year ended 31 March 2017 which comprise the

consolidated income statement, consolidated statement of comprehensive income, consolidated statement of

financial position, consolidated statement of changes in equity, consolidated statement of cash flows, company

statement of financial position, company statement of changes in equity and company statement of cash flows and

the related notes. The financial reporting framework that has been applied in their preparation is applicable law and

International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent

company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

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.

Respective responsibilities of directors and auditorAs explained more fully in the statement of directors’ responsibilities, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view. Our

responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and

International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial

Reporting Council’s (FRC’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the FRC’s website at

www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion:

• the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs

as at 31 March 2017 and of the group’s loss for the year then ended;

• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the

European Union;

• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by

the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

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

Emphasis of matter – Going concernIn forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the

disclosures made in Note 2.4 to the financial statements concerning the Company's ability to continue as a going

concern. As discussed in Note 2.4, the Company is reliant on the directors being able to raise sufficient additional

financing within the next 12 months. Although they have been successful in raising finance in the past, there is no

certainty that they will in the future. These conditions indicate the existence of a material uncertainty which may

cast significant doubt about the Company's ability to continue as a going concern. The financial statements do

not include the adjustments that would result if the Company were unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

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

29


Matters on which we are required to report by exceptionIn the light of the knowledge and understanding of the Group and the Parent Company and its environment

obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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 by the parent company, or returns adequate for our audit

have not been received from branches not visited by us; or

• the parent company 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.

Iain Henderson (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor London

United Kingdom

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

30


CONSOLIDATED INCOME STATEMENTFOR THE YEAR TO 31 MARCH 2017

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR TO 31 MARCH 2017

MEMORANDUM

Notes

Year to

31 March

2017

INRm

Year to

31 March

2016

INRm

Year to

31 March

2017

£000

Year to

31 March

2016

£000

3 Revenue 760.9 512.4 8,680 5,198

Cost of sales (1,054.9) (747.4) (12,034) (7,581)

Gross loss (294.0) (235.0) (3,354) (2,383)

Operating expenses (1,425.3) (1,452.8) (16,258 ) (14,738)

4 Operating loss (1,719.3) (1,687.8) (19,612) (17,121)

7 Finance income 34.5 47.8 394 485

7 Finance expense (6.5) (10.4) (75) (105)

Loss for the period before tax (1,691.3) (1,650.4) (19,293) (16,741)

8 Tax expense – – – –

Loss for the period (1,691.3) (1,650.4) (19,293) (16,741)

Loss attributable to:

Equity holders of the Company (1,662.5) (1,045.2) (18,965) (10,602 )

Non-controlling interests (28.8) (605.2) (328) (6,139)


Loss per share

10 Basic and diluted loss per share INR(11.2) INR(36.7) (12.8)p (37.2)p

The accompanying Notes are an integral part of the Consolidated Income Statement.

All results relate to continuing operations.

31


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR TO 31 MARCH 2017

MEMORANDUM

Year to

31 March

2017

INRm

Year to

31 March

2016

INRm

Year to

31 March

2017

£000

Year to

31 March

2016

£000


Other comprehensive income/(loss)

Items that may be reclassified to Income Statement

in subsequent periods:

Currency translation differences from operations

denominated in currencies other than Rupee –

equity holders of the parent, net of tax (38.3) 3.5 (437) 35

Items that will not be reclassified to Income Statement

in subsequent periods:

Re-measurement of defined benefits plan, net of tax 0.7 2.1 8 21

Other comprehensive (loss)/income, net of tax (37.6) 5.6 (429) 56

Total comprehensive loss for the period (1,728.9) (1,644.8) (19,722) (16,685)

Total comprehensive loss attributable to:

Equity holders of the Company (1,700.2) (1,040.5) (19,394) (10,555)

Non-controlling interests (28.8) (604.3) (328) (6,130)

Total income and expense recognised in the period (1,728.9) (1,644.8) (19,722) (16,685)

The accompanying Notes are an integral part of the Consolidated Statement of Comprehensive Income.

All results relate to continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


32


CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2017

MEMORANDUM

Notes

31 March

2017

INRm

31 March

2016

INRm

31 March

2017

£000

31 March

2016

£000

Non-current assets

11 Intangible assets 627.5 623.0 7,736 6,543

12 Property, plant and equipment 18.5 25.2 228 265

14 Non-current financial assets 8.7 8.7 107 91

Total non-current assets 654.7 656.9 8,071 6,899

Current assets

15 Inventories 187.9 275.4 2,316 2,891

16 Trade receivables, other receivables,

prepayments and other assets 710.8 62.5 8,762 656

17 Bank deposits 445.5 105.2 5,492 1,105

17 Cash and cash equivalents 200.5 188.9 2,472 1,984

Total current assets 1,544.7 632.0 19,042 6,636

Total assets 2,199.4 1,288.9 27,113 13,535

Non-current liabilities

18 Long-term liabilities (11.7) (11.0) (144) (116)

Total non-current liabilities (11.7) (11.0) (144) (116)

Current liabilities

20 Bank short-term borrowing (48.7) (125.5) (600) (1,318)

21 Trade and other payables (310.2) (308.2) (3,824) (3,236)

Total current liabilities (358.9) (433.7) (4,424) (4,554)

Total liabilities (370.6) (444.7) (4,568) (4,670)

NET ASSETS 1,828.8 844.2 22,545 8,865

Capital and reserves

25 Equity share capital 168.0 44.9 2,071 471

26 Share premium reserve 6,196.5 2,768.4 76,388 29,071

Other reserves (7.8) (1.6) (97) (16)

Retained earnings (4,527.9) (1,978.0) (55,817) (20,771)

Non-controlling interest – 10.5 – 110

TOTAL EQUITY 1,828.8 844.2 22,545 8,865

The accompanying Notes are an integral part of the Consolidated Statement of Financial Position.

Mary Turner Robert PursellChief Executive Officer Chief Financial Officer


33


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR TO 31 MARCH 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Attributable to the equity holders of the Parent

Equity

share

capital

INRm

Share

premium

reserve

INRm

Share

based

payment

reserve

INRm

Currency

translation

reserve

INRm

Total

other

reserves

INRm

Retained

earnings

INRm

Total

INRm

Non–

controlling

interests

INRm

Total

equity

INRm

At 31 March 2015 24.5 2,271.1 3.1 (12.2) (9.1) (857.7) 1,428.8 538.5 1,967.3

Loss for the period – – – – – (1,045.2) (1,045.2) (605.2) (1,650.4)

Other comprehensive

(loss)/income – – – 3.5 3.5 1.2 4.7 0.9 5.6

Total comprehensive

(loss)/income – – – 3.5 3.5 (1,044.0) (1,040.5) (604.3) (1,644.8)

Equity issue 20.4 524.9 – – – – 545.3 – 545.3

Costs of equity issue – (27.6) – – – – (27.6) – (27.6)

Change in non-controlling

interest (Note 13) – – – – – (76.3) (76.3) 76.3 –

Share based payments reserve – – 4.0 – 4.0 – 4.0 – 4.0

At 31 March 2016 44.9 2,768.4 7.1 (8.7) (1.6) (1,978.0) 833.7 10.5 844.2

Loss for the period – – – – – (1,662.5) (1,662.5) (28.8) (1,691.3)

Other comprehensive

(loss)/income – – – (38.3) (38.3) 0.7 (37.6) (37.6)

Total comprehensive

(loss)/income – – – (38.3) (38.3) (1,661.8) (1,700.1) (28.8) (1,728.9)

Equity issue 123.2 3,500.8 – – 3,624.0 3,624.0

Costs of equity issue – (72.7) – – (72.7) – (72.7)

Change in non-controlling

interest – – (888.0) (888.0) 18.3 (869.7)

Share based payments reserve 31.8 0.2 32.0 32.0 32.0

At 31 March 2017 168.0 6,196.5 38.9 (46.8) (7.9) (4,527.8) 1,828.8 0.0 1,828.8

MEMORANDUM £000 £000 £000 £000 £000 £000 £000 £000 £000

At 31 March 2016 2,071 76,388 480 (577) (97) (55,817) 22,545 0 22,545

34


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR TO 31 MARCH 2017

CONSOLIDATED STATEMENT OF CASH FLOWS


MEMORANDUM

Notes

Year to

31 March

2017

INRm

Year to

31 March

2016

INRm

Year to

31 March

2017

£000

Year to

31 March

2016

£000

Operating activities

Loss for the period (1,691.3) (1650.4) (19,293) (16,741)

Adjustments to reconcile loss for the period

to net cash flow from operating activities

Depreciation and amortisation 11.8 11.2 135 116

Share based payment 34.4 4.0 392 40

Other non-cash items (0.7) 9.1 (8) 91

Interest income and finance expense (28.0) (37.4) (320) (381)

Working capital adjustments:

Decrease/(Increase) in inventories 87.5 (80.0) 998 (812)

(Increase)/Decrease in trade and other receivables (648.3) 83.6 (7,395) 848

Increase in trade and other payables 2.0 122.7 23 1,245

Net cash flow from operating activities (2,232.6) (1,537.2) (25,468) (15,594)

Investing activities

Acquisition of shares in subsidiary (869.8) – (9,921) –

Withdrawal: original maturity greater than 12m 1.5 1,229.2 15 (12,469)

Deposits: original maturity less than 12m (340.3) (106.3) (3,882) (1,078)

Purchase of non-current assets (9.6) (13.5) (109) (137)

Interest income received 34.5 47.8 394 484

Net cash flow from investing activities (1,183.7) 1,157.2 (13,503) (11,738)

Financing activities

25 Proceeds from issue of shares 3,624.0 545.3 41,340 5,550

26 Costs of share issues (72.7) (27.6) (830) (280)

Proceeds from short-term borrowings – 65.0 0 659

Repayment of short-term borrowings (76.9) (2.8) (877) (29)

Interest and finance expense (6.5) (8.1) (75) (82)

Net cash flow from financing activities 3,467.9 571.8 39,558 5,818

Net increase in cash and cash

equivalents 51.6 191.8 794.9 1,962

Cash and cash equivalents at start of period 127.6 (54.7) 1,456 (592)

Exchange differences (27.4) (9.5) (312) (30)

17/28 Cash and cash equivalents at end of period 151.8 127.6 1,938.9 1,340

35


COMPANY STATEMENT OF FINANCIAL POSITIONAT 31 MARCH 2017

COMPANY STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2017

Notes

31 March

2017

£000

31 March

2016

£000

Non-current assets

12 Property, plant and equipment 12 14

13 Investment in subsidiary 52,866 18,826

Total non-current assets 52,878 18,840

Current assets

16 Trade and other receivables 109 729

17 Cash and cash equivalents 2,337 1,765

Total current assets 2,446 2,494

Total assets 55,324 21,334

Current liabilities

21 Trade and other payables (380) (441)

Total current liabilities (380) (441)

NET ASSETS 54,944 20,893

Capital and reserves

25 Equity share capital 1,754 449

Share premium reserve 64,236 27,281

Other reserves 466 71

Retained earnings (11,512) (6,908)

TOTAL EQUITY 54,944 20,893

The accompanying Notes are an integral part of the Company Statement of Financial Position.

As permitted by the exemption in Section 408 of the Companies Act 2006, the Company has not presented its

own profit or loss account. The loss for the period was £4,604k (2016: £2,227k).

Signed and agreed on behalf of the Board by:

Mary Turner Robert PursellChief Executive Officer Chief Financial Officer


36


COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR TO 31 MARCH 2017

Equity

share

capital

£000

Share

premium

reserve

£000

Share based

payment

reserve

£000

Retained

earnings

£000

Total

equity

£000

At 31 March 2015 241 22,194 31 (4,681) 17,785

Loss for the period – total comprehensive income – – – (2,227) (2,277)

Share based payment reserve – – 40 – 40

Equity issue 208 5,087 – – 5,295

At 31 March 2016 449 27,281 71 (6,908) 20,893

Loss for the period – total comprehensive income – – – (4,604) (4,604)

Share based payment reserve – – 395 – 395

Equity issue 1,305 36,955 – – 38,260

At 31 March 2017 1,754 64,236 466 (11,512) 54,944

The accompanying Notes are an integral part of the Company Statement of Changes in Equity.

COMPANY STATEMENT OF CHANGES IN EQUITY


37


COMPANY STATEMENT OF CASH FLOWSFOR THE YEAR TO 31 MARCH 2017

Notes

Year to

31 March

2017

£000

Year to

31 March

2016

£000

Operating activities

Loss for the period (4,604) (2,227)

Adjustments to reconcile loss for the period to net cash flow

from operating activities

Depreciation 7 3

Share based payment 395 40

Interest income (4) (6)

Working capital adjustments:

Decrease in trade and other receivables 620 104

(Decrease)/Increase in trade and other payables (61) 150

Cash flows from operations (3,649) (1,936)

Income tax paid – –

Net cash flow from operating activities (3,649) (1,936)

Investing activities

13 Investment in subsidiary (25,001) (2,000)

13 Acquisition of non-controlling interest in subsidiary (9,037) –

Purchase of plant and equipment (5) (7)

Interest income received 4 7

Net cash flow from investing activities (34,039) (2,000)

Financing activities

Proceeds from issue of shares 39,050 5,550

Costs of share issues (790) (255)

Net cash flow from financing activities 38,260 5,295

Net increase in cash and cash equivalents 572 1,359

Cash and cash equivalents at start of period 1,765 406

17 Cash and cash equivalents at end of period 2,337 1,765

The accompanying Notes are an integral part of the Company Statement of Cash Flows.

COMPANY STATEMENT OF CASH FLOWS


38


NOTES TO THE FINANCIAL STATEMENTS


1 Authorisation of financial statements The consolidated financial statements of Koovs plc (the “Company”) and its subsidiary (together, the “Group”) and

the financial statements of the Company were authorised for issue by the board of Directors on 6 September 2017

and the Statement of Financial Position of both the Group and Company were signed on the Board’s behalf by Mary

Turner and Robert Pursell.

Koovs plc is a public limited company incorporated and domiciled in England and Wales. The address of its

registered office is York House, Kingsway, London WC2B 6JU.

2 Accounting policies

2.1. Basis of preparationThe Group’s consolidated financial statements and the Company’s financial statements have been prepared in

accordance with IFRS as adopted by the European Union as they apply to the financial statements for the period

ended 31 March 2017 and applied in accordance with the Companies Act 2006. The accounting policies which

follow set out those policies which have been consistently applied for the period ended 31 March 2017 and the

preceding year.

The financial statements are prepared under the historical cost convention except for assets valued at fair value

on business acquisition.

The financial statements of the Group are presented in the Indian Rupee, and all values are rounded to the nearest

100,000 Rupees (INR0.1m) except when otherwise indicated. The Financial Statements of the Company are

presented in Pounds Sterling the functional currency of the Company and are rounded to the nearest thousand

pounds (£000).

There were no revisions to Adopted IFRS that became applicable in the year ended 31 March 2017 which had a

significant impact on the Group’s or Company’s financial statements.

The preparation of the financial statements in conformity with adopted IFRS requires management to make

judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and

liabilities, income and expenses. Actual results may differ from these assumptions. The estimates and assumptions

are based on historical experience and are reviewed on an ongoing basis and are disclosed in Note 2.5. Revisions

to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only

that period, or in the period of revision and future periods if the revision affects both current and future periods.

2.2. Basis of consolidationThe consolidated financial statements of the Group comprise the financial statements of the Company and its

subsidiary undertaking, the financial statements of which are made up to 31 March each year.

Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to

variable returns from its involvement with the investee and has the ability to affect those returns through its

power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of

the investee);

• Exposure, or rights, to variable returns from its involvement with the investee; and

• The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption

and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all

relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangements with the other vote holders of the investee;

• Rights arising from other contractual arrangements; and

• The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group

obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,

income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated

financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

39


Profit or loss and each component of Other Comprehensive Income are attributed to the equity holders of the parent

of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit

balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting

policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses

and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

2.3. Reporting currencySince all of the Group’s revenue is generated in India and the majority of the costs are incurred in India, the

functional currency of the Group is the Indian Rupee (“INR”). For this reason, the Rupee is used as the

presentational currency of the Group.

Where appropriate the following exchange rates to £1 (rounded to one decimal place) have been used in the

relevant periods to translate Sterling figures to Rupees:

Indian Rupees

31 March

2017

31 March

2016

31 March

2015

Balance sheet 81.1 95.2 92.4

Trading statements 87.7 98.6 98.4

The rates used for the balance sheet represent the rate at the close of the period. The rates used for trading items

reflect the average rates during the periods.

All Indian Rupee amounts are millions of Rupees (INRm) except where otherwise indicated.

To assist UK-based readers of the financial statements, translations into Sterling have been supplied on a

memorandum basis to allow a clear understanding of the results and financial position of the business. The

memorandum information has not been audited and does not form part of the financial reporting of the Group

representing, as they do, presentation translations of the Indian Rupee information. The exchange rates used are

those shown in the table above.

The financial statements of the Company continue to be presented in its functional currency, pounds Sterling.

2.4. Significant accounting policiesa. Going concernThese financial statements have been prepared on the going concern basis. The directors have reviewed the Group's going concern position taking account of its current business activities, budgeted performance and the factors likely to affect its future development, are set out in the strategic report, and include the Group's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposure to credit and liquidity risks.

The Board have identified that approximately INR1,320m/£15m of additional funding would be required over the

next two years. Furthermore, the sales forecast for the year ended 31 March 2018 are low value and high volume

in nature, which are factors that constrain the ability to accurately predict revenue performance and investment in

sales and marketing remains a key strategic focus and requirement to winning customers, and thus both are an

important function of the forecasts too. The Board and its advisers have therefore been engaged in a staged

capital raising process which, by the date of this report, has secured additional funding through convertible loan

notes amounting to INR780m/£8.9m (see Note 33), with strong interest indicated for a further INR658m/£7.5m.

The success of the recently completed fund raising and the on-going interest and support from new and existing

shareholders give the board confidence that further funding will be secured in due course.

The Directors have concluded that the circumstances set forth above indicate the existence of a material

uncertainty which may cast significant doubt about the Group and Company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of

business. However they believe that taken as a whole, the factors described above enable the Group and the

Company to continue as a going concern for the foreseeable future. The financial statements do not include the

adjustments that would result if the Group and Company were unable to continue as a going concern.

40


NOTES TO THE FINANCIAL STATEMENTSCONTINUED


CONTINUED

b. Business combinations and goodwillBusiness combinations are accounted for by applying the acquisition method of accounting. Goodwill arising on

business combinations represents the difference between the cost of the acquisition and the fair value of the

identifiable assets and liabilities acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment.

The carrying amount is compared with the recoverable amount annually. The recoverable amount is assessed as

the higher of value in use and fair value less cost of disposal.

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any

indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s

recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash Generating Unit’s (CGU)

fair value less costs of disposal and its value in use. For the purpose of impairment testing, goodwill is allocated to

the lowest level of cash generating unit within the Group at which the goodwill is monitored for internal

management purposes. Where goodwill forms part of a cash generating unit and part of the operation within that

unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of

the operation when determining the gain or loss on disposal.

For each business combination, the Group elects whether to measure any non-controlling interests in the acquiree

at fair value or at the proportionate share of the acquiree’s identifiable net assets.

c. Foreign currency translationThe Group’s financial statements are presented in Indian Rupees. The functional currency of Koovs India is the

Indian Rupee and the functional currency of Koovs plc is Pounds Sterling.

Transactions in foreign currencies are initially recorded in the Company’s functional currency by applying the spot

exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign

currencies are retranslated at the functional currency rate of exchange ruling at the period end date. All

differences are taken to the Income Statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the

exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign

currency are translated using the exchange rates at the date when the fair value was determined.

Further, in consolidating the results of companies whose functional currency is other than the Rupee:

• assets and liabilities denominated in Sterling are translated into INR at the closing rates of exchange on the

relevant balance sheet date;

• Sterling income and expenditures are translated at the average rates of exchange prevailing for the relevant

periods; and

• Sterling share capital, share premium and the other equity transactions are translated at the historic rates

prevailing on the date of each relevant transaction.

2 Accounting policies continued2.4. Significant accounting policies continued

41


d. Financial Instrumentsi. Financial assetsAll financial assets are recorded on initial recognition at fair value.

Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount.

Where the time value of money is material, receivables are carried at amortised cost. A provision is made when

there is objective evidence that the Group will not be able to recover balances in full. Balances are written off

when the probability of recovery is assessed as being remote.

Cash and short-term deposits in the Statement of Financial Position comprise cash at banks and in hand and short-

term deposits with an original maturity of three months or less. For the purpose of the cash flow statement, cash

and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

ii. Financial liabilitiesFinancial liabilities and equity instruments issued by the Company are classified according to the substance of the

contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An

equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all

of its liabilities.

Trade and other payables mainly originate from the financing of assets used in the Group’s ongoing operations for

working capital. These assets are considered part of the Group’s overall liquidity risk.

The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the

market rate of interest at the period end if the effect is material.

iii. Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in the Statement of Financial

Position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an

intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

iv. Fair valuesFor financial instruments not traded in an active market, the fair value is determined using appropriate valuation

techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair

value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

e. Revenue recognitionRevenue represents sale of products made to the Group’s customers and is recognised when the significant risks

and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

Revenue is recognised to the extent it is probable that economic benefits will flow to the Group which can be

reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the

consideration received or receivable, taking into account contractually defined terms of payment and excluding

taxes or duty.

The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as

principal or agent.

f. Property, plant and equipment Property, plant and equipment is stated at cost (including capitalised borrowing costs where appropriate) less

accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the

acquisition of the asset.

Depreciation is charged to the Income Statement on a straight-line basis over the useful economic life of the

asset. Residual values are reviewed at each reporting date.

The estimated useful lives are as follows:

Leasehold improvements: shorter of the period of the lease and the useful economic life.

Plant, equipment, fixtures and fittings: 3 to 10 years

42




CONTINUED

g) Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,

intangible assets are carried at cost less any accumulated amortisation and/or accumulated impairment losses, if

any. Internally generated intangible assets are not capitalised and expenditure is reflected in profit and loss in the

period in which the expenditure is incurred.

Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an

indication that the intangible asset may be impaired.

The estimated useful lives are as follows:

Software licences: period of the licence

h. Leased assets Operating leases are leases where substantially all of the risks and rewards of ownership have not been

transferred to the Group. The cost of operating leases is charged to the income statement on a straight line basis

over the period of the lease.

i. Inventories Inventories and work in progress are stated at the lower of cost and net realisable value. Cost includes the

purchase price of manufactured products, materials, direct labour, transport costs and a proportion of attributable

design and production overheads calculated on a first in, first out basis. Net realisable value is the estimated

selling price in the ordinary course of business. Provision is made for obsolete, slow moving or defective items

where appropriate.

j. Prepayments, advances and accrued incomePrepayments includes security deposit payments made for advertising contracts, which are realised and recorded

in the income statement as the contract matures

k. Impairment The carrying amount of the Group’s assets, other than inventories and deferred tax assets, are reviewed each

balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the

asset’s recoverable amount is estimated. Where the asset does not generate cash flows that are independent from

other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an

indication that the asset may be impaired. An impairment loss is recognised in the Income Statement whenever

the carrying amount of an asset exceeds its recoverable amount. For tangible fixed assets, the recoverable

amount is determined with reference to the cash generating unit to which the asset belongs.

l. Taxes Income tax expense comprises current and deferred tax. Any tax payable is based on taxable profit for the year.

Taxable profit differs from net profit as reported in the income statement because it excludes items of income or

expense that are taxable or deductible in other years and it further excludes items that are never taxable or

deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation

purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of

goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that

affects neither accounting nor taxable profit and differences relating to investments in subsidiaries and jointly

controlled entities to the extent that they will probably not reverse in the foreseeable future. Deferred tax is

measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based

on the laws that have been enacted or substantially enacted by the reporting date. A deferred tax asset is

recognised only to the extent that it is probable that future taxable profits will be available against which the asset

can be utilised and are not discounted. Deferred tax assets are reduced to the extent that it is no longer probable

that the related tax benefit will be realised.

2 Accounting policies continued2.4. Significant accounting policies continued

43


m. Post-employment benefits The Group operates an unfunded defined benefit gratuity plan for its employees in India. The costs of providing

benefits under this plan are determined on the basis of actuarial valuation at each year end. The cost is

determined using the projected unit credit method. Re-measurements, comprising of actuarial gains and losses,

excluding amounts included in net interest on the net defined benefit liability, are recognised immediately in the

statement of financial position with a corresponding debit or credit to retained earnings through Other

Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in

subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

• The date of the plan amendment or curtailment; and

• The date that the Group recognises related restructuring costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability. The Group recognises

the following changes in the net defined benefit obligation under administration expenses in the consolidated

statement of profit or loss:

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-

routine settlements.

The Group also contributes to defined contribution pension schemes. Pension costs charged to the Income

Statement represent the amount of contributions payable to such schemes in respect of the period.

n. Finance income Finance income comprises interest receivable on funds invested. Finance income is recognised in the Group

income statement using the effective interest method.

o. Share-based payment The Group operates share option incentive schemes for Directors and key employees. The fair value of options

granted is recognised as an employee expense in the income statement with a corresponding increase in equity. The

fair value is measured at grant date and spread over the period during which the employees become unconditionally

entitled to the options. The fair value of the options is measured using the “Black-Scholes” option valuation model,

taking into account the terms and conditions upon which the options were granted. The amount recognised in the

income statement is adjusted at each balance sheet date to reflect the number of share options that are expected to

vest revised for expected leavers and estimated achievement of non-market based vesting conditions.

p. Segmental informationThe Directors consider that the business comprises a single operating segment for reporting purposes.

2.5. Judgements and key sources of estimation uncertaintyThe preparation of financial statements requires management to make judgements, estimates and assumptions

that affect the amounts reported for assets and liabilities as at the period end date and the amounts reported for

revenues and expenses during the period. However, the nature of estimation means that actual outcomes could

differ from those estimates.

a. JudgementsThe following judgements (apart from those involving estimates) have had the most significant effect on amounts

recognised in the financial statements:

TaxesUncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the

amount and timing of future taxable income.

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be

available against which the losses can be utilised. Significant management judgement is required to determine the

amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable

profits together with future tax planning strategies. See Note 8.

44




CONTINUED

Fair values of assets acquiredThe assessment of the fair value of the assets acquired and any potential value of intangible assets acquired in

relation to the investment in Koovs India has required judgement to be applied affecting the accounting for the

acquisition and the resulting goodwill.

No value has been attributed to the Koovs brand at the date of acquisition due to the brand being in its infancy.

No value has been attributed to the supply agreement with the Group’s customer as the relationship was

established only shortly before acquisition and the customer had no pre-existing relationships with customers.

Business relationshipThe Koovs Group wholesales products exclusively to Marble, an independently owned and managed company

which operates both the KOOVS.COM website and the associated e-commerce retail distribution business under a

licence granted by the Koovs Group. Marble operates independently and carries the stock and credit risk

associated with the sales it makes to consumers. It has therefore been assessed that Marble acts as principal in its

dealings with its customers and not as agent for Koovs.

b. EstimatesImpairment reviews (tangible and intangible assets)The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired

and is written down to its recoverable amount.

The goodwill was tested for impairment at 31 March 2017 and the recoverable amount was based on fair value less

costs of disposal. Goodwill has been allocated to the assets and liabilities of Koovs Marketing Consultants Private

Limited, which is considered to be a cash-generating unit. The value of the CGU has been determined using the

listed share price of the Group on 31 March 2017. Refer to Note 11 for further details.

Valuation of inventoryInventories and work in progress are stated at the lower of cost and net realisable value. Net realisable value is the

estimated selling price in the ordinary course of business. Provision is made for obsolete, slow moving or defective

items where appropriate. The assessment of the selling price follows a two-stage process; first the most recent

selling price is used to calculate the lower of cost and net realisable value and a provision is created for any items

where the recent selling price is below cost; and second, a further provision is made based on the age of the

inventory on a sliding scale so that all inventory over six months old attracts a provision and inventory over

12 months old is fully provided.

2 Accounting policies continued2.5. Judgements and key sources of estimation uncertainty continueda. Judgements continued

45


2.6 Revisions, updates and new IFRSs The Group and Company have considered the following new standards, interpretations and amendments to

published standards that are effective for the Group and Company for the year beginning 1 April 2015:

New and Revised Standards

Effective for annual

periods beginning

on or after

Amendments to IAS 16 and 38 – Clarification of Acceptable Methods of Depreciation

and Amortisation 1 January 2016

Amendments to IFRS 11 – Joint Arrangements: Accounting for Acquisition of Interests in

Joint Operations 1 January 2016

Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment Entities: Applying the

Consolidation Exception 1 January 2016

Amendments to IAS 1 – Disclosure Initiative 1 January 2016

There are no standards, amendments or interpretations adopted by the EU that are in issue but not yet effective

that are currently expected to have a significant impact on the Group financial statements. The Group is

considering the impact on the Group financial statements of adopting the following standards, amendments or

interpretations all of which are effective for annual periods ending 30 June 2017 and thereafter:

New and Revised Standards

Issue date of

original standard

Effective date (annual

periods beginning

on or after)

1 IFRS 9 Financial Instruments July 2014 1 January 2018

2 IFRS 15 Revenue from Contracts with Customers May 2015 1 January 2018

3 IFRS 16 Leases January 2016 1 January 2019

IFRS 15 is based on the principle that revenue is recognised when control of goods or services transfer to a

customer, so the notion of control replaces the existing notion of risks and rewards. Koovs plc is currently

reviewing the revenue in relation to the contract with its customers to determine whether it will be impacted by

IFRS 15. It is not expected that implementation of this standard will have a material impact on revenues.

The Directors anticipate that the adoption of IFRS 9 in future periods will not have a material impact on the

financial statements of the Group or Parent Company, however the Directors are still continuing to analyse the

impact of these changes.

IFRS 16 has been issued by the IASB but has not yet been adopted by the EU. IFRS 16 will primarily change lease

accounting for lessees; lease agreements will give rise to the recognition of an asset representing the right to use

the leased item and a loan obligation for future lease payables. Lease costs will be recognised in the form of

depreciation of the right to use asset and interest on the lease liability. The adoption of IFRS 16 is likely to result in

an increase in both assets and liabilities in the balance sheet and an increase in operating profit and finance

expenses in the income statement.

46




CONTINUED

3 Revenue Revenue recognised in the Income Statement is analysed as follows:

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Sale of fashion garments, India 760.9 512.4 8,680 5,198

The Group’s sole operation was that of supplying fashion garments at wholesale to third parties. All of the revenue

was generated in the Republic of India, based on the location of the customers.

Operating segmentAll of the Group’s revenue is generated by Koovs India through its operations as a supplier of branded fashion

products. The chief operating decision maker is the Chief Executive Office who makes resource allocation

decisions based on financial statements and operating reports for the entire Group. The Group therefore

represents a single cash generating unit and a single operating segment.

Information about major customersAll of the revenue arising from the sale of fashion garments arises from Marble Pvt. Ltd.

4 Operating lossOperating loss is stated after charging:

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Auditor’s remuneration (Note 5) 12.1 15.1 137 154

Operating lease payments 70.6 49.4 806 501

Depreciation expense 10.4 9.5 119 99

Amortisation expense 1.4 1.7 16 17

Staff costs (Note 6) 387.5 380.7 4,420 3,863

Net foreign currency exchange loss 0.3 1.7 4 17

All operating expenses are administrative by nature.

5 Auditor’s remunerationThe Group paid the following amounts to the Group’s auditor or its associates in respect of the audit of the

financial statements and for other services provided to the Group.

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Audit of the financial statements – audit services 11.0 15.1 124 154

Taxation compliance and advisory services 1.1 – 13 –

12.1 15.1 137 154

47


6 Staff costs and Directors’ emoluments

a. Group staff costs MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Total wages and salaries 324.3 341.7 3,700 3,468

Social security costs 15.7 21.3 179 216

Pension contributions 7.9 8.4 90 86

Unfunded post-employment benefits 1.1 2.5 12 25

Employee benefits – health insurance 4.1 2.8 47 28

Share based compensation 34.4 4.0 392 40

Total 387.5 380.7 4,420 3,863

The average monthly number of employees during the period was made up as follows:

2017

No.

2016

No.

UK operations 24 29

India operations 153 154

177 183

b. Directors’ remuneration

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Total Directors’ remuneration 63.1 82.2 721 834

Highest paid Directors’ remuneration 18.1 27.6 205 280

Contributions to money purchase pension schemes – 2.3 – 23

c. Company staff costs

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Total wages and salaries 152.9 199.7 1,744 2,026

Social security costs 15.7 21.3 179 216

Pension contributions 0.3 2.4 4 24

Employee benefits – health insurance 1.3 1.2 15 12

Share based compensation 32.8 4.0 375 40

Total 203.0 228.6 2,317 2,318

The average monthly number of employees during the period was made up as follows:

2017

No.

2016

No.

UK operations 24 29

48




CONTINUED

The remuneration of the Directors is shown in the following table and more detail is supplied in the Directors’

Remuneration report. All of the Directors’ emoluments are denominated and paid in Sterling and therefore are

shown in Sterling in the following table with a conversion to Rupees at the average rate for the year.

Period in office

Salary

£

Health insurance

£

Pension

£

Total

£

Year to

31 March 2017

£Year to 31 March 2017

Executive directors

W Alli 12 months – – – – 100,000

M Turner 12 months 50,000 4,920 – 54,920 26,920

R Bready 12 months 150,000 1,836 – 151,836 201,581

R Pursell 9 months 131,250 1,694 – 132,944 –

R Naismith 3 months 202,575 3,421 – 205,996 248,569

Total 533,825 11,241 – 545,066 577,070

Period in office

Fees

£

Health insurance

£

Consultancy

£

Total

£

Year to

31 March 2017

£

Non-executive directors

W Alli 12 months – – – – –

A Nahata 12 months 50,000 – – 50,000 75,000

G Rebuck 12 months 50,000 – – 50,000 50,000

E Sheffield 12 months 50,000 – – 75,000 75,000

M Turner 12 months – – – – 25,000

Total 150,000 – 25,000 175,000 225,000

Total 683,825 11,241 25,000 720,066 802,070

Total: INR 63,124,291 79,083,122

Waheed Alli has voluntarily waived his entitlement to his salary, Mary Turner voluntarily waived £200,000 of her


his salary. The full salaries will be reinstated at the request of the individuals. The table above shows the salaries

actually paid, having been reduced by the waivers noted above.

There are no amounts paid to or receivable by Directors under long term incentive plans in respect of qualifying

services. Contributions to pension schemes relate to one Director. Further information is given in the Directors’

Remuneration Report.

d. Share based payments

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Share based payments – Directors 32.7 2.0 375 20

Share based payments – other staff 1.7 2.0 19 20

Total 34.4 4.0 394 40

6 Staff costs and Directors’ emoluments continuedc. Company staff costs continued

49


7 Finance Income and ExpenseMEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Finance income

Interest on deposits 34.5 47.8 394 485

Finance expense

Bank charges (6.5) (10.4) (75) (105)

8 Taxation

a. Tax charged in the Income StatementThere is no tax credit or charge in either of the two years ended 31 March 2017.

The Group has generated tax losses during the period. No tax credit has been accounted for in the period ended

31 March 2017 in relation to these losses as the likelihood is that it will be some time before tax losses can be

utilised. There is no tax charge or credit relating to items charged or credited to other comprehensive income.

b. Reconciliation of the total tax chargeThe tax expense in the Income Statement for the period is different to the standard rate of corporation tax in the

UK. The differences are reconciled below:

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Loss from continuing operations before taxation (1,691.3) (1,650.4) (19,293) (16,741)

Tax calculated at UK standard rate of corporation

tax of 20% (2016: 20%) (338.3) (330.1) (3,859) (3,348)

Expenses not deductible for tax purposes 9.2 2.3 105 23

Deferred tax asset not recognised 329.0 327.8 3,753 3,325

Total tax expense reported in the Income Statement – – – –

c. Change in corporation tax rateThere was no reduction in the rate of corporation tax of 20% in the year. The UK tax rate is to be reduced to 19%

from 1 April 2017 and 18% from 1 April 2020, which was substantially enacted in October 2016. The Chancellor

announced in the 2016 budget that the UK corporation main rate of corporation tax rate will reduce to 17% from

1 April 2020, this rate has not yet been enacted or substantively enacted.

d. Deferred taxThe Group has INR3,716m/£45.8m (2016: INR2,477/£26.0m) of tax losses in India which are available to carry

forward against taxable profits generated over the next seven years. Tax losses in the UK available to carry

forward indefinitely amount to INR859.8m/£10,599k (2016: INR614.8m/£6.5k). No deferred tax asset has been

recognised in relation to these losses.

9 Dividends paid and proposedNo dividends were paid or declared in either period from 1 April 2015 to 31 March 2017.

50




CONTINUED

10 Earnings per shareBasic earnings per share is calculated by dividing the earnings attributable to the owners of the Parent Company

by the weighted average number of ordinary shares in issue during the period.

2017 2016

Weighted average shares in issue for basic earnings per share 148,479,033 28,482,540

Effect of dilutive options – –

Weighted average shares in issue for diluted earnings per share 148,479,033 28,482,540

Earnings attributable to the owners of the Parent (INRm) (1,662.5) (1,045.2)

Basic and diluted loss per share – Rupees (11.2) (36.7)

Basic and diluted loss per share – Pence (12.8) (37.2)

Diluted earnings per share is calculated by dividing the earnings attributable to the owners of the Parent Company

by the weighted average number of ordinary shares in issue during the period, adjusted for the effects of

potentially dilutive share options. The effect of the share options in issue is anti-dilutive and therefore no

adjustment has been made to the weighted average shares in issue for diluted earnings per share.

11 Intangible assets

Group

Computer

software

INRm

Goodwill

INRm

Total

INRm

Cost

At 31 March 2015 4.1 621.2 625.3

Additions: year to 31 March 2015 0.9 – 0.9

At 31 March 2016 5.0 621.2 626.2

Additions: year to 31 March 2016 5.9 – 5.9

At 31 March 2017 10.9 621.2 632.1

Amortisation

At 31 March 2015 1.5 – 1.5

Amortisation charge: year to 31 March 2015 1.7 – 1.7

At 31 March 2016 3.2 – 3.2

Amortisation charge: year to 31 March 2016 1.4 – 1.4

At 31 March 2017 4.6 – 4.6

Net Book Amount

At 31 March 2016 1.8 621.2 623.0

At 31 March 2017 6.3 621.2 627.5

Net Book Amount (£000)

At 31 March 2017 78 7,658 7,736

Computer software assets are assumed to have a finite useful life and are amortised on a straight-line basis over

the life of the licence.

51


The goodwill is not amortised but it is subject to an annual impairment test. The goodwill relates entirely to the

Group’s Indian subsidiary, Koovs Marketing Consulting Pvt. Ltd. The recoverable amount of the asset has

measured using the fair value less costs of disposal method. As Koovs Marketing Consulting Pvt. Ltd. accounts

for all Koovs Plc Groups' trading activities the fair value is determined by the market value of the Koovs Plc Group.

As at the balance sheet date the market value was INR7,623m/£94m.

12 Property, plant and equipment

Group

Leasehold

improvements

INRm

Computer

equipment

INRm

Office

equipment

INRm

Fixtures

& Fittings

INRm

Motor

vehicle

INRm

Total

INRm

Cost

At 31 March 2015 9.9 8.1 10.2 2.6 1.0 31.8


Additions 1.0 4.6 6.5 0.5 – 12.6

Disposals – (0.1) – – – (0.1)

At 31 March 2016 10.9 12.6 16.7 3.1 1.0 44.3


Additions 0 1.9 1.4 0.4 – 3.7

At 31 March 2017 10.9 14.5 18.1 3.5 1.0 48.0

Accumulated Depreciation

At 31 March 2015 3.5 2.9 2.4 0.7 0.1 9.6


Depreciation charge 3.1 3.1 2.8 0.4 0.1 9.5

Disposals 0 – – – – 0

At 31 March 2016 6.6 6.0 5.2 1.1 0.2 19.1


Depreciation charge 3 3.5 3.4 0.4 0.1 10.4

At 31 March 2017 9.6 9.5 8.6 1.5 0.3 29.5

Net Book Amount

At 31 March 2016 4.3 6.6 11.5 2.0 0.8 25.2

At 31 March 2017 1.3 5.0 9.5 2.0 0.7 18.5

Net Book Amount (£000)

At 31 March 2017 16 62 117 23 9 228

52




CONTINUED

Company Fixtures & Fittings

£000

Cost

At 31 March 2015 17


Additions 6

At 31 March 2016 23


Additions 5

At 31 March 2017 28

Depreciation

At 31 March 2015 6


Deprecation charge 3

At 31 March 2016 9


Deprecation charge 7

At 31 March 2017 16

Net Book Amount

At 31 March 2016 14

At 31 March 2017 12

13 Company investment in subsidiary

Cost of shares in

subsidiary

undertaking

£000

Total

£000

At 31 March 2015 16,826 16,826

Additions 2,000 2,000

At 31 March 2016 18,826 18,826

Additions 34,040 34,040

At 31 March 2017 52,866 52,866

Koovs Marketing Consulting Private Limited (“Koovs India”) operates a wholesale business supplying fashion

clothing and accessories in India and owns the rights to the “Koovs” brand. By 31 March 2016 the Company had

subscribed for 185,349,356 shares in Koovs India for a cost of £18,826k. As a result Koovs plc held 60.2% of

its subsidiary.

During the year ended 31 March 2017 the Company acquired the remaining shares in Koovs India at a cost of

INR869.8m/£9,039k and Koovs India became a 100% subsidiary of the Company. Subsequent to acquiring the

remaining shares and during the year ended 31 March 2017 a further INR2,302.6m/£25,001k was invested.

Koovs India is located at 77A Sector-18, IFFCO Road, Gurgaon – 122015, India.

53


The investment has been tested for impairment and the recoverable amount has been based on the using the fair

value less costs of disposal method. The recoverable value is in excess of the carrying value of the asset so no

impairment has been charged.

14 Non-current financial assetsNon-current financial assets comprise security deposits given towards rental premises and Governmental liabilities

in India.

15 Inventories

Group

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Raw materials 2.5 4.7 31 49

Goods in transit – 23.6 0 248

Finished goods (at lower of cost and net realisable value) 185.4 247.1 2,285 2,594

187.9 275.4 2,317 2,891

The cost of inventory charged through cost of sales in the Consolidated Income Statement during the year

amounted to INR1,017.5m/£11,607k (2016: INR730.2m/£7,420k). Slow moving inventory is assessed each reporting

period and appropriate provision made against the inventory balance. The value of inventory is therefore shown

net of this provision. During the period the provision against inventory decreased by a net INR37.4m/£301k

(2016: increased by INR32.2m/£351k). This expense was recognised within cost of sales in the Consolidated

Income Statement.

Provisions against inventory INRm

MEMO

£000

At 31 March 2015 40.4 411

Arising during the period 32.2 351

At 31 March 2016 72.6 762

Released during the period (37.4) (301)

At 31 March 2017 35.2 461

16 Trade receivables, other receivables, prepayments and other assets

Group

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Trade receivables 67.7 8.3 834 87

Due from related parties 8.7 8.0 107 84

Employee receivables 6.7 1.1 83 12

VAT and other taxes recoverable 15.8 11.3 195 118

Prepayments, advances and accrued income 611.9 33.8 7,543 355

710.8 62.5 8,762 656

Company2017

£000

2016

£000

Due from related parties 9 697

Prepayments and other receivables 76 23

VAT and other taxes recoverable 24 9

109 729

54




CONTINUED

Group trade receivables are due from one customer. Trade receivables are non-interest bearing and there were no

provisions for impairment

As at the end of the financial periods, none of the trade receivables was past due.

Credit quality of financial assetsThe credit quality of financial assets is assessed by reference to external credit ratings where available, or if no

independent rating exists, a rating based on historical information relating to counterparty default rates is used.

The trade receivables balance includes amounts due from the Group’s one major customer for goods provided.

In the period to 31 March 2017 the Company’s trade receivable from this counterparty has never been past due or

impaired therefore management considers the credit quality to be certain.

Provisions for doubtful debts

Group

Trade

receivables

INRm

Other

receivables

INRm

At 31 March 2015 – 5.0

Charge for the period – –

Utilised during the year – 5.0

At 31 March 2016 – –

Charge for the period – –

Utilised during the year – –

At 31 March 2017 – –

At 31 March 2017: £000 – –

16 Trade receivables, other receivables, prepayments and other assets continued

55


17 Cash and bank deposits MEMORANDUM

Group2017

INRm

2016

INRm

2017

£000

2016

£000

Current assets:

Bank deposits with an original maturity of

more than 12 months 1.0 1.0 12 11

Bank deposits with an original maturity of not

more than 12 months 444.5 104.2 5,480 1,094

Cash at bank and in hand 200.5 188.9 2,472 1,984

Total 646.0 294.1 7,964 3,089

Non-current assets:

Security deposits 8.7 8.7 107 91

Bank overdrafts (48.7) (61.3) (600) (644)

Total cash and bank deposits 606.0 241.5 7,471 2,536

Cash and cash equivalents2017

INRm

2016

INRm

2017

£000

2016

£000

Cash at bank and in hand 200.5 188.9 2,472 1,984

Bank overdrafts (Note 20) (48.7) (61.3) (600) (644)

Total 151.8 127.6 1,871 1,340

Cash and cash equivalents comprise cash in hand and cash held in bank accounts from which deposits can be

drawn without any substantial delay and which have not been deposited under any agreement for a fixed term,

net of any bank overdrafts which are utilised for operational cash flow purposes.

Company2017

£000

2016

£000

Cash at bank and in hand 2,337 1,765

18 Non-current liabilities

Group

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Provision for employment benefits – Note 19 3.7 4.5 45 48

Lease equalisation – arising from straight-line expensing of

property lease costs 8.0 6.5 99 68

11.7 11.0 144 116

56




CONTINUED

19 Provision for post-employment benefitsKoovs India has a defined benefit gratuity plan as required by India regulation. There are no other defined benefit

post-employment plans. The gratuity plan is governed by the laws of India which require payment of a gratuity on

termination of employment where continuous service has been greater than five years. There are no assets held in

relation to these liabilities. The movements during the period and the balance at the end of the period were:

Provisions for post-employment liabilities INRm

MEMO

£000

At 31 March 2015 4.1 44

Arising during the period 0.4 4

At 31 March 2016 4.5 48

Arising during the period (0.9) (3)

At 31 March 2017 3.7 45

The gratuity is based on final salary and length of service. The expense recognised in the period is as follows:

Group

MEMORANDUM

2017

INRm

2016

INRm

2017

£000

2016

£000

Net benefit expense

Current service cost 1.5 2.1 18 21

Interest cost on benefit obligation 0.3 0.4 4 4

Benefits paid (1.3) – (16) –

Net actuarial loss in the period (1.4) (2.1) (17) (21)

Net benefit expense (0.9) 0.4 (11) 4

Note: “Net benefit expense” in memorandum above is not equal to the “Arising in the period” charge in the Provision for post-employment liabilities table above due to the exchange rate differences.

The principal assumptions used in determining the post-employment benefit obligations for the plans outlined

above are:

Discount rate per annum 7.0%

Salary increases per annum 12.00%

Mortality rate reference table India Assured Lives Mortality (2006-08) Ult.

Withdrawal rate per annum 20.00%

A quantitative sensitivity analysis shows that for the key assumptions, increases or decreases of 100 basis points

have an individual impact of not more than INR0.5m/£6k on the defined benefit plans obligation at 31 March 2017.

The following payments are expected to be made in the future years out of the defined post-employment

plans obligation:

2017

INRm

2016

INRm

Within 1 year from balance sheet date 0.4 0.2

Between 2 and 5 years 3.0 3.8

Between 5 and 10 years 0.6 0.2

Beyond 10 years 0.8 4.3

Total expected payments 4.8 8.5

57


20 Short-term borrowing

Cash and cash equivalents2017

INRm

2016

INRm

2017

£000

2016

£000

Bank overdraft (Note 17) 48.7 61.3 600 644

Short-term loan – 64.2 0 674

Total 48.7 125.5 600 1,318

Koovs India has an overdraft facility with Axis Bank amounting to INR93m (£1,575k). The facility is available until

13 December 2017 and accrues interest at 8.2% per annum. The facility is secured against fixed rate deposits at

the same bank.

21 Trade and other payablesMEMORANDUM

Group2017

INRm

2016

INRm

2017

£000

2016

£000

Trade payables 172.4 213.0 2,125 2,236

Amounts owed to related parties 5.0 5.2 62 55

Other payables 0.1 9.1 1 96

Other taxes and social security costs 16.3 23.1 201 242

Accrued expenses 116.4 57.8 1,435 607

310.2 308.2 3,824 3,236

Company2017

£000

2016

£000

Trade payables 144 273

Amounts owed to related parties 62 55

Other payables – 31

Other taxes and social security costs 42 56

Accrued expenses 132 26

380 441

Trade and other payables are non-interest bearing and are normally settled on 30 day terms.

58




CONTINUED

22 Commitments and contingencies

Operating lease agreements where the Company is lesseeThe Group has entered into commercial leases on the Group’s offices and warehouse premises. The leases have an

average duration of between two and five years with no right of renewal. There are no restrictions placed upon

the lessee by entering into these leases.

Future minimum rents payable under non-cancellable operating leases are as follows:

MEMORANDUM

Group2017

INRm

2016

INRm

2017

£000

2016

£000

Not later than one year 44.8 31.4 552 330

After one year but not more than five years 125.0 82.7 1,541 868

After five years 11.2 30.2 138 317

Company2017

£000

2016

£000

Not later than one year 208 55

After one year but not more than five years 626 –

After five years – –

Of the £834k of Company commitments £824k relates to a rental lease. The rental lease terminates on 5 April

2021 and has a six-month notice period that can be exercised at any time with no penalty. As the Company does

not expect to terminate the lease prior to 5 April 2021 all rental commitments up to this time have been disclosed.

Other contingenciesAt 31 March 2016, Koovs India had issued a bank guarantee to a supplier amounting to INR6.5m in support of

planned purchase orders. No such guarantees exist at 31 March 2017.

23 Financial risk managementFor the purpose of both the Group’s and the Company’s capital management, capital includes issued capital,

share premium and all other equity reserves attributable to the equity holders of the parent, along with any

long-term debt secured to fund the business. The primary objective of the Group’s and the Company’s capital

management policy is to safeguard the ability to continue as a going concern in order to provide returns for

shareholders and benefits for other stakeholders over the longer term. At 31 March 2017 the total capital managed

under this policy amounted to INR6,364.6m/£65,990k, having secured additional equity funding during the year

as described in Note 25.

The Group and the Company both operate with cash balances derived from equity investment. Koovs India

operates an overdraft secured on bank deposits in order to provide flexibility in cash management and also holds

a small, short-term loan secured on the assets of the Group, for the same purpose. During this period of initial

investment in the business, the Group manages its capital by monitoring the Group’s profitability, its net cash

balances and through the use of detailed funds flow forecasts. The cash resources are managed in the light of

changes in trading conditions and expectations over the medium term. In order to maintain or adjust the capital

structure, the Group may amend expenditure budgets, issue new shares or seek short-term bank funding. As

described in the Strategic Report, the Board is seeking further equity investment to support its operational plans.

Exposure to credit, interest rate and currency risk arises in the normal course of business

Market risk – interest rate risk (Group and Company)The Group’s exposure to interest rate risk arises from the fluctuations in the rate of interest income arising from

cash and cash equivalents balances as impacted on by the changes in the bank base rates in the UK and India.

Interest rate fluctuations in the UK are unlikely to have a significant effect on the financial results of the Group or

the Company. In India, interest is currently earned at rates in the region of 6.5% on bank balances at the period

end of INR447.3m/£5,514k. A 1% change in this interest rate either way would have an impact in the region of

INR4.5m/£55k on the Income Statement and equity.

59


Market risk – foreign currency risk (Group)All of the income of the Group is denominated in Indian Rupees and the majority of the cost of sales are also

denominated in Rupees. Of the overheads, 30% are denominated in Sterling and therefore the Income Statement

is susceptible to fluctuations as a result of changes in the exchange rate. Certain cash balances, receivables and

overhead payables are also denominated in Sterling relating to the UK operations of the Group.

The following table demonstrates the sensitivity to a reasonably possible change in Sterling exchange rates, with

all other variables held constant.

Sterling Change in rate

Effect on loss

before tax

INRm

Effect on

pre-tax equity

INRm

MEMORANDUM

£000 £000

2017 +10% (36.8) 16.8 – –

–10% 36.8 (16.8) – –

2016 +10% (41.5) (13.0) (432) (137)

–10% 41.5 13.0 432 137

Credit risk (Group)All of the trade receivables are due from one customer. This amount has been received by the date of this report.

No provision is made against these amounts. Cash deposits in the UK are held with the Company’s principal

banker, Barclays Bank PLC. Cash deposits in India are held by substantial local banks. There is no concern over the

credit quality of the banks holding any of the cash deposits.

The Group has established procedures to minimise the risk of default by trade debtors including detailed credit

checks undertaken before a customer is accepted.

Liquidity risk (Group and Company)Liquidity risk is the risk that the Group or the Company will not be able to meet its financial obligations as they

fall due.

The table below summarises the maturity profile of the Group’s financial liabilities at 31 March 2017 based on

contractual undiscounted payments.

Period ended 31 March 2017

On demand

INRm

Less than

3 months

INRm

3 to

12 months

INRm

1 to

5 years

INRm

Over

5 years

INRm

Total

INRm

Non-derivative

financial liabilities

Trade and other payables – 293.9 – – – 293.9

Bank overdraft 48.7 – – – – 48.7

Lease equalisation – – – 8.0 – 8.0

Total 48.7 293.9 – 8.0 – 350.6

60




On demand

INRm

Less than

3 months

INRm

3 to

12 months

INRm

1 to

5 years

INRm

Over

5 years

INRm

Total

INRm

Non-derivative

financial liabilities

Trade and other payables – 285.1 – – – 285.1

Bank overdraft 61.3 – – – – 61.3

Short-term loan – – 64.2 – – 64.2

Lease equalisation – – – 6.5 – 6.5

Total 61.3 285.1 64.2 6.5 – 417.1

All of the Company’s financial liabilities at 31 March 2017 amounting to £380,000 (2016: £385,000) were due

within 3 months.

Trade and other payables mainly originate from the financing of assets used in the Group’s ongoing operations for

working capital. These assets are considered part of the Group’s overall liquidity risk.

24 Fair value of financial instrumentsThe fair value of cash and cash equivalents, trade receivables, trade payables, and other current liabilities

approximate their carrying amounts due to the short-term maturities of these instruments. There is no material

difference between the carrying amount and the fair value of any other assets or liabilities in the Statement of

Financial Position.

25 Issued share capital2017

No.

2017

£

2016

No.

2016

£

Allotted, called up and fully paid

At start of period:

Ordinary shares of £0.01 each 44,883,691 448,837.0 24,110,719 241,107

Movements during the period:

Issued for cash – ordinary shares 130,500,000 1,305,000 20,772,972 207,730

At end of period – £ Sterling 175,383,691 1,753,837 44,883,691 448,837

No. INRm No. INRm

Converted to Rupees at the rates ruling on the

date of issue of the shares

At start of period 44,883,691 44.9 24,110,719 24.5

Issued during the period 130,500,000 123.1 20,772,972 20.4

At end of period 175,383,691 168.0 44,883,691 44.9

The share capital of the parent company, Koovs plc, is denominated in Sterling and therefore the information

provided in relation to the share capital of the Company is given in Sterling and has been translated into Rupees

for the purposes of the consolidated accounts.

23 Financial risk management continued


CONTINUED

61


During the financial year, and subsequently, the Company has been engaged in a Capital Raising process as more

fully described in the Directors' Report.

Shares Issue price Proceeds

£

Nominal value

£

Share premium

£

29 April 2016 87,600,000 25p 21,900,000 876,000 21,024,000

08 June 2016 13,200,000 25p 3,300,000 132,000 3,168,000

07 July 2016 4,000,000 25p 1,000,000 40,000 960,000

17 November 2016 25,700,000 50p 12,850,000 257,000 12,593,000

Total £ 130,500,000 39,050,000 1,305,000 37,745,000

Total, INR 130,500,000 3,624,030,640 123,161,529 3,500,869,111

Following the end of the financial year, additional funds were raised through convertible loan notes as set out in

Note 33.

26 Reserves

Equity share capitalThe amount classified as equity share capital represents the nominal value of shares issued comprising ordinary

shares of £0.01 each.

Share premiumThe amount classified as share premium represents the premium received on subscription for shares as follows:

Shares

issued

No.

Premium

per share

INR

Share

premium

INRm

Rights issued on 11 December 2013 5,735,629 – –

Shares issued on 18 December 2013 3,622,283 33.3 120.7

Shares issued on 10 March 2014 14,666,667 152.6 2,238.6

Shares issued on 16 October 2015 2,972,972 36.4 108.1

Shares issued on 28 January 2016 17,800,000 23.4 416.8

Shares issued on 29 April 2016 87,600,000 23.3 2,040.3

Shares issued on 8 June 2016 13,200,000 23.2 306.4

Shares issued on 4 July 2016 4,000,000 21.5 86.0

Shares issued on 17 November 2016 25,700,000 41.6 1,068.2

Costs associated with share issues, brought forward 6,196.5

Costs associated with share issues during the year (72.7)

Total share premium 6,196.5

Total share premium – memo £000 76,388

Share based paymentThe amount classified as share based payment reserve represents the accumulated charge made in the Income

Statement in relation to share based payments reduced by the effect of any shares issued in settlement of liabilities.

62




CONTINUED

Currency translation reserveThe translation reserve comprises foreign currency differences arising from the translation of the financial

statements of the parent company.

Non-controlling interestsThe amount classified as non-controlling interests represents the proportionate share of the fair value of the net

assets of the Group’s subsidiary, Koovs India, held by third parties.

Capital managementFor details of capital management refer to the Strategic Report and Directors’ Report.

27 Share-based payments

Share optionsAt 31 March 2017 the following equity settled share options had been granted and remained outstanding in

respect of Ordinary Shares of 1p each in the Company:

Date of grant Number Option price Vesting date Contractual life

1 July 2016 9,469,747 53.5p 1 July 2021 10 years

4 July 2016 2,245,255 53.5p 4 July 2021 10 years

12 December 2016 523,893 53.5p 12 December 2021 10 years

Total 12,238,895 Average: 53.5p

There are no cash settlement alternatives.

The share options are subject to a vesting condition which requires that the Group generates an operating profit

before the options vest.

The expense recognised for employee services during the year is INR32m/£395k (2016: INR4.0m/£40k).

28 Additional cash flow information

Analysis of net cash

Start of

period

INRm

Cash

flow

INRm

Exchange

differences

INRm

End of

period

INRm


Cash and cash equivalents 127.6 51.6 (27.4) 151.8


Cash and cash equivalents (54.7) 191.8 (9.5) 127.6

MEMORANDUM

Analysis of net cash

Start of

period

£000

Cash

flow

£000

Exchange

differences

£000

End of

period

£000


Cash and cash equivalents 1,340.0 588.2 (56.8) 1,871


Cash and cash equivalents (592) 1,962 (30) 1,340

26 Reserves continued

63


29 Subsidiary with material non-controlling interestThe Group’s sole subsidiary, Koovs India, had a material non-controlling interest for 28 days until 28 April 2016.

The Company then acquired this interest to give Koovs plc 100% ownership of Koovs India.

Koovs Marketing Consulting Private LtdMEMORANDUM

Summarised Income Statement

Year to

31 March 2017

INRm

Year to

31 March 2016

INRm

Year to

31 March 2017

£000

Year to

31 March 2016

£000

Revenue 760.9 512.4 8,680 5,198

Loss before taxation (1,290.8) (1,435.1) (14,724) (14,557)

Total comprehensive income (1,290.1) (1,433.0) (14,716) (14,536)

Attributable to non-controlling interest (28.8) (604.3) (328) (6,130)

Summarised Statement of Financial PositionAt 31 March 2017

INRm

At 31 March 2016

INRm

At 31 March 2017

£000

At 31 March 2016

£000

Non-current assets 32.8 34.4 405 361

Current assets 1,297.6 460.8 15,996 4,839

Total assets 1,330.4 495.2 16,401 5,200

Non-current liabilities (12.4) (11.0) (152) (116)

Current liabilities (279.4) (457.9) (3,444) (4,808)

Total liabilities (291.8) (468.9) (3,596) (4,924)

Net assets 1,038.7 26.3 12,805 276

Attributable to equity holders of the parent 1,038.7 14.9 12,805 158

Attributable to non-controlling interests – 9.9 – 104

30 Directors’ interestsAt 31 March 2017, Waheed Alli was interested in a 19.2% (2016: 28.7%) equity interest in the Company. During the

period the Company paid remuneration to Lord Alli of INR0m/£0 (2016: INR9.9m/£100,000). At 31 March 2017 or

31 March 2016, the Company did not owe any amounts to Lord Alli for his services as a Director.

At 31 March 2017, Mrs Mary Turner held a 0.2% (2016: 0.6%) equity interest in the Company. During the period the

Company paid remuneration to Mrs Turner of INR4.8m/£54,290 (2016: INR5.1m/£51,920). At 31 March 2017 or

31 March 2016, the Company did not owe any amounts to Mrs Turner for her services as a Director.

At 31 March 2017, Mr Robert Bready held a 0.6% (2016: 2.5%) equity interest in the Company. During the period,

the Company paid remuneration to Mr Bready of INR13.3m/£151,836 (2016: INR19.2m/£201,580). At 31 March 2017,

the Company did not owe any amounts to Mr Bready for his services as a Director.

At 31 March 2017, Mr Anant Nahata held a 23.2% (2016: 28.6%) equity interest in the Company. During the period,

the Company paid remuneration to Mr Nahata of INR4.3m/£50,000 (2016: INR7.1m/£75,000). At 31 March 2017,

the Company did not owe any amounts to Mr Nahata for his services as a Director.

Recharges of expenses and purchases of services were made between the Company and Silvergate Media

Limited, Silvergate Media Holdings Limited and Olga TV Limited as set out in Note 32. Waheed Alli is interested in,

and is the Chairman of, both of these companies.

64




CONTINUED

31 Off-balance sheet arrangements The Group enters into operating lease arrangements for the hire of buildings and plant and equipment as these

arrangements are a cost effective way of obtaining the short-term benefits of these assets. The annual

commitments under these arrangements are disclosed in Note 22.

Koovs India is party to an Option Agreement pursuant to which Koovs India has granted to Marble’s Shareholders

an option to require Koovs India to purchase all of the issued share capital of Marble, Koovs India’s customer and

operator of the KOOVS.COM website. Similarly Koovs India has been granted a call option over the same shares.

The option period commences on the date of a change in law in India allowing foreign direct investment into the

business of multi-brand e-commerce retailing in India; at the balance sheet date and reporting date there had

been no change in the law, which would enable the options to be exercisable. The price payable for the shares will

be the fair market value of such shares as determined by a valuer appointed by Koovs India.

There are no other material off-balance sheet arrangements.

32 Related parties During the period, the Group and the Company entered into transactions in the ordinary course of business with

certain related parties as follows:

Purchases

from

related

party

INRm

Recharges

between

related

parties

INRm

Amounts

owed by

related

party

INRm

Amounts

owed to

related

parties

INRm

Year ended 31 March 2017

Parties related to Koovs plc:

Silvergate Media Holdings Limited – 1.4 0.7 0.4

Olga TV Limited – 4.8 – –

Silvergate Investments Ltd – 28.4 – 4.6


Parties related to Koovs plc:

Silvergate Media Holdings Limited – 3.0 – 0.4

Olga TV Limited – 21.6 – 4.8

Other related parties – shareholder in Koovs India

Infotel E-commerce Pvt Ltd – – 8.0 –

Companies related to Koovs plcSilvergate Media Limited, Silvergate Media Holdings Limited and Olga TV Limited are subsidiaries or associates of

Silvergate Investments Limited, a company wholly owned by Waheed Alli. Waheed Alli is a Director of each of

the companies.

Terms and conditions of transactions with related partiesPurchases from Silvergate Media Holdings Limited and Olga Limited related to property, IT and other services

supplied. Outstanding balances with related parties are at normal market prices, unsecured, interest free and cash

settlement is expected within 30 days of invoice.

The Group has not provided or benefited from any guarantees for any related party receivables or payables.

Intra-Group transactionsKoovs plc and Koovs India are related parties. During the year ended 31 March 2017 Koovs plc issued a credit note

to Koovs India amounting to INR66.4m/£697k (2016: INR0m/£0k) and made sales of INR66.4m/£697k (2016:

INR191.2m/£1,939k).

Key Management PersonnelThe Directors are the key management personnel of the Group and their remuneration has been disclosed in

Note 6.

65


33 Post balance sheet eventsAt a General Meeting of the Company held on 14 August 2017, the shareholders approved the issue of up to

£18.9m of convertible loan notes in order to provide funding for the Group’s business plan. Binding commitments

for £8.9m have been received to date.

A Summary of the key terms of the loan notes is as follows:

Maximum Nominal Amount of Convertible Loan Notes to be issued

GBP £18.9m

Term 24 months from completion of the issue of the Convertible Loan Notes.

Conversion Price The Convertible Loan Notes can be converted into Koovs Ordinary Shares

at a conversion price of £0.40 per share.

Redemption The Convertible Loan Notes can be redeemed:

• at the election of the noteholders following a material breach by the

Company of the terms of the Convertible Loan Note instrument;

• automatically on the occurrence of certain insolvency events; and

• otherwise, automatically at the end of the two year term.

Conversion Rights The Convertible Loan Notes can be fully converted at any time by the

debenture holder giving to the Company three months' prior written

notice.

Security All amounts falling due under the Convertible Loan Notes will be secured

by a debenture constituting a first-ranking fixed and floating charge over

all the assets of the Company (the “Debenture”).

Coupon & Payment Three month sterling LIBOR +6% per annum, calculated monthly and

rolled up (but not compounded) with payment at the end of the Term

unless previously converted, in which case accrued interest is paid in kind

in Ordinary Shares at the Conversion Price or at the point of conversion.

Conversion by the Company The Company will have the right to require the holder to convert the

Convertible Loan Notes into equity at the Conversion Price if:

(a) During the Term the three-month volume weighted average price of

Koovs Ordinary Shares is equal to, or in excess of, £0.75; or

(b) At the end of the Term if the five-day volume weighted average price

of Koovs Ordinary Shares is equal to, or in excess of, £0.45.

"Most Favoured Nation" basis Following the issue of the Convertible Loan Notes, if the Company

proposes to issue any convertible debt securities or instruments ("New

Convertibles") on terms as to either the Coupon or the Conversion Price

that are more favourable to subscribers of the New Convertibles than to

the holders of the Convertible Loan Notes, the holders of the Convertible

Loan Notes shall have the right to require the Company to amend the

terms of the Convertible Loan Notes so as to be at least equivalent in

those aspects to the New Convertibles subject in all cases to all requisite

approvals from shareholders and regulatory authorities.

Printed in the UK by CPI Colour

Koovs Plc

York House

23 Kingsway

London WC2B 6UJ

koovs.com/corporate

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