TIDMKNB
RNS Number : 6867N
Kanabo Group PLC
06 June 2022
Kanabo Group Plc
(Formerly: Spinnaker Opportunities Plc)
(" Kanabo " or the "Company")
Final Results
Kanabo Group Plc (LON: KNB), a medical cannabis R&D Company
that focuses on the distribution of cannabis-derived products for
medical patients, and non-THC products for CBD consumers , is
pleased to announce its Full Year Audited Results for the year
ended 31 December 2021.
Period Highlights
-- Successful listing of the Company's shares on 16 February
2021 to become one of the first medical cannabis companies on the
London Stock Exchange, raising gross proceeds of GBP6 million
-- Production developments:
a. Signed a production and supply agreement with PharmaCann
Polska in March 2021 for the supply of cartridges containing the
Company's proprietary medicinal cannabis formulations for use with
the VapePod inhalation device.
b. Secured a further manufacturing agreement on 20 May 2021 with
Pure Origin Limited to supply Kanabo's CBD wellness product line
from its facility in Wales.
c. Completed a certified EU-GMP production line in June 2021 in
partnership with Pure Origin Group.
-- Product Developments:
a. Kanabo's medicinal cannabis cartridges became available to UK patients.
b. Applied to undertake a bioavailability and efficacy trial of
its proprietary Cannabis inhalation formulas used in conjunction
with its VapePod delivery device.
-- Supply Chain and Distribution Developments:
a. Launched the first medical cannabis product in the UK in July
2021, demonstrating the Company's fully operational supply,
production, and distribution chain.
b. Delivered the first shipment of the Company's medical
cannabis cartridges for distribution through LYPHE Group clinics
and dispensaries.
c. In September 2021, the Company's CBD products became
available for sale via HandpickedCBD.com, a leading UK eCommerce
site dedicated to CBD.
-- Invested GBP0.75 million as a Pre-RTO investment in Hellenic Dynamics S.A.
P ost P eriod Highlights:
-- Acquired The GP Service Limited, a UK-based private primary
care telemedicine provider, for a net consideration of GBP13.5
million on 21 February 2022.
-- Signed a Memorandum of Understanding with Forbe Ltd on 9th
March 2022 for the sale of the Company's CBD products into
Israel.
-- Launched the Company's eCommerce platform, 'The Kanabo
Store', for the distribution of CBD products to consumers. The
roll-out will have an initial focus on the UK market before the
website launches in Europe.
-- Raised GBP2.25 million through a placing of 28,125,000 new ordinary shares.
Outlook
Having completed its strategic acquisition of The GP Service,
the Company is now in a position to grow the primary care
tele-medicine business and be at the leading edge of an emerging
medical cannabis tele-medicine market. This market segment is
expected to grow strongly in FY22 as legislation evolves and
medicinal cannabis continues to gain acceptance as a treatment for
more indications and becomes more mainstream.
Furthermore, the Company is anticipating CE accreditation for
its Vapepod medical device in 2022 paving the way for accelerated
sales in Germany and other European markets. At the same time,
within the next 12 months, the Company aim to expand product
development to include products and delivery systems beyond
vaporization.
Kanabo, CEO, Avihu Tamir, said :
"Since the beginning of 2021, we completed the reverse takeover
transaction and successfully raised GBP6 million as one of the
first cannabis-related businesses to list on the London Stock
Exchange.
I believe 2022 will be another year of transformation growth as
we work toward achieving CE accreditation for our vapePod and
develop our vertically integrated business with investment and
complementary acquisitions.
I am therefore confident Kanabo can expect to deliver
significant revenue from the sale of CBD and medicinal cannabis
over the next 12 months, well beyond anything the Company has seen
to date and remains well positioned to become one of Europe's
leading compliant providers of both wellness CBD services and
medicinal cannabis products in the UK and EU.
I therefore look forward to executing our business plan and
achieving our future goals as Kanabo continues to work on several
initiatives, that are expected to create significant value for
shareholders"
For further information, please visit www.kanabogroup.com or
contact the following:
Kanabo Group Plc
Tel: +972 52 3173 633
press@kanabogroup.com
Assaf Vardimon
Peterhouse Capital Limited (Financial Adviser)
Tel: +44 (0) 20 7469 0930
Eran Zucker / Lauren Riley
K anabo Group Plc
(Formerly: Spinnaker Opportunities Plc)
Annual Report & Financial Statements
for the year ended 31 December 2021
Company Registration No. 10485105 (England and Wales)
Contents
Page
Company Information 3
Chairman's Statement 4
Chief Executive Officer's Review 5
Board of Directors and Senior Management 9
Directors' Report 11
Strategic Report 15
Governance Report 22
Remuneration Committee Report 29
Audit Committee Report 33
Nomination Committee Report 35
Independent Auditors' Report 36
Consolidated Statement of Comprehensive
Income 44
Consolidated Statement of Financial Position 45
Parent Company Statement of Financial Position 46
Consolidated Statement of Changes in Equity 47
Parent Company Statement of Changes in Equity 48
Consolidated Statement of Cash Flows 49
Parent Company Statement of Cash Flows 50
Notes to the Financial Statements 51
Company Information
Directors Principal Bankers
Mr. Andrew Morrison PayrNet Limited
Mr. David Tsur 138 Holborn
Mr. Avihu Tamir London
Mr. Daniel Poulter England
Mr. Gil Efron EC1N 2SW
Company Secretary Registrars
Mr. Howard Rubenstein Neville Registrars
Neville House
Registered Office Steelpark Road
Churchill House Halesowen
137-139 Brent Street B62 8HD
London
NW4 4DJ
Registered Number
10485105
Brokers
Peterhouse Capital Limited
3(rd) Floor
80 Cheapside
London
EC2V 6EE
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Solicitors
Asserson
Churchill House
137-139 Brent Street
London
NW4 4DJ
Chairman's Statement
I am pleased to present the audited financial statements to
shareholders for the year ended 31 December 2021, which is our
first annual report published as a publicly listed company since
the completion of the acquisition of Kanabo Research Ltd via a
reverse takeover ("RTO") .
The period under review covers the reverse takeover of Spinnaker
Opportunities Plc and and re-listing onto the London Stock
Exchange, with the Company successfully raising gross proceeds of
GBP6 million from new and existing investors. Since the RTO, we
made a number of exciting developments and met a number of key
milestones that testifies to the rapid development of the business,
delivering on several strategic milestones stated at the time of
RTO.
As we outlined at the time of re-listing and subsequently in the
June 2021 interim consolidated financial statements , the Board
remains committed to executing our stated strategy of leading the
global evolution of the cannabis industry by building a fully
vertically integrated platform that will generate significant value
from new product development, innovative production techniques and
enhanced distribution direct to the user of cannabis-based
products.
Since the completion of the RTO , we have witnessed huge
developments in the cannabis industry and markets with a
groundswell of growing acceptance of cannabis products for both
overall wellbeing and specific medicinal applications.
With further investment and patient access to medical cannabis,
we can now see a clear path towards medical cannabis and CBD
products becoming mainstream products in the European market.
The cannabis market is now estimated to increase to a EUR3.2
billion market by 2025 in Europe with Germany forecasted to remain
the dominant territory and with the UK market accelerating quickly.
According to a UK-based cannabis consultancy, Prohibition Partners,
the UK medical cannabis market is now expected to be worth around
GBP1 billion by 2024, while in 2021, the UK-based real estate
company Savills valued the CBD market alone at around GBP300
million a year.
The rising interest in the potential of cannabis in the UK, has
seen consumer demand for products outstrip supply by some margin
with patient numbers now growing at an unprecedented level.
We have also seen the level of hesitancy from healthcare
professionals regarding prescribing medicinal cannabis products
begin to wane, as the pace of education catches up to the demand
from consumers and patients alike. Education has been vital at
combatting the glacial pace of regulatory clarity, not only for
consumers, but for consultants and policymakers as well as
innovative businesses such as Kanabo.
We have also taken the opportunity during the period to
strengthen our board with the appointment of Dr Daniel Poulter MP
as a Non-Executive Director. Daniel's knowledge and insight into
both UK health service provision and cannabis regulation continues
to be invaluable to the Board.
Thanks to the steadfast commitment of our people, Kanabo has
delivered significant progress in the execution of its strategy
during the year. I therefore thank all our employees, advisors and
our shareholders for their dedication and support during the
period.
David Tsur
Chairman, Non - Executive Director
1 June 2022
Chief Executive Officer's Review
The period under review was a transformational one for the
Company with both re-admission on the London Stock Exchange and the
development of the vertically integrated supply chain and unique
distribution channels.
Given the progress during the year and the post period
acquisition ( see note 27 for further commentary) , the Group
continues to work towards its stated strategy of becoming a leading
Group within the CBD consumer and medical cannabis markets.
Financial Review
On 16 February 2021, the Company successfully completed its
acquisition of Kanabo Research Ltd via a share-for-share swap
("Reverse takeover" or "RTO"). Since this acquisition falls outside
the scope of IFRS 3, RTO accounting has been applied. As a result,
the comparatives in the primary statements represent that of Kanabo
Research Ltd. The current year figures within the primary statement
represent the results of both the Company and Kanabo Research Ltd
for the year and the assets and liabilities of both entities as at
the year-end respectively. For further commentary on accounting for
the RTO, see note 8.
In addition to share consideration issued on 16 February 2021
totaling GBP15,000K, under the terms of the agreements, an
additional 38,461,492 shares at the fundraising price, 6.5p, were
to issued providing a number of agreed upon milestones had been met
in the year. As these milestones were met, as announced in the RNS
released on 30 December 2021, shares for a value of GBP2,500k were
to be issued as at the year-end. As at the approval date of this
annual report, these shares have yet to be issued however, the
Company will issue the shares in question once it has sufficient
authorised share capital.
The Group remained predominantly pre-revenue during the period
recording an operating loss of GBP3.4m. Included in the GBP3.4m of
operating expenses were research and development, sales and
marketing costs of GBP0.2m and GBP0.6m respectively. As in 2020, no
research and development expenses incurred in the year have been
capitalised. See note 4 for our justification.
The operation loss includes a loss in the amount of GBP0.6m
which was recorded as a net impairment loss over the loans granted
to Materia.
The majority of operating expenses were salary related with the
exceptional reverse acquisition costs of GBP1.2m resulting in a
loss for the year of GBP4.6m.
Importantly, the balance sheet remained strong with the Group's
cash and cash equivalents totalling GBP4.5m as at 31 December 2021,
following a net cash outflow of GBP2.1m from operating activities
and approximately GBP7.2m raised through share, warrants and
options issuance during the period.
During the reporting period, as part of its strategic plan, the
Company signed a head of agreement with 11157353 Canada Corp. a
company incorporated in Canada ("Materia"). As part of this
agreement the Group had advanced CAD 1,000K (GBP582K) to Materia.
When assessing whether the loan receivable and accrued interest is
recoverable or not, the Directors identified a number of impairment
indicators. Whilst no repayments of the loan are due, or yet to
have been received and whilst through communications with Materia
the Directors understand Materia is willing to repay the balance,
there is not sufficient evidence to demonstrate that it is probable
that Materia has the ability to make full repayment of the balance.
The Directors have therefore taken a prudent view and decided to
fully impair the loan, however, the Company and Materia will
continue to discuss their future collaboration and a strategic
partnership through which the Company hope to recover the loan
balance.
Chief Executive Review (Continued)
Financial Review (continued)
Since the year-end, the Company has received strong investor
support from both existing and new investors. On 21 February 2022,
the Company successfully completed a GBP2.25 million fundraising
ensuring Kanabo remains well funded to progress its strategic plans
during 2022, as disclosed in the strategic report on page 15.
Operational Review
Kanabo launched its first medical cannabis product in the UK in
July 2021, thereby demonstrating its fully operational supply chain
from flower to production and through our extensive distribution
network outlined at the time of re-listing at the beginning of the
period.
This first shipment of medical cannabis cartridges not only
marked a key milestone for Kanabo, but moreover for the medicinal
cannabis industry across the UK.
Production Capability
Our production and supply agreement with PharmaCann Polska
established Kanabo's first medical cannabis production line in the
EU, with an initial production capacity of up to 36,000 cartridges
per month. The Company can further increase this production line
when necessary.
In addition, the agreement with Pure Origin to manufacture,
package and deliver our wellness product line has introduced
another dedicated production line with an initial capacity of
44,000 units a month. In this case too, Kanabo can further increase
production capacity when necessary.
These relationships add significant production capacity to
Kanabo's CBD wellness business while we retain full control over
product quality and distribution of our tamper proof
cartridges.
Following the period-end, Kanabo signed a Memorandum of
Understanding with Forbe Ltd, thereby taking the Company into the
emerging CBD markets in Israel. We expect this to position the
Company as a CBD market leader in this high growth market where the
regulatory landscape for the sale of CBD products is on an
increasingly positive trajectory; Israel's deregulated market is
estimated to be worth up to US$475 million by 2025.
Sales and Distribution Capability
During 2022, Kanabo's launched a UK eCommerce site. This clearly
demonstrates how focused we are to bring our proprietary products
to market and accelerate the path to commercial sales volumes.
Post year-end, we launched the Company's first dedicated
eCommerce platform, 'The Kanabo Store', for the distribution of CBD
products to consumers. The planned roll-out will have an initial
focus on the UK before the website launches across Europe.
Product Development
During October 2021, Kanabo submitted a clinical trial protocol
for approval at the Hadassah Medical Centre and review by the
Helsinki Committee to test the impact on healthy volunteers of the
inhalation of various medical cannabis formulas via a proprietary
VapePod delivery device, which dispenses standardized and metered
inhalations.
As the first of its kind, this trial is expected to position
Kanabo as the new gold standard for medical cannabis inhalation
within the global medicinal Cannabis community.
Chief Executive Officer's Review (Continued)
Post Period Events
Our long-term mission to enable greater patient access to
medicinal cannabis products in the UK has already been advanced
with our post-period acquisition of The GP Service Limited ("GPS"),
a private primary care telemedicine provider, which uses an
online-based consultation platform. The acquisition was closed for
a net share issue consideration of GBP13.5m, see note 27.
The objective of our acquisition of GPS is to rapidly grow an
existing digital and telemedicine business while establishing a
fully compliant channel to market for our products for medical
patients. By improving patient access, the Company hopes to make a
substantial contribution to improving outcomes for thousands of
patients across the UK and Europe and beyond.
Given the current market environment, I believe that Kanabo is
well positioned to deliver attractive growth in revenue and margin
as a result of this acquisition in 2022.
As part of strengthening the Group's financial position, on 21
February 2022, the Company raised GBP2.25 million by way of a
placing of 28,125,000 new ordinary shares of 2.5 pence each in the
Company ("placing shares") at a price of 8p per share, see note
27.
Most recently, the Company has announced that is no longer
proceeding with the proposed acquisition of the European businesses
of 11157353 Canada Corp., which trades under the name of Materia
("Materia"). The Company has now decided that the benefits of
working with Materia, including its GMP facility in Malta, are now
most effectively executed through a non-dilutive Strategic
Partnership between the two independent companies, as opposed to
the previously proposed all-share acquisition.
Kanabo and Materia are currently negotiating a partnership to
directly support the Company's key strategy, which is the
commercialisation of its medical cannabis products in the UK and
Germany, with:
-- Access to Materia's EU-GMP production facility in Malta via a
contract manufacturing agreement
-- Exclusive distribution rights in the UK for Materia's new products.
Arrangements for the servicing and repayment of the CAD$1
million secured loan facility previously made available by the
Company to Materia will be incorporated into the new strategic
partnership.
Outlook
The acquisition of GPS will prove to be transformational for
Kanabo in 2022; reflecting our strategy to use M&A and organic
growth to build a leading pan-European company to offer innovative
medical solutions to patients suffering from conditions including
chronic pain, anxiety and central nervous system diseases.
However, the full impact of our acquisition of GPS will only be
realised once we can use this online channel to prescribe medicinal
cannabis within a compliant digital framework. To that end, we
intend to invest in additional sales capacity at GPS to further
develop this recurring revenue stream to offer advanced
telemedicine services to medium to large enterprises.
Cannabis legislation is evolving rapidly, and the Company is
making significant progress along its product development roadmap
with the CE Mark for its proprietary Vapepod expected this year.
The CE Mark is a certification that our products meet all health,
safety, and environmental protection standards and will pave the
way for VapePod sales across the UK and EU.
Chief Executive Officer's Review (Continued)
In addition, the Company is aiming to diversify its offering
through the establishment of several new delivery methods for our
cannabis products. This is expected to bring new and significant
growth opportunities in this market as we extend our offering
beyond vaporisation.
Furthermore, the Company is pursuing additional supply and
production capacity in order to expand its routes to its key
markets.
Therefore, I believe that Kanabo is well positioned to deliver
attractive growth in 2022 for shareholders and, subject to
legislation, remains on track to become one of Europe's first
digitally led, legally compliant providers of both wellness CBD
services and medicinal products.
Avihu Tamir
CEO, Executive Director
1 June 2022
Board of Directors and Senior Management
Andrew Morrison - Non-Executive Director
Formerly Chairman of Spinnaker Opportunities Plc, Mr. Morrison
is an active investor and maintains a portfolio of non-executive
directorships amongst junior public companies, in the energy and
other sectors. He has in the past acted as Chief Executive of
companies including Xtract Energy Plc, Silvermere Energy Plc and
Zeta Petroleum Plc.
Mr. Morrison began his career at Shell in oil products and in
1999, joined BG Group Plc as a New Ventures Director. Subsequently
he held senior New Business Development roles for the industrial
gases group BOC Group Plc until its acquisition in 2007. Mr.
Morrison has a BSc in Chemical Engineering and Fuel Technology from
the University of Sheffield and a Diploma in Company Direction from
the Institute of Directors.
David Tsur - Chairman, Non-Executive Director
Mr. Tsur is the co-founder of Kamada Ltd, a public company
listed on both NASDAQ and the Tel-Aviv Stock Exchange. He served as
its Chief Executive Officer and on its board of directors from the
company's inception in 1990 until July 2015. Mr. Tsur served as a
Board member and Chairman of Collplant listed on the NASDAQ.
Prior to co-founding Kamada, Mr. Tsur was the Chief Executive
Officer of Arad Systems and RAD Chemicals Inc. He has also held
various positions in the Israeli Economic Ministry (formerly named
the Ministry of Industry and Trade), including Chief Economist and
Commercial Attaché in Argentina and Iran.
Mr. Tsur holds a BA degree in Economics and International
Relations and an MBA in Business
Management from the Hebrew University of Jerusalem.
Avihu Tamir - Chief Executive Officer, Executive Director
Mr. Tamir is a cannabis entrepreneur with over five years of
hands-on experience in multiple cannabis ventures and vast
experience in consulting for international cannabis projects. Mr.
Tamir began his career and built his reputation as a senior
strategy consultant at Accenture. He is also the founder of Teva
Nature, the leading vaporiser company in Israel.
Mr. Tamir founded Kanabo Research in 2017 and since then has
served as CEO of the company. His expertise includes biotechnology,
new agriculture and agro-tech, and other breakthrough technologies
in the dynamic field of medical cannabis.
Mr. Tamir holds a B.A. in Finance and Risk Management (Magna Cum
Laude), and a M.A. in Political Science (Magna Cum Laude) from the
IDC Herzliya.
Board of Directors and Senior Management (continued)
Dr. Daniel Poulter - Non-Executive Director
Dr Poulter is a former U.K. health minister with a detailed
knowledge of the medicines and drugs regulatory framework in the
UK. and across Europe.
He studied law at Bristol University and has a degree in
medicine from Guy's, King's and St Thomas' School of Medicine.
Before retraining as an NHS psychiatrist, Dr Poulter previously
worked as a hospital doctor specialising primarily in women's
health. He continues to practice medicine as an NHS hospital doctor
on a part-time basis.
Dr Poulter's medical experience and extensive knowledge of both
healthcare policy and regulation makes him well placed to support
the Company's approach to establishing medicinal cannabis
markets.
Gil Efron - Non-Executive Director
Mr. Efron is serving as President and Chief Financial Officer of
NASDAQ and TASE dual-listed Purple Biotech Ltd, a clinical-stage
company since June 2021, having previously held the position of
Deputy Chief Executive Officer and Chief Financial Officer from
October 2018.
Between 2011 and 2017, Gil served as Deputy CEO and CFO of
Kamada Ltd, a NASDAQ and TASE dual-listed plasma-derived protein
therapeutics company between 2011-2017.
Mr. Efron holds a B.A. degree in Economics and Accounting and an
M.A. degree in Business Administration from the Hebrew University
of Jerusalem.
Directors' Report
The Directors present their report with the audited financial
statements of the Company for the year ended 31 December 2021. A
commentary on the business for the year is included in the
Chairman's Statement on page 4. A review of the business is also
included in the Strategic Report on page 15.
The Company's Ordinary Shares were admitted to listing on the
London Stock Exchange, on the Official List pursuant to Chapters 14
of the Listing Rules, which sets out the requirements for Standard
Listings.
Directors
The Directors of the Company during the year and their
beneficial interest in the Ordinary shares of the Company at 31
December 2021 were as follows:
Director Position Appointed Resigned Ordinary Options Warrants Consideration
shares shares (b)
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Andrew
Morrison Non-Executive
(a) Director 17/11/2016 - 4,600,080 900,000 2,300,040 -
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Chairman,
Non-Executive
David Tsur Director 16/02/2021 - 9,061,102 2,700,000 - 1,513,542
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
CEO, Executive
Avihu Tamir Director 16/02/2021 - 97,263,870 - - 16,246,722
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Daniel Non-Executive 19/07/2021 - - 1,800,000 - -
Poulter Director
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Gil Efron Non-Executive 21/03/2022 - - - - -
Director
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Non-Executive
Uziel Danino Director 16/02/2021 21/03/2022 3,683,382 1,800,000 - 615,262
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Anthony Non-Executive 21/02/2017 16/02/2021 - - - -
Harpur Director
(c)
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
Alan Hume Non-Executive
(c) Director 17/09/2018 16/02/2021 1,521,538 - 400,000 -
-------------- ---------------- ------------ ------------ ----------- ---------- ---------- --------------
(a) 2,600,080 Ordinary Shares held by Mr. Andrew Morrison were
held by Global Prime Partners Nominees Limited on behalf of his
Self-Invested Personal Pension (SIPP) .
(b) The consideration shares were not issued as of the reporting
period; the amount presented in the schedule above is still subject
to Board approval.
(c) Anthony Harpur and Alan Hume resigned during the year upon
completion of the RTO .
Directors' Report (continued)
Qualifying third party indemnity provision
At the date of this report, the Company has a third-party
indemnity policy in place for all five Directors.
Substantial shareholders
As at 31 December 2021, the total number of issued Ordinary
Shares with voting rights in the Company was 369,966,277. Details
of the Company's capital structure and voting rights are set out in
note 19 to the financial statements.
As of the date of the approval of the financial statements, the
Company has been notified of the following interests of 3 per cent
or more in its issued share capital as at the date of approval of
this report.
Number of ordinary % of
Name of shareholder shares Share capital
-------------------- ------------------ --------------
Avihu Tamir 97,263,870 23.00%
David Sack 16,191,080 3.83%
Financial instruments
Details of the use of the Company's financial risk management
objectives and policies as well as exposure to financial risk are
contained in the accounting policies and note 24 of the financial
statements.
Greenhouse gas (GHG) emissions
The Group is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, since the Group, due to its limited activities in
the year under review, did not consume more than 40,000kWh of
energy, the Group's emissions are not disclosed for this
reason.
In the future, the Group will only measure the impact of its
direct activities, as the full impact of the entire supply chain of
its suppliers cannot be measured practically.
Dividends
The Directors do not propose a dividend in respect of the year
ended 31 December 2021 (2020: nil).
Directors' Report (continued)
Future developments and events subsequent to the year-end
Further details of the Company's future developments and events
subsequent to the year-end are set out in the Strategic Report on
page 15 and in note 27 in the financial statements.
Corporate governance
The Governance report forms part of the Director's Report and is
disclosed on page 22.
Going Concern
As at 31 December 2021, the Group's cash position totaling
GBP4,477k and it was in a strong net current asset position. Based
on the Group's current cash reserves and detailed cash forecasts
produced , the Directors are confident that the Group will be able
to meet its obligations as they fall due over the course of the
next 12 months. Whilst the Group may seek to raise further funds in
the next 12 months, the Directors are confident that the Group
would be able to meet its obligations as they fall due in the event
that no further funding is obtained because of low level committed
expenditure relative to the forecasted discretionary expenditure,
which could be reduced or deferred.
The Directors also acknowledge that the COVID-19 pandemic has
had, and will likely continue to have, adverse impacts on the
global economy and capital markets. However, the Directors are
confident that the Group will continue to remain a going concern as
they do not believe the Group is dependent on raising further funds
to remain a going concern.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the
Company on 12 December 2018.
As a result of the ethical breach detailed within the Auditors'
Report, they will not be able to continue in office and thus the
Board will be appointing new auditors in the foreseeable
future.
Statement of directors' responsibilities
The Directors are responsible for preparing the annual report
alongside the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors have prepared the
financial statements in accordance with UK-adopted international
accounting standards and in conformity 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 Group and the Company and of
the profit or loss of the Group and Company for that year . The
Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for
companies with a standard listing.
Directors' Report (continued)
Statement of directors' responsibilities (continued)
In preparing these financial statements, the Directors are
required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgments and accounting estimates that are reasonable and prudent;
-- State whether they comply with UK-adopted international
accounting standards, 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 Group and Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements and the Remuneration Committee Report comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. They are also responsible to make a statement
that they consider that the annual report and accounts, taken as a
whole, is fair, balanced, and understandable and provides the
information necessary for the shareholders to assess the Group's
position and performance, business model and strategy.
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 of directors' responsibilities pursuant to disclosure
and transparency rule
Each of the Directors, whose names and functions are listed on
page 9 confirm that, to the best of their knowledge and belief:
-- the financial statements prepared in accordance with
UK-adopted international accounting standards and , give a true and
fair view of the assets, liabilities, financial position, and loss
of the Group; and
-- the Annual Report and financial statements include a fair
review of the development and performance of the business and the
position of the Group, together with a description of the principal
risks and uncertainties that they face.
Disclosure of information to auditors
So far as the Directors are aware, there is no relevant audit
information of which the Company'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 Company's auditors are aware
of that information.
This directors' report was approved by the Board of Directors on
1 June 2022 and is signed on its behalf by:
David Tsur
Chairman, Non - Executive Director
Strategic Report
The Directors present the Strategic Report of the Company for
the year ended 31 December 2021.
Section 172(1) Statement - Promotion of the Company for the
benefit of the members as a whole
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members,
as required by section 172 of the Companies Act 2006.
The requirements of section 172 are for the Directors to:
-- Consider the likely consequences of any decision in the long term;
-- Act fairly between the members of the Group;
-- Maintain a reputation for high standards of business conduct;
-- Consider the interests of the Group's employees;
-- Foster the Group's relationships with suppliers, customers and others; and
-- Consider the impact of the Group's operations on the community and the environment.
The Board recognise that their primary role is the
representation and promotion of shareholders' interests. The Board
makes every effort to understand the interests and expectations of
the Group's shareholders and other stakeholders, and to reflect
these in the choices it makes in its effort to create long-term
sustainable value. Governed by the Companies Act 2006, the Company
has adopted the Quoted Companies Alliance Corporate Governance Code
2018 (the "QCA Code"). The Board recognises the importance of
maintaining a good level of corporate governance which, together
with the requirements of a main market listing, ensures that the
interests of the Company's stakeholders are safeguarded.
As a Company, the Board seriously considers its ethical
responsibilities to the communities and environment.
The application of the section 172 requirements can be
demonstrated in relation to some of the key decisions made during
the year:
-- The acquisition of Kanabo Research ltd via an RTO and the
re-listing of the Company onto the London Stock Exchange was
successfully executed in February 2021 alongside a significant
fundraise
-- Management entered into negotiations with GPs and Materia and
made a significant investment in Hellenic, entities in the CBD and
Medicinal Cannabis sector thus taking further steps towards its
goal to become on of Europe's leading compliant providers of CBD
and Medicinal Cannabis
-- The Board recognises that its is key to its long-term success
thus the Group invest in research activities within the
subsidiary.
The Board considers that they have acted 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 in decisions
taken during the year ended 31 December 2021.
Strategic Report (continued)
Review of Business in the Period
Operational Review
The Group's principal activity is set out in the Directors'
Report on page 11.
On 29 January 2021 the Company published the prospectus in
relation to the acquisition of Kanabo and called for a General
Meeting of shareholders on the 15 February 2021. The completion of
the Kanabo transaction took place on 15 February 2021 with
re-admission to trading on the London Stock Exchange the following
day.
Following the RTO, the following actions were taken to help
enhance the Group's product offering, production processes and
supply chain:
-- Production developments:
a. Signed a production and supply agreement with PharmaCann
Polska in March 2021 for the supply of cartridges containing the
Company's proprietary medicinal cannabis formulations for use with
the VapePod inhalation device.
b. Secured a further manufacturing agreement on 20 May 2021 with
Pure Origin Limited to supply Kanabo's CBD wellness product line
from its facility in Wales.
c. Completed a certified EU-GMP production line in June 2021 in
partnership with Pure Origin Group.
-- Product Developments:
a. Kanabo's medicinal cannabis cartridges became available to UK patients.
b. Applied to undertake a bioavailability and efficacy trial of
its proprietary Cannabis inhalation formulas used in conjunction
with its VapePod delivery device.
-- Supply Chain and Distribution Developments:
a. Launched the first medical cannabis product in the UK in July
2021, demonstrating the Company's fully operational supply,
production, and distribution chain.
b. Delivered the first shipment of the Company's medical
cannabis cartridges for distribution through LYPHE Group clinics
and dispensaries.
c. In September 2021, the Company's CBD products became
available for sale via a leading UK eCommerce site dedicated to
CBD, HandpickedCBD.com.
Business strategy
After the reporting period the Group completed a strategic
acquisition of GP Service (UK) Limited ("GPS") . As a result,
through investment made by the Company, GPS will now be able to
grow its primary care tele-medicine business and be at the leading
edge of an emerging medicinal cannabis tele-medicine market . This
market segment is expected to grow strongly during 2022 as
legislation evolves and medicinal cannabis continues to gain
acceptance as a treatment for more indications and become more
mainstream.
The Company is committed to the development and acquisition of
cannabis related businesses and production assets in UK and abroad
(subject to compliance with applicable law), intellectual
properties, technologies or other assets that are synergistic to
the Company's UK and international strategies.
Strategic Report (continued)
Subsequent events
On 21 February 2022, the Company acquired GP Service (UK)
Limited ("GPS"), a UK-based private primary care telemedicine
provider, for a net consideration of GBP13,498,634 ("net
consideration"). The net consideration was 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
owed at completion by GPS to MEIF WM Debt LP (GBP1,590,729) will be
repayable by the Company by the allotment of 12,574,931 ordinary
shares within 18 months based on the same price of 12.65p per
share, see note 27.a in the financial statements.
The acquisition of GPS is part of the Company's strategy to
establish a new and fully compliant channel to market for the
Company's products for medical patients. Through improved access to
these patients, the Company hopes to make a substantial
contribution to improving outcomes for thousands of patients in the
UK and Europe.
On 21 February 2022, the Company successfully raised GBP2.25
million by way of a placing of 28,125,000 new ordinary shares of
2.5 pence each in the Company ("placing shares") at a price of 8p
per share. The placing shares issued represented approximately 7%
of the Company's enlarged ordinary share capital following the
placing.
COVID-19
The impact of the Covid-19 pandemic had little effect on the
business of the Group during 2021 as the work continued using phone
communications and video conference facilities to minimise risk to
participants. Due to the continued success of global vaccination
programmes and the widespread existence of online purchasing, the
Directors do not believe that COVID-19 will have a significantly
adverse impact on the Group in the foreseeable future.
Strategic Report (continued)
Environment and Social
The Group is committed to creating long-term value and sharing
the benefits of its operations with all its stakeholders, including
employees, and shareholders. The Group operations have the
potential to provide a significant positive impact on the
socio-economic development of its local communities, while
minimising their impact on the environment. Environment, social and
governance ("ESG") policies, systems and practices are embedded
throughout the business.
The Group is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, since the Group, due to its limited activities in
the year under review, did not consume more than 40,000kWh of
energy, the Group's emissions are not disclosed for this
reason.
In the future, the Group will only measure the impact of its
direct activities, as the full impact of the entire supply chain of
its suppliers cannot be measured practically.
Financial review
Results for the year
The Group incurred a loss for the year to 31 December 2021 of
GBP4,633K (2020 - loss of GBP580K).
The Group recorded an operating loss of GBP3,402K which included
research and development, sales and marketing and general and
administration costs of GBP242K, GBP569K and GBP2,000K
respectively. The operating loss include also an impairment
recorded over the loans granted to Materia in the total amount of
GBP598K
The Company recorded a share-based payment expense of GBP1,172K
resulting from the accounting treatment for the RTO.
Cash flow
The net cash increase for 2021 was GBP4,150K (2020: GBP29K
inflow).
Closing cash
As at 31 December 2021, the Group held GBP4,477K of cash (2020:
GBP380K).
Key performance indicators
After the reporting period, the Company adopted a KPI plan to
its employees which is determined by company and personal
performance.
The Company has not yet agreed upon KPIs upon at board level yet
but that generally the performance of the Group is reviewed by
considering factors such as the level of sales, completion of
M&A deals, fundraising, clinical trials, and receiving CE
mark.
During the year the sole KPI of the Company was to execute a
successful RTO of a target company in the CBD/medicinal cannabis
sector therefore this KPI was fully achieved.
Strategic Report (continued)
Position of Group's business
At the year end the Group's Statement of Financial Position
shows net assets totaling GBP5,184K (2020: GBP39K, deficit). As at
the year end the Group were in a current net asset position of
GBP4,392K (31 December 2020 - net current liability position of
GBP66K) which is principally due to the Group's strong cash
reserves.
Environmental matters
The Board contains personnel with a good history of running
businesses that have been compliant with all relevant laws and
regulations and there have been no instances of non-compliance in
respect of environmental matters.
Employee information
At present, there are no female Directors in the Company. The
Company has an executive director and four Non-Executive Directors.
The Group are committed to gender equality and, if future roles are
identified, a wide-ranging search would be completed with the most
appropriate individual being appointed irrespective of gender.
Social/Community/Human rights matters
The Group ensures that employment practices take into account
the necessary diversity requirements and compliance with all
employment laws. The Board has experience in dealing with such
issues and have sufficient training and qualifications to ensure
they meet all requirements.
Anti-corruption and anti-bribery policy
The government of the United Kingdom has issued guidelines
setting out appropriate procedures for companies to follow to
ensure that they are compliant with the UK Bribery Act 2010. The
Company has conducted a review into its operational procedures to
consider the impact of the Bribery Act 2010 and the Board has
adopted an anti-corruption and anti-bribery policy.
Strategic Report (continued)
Principal risks and uncertainties
The Group operates in an uncertain environment and its business
is subject to a number of risk factors. The Directors consider the
following risk factors are of particular relevance to the
Group's
activities although it should be noted that this list is not
exhaustive and that other risk factors not presently known or
currently deemed immaterial may apply.
Risks/uncertainties to the G roup
Issue Risk/uncertainty Mitigation
------------------------------------ ------------------------------------
The G roup may There may be significant The growth prospects in
face significant competition faced by the the cannabis industry are
competition in Group. The G roup is currently widely regarded as very
its chosen industry focussed on the cannabis strong, which may help to
processing industry which reduce the effect of competition.
received considerable publicity By consulting with knowledgeable
in recent years. There experts in the industry,
is a risk that by the time carrying out thorough due
the product is brought diligence on potential targets
to market, there will be and extensive market research,
a large number of competitors. the Group may reduce this
A number of these competitors risk.
may possess greater technical,
financial and other resources
than the G roup .
------------------------------------ ------------------------------------
The Group relies The successful management The Group offers incentives
on the experience and operations of the Group to Directors through participation
and talent of are reliant upon the contributions in share offerings, which
its management of directors and advisors. makes them linked to the
and advisors In addition, the Group's long-term success of the
future success depends business.
in part on its ability
to continue to recruit,
motivate and retain highly
experienced and qualified
directors and consultants.
------------------------------------ ------------------------------------
The Group may The cannabis processing The Group monitors legislative
be subject to industry in which the Group and regulatory changes and
changes in regulation is focussed is controversial alters its business practices
affecting its and is highly regulated. where appropriate. In the
target industry Against a backdrop of overall event that the Group becomes
liberalisation, the industry subject to specific regulation
will likely continue to regarding its activities
be the subject of regulatory the Group will put in place
oversight. Compliance with such procedures as are necessary
various laws and regulations to ensure it complies with
may impose compliance costs such regulation.
and restrictions on the
Group, with fines and/or
sanctions for non-compliance.
------------------------------------ ------------------------------------
The Group may There is no guarantee that The directors have a reasonable
not be able to the Group will obtain adequate expectation that they will
raise future finance in the market in secure additional funding
funds to support the future. when required to continue
its activities as took place after the
before it becomes reporting period.
self-funding
------------------------------------ ------------------------------------
The Covid-19 The uncertainty and any With the core of the Group's
pandemic future restrictions resulting operations based in Europe
from the Covid-19 pandemic and Israel, the Group is
may disrupt the Group's vigilantly monitoring the
operations. situation and the health
of our staff. The Group
have implemented appropriate
policies to protect and
best manage the health of
our staff. The Group has
experienced minor disruptions
to parts of its raw materials
supply chain, which is being
managed on a daily basis
to mitigate any disruption
to manufacturing operations.
------------------------------------ ------------------------------------
Strategic Report (continued)
Composition of the board
A full analysis of the Board, its function, composition, and
policies, is included in the Governance Report.
Capital structure
The Company's capital consists of ordinary shares which rank
pari passu in all respects and which are traded on the Standard
segment of the Main Market of the London Stock Exchange. There are
no restrictions on the transfer of securities in the Company or
restrictions on voting rights and none of the Company's shares are
owned or controlled by employee share schemes. There are no
arrangements in place between shareholders that are known to the
Company that may restrict voting rights, restrict the transfer of
securities, result in the appointment or replacement of Directors,
amend the Company's Articles of Association or restrict the powers
of the Company's Directors, including in relation to the issuing or
buying back by the Company of its shares or any significant
agreements to which the Company is a party that take effect after
or terminate upon, a change of control of the Company following a
takeover bid or arrangements between the Company and its Directors
or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or
otherwise) that may occur because of a takeover bid.
Approved by the Board on 1 June 2022, and signed on its behalf
by:
David Tsur
Chairman, Non - Executive Director
Governance Report
Introduction
The Company recognises the importance of, and is committed to,
high standards of Corporate Governance. The Company is not formally
required to comply with a corporate governance code; however, the
Company has voluntarily applied the QCA Corporate Governance Code
published in April 2018 (the QCA Code). As meeting the QCA code is
not required, the Company did not fully comply with the any
corporate governance code during the year, however, post year-end
it has adopted the QCA code and will seek to meet its 10
principles.
Compliance with the QCA Code
The QCA Code , as published by the Quoted Companies Alliance, is
tailored for small and mid-size quoted companies in the UK. The QCA
Code (through its ten principles) is designed to be the means
through which companies can earn and maintain the confidence of
shareholders and other stakeholders as they develop and mature. We
note the following important principles included in the QCA
Code:
The 10 principles of the QCA Code:
1 Establish a strategy and business model which promotes
long-term value for shareholders
2 Seek to understand and meet shareholder needs and expectations
----------------------------------------------------------------
3 Take into account wider stakeholder and social responsibilities
and their implications for long-term success
----------------------------------------------------------------
4 Embed effective risk management, considering both opportunities
and threats, throughout the organisation
----------------------------------------------------------------
5 Maintain the board as a well-functioning, balanced team
led by the chair
----------------------------------------------------------------
6 Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
----------------------------------------------------------------
7 Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
----------------------------------------------------------------
8 Promote a corporate culture that is based on ethical values
and behaviours
----------------------------------------------------------------
9 Maintain governance structures and processes that are fit
for purpose and support good decision-making by the board
----------------------------------------------------------------
10 Communicate how the company is governed and is performing
by maintaining a dialogue with shareholders and other relevant
stakeholders
----------------------------------------------------------------
Set out below are the Company's corporate governance practices
for the year ended 31 December 2021.
Governance Report (continued)
Leadership
The Company is headed by an effective board of directors (the
Board) which is collectively responsible for the long-term success
of the Group.
The role of the Board - The Board sets the Group's strategy;
ensuring that the necessary resources are in place to achieve the
agreed strategic priorities, and reviews management and financial
performance. It is accountable to shareholders for the creation and
delivery of strong, sustainable financial performance and long-term
shareholder value. To achieve this, the Board directs and monitors
the Group's affairs within a framework of controls which enable
risk to be assessed and managed effectively. The Board also has
responsibility for setting the Group's core values and standards of
business conduct and for ensuring that these, together with the
Group's obligations to its stakeholders, are widely understood
throughout the Group. The Board has a formal schedule of matters
reserved which is provided later in this report.
Board Meetings - The core activities of the Board are carried
out in scheduled meetings of the Board. These meetings are timed to
link to key events in the Company's corporate calendar and regular
reviews of the business are conducted. Additional meetings and
conference calls are arranged to consider matters which require
decisions outside the scheduled meetings. During the year, the
Board met on 13 occasions. Outside the scheduled meetings of the
Board, the Directors maintain frequent contact with each other to
discuss any issues of concern they may have relating to the Company
or their areas of responsibility, and to keep them fully briefed on
the Company's operations. Where Directors have concerns which
cannot be resolved about the running of the company, or a proposed
action, they will ensure that their concerns are recorded in the
Board minutes.
Matters reserved specifically for Board - The Board has a formal
schedule of matters reserved that can only be decided by the Board.
The key matters reserved are the consideration and approval of:
-- Strategy and management including potential investment opportunities.
-- Financial reporting and controls (to include oversight of the
appointment of and communications with the Auditors and the overall
audit process).
-- Board membership and other appointments.
-- Internal financial and operating controls.
-- Ensuring compliance with the Listing Rules.
-- Communication.
-- Remuneration policy.
-- Delegation and overall supervision of all delegated authorities.
-- Corporate governance matters.
-- Appointment of third-party advisers/service providers.
Certain other matters are delegated to the Board Committees,
namely the Audit, Nomination and Remuneration Committees.
Governance Report (continued)
Leadership (continued)
Summary of the Board's work in the year - During the year, the
Board considered all relevant matters within its remit, but focused
in particular on the establishment of the Company and the
identification of suitable investment opportunities for the Company
to pursue, the associated due diligence work as required and the
decisions thereon.
Attendance at meetings:
Member Position Meetings attended
------------------ ------------------------ ------------------
David Tsur Chairman, Non-Executive 13 out of 13
Director
Avihu Tamir CEO, Executive Director 13 out of 13
Andrew Morrison Non-Executive Director 13 out of 13
(*)
Uziel Danino Non-Executive Director 10 out of 13
Daniel Poulter Non-Executive Director 7 out of 7
Howard Rubenstein Company Secretary 12 out of 13
------------------ ------------------------ ------------------
(*) In addition to the Company's 13 board meetings that were
held during 2021, Andrew Morrison attended 3 board meetings of
Spinnaker Opportunities Plc prior to the Company's admission on 16
February 2021.
The Board is pleased with the high level of attendance and
participation of Directors at Board and Committee meetings.
Attendance at Committee meetings is detailed in the respective
Committee reports.
Directors appointed by the Board are subject to election by
shareholders at the Annual General Meeting of the Company following
their appointment and thereafter are subject to re-election in
accordance with the Company's articles of association.
The terms and conditions of appointment of Non-Executive
Directors will be made available upon written request.
Remuneration Committee
The Company has established a Remuneration Committee to assist
the Board in determining its responsibilities in relation to
remuneration, including making recommendations to the Board on the
policy on remuneration.
The report of the Remuneration Committee is included in this
Annual Report. Formal terms of reference for the Remuneration
Committee have been documented and are made available for review at
the AGM.
The members of the Remuneration Committee in the reporting year
were Mr. Uziel Danino and Mr. Andrew Morrison. After the reporting
period Mr. Uziel Danino resigned from his position and was replaced
by Mr. Gil Efron.
Governance Report (continued)
Audit Committee
The Audit Committee meets with the auditors at least twice a
year and more frequently if required.
Terms of reference of the Audit Committee will be made available
upon written request.
The Audit Committee report is included on page 33.
The members of the Audit Committee in the reporting year were
Mr. Uziel Danino and Mr. Andrew Morrison. After the reporting
period Mr. Uziel Danino resigned from his position and was replaced
by Mr. Gil Efron.
Nominations Committee
The Nomination Committee meets as required to fulfil its duties
of reviewing the Board structure and composition and identifying
and nominating candidates to fill Board vacancies as they
arise.
Terms of reference of the Nominations Committee will be made
available upon written request.
The Nominations Committee report is included on page 35.
The members of the Nominations Committee in the reporting period
were David Tsur, Avihu Tamir and Andrew Morrison.
Other governance matters - All of the Directors are aware that
independent professional advice is available to each Director in
order to properly discharge their duties as a Director. In
addition, each Director and Board committee has access to the
advice of the Company Secretary.
The Company Secretary - The Company Secretary is Howard
Rubenstein who is responsible for the Board complying with UK
procedures.
Effectiveness
For the period under review the Board comprised of a chairman,
one Director and four Non-Executive Directors. Biographical details
of the Board members are set out on page 9 of this report.
The Directors are of the view that the Board and its committees
consist of Directors with an appropriate balance of skills,
experience, independence and diverse backgrounds to enable them to
discharge their duties and responsibilities effectively.
Independence - The non-executive Directors bring a broad range
of business and commercial experience to the Company. The Board
considers all the non-executive Directors to be independent in
character and judgement. Despite the shares, options and warrants
held by these Directors, they are not involved in the day-to-day
operations of the Group and the executive directors deem them to be
independent .
Commitments - All Directors have disclosed any significant other
commitments to the Board and confirmed that they have sufficient
time to discharge their duties.
Governance Report (continued)
Effectiveness (continued)
Induction - All new Directors received an informal induction as
soon as practical on joining the Board. No formal induction process
exists for new Directors, given the size of the Company, but the
Chairman ensures that each individual is given a tailored
introduction to the Company and fully understands the requirements
of the role.
Conflict of interest - A Director has a duty to avoid a
situation in which he or she has, or can have, a direct or indirect
interest that conflicts, or possibly may conflict with the
interests of the Company. The Board had satisfied itself that there
is no compromise to the independence of those Directors who have
appointments on the Boards of, or relationships with, companies
outside the Company. The Board requires Directors to declare all
appointments and other situations which could result in a possible
conflict of interest.
Board performance and evaluation - The Chairman will carry out
periodic formal appraisals of the performance of the other
Directors which takes into account the objectives set in the
previous year and the individual's performance in the fulfilment of
these objectives.
Although the Board consisted of five male Directors, the Board
supports diversity in the Boardroom and the Financial Reporting
Council's aims to encourage such diversity. Aside from the
Directors, there are no employees in the Company. The following
table sets out a breakdown by gender at 31 December 2021:
Male Female
---------- ----- -------
Directors 5 -
---------- ----- -------
The Board will pursue an equal opportunity policy and seek to
employ those persons most suitable to delivering value for the
Company.
Codes and Terms of Reference
The Company has adopted the following documents:
-- Audit Committee Terms of Reference
-- Remuneration Committee Terms of Reference;
-- Nomination Committee Terms of Reference;
-- Share Dealing Code; and
-- Code of Ethics.
Governance Report (continued)
Accountability-
The Board is committed to providing shareholders with a clear
assessment of the Group's position and prospects. This is achieved
through this report and as required other periodic financial and
trading statements. The Board has made appropriate arrangements for
the application of risk management and internal control principles.
The Board has delegated to the Audit Committee oversight of the
relationship with the Group 's auditors as outlined in the Audit
Committee report on page 33.
Going concern - The preparation of the financial statements
requires an assessment of the validity of the going concern
assumption.
In making their assessment of going concern, the Directors have
reviewed forecasts for the group, for a period of at least 12
months from the date of approval of these financial statements. The
Directors recognise the modest committed cost base of the group
relative to its current working capital. As a result the Directors
consider that the Group has sufficient funds for the required
timeframe and as such they consider it appropriate to adopt the
going concern basis in the preparation of the financial
statements.
Internal controls - The Board of Directors reviews the
effectiveness of the Group's system of internal controls. The
internal control system is designed to manage the risk of failure
to achieve its business objectives. This covers internal financial
and operational controls, compliance and risk management. The Group
had necessary procedures in place for the year under review and up
to the date of approval of the Annual Report and financial
statements. The Directors acknowledge their responsibility for the
Group's system of internal controls and for reviewing its
effectiveness. The Board confirms the need for an ongoing process
for identification, evaluation and management of significant risks
faced by the Group. The Directors carried out a risk assessment
before signing up to any material commitments.
The Directors are responsible for taking such steps as are
reasonably available to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
At the present, due to the size of the Group, there is no
internal audit function. The requirement for internal audit will be
considered as the Group grows.
Shareholder relations
Communication and dialogue - Open and transparent communication
with shareholders is given high priority and there is regular
dialogue with institutional investors, as well as general
presentations made at the time of the release of the annual and
interim results. All Directors are kept aware of changes in major
shareholders in the Company and are available to meet with
shareholders who have specific interests or concerns. The Company
issues its results promptly to individual shareholders and also
publishes them on the Company's website. Regular updates to record
news in relation to the Company and the status of its exploration
and development programs is included on the Company's website.
Shareholders and other interested parties can subscribe to receive
these news updates by email by registering online on the website
free of charge.
Governance Report (continued)
Shareholder relations (continued)
The Directors are available to meet with institutional
shareholders who wish to discuss any issues and gain an
understanding of the Company's business, its strategies and
governance.
Annual General Meeting - At every AGM, individual shareholders
are given the opportunity to put questions to the Chairman and to
other members of the Board that may be present. Notice of the AGM
is sent to shareholders at least 21 working days before the
meeting. Details of proxy votes for and against each resolution,
together with the votes withheld are announced to the London Stock
Exchange and are published on the Company's website as soon as
practical after the meeting.
Approved by the Board on 1 June 2022, and signed on its behalf
by:
David Tsur
Chairman, Non - Executive Director
Remuneration Committee Report
The Remuneration Committee presents its report for the year
ended 31 December 2021.
Membership of the remuneration committee
During the reporting period the Remuneration Committee is
comprised of two Non-Executive Directors Mr. Andrew Morrison
(Chair) and Mr. Uziel Danino. After the reporting period Mr. Uziel
Danino resigned from his position and was replaced by Mr. Gil
Efron.
During 2021 the Remuneration Committee met on 1 occasion.
Subject to what appears below, no other third parties have
provided advice that materially assisted the Remuneration Committee
during the year.
The items included in this report are unaudited unless otherwise
stated.
Remuneration committee's main responsibilities
-- The Remuneration Committee considers the remuneration policy,
employment terms and remuneration of the Board and advisors;
-- The Remuneration Committee's role is advisory in nature and
it makes recommendations to the Board on the overall remuneration
packages;
-- The Remuneration Committee, when considering the remuneration
packages of the Company's Board, will review the policies of
comparable companies in the industry.
Report approval
A resolution to approve this report will be proposed at the AGM
of the Company. The vote will have advisory status, will be in
respect of the remuneration policy and overall remuneration
packages and will not be specific to individual levels of
remuneration.
Remuneration policy
During the year ended 31 December 2021, the Company adopted a
compensation policy as regards executive directors which included
variable and non-variable elements together with long term
incentives.
On 16 February 2021, the Company entered a service contract with
its Chief Executive, Avihu Tamir on terms as set out in the
prospectus published on 29 January 2021.
There was no vote taken during the last general meeting with
regard to the Directors' remuneration policy.
Remuneration Committee Report (continued)
Non-executive directors
The Company policy is that the Non-Executive Directors are
expected to attend scheduled board meetings and attend committee
meetings as required. The Company issued fresh letters of
appointment to its Non-Executive Directors, effective 16 February
2021 on terms as set out in the prospectus published on 29 January
2021.
Other employees
During the year ended 31 December 2021, there were no employees
in the Company other than the Directors, so this policy only
applies to the Board.
Terms of appointment
The services of the Directors during the year ended 31 December
2021 were provided in accordance with their appointment letters.
Directors were expected to devote such time as was necessary for
the proper performance of their duties, but as a minimum they were
expected to commit at least one day per month, which should include
attendance at all meetings of the Board and any sub-committees of
the Board.
Number of years
Director Year of appointment completed
------------------- --------------------- ----------------
Andrew Morrison 2016 6
David Tsur 2021 1
Avihu Tamir 2021 1
Daniel Poulter 2021 1
Gil Efron(a) 2022 -
Uziel Danino (b) 2021 1
Anthony Harpur (c) 2017 2
Alan Hume (c) 2018 3
(a) Appointed after the reporting period.
(b) Resigned after the reporting period.
(c) Resigned during the reporting period.
Directors' emoluments and compensation (audited)
Details of the directors' remuneration during the year ended 31
December 2021 are as follows:
Annual
bonus Pension
Salary Taxable and long-term related
Name of Director and fees benefits benefits benefits Other Total
GBP GBP GBP GBP GBP GBP
--------------------- ---------- ---------- --------------- ---------- ------ --------
Andrew Morrison
( a), (e) 20,831 - 62,500 - - 83,331
David Tsur 17,293 - - - - 17,293
Avihu Tamir 93,698 - 40,000 15,847 - 149,545
Daniel Poulter 10,923 - - - - 10,923
Gil Efron (c) - - - - - -
Uziel Danino (d) 17,293 - - - - 17,293
Anthony Harpur (b),
(e) - - - - - -
Alan Hume (e) - - 50,000 - - 50,000
Remuneration Committee Report (continued)
Directors' emoluments and compensation (audited) (continued)
(a) An additional amount of GBP37,500 was paid to Spinnaker
Management Resources Ltd, which is a company owned and controlled
by Mr. Andrew Morrison.
(b) An amount of GBP30,000 which was granted as a bonus for
completion of the RTO, was paid to Peacock DDC Trading Ltd, which
is a company owned and controlled by Mr. Anthony Harpur.
(c) Appointed on 21 March 2022.
(d) Resigned from his position on 21 March 2022.
(e) The bonuses granted were for completion of the RTO.
Details of the directors' remuneration during the year ended 31
December 2020 are as follows:
Annual bonus Pension
Salary Taxable and long-term related
Name of Director and fees benefits benefits benefits Other Total
GBP GBP GBP GBP GBP GBP
----------------- ---------- ---------- --------------- ----------- ------ ------
Andrew Morrison - - - - - -
Anthony Harpur - - - - - -
Alan Hume - - - - - -
Pension contributions (audited)
The Company does not currently have any pension plans for its
non-executive Directors and does not pay pension amounts in
relation to their remuneration.
The Company has not paid out any excess retirement benefits to
non-executive Directors or past non-executive Directors.
Payments to past directors (audited)
As part of the RTO the Company paid an aggregate GBP80,000 in
success bonuses to its directors prior to RTO (out of the total
bonus pool of GBP200,000).
Payments for loss of office (audited)
No payments were made for loss of office during the year.
UK Remuneration percentage changes
As the remuneration for the preceding financial year is nil for
all Directors, no percentage changes for remuneration have been set
out in this report.
Remuneration Committee Report (continued)
UK 10-year performance graph
The Directors have considered the requirement for a UK 10-year
performance graph comparing the Company's Total Shareholder Return
with that of a comparable indicator. The Directors do not currently
consider that including the graph will be meaningful because the
Company has only been listed since 2017, is not paying dividends,
is currently incurring losses as it gains scale and its focus
during the year ended 31 December 2021 was to seek an acquisition.
In addition, and as mentioned above, the remuneration of Directors
was not linked to performance, and we therefore do not consider the
inclusion of this graph to be useful to shareholders at the current
time. The Directors will review the inclusion of this table for
future reports.
UK 10-year CEO table and UK percentage change table
The Directors have considered the requirement for a UK 10-year
CEO table. The Directors do not currently consider that including
these tables would be meaningful given that the Directors were
remunerated for their services however it is not material to be
presented under the table. The Directors will review the inclusion
of this table for future reports.
Relative importance of spend on pay
The Directors have considered the requirement to present
information on the relative importance of spend on pay compared to
shareholder dividends paid. Given that the Company does not
currently pay dividends we have not considered it necessary to
include such information.
UK Directors' shares (audited)
The interests of the Directors who served during the year in the
share capital of the Company at 31 December 2021 and at the date of
this report has been set out in the Directors' Report on page
11.
Approved by the Board on 1 June 2022, and signed on its behalf
by:
Andrew Morrison
Chairman of the Remuneration Committee
Audit Committee Report
After the completion of the reverse takeover, the company
appointed Mr. Uziel Danino (Chair) and Andrew Morrison as members
of the Audit Committee.
After the reporting period Mr. Danino resigned from his position
as a director in the Company and was replaced by Mr. Gil Efron. Mr.
Efron was appointed as a member of the Audit Committee (Chair).
Main responsibilities
The Audit Committee acts as a preparatory body for discharging
the Board's responsibilities in a wide range of financial matters
by:
-- monitoring the integrity of the financial statements and
formal announcements relating to the Company's financial
performance;
-- reviewing significant financial reporting issues, accounting
policies and disclosures in financial reports, which are considered
to be in accordance with the key audit matters identified by the
external auditors;
-- overseeing that an effective system of internal control and
risk management systems are maintained;
-- ensuring that an effective whistleblowing, anti-fraud and bribery procedures are in place;
-- overseeing the Board's relationship with the external auditor
and, where appropriate, the selection of new external auditors;
-- monitoring the statutory audit of the annual financial
statements, in particular, its performance, taking into account any
findings and conclusions by the competent authority;
-- approving non-audit services provided by the external
auditor, or any other accounting firm, ensuring the independence
and objectivity of the external auditors is safeguarded when
appointing them to conduct non-audit services; and
-- ensuring compliance with legal requirements, accounting
standards and the Listing Rules and the Disclosure and Transparency
Rules.
Governance
The Code requires that at least one member of the Audit
Committee has recent and relevant financial experience. The audit
members have vast experience working with a wide variety of
companies. As a result, the Board is satisfied that the Audit
Committee has recent and relevant financial experience.
Members of the Audit Committee are appointed by the Board and
whilst shareholders, the Company believes they are independent in
both character and judgement.
Due to an ethical breach, PKF Littlejohn LLP, the Company's
external auditor, will be required to resign as auditors following
the approval of this annual report. Once new external auditors have
been appointed, the Audit Committee will monitor the level of audit
and non-audit services they provide to the Company.
Audit Committee Report (continued)
Meetings
In the year to 31 December 2021 the Audit Committee has met with
the auditors on 3 occasions.
The key work undertaken by the Audit Committee is as
follows:
-- interview of external auditors and recommendation to the Board
-- review of audit planning and update on relevant accounting developments;
-- consideration and approval of the risk management framework,
appropriateness of key performance indicators;
-- consideration and review of full-year results;
-- review of the effectiveness of the Audit Committee;
-- review of internal controls; and
-- consider whether an internal audit function is required and
confirmed not considered necessary given the present size of the
Company.
The Code states that the Audit Committee should have primary
responsibility for making a recommendation on the appointment,
reappointment or removal of the external auditor.
External auditor
The Group's external auditor is PKF Littlejohn LLP. The external
auditor has unrestricted access to the Audit Committee Chairman.
Despite the ethical breach as described in the Auditors' Report,
the Committee is satisfied that auditor objectivity and
independence is maintained. The external auditors report to the
Audit Committee annually on their independence from the Group. Due
to the aforementioned ethical breach, the external auditor will be
required to resign and thus the Audit Committee shall seek to
appoint a new external auditor in the foreseeable future
Approved by the Board on 1 June 2022, and signed on its behalf
by:
Gil Efron
Chairman of the Audit Committee
Nomination Committee Report
The Nomination committee is comprised of Andrew Morrison
(Chair), David Tsur and Avihu Tamir.
The committee considers potential candidates for appointment to
the Company's Board who maintain the highest standards of corporate
governance and have sufficient time to commit to the role.
Nomination committee evaluation
The nomination committee evaluates the composition, skills, and
diversity of the Board and its committees and identifies a
requirement for a Board appointment.
Identify suitable candidates
The nomination committee undertakes a review of each candidate
and their experience in accordance with the Company's 'director's
profile' and suitable candidates are identified.
For the appointment of a Chairman, the Nomination Committee will
prepare a job specification, including an assessment of the time
commitment expected, recognising the need for availability in the
event of crises.
Nomination committee recommendation
Following interviews with a candidate conducted by the Chairman,
and other members of the Board, the nomination committee makes a
recommendation on a preferred candidate to the Board.
Due diligence
After a candidate has been recommended to the Board by the
nomination committee, the company secretary undertakes appropriate
background checks on a candidate. The Board of directors meets any
candidate recommended by the nomination committee and the candidate
is given an opportunity to make a presentation to the Board prior
to deciding on their appointment.
Board appointment
The Board formally approves a candidate's appointment to the
Board.
Approach to diversity
The nomination committee believes in the benefits of diversity,
including the need for diversity in order to effectively represent
shareholders' interests. This diversity is not restricted to gender
but also includes geographic location, nationality, skills, age,
educational and professional background. The Board's policy remains
that selection should be based on the best person for the role.
Approved by the Board on 1 June 2022, and signed on its behalf
by:
Andrew Morrison
Chairman of the Nomination Committee
Independent Auditors' Report to the Members of Kanabo Group
Plc
Opinion
We have audited the financial statements of Kanabo Group Plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2021 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 31
December 2021 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 group
and parent 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 public
interest 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' 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 reviewing cashflow forecasts covering the next
12 months, considering the levels of discretionary and
non-discretionary expenditure forecasted, challenging and
conducting sensitivity analysis using the key inputs and
assumptions underpinning said forecasts, ascertaining the group's
current cash position and reviewing the group's performance since
the year end. Whilst the Group made a significant loss in the year
and has forecasted significant growth in revenues over the going
concern period, the Group has significant cash reserves and a
significant proportion of the costs forecasted are discretionary
therefore if forecasted growth targets are not met, discretionary
costs could be reduced accordingly.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's or parent company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
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
For the purposes of determining whether the financial statements
are free from material misstatement, 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 appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial
statements as a whole.
Materiality for the group financial statements as a whole was
set as GBP175,000 . This was calculated based upon 5% of loss
before tax due to the group having incurred significant expenditure
in the year and this expenditure, being an indicator as to how much
revenue may have to increase in order for the group to reach
profitability. Performance materiality and the triviality threshold
for the consolidated financial statements was set at GBP122,500 and
GBP8,750 respectively due to the assessed risk and our accumulated
knowledge of the Company.
Materiality for the parent company financial statements as a
whole was set as GBP170,000 (2020: GBP33,000). This was calculated
based upon 5% of net assets (2020: 5% of net asset) but capped so
as not to exceed group materiality, as required by ISA (UK) 600.
Net assets was considered to be an appropriate basis due to the
fact that the parent company is a holding company that holds a
significant value of assets and the carrying value of these assets,
and any impairment or fair value decreases recognised in respect of
these assets in the year, provides an indicator of the value to be
generated by the parent company from said assets. Since 5% of the
Company's net assets far exceeds group materiality, it was deemed
appropriate to set materiality for the parent company at GBP5,000
less than group materiality. Performance materiality and the
triviality threshold for the parent company was set at GBP119,000
(2020: GBP19,600) and GBP8,500 (2020: GBP1,400) respectively due to
the assessed risk and our accumulated knowledge of the Company.
We also agreed to report to those charged with governance any
other audit misstatements below the triviality thresholds
established above which we believe warranted reporting on
qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature,
timing, and extent of our audit procedures.
In designing our audit, we considered areas involving
significant accounting estimates and judgements by the directors as
well as future events that are inherently uncertain. These included
the recoverable value of the parent company's investment in its
subsidiary and the amounts due to the parent company by its
subsidiary, the financial asset held at fair value through other
comprehensive income and the recoverable value of the loans
advanced to the acquisition target. We also addressed the risk of
management override of internal controls, including among other
matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
We performed an audit of the financial information of the
group's two components in order to obtain the assurance required
for the group audit opinion. Both of the components were assessed
as being significant due to their results for the year, the value
of their assets, liabilities and capital and reserves as at 31
December 2021 and the assessed risks in respect of their results
for the year and their assets, liabilities and capital and
reserves.
Of the two reporting components of the group, one is located in
both of the United Kingdom and Israel. PKF Littlejohn LLP audited
the ultimate parent company, situated in the United Kingdom, and
its subsidiary, situated in Israel. The Engagement Partner
conducted audit work in the United Kingdom but interacted regularly
with the Management team in Israel during all stages of the audit
and was responsible for the scope and direction of the audit
process. This, in conjunction with additional procedures performed,
gave us appropriate evidence for our opinion on the group financial
statements.
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.
Key Audit Matter How our scope addressed this
matter
Carrying value of the investment
in subsidiary and intercompany
receivables
========================================================================
Following the reverse takeover We performed the following procedures
acquisition in February 2021 to address this identified risk:
(see the second Key Audit Matter
below for further details), * Obtained management's recoverable value assessment in
the carrying value of the parent respect of both the investment in the subsidiary and
company's investment in subsidiary the balances due from the subsidiary including all
as at 31 December 2021 was GBP17,951k the supporting workings.
(see note 12) and the balance
due from the subsidiary (intercompany
receivable) was GBP834k (see * Reviewed the assessment, ascertained and challenged
note 18). the method, data and key assumptions applied by
management
As the subsidiary has historically
been loss making and also made
a loss for the year ended 31 * Reviewed the post year-end performance, financial
December 2021 of GBP4,035k, position, projected cashflows and other sources of
there is a risk that the investment data to assess whether there were any indicators that
and the intragroup receivable the recoverable values were less than their carrying
may not be fully recoverable value; and
and are thus materially overstated.
Refer to Note 2f of the financial * Agreed the intercompany balance due from the
statements for the disclosure subsidiary to the corresponding creditor balance in
of significant accounting judgements, the subsidiary's trial balance.
estimates assumptions in respect
of the recoverability of the
investment in the subsidiary Through the performance of the
and the amounts due from the aforementioned procedures, it
loan to the subsidiary. was ascertained that Management
believe the investment in the
subsidiary and the balance due
from the subsidiary as at the
year-end are fully recoverable
due to the positive developments
made and milestones met during
the year and post year-end and
the forecasts prepared. From
our review and challenge of
this assessment and supporting
information, this assessment
was found to be appropriate
and thus assurance has been
gained that the investment in
subsidiary and balances due
from the subsidiary are not
materially misstated.
========================================================================
Reverse takeover treatment
and disclosure
========================================================================
We performed the following procedures
On 16 February 2021, the parent to address this identified risk:
company acquired the entire
share capital of Kanabo Research * Obtained the agreements in respect of the transaction
Ltd via a share for share exchange. to ascertain the key terms of the transaction;
Due to the complexity of the
accounting for reverse takeovers
, and the material value of * Reviewed the accounting treatment and accounting
that acquisition, there was entries of the reverse transaction in the group
a significant risk that the financial statements against the requirements of the
acquisition may not have been financial reporting framework;
accounted for correctly or disclosed
appropriately within the financial
statements. * Reviewed and challenged the key assumptions, data and
Refer to Note 2f and 8 of the method applied in management's fair value assessment;
financial statements for details
on the acquisition, including
key terms, and the accounting * Ensured disclosures in the financial statements were
treatment applied. in accordance with the financial reporting framework;
and
* Confirmed that any consideration in respect of
milestones had been accounted for appropriately.
Through the performance of the
aforementioned procedures, we
found that that the RTO was
correctly assessed as falling
outside of the scope of IFRS
3. It was also found that the
acquisition was accounted for
in accordance with IFRS 2 with
a share based payment charge
being recognised equal to the
difference between the deemed
cost of the investment and the
net assets of Kanabo Group Plc
at the time of acquisition and
a reverse acquisition merger
being recognised.
========================================================================
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 group and parent company 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.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with 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 group and
the parent company and their 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 by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements and the part of the
directors' remuneration report to be audited 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
group and parent company 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 group and parent company financial statements,
the directors are responsible for assessing the group's and the
parent 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 group or the parent 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 group and parent company
and the sector in which they operate 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 and our cumulative audit knowledge and experience of the
sector.
-- We determined the principal laws and regulations currently
relevant to the group and parent company in this regard to be those
arising from UK Company Law, rules applicable to issuers on the LSE
Standard List Main Market, including the FCA Listing Rules and the
Disclosure Guidance and Transparency Rules.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to:
o Discussions with management regarding compliance with laws and
regulations by the parent company and the component;
o Review of board minutes; and
o Review of regulatory news announcements made throughout and
post year-end.
-- 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 for evidence of bias; and evaluating the
business rationale of any significant transactions that are unusual
or outside the normal course of business.
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.
Other matters which we are required to address
We were appointed by the audit committee on 26 June 2019 to
audit the financial statements for the period ending 31 December
2018 and subsequent financial periods. Our total uninterrupted
period of engagement is 4 years, covering the periods ending 31
December 2018 to 31 December 2021.
During the period subject to audit, a non-audit service
prohibited by the FRC's Ethical Standard was inadvertently provided
by the Firm to the parent company. This involved the provision of
due diligence services in respect of a transaction that did not
require a reporting accountant report under the Prospectus Rules by
the Firm's transaction services department. This non-permitted
service was provided without the knowledge or approval of the
Firm's central ethics function. As the consultation required by the
Firm's policies and procedures did not take place in respect of
this service, this was assessed as an inadvertent breach. In
reviewing the nature of this inadvertent breach, specifically that
it involved amounts that would not be subject to review or
consideration in the current year's audit of these financial
statements, no judgements were made in providing the service and
that it was provided by a team separate from the audit engagement
team, we concluded that this did not affect our professional
judgement or our audit report. We obtained confirmation from those
charged with governance that they agreed with our assessment and
were in agreement that we could continue to act as auditor. In
reporting the inadvertent provision of this prohibited non-audit
service to those charged with governance, we determined that our
independence had not been compromised and that we could continue to
carry out the audit of the group and parent company for the year
ended 31 December 2021.
Our audit opinion is consistent with the additional report to
the audit committee.
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.
Joseph Archer (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 31 December
2021 2020
Note GBP'000 GBP'000
----- ------------- -------------
Continuing operations
Revenue from sales of goods 3 73 60
Cost of sales 66 26
Gross profit 7 34
Research and development 4 242 149
Sales and marketing 5 569 59
General and administration 6 2,000 389
Net impairment losses on financial
assets 16 598 -
------------- -------------
Operating loss (3,402) (563)
Reverse acquisition expenses 8 1,172 -
Finance (income)/expense (23) 28
------------- -------------
Loss before taxation (4,551) (591)
Taxation 9 - -
Loss for the year (4,551) (591)
Other comprehensive income for
the year
Foreign exchange translation (loss)/gains (82) 11
Total items that may be reclassified
to profit or loss (82) 11
------------- -------------
Total comprehensive loss for
the year attributable to the equity
owners (4,633) (580)
============= =============
Earnings (basic and diluted)
per share from continuing operations
attributable to the equity owners
Basic and diluted loss per share
(pence per share) 10 (1.40) (0.26)
============= =============
The notes to the financial statements form an integral part of
these financial statements.
Consolidated Statement of Financial Position
As at As at
31 December 2021 31 December 2020
Note GBP'000 GBP'000
----- ------------------ ------------------
Assets
Non-current assets
Property, plant, and equipment 11 42 13
Long term deposit - 14
Financial asset held at
fair value through other
comprehensive income 13 750 -
792 27
------------------ ------------------
Current assets
Cash and cash equivalents 14 4,477 380
Short-term deposit 20 5
Inventories 15 63 27
Short term loan 16 - -
Trade and other receivables 17 247 33
------------------ ------------------
4,807 445
------------------ ------------------
Total assets 5,599 472
================== ==================
Equity and Liabilities
Equity attributable to
shareholders
Share capital 19 9,249 -
Share premium 20 14,400 2,098
Share based payments reserve 21 758 805
Share to be issued reserve 8 2,500 -
Reverse acquisition reserve 8 (14,968) -
Foreign currency reserve (7) 75
Retained deficit (6,748) (3,017)
Total equity 5,184 (39)
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 22 228 53
Employee and related payables 23 187 34
Borrowings - 424
415 511
------------------ ------------------
Total equity and liabilities 5,599 472
================== ==================
The notes to the financial statements form an integral part of
these financial statements .
This report was approved by the board and authorised for issue
on 1 June 2022 and signed on its behalf by:
...........................
David Tsur
Chairman of board of directors
Parent Company Statement of Financial Position
As at As at
31 December 2021 31 December 2020
Note GBP'000 GBP'000
----- ------------------ ------------------
Assets
Non-current assets
Property, plant, and equipment 11 21 -
Investments in subsidiary 12 17,951 -
Financial asset held at
fair value through other
comprehensive income 13 750 -
18,722 -
------------------ ------------------
Current assets
Cash and cash equivalents 14 4,148 359
Intercompany receivables 18 834 -
Inventories 15 63 -
Short term loan 16 - -
Trade and other receivables 17 220 433
------------------ ------------------
5,265 792
------------------ ------------------
Total assets 23,987 792
================== ==================
Equity and liabilities
Equity attributable to
shareholders
Share capital 19 9,249 735
Share premium 20 14,400 592
Shares to be issued reserve 8 2,500 -
Share based payments reserve 21 750 33
Convertible loan notes - 162
Retained deficit (3,085) (784)
Total equity 23,814 738
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 22 173 54
173 54
------------------ ------------------
Total equity and liabilities 23,987 792
================== ==================
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 from presenting the Parent Company
statement of comprehensive income. The Parent Company loss for the
period was GBP2,309K (2020: loss of GBP131K)
The financial statements of Kanabo Group Plc, company number
10485105, were approved by the Board of Directors and authorised
for issue on 1 June 2022. They were signed on its behalf by:
...........................
David Tsur
Chairman of board of directors
The notes to the financial statements form an integral part of
these financial statements.
Consolidated Statement of Changes in Equity
Share to
Share based be issued Reverse Foreign Retained
Share Share payments reserve acquisition exchange deficit
capital(a) premium(b) reserve(c) (d) reserve (e) reserve (f) Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Balance as at 1
January
2020 - 1,831 800 - - 64 (2,506) 189
Total
comprehensive
loss
for the year - - - - - 11 (591) (580)
Exercise of
options - - (80) - - - 80 -
Exercise of
warrants - 267 - - - - - 267
Share base payment - - 85 - - - - 85
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Total transactions
with
owners,
recognised in
equity - 267 5 - - 11 (511) (228)
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Balance as at 31
December
2020 - 2,098 805 - - 75 (3,017) (39)
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Total
comprehensive
loss 4,551)
for the year - - - - - (82) ) (4,633)
Transfer to
reverse
acquisition
reserve - (2,098) - 2,098 - - -
Exercise of
options 4 - (820) - - - 820 4
Recognition of plc
equity
at acquisition
date 735 592 - - 434 - - 1,761
Issue of shares
for acquisition
of subsidiary 5,769 9,231 - - (15,000) - - -
Shares issued 2,600 4,775 - - - - - 7,375
Shares to be
issued - - - 2,500 (2,500) - - -
Exercise of
warrants 126 411 - - - - - 537
Issue of shares in
settlement
of fees 15 25 - - - - - 40
Cost of share
issue - (634) - - - - (634)
Issue of warrants - - 113 - - - 113
Share based
payment - - 660 - - - 660
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Total transactions
with
owners,
recognised in
equity 9,249 12,302 (47) 2,500 (14,968) (82) 3,731 5,223
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
Balance as of 31
December
2021 9,249 14,400 758 2,500 (14,968) (7) (6,748) 5,184
------------------ ----------- ----------- ----------- ---------- ------------ --------- -------- ------------
(a) Share capital - the ordinary issued share capital of the Company .
(b) Share premium - consideration less nominal value of issued
shares and costs directly attributable to the issue of new
shares.
(c) Share based payments - the value of equity settled
share-based payments provided to employees, including key
management personnel, and third parties for services provided.
(d) Shares to be issued - shares to be issued comprises of
obligations at the year-end which are to be settled by a fixed
number of shares for a fixed consideration.
(e) Reverse acquisition reserve - see note 8.
(f) Retained deficit - Cumulative net gains and losses
recognised in the Consolidated Statement of Comprehensive
Income
The notes to the financial statements form an integral part of
these financial statements .
Parent Company Statement of Changes in Equity
Share based Convertible Shares to Retained
Share Share payments loan notes be issued deficit
capital(a) premium(b) reserve(c) reserve(d) reserve (e) (f) Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Balance as of 1
January
2020 735 592 59 - - (712) 674
Total
comprehensive
loss for the
year - - - - - (131) (131)
Shares options
issued - - 33 - - - 33
Lapsed share
options - - (59) - - 59 -
Loan notes
issued - - - 165 - - 165
Loan note issue
costs - - - (3) - - (3)
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Total
transactions
with owners,
recognised
in equity - - (26) 162 - (72) 64
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Balance as at
31
December 2020 735 592 33 162 - (784) 738
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Total
comprehensive
loss for the
year - - - - - (2,309) (2,309)
Issue of share
for
convertible
loan 83 79 - (162) - - -
Issue of shares
for
acquisition of
subsidiary 5,769 9,231 - - - - 15,000
Issue of shares
for
cash 2,455 4,634 - - - - 7,089
Shares options
issued 53 49 (8) - - 8 102
Consideration
shares
to be issued - - - - 2,500 - 2,500
Exercise of
warrants 139 424 (33) - - - 530
Cost of share
issue - (634) - - - - (634)
Issue of shares
in
settlement of
fees 15 25 - - - - 40
Issue of
warrants - - 113 - - - 113
Share based
payment - - 645 - - - 645
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Total
transactions
with owners,
recognised
in equity 8,514 13,808 717 (162) 2,500 (2,301) 23,076
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
Balance as at
31
December 2021 9,249 14,400 750 - 2,500 (3,085) 23,814
--------------- ----------- ----------- ----------- ----------- ----------- -------- ------------
(a) Share capital - the ordinary issued share capital of the Company .
(b) Share premium - consideration less nominal value of issued
shares and costs directly attributable to the issue of new
shares.
(c) Share based payments - the value of equity settled
share-based payments provided to employees, including key
management personnel, and third parties for services provide.
Retained deficit represents the cumulative retained losses of the
Company at the reporting date.
(d) The convertible loan note reserve - consists of the fair
value of convertible loan notes issued and outstanding which meet
the definition of equity as per IAS 32.
(e) Shares to be issued - shares to be issued comprises of
obligations at the year-end which are to be settled by a fixed
number of shares for a fixed consideration.
(f) Retained deficit - Cumulative net gains and losses
recognised in the Statement of Comprehensive Income.
The notes to the financial statements form an integral part of
these financial statements.
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2021 2020
Note GBP'000 GBP'000
----- ------------- -------------
Cash flow from operating activities
Loss before taxation (4,551) (591)
Adjustments for:
Reverse acquisition share-based payment
expense 8 1,172 -
Net impairment losses on financial
assets 16 598 -
Share-based payment expense 658 85
Depreciation 21 7 5
Finance income, net 15 18
Loss from sale of property, plant,
and equipment 11 - 1
Net cash used in operating activities (2,101) (482)
------------- -------------
Working capital changes:
Change in trade receivable and other
accounts receivable (204) (16)
Change in inventories (35) 9
Change in trade payable and other accounts
payable 119 (17)
Change in employee and related payables 143 (28)
Net cash used in operating activities (2,078) (534)
------------- -------------
Cash flows from investing activities
Purchase of property, plant, and equipment 11 (35) -
Investment in financial asset held
at fair value through other comprehensive
income 13 (750) -
Cash acquired on acquisition 8 358 -
Investment in short term deposits (2) (5)
Short term loan 16 (582) -
Net cash used in investing activities (1,011) (5)
------------- -------------
Cash flows from financing activities
Receipts on short term loan - 300
Share Issue net of issuing cost 19 6,606 -
Exercise of warrants 21 529 268
Exercise of options 21 102 -
Net cash generated from financing
activities 7,239 568
------------- -------------
Net increase in cash and cash equivalents 4,150 29
Cash and cash equivalents at 1 January 380 333
Net foreign exchange difference (53) 18
Cash and cash equivalents at 31 December 14 4,477 380
------------- -------------
Major non-cash transactions:
On 16 February 2021 the Company issued of 230,769,210 shares of
GBP0.025 each at a price of GBP0.065 per share to the shareholders
of Kanabo Research Ltd as part of the RTO acquisition for the total
value of GBP15,000K.
The Company also issued 615,384 shares of GBP0.025 each at a
price of GBP0.065 for the total value of GBP40K for the settlement
of services rendered to the Company.
On 30 December 2021 the Company agreed to issue up to 38,461,492
shares of GBP0.025 each at a price of GBP0.065 per share to the
shareholders of Kanabo Research Ltd for the achievement of the
Company milestones according to the RTO agreement for the total
value of GBP2,500K. As of 31 December 2021, these contingent
consideration shares had not been issued.
The notes to the financial statements form an integral part of
these financial statements.
Parent Company Statement of Cash Flows
Year ended Year ended
31 December 31 December
2021 2020
Note GBP'000 GBP'000
----- ------------- -------------
Cash flow from operating activities
Loss before taxation (2,309) (131)
Adjustments for:
Net impairment losses on financial
assets 16 598 -
Share-based payment expense 193 33
Depreciation 21 2 -
Finance income, net (57) -
Net cash used in operating activities (1,573) (98)
------------- -------------
Working capital changes:
Change in trade receivable and other
accounts receivable (210) (20)
Change in inventories (63) -
Change in Intercompany receivable (368) -
Change in trade payable and other accounts
payable 119 18
Net cash used in operating activities (2,095) (100)
------------- -------------
Cash flows from investing activities
Purchase of property, plant, and equipment 11 (23) -
Investment in financial asset held
at fair value through other comprehensive
income 13 (750) -
Short term loan 16 (582) (300)
Net cash used in investing activities (1,355) (300)
------------- -------------
Cash flows from financing activities
Proceeds from issue of convertible
loan notes - 162
Share Issue net of issuing cost 8 6,608 -
Exercise of warrants 21 529 -
Exercise of options 21 102 -
Net cash generated from financing
activities 7,239 162
------------- -------------
Net increase/(decrease) in cash and
cash equivalents 3,789 (238)
Cash and cash equivalents at 1 January 359 597
Cash and cash equivalents at 31 December 14 4,148 359
------------- -------------
Major non-cash transactions
On 16 February 2021 the Company issued of 230,769,210 shares of
GBP0.025 each at a price of GBP0.065 per share to the shareholders
of Kanabo Research Ltd as part of the RTO acquisition for the total
value if GBP15,000K.
The Company also issued 615,384 shares of GBP0.025 each at a
price of GBP0.065 for the total value of GBP40K for the settlement
of services rendered to the Company.
On 30 December 2021 the Company agreed to issue up to 38,461,492
shares of GBP0.025 each at a price of GBP0.065 per share to the
shareholders of Kanabo Research Ltd for the achievement of the
Company milestones according to the RTO agreement for the total
value of GBP2,500K. As of 31 December 2021, these contingent
consideration shares had not been issued.
The notes to the financial statements form an integral part of
these financial statements.
Notes to the Financial Statements
1. General Information
Kanabo Group Plc's (the "Company") and its subsidiaries'
(together, "the Group") principal activities are the distribution
and development of medical cannabis products and non-THC CBD
products.
The Group has its research centre in Israel.
The Company is incorporated and domiciled in England and Wales
as a public limited company and operates from its registered office
at Churchill House 137-139 Brent Street London NW4 4DJ and is
listed on the London Stock Exchange in the standard segment.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
a) Basis of Preparation
The financial statements of Kanabo Group Plc have been prepared
in accordance with UK-adopted international accounting
standards.
The financial statements have been prepared under the historical
cost convention, unless stated otherwise.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts in the
financial statements. The areas involving a higher degree of
judgment or complexity, or areas where assumptions or estimates are
significant to the financial statements.
b) Consolidation and Acquisitions
The financial statements consolidate the financial information
of the Group and companies controlled by the Group (its
subsidiaries) at each reporting date. Control is achieved where the
Company has the power to govern the financial and operating
policies of an investee entity, has the rights to variable returns
from its involvement with the investee and has the ability to use
its power to affect its returns. The results of subsidiaries
acquired or sold are included in the financial information from the
effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are made to
the results of acquired subsidiaries to bring their accounting
policies into line with those used by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies.
2. Summary of Significant Accounting Policies (continued)
b) Consolidation and Acquisitions (continued)
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Please refer to note 8 for information on the consolidation of
Kanabo Group Plc and the application of the reverse acquisition
accounting principles.
The Group applies the acquisition method to account for business
combinations that fall within the scope of IFRS 3. For commentary
on how the acquisition of Kanabo Research Ltd, which falls outside
the scope of IFRS 3, was accounted for, see below note 8 .
The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The group recognises any non-controlling interest
in the acquire on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised either in profit
or loss or as a change to other comprehensive income. Contingent
consideration that is classified as equity is not re-measured, and
its subsequent settlement is accounted for within equity.
On 16 February 2021, the Company acquired Kanabo Research Ltd
via a reverse takeover which resulted in the Company becoming the
ultimate holding company of the Group. The transaction was
accounted for as a reverse acquisition since it did not meet the
definition of a business combination under IFRS 3. In accordance
with IFRS 2, a share-based payment expense equal to the deemed cost
of the acquisition less the fair value of the net assets of the
Company at acquisition was recognised. The comparatives within the
consolidated statement of financial position, the consolidated
statement of comprehensive income, consolidated statement of
changes in equity and the consolidated cashflow statement represent
that of the legal subsidiary and accounting acquirer, Kanabo
Research Ltd. In the consolidated statement of financial position,
the share capital and premium as at 31 December 2021 is that of
Kanabo Group Plc with the reverse acquisition reserve representing
the difference between the deemed cost of the acquisition and the
net assets of Kanabo Group Plc as at 31 December 2020. The
consolidated statement of comprehensive income for 2021 represents
the results of both Kanabo Group Plc and Kanabo Research Ltd. For
more details on the key terms of the reverse takeover and a
breakdown of what the reverse acquisition reserve as at 31 December
2021 comprises of, see note 8.
2. Summary of Significant Accounting Policies (continued)
c) New Standards and Interpretations
i) New and amended standards adopted by the Group and Company
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1
January 2021 have had a material impact on the Group and
Company.
ii) New standards, amendments and Interpretations in issue but
not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are issued, but not yet
effective as at the date of issuance of the financial statements
are listed below.
Effective
Standard Impact on initial application date
IAS 1 Amendments - Presentation and Classification TBC
of Liabilities as Current or Non-current
IAS 16 Amendments - Property, Plant and 1 January
Equipment 2022
IAS 37 Provisions, Contingent Liabilities 1 January
and Contingent Assets 2022
IAS 8 Amendments - Definition of Accounting 1 January
Estimates 2023
IAS 1 Amendments - Disclosure of Accounting 1 January
Policies 2023
IFRS 3 Amendments - Business Combinations 1 January
- Conceptual Framework 2022
The Group and Company intends to adopt these standards, if
applicable, when they become effective. The Directors are
evaluating the impact of the new and amended standards above. The
Directors believe that these new and amended standards are not
expected to have a material impact on the financial statements of
the Group and Company.
d) Going Concern
The preparation of the financial statements requires an
assessment on the validity of the going concern assumption.
As at 31 December 2021, the Group's cash position was GBP4,477K
and it was in a strong net current asset position. Based on the
above, the Group's current cash reserves and detailed cash
forecasts produced , the Directors are confident that the Group
will be able to meet its obligations as they fall due over the
course of the next 12 months. Whilst the Group may seek to raise
further funds in the next 12 months, the Directors are confident
that the Group would be able to meet their obligations as they fall
due in the event of no further funding being obtained due to the
low level of committed expenditure relative to the forecasted
discretionary expenditure, which could be reduced or deferred.
2. Summary of Significant Accounting Policies (continued)
d) Going Concern (continued)
The Directors also acknowledge that the COVID-19 pandemic has
had, and will likely continue to have, adverse impacts on the
global economy and capital markets. However, the Directors are
confident that the Group will continue to remain a going concern
and they do not believe the Group is dependent on raising further
funds to remain a going concern.
e) Foreign Currency Translation
i) Functional and Presentation Currency
The consolidated financial statements are presented in Pounds
Sterling (GBP000), which is also the Company's functional and
presentation currency.
ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement.
(iii) Foreign operations
The assets and liabilities of foreign operations, including
goodwill and the fair value adjustments arising on acquisition, are
translated to GBP at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to GBP at
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income and accumulated in the translation reserve
except to the extent that the translation difference is allocated
to non-controlling interests. When a foreign operation is disposed
of in its entirety or partially such that control, significant
influence or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation is
reclassified to profit or loss as part of the gain or loss on
disposal. If the Group disposes of part of its interest in a
subsidiary but retains control, then the relevant proportion of the
cumulative amount is reattributed to non-controlling interests.
When the Group disposes of only part of an associate or joint
venture while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
2. Summary of Significant Accounting Policies (continued)
f) Significant Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements in conformity with
International Financial Reporting Standards requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
accounting policies.
Estimates and judgements are continually evaluated, and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Group consider the significant
accounting judgements, estimates and assumptions used within the
financial statements to be:
Recoverability of the investment in subsidiary (note 12)
At at 31 December 2021 the carrying value of the Company's
investment in Kanabo Research Ltd was GBP17,951K. The recoverable
value of this investment is not considered to be less than it is
carrying value as at 31 December 2021 and therefore no impairment
has been have recognised. The Directors have made this assessment
through reviewing forecasts, other available financial information
available and developments during the year and since the year-end.
The key inputs within the forecast include revenue growth, gross
profit margins and overheads.
Recoverability of amounts due from the subsidiary (note 18)
By 31 December 2021 the parent Company had advanced GBP400K as a
loan to Kanabo Research Ltd and GBP368K as an ongoing operational
balance. The Directors expect this balance to be fully recoverable
and have thus not recognised any IFRS 9 expected credit loss
charges. They made this assessment through reviewing forecasts,
other financial information available and developments during the
year and since the year-end.
Recoverability of amounts due from Materia (note 16)
By 31 December 2021 the Group had advanced CAD 1,000K (GBP582K)
to Materia Ventures ("Materia), a company incorporated in
Canada.
When assessing whether the loan receivable and accrued interest
is recoverable or not, the Directors identified a number of
impairment indicators. Whilst, no repayments of the loan are due,
or yet to have been received and whilst through communications with
Materia the Directors understand Materia is willing to repay the
balance, there is not sufficient evidence to demonstrate that it is
probable that Materia has the ability to make full repayment of the
balance. The Directors have therefore taken a prudent view and
decided to fully impair the loan, however, the Company and Materia
will continue to discuss their future collaboration and a strategic
partnership through which the Company hope to recover the loan
balance.
2. Summary of Significant Accounting Policies (continued)
f) Significant Accounting Judgements, Estimates and Assumptions (continued)
Share Based Payments (note 21)
During 2021, 16,408,102 share options, and 19,051,774 warrants
were granted by the Company. When accounting for the share-based
payment expense in respect of those share options granted,
Management must calculate the fair value of the share options
issued. Management have done so using the Black-Scholes model.
However, several of the inputs into this model, including the
risk-free rate, the dividend yield, the expected life of the
instrument where it is not a defined period and the volatility, are
subjective and thus management has made estimates in respect of
these inputs.
Financial assets at fair value through other comprehensive
income (note 13)
During 2021 shares were purchased from a private company
incorporated in the UK called Kanabi Ltd. The shares purchased did
not give the Company a controlling stake nor did it allow the
Company to have a significant influence on the operating activities
of the company. Additionally, an agreement was entered into with
Kanabi Ltd that ensured that in the event of the successful
completion of a reverse takeover of a listed company by Hellenic
Dynamics S.A, a subsidiary of Kanabi Ltd, the Company would receive
shares in the listed company. The number of shares to be received
by the Company would be GBP750K divided by the IPO share price less
a 30% discount.
Under IFRS 9 this asset has been classified as a financial asset
at fair value with any gains or losses going through other
comprehensive income. As a result, the Directors are required to
assess the fair value of the asset on acquisition and at the
year-end.
Through discussions with management of the investee and the
Company's corporate advisors, who are assisting with the proposed
transaction, they are confident that the proposed transaction will
take place. To take a prudent view and account for the fact that
whilst probable, the transaction has not yet taken place, the
Directors have not recognised a gain equal to the discounted price
they will receive and therefore the fair value of the financial
asset as at 31 December 2021 remained at GBP750K.
Reverse takeover accounting (note 8)
When considering how the acquisition of Kanabo Research Ltd via
a reverse takeover should be accounted for, the Directors have been
required to make a judgment on whether the acquisition falls within
the scope of IFRS 3 or not. The directors assessed the accounting
acquiree, Kanabo Group Plc, at the time of acquisition to not be a
business as defined by IFRS 3. As a result, the acquisition was
assessed as falling outside the scope of IFRS 3. See note 2b for
commentary on how the reverse takeover was accounted for.
2. Summary of Significant Accounting Policies (continued)
g) Financial Assets
Classification
The Group classifies its financial assets in the following
categories: at amortised cost (including trade receivables and
other financial assets at amortised cost) fair value through other
comprehensive income or fair value through profit or loss. The
classification depends on the financial asset's contractual cash
flow characteristics and the business model for managing them.
Management determines the classification of its financial assets at
initial recognition.
Financial assets at amortised cost
(i) Classification of financial assets at amortised cost
The Company classifies its financial assets as at amortised cost
only if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect the contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payments of principal and interest
Financial assets at amortised cost are initially measured at
fair value and subsequently measured using the effective interest
rate method less impairment.
(ii) Impairment and risk exposure
All of the financial assets at amortised cost are denominated in
Pounds Sterling. As a result, there is no exposure to foreign
currency risk. There is also no exposure to price risk.
For the Directors' justification for there being no expected
credit loss charge required in respect of the loan due from Materia
and the amounts due from the subsidiary, see note 16 .
There is no definition of default at present. This will be
reassessed as and when repayments are due in respect of financial
assets at amortised cost held.
2. Summary of Significant Accounting Policies (continued)
h) Financial Liabilities
Trade and other Payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade and other payables are recognised initially at fair value,
and subsequently measured at amortised cost using the effective
interest method.
i) Convertible Loan Notes
Convertible loan notes are classified as either equity,
financial liabilities or a mixture of both in accordance with the
contractual agreement.
Where a convertible loan note is deemed to meet the definition
of equity as per IAS 32, the proceeds receive less any associated
issue costs are recognised directly within equity and is not
subsequently remeasured.
j) Taxation
Current Tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and the tax laws used to
compute the amount are those that are enacted or substantively
enacted by the statement of financial position date.
2. Summary of Significant Accounting Policies (continued)
j) Taxation (continued)
Deferred Tax
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of
the transaction, affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investment in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled, and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the statement of
financial position date.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity. Otherwise
income tax is recognised in the statement of comprehensive
income.
k) Segmental Reporting
Although the Group comprises of two entities in two different
jurisdictions, the directors and senior management appraise the
performance of the Group as a whole rather than on a company level.
They view the group's activities as that of a Cannabinoid research
and sales Group and this is the only operating/reportable
segment.
As such, the financial information of the single segment is the
same as that set out in the consolidated statement of comprehensive
income and the consolidated statement of financial position.
2. Summary of Significant Accounting Policies (continued)
l) Share-Based Payments
The Company has applied the requirements of IFRS 2 Share-based
payments.
The Company issues equity settled share-based payments to the
directors and to third parties for the provision of services.
Equity settled share-based payments are measured at fair value at
the date of grant, or the date of the service provided. The fair
value determined at the grant date or service date of the equity
settled share-based payment is recognised as an expense or
recognised against share premium where the service received relates
to assistance in raising equity, with a corresponding credit to the
share base payment reserve. The fair value determined at the grant
date of equity is expensed on a straight-line basis over the life
of the vesting period, based on the company's estimate of shares
that will eventually vest. Once an option vests, no further
adjustment is made to the aggregate expensed.
The fair value is measured by use of the Black-Scholes model as
the Directors view this as providing the most reliable measure of
valuation. The expected life used in the model has been adjusted,
based on management's best estimates, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The market
price used in the model is the issue price of Company shares at
the last placement of shares immediately preceding the calculation
date. The fair value calculated is inherently subjective and
uncertain due to the assumptions made and the limitations of the
calculation used.
m) Financial Risk Management Objectives and Policies
The Company does not enter into any forward exchange rate
contracts.
The main financial risks arising from the Company's activities
are market risk, interest rate risk, foreign exchange risk, credit
risk, liquidity risk and capital risk management. Further details
on the risk disclosures can be found in note 24.
n) Equity
Equity instruments issued by the Company are recorded at the
value of net proceeds after direct issue costs.
o) Shares to be issued
Obligations which are to be settled via the issue of the
Company's shares at the year-end which meet the definition of
equity per IAS 32 are classified as shares to be issue within
equity and are held at fair value.
2. Summary of Significant Accounting Policies (continued)
p) Cash and Cash Equivalents
Cash and cash equivalents comprise cash held in bank. This
definition is also used for the Statement of Cash Flows.
The Company considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk. The Company
only keeps its holdings of cash and cash equivalents with
institutions which have a minimum credit rating of 'A-'.
The Company considers that it is not exposed to major
concentrations of credit risk.
q) Investments in Subsidiaries
Investments in Group undertakings are stated at cost, which is
the fair value of the consideration paid, less any impairment
provision.
r) Property, Plant, and Equipment
Property, plant, and equipment are measured at cost, including
directly attributable costs, less accumulated depreciation,
accumulated impairment losses and any related investment grants and
excluding day-to-day servicing expenses. Cost includes spare parts
and auxiliary equipment that are used in connection with plant and
equipment.
A part of an item of property, plant and equipment with a cost
that is significant in relation to the total cost of the item is
depreciated separately using the component method.
The cost of an item of property, plant and equipment comprises
the initial estimate of the costs of dismantling and removing the
item and restoring the site on which the item is located.
Depreciation is calculated on a straight-line basis over the
useful life of the assets at annual rates as follows:
%
-------
Leasehold improvements 15%
Equipment and furnishing 15%
Computers and electronic equipment 15%-33%
2. Summary of Significant Accounting Policies (continued)
s) Inventory
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories comprises costs of purchase and
costs incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated
selling price in the ordinary course of business less estimated
costs of completion and estimated costs necessary to make the sale.
The Company periodically evaluates the condition and age of
inventories and makes provisions for slow moving inventories
accordingly.
Cost of inventories is determined as follows:
-- Raw materials - at cost of purchase using the "first-in, first-out" method.
-- Finished goods - on the basis of average costs including
materials, labour and other direct and indirect manufacturing costs
based on normal capacity.
-- Purchased merchandise and products - using the weighted
average cost method or using the "first-in, first-out" method.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
t) Revenue Recognition
Revenue from contracts with customers is recognised when the
control over the goods is transferred to the customer. The
transaction price is the amount of the consideration that is
expected to be received based on the contract terms, excluding
amounts collected on behalf of third parties (such as taxes).
In determining the amount of revenue from contracts with
customers, the Company evaluates whether it is a principal or an
agent in the arrangement. The Company is a principal when the
Company controls the promised goods or services before transferring
them to the customer. In these circumstances, the Company
recognises revenue for the gross amount of the consideration. When
the Company is an agent, it recognises revenue for the net amount
of the consideration, after deducting the amount due to the
principal.
Revenue from the sale of goods:
Revenue from the sale of goods is recognised when significant
risks and rewards of ownership of the goods have transferred to the
buyer, the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the transaction
will flow to the Company and the costs incurred or to be incurred
in respect of the transaction can be measured reliably. Revenue is
measured at the fair value of the consideration received or
receivable, net of returns, trade discounts and volume rebates.
Revenue from selling agreements is recognised when the revenue
recognition criteria have been met and only to the extent the
consideration is not contingent upon other deliverables in the
agreements
2. Summary of Significant Accounting Policies (continued)
u) Research and Development Expenses
Research expenses are recognised as an expense. The costs
incurred during the development projects are recognised as
intangible assets if the following occurs:
- The product or process is technically and commercially feasible
- The company intends to and has sufficient resources to
complete development and to use or sell the asset.
- The product or process is ready for use or sale.
- Future economic benefits are likely.
- Development costs can be measured reliably.
- The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable to
preparing the asset for its intended use, as well as capitalised
borrowing costs.
- Capitalised development expenditure can be measured fairly.
v) Fair Value Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Fair value measurement is based on the assumption that the
transaction will take place in the asset's or the liability's
principal market, or in the absence of a principal market, in the
most advantageous market.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
Fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
2. Summary of Significant Accounting Policies (continued)
v) Fair Value Measurement (continued)
All assets and liabilities measured at fair value or for which
fair value is disclosed are categorized into levels within the fair
value hierarchy based on the lowest level input that is significant
to the entire fair value measurement:
Level 1 - quoted prices (unadjusted) in active markets
for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within
Level 1 that are observable directly or indirectly.
Level 3 - inputs that are not based on observable market
data (valuation techniques which use inputs
that are not based on observable market data).
w) Provisions
A provision in accordance with IAS 37 is recognised when the
Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Company expects part or all of the expense to
be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense is recognised in
the statement of profit or loss net of any reimbursement.
3. Revenues
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------ ------------
Revenue from sales of products 73 60
73 60
------------ ------------
During 2021 and 2020 the revenues were generated only from the
sale of products and were made to customers in the United Kingdom.
All revenues were recognised at a point in time.
4. Research and Development Expenses
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------ ------------
S Salaries and related expenses 163 73
A Share-based payment expense 6 21
Lab expenses 45 44
Professional services 26 6
Other 2 5
242 149
------------ ------------
The Group did not capitalise any research and development
expenses incurred during 2021 and 2020 as Management have taken the
prudent view that it is not yet probable that the technology and
products upon which the research and development expenditure
related to will bring in future economic benefits to the Group.
5. Sales and Marketing Expenses
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------ ------------
S Salaries and related expenses 151 19
A Share-based payment expense 211 (8)
Subcontractors 14 4
Marketing expenses 141 44
Professional services 31 -
Business development 16 -
Other 5 -
569 59
------------ ------------
6. General and Administration Expenses
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------ ------------
S Salaries and related expenses 676 139
A Share-based payment expense 436 72
Insurance 100 8
Professional services 599 71
Rent and related expenses 52 33
Depreciation 5 5
Licenses 12 2
Travel and accommodation 54 11
Business development - 25
Patent 13 16
Other 53 7
2,000 389
------------ ------------
7. Auditors' Remuneration
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------ ------------
Fees payable to the Company's auditor
for:
* The audit of parent company and consolidated
financial statements 43 27
* Due diligence services in respect of acquisition
targets 15 -
* Interim review of the Group for the six-month period
ended 30 June 2021 in accordance with ISRE 2410 15 -
8. Reverse Acquisition
On 16 February 2021, Kanabo Group Plc ("Company") formerly known
as Spinnaker Opportunities Plc, acquired through a share for share
exchange the entire share capital of Kanabo Research Ltd, whose
principal activity is the provision of THC-Free retail CBD products
and Vaporization devices.
Although the transaction resulted in Kanabo Research Ltd
becoming a wholly owned subsidiary of the Company, the transaction
constituted a reverse acquisition, as the previous shareholders of
Kanabo Research Ltd own a substantial majority of the Ordinary
Shares of the Company and the executive management of Kanabo
Research Ltd became the executive management of Kanabo Group
Plc.
In substance, the shareholders of Kanabo Research Ltd acquired a
controlling interest in the Company and the transaction has
therefore been accounted for as a reverse acquisition. As the
Company's activities prior to the acquisition were purely the
maintenance of the LSE Listing, acquiring Kanabo Research Ltd and
raising equity finance to provide the required funding for the
operation of the acquisition, it did not meet the definition of a
business in accordance with IFRS 3.
Accordingly, this reverse acquisition does not constitute a
business combination and was accounted for in accordance with IFRS
2 "Share-based Payments" and associated IFRIC guidance. Although,
the reverse acquisition is not a business combination, the Company
has become a legal parent and is required to apply IFRS 10 and
prepare consolidated financial statements. The Directors have
prepared these financial statements using the reverse acquisition
methodology, but with the result that rather than recognising
goodwill, the difference between the equity value given up by
Kanabo Research Ltd's shareholders and the share of the fair value
of net assets gained by these shareholders, is charged to the
consolidated statement of comprehensive income as a share-based
payment on reverse acquisition and represents in substance the cost
of acquiring an LSE listing.
On 16 February 2021, the Company issued 230,769,231 ordinary
shares to acquire the 237,261 ordinary shares of Kanabo Research
Ltd. Based on a share price of GBP0.065 (the price at which those
shares issued as part of the placing that day were issued at), the
Company's investment in Kanabo Research Ltd is valued at GBP15,000K
prior to the consideration of contingent consideration and share
based payments charges for the year recognised in the subsidiary -
see note 12 for further commentary regarding this component of the
carrying value of the investment in the subsidiary as at 31
December 2021.
On 16 November 2021, the Company achieved two of its deferred
consideration share milestones under the terms of the share
purchase agreement. The achievement entitles the sellers to
38,461,492 deferred consideration shares with a total value of
GBP2,500K which increases the total investment to GBP17,500K. The
Company had not issued the shares as at 31 December 2021 and as
this obligation met the 'fixed for fixed' rule under IAS 32, the
contingent consideration has been included in the "shares to
issued" reserve within equity.
Because the legal subsidiary, Kanabo Research Ltd, was treated
on consolidation as the accounting acquirer and the legal Parent
Company, Kanabo Group Plc, was treated as the accounting
subsidiary, the fair value of the shares deemed to have been issued
by Kanabo Research Ltd was calculated at GBP1,911K based on an
assessment of the purchase consideration for a 100% holding of
Kanabo Group Plc.
8. Reverse Acquisition (continued)
According to the IFRS 2 the value of the share-based payment is
calculated as the difference between the deemed cost and the fair
value of the net assets as at the acquisition date. During the
period between 1 January 2021 to 16 February 2021 several
shareholders exercised their warrants. The exercised warrants
indicated that in the event the RTO acquisition would not be
completed the funds would be returned to the shareholders. For that
reason, it was decided that it would be more appropriate to use the
Company's value of the net assets as of 1 January 2021.
GBP
----------
Deemed cost 1,911,007
Trade and other receivables 433,781
Cash and cash equivalents 358,726
Trade and other payables (53,631)
----------
738,876
----------
RTO expenses 1,172,131
----------
The difference between the deemed cost (GBP1,911K) and the fair
value of the net assets assumed per above of GBP738,876 resulted in
GBP1,172,131 being expensed within "reverse acquisition expenses"
in accordance with IFRS 2, Share Based Payments, reflecting the
economic cost to Kanabo Research Ltd's shareholders of acquiring a
quoted entity.
The reverse acquisition reserve which arose from the reverse
takeover is made up as follows:
GBP
Pre-acquisition equity (a) (738,876)
Kanabo Research Ltd share capital at acquisition
(b) 2,098,889
Investment in Kanabo Research Ltd (c) (17,500,000)
Reverse acquisition expense (d) 1,172,131
(14,967,856)
-------------
(a) Recognition of pre-acquisition equity of Kanabo Group Plc as at 1 January 2021.
(b) Kanabo Research Ltd had issued share capital of 2,098,889.
As these financial statements present the capital structure of the
legal parent entity, the equity of Kanabo Research Ltd is
eliminated.
(c) The value of the shares issued by the Company in exchange
for the entire share capital of Kanabo Research Ltd The above entry
is required to eliminate the balance sheet impact of this
transaction.
(d) The shares to be issued to the vendors upon the meeting of
two of the agreed milestones had not been issued as at 31 December
2021. Since the obligation in question is to be settled by the
Company through an issue of a fixed number of shares for a fixed
consideration, this obligation has been treated as an equity
instrument and has been included within equity under the "shares to
be issued reserve".
9. Income Tax
Analysis of charge in the year
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
-------------- ---------------
Current tax - -
Deferred tax - -
Total tax - -
-------------- ---------------
Accounting profit before tax
from continuing operations (4,551) (591)
Analysis of charge in the year:
Tax using the company's domestic
tax rate 19% (2020: 19%) (865) (112)
Non-deductible expenses 331 47
Current year losses for which
no deferred tax asset is recognised 534 64
Total tax - -
-------------- -----------
The Group has accumulated tax losses of approximately GBP6,472K
(2020: GBP3,691K) that are available, under current legislation, to
be carried forward indefinitely against future profits.
A deferred tax asset has not been recognised in respect of these
losses due to the uncertainty of future profits. The amount of the
deferred tax asset not recognised is approximately GBP1,377K (2020:
GBP849K).
10. Earnings per Share
The basic earnings per share is calculated by dividing the
(loss)/profit attributable to the ordinary shareholders of the
Company by the weighted average number of Ordinary shares in issue
during the period, excluding Ordinary shares purchased by the
Company and held as treasury shares.
2021 2020
GBP'000 GBP'000
------------ ------------
Loss for the year from continuing operations (4,551) (591)
Weighted average number of shares in
issue 324,287,000 230,984,943
------------ ------------
Basic and diluted earnings per share
(pence per share) (1.40) (0.26)
------------ ------------
There is no difference between the basic and diluted earnings
per share as a loss has been made in the year.
11. Property, Plant, and Equipment
Group :
Computers Equipment
and and
Electronic Leasehold
equipment Furnishing improvement Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- ------------- --------
Cost
At 1 January 2020 13 16 - 29
Additions - - - -
Disposals ( 1 ) - - (1)
Exchange differences - 1 - 1
----------- ----------- ------------- --------
At 31 December
2020 12 17 - 29
Additions 13 21 1 35
Exchange differences 1 1 - 2
----------- ----------- ------------- --------
At 31 December
2021 26 39 1 66
----------- ----------- ------------- --------
Accumulated depreciation
At 1 January 2020 7 4 - 11
Additions 2 3 - 5
Disposals (1) - - (1)
Exchange differences 1 - - 1
----------- ----------- ------------- --------
At 31 December
2020 9 7 - 16
----------- ----------- ------------- --------
Additions 3 4 - 7
Exchange differences 1 - - 1
----------- ----------- ------------- --------
At 31 December
2021 13 11 - 24
----------- ----------- ------------- --------
Net book value
At 31 December 2020 3 10 - 13
=========== =========== ============= ========
At 31 December 2021 13 28 1 42
=========== =========== ============= ========
11. Property, Plant, and Equipment (continued)
Company :
Computers
and
Electronic
equipment Total
GBP'000 GBP'000
----------- --------
Cost
At 1 January 2020 - -
Additions - -
Disposals - -
At 31 December 2020 - -
Additions 23 23
At 31 December 2021 23 23
----------- --------
Accumulated depreciation
At 1 January 2020 - -
Additions - -
At 31 December 2020 - -
Additions 2 2
----------- --------
At 31 December 2021 2 2
----------- --------
Net book value
At 31 December 2020 - -
----------- --------
At 31 December 2021 21 21
=========== ========
12. Investment in subsidiary
GBP'000
--------
Cost
At 1 January 2020 -
Additions -
Disposals -
At 31 December 2020 -
Additions 17,951
At 31 December 2021 17,951
--------
On 16 February 2021, the Company acquired Kanabo Research Ltd,
an Israeli-based private company operating the CBD industry, via a
share-for-share exchange. The carrying value of investment
comprises of GBP17,500k in respect of share consideration, of which
GBP2,500k remains unissued as at 31 December 2021, at GBP451k in
respect of share based payment charges recognised in the subsidiary
during the year. As there is no agreement in place for Kanabo
Research Ltd to reimburse the Company for share options issued to
and exercised by employees of Kanabo Research Ltd, the share-based
payment charged recognised in the subsidiary in the year is
recognised as a capital contribution in the subsidiary and thus an
investment in the Company.
No impairments have been recognised in the year as the Directors
do not believe the recoverable value of the investment to be below
it is carrying value. See note 2.f for further commentary on how
the Directors made this estimate.
The Company owns 100% of the share capital of Kanabo Research
Ltd and the subsidiary's registered address is Habarzel 21 st,
Tel-Aviv, Israel.
13. Financial Asset Held at Fair Value through other
Comprehensive Income - non-current assets (Group and Company)
On 24 May 2021, the Company entered into an agreement to receive
shares in Hellenic Dynamics S.A ("HD") following a reverse takeover
by HD of a listed company. HD is a company incorporated in Greece
and is a medical cannabis cultivator which is in the process of
securing admission to the London Stock Exchange through a Reverse
Take Over ("RTO").
As part of the agreement, for consideration of GBP750K the
Company has acquired 5,000 shares in HD's parent company, Samos
Investments Ltd, and will be entitled to receive shares in HD as
part of HD's proposed listing on the London Stock Exchange. The
number of HD shares that will be issued to the Company shall be
calculated as GBP750K divided by the RTO valuation share price less
a 30% discount.
As of the date of approving the financial statements, the RTO
has not yet been completed. See note 2.f. for commentary on the
Directors' assessment of the fair value of this financial asset as
at the year-end.
14. Cash and Cash Equivalents
Group Company
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Cash at bank 4,477 380 4,148 359
------------- ------------- ------------- -------------
4,477 380 4,148 359
------------- ------------- ------------- -------------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
15. Inventory
Group Company
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Raw materials 17 5 17 -
Finished goods 49 22 49 -
------------- ------------- ------------- -------------
66 27 66 -
------------- ------------- ------------- -------------
Provision for
slow moving and
obsolete inventory (3) - (3) -
------------- ------------- ------------- -------------
63 27 63 -
------------- ------------- ------------- -------------
During 2021, GBP3K was recognised as an expense for provision of
slow moving and obsolete inventory.
16. Short Term Loan
Group Company
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
L oan 583 - 583 -
A ccumulated
interest 15 - 15 -
------------- ------------- ------------- -------------
598 - 598 -
------------- ------------- ------------- -------------
Provision for
impairment loss
on financial
asset (598) - (598)
------------- ------------- ------------- -------------
- - - -
------------- ------------- ------------- -------------
16. Short Term Loan (continued)
On 25 July 2021 the Company signed a head of agreement with
11157353 Canada Corp. a company incorporated in Canada
("Materia").
As part of the agreement the Company agreed to extend Materia a
GBP1.7 million (CAD 3 million) credit facility which was to be
drawn down in tranches based upon agreed uses.
Under the agreement, amounts loaned are due for repayment twelve
months after the drawdown date. No repayments were received in the
year, and none have been received post year-end.
According to the loan agreement, Materia is obliged to receive
the Company's approval for any additional investment from a 3rd
party (excluding current investors). The loan is secured by a
General Security Agreement under which all the Materia's assets
from time to time constitute a floating collateral for the Loan.
The collateral is shared equally with another lender to Materia
(unconnected to the Group) and the relationship between the two
lenders is regulated by an inter-creditor agreement.
Additionally, the agreement states that should the proposed
transaction not complete within six months of the signing of the
heads of terms, interest of 10% per annum would be charged on
amounts drawn down from the date of drawdown. As at the year-end
the Directors believed the transaction would not complete by 25
January 2022, and therefore, interest income at 10% per annum has
been recognised for the period from drawdown to the year-end.
As of 31 December 2021, the Company transferred Materia CAD
1,000K (GBP582K) in three tranches. As of the reporting period the
Company recorded interest income in the total amount of GBP15K.
The loan receivable has been impaired in full. See note 2.f for
commentary regarding the assessment made by the Directors .
17. Trade and Other Receivables
Group Company
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Trade receivables 10 - 10 -
Prepaid 172 15 165 4
Other 65 18 45 5
Loan - - - (*) 424
------------- ------------- ------------- -------------
247 33 220 433
------------- ------------- ------------- -------------
(*) After the completion of the RTO the company reclassified the
loan to intragroup receivables.
18. Intercompany receivables
Amounts due to the Company from its subsidiary as at 31 December
2021 totalled GBP834K. When conducting their IFRS 9 expected credit
loss assessment, the Directors have assessed there are no
indications that an impairment is required to be recognised and
thus the intercompany receivables remain at carrying value. See
note 2.f for further commentary on how the Directors have made this
assessment.
The amounts due to the Company from its subsidiary are repayable
on demand and are denominated in GBP.
19. Called up Share Capital
As at 31 December 2021 the Company had 369,966,277 allotted and
fully paid ordinary shares.
The ordinary shares have attached to them full voting, dividend,
and capital distribution rights (including on a winding up). The
ordinary shares do not confer any rights of redemption.
Number of
Ordinary Shares of
GBP0.025 each
--------------------
As at 1 January 2021 29,400,120
Shares issued in the year for RTO (a) 230,769,210
Shares issued in placing and subscriptions
16 February 2021 (c) 92,307,693
Shares issued to settled debt 615,384
Share issued in placing and subscriptions
24 May 2021(d) 4,545,454
Shares issued due to option and warrant
exercises 9,028,416
Shares issue to settle convertible loans 3,300,000
--------------------
As at 31 December 2021 369,966,277
--------------------
(a) On 16 February 2021, the company completed its reverse
takeover ("RTO") process with Spinnaker Opportunities Plc ("SOP").
The RTO was completed in the form of a share for share exchange and
the ratio was approximately 1:972.64.
(b) As of 31 December 2021, 38,461,492 consideration shares
still need to be issued.
(c) On 16 February 2021, the Company issued 92,307,693 shares
raising GBP6,000K before costs.
(d) On 24 May 2021, the Company issued 4,545,454 shares raising
GBP1,000K before costs.
20. Share premium
GBP000
-------
As at 1 January 2021 592
Shares issued in the year for RTO 9,231
Shares issued in placing and subscriptions 4,634
Shares issued to settled debt 21
Shares issued to settle convertible loan
notes 83
Share issue costs (634)
Shares issued due to option and warrant
exercises 473
-------
As at 31 December 2021 14,400
-------
21. Share Based Payments
a. Warrants
Weighted average
Number of awards exercise price
-------------------------- ----------------------------
As at 1 January 2021 - -
Granted 19 ,051,774 0. 09
Exercised (5, 5 45,843) 0.10
-------------------------- ----------------------------
Exercisable at 31 December
2021 13,505,931 0. 09
-------------------------- ----------------------------
On 17 February 2021 ("date of admission") the Group granted a
warrant over one new Ordinary Share for every two Ordinary Shares
registered in the name of an existing Shareholder of the Company as
at the date of the RTO . The warrants granted under the terms of
the RTO Warrant Instrument shall be exercisable in the period
commencing on the date of Admission until the date 12 months after
the date of Admission. The warrants are exercisable at 10 pence per
Ordinary Share. Total warrants issued sum to 14,700,055. The
warrants were not issued for goods or services provided and
therefore fall outside the scope of IFRS 2 and do not require fair
valuing.
On 27 January 2021, the Company entered into a financial adviser
warrant deed entitling Peterhouse Capital Limited to warrants over
a number of ordinary shares, representing approximately 0.75 per
cent. of the enlarged Issued Share Capital (the share capital on
the date of the RTO) in accordance with their engagement letter.
The warrants are exercisable at the fundraising price, exercisable
for a period of 7 years from the date of admission. Total warrants
issued sum to 2,701,719. As the warrants were issued to the brokers
assisting with the raise upon re-listing, the fair value of these
warrants, GBP113K, was treated as a share issue cost and debited
against share premium
On 17 February 2021 ("date of admission") the Group granted a
warrant to the noteholders to subscribe for one Ordinary Shares for
every two Conversion Shares issued to the noteholder. The warrants
are exercisable at the Conversion Price (5 pence) and will be valid
for a period of three years. Total warrants issued sum to
1,650,000. The warrants were not issued for goods or services
provided and therefore fall outside the scope of IFRS 2 and do not
require fair valuing.
21. Share Based Payments (continued)
a. Warrants (continued)
The fair value of the warrants was determined using the
Black-Scholes calculation model. The parameters used are detailed
below:
27 January
Grant Date 2021
----------------------- -----------
Life (years) 7
Exercise price (pence
per share) 6.5
Risk free rate 0.32
Expected volatility 70%
Expected dividend
yield -
----------------------- -----------
Total fair value
( GBP'000 ) 113
----------------------- -----------
b. Stock option
1. During the period ended 31 December 2018, the Company had a
share-based payment plan. The plan was approved in February 2018
and has a 10-year duration. The terms of vesting vary according to
the grant agreement subject to approval by the Board of Directors.
Some grants mature immediately, and others vest over up to 4
years.
2. On 28 March 2021, the Group approved an Israeli appendix to
the share-based payment plan ("The Israeli new plan"). The plan
will include a replacing of existing options granted by Kanabo
Research Ltd to three of its employees and consultants and for
future grants for Kanabo Research Ltd employees. The plan is for 10
years forming the date of approval.
Further details regarding the Company's share option plans
For the year ended 31 December
2021
---------------------------------
Weighted
average of
the exercise
Number of price in
options GBP
-------------- -----------------
Are in circulation at the beginning
of the year 20,612 0.62
-------------- -----------------
Granted during the year -
--------------
Forfeited during the year -
--------------
Exercised during the year ) 18,407 ( 0.62
-------------- -----------------
Expired during the year 2,205 0.62
-------------- -----------------
At the end of the year - -
-------------- -----------------
21. Share Based Payments (continued)
b. Stock option (continued)
Further details regarding the Group's share option plans
For the year ended 31 December
2021
----------------------------------------
Weighted
average
of the exercise
price in
Number of options GBP
-------------------- ------------------
Are in circulation at the
beginning of the year 1,960,000 0.05
-------------------- ------------------
Granted during the year 16,408,102 0.15
Forfeited during the year (273,555) -
Exercised during the year (2,105,652) -
Expired during the year - -
-------------------- ------------------
Are in circulation at the
end of the period 15,988,895 0.16
-------------------- ------------------
The fair value of the share options was determined using the
Black-Scholes calculation model. The parameters used are detailed
below:
27 January 27 January 28 April 19 July 24 October
Grant Date 2021 2021 2021 2021 2021
--------------------- ----------- ----------- --------- -------- -----------
Life (years) 3 3 10 10 10
Exercise price
(pence per share) 6.5 10 27.21 19.7 16.5
Risk free rate 0.18 0.18 1.63 1.19 1.66
Expected volatility 70% 70% 70% 70% 70%
Expected dividend
yield - - - - -
--------------------- ----------- ----------- --------- -------- -----------
Total fair value
( GBP'000 ) 40 91 703 198 378
--------------------- ----------- ----------- --------- -------- -----------
The risk-free rate of return is based on zero yield government
bonds for a term consistent with the option life.
During the period the Group recognised total amount of GBP653K
(2020: GBP33K) for share-based payment expenses.
The amount was recorded in the profit and loss under research
and development expenses (GBP6K), sales and marketing expenses
(GBP211K) and the general and administration expenses
(GBP436K).
22. Trade and Other Payables
G roup C ompany
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Trade payables 36 19 24 15
Credit card 6 1 - -
Accrued expenses 186 33 149 39
228 53 173 54
------------- ------------- ------------- -------------
23. Employees and Related Payables
G roup C ompany
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Employees 110 14 - -
Provision for accrued
vacation and convalescence 48 15 - -
Employee's related tax 29 5 - -
187 34 - -
------------- ------------- ------------- -------------
Average number of people employed, including Directors:
Group Company
---------------- ----------------
2021 2020 2021 2020
Number Number Number Number
------- ------- ------- -------
Office and management 10 3 5 3
24. Financial Instruments
The following table sets out the categories of financial
instruments held by the Group as at 31 December 2021 and 31
December 2020:
G roup C ompany
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ------------- -------------
Financial assets held at amortised
cost
Other loans - - 834 -
Cash and cash equivalents 4,477 380 4,148 359
Financial assets held at fair
value
Financial assets held at fair
value 750 - 750 -
Financial liabilities held
at amortised cost
Trade and other payables 228 53 173 54
Employee and related payables 139 19 - -
Borrowings - 424 - -
Group Company
---------------------------- ------------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------ -------------- -------------- --------------
Financial assets held at amortised
cost
GBP 4,350 165 4,982 359
ILS 105 51 - -
Other currencies 22 164 - -
Total 4,477 380 4,982 359
============ ============== ============== ==============
Financial assets held at fair
value
GBP 750 - 750 -
Total 750 - 750 -
============ ============== ============== ==============
Financial liabilities held
at amortised cost
GBP 174 53 173 54
ILS 193 443 - -
Total 367 493 173 54
============ ============== ============== ==============
24. Financial Instruments (continued)
a) Market risk
The Group is not materially exposed to market risk as it has yet
to commence trading. Market risk is the risk that changes in market
prices, such as foreign exchange rates and interest rates will
affect the Company's income or value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return on risk.
b) Interest rate risk
The Group is not materially exposed to interest rate risk
because it does not have any funds at either fixed or floating
interest rates.
The Group does not have any borrowings at either fixed or
floating interest rates and whilst it does have loan receivables at
a fixed rate, interest generated from this loan is immaterial.
c) Foreign currency risk
The Directors do not believe that the Group have a material
exposure to foreign currency risk. The only notable foreign
currency risk is that of the loan receivable due from Materia. The
loan receivable due from Materia does represent a foreign currency
risk as the balance is denominated in Canadian Dollars. See note 16
for further commentary on the terms of this loan.
24. Financial Instruments (continued)
d) Credit risk
The Group's maximum exposure to credit risk in relation to each
class of recognised asset is the carrying amount of those assets as
indicated in the balance sheet. At the reporting date, there was no
significant concentration of credit risk. Receivables at the
year-end were not past due, and the Directors consider there to be
no significant credit risk arising from these receivables.
e) Liquidity risk
Cash flow working capital forecasting is performed for regular
reporting to the directors. The directors monitor these reports and
forecasts to ensure the Group has sufficient cash to meet its
operational needs.
f) Capital risk management
The Company defines capital based on the total equity of the
Company. The Company manages its capital to ensure that the Company
will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and
equity balance.
In order to maintain or adjust the capital structure, the
Company may adjust the number of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to
reduce debt, in the future.
25. Ultimate Controlling Party
The Directors have determined that there is no controlling party
as no individual shareholder holds a controlling interest in the
Company. Controlling party is defined as a shareholder which holds
more than 25% ownership of shares in the Company.
26. Related Party Transactions
During 2021, as a result of the RTO completion, the Company paid
bonuses to the Directors Alan Hume, Andy Morrison and Anthony
Harpur totaling GBP180K. The bonuses were paid directly to the
directors and to entities which are wholly owned by them.
During 2020, 165 convertible loan notes issued to Mr. Anthony
Harpur, a director of the Company contributed 50 loan notes for
consideration totaling GBP50K. During 2021 all the 165 convertible
loan notes were converted into shares.
For the details of the Directors' remuneration in 2021 and 2020,
please see the Remuneration Committee Report on page 29.
27. Post Balance Sheet Events
a. On 21 February 2022, the Company acquired GP Service (UK)
Limited ("GPS"), a UK-based private primary care telemedicine
provider, for a net consideration of GBP13,498K ("Net
Consideration"). The Net Consideration was 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
owed as at completion by GPS to MEIF WM Debt LP (GBP1,591K) will be
repayable by the Company by the allotment of 12,574,931 ordinary
shares within 18 months based on the same price of 12.65p per
share.
The provisional fair values of the identifiable assets and
liabilities of GPS as at the date of acquisition were:
Fair value
on acquisition
date
GBP'000
----------------
Cash and cash equivalents 234
Trade and other receivables 20
Property and equipment 54
Total assets 308
----------------
Trade payables (85)
Employees and related payables (19)
Accrued expenses and other accounts payables (98)
Long term loan (3,428)
Total liabilities (3,630)
----------------
Total identifiable net liabilities at
fair value (3,322)
----------------
Goodwill arising on acquisition 16,820
Purchase consideration transferred 13,498
----------------
The goodwill of GBP16,820K comprises the value of expected
synergies arising from the acquisition. None of the goodwill
recognised is expected to be deductible for income tax
purposes.
A Purchase Price Allocation exercise has not yet been conducted
and thus the fair values of the assets and liabilities disclosed
are subject to change.
b. On 21 February 2022, the Company raised GBP2.25 million by
way of a placing of 28,125,000 new ordinary shares of 2.5 pence
each in the Company ("placing shares") at a price of 8p per share.
The placing shares issued represent approximately 7% of the
Company's enlarged Ordinary Share capital following the
placing.
28. Copies of the Annual Report
Copies of the annual report are available on the Company's
website at www.kanabogroup.com and from the Company's registered
office Churchill House, 137-139 Brent Street, London, NW4 4DJ.
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END
FR EAXKSELSAEFA
(END) Dow Jones Newswires
June 06, 2022 02:02 ET (06:02 GMT)
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