REG - Hellenic Dynamics - Annual Report for the period ended 31 March 2023
31/07/2023 10:00
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RNS Number : 7324H Hellenic Dynamics PLC 31 July 2023
31 July 2023
Hellenic Dynamics Plc
("Hellenic" or the "Company")
Annual Report & Financial Statements for the Period Ended 31 March 2023
Hellenic Dynamics Plc (LON: HELD), the cultivator of tetrahydrocannabinol
("THC") dominant strains of medical cannabis flowers, operating a 40,000
square meter cultivation licence from its 195,506 square meter facility in
Northern Greece and focused on the supply of medical cannabis to the growing
markets across Europe is pleased to announce its full year audited results for
the period ended 31 March 2023.
Highlights for the period and post period end
Corporate:
o Completed the reverse takeover ("RTO") of UK SPAC PLC and achieved admission
to the Official List (by way of a Standard Listing) and to trading on the
London Stock Exchange 's main market for listed securities ("Admission") as
the first medical cannabis cultivator, with funds of approximately £2.626m
being available to the Company on Admission
o Signed a five year memorandum of understanding ("MoU") with Elgo Dimitra,
the Institute of Plant Breeding and Genetic Resources functioning under the
Greek Ministry of Agriculture, which could allow Hellenic to gain European
intellectual property ("IP") protection on medical cannabis flowers cultivated
at the facility
o Appointed Carl Haffner to the Company's cultivation team. Carl was
previously the Co-founder and CEO of Avida Global SAS, a vertically
integrated cannabis business which achieved all necessary certifications
including ISO, GACP & EU-GMP.
o Appointed Katherine Fleming to its Advisory Board. Katherine is currently
the President and CEO of the J. Paul Getty Trust, the international cultural
and philanthropic institution, overseeing its 1,500 employees and US $8.5
billion fund. Katherine holds a number of honours including being decorated by
the Greek Government as a commander in the Order of Beneficence.
Activity:
o Expanded its cultivation strategy to move into white label contract
cultivation under the Company's new Product Outsourcing Development ("POD")
concept. Under this strategy, Hellenic will provide a fully turn-key and
EU-GACP certified 1,000 square meter cultivation POD to fully licensed EU-GMP
distributors across Europe
o Signed a MoU with Deutsche Medizinalcannabis GmbH which trades as Demecan
Holding ("Demecan"). Demecan is the only licensed independent German company
that covers the entire value chain for medical cannabis from cultivation
through processing to distribution. Under the MoU, Hellenic will grow and
supply medical cannabis flowers from Demecan provided cultivars producing
circa 1,200 kg of medical cannabis flowers per annum for a minimum of 2 years
with the option of a further 2 years by mutual agreement.
o Entered into advanced discussion with a well known financial provider to
support the acceleration of our contract cultivation PODs by way of a capital
financing instrument.
o On track to produce its first crop for commercial sale, under its existing
off-take agreements, during Q2 of the Company's fiscal year.
Financial:
o Repaid a Convertible Loan Note ("CLN") of £375,000 based on the cost
savings against the Company's initial equipment costs.
o Made two grant applications both at EU and at domestic Greek level to
support the Company in best agricultural practices.
o In advanced discussion to move to 100% renewable energy, which is
anticipated to bring the overall production costs down even further, whilst
providing our customers with a sustainably grown quality product.
Davinder Rai, CEO of Hellenic, commented:
"2022 was a strong year for Hellenic following the completion of the RTO and
being the first medical cannabis cultivator to gain Admission, providing us
with the first mover advantage as we enter into cannabis 2.0, which has seen a
shake up on the European cannabis industry and a market expected to reach
€43.3 billion per annum by 2027, twice the size of the current north
American and Canadian markets combined. The period covered in this annual
financial report deals with the period leading up to the acquisition of
Hellenic and Admission where the entire process with the FCA took over 18
months from the signing of the sales purchase agreement with UK SPAC Plc. This
process showed the tenacity and commitment of all the experienced members of
the Hellenic team and our shareholders. Being based in Greece provides an
excellent cost base and legislative framework for medical cannabis cultivation
and, as such, we have the opportunity to become the leading supplier of
quality medical cannabis to all 25 counties in Europe that allow medical
cannabis via prescriptions. As we move through our 2023 financial year, I am
confident that we will sign a number of additional POD agreements and evolve
with the sector by listening to the markets and our customers' demands. I
personally look forward to reporting on our 2023 financial year end and would
also like to thank our shareholders for their continued support."
CHAIRMAN'S REPORT
I am pleased to present the annual report and financial statements for the
period ended 31 March 2023 for Hellenic Dynamics Plc ("Hellenic" or the
"Company"). UK SPAC PLC, which was renamed Hellenic Dynamics Plc on 17
November 2022, acquired Hellenic Dynamics SA ("Hellenic Dynamics" or the
"Company") and gained admission to the Official List (by way of a Standard
Listing) and to trading on the London Stock Exchange's ("LSE") main market for
listed securities ("Admission") with effect from 08:00 on the 5 December 2022.
I am extremely proud of the whole Hellenic team, its advisers and management
in the continuing roles they play, not only in gaining a main market listing
as the first medical cannabis company to do so, but also with their continued
work on the Company's facility in Greece. It has been a long process with the
Financial Conduct Authority and LSE and this commitment alone shows that the
experienced operational and cultivation teams have led the Company to be a
market leader in the cultivation and supply of medical cannabis flowers for
the European markets.
Having been involved since the admission process, I was fortunate enough to
witness first-hand the positive impact medical cannabis is having on patients
across a various range of chronic pain indicators and I believe the low-cost
base we enjoy together with the supportive legislative framework in Greece,
will support Hellenic in its endeavour for European dominance in the supply of
medical cannabis.
Milestones
The law changed in Greece in 2017 allowing the cultivation of
tetrahydrocannabinol ("THC") medical cannabis. Since that time, members of the
Hellenic team have navigated the changing landscape of this exciting new
industry culminating in the Company achieving the milestone of working with
the FCA and LSE to become the first medical cannabis cultivator to gain
admission to the Official List and to trading on the LSE's main market.
In addition to the Admission process, significant work and capital has been
invested since the formation of the Group in 2019, leading Hellenic to move
towards a contract cultivation expanded strategy with the first cultivation
anticipated to occur in the second quarter of the Company's 2023 fiscal year.
Board changes
As a result of the acquisition of Hellenic Dynamics and Admission, there was a
change of the Company's board of directors ("Board"). I was appointed as
Non-executive Chairman, replacing Peter Jay who stepped down on 16 December
2022.
At the time of the acquisition, Nigel Brent Fitzpatrick ("Brent") and Simon
Grant-Rennick both Non-executive Directors stepped down and the appointments
of Davinder Rai as CEO, Filippos Papadopoulos as Executive Director and Joseph
Colliver as a Non-executive Director were completed.
I would like to thank Peter, Brent and Simon for their contributions.
Appointments
During the reporting period and post Admission, I am pleased to welcome both
Carl Haffner who was appointed as a consultant to our cultivation team and
Katherine Fleming who was appointed to our Advisory Board. Carl was previously
the Co-founder and CEO of Avida Global SAS, a vertically-integrated cannabis
business which achieved all the necessary certifications including ISO, GACP
& EU-GMP. Carl is a great addition to the Hellenic team of experienced
cannabis professionals.
Katherine is currently the President and CEO of the J. Paul Getty Trust, the
international cultural and philanthropic institution, overseeing its 1,500
employees and US$8.5 billion fund and holds a number of honours including
being decorated by the Greek Government as a commander in the Order of
Beneficence. With Katherine's appointment we believe that we ensure our
further exposure both domestically in Greece and in other international
markets.
Employees
Together with the board, I would like to thank our entire Hellenic team for
their total commitment and approach to our business which they have
demonstrated through real world experience in the work they have done to date
both on the Hellenic facility and in the wider business. Despite many
challenges faced, especially with regards to the Admission process, I feel
confident that under their stewardship Hellenic can achieves its goals of
European dominance in the supply of medical cannabis.
Sustainability
With the advanced discussions underway for a move to using solar power as
sustainable, low-cost energy, this will in turn lower the cost base for our
operations and production and also allow our customers to benefit from a
sustainable product. The Company has opted to cultivate in a fully indoor
facility, rather than a glasshouse, to save on the additional power required
to heat glasshouses in winter and cool during the summer, by then combining
solar energy with indoor cultivation, the Company hopes to be a market leader
in sustainable medical cultivation.
Dividends
Given the Group is continuing to invest in growing the business, the Board
does not recommend the payment of a dividend (2021: £Nil).
Looking ahead
Despite the extended period working with the FCA to achieve Admission, the
Group has made significant progress during the period. The number of European
medical cannabis prescriptions and the number of European countries that are
legalising medical cannabis is growing. However, the number of producing
European medical cannabis cultivators is shrinking due to the challenges they
have faced from inflation and increasing energy costs. By being agile,
listening to not only its customers but also ensuring its competent
understanding of the fast-evolving European cannabis industry, coupled with
the low cost of operations, I believe, set Hellenic apart from its
competitors.
Hellenic is constantly educating itself as the industry shifts into its new
phase, not only from a legislative viewpoint but also firmly with the end
patient in mind. The Group has moved with the recent changes in the industry
and is now well placed to the reap the incoming rewards.
With industry leaders joining the Company's team, the signing of the first POD
MoU with Deutsche Medizinalcannabis GmbH which trades as Demecan Holding
("Demecan") (post period end) and with further expressions of interest in POD
contracts resulting in active discussion, all demonstrate the Company's
growing reputation within the sector.
I remain confident in Hellenic's strategic direction as a white label contract
cultivator of tetrahydrocannabinol ("THC") dominant strains of medical
cannabis flowers, where I have seen first-hand how this improves the quality
of patients' lives for the better. Achieving our goals during the coming year,
I expect Hellenic to deliver growth for our investors.
I am pleased to present the 2023 first full results to shareholders for the
period ended 31 March 2023.
Once published, hard copies will be available to shareholders upon request to
the Company Secretary at Shakespeare Martineau, 60 Gracechurch Street,
London, EC3V 0HR soft copies will be available for download and inspection
from the Company's website at www.hellenicdynamics.com
(http://www.hellenicdynamics.com) in due course.
The Company will also upload the annual report and accounts for the period
ended 31 March 2023 to the FCA's National Storage Mechanism
at www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(http://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
in due course.
The financial information set out below does not constitute the Company's
statutory accounts for the periods ended 31 March 2023 or 31 December 2021
within the meaning of Section 434 of the Companies Act 2006, but is derived
from those accounts. Statutory accounts for 2021 have been delivered to the
Registrar of Companies and those for 2023 will be delivered in due course. The
auditor's report on the statutory accounts for the period ended 31 March 2023
were unqualified. The statutory accounts for the year ended 31 December 2021
were not audited given that they solely relate to the financial information of
the subsidiary Hellenic Dynamics S.A. which was acquired through a reverse
takeover.
The announcement has been prepared on the basis of the accounting policies as
stated in the financial statements for the period ended 31 March 2023. The
information included in this announcement is based on the Company's financial
statements which are prepared in accordance with UK-adopted International
Accounting Standards ("IAS"). The Company will publish full financial
statements that comply with IAS on its website in due course.
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.
The Directors of the Company take responsibility for this announcement.
Enquires:
Hellenic Dynamics Plc
+44 (0)20 3818 7850
Davinder Rai
info@hellenicdynamics.com
Cairn Financial Advisers LLP
Emily Staples / Jo Turner
+44 (0)20 7213 0880
Peterhouse Capital - Brokers
Lucy Williams / Charles Goodfellow
+44
(0)20 7469 0930
J&H Communications - PR
George Hudson
+44(0)7803 603 130
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
CHIEF EXECUTIVE OFFICER'S REPORT
I am delighted to report on the significant number of achievements and
strategic progress for Hellenic in the period.
These are the first results for Hellenic as a public company following the
successful completion of the reverse takeover of UK SPAC Plc (renamed Hellenic
Dynamics Plc), where the balance of £2.626 million was available to the
Company on Admission to support the Company's plans, which are detailed in the
enlarged Company's prospectus dated 14 November 2022. On Admission Hellenic
became the first medical cannabis cultivator to be admitted to the Official
List and to trade on the main market of the London Stock Exchange and remains
the only one as of the date of this report, further details of which can be
found in the financial review section on page 7 of the Report and Accounts.
Hellenic aims to be the dominant wholesale cultivator of medical cannabis
flowers in Europe. With the numerous advantages available to us in Greece,
which covers a low cost base, clear legislation and a supportive government,
Hellenic has the ability to export its medical cannabis products to all 25
European countries that allow medical cannabis by prescription, with no
limitation on THC content nor export quantity.
Hellenic's strategy is to work closely with licensed medical cannabis
distributors in our key target markets and allow these distributors the
ability to take one step up the vertical by way of the Hellenic POD concept we
announced post period end on 6 June 2023. This strategy has been well received
by the wider European cannabis markets resulting in the signing of a MoU with
Demecan as per our announcement dated 13 June 2023. With numerous other
advanced discussions on-going with other well established European licensed
distributors, I believe the Company has skilfully navigated the evolving
medical cannabis sector and positioned itself to reap the rewards as we enter
into our first full year as a listed entity.
Market
25 countries now allow medical cannabis prescriptions for patients across
Europe, with the total European market expected to reach €43.3 billion per
annum by 2027, twice the size of the American and Canadian markets combined.
Presently there are circa 29,000 private patients who receive medical cannabis
prescriptions in the UK and over 1.4m people in the UK using illegal cannabis
for medical reasons.
Opioid alternative
Approximately 26% of the UK population suffer from chronic pain, this number
increases to 60% of the population over aged over 75. This has resulted in the
UK being the largest prescriber of opioids per capita in the world with circa
40 million annual opioid prescriptions. Presently opioid prescriptions lead to
4.6 million UK GP visits per annum, however 90% of patients prescribed opioids
state they are ineffective for long term pain management. Furthermore, the UK
presently has approximately 540,000 patients with some form of dependency
prescription opioids. This gives an idea of the total addressable market where
medical cannabis could replace opioid prescriptions in the UK
Strategy
In line with the Company's expanded strategy, Hellenic will continue to fulfil
its current off-take term sheets as per the Company's prospectus and further
sign and develop more PODs on the Company's near 200,000 square meter
facility. Each Pod occupies 1,000 square meters and is capable of producing
1,200 kg per annum of wholesale flowers. With just four POD agreements (of
which Hellenic currently has 1 MoU in place) Hellenic would have a total
production of 4,800 kg per annum and all devoid of any cost of sales.
Hellenic's licence of 40,000 square meters is capable of producing circa
54,000 kg of flowers per annum. Each POD to be entered into moving forwards
would be for a minimum of 2+2 years. This tenure is linked to the advanced
discussion the Company is currently having with a well-known financial
institution in relation to a capital loan facility, covering the entire
capital expenditure of four PODs in this phase of the Company's expansion
strategy.
Adapting to the evolving European medical cannabis industry in the way Company
has and will continue to do so, allows Hellenic to concentrate on the
wholesale commercial and contract cultivation of medical cannabis flowers.
Many of our current and new customers are well advanced in several aspects of
the medical cannabis value chain, however the main resource is a quality and
consistent wholesale product. This can then be used for a number of drug
development programmes along with batch release to pharmacies. Furthermore,
Hellenic has opted to arrange forward sales of its products prior to
expansion. This devoids the Company of any over production or any potential
inability to sell its product. In essence every phase of expansion of the
cultivation facility will be based by a 2 + 2 year off-take agreement, where
Hellenic cultivate the specific cultivars our customers want for their
respective markets.
Update
Since Admission on 5 December 2022, Hellenic has moved full force into the
completion of its facility in northern Greece and it is expected that its
first commercial cultivation will occur in the coming months from the
publication of this document.
Environment
As a company, we recognise the importance of operating to the highest
standards of compliance across the business, and we have continued to advance
our approach to environmental, social and governance "ESG", focusing on
identifying those issues that are most material to Hellenic's business. This
work will form part of a comprehensive ESG strategy in due course.
Future
I look forward to updating shareholders in due course on our production of
medical cannabis flowers for our current off-takers, further to agreements to
be signed with third parties, and to reporting on our first full year as a
listed entity and showcasing the dedication of our team and our commitment to
shareholders by delivering on our strategy.
Davinder Rai
Executive Chairman
STRATEGIC REPORT
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 a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
· Consider the likely consequences of any decision in the long
term;
· Act fairly between the members of the Company;
· Maintain a reputation for high standards of business conduct;
· Consider the interests of the Company's employees;
· Foster the Company's relationships with suppliers, customers, and
others; and
· Consider the impact of the Company's operations on the community
and the environment.
The Company operated as a cash shell, which was successful in sourcing a
business to acquire and was in the process of applying to the FCA to
re-admit to trading on the LSE's main market. The pre-revenue nature of the
business prior to the acquisition of Hellenic Dynamics SA is important to the
understanding of the Company by its members and suppliers, and the Directors
were as transparent about the cash position and funding requirements as is
allowed under the relevant regulations.
The application of the s172 requirements can be demonstrated in relation to
some of the key decisions made during the period:
Shareholders
The Company publishes regular announcements to ensure shareholders are kept
up to date with developments within the Group. Going forward the Directors
expect to increase the number of face-to-face meetings with its shareholders
and potential investors.
Employees and contractors
During the period under review the Company directly employed agronomists and
when required engaged contractors to provide specialist technical and
cultivation services. Management and the Company's Directors maintain regular
direct contact with all employees and contractors to ensure any concerns they
have are considered and action taken if necessary. Each employee or
contractor is given the Company's employee handbook which sets out the
provisions for any concerns.
Suppliers
Procurement of technical and cultivation such as construction, irrigation and
lighting rely on the expertise of management and the availability of those
services at the time (both geographically and the supplier's capacity).
Relations with suppliers is maintained through regular contact, prompt payment
and where necessary ensuring high standards of health and safety are
maintained or implemented. Health and safety management by the Company is most
important during construction works. Any contracts for services provided have
been undertaken with a clear cap on financial exposure.
Local community
At the subsidiary level, management and the Company's employees maintain
excellent relationships with the local communities where they operate. During
the year under review, the Company used local businesses for the provision of
certain services, specifically for construction, earth works and fabrications.
This created and will continue to create increased economic activity in the
areas in which the Company operates. Local management also maintains regular
dialogue with the local population and government officials to ensure support
for and an informed view of its activities.
Environment
The Company's current activities are restricted to the construction and
installation of its cultivation buildings with groundworks the most
environmentally impactful due to the small-scale earth works required.
Considerations include choosing the right cement suppliers and waste
companies. As part of the Company's construction phase, baseline environmental
studies were undertaken by the chosen construction. company.
As a company, the Board seriously considers its ethical responsibilities to
the communities and environment. we recognise the importance of operating to
the highest standards of compliance across the business, and we have
continued to advance our approach to environmental, social and governance,
focusing on identifying those issues that are most material to Hellenic's
business.
The Company started in early 2023 implementing a Corporate Social
Responsibility ("CSR") policy designed to support the United Nations
Sustainable Development Goals ("UN SDG") by actively engaging the local
communities, with a focus on youth and student populations. Further details
can be found in the Task Force on Climate related financial disclosures
("TCFD") in the Company's strategic report on pages 10 to 12 of the Report and
Accounts.
Review of Business in the Period
Operational review
The Company's principal activity is specifically focused on the cultivation
and supply of tetrahydrocannabinol ("THC") - dominant strains of medical
cannabis flowers, destined for the growing medical cannabis markets
across Europe. Hellenic's core strategy is to develop and operate its 40,000
square metre active cultivation licence from its 195,506 square metre facility
located near Thessaloniki in Northern Greece. In full production, Hellenic is
capable of producing over 54,000 kg of dried flowers per annum.
On 2 August 2021, the Company signed the Sales Purchase Agreement ("SPA") with
Hellenic Dynamics SA and suspension of trading of the company's ordinary
shares on AIM took place with immediate effect. Following the publication of
the Company's prospectus dated 14 November 2022 and the subsequent AGM on 15
November 2022, the Company published its prospectus and completed its proposed
acquisition of Hellenic Dynamics SA achieving admission to the Official List
(by way of a standard Listing) and to trading on the London Stock Exchange's
main market for listed securities at 08:00am on 5 December 2022.
Business strategy
Hellenic will take advantage of its relatively low-cost base resulting from a
comparatively low cost of power, having its own running water supply and the
labour rates for skilled and semi-skilled labour in Northern Greece. The
expanded strategy of contract cultivation under the Company's expanded POD
strategy will be increased to allow more licensed medical cannabis
distributors to move up the vertical and have the ability to control their own
cultivation strategies utilising the experience of the Hellenic Dynamics team
to produce consistent, quality THC dominant strains of medical cannabis
flowers.
Financial review
On 30 October 2008, U.K. SPAC Plc was admitted to trading on the AIM, a market
operated by the London Stock Exchange. On 3 March 2021, the Company disposed
of its assets and became a cash shell under AIM Rule 15, with the purpose of
acquiring a target company or business or asset(s).
On the 5 December 2022, U.K. SPAC Plc (renamed Hellenic Dynamics Plc) acquired
Hellenic Dynamics S.A. via a reverse takeover, with the enlarged Group's
issued share capital admitted to the Official List (by way of a Standard
Listing) and to trading on the London Stock Exchange's main market for listed
securities.
At the date of the acquisition, U.K. SPAC Plc had 1,852,219,137 Ordinary
Shares in issue. Upon Admission, the Company approved the issue and allotment
of 250,000,000 subscription shares, 13,333,333 fee shares and 10,414,447,530
consideration shares. Immediately on Admission, the enlarged issued share
capital of the Company was 12,530,000,000 Ordinary Shares in issue, all of
which were fully paid.
The acquisition of Hellenic Dynamics S.A. by the Company via a reverse
takeover, resulted in the Company becoming the ultimate holding company of the
Group.
Accordingly:
· The consolidated statement of financial position at 31 March 2023
shows the share capital and premium of Hellenic Dynamics Plc.
· The consolidated statement of comprehensive income for the
15-month period to 31 March 2023 represents the results of both Hellenic
Dynamics Plc from the reverse takeover date and Hellenic Dynamics S.A. for the
full period.
· 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, Hellenic
Dynamics S.A. for the year-ended 31 December 2021.
The transaction was accounted for as a reverse acquisition but as U.K. SPAC
Plc did not meet the definition of a business it was not treated as a business
combination under IFRS 3. Instead, in accordance with IFRS 2, the deemed
issue of shares to the original U.K. SPAC Plc shareholders by Hellenic
Dynamics Plc was accounted for as a share-based payment, which gives rise to a
non-cash charge in the consolidated statement of comprehensive income of
£3.7million, which is included within the reverse acquisition reserve.
The Reverse Acquisition Accounting is described in more detail in note 9 to
these financial statements.
Revenue and cost of sales - no trading activity was recorded in the period, as
the Company is completing the build and fit-out of its cultivation facilities.
Administrative expenses - total costs of £1,147,442 incurred in the 15 month
period to 31 March 2023 (12 months to 31 December 2021: £334,560),
incorporate staff costs of £296,668 (2021: £81,315), professional service
fees (predominately relating the reverse takeover of U.K. SPAC Plc) of
£361,422 (2021: £66,578), promotion and advertising £87,743 (2021:
£49,256), and non-cash share based payment charges of £62,921 (2021: £Nil).
Operating loss - is gross profit less administrative expenses and equates to
£1,147,442 in the period to 31 March 2023 (2021: £334,560).
Reverse acquisition expense - as detailed above, the reverse acquisition of
U.K. SPAC Plc by the Company, resulted in a non-cash share-based payment
charge of £3,700,209, due to the difference between the deemed cost and the
fair value of the net assets at acquisition.
Total comprehensive loss for the period - was £4,853,146 (2021: £342,012)
after incorporating £15,388 of finance costs (2021: £14,840) and £9,893 of
positive exchange differences (2021: £7,388), in addition to the charges
detailed above.
Non-current assets - increased by £106,421 to £961,726 at the period ended
31 March 2023, primarily due to a net £104,103 increase in property, plant
and equipment, and by £1,753 increase in the value of the right-of-use
assets.
Current assets - increased by £2,130,760 to £2,304,055 at the period end 31
March 2023, resulting from the £1,781,047 cash balance realised from the
reverse acquisitions of U.K. SPAC Plc, and £834,652 of funds arising from the
subscription and issue of the convertible loan note on 5 December 2022.
Current liabilities - increased by £683,738 to £947,695 at the period end 31
March 2023, predominantly due to amounts owed to professional advisers
relating to transaction costs.
Non-current liabilities - increased by £327,012 to a balance of £636,695 at
31 March 2023, relating to £333,695 of convertible loan notes issued as part
of the acquisition, off-set by a reduction in the lease liability.
Total equity and liabilities - at 31 March 2023 were £3,265,781.
Cash flow
Net cash outflow in the 15 month period to 31 March 2023 was £2,112,139
(2021: outflow £4,060), resulting from £294,684 in cash outflows from
operating activities (2021: £381,323), £1,682,722 of net cash flows from
investing activities (2021: £87,036 outflow), and £724,101 net cash flows
from financing activities (2021: 464,299).
Closing cash
As at 31 March 2023, the Company held £2,117,159 of cash and cash equivalents
(2021: £5,020).
Key Performance Indicators
The KPI for the Company during the accounting period to the year ended 31
March 2023 has been to achieve Admission along with continued works on its
facility in Greece to begin the commercial cultivation of medical cannabis
flowers for sales to the growing medical cannabis markets in Europe, in
addition to exploring all cost saving measures where possible.
Future Developments and Events Subsequent to the Period End
The Company repaid a convertible loan note post period end and also signed a
MoU with Demecan. Further details can be found in the Chairman's report on
pages 2 to 3 of the Report and Accounts.
The Board seeks to maximise shareholder value and is in the process of
establishing financial and operational KPIs ahead of the first cultivation.
Financial KPIs are not deemed relevant at this stage by the Directors.
Position of Company's Business
At the period end the Company's Statement of Financial Position shows net
assets totalling £32,937,760 (2022: £2,312,553).
Environmental, Social and Governance Statement
The Company is committed to providing a safe working environment for all its
employees and to responsibly manage all of the environmental interactions of
its business.
Health & Safety
The Company is committed to provide a safe working environment. A health and
safety policy in place which is given to all employees of the Company.
Communities
The Company started in early 2023 implementing a Corporate Social
Responsibility ("CSR") policy designed to support the United Nations
Sustainable Development Goals ("UN SDG") by actively engaging the local
communities, with a focus on youth and student populations. Objective:
facilitate school education in the municipality of Kilkis on issues related to
sustainability & biodiversity by:
· Providing educational hardware.
· Pictorial learning material related to the biodiversity of their
region created by the local.
· Civil society group "Flora Kristonia".
· Educational projects designed by a content expert in order to
help the teachers utilise the material provided.
· Digital networking to encourage the extroversion of the schools
and motivate teacher & pupil engagement through networking.
UN SDGs addressed:
· Goal 4: Ensure inclusive and quality education for all and
promote lifelong learning
· Goal 13: Take urgent action to combat climate change and its
impacts
In early 2023 the Company entered into advanced discussion with solar power
providers with a view to being reliant on sustainable energy in due course.
· Goal 15: Sustainably manage forests, combat desertification, halt
and reverse land degradation, halt biodiversity loss.
The Company looked at its facility and took the decision not to use pesticides
for its grassland rather took the approach to maintain its grassland by way of
regular trimming.
Following consultations with local civil society organisations, in the coming
fiscal year, the company's CSR policy will be expanded to (a) systematically
support the 2nd experimental High School of Kilkis with its sustainability and
digital technology student projects, and (b) additionally cover UN SDGs:
· Goal 12: Ensure sustainable consumption and production patterns
· Goal 14: Conserve and sustainably use the oceans, seas and marine
resources
Environment
The Company recognises the importance of cultivating and processing medicinal
cannabis in a responsible manner, reducing, where possible, its carbon
emissions, water and energy usage, and impact on biodiversity The Company is
in the early stages of devising a policy to incorporate decision metrics and
benchmarks in order to set targets for continuous improvement.
Task Force on Climate-related Financial Disclosures (TCFD)
The Board recognises the importance of taking climate related risks and
opportunities into account within the Company's decision making and governance
frameworks, and the need to measure and report on climate related metrics.
Given the very limited timeframe since the reverse acquisition, and the
early-stage nature of its operations during the period under review, the Board
is taking steps to address the eleven TCFD recommendations within the four
thematic areas detailed below. Further reporting and disclosure will be made
in future annual reports. The Board envisages that all of the eleven
recommendations will be implemented, where possible prior to the publication
of the next set of the Company's annual accounts.
Governance
1. Describe the Board's oversight of climate related risks and opportunities.
2. Describe management's role in assessing and managing climate related risks
and opportunities.
The Company does not currently have a climate risk committee, and the
Directors are evaluating how to practically and effectively incorporate the
evaluation of climate related risks and opportunities within Board,
sub-committee and management decision-making and reporting. Climate related
risks and opportunities are discussed at the Board level when relevant.
Dr Filippos Papadopoulos (Executive Director) currently leads on climate
related issues at the Board, based on his prior Corporate Social
Responsibility experience and on-going professional involvement on issues
related to sustainability, biodiversity, agro-ecology and civil society
engagement via his role as Director of the Strategic Project Management Office
of the American Farm School (AFS). Joseph Colliver (Non-Executive Director)
also provides oversight, and has completed a short-course in Business
Sustainability Management from the Cambridge Institute for Sustainability
Leadership (CISL).
3. Describe the climate related risks and opportunities the organisation has
identified over the short, medium, and long-term.
4. Describe the impact of climate related risks and opportunities on the
organisation's businesses, strategy, and financial planning.
5. Describe the resilience of the organisation's strategy, taking into
consideration different climate related scenarios, including a 2°C or lower
scenario.
The Board has identified two climate related issues:
1) Energy inputs required to cultivate and process medicinal cannabis.
2) Sourcing of reliable water supply, without polluting the local water
table.
Strategy
The Company has taken the following initial actions to address these issues:
· Performed a strategic pivot in June 2021 away from plans to
cultivate under glass, reverting instead to a controlled indoor grow
environment, partly to ensure reduce the energy required to cool the facility
in the summer and less heat required in winter.
· The management team of Hellenic Dynamics S.A., supported by the
Company's Board of Directors, are actively pursuing contractual negotiations
to, on the one hand source a renewable and cost-effective solar energy source,
and on the other acquire energy storage capacity as a means of harnessing
excess PV capacity.
· Currently installing a closed-loop irrigation systems, sourced
from an on-sight bore hole (reducing carbon emissions related to the transport
of water), with wastewater purified to ensure excess nutrients and other waste
products such as fertilisers are not released into the local water supply, by
way of a water remediation system utilising ultraviolet light.
The Company is evaluating the impact of climate related opportunities and
risks within its business strategy and financial plan and will be in a
position to report further in future annual reports.
Risk management
6. Describe the organisations processes for identifying and assessing climate
related risks.
7. Describe the organisations processes for managing climate related risks.
8. Describe how processes for identifying, assessing, and managing climate
related risks are
integrated into the organisation's overall risk management.
The Company is in the process of embedding climate considerations within the
risk management framework of its controlled environment operating model.
The following climate change related risks have been identified initially:
· Potential for higher input costs from increased temperatures to
maintain an optimum grow environment in terms of temperature, humidity, and
air purity (via a heating, ventilation and air conditioning (HVAC) systems)
and exposure to microbiology.
· Competition for equity and debt capital to fund storage or excess
PV capacity, and competition to source solar energy supplies.
· Potential for higher input costs for building materials.
· Potential disruption to the supply of clean water from the
on-site bore hole, requiring costly alternative water supply from external
suppliers.
· Supplier disruption.
· Future patient / consumer demand for lower carbon emission
product.
· Increased frequency of wildfires.
Metrics & targets
9. Disclose the metrics used by the organisation to assess climate related
risks and opportunities in line with its strategy and risk management process.
10. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks.
11. Describe the targets used by the organisation to manage climate related
risks and opportunities and performance against targets.
The Directors are aware of need to measure and control emissions. However, due
to the limited activities in the period under review, the Company did not
consume more than 40,000kWh of energy, and its emissions are therefore not
disclosed.
In the future, the Company 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.
Due to the nature of the pre-production early stage of the Company the Board
feels that exposure to climate related risks is low at present, however will
look more closely at this issue once the Company is in it's operational phase
and will put in place a climate related strategy. In addition the Company
will obtain relevant data, wherever possible to comply with the TCFD
recommendations, however based on the current stage of the Company we have not
acquired any data at of the date of this document and therefore have not faced
any challenges in the gathering of any data.
Hellenic Dynamics headquartered in the United Kingdom which has made a
commitment in the Climate Change Act 2008 (2050 Target Amendment) Order
2019. Due to the early stage of the Company there is currently no transition
plan in place. As the Company moves into its operational phase this position
will be reconsidered prior to the publication of the Company's next set of
annual accounts.
Employee information
At present, there are no female Directors in the Company. The Company has a
Non-Executive Chairman and one Non-Executive Director and two Executive
Directors. There are also five members of the Advisory Board. The Company is
committed to equality and, if future roles are identified, a wide-ranging
search would be completed with the most appropriate individual being appointed
irrespective of gender or race.
Human rights matters
The Company 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 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.
Principal Risks and Uncertainties
The Company operates in an uncertain environment and is subject to a number of
risk factors. The Directors consider the following risk factors are of
particular relevance to the Company'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 Company
Issue Risk/Uncertainty Mitigation
Hellenic will not undertake business activities until it has obtained all The licencing structure of the Greek government is based on a phased approach, The licence awarded to the Company is for 40,000 square meters of active
relevant licences, approvals, and consents where the Company must have an operational licence to commercially cultivate cultivation of THC dominant strains of medical cannabis. The progression to
medical cannabis flowers for commercial sale the commercial stage is based on the submission of four self-certified
affidavits, confirming the Company does not use port facility, does not use
propane, has full fire and safety measures and lastly has taken a full power
reading of power consumption. The Company will submit the last power
self-certified affidavit within a few weeks of the publication of this report
to commence commercial cultivation activities.
The Group may fail to meet import requirements, in respect of its medical All markets the Group is looking to sell medical cannabis products into vary The Company will only cultivate medical cannabis in a fully indoor and fully
cannabis flowers and non-compliance could limit, restrict, or delay the with regards to the import requirements. Germany is the Company's initial controlled environment. In such an environment cannabis crops are considered
generation of revenues within the primary target markets. target market, which has one of the strictest quality controls with regards to to have significantly less exposure to microbiology and by utilising the
microbiology and heavy metals in Europe. Failure to comply to these quality correct substrate, which the Company has chosen to be a mixture of rock wool
control import requirements may delay the Company's generation of revenues. and coconut husk, devoid the plant of heavy metals. Furthermore, by moving to
a POD contract cultivation strategy, the POD owners are the end buyers and can
ensure further quality issues are adhered to for their own products for export
from Greece to the distributors target market.
The operations of Hellenic are subject to a new and evolving sector and are Hellenic Dynamics has only been operating its business since 2019 and with a Having gone through the process of gaining its Admission, the Company has
subject to change limited operational history, there is inherent uncertainty in relation to obtained significant information about the legislative nature of the medical
Hellenic's business strategy. There can be no guarantee that Hellenic's cannabis industry across Europe. The Company has continued to ensure it is
business model and development initiatives will be successful, or even if they always informed about changes in the industry and is ready and agile enough to
are successful, able to generate the revenue which is anticipated. adapt wherever necessary, as it proved by the move to a POD concept.
The Group is reliant on a small number of key employees and consultants. There Since inception the progress of Hellenic to date has been in large part due to The Company offers incentives to its directors and management teams through
is no guarantee that employment agreements, service contracts or consulting the experience of its founders, Directors and management team. There is no participation in an options scheme, linking them to the to the long-term
agreements will not be terminated, or that they will be renewed assurance that Hellenic will be able to retain the services of these persons success of the business. The Company also offers education and training to
personnel and has been successful in its recruitment endeavours.
The team is well motivated for the success of the business and its long-term
ambitions.
Hellenic Dynamics has to date been loss making and remains at an early stage As at the date of this document, Hellenic had not generated any revenues. The The Company's management and Directors have made significant in-roads to
of development ability of the Company to generate revenues is dependent upon the factors medical cannabis distributors across Europe to increase the addressable market
listed above. for its products. It is envisaged that the cultivation and production in the
first phase of the Company's growth will be sold through the Company's
existing term-sheets. Further supply agreements are at an advanced stage.
Failure to adhere to the licence regulations could result in loss of license Hellenic must at all times be in adherence to the regulations set out in the The management and Directors of the Company are in direct contact with the
Company's licence and all future licences granted by the Greek government. If Greek cannabis cultivation licensing authorities, thus keeping the Company
Hellenic or its management team, Directors and employees are found in breach informed for any changes or potential changes to the licensing requirements.
of any conditions of its licence(s) this could result in the loss of Company's management discusses its licensing obligations on monthly basis to
licence. ensure adherence. Furthermore, the Company will conduct a full criminal back
ground check on key management personnel on an annually basis and currently
ensures the Company's Greek Good Standing status is met. Both criminal
background checks and a certificate of good standing with the Greek tax office
are considered to be the most important elements of adhering to the Company's
licence obligations.
Composition of the Board
A full analysis of the Board, its function, composition and policies, is
included in the Corporate Governance Report on pages 16 and 17 of the Report
and Accounts.
Capital structure
The Company's capital consists of ordinary shares which rank Pari passu in all
respects and which are admitted to the Official List (by way of a Standard
Listing) and are traded on which are traded on 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 and signed on its behalf by:
Sir Anthony Jolliffe
Non-Executive Chairman
CORPORATE GOVERNANCE REPORT
Introduction
The Directors recognise the importance of sound corporate governance and seek
to apply The Quoted Company Alliance Corporate Governance Code for Small and
Medium size Companies (2018) (the 'QCA Code'), which they believe is the most
appropriate recognised governance code for a company of the Company's size
admission to the Official List (by way of a Standard Listing) and to trading
on the London Stock Exchange's main market for listed securities. The
Directors believe that the QCA Code will provide the Company with the
framework to help ensure that a strong level of governance is developed and
maintained, enabling the Company to embed a governance culture into its
organisation. A copy of the QCA Code is publicly available at www.theqca.com.
The QCA Code has ten principles of corporate governance that the Company has
committed to apply within the foundations of the business. These principles
are:
1. establish a strategy and business model which promote 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; and
10. Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
Here follows a short explanation of how the Company applies each of the
principles, including where applicable any deviation from those principles.
Business model and strategy
The Board believes that considerable shareholder value can be delivered if the
Company remains focused on its strategy of medical cannabis contract
cultivation aligned to the growing medical cannabis markets across Europe. In
our efforts to be the dominant wholesale supplier of medical cannabis flowers
in Europe, we have established a solid network of key strategic partners to
assist us in achieving our goals.
Understanding shareholder needs and expectations
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. During the period the Directors
have met with shareholders to discuss issues and provide feedback over the
Company's evolving strategy. In addition, all shareholders were invited to
attend the annual general meeting ("AGM") that was held in 2022 and are again
encouraged to attend the next AGM, details of which will be published in due
course. Investors also have access to current information on the Company
through its website, www.hellenicdynamics.com
(http://www.hellenicdynamics.com) and the various Hellenic social media
channels
Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Company is reliant upon
open communication with its internal and external stakeholders: employees,
investee companies, shareholders, contractors, suppliers, regulators and other
stakeholders. The Company has an ongoing relationship with a broad range of
its stakeholders as part of the Company's corporate social responsibility
("CSR") strategy and has regular and direct interaction where it provides
these stakeholders with opportunities to raise issues and provide feedback to
the Company. Further details on the Company's corporate social responsibility
can be found in the strategic report on page 9 of the Report and Accounts.
Risk management
The Board is responsible for ensuring that procedures are in place and being
implemented effectively to identify, evaluate and manage the significant risks
faced by the Company. It has an established a framework of internal financial
controls to address financial risk and is regularly reviewing the
non-financial risks to ensure all exposures are adequately managed. Due to the
early stage and size of the Company the Board has not set an internal audit
procedure in place in this period. The principal risks and uncertainties are
as set out in the Strategic and Corporate Governance Report on pages 13 to 14
of the Report and Accounts.
Well functioning Board of Directors
The Board currently comprises of a Non-Executive Chair, Sir Anthony Jolliffe,
the Chief Executive, Davinder Rai, Filippos Papadopoulos as Executive Director
and Joseph Colliver as a Non-Executive Director. Both Sir Anthony and Joseph
Colliver considered to be a fully independent Non-Executive Directors with
neither holding any Ordinary Shares in the Company.
Board of Directors
Sir Anthony Jolliffe - Non-Executive Chairman (appointed 5 December 2022)
City accountant and international trade pioneer, Sir Anthony formed his own
accountancy practice in 1965 which he grew into a multinational operation with
offices in 44 countries and over 200 partners. Sir Anthony's global career
included many directorships of private and public companies in the UK, USA,
China, Japan, Canada and South America. After leading the sale of DHL to Japan
Airlines, Sir Anthony embarked on numerous business projects in international
trade, he was on the board of Walker Greenbank, which currently trades on AIM
as Sanderson Design Group PLC (SDG), Sir Anthony has also been the chairman of
Smart Pensions, which is authorised and supervised by the Pensions Regulator.
He was knighted GBE in 1982 and also holds the Knight Order of St. John, Order
of Adbul Azziz - Saudi Arabia, Order of Nepal, Order of the Orange -
Netherlands, Hon Doctor of science - City of London University and Hon Doctor
of Music - Guildhall school of music. Some of his past public duties have
included being the Lord Mayor of London, Sheriff of London, President of the
London Chamber of Commerce, Chairman of the Police Dependants Trust, Chairman
of Stoke Mandeville Hospitals and Treasurer and Vice President of the European
League for Economic Co-operation.
Joseph Colliver - Non-Executive Director (appointed 5 December 2022)
A qualified Fellow Chartered Accountant with finance, regulatory, commercial
and management consulting experience across the life sciences, professional
services, and other sectors. Joseph is currently the CFO and main board
director of Phytome Life Sciences Plc, a CRO and early-stage drug developer of
advanced agro-pharmaceutical technologies and plant-derived biotherapeutics,
and non-executive Chairman of Psych Capital PLC, a biotech company developing
therapeutic treatments, drug development, and media and communication
platforms. Previously CFO of Sativa Group Inc. (renamed Goodbody Health Ltd) a
life sciences company operating in the CBD wellness and medical cannabis
space, where Joseph led the reverse takeover of Stillcanna Inc, via a scheme
of arrangement. Prior to this, Joseph held senior finance and commercial
roles within the Kantar arm of WPP Group Plc for a decade, after qualifying in
audit with Mazars LLP.
Dr Filippos Papadopoulos - Executive Director (appointed 5 December 2022)
Dr. Filippos Papadopoulos holds a PhD from London School of Economics and M.A.
in International Relations from the University of Sussex; he is currently the
Director of the Strategic Project Management Office of the American Farm
School (AFS). In this capacity he is responsible for the two Agricultural
Entrepreneurship Centres run by AFS and oversees projects in over thirty
locations throughout Greece. In addition, he is coordinating EU- funded
research & innovation projects, the Internet of Food Alliance (InoFA)
cluster and oversees the AFS private LoRaWAN pilot network throughout Greece.
Building and managing multi-actor alliances between research institutes, civil
society organisations and the real economy is one of his core activities. His
fields of interest include Diffusion of Technical Innovation, Community of
Practice Building, Consumer Behaviour, Entrepreneurship, Organisational
Culture & Climate, Leadership and Management.
Davinder Rai - Chief Executive Officer (appointed 5 December 2022)
Davinder has a wide breath of experience, actively investing in and operating
businesses and interests with a focus on natural resources, technology and
entertainment, globally. Davinder has held senior board positions for a number
of private and public companies spanning Europe and North America. Having left
university, Davinder went on to become an independent commodities trader,
specifically involved in the sale and purchase of minerals from West Africa
and Asia. Davinder has daily interactions with global leaders and industry
pioneers.
All Directors are subject to re-election in accordance with both the
requirements of the UK Companies Act 2006. The letters of appointment for all
Directors stipulate the time commitment that each Director is expected to
provide to the Company. The Executive Directors are contracted to provide
these services on an exclusive basis, though Board approval may be given to
engage in outside paid work. The Non-Executive Directors acknowledge in their
letter of appointment that the nature of the role makes it impossible to be
specific on maximum time commitment, but that there will be a minimum of 2-3
days a month, which will include preparation for and attendance at monthly
board meetings. The Board Non-Executive Chairman serves as chair of every
meeting of the Board of Directors.
The Board is expected to meet at least 6 times per year. It has established an
Audit and Risk Committee, Remuneration Committee and Nomination Committee,
particulars of which can be found on pages 29 to 35 of the Report and
Accounts.
Attendance at Board and Committee meetings
The Company will report annually in the Directors' Report on the number of
committee meetings held during the year and the attendance record of
individual Directors. Directors meet formally and informally both in person
and by telephone.
Board Meeting frequency and attendance
Member Position Appointed Resigned Meetings attended
Peter Jay Chairman 16/12/2022 12 of 12
Brent Nigel Fitzpatrick Non-Executive Director 05/12/2022 12 of 12
Simon Grant-Rennick Non-Executive Director 05/12/2022 12 of 12
Sir Anthony Jolliffe Non-Executive Chairman 05/12/2022 3 of 3
Joseph Colliver Non-Executive Director 05/12/2022 3 of 3
Filippos Papadopoulos Executive Director 05/12/2022 3 of 3
Davinder Rai CEO 05/12/2022 3 of 3
Appropriate skills and experience of the Directors
The Board currently consists of two Executive Directors and two Non-Executive
Directors and, in addition, the Company has employed the outsourced services
of Ben Harber of Shakespeare Martineau LLP (SGH Company Secretaries Limited),
appointed 16 December 2022, to act as the Company Secretary. The Company
believes that the Directors have wide ranging experience working for, and, or
advising businesses operating within the public markets and cannabis space.
They also have an extensive network of relationships to reach key
decision-makers to help achieve their strategy.
The Board recognises that it currently has a limited, all male, Board and does
not have a Finance Director. This will form a part of any future recruitment
consideration if the Board concludes that replacement or additional Directors
are required. The Board is aware, that as it grows, it will look to recruit
and develop a diverse and gender-balanced team.
There is no formal process to keep Directors' skill sets up-to-date given
their wealth of experience. However, the Company's auditors, brokers and
financial advisers provide regular updates on governance, financial reporting
and the Listing Rules and the Board is able to obtain advice from other
external bodies when necessary.
Evaluation of Board performance
Internal evaluation of the Board, the Committees and individual Directors will
be undertaken on an annual basis in the form of peer appraisal and discussions
to determine the effectiveness and performance against targets and objectives.
As a part of the appraisal the appropriateness and opportunity for continuing
professional development whether formal or informal is discussed and
assessed.
Corporate culture
The Board recognises that their decisions regarding strategy and risk will
impact the corporate culture of the Company as a whole which in turn will
impact the Company's performance. The Directors are very aware that the tone
and culture set by the Board will greatly impact all aspects of the Company
and the way that consultants or other representatives behave. The corporate
governance arrangements that the Board has adopted are designed to instil a
firm ethical code to be followed by Directors, consultants and representatives
alike throughout the entire organisation. The Company strives to achieve and
maintain an open and respectful dialogue with representatives, regulators,
suppliers and other stakeholders. Therefore, the importance of sound ethical
values and behaviours is crucial to the ability of the Company to successfully
achieve its corporate objectives. The Board places great importance on this
aspect of corporate life and seeks to ensure that this flows through all that
the Company does. The Directors consider that at present the Company has an
open culture facilitating comprehensive dialogue and feedback and enabling
positive and constructive challenge. The Company has adopted, with effect from
the date on which its shares were admitted to the LSE's main market for listed
securities, a code for Directors' dealings in securities which is appropriate
for a company whose securities are traded on the main market of the LSE and is
in accordance with the requirements of the Market Abuse Regulation which came
into effect in 2016.
Issues of bribery and corruption are taken seriously. The Company has a
zero-tolerance approach to bribery and corruption and has an anti-bribery and
corruption policy in place to protect the Company, its employees and those
third parties to which the business engages with. The policy is provided to
staff upon joining the business and training is provided to ensure that all
employees within the business are aware of the importance of preventing
bribery and corruption. Each employment contract specifies that the employee
will comply with the policies. There are strong financial controls across the
business to ensure on going monitoring and early detection.
Bribery & Corruption
The Company takes bribery and corruption seriously as such the Company has a
robust Bribery and Corruption policy in place that is presented to all members
of the Hellenic team.
Annual General Meeting
The Company will announce the date of the next AGM in Q3 of the Company's
fiscal year and details will be published via the regulatory news service
("RNS").
Maintenance of governance structures and processes
The Company's governance structures are appropriate for a company of its size.
The Board also meets regularly, and the Directors continuously maintain an
informal dialogue between themselves. The Non-Executive Chairman is
responsible for the effectiveness of the Board and the Chief Executive Officer
has primary contact with shareholders. The execution of the Company's
investment strategy is a matter also reserved for the Chief Executive Officer.
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 will be made available for review at the next AGM.
As of the 5 December 2022, Sir Anthony Jolliffe was appointed as chair of the
Remuneration Committee as independent Non-Executive Director along with
Davinder Rai (CEO).
Audit and Risk Committee
The Company has established an Audit and Risk Committee with delegated duties
and responsibilities. During the period, there were two members of the Audit
and Risk Committee being Joseph Colliver (chair) as independent Non-Executive
Director and Amit Parhar. Joseph who is a fellow chartered accountant who
qualified in audit practice with Mazars LLP, and is an experienced board
director and chief financial officer who has significant corporate governance,
financial control and risk management experience. Amit is the Company's Head
of financial Operations and during his career has held budget and P&L
responsibilities and fully understands the requirements of independent audit.
The Audit and Risk Committee is responsible, amongst other things, for making
recommendations to the Board on the appointment of auditors and the audit fee,
monitoring and reviewing the integrity of the Company's financial statements
and any formal announcements on the Company's financial performance as well as
reports from the Company's auditor on those financial statements. In addition,
the Audit and Risk Committee will review the Company's internal financial
control and risk management systems to assist the Board in fulfilling its
responsibilities relating to the effectiveness of those systems, including an
evaluation of the capabilities of such systems in light of the expected
requirements for any specific acquisition target.
The Audit and Risk Committee meets with the auditors at least twice a year and
more frequently if required.
Terms of reference of the Audit and Risk Committee will be made available upon
written request.
The Audit and Risk Committee report is included on pages 32 to 34 of the
Report and Accounts.
Nomination Committee
The Company has established a Nomination Committee, the members of which
are Sir Anthony Jolliffe, Davinder Rai and Filippos Papadopoulos. The
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 Nomination Committee will be made available upon
written request.
The Nomination Committee report is included on page 35 of the Report and
Accounts.
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 SGH Company Secretaries Limited who are responsible
for the Board complying with UK procedures.
Effectiveness
For the period under review the Board comprised of a Chairman and two
Non-Executive Directors prior to the completion of the Admission and reverse
takeover of Hellenic Dynamics SA after which the Board comprised of two
Directors and two Non-Executive Directors.
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; this has been explored in more
detail on pages 16 to 17 of the Report and Accounts.
Appointments
The Board is responsible for reviewing the structure, size and composition of
the Board and Advisory Board and making recommendations to the Board with
regards to any required changes.
Commitments
All Directors have disclosed any significant commitments to the Board and
confirmed that they have sufficient time to discharge their duties.
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 Non-Executive Chairman and CEO 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 Non-Executive Chairman normally carries out an annual formal appraisal 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 four male Directors, the Board supports
diversity in the Boardroom and the Financial Reporting Council's aims to
encourage such diversity and has an equality, diversity and inclusion policy
in place. Aside from the Directors, there are five members of the management
team and five members of the Advisory Board. The following table sets out a
breakdown by gender at 31 March 2023:
Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management
Men 4 100% 100% 4 100%
Women 0 0% 0% 0 0%
Not specified/prefer not to say 0 0% 0% 0 0%
The Board has not met the following targets on board diversity as at 31 March
2023:
1. at least 40% of the individuals on its board of directors are
women;
2. at least one of the following senior positions on its board
of directors is held by a woman: (A) the chair; (B) the Chief Executive; (C)
the senior independent director.
Due to the size of the Company at present the Company has opted to operate a
small board, where 50% of the Board comprises of the original founding
shareholders it has therefore not been possible for the Board to meet the
target above. As the Company progresses to its next stage of revenue
generation and expansion the Company has and always will implement an equal
opportunities programme for employment.
Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management
White British or White (including minority-white groups) 3 75% 3 1 50%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 1 25% 1 1 50%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
The Board has met the following targets on Board diversity as at 31 March
2023;
1. at least one individual on its board of directors is from a minority
ethnic background, such data is collected as part of the enrolment strategy
for all members of the wider Group and covered in the Company's Employee
Handbook.
Due to the size of the Company in its pre-revenue stage and with regards to
its operations in Greece, the Directors do not foresee any risks in being able
to meet or continue to meet the board diversity targets in the next accounting
period.
The Board will pursue an equal opportunity policy and seek to employ those
persons most suitable to delivering value for the Company.
Management
The Group has five members of its management team in the wider Group:
Number of Management Percentage of management
Men 3 60%
Women 2 40%
Not specified/prefer not to say 0 0%
Due to the size of the Group in its pre-revenue stage and with regards to its
operations in Greece, the Directors do not foresee any risks in being able to
meet or continue to meet the management diversity targets in the next
accounting period, only of such positions and applicants for such positions
are deemed suitable for the roles.
The Group will pursue an equal opportunity policy and seek to employ those
persons most suitable to delivering value for the Company.
Accountability
The Board is committed to providing shareholders with a clear assessment of
the Company'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 and Risk
Committee oversight of the relationship with the Company's auditors as
outlined in the Audit and Risk Committee report on pages 32 to 34 of the
Report and Accounts.
Going concern
The Directors, whilst they draw attention to the material uncertainty that
exists at the date of these financial statements, nevertheless consider it
appropriate to continue to adopt the going concern basis of accounting in
preparing the financial statements. In making their assessment of going
concern, the Directors have reviewed forecasts for the newly formed Group, for
a period of at least 12 months from the date of approval of these financial
statements. The Group is not currently generating revenues, and therefore an
operating loss has been reported in the period. Revenues from the first
cultivation cycle are expected in the second half of the calendar year.
Taking into account the redemption of the £375,000 convertible loan note in
early July and the realisation of significant cost savings against its initial
budget for the purchase of plant and equipment, the Directors have assessed
the cash requirements of the Group in terms of operational costs, capital
expenditure, gross profit contribution from the initial sales of product and
the financial resources available to the Group including the following sources
of funding:
· On the 6 July 2023, the Company announced advanced late stage
discussions with a number of funding sources, including a number of grant
applications.
· The Directors are in advanced discussions with a financial
institution pertaining to a capital debt draw-down facility.
· Discussions with brokers and corporate finance advisors regarding
potential future equity rounds.
Based on achieving successful cultivation cycles and the sale of crops,
securing only one of the grant applications currently in progress,
implementing savings in discretionary operational spend and delaying capital
investment, the Directors, whilst acknowledging the material uncertainty that
exists at the date of these financial statements, nevertheless are confident
of maintaining sufficient working capital for the twelve-month period from the
date of this report.
The auditors make reference to the material uncertainty in the Auditors'
report on page 37 of the Report and Accounts.
Internal controls
The Board of Directors reviews the effectiveness of the Company's system of
internal controls in line with the requirement of the Code. 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 Company had necessary procedures in place
for the period under review and up to the date of approval of the annual
report and financial statements. The Directors acknowledge their
responsibility for the Company'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
Company. The Directors carry out a risk assessment before signing up to any
commitments. This is by way of either arranged Board meetings or informal
meeting of the Board.
The Directors are responsible for taking such steps as are reasonably
available to them to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities.
Shareholder relations
Communication and dialogue
Open and transparent communication with all shareholders is given high
priority and there is regular dialogue, as well as general presentations made
at the time of the release of this annual report as per page 15 of the Report
and Accounts. 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 and also
publishes them on the Company's website. Regular updates to record news in
relation to the Company cultivation and other business and supporting
activities by way of RNS Reach, RNS and press by way of PR and via the
Company's various social media accounts. This is in addition to updates to the
Company's website.
The Directors are available to meet or talk with shareholders to discuss any
issues and gain an understanding of the Company's business, its strategies and
governance.
Annual General Meeting ("AGM")
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.
This Governance Report was approved by the Board and signed on its behalf by:
Anthony Jolliffe
Non-Executive Director
DIRECTORS' REPORT
The Directors present their report with the audited financial statements of
the Group for the period ended 31 March 2023. A commentary on the business
for the period is included in the Chairman's Statement on pages 2 to 3 of the
Report and Accounts. A review of the business is also included in the
Strategic Report on pages 6 to 14 of the Report and Accounts.
General information
Registered
office
21 Arlington Street
London
SW1A 1RN
United Kingdom
Company registration No.
06374598
(England and Wales)
Wholly owned subsidiary
Hellenic Dynamics SA
Chorigi - Kilkis
P.C. 6100
Greece
The Company's ordinary Shares of £0.001 each ("Ordinary Shares") are admitted
to the Official List (by way of a Standard Listing) and to trading on the
London Stock Exchange's main market for listed securities. The Listing Rules
set out the listing obligations for a Standard Listed company.
Directors
The Directors of the Company during the period and their beneficial interest
in the Ordinary Shares of the Company at 31 March 2023 were as follows:
Position Appointed Resigned Ordinary Shares Options
Director
Sir Anthony Jolliffe Non-Executive Chairman 05/12/2022 - - 93,975,000
Joseph Colliver Non-Executive Director 05/12/2022 - - 62,650,000
Filippos Papadopoulos Director 05/12/2022 - 982,963,319 62,650,000
Davinder Rai CEO 05/12/2022 - 452,923,219 250,600,000
Peter Jay Chairman - 16/12/2022 36,664,557 46,305,478
Nigel Brent Fitzpatrick Non-Executive Director - 05/12/2022 17,721,519 32,413,835
Simon Grant-Rennick Non-Executive Director - 05/12/2022 - 32,413,835
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has an indemnity policy in place for
all four Directors.
Substantial shareholders
As at 31 March 2023, the total number of issued Ordinary Shares with voting
rights in the Company was 12,530,000,000. Details of the Company's capital
structure and voting rights are set out in note 17 to 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 31 March 2023. No changes have been
disclosed to the Company since year ended 31 March 2023 to the date of this
report.
Party Name Number of Ordinary Shares % of Share Capital
George Papadopoulos 2,936,796,770 23.44%
Samos Investments Limited 2,061,288,134 16.45%
Vidacos Nominees Limited 1,121,288,149 8.95%
Keynes Ventures Limited 1,024,371,061 8.18%
Filippos Papadopoulos 982,963,319 7.74%
James Brearley CREST Nominees Limited 595,238,095 4.75%
Davinder Rai 447,024,327 3.57%
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.
Emissions
The Company is aware that it needs to measure its operational carbon footprint
in order to limit and control its environmental impact. However, given the
very limited nature of its operations during the period under review,
requiring significantly less than 40,000kWh of energy, it has not been
practical to measure its carbon footprint in the period.
In the future, the Company 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 period ended 31
March 2023 (2022: nil).
Future developments and events subsequent to the period end
The Company has adopted a contract cultivation product outsourcing and
development ("POD") concept and repaid a convertible loan note post year end.
Further details can be found in the Chief Executive Officers report on page 4
of the Report and Accounts.
Corporate Governance
The Corporate Governance report forms part of the Director's Report and is
disclosed on pages 24 to 27 of the Report and Accounts.
Going Concern
The Company's business activities, together with facts likely to affect its
future operations and financial and liquidity positions are set out in the
Chairman's Statement and also note 24 to of the financial statements. In
addition, note 24 to the financial statements disclose the Company's financial
risk management policy.
The Directors, whilst they draw attention to the material uncertainty that
exists at the date of these financial statements, nevertheless consider it
appropriate to continue to adopt the going concern basis of accounting in
preparing the financial statements. The going concern statement is detailed in
full in note 2.1 of the consolidated financial statements. In making their
assessment of going concern, the Directors have reviewed forecasts for the
newly formed Group, for a period of at least 12 months from the date of
approval of these financial statements. The Group is not currently
generating revenues, and therefore an operating loss has been reported in the
period. Revenues from the first cultivation cycle are expected in the second
half of the calendar year.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the Company on 6
March 2023 They 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 alongside the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with UK-adopted international accounting standards
("UK-adopted IAS")
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
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.
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 UK-adopted international accounting
standards ("UK-adopted IAS")
· have been followed, subject to any material departures disclosed
and explained in the financial statements; and
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and the Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company 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 the Company
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 and the Company'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 Guidance and
Transparency Rule
Each of the Directors, whose names and functions are listed on page 24 of the
Report and Accounts confirm that, to the best of their knowledge and belief:
· the financial statements prepared in accordance with UK-adopted
international accounting standards ("UK-adopted IAS"), give a true and fair
view of the assets, liabilities, financial position and loss of the Group and
the Company and the undertakings included in the consolidation taken as whole;
and
· the management report, as required by the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority which is covered by the
Directors' Strategic Report (pages 6 to 14 of the Report and Accounts) and the
Corporate Governance Report (pages 15 to 23 of the Report and Accounts) of
this annual report and financial statements, includes a fair review of the
development and performance of the business and the position of the Group and
the Company and the undertakings included in the consolidation taken as whole,
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 Group and 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 and is signed on
its behalf by:
Davinder Rai
Chief Executive Officer
REMUNERATION COMMITTEE REPORT
The Remuneration Committee presents its report for the period ended 31 March
2023.
Membership of the Remuneration Committee
During the period ended 31 March 2023 and until 28 July 2023, the Remuneration
Committee was comprised of one Non- Executive Director, Sir Anthony Jolliffe
(chair) and Davinder Rai the Company's CEO. Details of the audited Directors
shareholding can be found on page 29 of the Report and Accounts.
During the period ended 31 March 2033, no formal meeting of the Remuneration
Committee was held.
Subject to what appears below, no other third parties including shareholders
have provided advice that materially assisted the Remuneration Committee
during the period.
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 advisers;
· 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
On 5 December 2022, the Company entered into a service contract with its Chief
Executive Officer, Davinder Rai and its Executive Director Filippos
Papadopoulos on terms as set out in the prospectus published on 14 November
2022.
There was no vote taken during the last general meeting with regard to the
Directors' remuneration policy. This is considered reasonable given that the
Company was suspended pending direction from the FCA on its proposed
Admission.
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 5 December 2022 on terms as set out in the prospectus published on
14 November 2022.
Other Employees
During the period ended 31 March the Company had 5 members in its management
team and 5 members in its Advisory Board.
Recruitment policy
Base salary levels will take into account market data for the relevant role,
internal relativities, their individual experience and their current base
salary. For external and internal appointments, the Board may agree that the
Company will meet certain relocation and/or incidental expenses as
appropriate.
Terms of appointment
The services of the Directors during the period ended 31 March 2023 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 a minimum of 2-3 days a
month, which should include attendance at all meetings of the Board and any
sub-committees of the Board.
Director Appointed Number of months completed
Sir Anthony Jolliffe 05/12/2022 4
Joseph Colliver 05/12/2022 4
Filippos Papadopoulos 05/12/2022 4
Davinder Rai 05/12/2022 4
Directors' emoluments and compensation (audited)
Set out below are the emoluments of the Directors for the period 5 December
2022 to 31 March 2023 (GBP):
Name of Director Salary and fees Taxable benefits Annual bonus and long-term benefits Pension related benefits Total Options
£ £ £ £ £
Sir Anthony Jolliffe 16,667 - - - 16,667 93,975,000
Joseph Colliver 15,000 - - 188 15,188 62,650,000
Filippos Papadopoulos 10,000 - - 125 10,125 62,650,000
Davinder Rai 50,000 - - 625 50,625 250,600,000
Name of Director Base salary (per annum) Gross Notice period Term
£
Sir Anthony Jolliffe 50,000 3 month 12 months from Admission
Joseph Colliver 45,000 3 month 12 months from Admission
Filippos Papadopoulos 30,000 3 month -
Davinder Rai 150,000 3 month -
All Directors are subject to re-election at the Company's annual general
meeting.
Set out below are the emoluments of the Directors for the period 1 April 2022
to 5 December 2022 (GBP):
Name of Director Salary and fees Total Payments upon resignation Salary and fees Resigned
1 April 2022 to 5 December 2022 Year to 31 March 2022
£ £ £ £
Peter Jay 33,663 33,663 9,079 37,200 16 December 2022
Simon Grant Rennick 33,663 33,663 9,079 37,200 5 December 2022
Nigel Brent Fitzpatrick 34,021 34,021 9,079 37,200 5 December 2022
Payments for loss of office (Audited)
The following payments were made to the former directors UK S.P.A.C. Plc upon
their resignation after the reverse takeover:
· Peter Jay: £9,079 *(resigned 16 December 2022)
· Simon Grant Rennick: £9,079 **(resigned 5 December 2022)
· Nigel Brent Fitzpatrick: £9,079 ***(resigned 5 December 2022)
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 as a
medical cannabis cultivator since late 2022, is not paying dividends, is
currently incurring losses as it gains scale and its focus during the year
ended 31 March 2023 was to complete the reverse takeover, gain Admission and
complete all works at its facility in Greece with a view of beginning
commercial cultivation. 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 this tables would be
meaningful given that the Directors of the Company were only appointed on 5
December 2022. 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 period in the share
capital of the Company at 31 March 2023 which includes the previous directors
prior to the completion of the reverse takeover and at the date of this report
has been set out in the Directors' Report on pages 24 to 28 of the Report and
Accounts.
The Company does not currently have any other annual or long-term incentive
schemes in place, other than the share option scheme as set out on page 25 of
the Directors report of the Report and Accounts, for any of the Directors and
as such there are no disclosures in this respect.
Consideration of shareholder views
The Board considers shareholder feedback received and guidance from
shareholder bodies. This feedback, plus any additional feedback received from
time to time, is considered as part of the Company's annual policy on
remuneration.
Approved on behalf of the Board of Directors by:
Sir Anthony Jolliffe
Chair of the Remuneration Committee
AUDIT AND RISK COMMITTEE REPORT
The Audit and Risk Committee comprises of one Non-Executive Director, Joseph
Colliver (chair) and Amit Parhar the Company's Head of Financial
Operations. From Admission the Audit and Risk Committee has overseen the
Company's financial reporting and internal controls and provides a formal
reporting link with the external auditors. The ultimate responsibility for
reviewing and approving the annual report and financial statements and the
half-yearly report remains with the Board.
Main Responsibilities
The Audit and Risk 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 whistle-blowing, anti-fraud and
bribery procedures are in place;
· overseeing the Board's relationship with the external auditor and
external accountants 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 Guidance and Transparency Rules and
the Regulation on Market Abuse ("MAR")
Governance
Joseph Colliver has over 19 years of experience working with a wide variety of
companies in the roles of board director, Chief Financial Officer, Finance
Director, and auditor. As a result, the Board is satisfied that the Audit and
Risk Committee has recent and relevant financial experience.
Members of the Audit and Risk Committee are appointed by the Board. Neither
Joseph Colliver or Amit Parhar are shareholders in the in the Company. The
Board believes they are considered to be independent in both character and
judgement.
The Company's external auditor is PKF Littlejohn LLP and the Audit and Risk
Committee will closely monitor the level of audit and non-audit services they
provide to the Company.
Meetings
During the audit and process to approve the annual report and accounts for the
period to the 31 March 2023 the Audit and Risk Committee has meet with the
auditors on two occasions, in addition to five calls and virtual meetings.
The key work undertaken by the Audit and Risk 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-period results;
· review of the effectiveness of the Audit and Risk 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 following significant issues were considered by the Audit and Risk
Committee.
Significant issue Summary of significant issue Actions and conclusion
Going concern Assessment of the Group's ability to continue as a going concern as part of On 6 July, the Company announced the redemption of a £375,000 convertible
the preparation of the financial statements. loan note and the application for a number of grants. In addition, the
Directors are also in active conversations with advisers and finance providers
regarding access to a range of funding sources, including grants, a loan
drawdown facility, and discussions with advisers regarding future equity
This assessment of going concern covers a period of at least 12 months from funding.
the date of signing the financial statements.
The Directors are confident that based on obtaining some or all of these
various sources of finance over the coming months, as well as contribution
from the anticipated first harvest later in the year, and therefore the
Committee, whilst they draw attention to the material uncertainty that exists
at the date of these accounts, nevertheless consider it is appropriate to
continue to adopt the going concern basis of accounting in preparing the
financial statements. The going concern statement is detailed in full in note
2.1 of the consolidated financial statements.
Acquisition accounting The accounting treatment of the Company acquiring Hellenic Dynamics S.A. Management concluded that the acquisition should be accounted for as a reverse
giving rise to a share-based payment under IFRS 2. acquisition but since the Company did not meet the definition of a business it
was not treated as a business combination under IFRS 3. Instead, 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 at acquisition was
recognised. Further details of the accounting treatment are set out in notes
2.3 and 9 of the financial statements.
Share-based payments The Company makes equity-settled share-based payments to its employees and The charge was calculated based on market conditions such as share price
directors. The fair value of the options were charged. volatility, risk free rate, and expected life, using the Black-Scholes
framework. Management used inputs from impartial external sources to
appropriately calculate share-based payments reserve postings and share based
payments expense during the period. Calculations are set out in note 19 to the
consolidated financial statements.
Convertible loan notes The Company issued £375,000 of convertible loan notes in conjunction with the Under IAS 32, Convertible loan notes are classified as either equity,
reverse takeover and subsequent Admission. The accounting treatment was financial liabilities or a mixture of both in accordance with the contractual
assessed under IAS 32 Financial Instruments. agreement. Management concluded that it should be accounted for as a 'compound
financial instrument' under IAS 32. Further details are included in note 23 to
the consolidated financial statements.
Carrying value of the investments and assets The carrying values of the Group's property, plant and equipment (PPE), and Management conducted a discounted cashflow forecast over the next five years,
investments are tested for impairment. to determine if there were any indications of impairment of PPE and estimated
the recovery value of future cash flows from the cash generating units (CGUs).
Management were satisfied that no indications of impairment were present.
External auditor
The Company's external auditor is PKF Littlejohn LLP. The external auditor has
unrestricted access to the Audit and Risk Committee Chair. The Committee is
satisfied that PKF Littlejohn LLP has adequate policies and safeguards in
place to ensure that auditor objectivity and independence are maintained. The
external auditors report to the Audit and Risk Committee annually on their
independence from the Company. In accordance with professional standards, the
partner responsible for the audit will be changed every five years. The
current auditor, PKF Littlejohn LLP was first appointed by the Company on 6
March 2023 following them being the reporting accountants to the Admission and
therefore the current partner is due to rotate off the engagement after
completing the audit for the period ended 31 March 2027. Having assessed the
performance objectivity and independence of the auditors, the Committee will
be recommending the reappointment of PKF Littlejohn LLP as auditors to the
Company at the 2023 Annual General Meeting.
Prior to being the Company's auditor, PKF Littlejohn LLP was appointed as the
Company's reporting accountant for the Admission. As reporting accountants PKF
Littlejohn LLP was appointed on 1 August 2021 and the role of reporting
accounts ended on 5 December 2022.
Joseph Colliver
Chair of the Audit and Risk Committee
NOMINATION COMMITTEE REPORT
The Nomination committee is comprised of Sir Anthony Jolliffe (chair),
Filippos Papadopoulos and Davinder Rai.
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 agrees to meet 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.
On behalf of the Nomination Committee
Sir Anthony Jolliffe
Chair of the Nomination Committee
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HELLENIC DYNAMICS PLC (FORMERLY
KNOWN AS U.K. SPAC PLC)
Opinion
We have audited the financial statements of Hellenic Dynamics Plc (the 'parent
company') and its subsidiary (the 'group') for the period ended 31 March 2023
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 Cash Flow Statements 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 March 2023 and of
the group's loss for the period 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.
Other Matter
The financial statements of the group for the year ended 31 December 2021 were
not audited given that they solely relate to the financial information of the
subsidiary Hellenic Dynamics S.A. which was acquired through a reverse
takeover (see note 9). Hence the comparative balances within these financial
statements for the group are unaudited.
Material uncertainty related to going concern
We draw attention to note 2.1 in the financial statements, which indicates
that the group's current cash resources are insufficient to enable the group
to meet its recurring outgoings for the twelve months from the date of
approval of the financial statements. The group incurred a net loss of
£4,853,146 during the period ended 31 March 2023. As stated in note 2.1,
these events or conditions, along with the other matters as set forth in note
2.1, indicate that a material uncertainty exists that may cast significant
doubt on the group's and parent company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included:
· Reviewing the cashflow forecast and budgets for the period to 31
December 2024 and the corresponding key assumptions and inputs used. This
included the expected cash receipt in relation to grant applications, initial
revenue generation, repayment of convertible loan notes and future equity
raises;
· Discussions with management regarding the future plans of the
group; and
· Challenging management's key assumptions and inputs, in
particular the forecasted income and cash generation, committed costs and
plausible scenarios impacting the going concern assessment.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit,
and evaluating the effect of misstatements on our audit and on the financial
statements. For the purposes of determining whether the financial statements
are free from material misstatements, we define materiality as the magnitude
of misstatement that makes it probable that the economic decisions of a
reasonably knowledgeable person, relying on the financial statements, would be
changed or influenced. We also determine a level of performance materiality
which we use to assess the extent of testing needed to reduce to an
appropriate level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a
whole. When establishing our overall audit strategy, we determined a magnitude
of uncorrected misstatements that we judged would be material for the
financial statements as a whole.
Materiality for the group financial statements was set at £58,700. This was
calculated based on 3% of net assets. Net assets were used as the benchmark
for the basis of materiality being the key area of relevance to stakeholders
in assessing the financial performance of the group in its early years of
production. Performance materiality was set at £38,150. In determining
performance materiality of the group, we considered the risk profile of the
listed entity, including the key audit maters as described below and the
increased risk associated with the first year of reporting requirements.
We agreed with the Audit and Risk Committee that we would report to them all
audit differences identified during the course of our audit in excess of
£2,930 for the group. We also agreed to report any other audit misstatements
below that threshold that we believe warranted reporting on qualitative
grounds.
The parent company's materiality was calculated on the same basis as the group
but restricted to £57,700 (2022: £33,823), to ensure that if fell level
below that of the Group. Performance materiality was set at £37,500 (2022:
£25,367). This was determined in line with the reasons outlined above with
regard to the group.
We agreed with the Audit and Risk Committee that we would report all
individual audit differences identified during the course of our audit in
excess of £2,880 (2022: £1,691) together with any other audit misstatements
below that threshold that we believe warranted reporting on qualitative
grounds.
The audit of Hellenic Dynamics S.A., the wholly owned subsidiary, was
performed by a component auditor, with materiality set by us at £30,000.
Our approach to the audit
The group includes the listed parent company and its subsidiary. We tailored
the scope of our audit to ensure that the planned procedures allowed us to
gain sufficient appropriate audit evidence to be able to give an opinion on
the financial statements as a whole, taking into account the structure of the
group and the parent company, the accounting processes, and the industry in
which they operate.
As part of our planning, we assessed the risk of material misstatement
including those that required significant auditor consideration at the
component and group level. In particular, we looked at areas of estimation,
for example in respect of the carrying value of property, plant and equipment,
the carrying value and recoverability of investments in subsidiary at parent
company level, and the consideration of future events that are inherently
uncertain. Procedures were then performed to address the risk identified and
for the most significant assessed risks of misstatement, the procedures
performed are outlined below in the key audit matters section of this report.
We re-assessed the risks throughout the audit process and concluded the scope
remained the same as at planning.
An audit was performed on the financial information of the group's significant
operating components which, for the period ended 31 March 2023, were located
in the United Kingdom and Greece. The component in Greece was audited by a
component auditor operating under our instruction. We communicated regularly
with the component audit team during all stages of the audit and we were
responsible for the scope and oversight of the audit process. This, in
conjunction with additional procedures performed by us, provided sufficient
appropriate audit evidence for our opinion on the group and parent company
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. In addition to the matter
described in the Material uncertainty related to going concern section we
have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Hellenic Dynamics S.A. acquisition treatment and disclosure (Note 2.3 and Note
9)
On admission to the London Stock Exchange, the parent company acquired Our work on this key audit matter included the following:
Hellenic Dynamics S.A. by way of a share for share exchange on 5 December
2022. This was for a consideration of £31,243,342, with the consideration · Obtaining the share purchase agreement to identify the key terms
being satisfied through the issuance of 10,414,447,530 new ordinary shares in and conditions of the acquisition and to confirm ownership;
the parent company at a price of 0.3 pence. As part of the acquisition, U.K
SPAC Plc changed its name to Hellenic Dynamics Plc. · Obtaining management's accounting paper and reviewing and
challenging key assumptions, inputs, data and method applied in the
determination of the fair value;
Although the transaction resulted in Hellenic Dynamic S.A. becoming a wholly · Reviewing the accounting treatment and accounting entries
owned subsidiary of the parent company, the transaction constitutes a reverse included in the period in relation to the reverse acquisition against the
acquisition as the previous shareholders of Hellenic Dynamic S.A. own a requirements of IFRS 2 Share-based Payments; and
substantial majority of the ordinary shares of the parent company and the
Board of Directors of the parent company principally comprise of the Directors · Ensuring that disclosures in the financial statements were in
of Hellenic Dynamics S.A. accordance with the requirements of the relevant financial reporting
framework.
There is a risk that the reverse acquisition has been accounted for
incorrectly and not disclosed appropriately given the complexity of the Based on the audit procedures performed, we are satisfied that management's
transaction which falls outside the scope of IFRS 3 Business Combinations. assessment of Hellenic Dynamics S.A. as the accounting acquirer and Hellenic
This gives rise to significant management judgement in the acquisition Dynamics Plc as the accounting acquiree was appropriate, and was outside of
treatment and disclosure. the scope of IFRS 3 Business Combinations. The reverse acquisition expense
recognised in accordance with IFRS 2 Share-based payments, and management's
treatment in respect of the reverse acquisition, was in line with our
expectations.
Carrying value and recoverability of property, plant and equipment (Note 2.9
and Note 13)
The group has property, plant and equipment at the reporting date totalling Our work on this key audit matter included the following:
£632,244, as shown in the in the Consolidated Statement of Financial
Position. This property, plant and equipment pertains to building · Reviewing component auditor's work over additions during the year
installations, technical equipment and machinery, transportation means, PC which included the vouching of a sample of invoices to supporting documents
hardware and fixtures and furniture. These assets have been purchased and and also ensuring their capitalisation was in accordance with IAS 16 Property,
capitalised in respect of the group's core strategy of cultivation and plant and equipment;
distribution of medical-grade THC end-products.
· Reviewing component auditor's work over a site visit to
To determine whether an item of property, plant and equipment is impaired, the physically verify a sample of assets from the fixed assets register;
requirements of IAS 36 Impairment of Assets must be applied. Items of
property, plant and equipment shall not be carried at more than recoverable · Reviewing component auditor's work over the depreciation charge
amount. Recoverable amount is determined as the higher of an asset's fair for the year;
value less costs to sell and its value in use.
· Considering whether there were indicators of impairment in line
There is a risk that indicators of impairment exist which have not been with IAS 36;
identified, and therefore that the carrying amount of property, plant, and
equipment is overstated as at the period ended 31 March 2023. There is also a · Reviewing and challenging the model inputs as well as estimates
risk that inappropriate purchases have been capitalised with respect to IAS 16 and judgements made by management for reasonableness in the impairment review;
Property, Plant and Equipment.
· Verifying the mathematical accuracy of the impairment model used;
· Reviewing the depreciation policies of the group for
reasonableness and testing an appropriate sample of depreciation calculations;
and
· Ensuring that sufficient and appropriate disclosures had been
made in relation to the judgements and estimates.
Based on the audit procedures performed, we are satisfied with management's
assessment of the impairment indicators relating to property, plant and
equipment given their plans and activities since acquisition to prepare for
revenue generation. We are also satisfied with the carrying value of property,
plant and equipment given the work performed over additions and depreciation
in the period.
Carrying value of the investment in subsidiary and intragroup receivables
(Note 30)
Following the reverse takeover in December 2022 the parent company holds a Our work on this key audit matter included the following:
significant investment in Hellenic Dynamics S.A. of £31,243,342 and has an
intragroup receivable of £439,77 due from the subsidiary, which are both · Confirming ownership of the investment by agreeing the shares and
material to the Parent Company's Statement of Financial Position. shareholders to share certification and share purchase agreement;
The group is in its infancy stage and currently, the assets are not revenue · Considering whether there were any indicators of impairment in
generating. There is a risk that the investment and intragroup receivable may line with IAS 36;
not be fully recoverable and therefore materially overstated.
· Obtaining management's recoverability assessment in respect of
The valuation and potential impairment of the investment in subsidiary the investment in Hellenic Dynamics S.A and the intragroup receivable, and
involves significant judgement and estimation and therefore is an area than challenging key assumptions and inputs;
can be subject to management bias.
· Reviewing and challenging management's budget, cash flow
forecasts and projections for Hellenic Dynamics S.A. to ensure that the
investment in subsidiary and intragroup receivable was recoverable; and
· Ensuring that sufficient and appropriate disclosures had been
made in relation to the judgements and estimates.
Based on the audit procedures performed, we are satisfied with management's
assessment of impairment and recoverability of intragroup receivables given
their plans and activities since acquisition to prepare for revenue
generation.
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.
Opinions 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 period 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 Statement of Directors' responsibilities, 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 application of our cumulative audit knowledge and
experience of the sector.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from the Companies
Act 2006, the Quoted Companies Alliance (QCA) Corporate Governance Code,
General Data Protection Regulation (GDPR), Anti-bribery Laws, Serious
Organised Crime and Police Act 2005, Proceeds of Crime Act 2002, Listing
Rules, Disclosure Guidance and Transparency Rules, 1961 United Nations (UN)
Single Convention on Narcotic Drugs, European Union (EU) Good Manufacturing
Practices (GMP), Good Agricultural and Collection Practices for Medical Plants
(GACP) and the EU Good Distribution Practices (EU-GDP)
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures included,
but were not limited to:
o Making enquiries of management;
o A review of Board minutes;
o A review of legal edger accounts; and
o A review of Regulatory News Services announcements.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the potential for management bias was identified in relation
to the carrying value and recoverability of the property, plant and equipment
and the carrying value of investments in subsidiary and intragroup receivable
and the accounting treatment and disclosure of the acquisition as described in
the Key Audit Matters section above. We addressed this by challenging the
assumptions and judgements made by management when auditing these significant
accounting estimates.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
· As part of the group audit, we have communicated with component
auditor the risks associated with the components of the group, including the
risk of fraud as a result of management override of controls. To ensure that
this has been completed, we have reviewed component auditor working papers in
this area and obtained responses to our group instructions from the component
auditors.
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
(http://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 directors of Hellenic Dynamics Plc on 6 March 2023 to
audit the financial statements for the period ending 31 March 2023 and
subsequent financial periods. Our total uninterrupted period of engagement is
from the date of appointment noted above, covering the period ended 31 March
2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit and
Risk 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.
Daniel Hutson (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
Date: 30 July 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2023
15 months to 31 March 2023 (unaudited)
12 months to 31 December 2021
Note £ £
- -
Revenue
Cost of sales - -
Gross profit - -
Administrative expenses 5 (1,147,442) (334,560)
(1,147,442) (334,560)
Operating loss
Reverse acquisition expenses 9 (3,700,209) -
Net finance costs 6 (15,388) (14,840)
Loss before income tax (4,863,039) (349,400)
Income tax expense 10 - -
Loss for the period (4,863,039) (349,400)
Other comprehensive income
Exchange differences on translating of foreign operations 9,893 7,388
Total other comprehensive income for the period 9,893 7,388
(4,853,146) (342,012)
Loss for the period and total comprehensive income
11
Earnings per share
Basic earnings per share (0.044p) (0.003p)
There are no recognised gains and losses other than those passing through the
Statement of Comprehensive Income.
The notes on pages 48 to 74 of the Report and Accounts form part of these
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
31 March 2023 (unaudited)
31 December 2021
Note £ £
ASSETS
Non-current assets
Intangible assets 12 8,814 8,396
Property, plant and equipment 13 632,244 528,141
Right-of-use assets 14 317,583 315,830
Other receivables 15 3,085 2,938
961,726 855,305
Current assets
Other receivables 15 186,896 168,275
Cash and cash equivalents 16 2,117,159 5,020
2,304,055 173,295
TOTAL ASSETS 3,265,781 1,028,600
EQUITY AND LIABILITIES
Issued share capital 17 14,800,182 232,211
Share premium 18 2,971,570 902,610
Merger reserve 18 20,828,894 -
Reverse acquisition reserve (31,497,974) -
Convertible loan notes reserve 41,305 -
Capital redemption reserve 7,500 -
Share based payment reserve 62,921 -
Retained losses (5,533,007) (679,861)
TOTAL EQUITY 1,681,391 454,960
Current liabilities
Trade and other payables 20 654,990 209,437
Provisions 21 212,175 -
Lease liabilities 22 80,530 54,520
947,695 263,957
Non-current liabilities
Lease liabilities 22 303,000 309,683
Loan notes 23 333,695 -
636,695 309,683
TOTAL EQUITY AND LIABILITIES 3,265,781 1,028,600
The financial statements were approved by the board on
Davinder
Rai
Chief Executive Officer
The notes on pages 48 to 74 of the Report and Accounts form part of these
financial statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 MARCH 2023
Notes Period to 31 March 2023 (unaudited)
Year to 31 December 2021
£ £
Cash flows from operating activities
Loss before taxation (4,863,039) (349,400)
Adjusted for:
Reverse acquisition share-based payment expense 9 3,700,209 -
Depreciation 5 62,451 35,083
Share based payment expense 5 62,921 -
Finance costs 6 15,388 14,840
Foreign exchange movements 28,411
Changes in provisions 5 76,016 -
Operating cashflow before working capital movements (917,643) (299,477)
Increase/(decrease) in trade and other receivables 723,167 (96,871)
(Increase)/decrease in trade and other payables (84,820) 15,215
Finance costs 6 (15,388) (190)
Net cash outflow from operating activities (294,684) (381,323)
Cash flows from investing activities
Purchase of property, plant and equipment 13 (123,512) (93,968)
Disposal of property, plant and equipment 13 25,187 -
Disposal of intangible assets - 6,932
Cash acquired on acquisition 1,781,047 -
Net cash flows generated from/(used in) from investing activities 1,682,722 (87,036)
Cash flows from financing activities
Proceeds from issue of shares, net of issuing cost 378,696 -
Proceeds from borrowings - 464,299
Payment of lease liabilities (29,595) -
Issue of non-convertible loan notes 375,000 -
Net cash flows generated from financing activities 724,101 464,299
Net cash increase/(decrease) in cash and cash equivalents 2,112,139 (4,060)
Cash and cash equivalents brought forward 5,020 9,080
Cash and cash equivalents carried forward 16 2,117,159 5,020
Major non-cash transactions
On 5 December 2022, the Company issued 10,414,447,530 shares of 0.1p each at a
price of 0.3p per share to the shareholders of Hellenic Dynamics S.A. as part
of the RTO acquisition for a total of £31,243,343. See note 9.
The Company also issued 13,333,333 shares of 0.1p each at a price of 0.3p per
share for a total value of £40,000 for the settlement of services rendered to
the Company. See note 17.
The notes on pages 48 to 74 of the Report and Accounts form part of these
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2023
Share capital Share premium Merger reserve Reverse acquisition reserve Convertible loan note reserve Capital redemption reserve Retained earnings Total
Share based
payment
reserve
£ £ £ £ £ £ £ £
£
At 31 December 2020 225,703 - - - - - - (337,849) (87,853)
Shares issued during the period 6,508 902,610 - - - - - - 909,118
Total comprehensive loss for the period - - - - - - - (342,012) (366,305)
At 31 December 2021 232,211 902,610 - - - - - (679,861) 454,960
Shares issued during the period 263,333 526,667 - - - - - - 790,000
Transfer to reverse acquisition reserve (232,211) (902,610) - - 1,135,821 - - - -
Recognition of PLC equity at acquisition of subsidiary 4,122,400 2,816,208 - - (1,389,452) - 7,500 - 5,556,656
Issue of shares for the acquisition of subsidiary 10,414,449 - - 20,828,894 (31,243,343) - - - -
Equity element of convertible loan notes - - - - - 41,305 - - 41,305
Cost of share issue - (371,305) - - - - - - (371,305)
Share based payment - - 62,921 - - - - - 62,921
Total comprehensive loss for the period - - - - - - (4,853,146) (4,853,146)
-
At 31 March 2023 14,800,182 2,971,570 62,921 20,828,894 (31,497,974) 41,305 7,500 (5,533,007) 1,681,391
Share Capital - Share capital represents the nominal value of shares that have
been issued.
Share premium - Share premium represents the difference between the nominal
value of shares issued and the total consideration received.
Merger reserve - The merger reserve arises when the company acquires at least
a 90% interest in the shares of another company and under s612 Companies Act
2006 the excess of fair value of the shares issued in excess of their nominal
value is precluded from being recognised in the share premium account. This
reserve is not distributable.
Share based payment reserve - The value of equity settled share-based payments
provided to employees, including key management personnel.
Reverse acquisition reserve - See note 9.
Convertible loan note reserve - Convertible loan note reserve represents the
fair value of convertible loan notes issued and outstanding which meet the
definition of equity as per IAS 32.
Capital redemption reserve - Capital redemption reserve represents amounts
transferred following the purchase of own shares.
Retained earnings - Retained earnings represent cumulative profit or losses,
net of dividends and other adjustments
The notes on pages 48 to 74 of the Report and Accounts form part of these
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 General
information
Hellenic Dynamics Plc (Formerly known as U.K. SPAC Plc) ("the Company") is a
public company limited by shares and incorporated and in England and Wales.
The registered number of the Company is 06374598. The address of its
registered office is 21 Arlington Street, London, SW1A 1RN.
The Company and its subsidiary ("the Group") have a principal activity of the
cultivation and supply of medical cannabis flowers.
2 Summary of significant accounting policies
Statement of compliance with UK-adopted IAS
These financial statements have been prepared in accordance with UK-adopted
international accounting standards, IFRIC Interpretations and with those parts
of the Companies Act 2006 applicable to companies reporting under UK-adopted
IAS.
The adoption of these standards has not resulted in any changes to the Group's
accounting policies and has not affected amounts reported in prior periods.
The financial statements have been prepared under the historical cost basis.
2.1 Going concern
The preparation of the financial statements requires an assessment on the
validity of the going concern assumption. The financial statements have been
prepared under the going concern assumption. In making their assessment of
going concern, the Directors have reviewed forecasts for the newly formed
Group, for a period of at least 12 months from the date of approval of these
financial statements. The Group is not currently generating revenues, and
therefore an operating loss has been reported in the period. Revenues from
the first cultivation cycle are expected in the second half of the calendar
year, however an operating loss is expected in the 12 months from the date of
these financial statements.
Following the redemption of the £375,000 convertible loan note in early July,
due to the realisation of significant cost savings against its initial budget
for the purchase of plant and equipment, the Directors have assessed the cash
requirements of the Group in terms of operational costs, capital expenditure,
gross profit contribution from the initial sales of product, and the financial
resources available to the Group including the following sources of funding:
· On the 6 July 2023, the Company announced advanced late stage
discussions with a number of funding sources, including a number of grant
applications.
· The Directors are in advanced discussions with a well-known
financial institution pertaining to a capital debt draw-down facility.
· Discussions with brokers and corporate finance advisors regarding
potential future equity rounds.
Based on achieving successful cultivation cycles and the sale of crops,
securing only one of the grant applications currently in progress,
implementing savings in discretionary operational spend and delaying capital
investment, the Directors, whilst acknowledging the material uncertainty that
exists at the date of these financial statements, nevertheless are confident
of maintaining sufficient working capital for the twelve-month period from the
date of this report. For this reason, the Group has therefore adopted the
going concern basis in preparing the financial statements.
The auditors make reference to the material uncertainty in the Auditors'
report on page 37 of the Report and Accounts.
2.2 Standards and interpretations
(a) New standards, amendments and interpretations adopted
by the Group
There were no new or amended accounting standards that required the Group to
change its accounting policies for the period ended 31(st) March 2023 and no
new standards, amendments or interpretations were adopted by the Group during
the period.
(b) New standards, amendments and interpretations not yet
adopted by the Group
At the date of authorisation of these financial statements the following
Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective:
Effective Date
IAS 1 Amendments regarding the classification of liabilities 1 January 2023
IAS 8 Amendments to IAS 8 1 January 2023
IAS 1, IFRS Practice Statement 2 Amendments to IAS 1 and IFRS Practice Statement 2 1 January 2023
IFRS 16 Amendments regarding lease liability in a sale and leaseback 1 January 2024
IAS 1 Amendments regarding non-current liabilities with covenants 1 January 2024
It is anticipated that the Group will hold a number of biological assets in
the future and therefore will be applying IAS 41 "Agriculture" as an
accounting policy. This is not applicable in the current year's financial
statements as no biological assets were held as at 31 March 2023.
2.3 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.
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls and 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 9 for information on the consolidation of
Hellenic Dynamics 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
Hellenic Dynamics S.A., which falls outside the scope of IFRS 3, was accounted
for, see below note 9.
The consideration transferred for the acquisition of a subsidiary is the fair
values of assets transferred, the liabilities incurred to the former owners of
the acquiree, and the equity interest 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.
On 5 December 2022, the Company acquired Hellenic Dynamics S.A. 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,
Hellenic Dynamics S.A. for the year-ended 31 December 2021. In the
consolidated statement of financial position, the share capital and premium as
at 31 March 2023 is that of Hellenic Dynamics Plc with the reverse acquisition
reserve representing the difference between the deemed cost of the acquisition
and the net assets of Hellenic Dynamics Plc as at 5 December 2022. The
consolidated statement of comprehensive income for the 15-month period to 31
March 2023 represents the results of both Hellenic Dynamics Plc and Hellenic
Dynamics S.A. For more details on the key terms of the reverse takeover and a
breakdown of what the reverse acquisition reserve as of 31 March 2023
comprises of, see note 9.
2.4 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.
2.5 Share-based payments
The Group makes equity-settled share-based payments to its employees and
directors. The fair value of options and warrants granted is recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees
become unconditionally entitled to the options. The fair value of the options
and warrants granted is measured based on the Black-Scholes framework, taking
into account the terms and conditions upon which the instruments were granted.
At each balance sheet date, the Group revises its estimate of the number of
options and warrants that are expected to become exercisable.
2.6 Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the
statement of comprehensive income in the period to which they relate.
2.7 Foreign currency translation
i) Functional and Presentation Currency
The consolidated financial statements are presented in Pounds Sterling, 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.
2.8 Intangible assets
Intangible assets acquired separately are recognised at historical cost, on
the date of acquisition. Subsequently, they are carried at cost less
accumulated amortization and accumulated impairment losses. All intangible
assets have a finite useful life and are amortised on a straight-line basis
over their useful life. The useful life of intangible assets is reviewed on an
annual basis, and adjustments, where applicable, are made prospectively.
The intangible assets of the Group relate to licences, the useful life of
which has been estimated to be between 5 and 10 years.
2.9 Property, plant and equipment
Items of property, plant and equipment are measured at historical cost, plus
interest costs incurred during periods of construction, less accumulated
depreciation and any impairment in value. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Repairs and maintenance costs are expensed as incurred. The cost and related
accumulated depreciation of assets retired or sold are removed from the
corresponding accounts at the time of sale or retirement, and any gain or loss
is recognised in the income statement.
When significant parts of the property, plant and equipment are required to be
replaced at intervals, The Group recognises such parts as individual assets
with specific useful lives and depreciation, only when it is probable that
future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they are
incurred.
Depreciation is recognised on a straight-line basis over the estimated useful
lives of property, plant and equipment, which are periodically reviewed, at
least annually. The estimated useful lives and the respective rates are as
follows:
Item
Description
Estimated Useful
Life
Depreciation Rates
Building installations in third party properties
Duration of
lease
8-12%
Technical equipment and
machinery 5-10
periods
10-20%
Transportation
means
6-9
periods
11-17%
PC
Hardware
2-5
periods
10-20%
Fixtures and
fittings
5-10
periods
10-20%
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within "Other (Losses)/Gains - Net" in
the income statement.
2.10 Impairment of non-financial assets
The carrying values of the Group's non-financial assets are tested for
impairment, when there are indications that their carrying amount is not
recoverable. In such cases, the recoverable amount is estimated and if the
carrying amount of the asset exceeds its estimated recoverable amount, an
impairment loss is recognised in the income statement. The recoverable amount
of an asset is the higher of its fair value less costs of disposal and its
value in use. In measuring value in use, estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to that asset. If an asset does not generate cash flows individually, the
recoverable amount is determined for the cash generating unit to which the
asset belongs. At each reporting date, the Group assesses whether there is an
indication that an impairment loss recognised in prior periods may no longer
exist. If any such indication exists, the Group estimates the recoverable
amount of that asset and the impairment loss is reversed, increasing the
carrying amount of the asset to its recoverable amount, to the extent that the
recoverable amount does not exceed the carrying value of the asset that would
have been determined (net of amortisation or depreciation), if no impairment
loss had been recognised for the asset in prior years.
2.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Initial recognition and subsequent measurement of financial assets
The financial assets are classified, at initial recognition, as subsequently
measured at amortised cost, fair value through other comprehensive income and
fair value through profit or loss. The classification of financial assets at
initial recognition depends on the financial asset's contractual cash flow
characteristics and the business model within which the financial asset is
held.
Trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
Impairment of financial assets
The Group assesses at each reporting date, whether a financial asset or group
of financial assets is impaired and recognise, if necessary, an allowance for
Expected Credit Losses for all debt instruments not held at fair value through
profit or loss. Expected Credit Losses are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash
flows that the Group expects to receive, discounted at an approximation of the
original effective interest rate.
For all the Group's financial assets at amortised cost, the simplified
approach is applied. These assets are considered to have low credit risk and
any loss allowance is therefore limited to 12 months' expected losses.
Derecognition of financial assets
A financial asset (or, a part of a financial asset or part of a group of
similar financial assets) is derecognised when:
· the rights to receive cash flows from the asset have expired;
· The Group retains the right to receive cash flows from the asset,
but has assumed an obligation to pay them in full without material delay to a
third party under a "pass-through" arrangement; or
· The Group has transferred its rights to receive cash flows from
the asset and either (a) has transferred substantially all the risks and
rewards of the assets, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset
or has entered into a pass-through arrangement, it evaluates if, and to what
extent, it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Group continues to
recognise the transferred asset to the extent of its continuing involvement.
In that case, the Group also recognise an associated liability. The
transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration that the Group could be required to
repay.
Initial recognition and subsequent measurement of financial liabilities
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs. For the purpose of subsequent measurement, financial
liabilities are classified as financial liabilities at amortised cost or
financial liabilities at fair value through profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original
liability and a recognition of a new liability. The difference in the
respective carrying amounts is recognised in the income statement.
Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in
the statement of financial position only when the Group has a legally
enforceable right to set off the recognised amounts and intends either to
settle such asset and liability on a net basis or to realise the asset and
settle the liability simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal course of
business and in the event of default, insolvency or bankruptcy of the Group or
the counterparty.
2.12 Trade and other receivables
A receivable represents the Group's right to an amount of consideration that
is unconditional (i.e., only the passage of time is required before payment of
the consideration is due).
Trade receivables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment.
2.13 Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents comprise cash in
hand and deposits held at call with bank with a three month maturity or less.
2.14 Share capital
Ordinary shares are classified as equity. Share capital issuance costs, net of
related tax, are reflected as a deduction from Share Premium.
2.15 Share premium
Share premium represents the difference between the nominal value of shares
issued and the total consideration received, net of issue expenses incurred by
the Group.
2.16 Trade and other payables
Trade 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 payables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method.
2.17 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.
2.18 Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for
consideration.
Accounting by lessee
The Group apply a single recognition and measurement approach for all leases
(including short-term leases and leases of low-value assets). The Group
recognise lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
a) Right-of-use assets
The Group recognise right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment
losses and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and
the estimated useful life of the assets.
If ownership of the leased asset is transferred to the Group at the end of the
lease term or its cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
Payments associated with short-term leases of equipment and all leases of
low-value assets are recognised on a straight-line basis as an expense in the
Statement of Comprehensive Income. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets compromise IT equipment and small
items of office furniture.
b) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease term reflects the option
to terminate.
Variable lease payments that do not depend on an index or a rate are
recognised as expenses in the period in which the event or condition that
triggers the payment occurs. In calculating the present value of lease
payments, the Group use the group's incremental borrowing rate because the
interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced through the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there
is a reassessment or modification of the lease contract.
2.19 Provisions
Provisions are recognised when the Group 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. If the effect of the time value of money is material, provisions
are measured by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and the
risks specific to the liability. Where discounting is used, the increase of
the provision due to the passage of time is recognised as a borrowing cost.
Provisions are reviewed at each reporting date, and if it is no longer
probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, they are reversed. No provisions have been
recognised
2.20 Taxation
Income tax for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
Current income tax is measured on the taxable income for the year using
enacted or substantively enacted tax rates at the reporting date. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is provided on all temporary differences arising between
the carrying amounts of assets and liabilities for financial reporting
purposes and their tax bases.
Deferred tax liabilities are recognised for all taxable temporary differences
except:
· where the deferred tax liability arises from the initial
recognition of goodwill of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
· in respect of temporary differences associated with investment in
subsidiaries and associates, 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.
Deferred tax assets are recognised for all deductible temporary differences,
carry forward of unused tax credits and unused tax losses, to the extent that
is probable that taxable profit will be available against which the deductible
temporary differences and the carry forward of unused tax credits and unused
tax losses can be utilised except:
· where the deferred tax asset relating to the deductible temporary
differences arises from the initial recognition of goodwill of an asset or
liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit
or loss.
Deferred tax is measured at the tax rates that are expected to apply in the
year when the asset is realised or liability is settled based on tax rates
(and tax laws) that have been enacted or substantively enacted at the
reporting date. The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the
deferred tax asset to be utilised.
The Group did not recognise deferred tax assets on unutilised losses due to
uncertainty over the timing and existence of sufficient future tax profits.
3 Significant accounting matters
The preparation of the financial statements in accordance with UK-adopted
international accounting 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, and key sources of estimation
uncertainty used within the financial statements to be:
Significant judgements
Reverse acquisition accounting (Note 9)
When considering how the acquisition of Hellenic Dynamics S.A. 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, Hellenic Dynamics 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 9
for commentary on how the reverse takeover was accounted for.
Leases - estimating the incremental borrowing rate (Note 14)
The company cannot readily determine the interest rate implicit in the lease,
therefore, they use the incremental borrowing rate to measure lease
liabilities. The incremental borrowing rate of 4% is considered to be the rate
of interest that the Company would have to pay to borrow over a similar term,
and with a similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic environment.
Cost of issuing shares (Note 18)
When considering costs that relate to both the issue of shares and the listing
the Directors are required to make an assessment of the relevant allocation
between these functions. In their judgement the best way of allocating these
is based on the proportion of new shares issued to the total number of (new
and existing) shares listed.
Major sources of estimation uncertainty
Recoverability of investment in subsidiary and intragroup loan (Note 30)
The Company considers whether investments are impaired. Where an indication of
impairment is identified the estimation of recoverable value requires
estimation of the recoverable value of the cash generating units (CGUs). This
requires estimation of the future cash flows from the CGUs and also a
selection of appropriate discount rates in order to calculate the net present
values of those cash flows.
As at 31 March 2023, the carrying value of the Company's investment in
Hellenic Dynamics S.A. was £31,243,342. The recoverable value of this
investment is not considered to be less than it is carrying value as at 31
March 2023 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, which are used to estimate future cash flows
together with judgements and estimates relating to the cost of capital and
long-term growth rates.
Share Based Payments (Note 19)
During the period, 1,171,555,000 share options, and 375,000,000 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.
4 Segmental reporting
Following the acquisition of Hellenic Dynamics S.A. (see note 9), for
management purposes the Group is organised into business units based on its
products and services and has two reportable segments, as follows;
· Medical Cannabis Supply - Cultivation and supply of medicinal
cannabis flowers
· Head Office - The provision of management services of the Group
No operating segments have been aggregated to form the above reportable
operating segments.
The Executive Management Committee is the Chief Operating Decision Maker
(CODM) and monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on profit or loss and is
measured consistently with profit or loss in the consolidated financial
statements. Also, the Group's financing (including finance costs, finance
income and other income) and incomes are managed on a Group basis and are not
allocated to operating segments. Transfer prices between operating segments
are on an arm's length basis in a manner similar to transactions with third
parties.
Segmental operating
performance
Period to (unaudited)
31 March 2023 Year to 31 December 2021
Revenue Profit/(Loss) before tax Revenue Profit before tax
£'000 £'000 £'000 £'000
Medical Cannabis Supply - (468) - (342)
Head Office - (685) - -
(1,153) (342)
Inter-segmental revenue and unallocated - (3,700) - -
- (4,853) - (342)
Business segments assets and liabilities
31 March 2023 (unaudited)
31 December 2021
Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000
Medical Cannabis Supply 1,019 592 1,029 574
Head Office 2,247 992 - -
3,266 1,584 1,029 574
5 Expenses by nature
Period to 31 March 2023 (unaudited) Year to 31 December 2021
£ £
Payroll 204,213 81,315
Directors Remuneration 92,455 -
Professional services 361,422 66,578
Repairs and maintenance 4,217 2,663
Electricity 10,263 6,692
Fuel 9,158 12,692
Security services 12,186 31,413
Taxes and duties 46,705 2,737
Travelling 41,349 14,293
Promotion and advertising 87,743 49,256
Depreciation 62,451 35,083
Share based payment 62,921 -
Provisions 76,016 -
Other charges 76,343 31,838
1,147,442 334,560
6 Net finance expenses
Finance costs:
Period to 31 March 2023 (unaudited) Year to 31 December 2021
£ £
Finance expenses
Lease liability interest 15,203 14,650
Other interest 185 190
Interest paid 15,388 14,840
7 Employees
Average number of
employees
The average number of employees (including executive Directors)
was:
Period to 31 March 2023 (unaudited)
Year to December 2021
No. No.
Management 4 2
Administration 5 1
9 3
Staff costs:
Wages and salaries
Period to 31 March 2023 (unaudited)
Year to 31 December 2021
£ £
Wages and salaries 258,330 57,234
Social security costs 37,375 14,892
Other costs 963 9,189
Share based payment 62,921 -
359,589 81,315
Key management personnel
compensation
Period to 31 March 2023 (unaudited)
Year to 31 December 2021
£ £
Short-term employee benefits 91,667 -
Post-employment benefits 788 -
Share based payment 62,921 -
155,376 -
8 Auditor's Remuneration
Period to 31 March 2023 (unaudited)
Year to 31 December 2021
£ £
Fees payable to the Company's auditors and their associates for the audit of 66,420 10,411
the Company's financial statements
Other fees payable to the Company's auditors and their associates in
connection with the Company in respect of:
Due diligence services in respect of acquisition targets 15,000 -
9 Reverse acquisition
On 5 December 2022, Hellenic Dynamics Plc ("the Company") formerly known as UK
SPAC Plc acquired through share for share exchange the entire share capital of
Hellenic Dynamic S.A ("Hellenic"), a company whose principal activity is the
cultivation of medical grade cannabis.
Although the transaction resulted in Hellenic becoming a wholly owned
subsidiary of the Company, the transaction constituted a reverse acquisition,
as the previous shareholders of Hellenic own a substantial majority of the
Ordinary Shares of the Company and the executive management of Hellenic became
the executive management of the Company.
In substance, the shareholders of Hellenic acquired a controlling interest in
the Company and the transaction will therefore be accounted for as a reverse
acquisition. As the Company's activities prior to the acquisition were purely
that of a cash shell seeking a suitable acquisition, it will not meet the
definition of a business in accordance with IFRS 3. Accordingly, this
reverse acquisition will not constitute a business combination and will be
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 will be required to
apply IFRS 10 and prepare consolidated financial statements. The Directors
have prepared the financial statements using the reverse acquisition
methodology, but rather than recognising goodwill, the difference between the
equity value given up by Hellenic Dynamics S.A.'s shareholders and the share
of the fair value of net assets gained by these shareholders, is charged to
the statement of comprehensive income as a share-based payment on reverse
acquisition, and represents in substance the cost of acquiring the funds held
by the cash shell and the cost of obtaining a listing.
The acquisition cost of Hellenic was £31,243,342.59 the consideration for the
transaction was satisfied by the issue and allotment of a total of
10,414,447,530 Consideration Shares to the Sellers, such shares having an
implied issue price of £0.003.
Because the legal subsidiary, Hellenic Dynamics S.A., was treated on
consolidation as the accounting acquirer and the legal Parent Company,
Hellenic Dynamics Plc, was treated as the accounting subsidiary, the fair
value of the shares deemed to have been issued by Hellenic Dynamics S.A., was
calculated at £5,556,656, using the number of UK SPAC shares in issue at the
date of acquisition (1,852,219,137) multiplied by the subscription price of
£0.003, based on an assessment of the purchase consideration for a 100%
holding of Hellenic Dynamics PLC.
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 acquisition. The following reflects these figures as at 5 December 2022;
£
Deemed Cost 5,556,656
Trade and other receivables 741,935
Cash and cash equivalents 1,781,047
Trade and other payable (666,535)
Fair value of assets acquired 1,856,447
RTO expenses 3,700,209
The difference between the deemed cost (£5,556,656) and the fair value of the
net assets assumed per above of £1,856,447 resulted in £3,700,209 being
expensed within "reverse acquisition expenses" in accordance with IFRS 2,
Share Based Payments, reflecting the economic cost to the Hellenic Dynamic
S.A. shareholders of acquiring a cash shell and of obtaining a listing.
The reverse acquisition reserve which arose from the reverse takeover is made
up as follows;
£
Pre-acquisition retained losses (a) (5,089,661)
Hellenic Dynamics S.A. share capital at acquisition (b) 1,134,821
Investment in Hellenic Dynamics S.A. (c) (31,243,343)
Reverse acquisition expense 3,700,209
(31,497,974)
(a) Recognition of pre-acquisition retained losses of Hellenic Dynamics
Plc as at 5 December 2022.
(b) Hellenic Dynamics S.A. had issued share capital of £232,211 and a
share premium of £902,610. As these financial statements present the capital
structure of the legal parent entity, the equity of Hellenic Dynamics S.A. is
eliminated.
(c) The value of shares issued by the Company in exchange for the entire
share capital of Hellenic Dynamics S.A. The above entry is required to
eliminate the Statement of Financial Position impact of this transaction.
10 Income tax expense
No current or deferred tax amounts were recognised as a tax expense/(credit)
in the income statement, or in other comprehensive income in the year (2021:
£nil).
Period to 31 March 2023 (unaudited)
Year to 31 December 2021
£ £
Current tax
UK corporation tax on profits for the period - -
Total current tax
Deferred tax
Deferred tax - -
Income tax expense - -
Factors affecting tax charge
Loss before income tax (4,863,039) (349,400)
Tax at the applicable rate of 19.29% (2021: 22%) (938,080) (76,868)
Effects of:
Disallowed expenditure 765,398 167
Capital allowances (449) -
Foreign operations - foreign currency translation differences (715) 4,018
Tax losses not utilised and carried forward 173,846 72,683
Current tax charge - -
The weighted average applicable tax rate of 19.29% (2021: 22%) used is a
combination of the 19% standard rate of corporation tax in the UK and 22%
Greek corporation tax.
A deferred tax asset has not been recognised in respect of these losses of the
Company due to the uncertainty of future profits. The amount of deferred tax
asset not recognised is approximately £248,054 (2021: £94,811).
At the Budget 2021 on 3 March 2021, the Government announced that the
corporation tax rate will increase to 25% for companies with profits above
£250,000 with effect from 1 April 2023. These changes were substantively
enacted at the balance sheet date and hence have been reflected in the
measurement of deferred tax balances at the period end.
11 Earnings per
share
The basic earnings per share is calculated by dividing the earnings
attributable to equity shareholders by the weighted average number of shares
in issue. The diluted earnings per share is calculated by dividing the
earnings attributable to equity shareholders by the weighted average number of
shares in issue plus the number of warrants and share
options.
Period to 31 March 2023 (unaudited)
Year to 31 December 2021
Basic earnings per share £ £
Loss for the financial period (4,863,039) (349,400)
Weighted average number of shares 10,953,796,397 10,268,189,195
Earnings per share (0.044p) (0.003p)
The loss attributable to equity shareholders and weighted average number of
ordinary shares for the purposes of calculating diluted earnings per ordinary
share are identical to those used for basic earnings per ordinary share. This
is because the exercise of share options would have the effect of reducing the
loss per ordinary share and is therefore anti-dilutive.
12 Intangible assets
Licences
£
Cost
At 1 January 2021 15,868
Disposals (6,746)
Exchange differences (726)
At 31 December 2021 8,396
Exchange differences 418
At 31 March 2023 8,814
Amortisation and impairment
At 1 January 2021 -
Impairment -
At 31 December 2021 -
Impairment -
Balance at 31 March 2023 -
Net book value
At 31 March 2023 8,814
At 31 December 2021 8,396
Following their assessment of impairment, the Directors concluded that no
impairment charge was necessary for the year ended 31 December 2022 (2021:
£Nil).
Amortisation of intangible assets will begin when they are available for use.
13 Property, plant and equipment
Leasehold Computers, furniture and fittings Land Total
Improvements
£ £ £ £
Cost
At 1 January 2021 520,178 21,280 27,115 568,573
Additions - - - -
Disposals - - - -
Exchange differences (36,991) (1,513) (1,928) (40,432)
At 31 December 2021 483,187 19,767 25,187 528,141
Additions 5,497 118,015 - 123,512
Disposals - - (25,187) (25,187)
Exchange differences 24,107 986 25,093
At 31 March 2023 512,791 138,768 - 651,559
Depreciation
At 1 January 2021 - - - -
At 31 December 2021 - - - -
Charge for the period - 18,811 - 18,811
Exchange differences - 504 - 504
At 31 March 2023 - 19,315 - 19,315
Net book value
At 31 March 2023 512,791 119,453 - 632,244
At 31 December 2021 483,187 19,767 25,187 528,141
The Group has not recognised depreciation charge in profit or loss for the
periods 2021, 2020 and 2019.
Depreciation of assets will begin when they are available for use, i.e. when
are in the location and condition necessary for they to be capable of
operating in the manner intended by management.
14 Right-of-use asset
Land
£
Cost
At 1 January 2021 441,092
Exchange differences (31,367)
At 31 December 2021 409,725
Reassessment of lease liability 30,806
Exchange differences 20,441
At 31 March 2023 460,972
Depreciation
At 1 January 2021 64,326
Charge for the period 35,083
Exchange differences (5,514)
At 31 December 2021 93,895
Charge for the period 43,640
Exchange differences 5,854
Balance at 31 March 2023 143,389
Net book value
At 31 March 2023 317,583
At 31 December 2021 315,830
The above right-of-use asset concerns a 12- year land lease started April
2019.
During the period, rent paid on operating leases of £55,015 (2021 - £Nil)
were recognised in the profit and loss.
15 Trade and other receivables
31 March 2023 (unaudited)
31 December 2021
£ £
Due within one year
Amounts due from directors 14,353
Other receivables 44,006 24,929
VAT receivables 128,537 143,346
186,896 168,275
Due over one year
Other receivables 3,085 2,938
3,085 2,938
Total trade and other receivables 189,981 171,213
No interest is charged on overdue receivables. There is no material difference
between the fair value of receivables and their book value.
16 Cash and cash equivalents
31 March 2023 (unaudited)
31 December 2021
£ £
Cash at bank and in hand 2,117,159 5,020
17 Share capital
As at 31 March 2023, the Company had 12,530,000,000 allotted and fully paid
ordinary shares and 2,270,182 founder shares.
The ordinary shares have attached to them fully voting, dividend, and capital
distribution rights (including on a winding up). The ordinary shares do not
confer any rights of redemption.
2,270,182 Founder shares were issued in 2016. The founder shares were never
quoted and do not carry a right to vote or to receive a dividend.
Number of Ordinary Shares Number of Founder Shares
As at 1 January 2021 1,852,219,137 2,270,182
Shares issued in the year for RTO (a) 10,414,447,530 -
Shares issued to settle debt (b) 13,333,333 -
Shares issued in placing and subscriptions (c) 250,000,000 -
As at 31 March 2023 12,530,000,000 2,270,182
Ordinary Shares of 0.1p each Founder Shares of £1 each
£ £
As at 1 January 2021 1,852,219 2,270,182
Shares issued in the year for RTO (a) 10,414,448 -
Shares issued to settle debt (b) 13,333 -
Shares issued in placing and subscriptions (c) 250,000 -
As at 31 March 2023 12,530,000 2,270,182
The total value of Ordinary Shares of 0.1p each and Founder Shares of £1 each
is £14,800,182.
(a) On 5 December 2022, the company completed its reverse takeover ("RTO")
process with Hellenic Dynamics Plc ("HELD"). The RTO was completed in the form
of a share for share exchange and the ratio was approximately 1:38,858.86.
(b) On 5 December 2022, the company issued 13,333,333 shares issued in
respect of the settlement of professional fees raising £13,333.
(c) On 5 December 2022, the Company issued 250,000,000 shares raising
£750,000 before costs.
18 Reserves
Share Premium
£
As at 1 April 2022 2,816,208
Shares issued to settle debt 26,667
Shares issued in placing and subscriptions 500,000
Share issue costs (371,305)
As at 31 March 2023 2,971,570
Merger Reserve
£
As at 1 April 2022 -
Shares issued in the year for RTO 20,828,894
As at 31 March 2023 20,828,894
19 Share Based Payments
Warrants
Details of the warrants outstanding during the period are as follows;
Weighted average remaining contractual life (periods) Number Weighted average exercise price
£
Brought forward at 1 April 2022 0.92 1,647,594,936 0.003
Granted 0.67 375,000,000 0.003
Lapsed (0.92) (1,584,810,126) (0.003)
Carried forward at 31 March 2023 0.71 437,784,810 0.003
On 3 March 2021, the Company entered into a financial adviser warrant deed
entitling Peterhouse Capital Limited to warrants over a number of ordinary
shares, representing approximately 0.5 per cent, of the enlarged Issued Share
Capital (the share capital on the date of the RTO). The warrants are
exercisable at the fundraising price for a period to 3 March 2024. Total
warrants issued sum to 62,784,810.
On 5 December 2022 ("date of admission"), the Group granted a warrant to the
noteholders to subscribe for one Ordinary Share for every one Ordinary Share
issued to the noteholder. The warrants are exercisable at the Conversion Price
(0.3p) and will be valid for a period to 5 December 2024. Total warrants
issued sum to 375,000,000. 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.
Share Options
Details of the equity settled share options outstanding during the period are
as follows:
Number Weighted average remaining contractual life (years) Weighted average exercise price
£
Brought forward at 1 April 2022 111,133,148 0.5 0.002
Granted 1,171,555,000 4.67 0.002
Lapsed - - -
Carried forward at 31 March 2023 1,282,688,148 4.48 0.002
On 3 March 2021, the Group granted 111,133,148 share options with the share
price at the date of the grant of 0.33p and exercise price of 0.1975p. The
vesting period of these share options is 18 months. On 10 November 2022, the
exercise date of these share options was extended to 30 September 2025.
On 5 December 2022, the Group granted 1,171,555,000 share options with the
share price at the date of the grant of 0.175p and an exercise price of
0.1975p. The vesting period of these share options is five years. Half of
these options become exercisable once a production licence is issued and
approval for export is obtained, the remaining options become exercisable
after commercial sales are achieved.
The fair value of the remaining share options has been calculated using the
Black-Scholes model. The assumptions used in the calculation of the fair value
of the share options outstanding during the period are as follows:
Grant Date 3 March 2021 5 December 2022
Exercise period March 2021 - September 2025 December 2022 - December 2027
Share price at date of grant 0.33p 0.175p
Exercise price 0.1975p 0.1975p
Shares under option 111,133,148 1,171,555,000
Expected volatility 26% 47.55%
Expected life (periods) 1.5 5
Risk free rate 0.01% 3.24%
Expected dividend yield 0% 0%
Fair value per option 0.12p 0.064p
Volatility was determined by reference to the average movement in the share
price of comparable European companies involved in the cultivation of
medicinal cannabis.
The average share price movement was based on a 1-year movement.
All of the above options are equity settled and the charge for the period is
£62,921.
20 Trade and other payables
31 March 2023 (unaudited)
31 December 2021
£ £
Trade payables 458,939 80,298
Other payables 59,210 13,258
Amounted owed to related parties (Note 25) 3,665 -
Amounts owed to personnel 17,140 112,336
Accruals 100,920 -
Other tax and social security 15,016 3,545
Corporation tax 100 -
654,990 209,437
The directors consider that the carrying amount of trade payables approximate
their fair value.
21 Provisions
31 March 2023
£
Balance at 1 January 2022 -
Provision recognised during the year 212,175
Balance as at 31 March 2023 212,175
The provision represents tax reclaimed that could become repayable if the
assessment of the position were to be successfully challenged. The Directors
are in the process of obtaining a professional opinion in this respect,
however until such opinion is obtained believe it appropriate that the
provision is made. The provision represents the full amount of the potential
repayment.
22 Lease liabilities
31 March 2023 (unaudited)
31 December 2021
£ £
Current
Amounts due within one year 80,530 54,520
Non-current
Amounts due within two to five years 161,300 133,747
Amounts due over five years 141,700 175,936
303,000 309,683
383,530 364,203
Lease liabilities at 31 March 2023 are in respect of leasehold property.
31 March 2023 (unaudited)
31 December 2021
£ £
Up to 1 year 92,553 41,978
2 to 5 years 193,918 167,912
After 5 years 145,439 209,890
Total 431,910 419,780
Less: Future financial charges (48,380) (55,577)
Present value of future lease payments 383,530 364,203
23
Borrowings
31 March 2023 (unaudited)
31 December 2021
£ £
Current
Unsecured non-convertible loan notes - -
- -
Non - current
Unsecured non-convertible loan notes 333,695 -
333,695 -
Total borrowings 333,695 -
Whilst the loan notes were due for repayment after one year they were repaid
post year as disclosed in note 28.
24 Financial instruments
Capital risk management
The Company's objectives when maintaining capital are to safeguard the
entity's ability to continue as a going concern, so that it can continue to
provide future returns for shareholders and benefits for other stakeholders.
The Company monitors the capital structure with the debt to capital ratio.
This is calculated as the ratio of net borrowing to total capital employed.
Net borrowings are calculated as total borrowings (including short-term and
long-term borrowings as shown in the Statement of Financial Position) less
cash and cash equivalents. Total working capital is calculated as the total
equity as shown in the balance sheet plus net borrowing.
Classification of financial instruments
All financial assets have been classified as at amortised cost, and all
financial liabilities have been classified as other financial liabilities
measured at amortised cost.
31 March 2023 (unaudited)
31 December 2021
£ £
Financial assets
Cash and cash equivalents at fair value 2,117,159 5,020
Loans and receivables at amortised cost:
Trade and other receivables 182,481 171,213
Total 2,299,640 176,233
Financial liabilities
Loans and payables at amortised cost:
Trade and other payables 554,070 209,437
Lease liabilities 383,530 364,203
Total 937,600 573,640
Net 1,362,040 (397,407)
Cash and cash equivalents
This comprises cash and short-term deposits held by the Company. The carrying
amount of these assets approximates their fair value.
General risk management principles
The Group is exposed to financial risks, such as market risks (changes in
exchange rates, interest rates, market prices), credit risk and liquidity
risk. The Group's overall risk management program seeks to minimise the
potential negative impact of financial market volatility on the Group's
financial performance.
Risk management is handled by the Group's financial department, which operates
according to specific rules.
The following represent the key financial risks that the Group faced during
the period.
Market risk
The Group at this stage of operation is not exposed to the risk of
fluctuations in interest rates arising from bank loans with floating interest
rates. The Group is also not exposed to fluctuations in market interest rates
that may have affected its financial position as well as its cash flows. Due
to the non-lending of the Group there is no risk.
Nevertheless, the Group monitors interest rate trends as well as the duration
and nature of financial needs.
Credit risk
The Group's credit risk arises from cash and cash equivalents with banks and
financial institutions. The Group banks with Barclays Bank Plc who have a
Fitch Credit rating of A+ and Piraeus Bank S.A. who have a Fitch Credit rating
of B and therefore the credit risk is not considered material.
Liquidity risk
The maturity of the Group's financial liabilities including trade and other
payables, other loans to related parties and lease liability total payments
with the interest payable is as set out below. Current liabilities were
payable on demand or to normal trade credit terms with the exception of lease
liabilities which are payable quarterly.
The tables below summarise the maturity profile of the combined Group's
non-derivative financial liabilities at each financial period end based on
contractual undiscounted payments:
31 March 2023 Less than 1 year 1-2 years 2-5 years
Non-derivative financial liabilities £ £ £
Borrowings (current and non-current) - - 333,695
Trade payables and other payables 553,970 - -
Lease liabilities 80,530 161,300 141,700
634,500 161,300 475,395
31 December 2021 (unaudited) (unaudited) (unaudited)
Less than 1 year 1-2 years 2-5 years
Non-derivative financial liabilities £ £ £
Borrowings (current and non-current)
Trade payables and other payables 209,437 - -
Lease liabilities 54,520 133,747 175,936
263,957 133,747 175,936
Currency risk
Foreign exchange risk is the risk that fair value of future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates. The Group reports in Pounds Sterling, but the functional currency of
its subsidiary is the Euro. The Group does not currently hedge its exposure to
other currencies. The Group's cash and cash equivalents are held in Pounds
Sterling and Euros. At 31 March 2023, less than 1% (2021: 100%) of the Group's
cash and cash equivalent were held in Euros and therefore this is not
considered to be a risk.
25 Related party transactions
Transactions between the Company and its subsidiary which are related parties,
have been eliminated on consolidation. Related party transactions are
considered to be conducted at arm's length
Transactions with Directors
Remuneration paid and share options granted to the Directors is disclosed in
the Remuneration Committee report on pages 29 to 31 of the Report and
Accounts.
During the period, Ocean Park Developments Limited invoiced the Company
£33,663 (2021 - £37,200) for consultancy services provided by N B
Fitzpatrick, a director at that time.
During the period, the Company advanced amounts of £52,000 (2021 - £Nil) and
was repaid amounts of £37,647 (2021 - £Nil) by a director. At the period
end, the Company was owed £14,353 (2021 - £Nil) by one of the directors.
At the period end, the Group was owed £25,754 (2021 - £Nil) by one of the
directors of the subsidiary. This amount has been repaid post period-end.
At the year-end, the Company owed £3,665 (2021 - £3,491) to a company under
common control by one of the directors.
26 Pension costs
The Group operates a defined contribution pension scheme in respect of the
directors and employees. The assets of the scheme are held separately from
those of the Group in an independently administered fund. The pension cost
charge represents contributions payable by the Group to the fund and amounted
to £963 (2022 - £Nil). The amount payable at the period-end was £2,567
(2022 - £Nil).
27 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.
28 Post Balance Sheet Event
Subsequent to the year-end £375,000 of convertible loan notes were repaid and
the associated warrants lapsed then.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
2023 2022
Note £ £
ASSETS
Non-current assets
Investments 30 31,243,342 -
Property, plant and equipment 31 1,791 -
31,245,133 -
Current assets
Other receivables 32 572,623 216,871
Cash and cash equivalents 33 2,111,653 2,095,682
2,684,276 2,312,553
TOTAL ASSETS 33,929,409 2,312,553
EQUITY AND LIABILITIES
Issued share capital 34 14,800,182 4,122,400
Share premium 2,971,570 2,816,208
Merger reserve 20,828,894 -
Convertible loan notes reserve 41,305 -
Capital redemption reserve 7,500 7,500
Share based payment reserve 62,921 -
Retained losses (5,774,612) (4,681,916)
TOTAL EQUITY 32,937,760 2,264,192
Current liabilities
Trade and other payables 35 445,779 48,361
Provisions 36 212,175 -
657,954 48,361
Non-current liabilities
Convertible loan notes 37 333,695 -
TOTAL EQUITY AND LIABILITIES 33,929,409 2,312,553
As permitted by section 408 of the Companies Act 2006, the parent Company's
statement of comprehensive income has not be included within these financial
statements. The loss for the parent Company was £1,092,696 (2022 -
£613,696).
The financial statements were approved by the board on
Davinder
Rai
Chief Executive Officer
The notes on pages 78 to 81 of the Report and Accounts form part of these
financial statements.
COMPANY REGISTRATION NO. 06374598
COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
Notes 2023 2022
£ £
Cash flows from operating activities
Operating loss (1,092,696) (613,511)
Adjusted for:
Share based payment charge 19 62,921 112,578
Pre-acquisition costs - 197,510
Share-based compensation 5,913 -
Changes in provisions 36 212,175 -
Operating cashflow before working capital commitments (811,687) (303,423)
(Increase) in trade and other receivables (355,752) (181,254)
Increase/(decrease) in trade and other payables 431,505 (80,721)
Finance costs - (185)
Net cash outflow from operating activities (735,934) (565,583)
Cash flows from investing activities
Purchase of property, plant and equipment 31 (1,791) -
Pre-acquisition costs - (197,510)
Net cash flows used in investing activities (1,791) (197,510)
Cash flows from financing activities
Proceeds from issue of shares, net of issuing costs 34 378,696 -
Proceeds from issue of convertible loan notes 37 375,000 -
Net cash flows generated from financing activities 753,696 -
15,971 (763,093)
Net cash increase/(decrease) in cash and cash equivalents
Cash and cash equivalents brought forward 2,095,682 2,858,775
Cash and cash equivalents carried forward 33 2,111,653 2,095,682
Major non-cash transactions
On 5 December 2022, the Company issued 10,414,447,530 shares of 0.1p each at a
price of 0.3p per share to the shareholders of Hellenic Dynamics S.A. as part
of the RTO acquisition for a total of £31,243,343. See Note 9.
The Company also issued 13,333,333 shares of 0.1p each at a price of 0.3p per
share for a total value of £40k for the settlement of services rendered to
the Company. See note 19.
The notes on pages 78 to 81 of the Report and Accounts form part of these
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total
Convertible loan notes reserve Share based payment
Reserve
£ £ £ £ £ £ £ £
At 31 March 2021 4,122,400 2,816,208 - - - 7,500 (4,180,798) 2,765,310
Share based payment charge - - - - - - 112,578 112,578
Total comprehensive loss for the year - - - - - - (613,696) (613,696)
At 31 March 2022 4,122,400 2,816,208 - - - 7,500 (4,681,916) 2,264,192
Shares issued during the year 263,333 526,667 - - - - - 790,000
Shares issued for acquisition of subsidiary 10,414,449 - 20,828,894 - - - - 31,243,343
Share based payment charge - - - - 62,921 - - 62,921
Equity element of convertible loan notes - - - 41,305 - - - 41,305
Cost of share issue - (371,305) - - - - - (371,305)
Total comprehensive loss for the year - - - - - - (1,092,696) (1,092,696)
At 31 March 2023 14,800,182 2,971,570 20,828,894 62,921 7,500 (5,774,612) 32,937,760
41,305
Share Capital - Share capital represents the nominal value of shares that have
been issued.
Share premium - Share premium represents the difference between the nominal
value of shares issued and the total consideration received.
Merger reserve - The merger reserve arises when the company acquires at least
a 90% interest in the shares of another company and under s612 Companies Act
2006 the excess of fair value of the shares issued in excess of their nominal
value is precluded from being recognised in the share premium account. This
reserve is not distributable.
Share based payment reserve - The value of equity settled share-based payments
provided to employees, including key management personnel.
Capital redemption reserve - Capital redemption reserve represents amounts
transferred following the purchase of own shares.
Retained earnings - Retained earnings represent cumulative profit or losses,
net of dividends and other adjustments
The notes on pages 78 to 81 of the Report and Accounts form part of these
financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2023
29 ACCOUNTING POLICIES
The accounting policies of the Company are shown in the Consolidated Financial
Statements on pages 48 to 56 of the Report and Accounts.
29.1 Investment in subsidiaries
Investments in subsidiaries are stated at cost less any provision for
impairment.
30 Investment in subsidiary undertakings
Shares in subsidiary undertakings
Cost £
At 1 April 2021 -
Additions -
At 31 March 2022 -
Additions 31,243,342
At 31 March 2023 31,243,342
Accumulated Impairment provisions
At 1 April 2021 -
Impairment provision -
At 31 March 2022 -
Impairment provision -
At 31 March 2023 -
Net book value
At 31 March 2023 31,243,342
At 31 March 2022 -
As set out in note 3 the Company carried out an impairment review of its
investment in Hellenic Dynamics S.A. and based on this it was considered that
no impairment is required.
The following companies are the principal subsidiary undertakings at 31 March
2023 and are all consolidated:
Subsidiary undertakings Registered Office Country of incorporation Class of share Percentage of shares directly held
Hellenic Dynamics S.A. Chorigi-Kilkis P.C. 61100 Greece Ordinary 100%
Subsidiary undertakings Principal activity
Hellenic Dynamics S.A. The cultivation and supply of medical cannabis
NOTES TO THE COMPANY FINANCIAL STATEMENTS
31 Property, plant and equipment
Computer equipment Total
£ £
Cost
At 1 April 2021 - -
Additions - -
Disposals - -
- -
At 31 March 2022
Additions 1,791 1,791
Disposals - -
At 31 March 2023 1,791 1,791
Depreciation
At 1 April 2021 - -
Charge for the period - -
On disposals - -
At 31 March 2022 - -
Charge for the period - -
On disposals - -
At 31 March 2023 - -
Net book value
At 31 March 2023 1,791 1,791
At 31 March 2022 - -
32 Trade and other receivables
2023 2022
£ £
Other receivables 461,330 153,193
Other taxation and social security 111,293 63,678
572,623 216,871
33 Cash and cash
equivalents
2023 2022
£ £
Cash at bank 2,111,653 2,095,682
34 Share
capital
2023 2022
Number £ Number £
Allotted, called up and fully paid
Ordinary shares of 0.1p each 12,530,000,000 12,530,000 1,852,219,137 1,852,218
Founder shares of £1 each 2,270,182 2,270,182 2,270,182 2,270,182
14,800,182 4,122,400
2,270,182 Founder shares were issued in 2016. The founder shares were never
quoted and do not carry a right to vote or to receive a dividend.
On 5 December 2022, 10,677,780,863 0.1p ordinary shares were issued at a value
of 0.003p per share.
35 Trade and other payables
2023 2022
£ £
Trade payables 295,188 8,001
Other payables 36,995 -
Accruals 100,920 40,260
Other taxation and social security 12,576 -
Corporation tax 100 100
445,779 48,361
36 Provisions
2023
£
Balance at 1 April 2022 -
Provision recognised during the year 212,175
Balance as at 31 March 2023 212,175
The provision represents tax reclaimed that could become repayable if the
assessment of the position were to be successfully challenged. The Directors
are in the process of obtaining a professional opinion in this respect,
however until such opinion is obtained believe it appropriate that the
provision is made. The provision represents the full amount of the potential
repayment.
37
Borrowings
2023 2022
£ £
Current
Unsecured non-convertible loan notes - -
- -
Non - current
Unsecured non-convertible loan notes 333,695 -
333,695 -
Total borrowings 333,695 -
Whilst the loan notes were due for repayment after one year they were repaid
post year as disclosed in note 28.
38 Capital Commitments
There were no capital commitments at the 31 March 2023.
39 Key management personnel compensation
Key management personnel expenses are disclosed in Note 7 to the Consolidated
Financial Statements.
40 Related party disclosures
Related party disclosures are detailed at Note 25 to the Consolidated
Financial Statements. The company has taken advantage of the exemptions from
the requirement to disclose transactions with group companies.
41 Financial instruments
Details of key risks are included at Note 24 to the Consolidated Financial
Statements.
Categories of financial instruments
2023 2022
£ £
Financial assets
Cash and cash equivalents at fair value 2,111,653 2,095,682
Loans and receivables at amortised cost:
Trade and other receivables 565,123 216,871
Total 2,676,776 2,312,553
Financial liabilities
Trade and other payables at amortised cost (344,859) (48,361)
Net 2,331,917 2,264,192
41 Post Balance Sheet Event
Details of post balance sheet events are included at Note 28 to the
Consolidated Financial Statements.
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