TIDMSVEN
RNS Number : 6372E
S-Ventures PLC
30 June 2023
S-VENTURES PLC
("S-Ventures" or the "Company")
Audited results for the year ended 30 September 2022
S-Ventures plc (AQSE: SVEN) (OTCQB: SVTPF), the company
investing in and growing exciting brands across the natural,
wellness and food-tech categories, is pleased to announce the
audited results of the Company for the year ended 30 September
2022.
These accounts have been delayed for various audit reasons
concerned with the Purchase Price Allocation work and impairment
required our investment in Lizza GmbH, which as noted below, we
have had to close.
The highlights for the Financial Year ended 30 September
2022:
-- We acquired 100% of Market Rocket Limited in April 2022 to
help develop our digital sales strategy for group products. Market
Rocket is a specialist marketing agency focusing on Amazon selling
and distribution with major brand names as clients.
-- We negotiated a revision to the acquisition terms of Pulsin
which converted outstanding GBP2m of loan notes into equity in
S-Ventures PLC reducing debt significantly.
-- We have restructured the management at Pulsin and the company
is now trading profitably at EBITDA level. Opened a new
distribution centre in Gloucester.
-- Operational focus on building revenue and operational
synergies from wholly-owned subsidiaries, maintaining a lean cost
base. This will enable the group to make further investments and
achieve further growth.
-- We acquired 100% of Lizza GmBH, based in Frankfurt, in August
2022. The company made flaxseed-based pizza bases and similar
products including bread mixes and pastas, all "free from". The
company had infrastructure and manufacturing capacity and it was
planned that this would take the position as S-Ventures PLC's hub
for Europe expansion. However, in March 2023, we concluded that the
business could not be made viable in the near term and decided to
liquidate it. This has resulted in a significant impairment charge
in the September financial statements.
Year Ended 30 September 6 July 2020 to 30 September
2022 2021
Gross Revenues GBP8.6m GBP1.6m
------------------------ ----------------------------
Trade Discounts (GBP0.8)m (GBP0.1m)
------------------------ ----------------------------
Net Sales GBP7.8m GBP1.5m
revenues
------------------------ ----------------------------
Loss from operations (GBP3.4m) (GBP1.0m)
------------------------ ----------------------------
Loss per share (2.4p) (0.76 p)
------------------------ ----------------------------
Cash GBP1.8m GBP0.2m
------------------------ ----------------------------
The loss is stated after GBP2.1m of non-recurring costs
comprising costs associated with acquisitions (GBP0.3m), closures
and redundancies (GBP0.2m), goodwill written off (GBP0.5m) and
impairment of Lizza assets (GBP0.9m) and a deferred tax write back
of GBP0.2m. The completion of the Purchase Price Allocation reviews
resulted in an additional charge of GBP0.3m of amortisation.
Commenting, Scott Livingston, CEO of S-Ventures, said:
"Turbulent times requires extra effort and focus, 2022 has been
one of those years, for many reasons we all know about with
fundamental and macro-economic issues that affected us in many ways
on a granular level. The whole team at S-Ventures PLC have remained
very focused and vigilant. We have been opportunistic in our
acquisitions and strategic in our thinking in how the pieces fit
together. We remain committed to what we feel is a great fast
growing market and sector and we believe over the coming short term
through 2023 and 2024 we can create substantial shareholder value
as we stay disciplined in our focus."
For further information, please contact:
The Company
Robert Hewitt (Chief Financial
Officer)
Scott Livingston (Chief Executive
Officer) +44 (0) 1932 400 224
AQSE Corporate Adviser and
Broker:
VSA Capital Limited
Andrew Raca
Matthew Harker +44 (0) 20 3005 5000
About S-Ventures
S-Ventures is listed on UK AQUIS Growth Market (Ticker Code
"SVEN"). The Company seeks to identify investment opportunities in
the health & wellness, organic food and wellbeing sectors
within the UK and Europe, adding value by providing capital and
expertise to the target companies. The experience and operational
skills of the Board led by Scott Livingstone (CEO) are intended to
act as an accelerator to smaller brands that have a strong
foundation and platform but may lack the skills and capital. The
main objectives are to cross fertilise opportunities between the
target companies and to scale the individual entities and look for
exit opportunities and/or synergistic collaborations and through
scaling we seek to create significant value for all stakeholders.
Since listing on AQSE in September 2020, the Company has acquired
significant interests in 6 companies including one in December
2022.
Group Strategic Report, Report of the Directors and
Consolidated Financial Statements for the Year Ended 30
September 2022
for
S-VENTURES PLC
Strategic Report:
CHAIRMAN'S STATEMENT:
The Board is pleased to present the Company's audited results
for the year to 30 September 2022.
Since listing on the AQSE Growth Market in September 2020, the
Company has made rapid progress acquiring majority stakes in three
fast growing companies and investing in two more. Its ability to
identify targets and complete transactions has resulted in the
Company being able to raise significant investment funds enabling
the Company to develop and build an attractive and valuable
investment vehicle that will continue to take advantage of the
growth opportunities emerging in our sector.
Investment strategy and target markets
S-Ventures looks to identify investment opportunities in the
Health & Wellness, Organic Food and Wellbeing sectors within
the UK and Europe and our strategy is to add value by adding
capital and expertise to target companies. The year ending 30
September 2022 was a very busy period for S-Ventures PLC. During
the period we were very active in market conditions that were
challenging for many of our portfolio companies. In addition to
ongoing assistance and advice to our existing portfolio companies,
we acquired three companies - Livia's, Market Rocket and Lizza -
and negotiated the key terms of our acquisition of Juvela, our
largest to acquisition date by revenues, which closed after period
end.
Pulsin and our other portfolio companies faced substantial
headwinds in terms of supply sourcing and cost, which impacted both
revenue and profitability. We took early decisions to restructure
management functions, eliminate overhead, bring other portfolio
company brands under Pulsin control, and negotiate a revision to
Pulsin's acquisition terms, all of which have been very beneficial
for our shareholders.
The acquisition of Livia's, the healthy food treats brand, was
announced on 18 February 2022 and has since been integrated and
brought under the control of Pulsin also to rationalise overhead
and generate cost savings. During the period, Livia's faced
significant market headwinds which resulted in Livia's growing
revenues below plan. As a result, the contingent consideration in
cash and shares that might otherwise have been due from us to the
vendors lapsed.
The acquisition of Market Rocket, an award winning and market
leading digital tech company specialising in enabling clients to
sell more through the Amazon platform, was announced on 28 March
2022. Market Rocket has been highly successful and performed above
plan in the period. The Market Rocket team led by Matthew Peck
brings exciting expertise and immediate synergies to existing and
future brands acquired by the group. We are delighted to have
Matthew and his team on board and have since the period end have
supported further growth of this business through the acquisition
of two digital agencies.
The acquisition of Lizza GmbH, a natural free-from bread and
pasta brand based in Frankfurt, Germany, was announced on 1
September 2022 Lizza was a loss-making business acquired for a
nominal price with a need for an immediate turnaround. In the
period, we focused Lizza on its core Keto pizza base product range
and invested in supporting its growth. Unfortunately, in the period
and since the period end a combination of factors in terms of
supply, logistics and input costs materially affected the
profitability and prospects of Lizza. Having determined that
continuing to support Lizza was no longer commercially viable and
not in the interests of shareholders, we filed for insolvency of
Lizza as announced on 11 April 2023.
Throughout the year ending 30 September 2022 we were in
discussions with respect to the acquisition of a number of other UK
businesses but could not agree terms that would have been in
shareholders' interests except, ultimately, in the case of Juvela
where we concluded terms after the period end as announced on 15
December 2022. I am pleased to report that Juvela has been
successfully integrated and is performing as expected.
The Board continues to work closely with group companies,
offering operational, expertise and financial support, enabling
them to grow faster than otherwise might have been the case if
standing alone.
Finally, I would like to express our gratitude to our employees,
board members and shareholders for their efforts and continued
support and for making our progress to date possible. I would also
like to thank Nick D'Onofrio, a non-executive director of
S-Ventures plc since its formation, for his service. Nick has
notified the board that he will not be seeking re-election at the
forthcoming annual general meeting.
Summary
The Company's second year as a public company builds on the
progress made last year. We have grown our revenues, increased the
number of products and brands that we own or have significant
interest in, and we look forward with optimism to the future with a
management team ready to seize opportunities that arise from the
current uncertain economic and political back drop.
David Mitchell
Non-executive Chairman
30 June 2023
CHIEF EXECUTIVE OFFICER'S REPORT
The Board is pleased to report on its annual results for the
period ended 30 September 2022. This has proved to be a challenging
year as we developed our acquisition plans and bedded down existing
investments. These plans have seen the acquisition of Livia's,
Market Rocket, Lizza and, after the year end, Juvela. We continue
to look out for opportunities of significant synergistic advantage.
The market opportunity to acquire or invest in developing food and
consumer businesses remains both challenging and exciting, and we
are particularly well placed given our larger scale to enhance
operations through a centralised resource, marketing, and
distribution function.
We plan to accelerate each brand via diversified channels and
gain critical mass in a number of related and similar sectors.
Following our acquisitions, we have now grouped our businesses into
3 divisions to provide a better focus. These divisions are:
Bakery (and free from) - Juvela Ltd (Wales).
Plant Based free from Nutrition - Pulsin and brands now managed
under Pulsin: We Love Purely, Livia's and Ohso Chocolate
(Gloucester).
Technical services - Market Rocket Ltd and D2C / Amazon
specialists (London).
Post Balance Sheet events (Note 30 to Accounts)
-- On 1st October 2022, Market Rocket took on an experienced SEO
marketing team previously trading as Media Snug. This has enabled
Market Rocket to offer a full range of SEO and Digital marketing
services.
-- On 14 December 2022, we acquired 100% of Juvela Limited
(formerly) Hero UK Limited. The business is an approved supplier of
products for coeliacs and has annual revenues of c.GBP8.5m. It has
a fully equipped bakery in Pontypool which has opportunities for
merging other group activities into. The business was acquired for
a mix of cash, shares and deferred consideration totally GBP8.8m.
The cash element was supported by terms loans from Shawbrook
Finance amounting to GBP5.5m.
-- On 5 April 2023, Insolvency proceedings were started in
Germany to close Lizza GmBH following a board review and decision
to cease our operations there. Unsustainable trading losses were
incurred despite some savings in operating costs. The group has
lost c.GBP0.9m in support funding and unpaid customer accounts
mainly in the post balance sheet period. Following this strategic
decision, the monthly Group EBITDA has moved into positive
territory.
Outlook
Whilst our immediate aim is to absorb the recent acquisitions
and ensure they fuse into a well-run group operation, we remain
aware of opportunities to acquire further business. The investment
thesis central to S-Ventures is strengthened in the current
environment. The long-term structural trends in favour of health
and wellness and, particularly, healthy foods and beverages remain
intact. We expect the near-term macroeconomic environment to be
challenging with input cost inflation and potential erosion of
disposable incomes. Near-term headwinds for the economy will likely
present S-Ventures with potentially further compelling
opportunities and challenges. The Board's stance is to remain alert
for opportunities, while maintaining a cautious and defensive
approach to execution. We remain in dialogue with investors from
time to time and expect to continue to raise funds to take
advantage of opportunities, to ensure an optimal capital structure
in the context of rising interest rates as well as for general
corporate purposes.
Scott Livingston , Chief Executive Officer
Date: 30 June 2023
FINANCIAL REVIEW
Introduction:
Our second year has been busy, but the main focus has been on
restoring the existing businesses to profitability; a task which is
showing some promise in the management accounts since the year
end.
The group has grown its gross sales to GBP8.6m before trade
discounts of GBP0.8m resulting in net sales of GBP7.8m. but
sustained losses of GBP3.5m after costs of acquisition and
impairments.
The loss of GBP3.5m includes some GBP2.1m of one-off costs
comprising costs associated with acquisitions (GBP0.3m), closures
and redundancies (GBP0.2m), goodwill written off (GBP0.5m) and
impairment of Lizza assets (GBP0.9m) and a deferred tax writeback
of GBP0.2m.
In addition, now that we have completed the Purchase Price
Allocation reviews, this has resulted in additional amortisation
costs of (GBP0.3m). However, trading margins improved across the
group from 28% to 33%.
The directors do not propose to declare a dividend. The
resultant loss represents a 2.92p (2021- 0.76p) loss per share in
issue at the end of the financial period.
Comment on performance of our owned businesses:
PLANT BASED NUTRITION
Pulsin:
Pulsin (www.pulsin.co.uk) is a well-established and highly
respected plant-based nutrition company, excelling in plant-based
nutrition technology, manufacturing and sales, with a focus on
healthy protein bars, nutritional snacks and Keto bars. Pulsin
formulates and produces high quality plant-based products under its
own brands as well as for third parties, many of which are
household names, from its specialised facilities in Gloucester.
Pulsin's award-winning range of tasty snack bars, protein
powders, keto products and shakes are packed full of feel-good
nutritional goodness and balanced with the right amount of super
ingredients. The Pulsin range is gluten free and suitable for
vegetarians, with the majority being plant based too. Pulsin never
uses artificial ingredients, preservatives or palm oil. The
products are available from most large retailers such as
Sainsbury's, Tesco, Boots, Asda, Holland & Barrett and
Ocado.
Pulsin had gross sales of approximately GBP7.5m in the twelve
months to 30 September (2021 - GBP6.3m). Some GBP0.5m of this
growth is attributable to Livias, so the main Pulsin brand and
other direct activities grew by some 10%. This level of growth is a
little disappointing, but the focus in bringing the business back
to profitability has delayed the introduction of new products which
are now planned for later in 2023.
As a result of the problems and the losses sustained, we were
able to negotiate the acquisition terms whereby the Loan Notes were
cancelled in favour of a small further issue of shares in
S-Ventures and an element of cash. The gain on these loan notes of
GBP0.6m is shown in our Consolidated Income Statement.
The restructuring of the business has involved the following
during the year:
-- The taking on of new premises to manage the logistics; this
became operational in January 2022 but took a few months for staff
to bed in effectively.
-- Revising the shift patterns which was effective from August.
-- Changing the senior management team.
We Love Purely:
We Love Purely is a UK-based plantain chip brand with an
emphasis on sustainability and natural ingredients. Available at
many leading stores including Holland & Barrett, Ocado,
Selfridges, Harvey Nichols, Harrods and Planet Organic.
Sales for the year grew from GBP0.2m (in 9 months to 30
September 2021) to GBP0.4m. However, the business has suffered from
the fall in the US dollar exchange rate and also shipping
difficulties earlier in the year. The range is being updated and
new flavours should begin to appear in the coming months.
In addition, sales overseas are growing.
Ohso Chocolate:
Ohso is UK-based brand specialising in luxury Belgian chocolate
with added live cultures (probiotics) via a unique
micro-encapsulation process. It is proven that this delivers live
cultures to the gut three times more effectively than probiotic
yoghurts.
This business has struggled to find a place in retail circles,
and we now consider that it is essentially a niche subscription
product best suited to B2B channels. As a result, the 85g bar has
yet to gain much traction. Accordingly, Sales fell from GBP0.3m to
GBP0.2m. As a result of this experience, we have agreed to allow
Market Rocket to manage the brand as a B2B only product and we
anticipate that it will regain and grow its online presence. The
annual accounts include an impairment of GBP304,605 of the original
investment.
BAKERY DIVISION
This is a very new division based on recent acquisitions; Lizza
was part of the group for 6 weeks only.
After the balance sheet date, we acquired Juvela Limited in
December 2022, which is a profitable business generating EBITDA of
some GBP2m plus based on annual sales of some GBP8.5m. Early
indications are that it will be a good addition to the group's
portfolio with many synergy opportunities.
Lizza:
Lizza GmBH, a company based in Frankfurt, Germany was acquired
for EUR1 plus the assignment of an intercompany debt for a further
EUR1. The business was loss making and we expected it to take up to
18 months to turn around fully and integrate its products and
systems into the group fully.
Prior to our acquisition, the former owners decided to change
the product offering to make it more acceptable to retail outlets;
sadly this has resulted in a significant downturn in sales partly
because the price point was set too high and secondly the online
clientele did not like the newer offering so much. These factors
made the turnover targets more difficult than foreseen.
The Board concluded in late March that the business was not
viable and was considerably behind our expectations for turn
around. It was requiring c EUR100,000 or more per month to fund but
generating significant losses. Some redundancies were made, but the
sales did not respond as we had hoped. Accordingly, it was
reluctantly decided to close the business and place it into a
formal German Insolvency process which started on 5 April 2023.
Our reasons for acquiring Lizza were to provide a gateway into
the European markets and to also expand our range of products.
Whilst the early signs of being able to sell Pulsin products
through Lizza were encouraging, the flax based products have less
appeal in the UK, a position not aided by the short shelf life of
the products.
The group remains the largest creditor of the business both from
monies injected and the assigned intercompany debt. At this early
stage it is too early to assess whether any recovery will be made
from the Insolvency process. The groups' exposure is c.GBP0.9m.
TECHICAL SERVICES
Market Rocket Limited ("MRL") was acquired on 8 April 2022 to
provide a boost to our on-line strategies. Its sales in the 12
months to March 2022, from third party clients was some GBP0.8m.
Its sales for the 6 months since, including group services,
amounted to GBP0.4m.
We have continued to develop and grow this business by two key
decisions:
-- We took on a team of specialists to complement the MRL
services so that it can now provide a more rounded SEO skill set to
clients. The new team started in October 2023.
-- Under its brand of Marketverse, it is taking on direct sales
responsibilities for clients (including group companies) using
Amazon and other online platforms. As a result, sales are expected
to grow significantly. Although the margin from this business is
lower due to the marketing and selling fees, gross profit will be
higher due to the increase in sales volume.
Cash flow and cash position:
Since the launch of the group, funding for the group activities
has come from shareholder monies. The directors recognise the need
for additional funding and are in active discussion with a number
of parties pending the release of these accounts. Post the balance
sheet date the CEO has provided a GBP0.5m loan facility to fund
working capital as required. The expected improvement in trading of
our Group companies during the coming year should provide
opportunities to take up appropriate bank loans and working capital
facilities. The board is actively seeking additional investment and
is engaged in discussions with several parties.
INVESTMENTS
Coldpress Food:
S-Ventures acquired an original 3.3% stake in Coldpress Food Ltd
in September 2020 and provided convertible loans. In the event, we
elected not to convert our loans which have now been repaid in full
with interest. We retain our shares, although the stake has been
reduced to 1.97% due to further share issues in the Company.
Plant Punk:
S-Ventures acquired a 50% stake in Vegan Punk Ventures Limited
(trading as "Plant Punk") in August 2021 and has since invested
GBP175,000 as at the balance sheet date in loans (partly secured on
a line of production equipment).
The 100% plant-based meat alternative with zero compromise:
premium taste yet 60% less calories and fat than their competitors.
Plant Punk doesn't use any processed ingredients, only sustainable
plant-based ingredients created using low impact production
processes.
The product is now ready to launch to retail channels. However,
the progress in the past year has been made more difficult by the
difference of opinion between the shareholders in the joint
venture. We anticipate that this will be resolved in the next
quarter.
Current trading
Since the balance sheet date the company's trading has improved
in all companies, apart from Lizza. Our new acquisition Juvela is
currently trading ahead of its profit forecast and Pulsin is
trading in line with its H1 expectations. Market Rocket sales are
growing strongly on the back of Marketverse.
As noted above, we are working on bringing in some synergistic
changes which will greatly improve the profitability of the
group:
-- The potential merger of logistics and some production between Pulsin and Juvela
-- Some capital expenditure at Juvela which will enable us to
bring its ingredient mixing in house with, which will both improve
profitability and increase our flexibility
PRINCIPAL RISKS AND UNCERTAINTIES
Risk Impact Mitigation
Foreign exchange Currency volatility impacts The Group does not hedge
our cost of goods in its foreign exchange
We Love Purely as the exposures.
product is sourced in We Love Purely: we
US dollars. keep exchanges under
review and as sales
Also impacted on the grow will be looking
reporting of trading to lock in exchange
data from Lizza. rates.
Pulsin: - much of its
risk is naturally hedged
by having both EU suppliers
and Customers.
------------------------------ --------------------------------
Key Suppliers Risk that failure of This is not an issue
supply by a major supplier for the group save for
would impact on our ability We Love Purely which
to service our customers is reliant on a single
supplier. The position
is regularly reviewed,
but this supplier selected
provides a certain quality
of Plantain crisps not
available elsewhere.
------------------------------ --------------------------------
Brexit / Covid Pulsin was affected by The impact has receded
Brexit issues associated
with importing and exporting
and labelling in early
January which limited
supply of materials.
------------------------------ --------------------------------
Ukraine / Russian Initially the outbreak We continue to be aware
war of war caused a temporary and look for alternative
delay in supplies and sources of materials.
also increased the prices.
This has now receded
but the recent developments
and the beach of the
dam on the Dnieper could
further market disruption
as companies scramble
to get supplies for a
reduced market.
------------------------------ --------------------------------
Credit / Liquidity Lack of working capital Where issues arise,
risks would impact the group's we work with the Supplier
ability to acquire goods to ensure continued
and services. supply in some cases
rescheduling the payment
terms.
The CEO has provided
a line of credit of
GBP0.5m to support the
business.
------------------------------ --------------------------------
Insurance / Regulatory Loss occasioned by product All our business carry
risk issues and normal commercial appropriate insurance
risks covers for product liability
and other risks.
------------------------------ --------------------------------
As explained in note 2 of the accounts, there has been a
significant drain on the company's cash flow following the
acquisition if Lizza Gmbh. The directors recognise that additional
capital is needed to ensure that the company can continue to
discharge its liabilities as they fall due, resulting in a material
uncertainty which casts significant doubt upon the company's
ability to continue as a going concern. However, the directors are
presently engaged in discussions with a number of parties which
they believe will conclude successfully when these accounts are
issued. In the interim, the CEO has made a loan facility available
to the group of GBP0.5 million to ensure the company can meet its
liabilities as they fall due.
SECTION 172 STATEMENT
The Board of Directors, in line with their duties under section
172 of the Companies Act 2016, act in a way they consider, in good
faith, would be most likely to promote the success of the Company
for the benefit of its members as a whole, and in doing so have
regard to a range of matters when making decisions for the long
term. Key decisions and matters that are of strategic importance to
the Company are appropriately informed by s172 factors.
Section 172 of the Companies Act 2006 requires Directors to take
into consideration the interests of stakeholders and other matters
in their decision making. The Directors continue to have regard to
the interests of the Company's employees and other stakeholders,
the impact of its activities on the community, the environment and
the Company's reputation for good business conduct, when making
decisions. In this context, acting in good faith and fairly, the
Directors consider what is most likely to promote the success of
the Company for its members in the long term. We explain in this
annual report, and below, how the Board engages with
stakeholders.
The Board regularly reviews the Company's principal stakeholders
and how it engages with them. This is achieved through information
provided by management and also by direct engagement with
stakeholders themselves.
The table below sets out some examples of how the directors have
exercised this duty:
Stakeholder How we engage
Our Shareholders The Company proactively engages
The Board and Executive in dialogue with shareholders. Since
Management Team maintains the IPO in September 2021, the CEO
strong relationships with has participated in number of investor
investors and supports presentations and at various other
open channels of communication. investment led events.
Our first AGM was held on 11th April
2022 and our next will be held in
July 2023. This will provide an
opportunity for shareholders to
meet the directors and discuss the
year's results.
Website and shareholder communications
Further details on the Group, our
business and key financial dates
can be found on our corporate website:
www.S-venturesplc.com/
---------------------------------------------
Our People At S-Ventures, we believe that our
Our employees are at the strength comes from our staff and
core of all that we do. success comes from shared goals
and values. We are proud to celebrate
the diversity of our employees and
work hard to empower our workforce
and to create a positive and inclusive
culture within which our teams can
grow. The sustainable success of
the business is dependent upon the
development of and investment in
our teams of highly talented and
dedicated employees.
Our teams are kept fully informed
of the business' performance, operational
and strategic initiatives through
newsletters and quarterly townhalls.
We continually strive to maintain
open communication and encourage
collaboration from all our employees.
---------------------------------------------
Our Customers and Brand The trust of our customers and partners
partners is fundamental to our success. We
Communication with our are committed to building innovative
customers and brand partners customer-led technology solutions
is fundamental to understanding and products. We maintain a strong
how we can continue to relationship with our partners through
add value through the our dedicated accounts management
products and in the services team.
we provide. Through regular meetings and conversations,
we regularly review their feedback
which enables us to improve the
services and solutions we provide.
---------------------------------------------
Our Suppliers We rely on suppliers and logistics
The relationship we have partners across a number of geographical
with our suppliers is locations. Throughout the year we
key to ensuring that the have worked closely with our key
quality of the products suppliers and logistics partners
we deliver to our customers to manage the continued disruptions
are maintained at a high as a result of COVID-19 and Brexit.
standard and the delivery It is important that we continue
is managed for the smooth-running to communicate with our suppliers
of our business and its and adapt to ensure the high quality
operations. of our products and services are
maintained.
---------------------------------------------
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Group Strategic
Report, the Report of the Directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group and Company Financial Statements
in accordance with UK-adopted international accounting standards
and, as regards the Company financial statements, as applied in
accordance with the requirements of the Companies Act 2006.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and the group and of
the profit or loss of the group and the Company for that period. In
preparing these financial statements, the directors are required
to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether the applicable UK-adopted international
accounting standards have been followed subject to any material
departures disclosed and explained in the financial statements;
and
- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's and
the group's transactions and disclose with reasonable accuracy at
any time the financial position of the company and the group and
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the company and the group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may
differ from legislation in other jurisdictions.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit
information (as defined by Section 418 of the Companies Act 2006)
of which the Group's auditors are unaware, and each director has
taken all the steps that he ought to have taken as a director in
order to make himself aware of any relevant audit information and
to establish that the Group's auditors are aware of that
information.
AUDITORS
The auditor, PKF Littlejohn LLP, will be proposed for
re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
R D Hewitt - Director
Date: 30 June 2023
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF S-VENTURES PLC by
PKF Littlejohn LLP
Opinion
We have audited the financial statements of S-Ventures Plc (the
'company') for the year ended 30 September 2022 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
and Parent Company Statements of Financial Position, the
Consolidated and Parent Company Statements of Changes in Equity,
the Consolidated and Parent Company Statements of Cash Flows and
notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
September 2022 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards 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.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which
indicates that the Group generated a loss for the year and is
continuing to generate losses and will require additional funding
in the short to medium term in order to continue to fund the
Group's operations and to meet its liabilities as they fall due.
Whilst management believe that sufficient funds may be obtained
either through the issue of debt or equity the failure to obtain
sufficient funding in the timescales necessary may cast significant
doubt on the entity's ability to continue as a going concern. As
stated in note 2, these events or conditions, along with the other
matters as set forth in note 2, indicate that a material
uncertainty exists that may cast significant doubt on the company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's and parent
company's ability to continue to adopt the going concern basis of
accounting included a review of the cash flow forecasts prepared by
management, a review of management's assessment of going concern
and post year end information impacting going concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing the audit, and evaluating the effect of misstatements on
our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatements, we define materiality as the magnitude of
misstatement that makes it probable that the economic decisions of
a reasonably knowledgeable person, relying on the financial
statements, would be changed or influenced. We also determine a
level of performance materiality which we use to assess the extent
of testing needed to reduce to an appropriate level the probability
that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole. When
establishing our overall audit strategy, we determined a magnitude
of uncorrected misstatements that we judged would be material for
the financial statements as a whole.
We determined materiality for the group to be GBP136,000 (2021:
GBP63,400), with performance materiality of GBP107,870 (2021:
GBP38,000). We agreed with the Board that we would report all audit
differences in excess of GBP7,700 (2021: GBP3,170), as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. Materiality was determined on the
basis of 7.5% (2021:7.5%) of the group's loss before tax, which we
believe to be of particular relevance to the shareholders.
Whilst materiality for the group financial statements as a whole
was set at GBP136,000, materiality of the parent company was
GBP135,000 (2021: GBP45,000) and for significant components was set
at a range between GBP100,000 and GBP45,000 (2021: GBP45,000 and
GBP18,500). Performance materiality at 70% (2021: 60%) was set at
GBP94,500 (2021: GBP27,000) and for the significant components at a
range between GBP27,000 and GBP11,100. We agreed with the Board
that we would report all audit differences in excess of GBP6,800
(2021: GBP3,100) for the group and GBP6,750 (2021: GBP2,250), as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. Materiality for the
parent company was determined on the basis of 99% of group overall
materiality.
Our approach to the audit
The group includes the listed Parent company and its
subsidiaries. We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure
of the group and the Company, the accounting processes, and the
industry in which they operate. We have audited all significant
components from the dates of each acquisition until the year
end.
As part of our planning, we assessed the risk of material
misstatement including those that required significant auditor
consideration at the component and group level. In particular, we
looked at areas of estimation, for example in respect of the
valuation of inventory, the carrying value of goodwill and
intangibles, the carrying value and recoverability of investments
in subsidiaries at parent company level and the consideration of
future events that are inherently uncertain. Procedures were then
performed to address the risk identified and for the most
significant assessed risks of misstatement, the procedures
performed are outlined below in the key audit matters section of
this report. We reassessed the risks throughout the audit process
and concluded the scope remained the same as at planning.
An audit was performed on the financial information of the
group's significant operating components which, for the year ended
30 September 2022, were located in the United Kingdom. The audit of
significant components was performed in London solely by PKF
Littlejohn LLP using a team with experience of auditing
manufacturing and publicly listed entities.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this
matter
Carrying value of investment
in subsidiaries and intra-group
receivables (Parent Company)
(note 18)
================================================================
The carrying value of the Parent Our work in this area included:
Company's investment in subsidiaries
in intra-group receivables is * Confirmation of ownership.
material at the year end.
The recoverability of these * Obtaining management's impairment assessment for all
balances is ultimately dependent investments and specifically challenging the
on the subsidiaries being able assumptions made to third party evidence and our
to generate returns from their understanding of the business.
underlying assets in order to
settle the receivables. The
recoverability and valuation * Reviewing the value of the net investment and
of these amounts is therefore intra-group receivables in subsidiaries against the
a risk as they might be impaired. underlying assets and challenging the
judgements/estimates used by management to assess the
recoverability of investments and intra-group
receivables.
* Reviewing the latest subsidiary financial information
to confirm the period-end financial position and
performance against budgets and forecasts.
* Analysing subsequent events in support of the budgets
to determine reliability of management's budgeting
process.
* Considering the appropriateness of disclosure
included in the financial statements.
We note that the recoverability
of the Company' investments
relies on the Directors' assertion
that operations within the subsidiaries
will become more profitable
once group synergies have been
enacted.
================================================================
Inventory Valuation (Group)
(as disclosed in note 19)
================================================================
Inventory represents a material Our work in this area included:
balance within the financial
statements (GBP1.64m at 30 September * Attending subsidiaries' stocktakes to gain comfort
2022). over the existence of the inventory and the recording
There is also a risk that that of stock quantities is complete.
stock is not valued at the lower
of cost and NRV. There is also
a risk that the inventory does * Following up the stocktake attendance by confirming
not exist at year end and inventory that counted items are correctly included on the
is therefore misstated in the final stock sheets and that any discrepancies arising
financial statements.. are resolved.
* For a sample of stock items, testing the valuation of
finished goods against post period end selling prices
to confirm that the net realisable value is greater
than cost.
* For a sample of raw materials, testing stock items to
purchase invoices to ensure that stock is recorded at
the appropriate costs.
* Tracing the allocation of overheads costs to finished
goods by agreeing the elements of the calculation to
the appropriate accounting records such as labour
costs.
* Considering the appropriateness of disclosure
included in the financial statements.
================================================================
Acquisition of Subsidiaries
(Group) (as disclosed in notes
14)
================================================================
The parent entity has acquired Our work is this area included:
a number of subsidiaries during
the year. * Reviewing the sale and purchase agreements for
There is a risk that the accounting investments purchased during the period.
treatment applied by management
is not in accordance with the
criteria of IFRS 3. * Agreeing the level of consideration to supporting
There is a risk that the consideration documentation, including the valuation of any
payable is not conducted on deferred or contingent consideration.
an arm's length basis, and thus
either generating a higher goodwill
balance or a significant bargain * Reviewing management's accounting treatment and
purchase recognised in the profit policy applied for each acquisition to ensure it is
or loss account. in accordance with IFRS.
* Reviewing calculations of goodwill / intangible
assets identified on the acquisition of subsidiaries
and ensuring recognition is in accordance with IFRS.
* Reviewing and critically assessing management
impairment assessment for the goodwill and intangible
fixed assets arising from the acquisition.
* Considering the appropriateness of disclosure
included in the financial statements.
================================================================
Carrying value of goodwill
and intangibles (Group) (note
15)
================================================================
The Group carries a material Our work in this area included:
amount of goodwill relating
to the subsidiary undertakings * Obtaining management's PPA allocation assessment and
acquired in 2021, Pulsin Limited, reviewing the relating valuation methods for
OHSO Chocolate Limited and We reasonableness.
Love Purely Limited. Within
12 months of acquisition, Management
are required under IFRS 3 to * Involving the PKF valuations team who performed
conduct a purchase price allocation reviews of the valuations performed by management's
to allocate the goodwill, where expert.
applicable, to separately identifiable
intangible assets and to finalise
their assessment of the fair * Assessing the experts' competence and independence
value of assets and liabilities and reviewing the conclusions for reasonableness.
acquired. Both areas require
management judgement and estimation.
Provisional fair values were * Ensuring that the results from this exercise, the
used to value the assets and methods employed and the key estimates made have been
liabilities acquired and assumed adequately disclosed in accordance with IFRS 3 and
in business combination as at 13.
30 September 2021. The provisional
fair values were finalised in
the 2022 reporting period.
An impairment review is to
be performed by management on
goodwill arising from acquisition
of the subsidiary. Such an assessment
is expected to be performed
using actual results to budget,
cashflow forecasts as well as
using post year-end trading
as an indicator for performance
or events that can impact the
results of the subsidiary.
Given the significant judgements
and estimates involved to determine
the final fair values this is
considered a key audit matter.
================================================================
Revenue recognition (note 3)
================================================================
Under ISA (UK) 240 there is Our work in this area included:
a rebuttable presumption that
revenue recognition is a fraud * Updating our understanding of the internal control
risk. environment in operation for the material income
There is a risk around the streams and undertaking a walk-through to ensure that
occurrence and cut-off of revenues. the key controls within these systems have been
Management are in a position operating in the period under audit.
to manipulate revenues and may
do so to inflate profits and
improve their position. This * A review of the revenue recognition policy in line
is especially so as the group with IFRS 15 requirements.
is listed and is reliant on
external funding. Given the
above, this is considered a * Substantive transactional testing of income
key audit matter recognised in the financial statements.
* A review of a sample of revenue recorded on either
side of the year to ensure cut-off is correct.
* A review of post year end credit notes for evidence
of occurrence of revenue in the period and that cut
off is appropriate.
* Ensure revenue recorded within the group accounts is
complete and accurate from the date of acquisition of
each subsidiary.
* Ensuring disclosures in the financial statements are
appropriate.
================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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 in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the 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.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
We obtained an understanding of the company and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management, industry research, application of
cumulative audit knowledge and experience of the sector.
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from Companies Act
2006, UK Corporate Governance Code, UK Employment Rules, UK Tax
Legislation, and The Food Standards Agency (FSA).
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the company with those laws and regulations. These procedures
included, but were not limited to:
o Making enquiries of management;
o A review of Board minutes;
o A review of legal ledger accounts; and
o A review of RNS announcements.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates, judgement and assumptions
for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal
course of business. In this context we view the significant
estimates as being the key assumptions underlying the valuation of
investments.
-- We considered the above procedures at group as well as component levels.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
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.
Daniel Hutson (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
30 June 2023
Consolidated Statement of Profit or Loss
for the Year Ended 30 September 2022
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 from presenting the Parent Company profit
and loss account. The Parent Company loss for the year was
GBP1,349,637 (period to 30 September 2021: loss of GBP498,419).
The financial statements were approved by the Board of Directors
and authorised for issue on 30 June 2023 and were signed on its
behalf by:
RD Hewitt Director
See note 22 for a breakdown of share capital and share premium
transactions.
Notes to the Statements of Cash Flows
for the Year Ended 30 September 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 30 SEPTEMBER 2022
1. STATUTORY INFORMATION
S-Ventures PLC is a private company, registered in England and
Wales. The company's registered number and registered office
address can be found on the General Information page. The Company's
shares are traded on AQSE (ticker SVEN) and the US OTCQB Venture
market.
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
UK-adopted international accounting standards and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates.
The l financial statements have been prepared on the historical
cost basis, except for certain financial assets and liabilities
which are carried at fair value or amortised cost as
appropriate.
New standards and interpretations not yet adopted
At the date of approval of these financial statements, the
following standards and interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
Effective for accounting
Title of Standard or Interpretation periods beginning on
or after
Amendments to IFRS 3 References to the 1 January 2022
Conceptual Framework
Amendments to IAS 16 Proceeds before intended 1 January 2022
use
Amendments to IAS 37 Onerous Contracts
- Cost of Fulfilling a Contract 1 January 2022
Annual Improvements to IFRS Standards
2018-2020 Cycle (Amendments to IFRS 1, 1 January 2022
IFRS 9, IFRS 16, IAS 41)
Amendments to IAS 1 Presentation of financial
statements and IFRS practice 1 January 2023
Amendments to IAS 12 Deferred Tax related
to Assets and Liabilities arising from 1 January 2023
a Single Transaction
Amendments to IFRS 17 Insurance contracts 1 January 2023
Amendments to IAS 8 Accounting policies 1 January 2023
and accounting estimates
The effect of these new and amended Standards and
Interpretations which are in issue but not yet mandatorily
effective is not expected to be material.
Going concern
As disclosed by the Consolidated Statement of Profit and Loss,
the group has managed to grow its net sales to GBP7.8m but
sustained losses of GBP2.7 m. Part of that loss is attributable to
implementing a full Purchase Price Allocation review resulting in
additional amortisation charges of GBP0.3m and a significant sum
GBP0.7m relates to the impairment of the Lizza assets and
impairment of goodwill of GBP0.5m.
The directors have plans to further streamline group operations
across the group, to increase productivity and save costs and there
is expected to be a significant growth in group turnover following
an acquisition of a profitable subsidiary undertaking after the
balance sheet date.
After the balance sheet date, the acquisition of the subsidiary
company Lizza Gmbh has been a significant drain on the group's cash
flow. On 8 April 2023, Lizza Gmbh was put into liquidation to halt
this. The debtor on the balance sheet date of GBP136k has been
impaired in full. The company is currently owed circa GBP855k from
Lizza Gmbh and it is uncertain as to how much of this (if any) will
be recovered following the liquidation process.
The directors recognise that additional capital is required to
ensure that the company can continue to discharge its liabilities
as they fall due and have concluded that the funding requirements
represents a material uncertainty that casts significant doubt upon
the company's ability to continue as a going concern. However, the
directors are presently engaged in discussions with a number of
parties which they believe will conclude successfully when these
accounts are issued. In the interim a director has made a loan
facility available to the group of GBP0.5 million to ensure the
company can meet its liabilities as they fall due.
Accordingly, the Directors have concluded that it is reasonable
to adopt a going concern basis in preparing these financial
statements. This is based on a reasonable expectation that the
Group has adequate resources to continue in operational existence
for at least twelve months from the date of signing of these
accounts.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries as if they formed a single entity.
Intercompany transactions and balances between group companies are
therefore eliminated in full. All subsidiaries have a reporting
date of 30 September.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquiree identifiable assets
and liabilities are initially recognised at their fair values at
the acquisition date.
The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on
which control ceases.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of assets transferred by
the Group, liabilities incurred by the Group to the former owners
of the acquiree and the equity interest issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred. At the acquisition date,
the identifiable assets (both tangible and intangible) acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that deferred tax assets or liabilities
and assets or liabilities related to employee benefit arrangements
are recognised and measured in accordance with IAS 12 and IAS 19
respectively.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquiree's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. In the case of asset
acquisition, it is the excess of the sum of the consideration
transferred over the net of the acquisition date amounts of the
identifiable assets acquired and the liabilities assumed.
When the consideration transferred by the Group in a business
combination includes a contingent consideration arrangement, the
contingent consideration is measured at its acquisition-date fair
value and included as part of the consideration transferred in a
business combination. Changes in fair value of the contingent
consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise
from additional information obtained during the measurement period
(which cannot exceed one year from the acquisition date) about
facts and circumstances that existed at the acquisition date.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period or additional
assets or liabilities are recognised, to reflect new information
obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts
recognised as of that date.
Associates
Associates are all entities over which the Group has significant
influence but not control or joint control. This is generally the
case where the Group holds between 20% and 50% of the voting
rights. Investments in associates are accounted for using the
equity method of accounting.
Under the equity method of accounting, the investments are
initially recognised at cost, including any directly attributable
transaction costs, and adjusted thereafter to recognise the Group's
share of the post-acquisition profits or losses of the investee in
profit or loss. The Group's share of movements in other
comprehensive income of the investee are recognised in other
comprehensive income. Dividends received or receivable from
associates are recognised as a reduction in the carrying amount of
the investment.
Where the Group's share of losses in an equity accounted
investment equals or exceeds its interest in the entity, the Group
does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
Revenue recognition
Revenue is recognised at the fair value of the consideration
received or receivable for goods and services provided in the
normal course of business, and is shown net of VAT and other sales
related taxes. The fair value of consideration takes into account
trade discounts, settlement discounts and volume rebates.
Performance obligations and timing of revenue recognition:
Goods
The majority of Group revenue is derived from selling goods with
revenue recognised at a point in time when control of the goods has
transferred to the customer. This is generally when the goods are
delivered to the customer. There is limited judgement needed in
identifying the point control passes: once physical delivery of the
products to the agreed location has occurred, the Group no longer
has physical possession, usually it will have a present right to
payment. Consideration is received in accordance with agreed terms
of sale.
Determining the contract price:
The Group revenue is derived from:
a) sale of goods with fixed price lists and therefore the amount
of revenue to be earned from each transaction is determined by
reference to those fixed prices; or
b) Individual identifiable contracts, where the price is
defined
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product
sold. Therefore, there is no judgement involved in allocating the
price to each unit ordered.
Services
Revenue is recognised on technical services over time as
services are rendered and performance obligations are
satisfied.
Cash and cash equivalents
Cash represents cash in hand and deposits held on demand with
financial institutions. Cash equivalents are short-term,
highly-liquid investments with original maturities of three months
or less (as at their date of acquisition). Cash equivalents are
readily convertible to known amounts of cash and subject to an
insignificant risk of change in that cash value.
In the presentation of the Statement of Cash Flows, cash and
cash equivalents also include bank overdrafts. Any such overdrafts
are shown within borrowings under current liabilities on the
Statement of Financial Position.
Goodwill
Goodwill represents the excess of the cost of a business
combination over the Group interest in the fair value of
identifiable assets and liabilities acquired. Cost comprises the
fair value of assets given, liabilities assumed, and equity
instruments issued, plus the amount of any non-controlling in the
acquiree. Contingent consideration is included in cost at its
acquisition date fair value.
Goodwill is not amortised but it is tested for impairment
annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses.
Intangible assets
Intangible assets acquired separately from a business are
recognised at cost and are subsequently measured at cost less
accumulated amortisation and accumulated impairment losses.
Identified intangible assets arising on acquisition in business
combinations comprise; brand intellectual property and customer
relationships.
Amortisation is recognised so as to write off the cost or
valuation of assets less their residual values over
their useful lives on the following bases:
- Development costs 10 years
- Brand intellectual property 10 years
- Customer relationships 10 years
Property, plant and equipment
Depreciation is provided at the following annual rates in order
to write off each asset over its estimated useful life or, if held
under a finance lease, over the lease term, whichever is the
shorter.
Leasehold additions - Over remaining lease term
Plant and machinery - 25% and 10% on cost
Fixtures and fittings - 20% on cost, and 15% on cost
Computer equipment - 33% on cost and 25% on cost
Financial assets
Financial assets, which include receivables and cash and bank
balances are initially measured at transaction price including
transaction costs and are subsequently carried at amortised cost
using the effective interest method unless the arrangement
constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at
a market rate of interest. Financial assets classified as
receivable within one year are not amortised.
A loss allowance for expected credit losses is considered for
all financial assets. The bad debts for the group are low, so there
is no general loss allowance. Specific receivables are reviewed and
provided for in full where it is considered that there is a low
prospect of recovery.
Classification of financial liabilities
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the company after deducting all
of its liabilities.
Financial liabilities
Financial liabilities, including trade and other payables, bank
loans, loans from fellow group companies are initially recognised
at transaction price unless the arrangement constitutes a financing
transaction, where the debt instrument is measured at the present
value of the future payments discounted at a market rate of
interest. Financial liabilities classified as payable within one
year are not amortised.
Debt instruments are subsequently carried at amortised cost,
using the effective interest rate method. Trade payables are
obligations to pay for goods or services that have been acquired in
the ordinary course of business from suppliers. Amounts payable are
classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at transaction price and
subsequently measured at amortised cost using the effective
interest method.
Compound instruments and borrowings
The component parts of compound instruments are classified
separately as financial liabilities and equity in accordance with
the substance of the contractual agreement. At the date of issue,
the fair value of the liability component is estimated using the
prevailing market interest rate for similar debt instruments. This
amount is recorded as a liability on an amortised cost basis until
extinguished upon conversion or at the instrument's maturity date.
The equity component is determined by deducting the amount of the
liability component from the fair value of the compound instrument
as a whole. This is recognised and included in equity and is not
subsequently remeasured.
For convertible debt where the parent has the option to convert
the loan principal into shares at its discretion, the principal is
included within equity. The only element that the company has an
obligation to settle in cash is the interest element, which is
included in liabilities.
Inventories
Inventories are valued at the lower of cost and net realisable
value, after making due allowance for obsolete and slow moving
items.
Inventories are stated at the lower of cost and estimated
selling price less costs to complete and sell. Cost comprises
direct materials and, where applicable, direct labour costs and
those overheads that have been incurred in bringing the stocks to
their present location and condition.
At each reporting date, an assessment is made for impairment.
Any excess of the carrying amount of stocks over its estimated
selling price less costs to complete and sell is recognised as an
impairment loss in profit or loss. Reversals of impairment losses
are also recognised in profit or loss.
Research and development
Research expenditure is written off against profits in the year
in which it is incurred. Identifiable development expenditure is
capitalised to the extent that the technical, commercial and
financial feasibility can be demonstrated.
Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the statement of
financial position date. Transactions in foreign currencies are
translated into sterling at the rate of exchange ruling at the date
of transaction. Exchange differences are taken into account in
arriving at the operating result.
Employee benefit costs
The group operates a defined contribution pension scheme.
Contributions payable to the group's pension scheme are charged to
the income statement in the period to which they relate.
Taxation
The income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the statement of
financial position date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences. Deferred tax assets are only
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised and there is reasonable certainty over the timing
of the taxable profits. Such assets and liabilities are not
recognised if the temporary difference arises from the initial
recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised.
Leases
The Group recognises lease liabilities in relation to leases
other than leases of low-value assets and short-term leases
(shorter than twelve months). The lease liability is initially
recognised at the present value of the lease payments which have
not yet been made and subsequently measured under the amortised
cost method. The initial cost of the right-of-use asset comprises
the amount of the initial measurement of the lease liability, lease
payments made prior to the lease commencement date, initial direct
costs and the estimated costs of removing or dismantling the
underlying asset per the conditions of the contract.
Where ownership of the right-of-use asset transfers to the
lessee at the end of the lease term, the right-of-use asset is
depreciated over the asset's remaining useful life. If ownership of
the right-of-use asset does not transfer to the lessee at the end
of the lease term, depreciation is charged over the shorter of the
useful life of the right-of-use asset and the lease term.
Government grants
Grants from the government are recognised at their fair value
where there is reasonable assurance that the grant will be received
and the group will comply with all attached conditions. Government
grants which are revenue in nature are recognised on a systematic
basis within Other operating income in the Statement Profit and
Loss and Other Comprehensive income over the period in which the
group recognises as expenses the related costs for which the grants
are intended to compensate.
Investments (company accounting policy)
Investments in subsidiaries are measured at cost less
impairment. If there is objective evidence of impairment, an
impairment loss is recognised in profit or loss. A reversal of an
impairment loss is recognised immediately in profit or loss to the
extent that it eliminates the impairment loss which has been
recognised for the asset in prior years.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group's accounting policies, the
Directors are required to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. 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 the revision and future
periods if the revision affects both current and future
periods.
Critical judgments and sources of estimation uncertainty that
have the most significant effect on the amounts recognised in the
financial statements are as follows:
Identified intangible assets
Identified intangible assets arising on acquisition comprise;
brand intellectual property and customer relationships.
Their value is estimated based on revenue and EBIT forecasts
over 10 years. Judgements are required regarding the discount rate
and Weighted Average Cost of Capital (WACC). Rates have been bench
marked against similar companies in the industry.
Carrying value of goodwill
Impairment reviews for non-current assets are carried out at
each balance sheet date in accordance with IAS 36 Impairment of
assets. An annual impairment review is undertaken for Goodwill for
each operating subsidiary, which are considered to be a separately
identifiable cash generating units. The impairment reviews are
sensitive to various assumptions, including the expected sales
forecasts, cost assumptions, capital requirements, and discount
rate.
Right of use assets
Judgement is required regarding the incremental borrowing rate
to apply to leasehold assets to discount the cash flows to present
value.
Contingent consideration
Contingent consideration, resulting from business combinations,
is valued at fair value at the acquisition date as part of the
business combination. The determination of fair value is based on
key assumptions including estimation of the level of sales compared
to the performance target. Judgement is also applied in relation to
the discount rate used for deferred consideration.
Share based payments
Estimating fair value for share based payment transactions
requires determination of the most appropriate valuation model,
which is dependent on the terms and conditions of the grant of
share options and warrants. This estimate also requires
determination of the most appropriate inputs to the valuation model
including the expected life, volatility and dividend yield and
making assumptions about them. The assumptions used for estimating
fair value for share based payment transactions are disclosed in
Note 29.
Impairment of investments and recoverability of loans to
subsidiary undertakings
Investments in subsidiary undertakings and the recoverability of
receivables from group undertakings. The impairment reviews are
sensitive to various assumptions, including the expected sales
forecasts, cost assumption and discount rate.
3. REVENUE
Segmental reporting
For the purpose of IFRS 8, the Chief Operating Decision Maker
takes the form of the board of directors. The Directors are of the
opinion that the business of the Group focused on four reportable
segments as follows:
The Parent company Administration includes activities of raising
finance and seeking new investment opportunities, all based in the
UK.
The other three segments relate to the subsidiary undertakings
activities, which include:
Plant based nutrition (undertaken by Pulsin Limited, Ohso
Chocolate Limited and We Love Purely Limited)
Bakery (undertaken by Lizza Gmbh, a subsidiary acquired in the
current year)
Technical services (undertaken by Market Rocket Limited, a
subsidiary acquired in the current year)
The segmental information for the year ended 30 September 2022
is shown below:
Plant Technical Administration Segment Consolidation
Based Bakery services totals Adjustments Total
Nutrition
Revenue 7,253,527 103,546 439,052 4,500 7,800,626 - 7,800,626
------------ ---------- ---------- --------------- ------------ -------------- ------------
Operating
profit
(loss)
before
tax (1,963,147) (209,879) 61,537 (1,293,269) (3,404,759) 147,638 (3,257,121)
------------ ---------- ---------- --------------- ------------ -------------- ------------
Segment
total assets
(net of
investments
in subsidiaries) 6,227,013 2,709,388 256,202 2,208,267 11,400,870 4,990,550 16,391,420
------------ ---------- ---------- --------------- ------------ -------------- ------------
Segment
liabilities 4,762,927 2,783,244 111,346 1,273,314 8,930,832 (2,035,192) 6,895,641
------------ ---------- ---------- --------------- ------------ -------------- ------------
The segmental information for the year ended 30 September 2021
is shown below:
Pulsin Ohso We Love Total classed Corporate Total
Limited Chocolate Purely as Plant and Administrative
Limited Limited Based Nutrition
from 2022
Revenue 1,128,258 168,193 217,825 1,525,810 11,535 1,525,810
------------ ----------- ---------- ----------------- -------------------- ------------
Operating
profit (loss)
before tax (130,285) (198,278) (121,503) (1,004,853) (554,786) (1,004,853)
------------ ----------- ---------- ----------------- -------------------- ------------
Segment
total assets
(net of
investments
in subsidiaries) 4,799,576 352,729 227,192 6,720,885 283,639 6,720,885
------------ ----------- ---------- ----------------- -------------------- ------------
Segment
liabilities (4,799,576) (352,729) (70,800) (5,506,744) (283,639) (5,506,744)
------------ ----------- ---------- ----------------- -------------------- ------------
4. OTHER OPERATING INCOME
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Miscellaneous income 48,290 -
Local Council Grants - 18,251
CJRS Grants - 2,046
Business Interruption
Grant - 5,215
Work Placement Grant - 5,864
------------------- -------------------------
48,920
------------------- -------------------------
In the prior year, the group applied for various government
support grants introduced in response to the Covid-19 pandemic. The
Group has elected to present this government grant separately,
rather than reducing the related expense.
The Group does not have any unfulfilled obligations relating to
these grants.
5. EMPLOYEES AND DIRECTORS
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Wages and salaries 2,638,537 503,575
Social security costs 234,401 40,952
Other pension costs 34,975 6,853
2,907,913 551,380
------------------- -------------------------
The average number of employees during the year was as
follows:
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
Average number of
employees 76 63
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Directors Remuneration 252,226 181,158
6. EXCEPTIONAL ITEMS
During the year company entered into a settlement deed which
included a combination of cash and share settlement that was less
than the value of the loan convertible notes resulting in a gain on
settlement of the convertible loans of GBP645,064 shown in the
consolidated statement of profit and loss statement.
7. NET FINANCE COSTS
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Finance Income:
Deposit account interest 14,641 14,664
Interest on directors
loan account 888 1,835
------------------- -------------------------
15,529 16,499
------------------- -------------------------
Finance Costs:
Bank loan interest 6,482 3,551
Other loan interest (19,867) 34,471
Hire purchase 66,785 12,785
Leasing 40,956 3,913
------------------- -------------------------
94,356 54,720
------------------- -------------------------
Net finance costs 78,827 38,221
------------------- -------------------------
8. LOSS BEFORE INCOME TAX
The loss before income tax of GBP3,257,121 is stated after
charging / (crediting):
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Cost of inventories
recognised as expense 5,218,242 1,104,952
Depreciation - owned
assets 319,263 69,416
Depreciation - assets
on hire purchase contracts 275,349 13,434
Amortisation of intangible 314,678 -
assets
Foreign exchange differences 29,416 6,020
------------------- -------------------------
9. AUDITORS REMUNERATION
Year Ended 30.9.22 Period 6.7.20
to 30.9.21
Fees payable to the Group's
auditor in relation to the
audit of the consolidated
financial statements 132,250 50,000
Fees payable to the Group's
auditor for other advisory
services - 69,827
Total Fees 132,250 119,827
10. INCOME TAX
Year Ended 30.9.22 Period 6.7.20 to 30.9.21
GBP GBP
Current year tax credit
Corporation income
tax - (7,608)
Deferred tax movement 198,913 (148,471)
Total credit 198,913 (156,079)
------------------- -------------------------
The corporation tax rate changed from 19% to 25% from 1 April
2023.
11. LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the
income statement of the parent company is not presented as part of
these financial statements. The parent company's loss for the
financial year was GBP (1,349,637) (2021 - GBP (498,419)).
12. LOSS PER SHARE
Basic Loss Per Share (LPS) is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the
period.
The weighted average diluted number of shares is stated below,
but the diluted LPS is not included as the loss would make it
anti-dilutive.
Calculations for basic LPS are set out below.
13. SUBSIDIARIES
14. PURCHASE PRICE ALLOCATION
Market Rocket Lizza Gmbh
Limited
Total consideration GBP GBP
Cash 100,000 1
Shares issued at market value 672,783
Deferred consideration - cash 349,702
Contingent consideration - shares 112,131
Total consideration 1,234,616 1
Recognised amounts of assets
and liabilities acquired
Cash and cash equivalents 83,642 6,763
Trade and other receivables 46,495 146,029
Inventories - 355,813
Intangible assets recognised 430,000 -
on business combination
Property, plant & equipment 21,220 -
Tax liabilities/asset (14,538) -
Trade and other payables (72,779) (113,798)
Borrowings - (650,064)
Total identifiable net assets 494,040 (255,258)
Minority interest % 0% 0%
Net assets attributable to parent
company 494,040 (255,258)
Goodwill 740,576 255,259
Total consideration 1,234,616 1
During the year a Purchase Price Allocation (PPA) measurement
review was undertaken to ascertain the fair value of the
consideration and net assets of the subsidiary undertakings
acquired.
Market Rocket Limited
This included determining identifiable net assets not previously
recognised. Brand IP of GBP23,000 was calculated based on forecast
revenue and estimated royalty rates. Customer relationships of
GBP407,000 were valued based on revenue and EBIT forecasts and
estimated customer attrition rates. Both were discounted at the
weighted average cost of capital.
Deferred and contingent consideration are discounted at the
estimated cost of debt of 9.6%. Contingent consideration is based
on future performance criteria, which was expected to be met at the
date of acquisition.
Shares issued in the parent company as part of the consideration
are based on the average market value per the AQSE stock exchange
on the date of acquisition.
Lizza Gmbh
As referred to in note 30, Lizza Gmbh has been put into formal
German insolvency proceedings in April 2023, which was just 7
months after the date of acquisition. The assets were therefore
reviewed for impairment in determining the fair values at
acquisition. The fixed assets with a carrying value of GBP682,986
at acquisition were impaired in full to reflect that they have no
value in use due to recurring losses. A review of stock sales after
date resulted in a stock impairment of GBP51,527. The goodwill of
GBP255,259 has been impaired in full.
During the year the purchase price allocation measurement review
was undertaken for subsidiaries acquired in the previous year. The
following purchase price allocation adjustments were made in the
current year as a result of the review:
Pulsin Ohso Chocolate We Love
Limited Limited Purely
Limited
GBP GBP GBP
Revaluation of tangible assets
Plant and Machinery 741,000 - -
Identified intangible assets
Brand intellectual property 247,000 80,000 82,000
Customer relationships 2,116,000 105,000 61,000
Less Development cost intangibles
degrecognised (52,178) - -
Stock (61,946) (23,364) -
Increase in identifiable
net assets 2,989,876 161,636 143,000
Minority interest % 0% 24.90% 24.90%
Minority interest in net
assets increase - (40,248) (35,607)
Increase in net assets attributable
to parent 2,989,876 121,388 107,393
Reduction in deferred purchase 34,484 -
consideration
Reduction in Goodwill (3,024,362) (121,388) (107,393)
15. GOODWILL
See note 14 in respect of the reduction in goodwill following
the purchase price allocation (PPA) review in the current year. An
impairment review was undertaken in the current year, resulting in
the write off goodwill in full for Lizza Gmbh and Ohso Chocolate
Limited.
16. INTANGIBLE ASSETS
17. PROPERTY, PLANT AND EQUIPMENT
The net book value above includes the following split between
owned and right of use lease assets:
18. INVESTMENTS
19. INVENTORIES
20. TRADE AND OTHER RECEIVABLES
21. CASH AND CASH EQUIVALENTS
22. CALLED UP SHARE CAPITAL
Warrants
The warrants in existence for the issue of new Ordinary
Shares of GBP0.001 each can be summarised as:
Issued Issued Issued
for Investment for Investment with shares
services services as part Latest
- exercisable - exercisable of fund date for Exercise
at 2p each at 4p each raising exercise price
Number Number Number GBP
Brought
Forward
1 October
2021 1,487,800 743,900 - 01/09/2025
Brought
Forward
1 October
2022 - - 1,000,000 30/04/2023 0.25
Allotted in
December
2021 raise - - 1,428,571 15/12/2024 1.00
Exercised in
Year (1,250,000) - -
Balance
carried
forward 30
September
2022 237,800 743,900 2,428,571
The warrants exercised in the year were at 2p realising
GBP25,000
23. RESERVES
The movement in reserves is set out in the Statement of changes
in equity. The group has the following reserves in addition to the
retained deficit reserve:
Share based payment reserve
The share-based payment reserve arose from the share-based
payment charge for share options issued to group employees. The
shares over which the options were issued are that of the parent
company. It also includes share warrants issued to a supplier of
the parent for services provided. Details of share-based
transactions are included in note 32.
Contingent equity settled consideration reserve
The contingent consideration reserve is the estimated fair value
of the consideration payable to a subsidiary, subject to
performance targets, to be settled by the issue of shares in the
parent company. During the year two subsidiaries were acquired with
contingent equity settled consideration totaling GBP112,131. The
contingent equity settled consideration recognised in the prior
year of GBP34,484 was not payable as part of a settlement deed with
the sellers.
Equity component of convertible debt reserve
This represents the equity component of convertible loans. The
parent had the option to convert the loan principal into shares at
its discretion. Originally the loan notes were negotiated without a
conversion option at the same coupon rates, so the interest rates
would be the same without the conversion option. Therefore, no
discounting was required and the full principal has been classified
as equity. The loan note interest was included in accruals. During
the year the company agreed a settlement deed for the company's
loans, which involved settlement by shares and cash as set out in
the statement of changes in equity. There was a gain in settlement
of GBP645,064.
24. TRADE AND OTHER PAYABLES
25. FINANCIAL LIABILITIES - BORROWINGS
All loans are repayable by instalments over the loan term.
Other bank loans and other loans are in the subsidiary
undertaking Lizza Gmbh, which was liquidated in April 2023, so
these loans now forms part of the insolvency proceedings.
Interest rate risk
Loans are at a fixed rate of interest so the company is not
exposed to an increase in interest rates.
Currency risk
A subsidiary has costs arising in US dollars. The group does not
hedge its foreign exposure currently but this kept under review and
as the sales of the subsidiary grow it will look into locking
exchange rates. At September 2022 and 30 September 2021 the Group
did not have a material foreign currency exposure.
Liquidity risk
Working capital is carefully managed to minimise liquidity risk.
Management continually monitor the Group's actual and forecast cash
flows and cash positions. Where issues arise, we work with the
Supplier to ensure continued supply in some cases rescheduling the
payment terms. The CEO has provided a line of credit of GBP0.5m to
support the business as required at an interest rate of 15% with no
fixed repayment term.
26. LEASING
27. DEFERRED TAX
Due to uncertainty regarding the timing of future taxable
profits to utilise the losses carried forward, the deferred tax
assets recognised in the prior year, comprised of losses carried
forward less accelerated capital allowances, have been written off
to the profit and loss account in the current year.
The total group deferred tax asset written off is
GBP198,913.
The total parent company deferred tax asset written off is
GBP56,367.
28. DIRECTORS' ADVANCES, CREDITS AND GUARENTEES
The following advances and credits to a director subsisted
during the year ended 30 September 2022 and the period ended 30
September 2021:
Loans to directors are subject to Interest at the HMRC
beneficial loan rate of 2.25% and are repayable on demand. During
the year, the director repaid the prior year balance owed to the
company in full and provided loans totaling GBP171,635 to the
company. At the balance sheet date, the company owed the director
GBP171,635. Loans from the director to the company are interest
free and repayable on demand.
29. RELATED PARTY DISCLOSURES
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation.
During the year the company entered into a contract with the
sister of the director S Livingston, to provide consultancy fees of
GBP50,000 to be settled by the issue of shares on commencement. The
fees for the period of service in the current accounting period
totaled GBP45,714.
During the year the company paid sponsorship fees of GBP3,500
for an event held by a charity in which the company director, B
Choudhrie, also holds a directorship.
Loans from the directors during the period are disclosed within
the Advances, credits and guarantee note 28.
Key management personnel are considered to be the directors.
Compensation of the directors is disclosed in note 5.
30. EVENTS AFTER THE REPORTING PERIOD
Acquisition of subsidiary
On 14 December 2022, 100% of the share capital of Juvela Limited
(formerly Hero UK Limited) ("Juvela") was acquired for a mixture of
cash, shares and deferred consideration.
Juvela is a business manufacturing gluten-free and free-from
products from its factory in Pontypool, Wales. They have been
manufacturing gluten free food for people diagnosed with coeliac
disease for over 25 years and are the leading brand serving the UK
coeliac community under the brand name Juvela.
The acquisition was made through a newly formed wholly owned
subsidiary - S-Ventures Acquisitions Limited. The consideration of
GBP8.8 m million was satisfied as follows:
-- cash consideration of GBP6.4 million, payable on completion.
This was funded by loans from Shawbrook Bank of GBP5.5m and the
balance from the parent company's own resources. One loan for
GBP3.5m is fully amortising over the 4 year term and the second
loan of GBP2m is repayable at the end of the 4 year term. The
coupon on these loans is SONIA + 5.95% and 7% respectively.;
and
-- the issue of 5 million Ordinary Shares, which had a fair
value of GBP0.85 million based on the closing share price on the
day prior to completion; and
-- deferred consideration payable in cash on 1 September 2023 of GBP1.585m.
The initial estimate of the fair value of the assets acquired
and liabilities assumed of Juvela at the date of acquisition based
upon the draft completion accounts made up to the date of
acquisition is as follows:
GBP
Property, plant and equipment 858,204
Right of Use assets 255,168
Intangible assets 5,516,628
Cash at bank 484,936
Inventory 355,338
Trade and other receivables 1,462,187
Trade and other payables (885,806)
Loans and other borrowings (342,645)
----------
Total identifiable net assets acquired 7,704,010
Goodwill 1,109,176
8,813,186
----------
Consideration
Initial consideration (recorded at the
market value of the shares issued) 850,000
Cash consideration 6,367,378
Contingent consideration 1,595,808
Total consideration 8,813,186
----------
Lizza GMBH
As noted elsewhere, the group acquired 100% of Lizza Gmbh in
August 2022 for EUR1 plus the assignment for an intercompany loan
with a face value of EUR10m from the former parent for a further
EUR1. The purchase contract included terms which, provided that the
Company was viable, S-Ventures would support with working capital
loans of up to EUR2m.
The plan was to make Lizza the start of our European operations,
within the EU, and it build on its complementary flax based pizza
brands.
Whilst early indications were good, we found it more difficult
to assimilate the business and contain the unsustainable losses
which were running ahead of expectations and that, in fact, the
business was not viable or sustainable. Accordingly, the Board
decided on 31 March 2023, to start a German administered court
liquidation process. The Provisional Administrator was appointed on
5 April 2023. He is presently seeking buyers for the business.
The group is the largest creditor of Lizza but it is too early
to say what recovery, if any will be made from the insolvency
process. Sums advanced by the group, including unpaid invoices to
other group companies amounted to EUR855,000 when the decision was
made. It is not expected that further payments will be made. As
will be seen elsewhere in these accounts, substantial provisions
have also had to be made to impair the assets of the business.
Exercise of Warrants
On 3 February 2023, holders of warrants for 1.4m Ordinary shares
exercised their rights at 25p realising GBP350,000.
On 17 February 2023, holders of warrants for 243,000 Ordinary
shares exercised their rights at 2p and 4p realising GBP5,000.
Suspension of Shares
On 3 April 2023, the AQSE share quote was suspended pending
submission of the Audited accounts the preparation of which had
been delayed, principally due to a delay in obtaining advice on PPA
allocations. The quote will be restored once the accounts are
filed.
Loan facility
In April 2023, Scott Livingston, CEO, made a loan facility
available to the group of GBP0.5 million. Interest is charged at
15% and there is no fixed repayment date.
31. ULTIMATE CONTROLLING PARTY
In the opinion of the directors there is no ultimate controlling
party.
32. SHARE-BASED PAYMENT TRANSACTIONS
Movements in the number of share-based payment options and
warrants and their weighted average exercise prices are as
follows:
Weighted Number
average exercise of share-based Weighted
Number price of payment average exercise
of options options warrants* price of warrants
Brought forward at 1/10/2021 2,407,928 2,231,700
Lapsed during the year (1,870,436)
Exercised during the
year (537,492) (1,250,000)
As at 30/09/2022 - - 981,700 GBP0.04
*The number of warrants relates to warrants issued as part of
share-based payments. Warrants were also issued as part of a share
fund raise. See note 22 for the total number of warrants in
issue.
The weighted average remaining contractual life of the options
is 10 years.
On 16 June 2021, the Company granted 2,407,928 share options to
employees with an exercise price of 9 pence each under an
Enterprise Management Incentive Scheme the Options were exercisable
subject to certain performance conditions being met.
The performance conditions are based on the achievement of sales
targets in specific subsidiary undertakings.
Of the share options issued only 1,628,386 are expected to vest
based on performance conditions. At the date of grant, these
options were valued using the Black-Scholes option pricing model.
The fair value per options granted and the assumptions used in the
calculations were as follows:
Expected annualised volatility 10%
Time to maturity (years) 10
Risk free interest rate 1%
Fair value per option GBP0.016
During the year 537,492 options were exercised and the remaining
options have lapsed due to employees performance conditions not
being met during the current year.
On 1 September 2020 1,487,800 warrants with an exercise price of
2 pence each and 743,900 with an exercise price of 4 pence each
were issued in lieu pf professional fees. The professional fees
have been estimated at GBP25,000, resulting in a fair value per
warrant of GBP0.011.During the year 1,250,000 of shares were
exercised at a price of 2 pence per share, leaving 237,800 to
exercise at 2 pence per share and 743,900 at 4 pence per share.
During the year the company entered into a contract with the
sister of the director S Livingston, to provide consultancy fees of
GBP50,000 to be settled by the issue of shares on commencement. The
fees for the period of service in the current accounting period
totalled GBP45,714.
33. PRIOR YEAR ADJUSTMENT
During the purchase price allocation review undertaken in the
current year, it was identified that shares issued in the parent
company as part of the consideration for two of the subsidiary
undertakings share prices had been based on share prices specified
in the purchase agreements, but should have been recognised at fair
value based on the average market value per the AQSE stock exchange
on the date of acquisition. The total additional consideration of
GBP382,819 has increased the investment cost and share premium in
the prior year.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
NEXNKKBDOBKDNAN
(END) Dow Jones Newswires
June 30, 2023 13:14 ET (17:14 GMT)
SVentures (AQSE:SVEN)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
SVentures (AQSE:SVEN)
Gráfica de Acción Histórica
De May 2023 a May 2024
