TIDMKNB
RNS Number : 3342C
Kanabo Group PLC
21 February 2022
Kanabo Group Plc
("Kanabo" or the "Company")
Acquisition of The GP Service Limited
Kanabo Group Plc (LSE:KNB), the pan-European medical cannabis
company focusing on the development and distribution of
cannabis-derived products for medical patients and wellness CBD
consumers, announces the acquisition of The GP Service Limited (the
"GP Service" or the "Target"), a UK-based private primary care
telemedicine provider, for a net consideration of c. GBP13,498,634
("Net Consideration"). Pursuant to a sale and purchase agreement
between the Company (1) and the shareholders of the Target
("Sellers") (2) (the "Agreement") (details of which are described
below) Kanabo will issue the Sellers 106,708,576 Ordinary Shares at
a price of 12.65p which represent c. 22% of the issued share
Capital of the Company.
Whilst the acquisition will complete immediately, the
consideration shares will be issued at a later date when the
Company has the pre-requisite authorities.
Kanabo's acquisition of the GP Service will facilitate the rapid
growth of its existing digital and telemedicine business and will
establish a new and fully compliant channel to market for Kanabo's
products for medical patients. Through improved access to these
products, Kanabo hopes to make a substantial contribution to
improving outcomes for thousands of patients in the UK and
Europe.
Highlights:
-- The GP Service is an approved provider on the NHS digital
framework for video and on-line consultations
-- The GP Service is able to able to electronically deliver
prescriptions to a network of 4,200 pharmacies including major high
street chains and independent pharmacies
-- The GP Service provides online GP video consultation services
to corporate clients as an occupational health service for
employers as well as pharmacies, including a major high street
pharmacy chain
-- Kanabo intends to develop The GP Service platform to become
one of Europe's first digitally led and legally compliant providers
for Kanabo's products and wellness CBD services following
regulatory approval
The GP Service offers the services of online doctors to help
diagnose and treat common conditions using its internet-based
consultation platform. The system allows patients to consult with
qualified doctors via online assessment questionnaires and through
secure video chat. As part of the consultation process, the GP
Service doctors are able to provide prescriptions, as well as write
referral letters for hospital care, and fit notes. The GP Service
platform enables doctors to send electronic prescriptions to a
network of 4,200 high street and supermarket pharmacies.
All the Doctors contracted by the GP Service are UK registered
with the General Medical Council ("GMC"). All pharmacies affiliated
with the services provided by the GP Service are also UK based and
registered with the General Pharmaceutical Council ("GPhC").
The GP Service also offers a comprehensive 'white-label' service
to several enterprises, including a leading high street chain of
pharmacies in the UK. This enterprise offering complements its
well-established direct to consumer service model.
In addition to growing the existing telemedicine business,
Kanabo intends to further develop the GP Service digital
technology, physician network and patient community, leveraging the
platform for the sale of its own product and service offerings.
Avihu Tamir, founder and CEO of Kanabo, said: ""Today's
acquisition of the GP Service is part of our strategy to use
M&A alongside organic growth to build a pan-European company,
offering help to medical patients and consumers for conditions
including chronic pain, anxiety and central nervous system
diseases. We are very much looking forward to working with the
highly skilled team at GP Service to support the growth of their
business in the rapidly growing tele-medicine market in the UK and
beyond."
Atul Devani, CEO of the GP Service added: "The GP Service was
incorporated with the aim of offering patients an innovative and
cost-effective solution to access primary healthcare services
conveniently and efficiently. We have invested heavily in our core
systems and technologies to provide patients with treatment or
advice following a remote video or with a GMC Registered Doctor and
have successfully built one of the leading primary care
telemedicine companies in the UK. With further support and
investment from Kanabo we look forward to expanding our core
service to cover a range of other medical conditions and further
enhance our electronic prescription offerings in the coming months
across a number of territories."
GP Directors
Atul Devani , Executive Chairman and co-founder. Atul is a
serial technology entrepreneur and the founder of United Clearing,
which was admitted to AIM in 2004, before being sold in 2006 for
GBP25 million. He then served as CEO of BSG's wireless division
prior to its trade sale to Syniverse Technologies for $290 million.
Atul has a First Class Honours Degree in Electronic Engineering
from the University College of North Wales (now Bangor
University).
Suleman Sacranie , Director and co-founder. Suleman founded an
e-commerce business in 2010 and went on to win the Young
Entrepreneur of the Year awards in 2012 & 2013 and the Midlands
Entrepreneur of the Year award in 2014. Suleman holds a BSc in
Chemistry, from the University of Leicester.
Dr Alex Barber - Medical Director. MRCGP FRCA MRCP. Alex has a
Degree in Neuroscience from The University of Nottingham followed
by a degree in Medicine at St Bartholomew's and Royal London School
of Medicine and Dentistry. After his initial training as a House
Officer he joined the Imperial Anaesthetics Rotation gaining his
'Fellowship of the Royal College of Anaesthetists' followed by GP
training gaining both his Membership of the Royal College of
General Practitioners and Membership of the Royal College of
Physicians. He is also a GP in A&E at Chelsea & Westminster
Hospital
Details of the Agreement
Pursuant to the terms of the Agreement, Kanabo has today
acquired the entire issued share capital of the GP Service for a
total consideration of GBP13,498,634, following certain adjustments
. The Net Consideration will be satisfied by the allotment of
94,133,645 B ordinary shares of 0.00001p each in the capital of
Kanabo GP Limited, a subsidiary of Kanabo Group Plc, at a price of
12.65p per share ("Consideration Shares"). It has been agreed as
part of the acquisition that the principal and interest due at
completion by the GP Service of a fixed amount of GBP1,590,728.80
to MEIF WM Debt LP will be repayable by Kanabo Group Plc of
12,574,931 ordinary shares in 18 months based on the same price of
12.65p per share .
The Consideration Shares will be exchanged for ordinary shares
in Kanabo Group Plc (on a one for one basis) (with such shares
being referred to hereinafter as the "Kanabo Shares") within 13
months of closing ("Put Period") via a put/call option pursuant to
which Kanabo has the right to serve notice ("Put Notice") to
exercise an option to require the Sellers to exchange their
Consideration Shares for Kanabo Shares ("Put Option") at any time
during the Put Period. In the event Kanabo fails to exercise the
Put Option before expiry of the Put Period, a single Seller or
group of Sellers have the right to serve a call notice ("Call
Notice"), requiring Kanabo to issue the Kanabo Shares in exchange
for the Consideration Shares. In the event Kanabo fails to complete
the issue of the Kanabo Shares in exchange for the Consideration
Shares following service of a Put Notice or Call Notice, the
Sellers have the right to receive the requisite number of existing
ordinary shares from Avihu Tamir, in which case the Company will
commit to issue Avihu Tamir replacement ordinary shares (in
exchange for the Consideration Shares that Avihu Tamir exchanges
for his existing ordinary shares) so that his holdings will remain
unchanged.
The share price for these purposes is calculated based on VWAP
for the period of 30 days prior to closing being 12.65p. When all
Consideration Shares have been exchanged for Kanabo Shares (or
otherwise as described above), they will represent c. 22% of the
issued share capital post the deal.
Customary good leaver/bad leaver conditions are attached to
Consideration Shares issued to employee Sellers.
The Company intends to issue certain employees and the
management of the GP Service options for the value of GBP860,645 in
order to incentivise them. Further information will be provided
once the terms of those options have been agreed.
Additionally, the GP Service was granted a loan facility of
GBP500,000 of which GBP547,110 remains outstanding. This facility
is secured by a fixed and floating charge over the assets of the GP
Service. This facility and the security will remain in place
following completion.
Lock-in Arrangements
Other than set out below, those of the Sellers who will not,
following closing, be employed by the GP Service or within the
Kanabo Group have entered into lock-in arrangements with Kanabo
pursuant to which they are prevented from disposing of any of the
Kanabo Shares held by them (save in certain limited circumstance)
for a period of 18 months from the date of the agreement ("Lock In
Period") and will be subject to additional orderly market
restrictions for a further period of 18 months thereafter.
The Lock-In Period is extended to 36 months for those Sellers
who are joining Kanabo Group plc as employees and managers, with no
orderly market restrictions thereafter. A small percentage of the
equity in the GP Service (around 3.5% of the total Consideration
Shares) is held via CrowdCube, a crowd-funding platform. CrowdCube
are not subject to any of the lock in or orderly market
restrictions in respect of the Kanabo Shares held by them.
Materia Update
Kanabo's acquisition of Materia's European business, including
its Maltese EU GMP certified facility, German medical cannabis
wholesaler and UK CBD e-commerce platform, is currently on-going.
On 4th November 2021, Kanabo and Materia signed a revised term
sheet, details of which were set out in the announcement made by
the Company on that date. This transaction is still subject inter
alia to the agreement of formal documentation and conditional on,
among other things, the receipt of all necessary regulatory
consents. An update will be provided to the market in due course,
but the parties are currently negotiating a further investment by
Kanabo.
Warrant Update
The Company confirms that the effective expiry date of the
2,300,040 RTO warrants held by Mr Andrew Morrison, a director of
the Company has been extended from 16 February 2022 until 15 May
2022, in accordance with the terms of the corresponding warrant
instrument as they apply to PDMRs. As was foreseen when the warrant
instrument was prepared, the Company is in a closed period in the
lead-up to the original expiry date of the warrants.
In the event that any dealings are contemplated by Mr Morrison
during the extended validity that applies to him as a PDMR, these
will be dealt with and notified according to the Company's share
dealing policy.
For further information, please visit
http://www.kanabogroup.com/ or contact the following:
Kanabo Group Plc Via Vox Markets
Avihu Tamir, CEO
Peterhouse Capital Ltd (Financial Adviser) Tel: +44 (0)20 7469 0930
Eran Zucker / Lauren Riley
Peterhouse Capital Limited (Corporate Broker) Tel: +44 (0)20 7469 0930
Lucy Williams / Charles Goodfellow / Duncan Vasey / Martin Lampshire
Vox Markets (Investor Relations) KanaboGroup@voxmarkets.co.uk
Kat Perez kperez@voxmarkets.co.uk
GP Service Accounts For The Year Ended 31 January 2021
The information below is extracted directly from The GP Service
(UK) Ltd audited accounts for the year ended 31 January 2021.
2021 2020
as restated
Notes GBP GBP
Non-current assets
Property, plant and equipment 10 14,944 32,025
Current assets
Trade and other receivables 11 44,804 54,750
Current tax recoverable 79,906 63,197
Cash and cash equivalents 883,379 218,057
-------------- ------------
1,008,089 336,004
Current liabilities
Trade and other payables 17 207,152 156,529
Borrowings 13 - 2,387
Lease liabilities 18 4,266 5,352
211,418 164,268
Net Current Assets 796,671 171,736
Non-current liabilities
Borrowings 13 2,791,445 2,086,449
Deferred tax liabilities 19 - 10,869
2,791,445 2,097,318
Equity
Called up share capital 22 1,344 2,358
Share premium account 23 3,783,194 2,874,814
Retained earnings (5,764,368) (4,770,729)
Total Equity (1,979,830) (1,893,557)
For the year ending 31 January 2021 the company was entitled to
exemption from audit under section 477 of the Companies Act 2006
relating to small companies.
Directors' responsibilities:
-- The members have not required the company to obtain an audit
in accordance with section 476 of the Companies Act 2006.
-- The directors acknowledge their responsibilities for
complying with the requirements of the Act with respect to
accounting records and the preparation of accounts.
-- These accounts have been prepared in accordance with the
provisions applicable to companies subject to the small companies'
regime.
-- The company has taken advantage of section 444(1) of the
Companies Act 2006 and opted not to deliver to the registrar a copy
of the company's Profit and Loss Account.
The financial statements were approved by the board of directors
and authorised for issue on 10/06/21 and are signed on its behalf
by:
..............................
A S Devani
Director
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 JANUARY
2021
1 Accounting policies
Company information
The GP Service (UK) Ltd is a private company limited by shares
incorporated in England and Wales. The registered office is
Coventry University Technology Park, The Technocentre, Puma Way,
Coventry, West Midlands, United Kingdom, CV1 2TT. The company's
principal activities and nature of its operations are disclosed in
the directors' report.
1.1 Accounting convention
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for
use in the European Union and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, except as
otherwise stated.
The financial statements are prepared in sterling, which is the
functional currency of the company. Monetary amounts in these
financial statements are rounded to the nearest GBP.
The financial statements have been prepared under the historical
cost convention. The principal accounting policies adopted are set
out below.
These financial statements for the year ended 31 January 2021
are the first financial statements of the company prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
(ASB).
For periods up to an including the year ended 31 January 2020,
the company prepared its financial statements in accordance with
FRS 102. Accordingly, the company has prepared financial statements
that comply with IFRS applicable as at 31 January 2021, together
with the comparative period data for the year ended 31 January
2020. In preparing these financial statements, the company's
opening statement of financial position was prepared as at 1
February 2019, the company's date of transition to IFRS.
There were no changes to the previously reported financial
position and financial performance for those periods as a result of
the transition to IFRS.
1.2 Going concern
The directors are satisfied, given funding in place and further
support confirmed by existing stakeholders that the going concern
basis remains appropriate.
1.3 Revenue
The company is in the business of providing online medical
services. Revenue is measured based on the consideration specified
in a contract with a customer and excludes amounts collected on
behalf of third parties. The company recognises revenue when it
transfers control of a service to a customer.
1.4 Property, plant and equipment
Property, plant and equipment are initially measured at cost and
subsequently measured at cost or valuation, net of depreciation and
any impairment losses.
Depreciation 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:
-- Computers 33% straight line
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale proceeds and the
carrying value of the asset, and is recognised in the income
statement.
1.5 Impairment of tangible and intangible assets
At each reporting end date, the company reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the company estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
1.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short-term liquid investments with original
maturities of three months or less, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities.
1.7 Financial assets
Financial assets are recognised in the company's statement of
financial position when the company becomes party to the
contractual provisions of the instrument. Financial assets are
classified into specified categories, depending on the nature and
purpose of the financial assets.
Financial assets held at amortised cost
Financial instruments are classified as financial assets
measured at amortised cost where the objective is to hold these
assets in order to collect contractual cash flows, and the
contractual cash flows are solely payments of principal and
interest. They arise principally from the provision of goods and
services to customers (eg trade receivables). They are initially
recognised at fair value plus transaction costs directly
attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment where necessary.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
each reporting end date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected.
1.8 Financial liabilities
The company recognises financial debt when the company becomes a
party to the contractual provisions of the instruments. Financial
liabilities are classified as either 'financial liabilities at fair
value through profit or loss' or 'other financial liabilities'.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at fair value
through profit or loss when the financial liability is held for
trading. A financial liability is classified as held for trading
if:
-- it has been incurred principally for the purpose of selling
or repurchasing it in the near term, or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the company manages together
and has a recent actual pattern of short-term profit taking, or
-- it is a derivative that is not a financial guarantee contract
or a designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are
stated at fair value with any gains or losses arising on
remeasurement recognised in profit or loss.
Other financial liabilities
Other financial liabilities, including borrowings, trade
payables and other short-term monetary liabilities, are initially
measured at fair value net of transaction costs directly
attributable to the issuance of the financial liability. They are
subsequently measured at amortised cost using the effective
interest method. For the purposes of each financial liability,
interest expense includes initial transaction costs and any premium
payable on redemption, as well as any interest or coupon payable
while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the
company's obligations are discharged, cancelled, or they
expire.
1.9 Equity instruments
Equity instruments issued by the company are recorded at the
proceeds received, net of direct issue costs. Dividends payable on
equity instruments are recognised as liabilities once they are no
longer at the discretion of the company.
1.10 Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The company's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the reporting end
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
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
reporting end 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.
Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when the
company has a legally enforceable right to offset current tax
assets and liabilities and the deferred tax assets and liabilities
relate to taxes levied by the same tax authority.
1.11 Employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense, unless those costs are required to be
recognised as part of the cost of inventories or non-current
assets.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the company is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.13 Share-based payments
Equity-settled share-based payments are measured at fair value
at the date of grant by reference to the fair value of the equity
instruments granted. The fair value determined at the grant date is
expensed on a straight-line basis over the vesting period, based on
the estimate of shares that will eventually vest. A corresponding
adjustment is made to equity.
When the terms and conditions of equity-settled share-based
payments at the time they were granted are subsequently modified,
the fair value of the share-based payment under the original terms
and conditions and under the modified terms and conditions are both
determined at the date of the modification. Any excess of the
modified fair value over the original fair value is recognised over
the remaining vesting period in addition to the grant date fair
value of the original share-based payment. The share-based payment
expense is not adjusted if the modified fair value is less than the
original fair value.
Cancellations or settlements (including those resulting from
employee redundancies) are treated as an acceleration of vesting
and the amount that would have been recognised over the remaining
vesting period is recognised immediately.
1.14 Leases
At inception, the company assesses whether a contract is, or
contains, a lease within the scope of IFRS 16.
A contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period of
time in exchange for consideration. Where a tangible asset is
acquired through a lease, the company recognises a right-of-use
asset and a lease liability at the lease commencement date.
Right-of-use assets are included within property, plant and
equipment, apart from those that meet the definition of investment
property.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date plus any
initial direct costs and an estimate of the cost of obligations to
dismantle, remove, refurbish or restore the underlying asset and
the site on which it is located, less any lease incentives
received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-of-use assets
are determined on the same basis as those of other property, plant
and equipment.
The right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the company's incremental
borrowing rate. Lease payments included in the measurement of the
lease liability comprise fixed payments, variable lease payments
that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that
the company is reasonably certain to exercise, such as the exercise
price under a purchase option, lease payments in an optional
renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in: future lease payments arising from a change in an index or
rate; the company's estimate of the amount expected to be payable
under a residual value guarantee; or the company's assessment of
whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The company has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less, or for leases of low-value assets
including IT equipment. The payments associated with these leases
are recognised in profit or loss on a straight-line basis over the
lease term.
1.15 Grants
Government grants are recognised when there is reasonable
assurance that the grant conditions will be met and the grants will
be received.
2 Adoption of new and revised standards and changes in
accounting policies Standards which are in issue but not yet
effective
At the date of authorisation of these financial statements, the
following Standards and Interpretations, which have not yet been
applied in these financial statements, were in issue but not yet
effective (and in some cases had not yet been adopted by the
EU):
-- Amendment to IFRS 16 Leases - COVID-19 related rent concessions (effective 1 June 2020)
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform (effective 1 January 2021)
-- Amendments to IAS 1 Presentation of financial statements -
Classification of liabilities (effective 1 January 2022)
-- Narrow scope amendments to IFRS 3, IAS 16, IAS 17 and annual
improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective 1
January 2022)
The directors have considered the amendments above and do not
believe there will be a significant impact on the company's
financial statements when they are adopted.
3 Critical accounting estimates and judgements
In the application of the company's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amount 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.
The directors do not consider there to be any estimates or
assumptions which have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities.
4 Property, plant and equipment
Cost Computers
(GBP)
At 1 February 83,745
Additions 4,116
At 31 January 2020 87,870
Additions 4,058
----------
At 31 January 2021 91,928
----------
Computers
GBP
Accumulated depreciation and impairment
At 1 February 2019 36,452
Charge for the year 19,393
At 31 January 2020 55,845
Charge for the year 1,139
At 31 January 2021 76,984
Carrying amount
At 31 January 2021 14,944
At 31 January 2020 32,025
At 31 January 2019 47,302
5 Trade and other receivables
2021 2020
GBP GBP
Trade receivables 11,425 25,032
VAT recoverable - 932
Other receivables 3,118 -
Prepayments 30,261 28,786
44,804 54,750
6 Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting
end date.
7 Borrowings
Current Non-current
2021 2020 2021 2020
Borrowings held at amortised
cost:
Bank overdraft 2,387
Bank loans 500,000
Debentures 1,071,334 966,334
MEIF Debentures 1,220,111 1,120,115
_______ _______ _______ _______
2,387 2,791,445 2,086,449
_______ _______ _______ _______
Bank loans represent a Coronavirus Business Interruption Loan
Scheme (CBILS), repayable by instalments over a 3 year period
commencing March 2022.
MEIF Debenture Loan of GBP1,220,111 (2020: GBP1,120,115),
including accrued interest, is interest bearing at 10%pa and is
repayable, other than by instalments, in 2023. The loan is secured
by a first fixed and floating charge on the company's assets and
undertaking.
Debenture loans of GBP1,071,334, (2020: GBP966,334) , including
accrued interest, are interest bearing at 14%pa, and are repayable,
other than by instalments, commencing March 2022 at the earliest.
The debenture loan is secured by fixed and floating charges on the
company's assets and undertaking.
8 Fair value of financial liabilities
The directors consider that the carrying amounts of financial
liabilities carried at amortised cost in the financial statements
approximate to their fair values
9 Liquidity risk
The following table details the remaining contractual maturity
for the company's financial liabilities with agreed repayment
periods. The contractual maturity is based on the earliest date on
which the company may be required to pay.
Less than 1 - 5 years Total
1
month
GBP GBP GBP
At 31 January 2020
Debentures - 966,334 966,334
MEIF Debentures - 1,120,115 1,120,115
_______ _______ _______
- 2,086,449 2,086,449
_______ _______ _______
At 31 January 2021
Bank overdrafts 2,387 - 2,387
Accruals - 500,000 500,000
Debentures - 1,071,334 1,071,334
MEIF Debentures - 1,220,111 1,220,111
_______ _______ _______
2,387 2,791,445 2,793,832
_______ _______ _______
Additional details of the bank loans, Debentures and MEIF
Debentures can be found in Note 13.
Liquidity risk management
Liquidity risk is the risk that the company will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The company's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when they become due, under both
normal and stressed conditions, without incurring unacceptable
losses or risking damage to the company's reputation.
10 Market risk
Market risk management
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest
rate risk, currency risk and other price risk, such as equity price
risk and commodity risk. Financial instruments affected by market
risk include loans and borrowings.
The company only trades in sterling and is not exposed to
foreign exchange risk.
The company does not hold any investments in other companies or
marketable securities and so is not exposed to other price
risk.
Interest rate risk
The company has bank overdrafts, bank loans, debenture loans and
MEIF debenture loans which all incur interest. The company manages
the interest rate risk by limiting its exposure to floating
interest rates. The company currently has fixed interest rates on
all its borrowings, except for the bank overdraft which is
floating. The exposure is minimal and the company looks to avoid
using its overdraft where possible
11 Trade and other payables
2021 2020
GBP GBP
Trade payables 146,134 133,657
Accruals 35,980 15,136
Social security and other taxation 20,622 5,374
Other payables 4,416 2,362
_______ _______
207,152 156,529
_______ _______
12 Lease liabilities
2021 2020
Maturity analysis GBP GBP
Within one year 5,036 5,352
_______ _______
Lease liabilities are classified based on the amounts that are
expected to be settled within the next 12 months and after more
than 12 months from the reporting date, as follows:
2021 2020
GBP GBP
Current liabilities 4,266 5,352
_______ _______
2021 2020
GBP GBP
Amounts recognised in profit or loss include
the following:
Interest on lease liabilities 6,129 13,943
_______ _______
13 Deferred taxation
ACAs
GBP
Deferred tax liability at 1 February 2019 10,869
_______
Deferred tax liability at 1 February 2020 10,869
Deferred tax movements in current year
Credit to profit or loss (10,869)
_______
Deferred tax liability at 31 January 2021 -
_______
14 Share Capital
2021 2020 2021 2020
Ordinary share capital Number Number GBP GBP
Issued and fully paid
A Ordinary shares of 0.001p
each 11,283,310 11,283,310 1,129 2,146
B Ordinary shares of0.0001p
each 14,756,588 14,756,588 15 15
C Ordinary shares of 0.01p
each 1,966,000 1,966,000 197 197
D Ordinary shares of0.0001p
each 2,596,987 - 3 -
_______ _______ _______ ______
30,602,885 28,005,898 1,344 2,358
_______ _______ _______ ______
15 Share premium account
2021 2020
GBP GBP
At the beginning of the year 2,874,814 2,874,814
Issue of new shares 907,737 -
Share capital reduction 643 -
_______ _______
At the end of the year 3,783,194 2,874,814
_______ _______
16 Capital risk management
The company's objective when managing capital is to safeguard
its accumulated capital in order to provide an adequate return to
shareholders by maintaining a sufficient level of funds, in order
to support continued operations. The company considers its capital
to comprise equity capital plus accumulated profits.
The company is not subject to any externally imposed capital
requirements.
Notes to reconciliation
The prior year results have been restated to correct the value
of share capital shown as at 31 March 2020, which increased from
GBP1,687 to GBP2,358. This restatement has resulted in a reduction
in the profit and loss account reserve of GBP671.
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ACQQFLFLLLLZBBD
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