REG - daVictus Plc - Annual Financial Report ended 31 December 2021
13/05/2022 11:00
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RNS Number : 4534L daVictus plc 13 May 2022
13 May 2022
DAVICTUS PLC
("DAVICTUS" OR "THE COMPANY")
FINAL RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2021
daVictus plc, (LSE: DVT), a company established to seek business opportunities
in the food and beverage sector in Asia, announces its final audited results
for the period ended 31 December 2021.
The annual report and accounts is available on the Company's website
at: http://www.davictus.co.uk (http://www.davictus.co.uk/) and in hard copy
to shareholders upon request to the Company Secretary, JTC Trust Company
Limited at daVictus plc, 28 Esplanade, St. Helier, JERSEY, JE1 8SB
For More information:
Robert
Pincock
robert@davictus.co.uk
Chairman's Statement
Dear Valued Shareholders,
On behalf of the Board of directors, I would like to present the financial
statements of daVictus Plc (the "Company" or "daVictus") and its subsidiary
undertakings (together the "Group") for year ended 31 December 2021.
After more than a year into the COVID-19 pandemic and various economic
lockdowns, the Company had successfully appointed its second franchisee for
its flagship Premium Dining restaurant chain, Havana Dining, located in the
business district of Sukhumvit, Bangkok.
While the COVID-19 pandemic continues to affect the hospitality business, many
governments throughout the world are now moving ahead in treating the spread
of the COVID-19 virus as an endemic and thus enabling more regular opening of
businesses with the view of further opening of the economic and tourism
sectors in months to come. Already borders of most countries have opened for
unlimited travel starting from 1(st) April 2022.
Business for the franchisees have yet to pick up as expected and the Company
foresees a slow and steady growth of revenue beginning from April 2022 onwards
and expect businesses to reach its intended business capacity before the year
end.
We continue to take care of the welfare of our employees and the safety and
concerns of our franchisee's customers which remain paramount and I am happy
to announce that the Company had done everything it can in taking all
appropriate measures to keep people safe whilst ensuring continuity of our
operations.
The Company is hopeful that no further lockdowns will be necessary in the
future such that the businesses of both the franchisees can flourish as
planned.
Abd Hadi Bin Abd Majid
Chairman
13 May 2022
Operational and Financial Review
During the financial year, the Company successfully appointed its second
franchisee. The selected location for this second franchisee is in the
business district of Sukhumvit, Bangkok.
Cash on hand as of 31 December 2021 is £96,624.
On 21 February 2022, The Company announced the appointment of Shipleys LLP as
the Company's external auditor.
Financial risk management objectives and policies
The Group does not, at present enter into any forward exchange rate contracts
or any other hedging arrangements. The main financial risks arising from the
Group's activities are cash flow interest rate risk, liquidity risk, price
risk (fair value) and credit risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised as:
Cash flow interest rate risk - the Group's exposure to the risk of changes in
market interest rates relates primarily to the Group's overdraft accounts with
major banking institutions.
The Group's policy is to manage its interest income, when received, using a
mixture of fixed and floating rate deposit accounts.
Liquidity risk - the Company raises funds as required on the basis of budgeted
expenditure and inflows. When funds are sought, the Group balances the costs
and benefits of equity and debt financing. When funds are received, they are
deposited with banks of high standing in order to obtain market interest
rates.
Price risk - the carrying amount of the following financial assets and
liabilities are approximate to their fair value due to their short-term
nature: cash accounts, accounts receivable and accounts payable.
Credit risk - with respect to credit risk arising from other financial assets
of the Group, which comprise cash and time deposits and accounts receivable,
the Group's exposure to credit risk arises from default of the counterparty,
with a minimum exposure equal to the carrying amount of these instruments. The
credit risk on cash is limited as cash is placed with substantial financial
institutions.
Board of Directors
Abd Hadi bin Abd Majid (aged 72) - Non-Executive Chairman
Hadi Majid has, since 2007, been a director and Chairman of VCB Malaysia
Berhad ("VCB"), an investment group offering wealth management, corporate
finance and a private equity division. In this capacity Mr Majid has been
responsible for growing VCB's business within Asia. An MBA graduate, Mr Majid
has sixteen years of experience in merchant banking, with roles including
General Manager of Capital Markets and Corporate Banking Department of
Bumiputra Merchant Bankers Berhad. Mr Majid's capital markets experience and
exposure includes reviewing public listing proposals, company take-overs and
mergers, underwriting of new share issues, underwriting for bond issues and
investment portfolio of the bank. He has experience in managing portfolios
involved with making direct loans as well as arranging for various forms of
structured fund raisings via syndicated loans, club-deals, married deals,
private debt securities namely revolving underwriting facilities, note
issuance facilities, medium term notes and bank guarantees for bond issues.
Robert Logan Pincock (aged 43) - Chief Executive Officer
Robert Pincock is a graduate of the University of Edinburgh. In his career in
the hospitality industry, he has worked in both the United States and the
United Kingdom prior to being based in Bangkok, Thailand for over eleven
years. Mr Pincock began his career within his family's hotel business in the
UK, where he assisted in most areas of operations over a six-year period.
During this time, he undertook a hotel management internship with the
Hampshire Hotels and Resorts group based in Manhattan, New York. After
graduating, Mr Pincock had a short stint with Tesco UK before moving to South
East Asia. In Bangkok, Mr Pincock began as a General Manager for a new bar and
restaurant group and over time was promoted to Operations Director where he
oversaw the group growing to seven Western themed venues. This group was
eventually split between the two main shareholders. Mr Pincock retained his
involvement and initiated investments leading to him and his partners owning
and operating four venues. Mr Pincock is well versed with the Asian culture of
doing business as well as with promoting Western brands in the local market.
Maurice James Malcolm Groat (aged 61) - Non-Executive Director
Malcolm Groat has worked for many years as a consultant to companies in the
technology, natural resources, and general commerce sectors. Following an
early career with PricewaterhouseCoopers in London, he held posts as Chief
Financial Officer, Chief Operating Officer, and Chief Executive Officer in
established corporations including Executive Chairman at MMM Consulting Ltd;
Finance Director at then AIM traded London Mining plc and Platinum Mining
Corporation of India plc; and Group Finance Director and Chief Operating
Officer of E C Harris LLP. Mr Groat took on his first non-executive director
role with the former Milk Marketing Board in 2005 and was part of the team
that led the acquisition of the Community Foods Group, a supplier of health
foods and free trade products (including dried fruits, chocolate, etc.) to
many of the UK's major supermarkets. Mr Groat holds a number of non-executive
directorships with listed growth ventures. He also serves as Senior
Independent Director at Baronsmead Second Venture Trust PLC and as Chairman at
Harland & Wolff and TomCo Energy. Mr Groat is a Fellow of the Institute of
Chartered Accountants in England and Wales.
The Directors present their Report with the financial statements of the
Company and its subsidiary undertakings (together the "Group") for year ended
31 December 2021.
Results and dividends
The results for the year are set out in the Statement of Comprehensive Income
on page 17. The Directors do not recommend the payment of dividend on the
Ordinary Shares.
Company objective
The Company's primary objective is that of securing the best possible value
for the shareholders, consistent with achieving both capital growth and income
for shareholders. The Company intends to undertake one or more acquisitions of
business (either shares or assets) which operate in or own Western F&B
eatery franchises in Southeast Asia and/or the Far East.
The Company will retain flexibility between: (i) establishing a new franchise
in a new region, in which case it would purchase the franchise and then build
a management team to operate the franchise; or (ii) purchasing an established
franchise and seeking to grow this both within its established region and in
other regions in Asia.
The Group's business risk
An explanation of the Group's financial risk management objectives, policies
and strategies is set out in note 11 and the Operating and Financial Review.
Directors
The Directors who served the Company during the year and their beneficial
interest in the Ordinary Shares of the Company at 31 December 2021 were as
follows:
Abd Hadi bin Abd Majid
Robert Logan Pincock
Maurice James Malcolm Groat
Directors' interest
As at 31 December 2021, Robert Pincock, one of our directors, owns 1,250,000
ordinary shares, which represents an 9.36 % interest.
Directors Report (continued)
Substantial shareholders
The Company has been notified of the following interests of 3 per cent or more
in its issued share capital as at 2 March 2022
Number of Ordinary Shares % of
Party Name Share Capital
Infinity Mission Limited 1,435,000 10.75%
Link Summit Limited 1,388,343 10.40%
Nordic Alliance Holding Limited 1,288,546 9.65%
Belldom Limited 1,259,999 9.44%
Robert Pincock 1,250,000 9.36%
Amber Oak Holdings Limited 1,127,000 8.44%
Eastman Ventures Limited 1,104,454 8.27%
VCB A.G 900,000 6.74%
West Park Capital Manager Ltd 400,000 3.00%
Capital and returns management
Based on the Company's plans for 2022, and after making enquiries (including
preparation of reasonable trading forecasts) and consideration of current
financing arrangements, the Directors have a reasonable expectation that the
Company has adequate resources to continue operations for the foreseeable
future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Dividend policy
The Directors recognise the importance of dividends to investors and, as the
Company's business matures, will keep under review the desirability of paying
dividends. Future income generated by the Company is likely to be re-invested
in the Company to implement its strategy. In view of this, it is unlikely that
the Board will recommend a dividend in the following years unless there are
any changes in the business outlook. There are no fixed dates for dividend
payments by the Company and no dividends have been paid to date, although
should the Company be in a position to declare a dividend in the future it
will consider this at that time.
Going concern
As described in the note 2 (c), the financial statement have been prepared on
a going concern basis, which assumes that the Group will continue to be able
to meet its liabilities as as and when they fall due in the foreseeable
future.
The COVID-19 pandemic has adversely affected and is expected to continue to
adversely affect the financial results, condition and outlook. Health
epidemics or pandemics can adversely affect consumer spending and confidence
levels and supply availability and costs, as well as the local operations in
impacted markets, all of which can affect financial results, condition and
outlook. Importantly, the global pandemic resulting from COVID-19 has
disrupted global health, economic and market conditions, consumer behaviour
and Havana franchise restaurant operations beginning in middle 2020. Local and
national governmental mandates or recommendations and public perceptions of
the risks associated with the COVID-19 pandemic have caused, and we expect
will continue to cause, consumer behaviour to change and worsening or volatile
economic conditions, each of which could continue to adversely affect the
business. In addition, the franchise operations have been disrupted to varying
degrees and may continue to be disrupted given the unpredictability of the
virus, its resurgences and government responses thereto as well as potentially
permanent changes to the industry.
As before, even with all those risks and impact stated above, the Group have
taken and will continue to take a number of measures to monitor and prevent
the effects of the COVID-19 virus to its operations. This includes safety and
health measures for our people (i.e. social distancing and working from home),
securing the supply of materials that are essential to our production process,
raising capital as required and keeping the option open for additional
financing from directors to support continuity of our operations as well as
keeping open communication with our key stakeholders.
Where possible and applicable as a F&B franchiser, the company continues
to assists franchisee to adopt the new norm of post-COVID-19 consumer
behaviour and restaurant operations such as exploration of take-out,
drive-through and delivery options.
The Company supports increased domestic/local sourcing for supply chain as
well as meeting the standard operating procedures fr sanitization practices in
the preparing and handling of food.
The Company will not pay any dividends this year.
Based on the circumstances described above, the financial statements are
prepared on the assumption that the entity is a going concern.
Corporate governance
There is no applicable regime of corporate governance to which the directors
of a Jersey company must adhere over and above the general fiduciary duties
and duties of care, skill and diligence imposed on such directors under Jersey
law.
The Group has not yet adopted a corporate governance structure as it is still
in an early stage of development. Neither the diversity policy was adopted by
the Company.
However, the board has developed corporate governance process as discussed
below. These processes have been determined with reference to the Quoted
Companies Alliance revised Corporate Governance Code for Small and Mid-Size
Quoted Companies ('the QCA Code'), which the Company intends to adopt in the
future.
(1) Structure and process. The Group is young and not yet fully active
in its chosen business. Governance is achieved by the Directors acting
together in approving all activity and by accounting and financial control
being in the hands of the Directors acting alongside third party service
providers.
(2) Responsibility and accountability. Although the team is small, roles
are clearly defined. The Board is chaired by a seasoned Non-Executive Chairman
who is not the chief executive, and the Board also benefits from having a
second seasoned Non-Executive Director who is independent.
Corporate governance (Continued)
(3) Board balance and size. Because of its small size and low level of
commercial activity, the Group is well managed under a Board of three
Directors, none of whom works elsewhere with the others or worked previously
with the others and all of whom have individual professional standing.
(4) Board skills and capabilities. Robert Pincock has directly relevant
and current knowledge of running businesses in the Company's chosen sector and
geographical markets. The other two Directors have extensive financial and
governance experience, one with particular knowledge of the London markets and
one with particular knowledge of South East Asian markets.
(5) Performance and development. Each year the board conducts a review
of the performance of the Directors and of Board committees, and make a formal
consideration as to the need for change.
(6) Information and support. The Directors share and discuss all
relevant information and draw upon external advice as required.
(7) Cost-effective and value-added. Recognising the early stage of
development, the Directors do not intend to formalise a review of this until
after the Company makes its first acquisition.
(8) Vision and strategy. The Directors set out their clear vision in the
Admission prospectus. No changes have been made since then.
(9) Risk management and internal control. These matters fall into the
remit of the Group's Audit and Remuneration Committees.
(10) daVictus held its Annual General Meeting on 23 September 2021 engaging
shareholders who attended to vote for the given resolutions and approved those
resolutions including the adoption of audited account 2020, re-appointment of
director and auditor.
(11) Stakeholder and social responsibility. The Directors are mindful of the
impact of the Company on wider society and will ensure a formal corporate and
social responsibility regime is put in place following the Company's first
acquisition.
At a general meeting at which a director retires by rotation, the Company may
fill the vacancy and, if it does not do so, the retiring director shall be, if
willing, deemed reappointed. A Director who retires at an annual general
meeting may, if willing to act, be reappointed. If he is not reappointed (or
deemed reappointed by the Company failing to fill the vacancy), he may retain
office until the meeting appoints someone in his place or, if it does not do
so, until the end of the meeting.
The Company has established the following committees:
Audit committee
The audit committee, which currently comprises Malcolm Groat (as chair) and
Hadi Majid, has the primary responsibility for monitoring the quality of
internal control and ensuring that the financial performance of the Company is
properly measured and reported on and for reviewing reports from the Company's
auditors relating to the Company's accounting and internal controls. The
committee is also responsible for making recommendations to the Board on the
appointment of auditors and the audit fee and for ensuring the financial
performance of the Company is properly monitored and reported. The audit
committee will meet not less than two times a year.
Remuneration committee
The remuneration committee, which currently comprises Hadi Majid (as chair)
and Malcolm Groat, is responsible for the review and recommendation of the
scale and structure of remuneration for senior management, including any bonus
arrangements or the award of share options with due regard to the interests of
the Shareholders and the performance of the Company. No remuneration committee
meeting took place during in the year.
Nomination committee
The Company does not have a nomination committee as the Board does not
consider it appropriate to establish such a committee at this stage of the
Company's development. Decisions which would usually be taken by the
nomination committee will be taken by the Board as a whole. No nomination
committee meeting took place during in the year.
Auditors
The auditors, Shipleys LLP, have expressed their willingness to continue in
office and a resolution to reappoint them will be proposed at the Annual
General Meeting.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires financial statements to be prepared for each financial
year in accordance with one of the prescribed generally accepted accounting
principles. Under that law the directors have elected to prepare the financial
statements in accordance with UK-adopted International Accounting Standards
and applicable 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 of the profit or loss of the group for that period. 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 applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
- prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group will continue in business.
The directors are responsible for keeping proper 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 company and
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for keeping proper 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. They are
also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The maintenance and integrity of the daVictus plc website is the
responsibility of the Directors.
Legislation in Jersey or the United Kingdom governing the preparation and
dissemination of the accounts and the other information included in annual
reports may differ from legislation in other jurisdictions. The Directors
confirm, to the best of their knowledge that:
· the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group; and
· the management report includes 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 it faces.
Statement as to Disclosure of Information to Auditors
The Directors confirm that:
· there is no relevant audit information of which the Group's statutory
auditor is unaware; and
each Director has taken all the necessary steps he ought to have taken as a
Director in order to make himself aware of any relevant audit information and
to establish that the Group's statutory auditor is aware of that information.
This responsibility statement was approved by the Board of Directors on 13 May
2022 and is signed on its behalf by;
………………………………………….
Robert Pincock
Director
13 May 2022
Independent Auditor's Report to the Members of daVictus plc
Opinion
We have audited the financial statements of daVictus plc (the "Company") and
its subsidiary undertaking (together referred to as the "Group") for the year
ended 31 December 2021, which comprise:
· the consolidated statement of comprehensive income for the year ended
31 December 2021;
· the consolidated statement of financial position as at 31 December
2021;
· the consolidated statement of cash flows for the year ended 31
December 2021;
· the consolidated statement of changes in equity for the year ended 31
December 2021;
· notes to the financial statements, which include a summary of
significant accounting policies and other explanatory information.
In our opinion, the financial statements:
· give a true and fair view of the state of the Group's affairs as at
31 December 2021 and the Group's loss for the year then ended; and
· have been properly prepared in accordance with UK-adopted
International Accounting Standards.
· have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Our opinion is consistent with our reporting to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK)
are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the Group 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 applicable to listed public
interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services
prohibited by the FRC's Ethical Standard were not provided.
We have provided no non-audit services to the Company or its controlled
undertakings in the period under audit.
Material uncertainty related to going concern
We draw attention to the disclosure note 2c in the financial statements, which
indicates the existence of a material uncertainty, which may cast doubt about
the Group and Company's ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the ability of the Group and the Parent Company continue to
adopt the going concern basis of accounting included the following procedures:
We evaluated the Directors' assessment of the Group's ability to continue as a
going concern, including challenging the underlying data and key assumptions
used to make the assessment. Additionally, we reviewed and challenged the
results of management's stress testing, to assess the reasonableness of
economic assumptions in light of the impact of COVID-19 on the Group's
solvency and liquidity position.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.'
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
financial statements as a whole to be £4,099, based on approximately 2% of
the Group's total assets at the year end.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial statements.
Performance materiality is set based on the audit materiality as adjusted for
the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment. We
determined performance materiality to be £3,074.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of £205. Errors below that threshold would also be reported to it if,
in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
We performed a full scope audit on the Group in accordance with ISAs (UK).
We designed our audit by determining materiality and assessing the risks of
material misstatement in the financial statements. In particular, we looked at
areas where the Directors made subjective judgements, which involved making
assumptions and considering future events that are inherently uncertain, such
as their going concern assessment.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance on 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) that 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.
Going concern was identified as a key audit matter and has been addressed
within the "Conclusions relating to going concern" section of the audit
report. We have determined that there are no other key audit matters to
communicate in our report. Our audit procedures in relation to the matter were
designed in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on the matter individually and we
express no such opinion.
Other Information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in respect of these matters.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on page 6, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company and Group'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 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.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
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 legal and regulatory frameworks
within which the Group operates, focusing on those laws and regulations that
have a direct effect on the determination of material amounts and disclosures
in the financial statements. The laws and regulations we considered in this
context were relevant company law and tax legislation in the UK and Cayman
Islands jurisdictions in which the Group operates.
· We identified the greatest risk of material impact on the financial
statements from irregularities, including fraud, to be the override of
controls by management. Our audit procedures to respond to these risks
included enquiries of management about their own identification and assessment
of the risks of irregularities, sample testing on the posting of journals, and
reviewing accounting estimates for biases.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances on non-compliance with laws and
regulations that are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain
transactions and balances. However, it typically involves selecting a limited
number of items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor's report.
Appointment
We were appointed by the board on 21 February 2022 to audit the financial
statements for the year ended 31 December 2021. Our total uninterrupted period
of engagement is 1 year, covering the year ended 31 December 2021.
Use of our report
This report is made solely to the Company's members, in accordance with the
terms of our engagement letter. 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.
BENJAMIN BIDNELL
For and on behalf of
SHIPLEYS LLP
Chartered Accountants and Statutory Auditor
10 Orange Street, Haymarket, London, WC2H 7DQ
13 May 2022
Consolidated Statement of Comprehensive Income
for year ended 31 December 2021
Note As at As at
31-Dec-2021 31-Dec-2020
£ £
Revenue 4 162,500 78,333
Direct cost - -
Gross Profit 162,500 78,333
Other Income
Gain on Disposal of Lease 1,066 -
Interest income 8 210
163,574 78,543
Administrative expenses (181,685) (330,476)
Operating loss before taxation 5 (18,111) (251,933)
Income tax expense 6 - -
Loss for the year (18,111) (251,933)
Loss per share
Basic and diluted (pence per share) 7 (0.14) (2.11)
The notes to the financial statements form an integral part of these financial
statements
Consolidated Statement of Financial Position
as at 31 December 2021
Assets Note As at As at
31-Dec-2021 31-Dec-2020
£ £
Other assets
Right of use asset 8 60,844 47,054
60,844 47,054
Current assets
Trade and other receivables 9 47,461 35,850
Cash and cash equivalents 10 96,624 20,040
Total current assets 144,085 55,890
Total assets 204,929 102,944
Equity and liabilities
Capital and reserves
Stated capital 11 1,224,400 1,188,400
Accumulated loss (1,237,270) (1,219,159)
Total equity (12,870) (30,759)
Liabilities
Non-current liability
Lease liability 12 30,176 26,812
Current liabilities
Other payables 13 18,537 85,584
Lease liability 12 32,420 21,307
Deferred Income 136,666 -
Total current liabilities 187,623 106,891
Total liabilities 217,799 133,703
Total equity and liabilities 204,929 102,944
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 13 May 2022
and signed on its behalf by;
………………………
Robert Pincock
Director
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Stated capital Accumulated loss Total
£ £ £
As at 1 January 2021 1,188,400 (1,219,159) (30,759)
Proceeds from issuance of ordinary shares during the year 36,000 - 36,000
Loss for the year (18,111) (18,111)
Total comprehensive proceeds from issuance of ordinary shares / loss for the 36,000 (18,111) 17,889
year
As at 31 December 2021 1,224,400 (1,237,270) (12,870)
For the year ended 31 December 2020
Stated capital Accumulated loss Total
£ £ £
1,188,400 (967,226) 86,174
As at 1 January 2020
- (251,933) (251,933)
Loss for the year
Total comprehensive loss for the year - (251,933) (251,933)
As at 31 December 2020 1,188,400 (1,219,159) (30,759)
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Note As at As at
31-Dec-2021 31-Dec-2020
£ £
Cash flow from operating activities
Operating (loss) for the year (18,111) (251,933)
Adjustment for:
Depreciation of right-of-use-assets 30,422 18,097
Gain on disposal of lease (1,066) -
Interest income (8) (210)
Interest on lease liability 4,931 2,968
16,168 (231,078)
Changes in working capital
Trade and other receivables (11,611) (35,850)
Other payables 69,619 55,205
Net cash used in operating activities 74,176 (211,723)
Cash Flow from Financing activities
Proceed from issuance of shares 36,000 135,000
Interest 8 210
income
Repayment on lease liability (33,600) (20,000)
Net cash generated from financing activities 2,408 115,210
Increase / (decrease) in cash and cash equivalents 76,584 (96,513)
Cash and cash equivalents at beginning of the year 20,040 116,553
Cash and cash equivalents at end of the year 96,624 20,040
The notes to the financial statements form an integral part of these financial
statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The Company was incorporated and registered in Jersey as a public company
limited by shares on 5 February 2015 under the companies (Jersey) Law 1991 and
registered number 117716. The registered office of the Company is at the
offices of 28 Esplanade, St. Helier, Jersey, JE1 8SB.
On 15 March 2020, the Company acquired a dormant British Virgin Island
incorporated company as a wholly owned subsidiary for purpose of business
operation.
The consolidated financial statements comprise of the financial information of
the Company and its subsidiaries (the Group), which set out in note 14.
2. ACCOUNTING POLICIES
The Board has reviewed the accounting policies set out below and considers
them to be the most appropriate to the Group's business activities.
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards and IFRIC interpretations applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention as modified for financial assets carried
at fair value.
On 1 January 2021, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subjec tto endorsement by the UK Endorsement Board.
The Company transitioned to UK-adopted International Accounting Standards in
its consolidated financial statements on 1 January 2021. This change
constitutes a change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a result of
the change in framework
The financial information of the Company is presented in British Pound
Sterling ("£") which is the functional currency of the Company.
As permitted by Companies (Jersey) Law 1991 only the consolidated financial
statements are presented.
Standards and interpretations issued but not yet applied
A number of new standards and amendments to standards and interpretations have
been issued by International Accounting Standards Board but are not yet
effective and in some cases have not yet been adopted. The Directors do not
expect that the adoption of these standards will have a material impact on the
financial statements of the Group in future periods.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). Control
is achieved where the Company 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.
All intercompany transactions, balances, income and expenses are eliminated in
consolidation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Going concern
The Directors consider the going concern basis of preparation to be
appropriate in preparing the financial statements. The key conclusions are
summarised below:
The Group made a loss for the year of £18,111 (2020: £251,933). The Group
recorded net cash generated / (used) in operating activities of £76,584
(2020: (£96,513)). At the reporting date the group held cash and cash
equivalents of £96,624 (2020: £20,040) and net equity of (£12,870)
(2020: (£30,759)).
As expected, the COVID-19 pandemic has been unprecedented in scale and impact.
The Group had taken swift and decisive action to protect its customers,
colleagues, franchisees and its staff and the communities in which the Group
operates, by implementing the necessary steps to safeguard the business
through the crisis, in line with the government guidelines.
The significant impact of COVID-19 to the Company's business is summarised
below:
• Delay in appointing the second restaurant franchisee by about
three (3) months (initially planned second franchisee in Bangkok by July
2021).
• Reduced royalty payment that is by percentage of gross revenue
sales as franchised restaurants are having slower than expected business.
The Group raised £36,000 through the issue of 1.2 million ordinary shares at
a price of 3p per share as additional working capital. The Directors believe
there will be sufficient funds to pay on-going expenses and to meet its
liabilities as they fall due for a period of at least 12 months from the date
of approval of the financial statements.
The Directors have prepared financial projections for a period of 12 months
from the date of approval of these financial statements. Those projections
anticipate the Group will continue to generate revenue and resume its cash
collection from the franchise operation. In view of this prolonged COVID-19
pandemic, there is no certainty the expected cash remittance will be collected
as planned and the liability can be discharged at the timely manner. These
conditions indicate the existence of a material uncertainty which may cast
significant doubt about the Group and the Company's ability to continue as a
going concern.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. For
these reasons, they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured,
regardless of when the payment is made. Revenue is measured at the fair value
of consideration received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duty.
Fees receivable from franchisee according to franchise agreement at which time
the Group has performed its obligation. Fees receivable in advance are stated
on the Consolidated Statement of Financial Position as contract liability.
Franchise fees and brand licence fees comprise of revenue for the initial
allocation of the franchise to the respective franchisee and they are
recognised over time during the licence period.
Compliance fees comprise of assistance provided in maintaining compliance to
the brand standards, food hygiene standard, customer service standard, dining
ambience standard, environmental standard, food, menu and cuisine standard,
general quality standard, cultural standard and compliance to various other
standards and guidelines. The revenue is recognised over time during the
period.
Taxation
The tax currently payable is based on the taxable profit for the period.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other periods and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred income tax is provided for using the liability method on temporary
differences at the reporting date between the tax basis of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised in full for all temporary
differences.
Deferred income tax assets are recognised for all deductible temporary
differences carried forward of unused tax credits and unused tax losses to the
extent that it is probable that taxable profits will be available against
which the deductible temporary differences and carry-forward of unused tax
credits and unused losses can be utilised.
The carrying amount of deferred income tax assets is assessed at each
reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised deferred income tax
assets are reassessed at each reporting date and are recognised to the extent
that is probable that future taxable profits will allow the deferred income
tax asset to be recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Leases
The Group assesses whether a contract is or contains a lease, at the inception
of the contract. The Group recognises a right-of-use asset and corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for low-value assets and short-term leases with 12 months or
less. For these leases, the Group recognises the lease payments as an
operating expense on a straight-line method over the term of the lease unless
another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use assets and the associated lease
liabilities are presented as a separate line item in the statement of
financial position.
The right-of-use asset is initially measured at cost. Cost includes the
initial amount of the corresponding lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred, less any incentives received.
The right-of-use asset is subsequently measured at cost less accumulated
depreciation and any impairment losses, and adjustment for any remeasurement
of the lease liability. The depreciation starts from the commencement date of
the lease. If the lease transfers ownership of the underlying asset to the
Group or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. Otherwise, the Group depreciates the
right-of-use asset to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
The lease liability is subsequently measured at amortised cost using the
effective interest method. It is remeasured when there is a change in the
future lease payments (other than lease modification that is not accounted for
as a separate lease) with the corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recognised in profit or loss if the
carrying amount has been reduced to zero.
Loan and receivables
Loans and receivables are held with an objective to collect contractual cash
flows which are solely payments of principal and interest on the principal
amount outstanding. Such assets are recognised initially at fair value plus
any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at
amortised cost using the effective interest method, less any impairment
losses.
Loans and receivables comprise cash and cash equivalents and other
receivables.
Trade receivables are recognised initially at the transaction price and
subsequently measured at amortised cost, less any impairment losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Loan and receivables (Continued)
Impairment provisions for current and non-current trade receivables are
recognised based on the simplified approach within IFRS 9 using a historical
provision matrix in the determination of the
lifetime expected credit losses. During this process the probability of the
non-payment of the trade receivables is assessed. This probability is then
multiplied by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the trade receivables. For
trade receivables, which are reported net, such provisions are recorded in a
separate provision account with the loss being recognised within
administration costs in the consolidated statement of comprehensive income. On
confirmation that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those for which credit risk has
increased significantly, ifetime expected credit losses are recognised, unless
further information becomes available contrary to the increased credit risk.
For those that are determined to be permanently credit impaired, lifetime
expected credit losses are recognised.
Trade and other payables
Trade and other payables are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortised cost, where
applicable, using the effective interest method, with interest expense
recognised on an effective yield basis.
Cash and cash equivalents
The Group considers any cash on short-term deposits and other short-term
investments to be cash equivalents.
Financial instruments
Financial assets and financial liabilities are recognised on the statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision maker has been identified as the management team including member of
the Board of Directors.
The Board considers that the Group's activity constitutes one operating and
one reporting segment, as defined under IFRS 8. Management reviews the
performance of the Company by reference to total results against budget.
The total profit measures are operating profit and profit for the period, both
disclosed on the face of the income statement. No differences exist between
the basis of preparation of the performance measures used by management and
the figures in the Group's financial information.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Impairment of assets
An assessment is made at each of the end reporting period to determine whether
there is any indication of impairment of all assets or reversal of previous
impairment. In the event that an asset's carrying amount exceeds its
recoverable amount, the carrying amount is reduced to recoverable amount and
an impairment loss is recognised in the income statement. A previously
recognised impairment loss is reversed only if there has been a change in the
estimates used to determine the recoverable amount, however not to an amount
higher than the carrying amount that would have been determined (net of
amortisation or depreciation), had no impairment losses been recognised for
the asset in prior periods.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in compliance with IFRS as adopted for
use by the European Union requires the use of certain critical accounting
estimates or judgements. The estimates and judgements which have a significant
risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year are discussed below:
Going concern
As disclosed in note 2 the Directors have a reasonable expectation that the
Group and Company have adequate resources to continue in operational existence
for the foreseeable future. For this reason, the Group and the Company
continue to adopt the going concern basis in preparing the financial
statements.
4. REVENUE
As at As at
31-Dec-2021 31-Dec-2020
£ £
Franchise Fees 43,333 23,333
Brand Licence Fees 65,000 25,000
Compliance Fees 54,167 30,000
162,500 78,333
The Group revenue are derived from franchise related fees including franchise
fee, brand licence fee, compliance fee and royalties according to Restaurant
Franchise Agreement between the Group's operating subsidiary company, Havana
Dining Limited and Havana Café Sdn Bhd and Everest Consulting Co. Limited,
the franchisees.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. LOSS BEFORE TAXATION
The loss before taxation is stated after charging:
As at As at
31-Dec-2021 31-Dec-2020
£ £
Fees payable to the Group's auditors
- Audit of the Group's financial statements 18,500 22,000
- Other assurance services 1,099 2,768
- Non audit services relating to corporate finance transactions - 3,293
Secretarial services fees 8,563 22,987
Professional fees 47,404 37,200
Other costs associated to the acquisition transaction - 47,528
Depreciation of right-of-use assets 30,422 18,097
Costs related to the acquisition of IP rights - 100,000
Interest on lease liability 4,931 2,968
Director emoluments 29,000 29,000
6. INCOME TAX EXPENSE
The Company is not a "Financial Services Company" registered under the
relevant Jersey laws; or a specified utility company and therefore it is
subject to Jersey income tax at the general rate of Nil percent. If the
Company derives any income from Jersey property, including development of land
or quarrying, such income will be subject to tax at the rate of 20 per cent.
It is not expected that the Company will derive any such income.
The subsidiary company, Havana Dining Limited registered under the relevant
British Virgin Island laws and therefore it is subject to BVI income tax at
the general rate of Nil percent.
Malaysian income tax is calculated at the statutory tax rate of 24 per cent of
the estimated assessable profits for the financial year. No deferred tax asset
has been recognised in respect of such losses and temporary differences due to
the unpredictability of future profit streams. Such losses may be carried
forward indefinitely.
No liability to the corporation tax arose for the year ended 31 December 2021
and year ended 31 December 2020, as the Group did not generate any assessable
profits during the reporting period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss attributable
to equity holders of the company by the weighted average number of ordinary
shares in issue during the period. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. There are currently no
dilutive potential ordinary shares.
Loss per share attributed to ordinary shareholders
As at As at
31-Dec-2021 31-Dec-2020
Loss for the year from continuing operations (£) 18,111 251,933
Weighted average shares in issue (unit) 12,797,671 11,925,000
Loss per share (pence per share) 0.14 2.11
8. RIGHT-OF-USE ASSETS
The Company have cancelled its existing operating lease agreement on 31
December 2020 and have entered into a new operating lease agreement for
tenancy of office space. The new lease agreement is for a period of 36 months,
commencing from 1 January 2021 with an option to renew the lease for a further
12 months.
£
Cost
As at 1 January 2020 65,150
Additions / (Disposals) during the year -
As at 1 January 2021 65,150
Additions during the year 91,266
Derecognising due to lease termination (65,150)
As at 31.12.2021 91,266
Accumulated depreciation
As at 1 January 2020 -
Charge for the year 18,097
As at 1 January 2021 18,097
Charge for the year 30,422
Derecognising due to lease termination (18,097)
As at 31 December 2021 30,422
Net Book Value
At 31 December 2021 60,844
At 31 December 2020 47,054
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. TRADE AND OTHER RECEIVABLES
As at As at
31-Dec-2021 31-Dec-2020
£ £
Trade Receivables 40,000 27,500
Other Receivables 7,461 8,350
47,461 35,850
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets, as set out in note 18(a).
10. CASH AND CASH EQUIVALENT
Cash and cash equivalents are denominated in the following currencies:
As at As at
31-Dec-2021 31-Dec-2020
£ £
Great Britain Pound 3,102 15,680
Malaysia Ringgit 93,522 4,360
96,624 20,040
11. SHARE CAPITAL
As at As at
31-Dec-2021 31-Dec-2021
No. of shares £
As at 1 January 2021 12,150,000 1,188,400
Issuance of new ordinary shares 1,200,000 36,000
As at 31 December 2021 13,350,000 1,224,400
On 18 Jun 2021 the Company issued 1,200,000 ordinary shares of £0.03 credited
as fully paid increasing its issued share capital to 13,350,000 ordinary
shares.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. LEASE LIABILITIES
As at As at
31-Dec-2021 31-Dec-2020
£ £
At 1 January 48,119 -
Additions 100,804 72,000
Gain on early lease termination (1,066) -
Derecognition due to lease termination (47,053) -
Interest in suspense (9,539) (6,849)
91,265 65,151
Interest expense recognised in income statement 4,931 2,968
Repayment of principal (33,600) (20,000)
62,596 48,119
Repayment of lease liabilities as follow:
As at As at
31-Dec-2021 31-Dec-2020
£ £
Within one year 33,602 24,000
After one year but not later than five years 33,602 28,000
67,204 52,000
13. OTHER PAYABLES
As at As at
31-Dec-2021 31-Dec-2020
£ £
Other creditors (1,026) 5,860
Contract liabilities 136,666 56,667
Amount due to Director 318 318
Accruals and provision 19,245 22,739
155,203 85,584
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. SUBSIDIARY UNDERTAKING
The details of the subsidiaries in the Group are as follows:
Name of company Country of incorporation Effective holding Principal activities
Direct holding :
Havana Dining Limited. British Virgin Island 100% Facilitator for Group operation
Address: Coastal Building, Wickham's Cay II, P.O. Box 2221, Road Town, Tortola, British
Virgin Islands
Indirect holding :
Davictus World Sdn Bhd Malaysia 100% Management and administration of Group operation
Address: No.9, 1(st) Floor, SS15/2A,
47500 Subang Jaya, Selangor, Malaysia
On 22 February 2022, The board approved to dispose Havana Dining limited and
novate the franchise agreement to Davictus PLC. Thereafter, Davictus PLC will
no longer have Havana Dining Limited as its subsidiary in company structure
and Davictus World Sdn Bhd becomes a direct holding company.
15. DIRECTORS' EMOLUMENTS
The directors are considered to be the key management personnel. Details
concerning Directors' remuneration can be found below:
As at As at
31-Dec-2021 31-Dec-2020
£ £
Name of Director
Robert Logan Pincock 15,000 15,000
Abd Hadi bin Abd Majid 10,000 10,000
Maurice James Malcolm Groat 4,000 4,000
29,000 29,000
There are no other employment benefits offered to the Directors.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. SEGMENTAL ANALYSIS
The chief operating decision maker has been identified as the management team
including the one director and two non-executive directors. The chief
operating decision-maker allocates resources and assesses performance of the
business and other activities at the operating segment level.
The chief operating decision maker has determined that in the year end 31
December 2021, the Group had a single operating segment, the provision of
managed restaurant franchise business. All the activities and operations are
based in Malaysia and Thailand.
There are two franchisee during the reporting year.
17. FINANCIAL INSTRUMENTS
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Fair value
• Foreign exchange risk, and
• Liquidity risk.
The Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group's objectives, policies and
processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
• Trade receivables
• Cash and cash equivalents
• Trade and other payables
• Right of use assets and lease liabilities
Financial instruments by category
As at 31 As at 31
December December
2021 2020
£ £
Financial assets
Cash and cash equivalents 96,624 20,040
Trade and other receivables 42,000 35,850
Total financial assets 138,624 55,890
Financial laibilities measured at amortised cost
Amount due to a director 318 318
Trade and other payables 18,219 28,599
Lease liability 62,596 48,119
Total financial laibilities 81,133 77,036
The Group uses a limited number of financial instruments, comprising cash,
short-term deposits and various items such as trade receivables and payables,
which arise directly from operations. The Group does not trade in financial
instruments and it has no external borrowing.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. FINANCIAL INSTRUMENTS (Continued)
Financial instruments not measured at fair value
These include cash and cash equivalents, trade and other receivables, trade
and other payables, and loans and borrowings. Due to their short-term nature,
the carrying value of cash and cash equivalents, trade and other receivables,
trade and other payables approximates their fair value.
The Group's activities expose it to a variety of financial risks: market risk
(including foreign exchange risk, price risk and interest rate risk) credit
risk and liquidity risk. The financial risks relate to the following financial
instruments: cash and cash equivalents, trade and other receivables, trade and
other payables, and loans and borrowings. The accounting policies with respect
to these financial instruments are described above.
Risk management is carried out by the directors under policies, where they
identify and evaluate financial risks in close co‑operation with the Group's
operating units. The directors provide principles for overall risk management.
The reports on the risk management are produced periodically to the key
management personnel of the Group.
a) Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. In order to
minimise this risk the Group endeavours only to deal with companies which are
demonstrably creditworthy.
The expected loss rates are based on the Group's historical credit losses
experienced. The historical loss rates are then adjusted to reflect current
and forward-looking information, any known legal and specific economic
factors, including the credit worthiness and ability of the customer to settle
the receivable.
The Group's major concentration of credit risks relates to the amount owed by
a single franchisee customer, which was past due but not impaired, at the end
of reporting year. Subsequent to the year end, the Group received the payment
of overdue debts in full before the date of approval these financial
statements.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. The Group's exposure to credit risk on cash and
cash equivalents is considered low as the bank accounts are with banks with
high credit ratings.
19. FINANCIAL INSTRUMENTS (Continued)
b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash flow for
operations. The Group manages its' risk to shortage of funds by monitoring
forecast and actual cash flows.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Group monitors its risk to a shortage of funds using a recurring liquidity
planning tool. This tool considers the maturity profile of the Group's
financial liabilities, based on the contracted undiscounted payments were as
follow:
Carrying value Contractual cash flow Within one year 2-5 years
1-2 years
At 31 December 2021
Amount due to director 318 318 318 - -
Trade and other payable 131,352 131,352 131,352 - -
Lease liability 62,596 67,203 33,602 33,601
194,266 198,873 165,272 33,601
At 31 December 2020
Amount due to director 318 318 318 - -
Trade and other payable 28,599 28,599 28,599 - -
Lease Liability 48,119 52,000 24,000 24,000 4,000
77,036 80,917 52,917 24,000 4,000
c) Foreign currency risk
The Group has some exposure to foreign currency risk. The Group purchases and
sells in various foreign currencies, mainly Ringgit Malaysia (MYR) that
exposes it to foreign currency risk arising from such purchases and sales and
the resulting receivables and the payables. However, the Group continuously
monitors its foreign currency position.
The carrying amounts of the Group's financial instruments are denominated in
the following currencies at each reporting year:
MYR GBP Total
At 31 December 2021
Financial assets 93,522 3,102 96,624
Financial liabilities 1,104 84,637 85,741
Net financial assets 92,418 (81,535) 10,883
At 31 December 2020
Financial assets 4,360 131,530 135,890
Financial liabilities (360) (76,676) (77,036)
Net financial assets 4,000 54,854 58,854
20. FINANCIAL INSTRUMENTS (Continued)
c) Foreign currency risk (continued)
The sensitivity analysis in the table below details the impact of changes in
foreign exchange rates on the Group's post-tax profit or loss for each
reporting period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
It is assumed that the named currency is strengthening or weakening against
all other currencies, while all the other currencies remain constant.
If the GBP strengthened or weakened by 10% against the other currencies, with
all other variables in each case remaining constant, then the impact on the
Group's post-tax profit or loss would be gains or losses as follows: -
strengthen weaken
For the year ended 31 December 2021
MYR 606 606
d) Fair values
Management assessed that the fair values of cash and short-term deposits,
trade receivables, trade payables and other current liabilities approximate
their carrying amounts largely due to the short-term maturities of these
instruments.
21. CAPITAL MANAGEMENT POLICY
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The capital structure of the
Group consists of the equity attributable to equity holders of the Group which
comprises of issued share capital and reserves.
22. RELATED PARTY TRANSACTIONS
Included within the current liabilities is an amount of £318 (2020: £318)
owing to Abd Hadi bin Abd Majid, who is one of the Directors of the ultimate
holding company.
23. CAPITAL COMMITMENTS
The Group has no capital commitments.
24. SUBSEQUENT EVENTS
On 22 February 2022, The Board approved to dispose Havana Dining limited and
novate the franchise agreement to Davictus PLC. Thereafter, Davictus PLC will
no longer have Havana Dining Limited as its subsidiary in company structure
and Davictus World Sdn Bhd becomes a direct holding company.
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