REG - Kanabo Group PLC - Acquisition of GP Service Ltd
21/02/2022 17:00
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RNS Number : 3342C Kanabo Group PLC 21 February 2022
Kanabo Group Plc
("Kanabo" or the "Company")
Acquisition of The GP Service Limited
Kanabo Group Plc (LSE:KNB), the pan-European medical cannabis company focusing
on the development and distribution of cannabis-derived products for medical
patients and wellness CBD consumers, announces the acquisition of The GP
Service Limited (the "GP Service" or the "Target"), a UK-based private primary
care telemedicine provider, for a net consideration of c. £13,498,634 ("Net
Consideration"). Pursuant to a sale and purchase agreement between the Company
(1) and the shareholders of the Target ("Sellers") (2) (the "Agreement")
(details of which are described below) Kanabo will issue the Sellers
106,708,576 Ordinary Shares at a price of 12.65p which represent c. 22% of the
issued share Capital of the Company.
Whilst the acquisition will complete immediately, the consideration shares
will be issued at a later date when the Company has the pre-requisite
authorities.
Kanabo's acquisition of the GP Service will facilitate the rapid growth of its
existing digital and telemedicine business and will establish a new and fully
compliant channel to market for Kanabo's products for medical patients.
Through improved access to these products, Kanabo hopes to make a substantial
contribution to improving outcomes for thousands of patients in the UK and
Europe.
Highlights:
· The GP Service is an approved provider on the NHS digital framework
for video and on-line consultations
· The GP Service is able to able to electronically deliver
prescriptions to a network of 4,200 pharmacies including major high street
chains and independent pharmacies
· The GP Service provides online GP video consultation services to
corporate clients as an occupational health service for employers as well as
pharmacies, including a major high street pharmacy chain
· Kanabo intends to develop The GP Service platform to become one of
Europe's first digitally led and legally compliant providers for Kanabo's
products and wellness CBD services following regulatory approval
The GP Service offers the services of online doctors to help diagnose and
treat common conditions using its internet-based consultation platform. The
system allows patients to consult with qualified doctors via online assessment
questionnaires and through secure video chat. As part of the consultation
process, the GP Service doctors are able to provide prescriptions, as well as
write referral letters for hospital care, and fit notes. The GP Service
platform enables doctors to send electronic prescriptions to a network of
4,200 high street and supermarket pharmacies.
All the Doctors contracted by the GP Service are UK registered with the
General Medical Council ("GMC"). All pharmacies affiliated with the services
provided by the GP Service are also UK based and registered with the General
Pharmaceutical Council ("GPhC").
The GP Service also offers a comprehensive 'white-label' service to several
enterprises, including a leading high street chain of pharmacies in the UK.
This enterprise offering complements its well-established direct to consumer
service model.
In addition to growing the existing telemedicine business, Kanabo intends to
further develop the GP Service digital technology, physician network and
patient community, leveraging the platform for the sale of its own product and
service offerings.
Avihu Tamir, founder and CEO of Kanabo, said: ""Today's acquisition of the GP
Service is part of our strategy to use M&A alongside organic growth to
build a pan-European company, offering help to medical patients and consumers
for conditions including chronic pain, anxiety and central nervous system
diseases. We are very much looking forward to working with the highly skilled
team at GP Service to support the growth of their business in the rapidly
growing tele-medicine market in the UK and beyond."
Atul Devani, CEO of the GP Service added: "The GP Service was incorporated
with the aim of offering patients an innovative and cost-effective solution to
access primary healthcare services conveniently and efficiently. We have
invested heavily in our core systems and technologies to provide patients with
treatment or advice following a remote video or with a GMC Registered Doctor
and have successfully built one of the leading primary care telemedicine
companies in the UK. With further support and investment from Kanabo we look
forward to expanding our core service to cover a range of other medical
conditions and further enhance our electronic prescription offerings in the
coming months across a number of territories."
GP Directors
Atul Devani, Executive Chairman and co-founder. Atul is a serial technology
entrepreneur and the founder of United Clearing, which was admitted to AIM in
2004, before being sold in 2006 for £25 million. He then served as CEO of
BSG's wireless division prior to its trade sale to Syniverse Technologies for
$290 million. Atul has a First Class Honours Degree in Electronic Engineering
from the University College of North Wales (now Bangor University).
Suleman Sacranie, Director and co-founder. Suleman founded an e-commerce
business in 2010 and went on to win the Young Entrepreneur of the Year awards
in 2012 & 2013 and the Midlands Entrepreneur of the Year award in 2014.
Suleman holds a BSc in Chemistry, from the University of Leicester.
Dr Alex Barber - Medical Director. MRCGP FRCA MRCP. Alex has a Degree in
Neuroscience from The University of Nottingham followed by a degree in
Medicine at St Bartholomew's and Royal London School of Medicine and
Dentistry. After his initial training as a House Officer he joined the
Imperial Anaesthetics Rotation gaining his 'Fellowship of the Royal College of
Anaesthetists' followed by GP training gaining both his Membership of the
Royal College of General Practitioners and Membership of the Royal College of
Physicians. He is also a GP in A&E at Chelsea & Westminster Hospital
Details of the Agreement
Pursuant to the terms of the Agreement, Kanabo has today acquired the entire
issued share capital of the GP Service for a total consideration of
£13,498,634, following certain adjustments. The Net Consideration will be
satisfied by the allotment of 94,133,645 B ordinary shares of 0.00001p each in
the capital of Kanabo GP Limited, a subsidiary of Kanabo Group Plc, at a price
of 12.65p per share ("Consideration Shares"). It has been agreed as part of
the acquisition that the principal and interest due at completion by the GP
Service of a fixed amount of £1,590,728.80 to MEIF WM Debt LP will be
repayable by Kanabo Group Plc of 12,574,931 ordinary shares in 18 months based
on the same price of 12.65p per share.
The Consideration Shares will be exchanged for ordinary shares in Kanabo Group
Plc (on a one for one basis) (with such shares being referred to hereinafter
as the "Kanabo Shares") within 13 months of closing ("Put Period") via a
put/call option pursuant to which Kanabo has the right to serve notice ("Put
Notice") to exercise an option to require the Sellers to exchange their
Consideration Shares for Kanabo Shares ("Put Option") at any time during the
Put Period. In the event Kanabo fails to exercise the Put Option before expiry
of the Put Period, a single Seller or group of Sellers have the right to serve
a call notice ("Call Notice"), requiring Kanabo to issue the Kanabo Shares in
exchange for the Consideration Shares. In the event Kanabo fails to complete
the issue of the Kanabo Shares in exchange for the Consideration Shares
following service of a Put Notice or Call Notice, the Sellers have the right
to receive the requisite number of existing ordinary shares from Avihu Tamir,
in which case the Company will commit to issue Avihu Tamir replacement
ordinary shares (in exchange for the Consideration Shares that Avihu Tamir
exchanges for his existing ordinary shares) so that his holdings will remain
unchanged.
The share price for these purposes is calculated based on VWAP for the period
of 30 days prior to closing being 12.65p. When all Consideration Shares have
been exchanged for Kanabo Shares (or otherwise as described above), they will
represent c. 22% of the issued share capital post the deal.
Customary good leaver/bad leaver conditions are attached to Consideration
Shares issued to employee Sellers.
The Company intends to issue certain employees and the management of the GP
Service options for the value of £860,645 in order to incentivise them.
Further information will be provided once the terms of those options have been
agreed.
Additionally, the GP Service was granted a loan facility of £500,000 of which
£547,110 remains outstanding. This facility is secured by a fixed and
floating charge over the assets of the GP Service. This facility and the
security will remain in place following completion.
Lock-in Arrangements
Other than set out below, those of the Sellers who will not, following
closing, be employed by the GP Service or within the Kanabo Group have entered
into lock-in arrangements with Kanabo pursuant to which they are prevented
from disposing of any of the Kanabo Shares held by them (save in certain
limited circumstance) for a period of 18 months from the date of the agreement
("Lock In Period") and will be subject to additional orderly market
restrictions for a further period of 18 months thereafter.
The Lock-In Period is extended to 36 months for those Sellers who are joining
Kanabo Group plc as employees and managers, with no orderly market
restrictions thereafter. A small percentage of the equity in the GP Service
(around 3.5% of the total Consideration Shares) is held via CrowdCube, a
crowd-funding platform. CrowdCube are not subject to any of the lock in or
orderly market restrictions in respect of the Kanabo Shares held by them.
Materia Update
Kanabo's acquisition of Materia's European business, including its Maltese EU
GMP certified facility, German medical cannabis wholesaler and UK CBD
e-commerce platform, is currently on-going. On 4th November 2021, Kanabo and
Materia signed a revised term sheet, details of which were set out in the
announcement made by the Company on that date. This transaction is still
subject inter alia to the agreement of formal documentation and conditional
on, among other things, the receipt of all necessary regulatory consents. An
update will be provided to the market in due course, but the parties are
currently negotiating a further investment by Kanabo.
Warrant Update
The Company confirms that the effective expiry date of the 2,300,040 RTO
warrants held by Mr Andrew Morrison, a director of the Company has been
extended from 16 February 2022 until 15 May 2022, in accordance with the terms
of the corresponding warrant instrument as they apply to PDMRs. As was
foreseen when the warrant instrument was prepared, the Company is in a closed
period in the lead-up to the original expiry date of the warrants.
In the event that any dealings are contemplated by Mr Morrison during the
extended validity that applies to him as a PDMR, these will be dealt with and
notified according to the Company's share dealing policy.
For further information, please visit http://www.kanabogroup.com/ or contact
the following:
Kanabo Group Plc Via Vox Markets
Avihu Tamir, CEO
Peterhouse Capital Ltd (Financial Adviser) Tel: +44 (0)20 7469 0930
Eran Zucker / Lauren Riley
Peterhouse Capital Limited (Corporate Broker) Tel: +44 (0)20 7469 0930
Lucy Williams / Charles Goodfellow / Duncan Vasey / Martin Lampshire
Vox Markets (Investor Relations) KanaboGroup@voxmarkets.co.uk
Kat Perez kperez@voxmarkets.co.uk
GP Service Accounts For The Year Ended 31 January 2021
The information below is extracted directly from The GP Service (UK) Ltd
audited accounts for the year ended 31 January 2021.
2021 2020
as restated
Notes £ £
Non-current assets
Property, plant and equipment 10 14,944 32,025
Current assets
Trade and other receivables 11 44,804 54,750
Current tax recoverable 79,906 63,197
Cash and cash equivalents 883,379 218,057
1,008,089 336,004
Current liabilities
Trade and other payables 17 207,152 156,529
Borrowings 13 - 2,387
Lease liabilities 18 4,266 5,352
211,418 164,268
Net Current Assets 796,671 171,736
Non-current liabilities
Borrowings 13 2,791,445 2,086,449
Deferred tax liabilities 19 - 10,869
2,791,445 2,097,318
Equity
Called up share capital 22 1,344 2,358
Share premium account 23 3,783,194 2,874,814
Retained earnings (5,764,368) (4,770,729)
Total Equity (1,979,830) (1,893,557)
For the year ending 31 January 2021 the company was entitled to
exemption from audit under section 477 of the
Companies Act 2006 relating to small companies.
Directors' responsibilities:
· The members have not required the company to obtain an audit in
accordance with section 476 of the Companies Act 2006.
· The directors acknowledge their responsibilities for complying with
the requirements of the Act with respect to accounting records and the
preparation of accounts.
· These accounts have been prepared in accordance with the provisions
applicable to companies subject to the small companies' regime.
· The company has taken advantage of section 444(1) of the Companies
Act 2006 and opted not to deliver to the registrar a copy of the company's
Profit and Loss Account.
The financial statements were approved by the board of directors and authorised for issue
on 10/06/21 and are signed on its behalf by:
..............................
A S Devani
Director
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JANUARY 2021
1 Accounting policies
Company information
The GP Service (UK) Ltd is a private company limited by shares incorporated in
England and Wales. The registered office is Coventry University Technology
Park, The Technocentre, Puma Way, Coventry, West Midlands, United Kingdom,
CV1 2TT. The company's principal activities and nature of its operations
are disclosed in the directors' report.
1.1 Accounting convention
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the European Union
and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements are prepared in sterling, which is the functional
currency of the company.
Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost
convention. The principal accounting policies adopted are set out below.
These financial statements for the year ended 31 January 2021 are the first
financial statements of the company prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board (ASB).
For periods up to an including the year ended 31 January 2020, the company
prepared its financial statements in accordance with FRS 102. Accordingly, the
company has prepared financial statements that comply with IFRS applicable as
at 31 January 2021, together with the comparative period data for the year
ended 31 January 2020. In preparing these financial statements, the company's
opening statement of financial position was prepared as at 1 February 2019,
the company's date of transition to IFRS.
There were no changes to the previously reported financial position and
financial performance for
those periods as a result of the transition to IFRS.
1.2 Going concern
The directors are satisfied, given funding in place and further support
confirmed by existing stakeholders
that the going concern basis remains appropriate.
1.3 Revenue
The company is in the business of providing online medical services. Revenue
is measured based on the consideration specified in a contract with a
customer and excludes amounts collected on behalf of
third parties. The company recognises revenue when it transfers control of a service to a customer.
1.4 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently
measured at cost or
valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets
less their residual values over their useful lives on the following bases:
· Computers 33% straight line
The gain or loss arising on the disposal of an asset is determined as the
difference between the
sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.5 Impairment of tangible and intangible assets
At each reporting end date, the company reviews the carrying amounts of its
tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the
company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
1.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short-term liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities.
1.7 Financial assets
Financial assets are recognised in the company's statement of financial
position when the company becomes party to the contractual provisions of the
instrument. Financial assets are classified into specified
categories, depending on the nature and purpose of the financial assets.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised
cost where the objective is to hold these assets in order to collect
contractual cash flows, and the contractual cash flows are
solely payments of principal and interest. They arise principally from
the provision of goods and services to customers (eg trade receivables). They
are initially recognised at fair value plus transaction costs
directly attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the
effective interest rate method, less provision for impairment where necessary.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been affected.
1.8 Financial liabilities
The company recognises financial debt when the company becomes a party to the
contractual provisions of the instruments. Financial liabilities are
classified as either 'financial liabilities at fair value through profit
or loss' or 'other financial liabilities'.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at fair value through profit
or loss when the financial liability is held for trading. A financial
liability is classified as held for trading if:
· it has been incurred principally for the purpose of selling or
repurchasing it in the near term, or
· on initial recognition it is part of a portfolio of identified
financial instruments that the company manages together and has a recent
actual pattern of short-term profit taking, or
· it is a derivative that is not a financial guarantee contract or a
designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are stated at fair
value with any gains or losses arising on remeasurement recognised in profit
or loss.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other
short-term monetary liabilities, are initially measured at fair value net of
transaction costs directly attributable to the issuance of the
financial liability. They are subsequently measured at amortised cost using
the effective interest method. For the purposes of each financial liability,
interest expense includes initial transaction costs and any premium payable on
redemption, as well as any interest or coupon payable while the liability is
outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the
company's obligations are discharged, cancelled, or they expire.
1.9 Equity instruments
Equity instruments issued by the company are recorded at the proceeds
received, net of direct issue costs. Dividends payable on equity instruments
are recognised as liabilities once they are no longer at the discretion of the
company.
1.10 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because
it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or
deductible. The company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by
the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to
be recovered. Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset is
realised.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when the company has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate
to taxes levied by the same tax authority.
1.11 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense, unless those costs are required to be recognised as part of the cost
of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
Termination benefits are recognised immediately as an expense when the company
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13 Share-based payments
Equity-settled share-based payments are measured at fair value at the date of
grant by reference to the fair value of the equity instruments granted. The
fair value determined at the grant date is expensed on a straight-line basis
over the vesting period, based on the estimate of shares that will eventually
vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the
time they were granted
are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under
the modified terms and conditions are both determined at the date of the
modification. Any excess of the modified fair value over the original fair
value is recognised over the remaining vesting period in addition to the
grant date fair value of the original share-based payment. The share-based
payment expense is
not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee
redundancies) are treated as an acceleration of vesting and the amount that
would have been recognised over the remaining vesting period
is recognised immediately.
1.14 Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16.
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration. Where a tangible asset is acquired through a lease,
the company recognises a right-of-use asset and a lease liability at the
lease commencement date.
Right-of-use assets are included within property, plant and equipment,
apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date plus any initial direct costs and an estimate
of the cost of obligations to dismantle, remove, refurbish or restore the
underlying asset and
the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same basis as those
of other property, plant and equipment.
The right-of-use asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are unpaid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be
readily determined, the company's incremental borrowing rate. Lease payments
included in the measurement of the lease liability comprise fixed payments,
variable lease payments that depend on an index or a rate, amounts expected
to be payable under a residual value guarantee, and the cost of any options
that the company is reasonably certain to exercise, such as the exercise
price under a purchase option, lease payments in
an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in: future lease payments
arising from a change in an index or rate; the company's estimate of the
amount expected to be payable under a residual value guarantee; or the
company's assessment of whether it will exercise a purchase, extension or
termination option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the right-of-use
asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease
liabilities for short-term leases of machinery that have a lease term of 12
months or less, or for leases of low-value assets including
IT equipment. The payments associated with these leases are recognised in
profit or loss on a straight-line basis over the lease term.
1.15 Grants
Government grants are recognised when there is reasonable assurance that the
grant conditions will be met and the grants will be received.
2 Adoption of new and revised standards and changes in accounting policies Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following
Standards and Interpretations, which have not yet been applied in these
financial statements, were in issue but not yet effective (and in some cases
had not yet been adopted by the EU):
· Amendment to IFRS 16 Leases - COVID-19 related rent concessions
(effective 1 June 2020)
· Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest
Rate Benchmark Reform (effective 1 January 2021)
· Amendments to IAS 1 Presentation of financial statements -
Classification of liabilities (effective 1 January 2022)
· Narrow scope amendments to IFRS 3, IAS 16, IAS 17 and annual
improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective 1 January 2022)
The directors have considered the amendments above and do not believe there
will be a significant impact on the company's financial statements when they
are adopted.
3 Critical accounting estimates and judgements
In the application of the company's accounting policies, the directors are
required to make judgements, estimates and assumptions about the carrying
amount of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and
other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current
and future periods.
The directors do not consider there to be any estimates or assumptions which
have a significant risk
of causing a material adjustment to the carrying amount of assets and liabilities.
4 Property, plant and equipment
Cost Computers (£)
At 1 February 83,745
Additions 4,116
At 31 January 2020 87,870
Additions 4,058
At 31 January 2021 91,928
Computers
£
Accumulated depreciation and impairment
At 1 February 2019 36,452
Charge for the year 19,393
At 31 January 2020 55,845
Charge for the year 1,139
At 31 January 2021 76,984
Carrying amount
At 31 January 2021 14,944
At 31 January 2020 32,025
At 31 January 2019 47,302
5 Trade and other receivables
2021 2020
£ £
Trade receivables 11,425 25,032
VAT recoverable - 932
Other receivables 3,118 -
Prepayments 30,261 28,786
44,804 54,750
6 Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
7 Borrowings
Current Non-current
2021 2020 2021 2020
Borrowings held at amortised cost:
Bank overdraft 2,387
Bank loans 500,000
Debentures 1,071,334 966,334
MEIF Debentures 1,220,111 1,120,115
_______ _______ _______ _______
2,387 2,791,445 2,086,449
_______ _______ _______ _______
Bank loans represent a Coronavirus Business Interruption Loan Scheme (CBILS),
repayable by instalments over a 3 year period commencing March 2022.
MEIF Debenture Loan of £1,220,111 (2020: £1,120,115), including accrued
interest, is interest bearing at 10%pa and is repayable, other than by
instalments, in 2023. The loan is secured by a first fixed and floating charge
on the company's assets and undertaking.
Debenture loans of £1,071,334, (2020: £966,334) , including accrued
interest, are interest bearing at 14%pa, and are repayable, other than by
instalments, commencing March 2022 at the earliest. The debenture loan is
secured by fixed and floating charges on the company's assets and undertaking.
8 Fair value of financial liabilities
The directors consider that the carrying amounts of financial liabilities
carried at amortised cost in the
financial statements approximate to their fair values
9 Liquidity risk
The following table details the remaining contractual maturity for the
company's financial liabilities with agreed repayment periods. The
contractual maturity is based on the earliest date on which the company may
be required to pay.
Less than 1 1 - 5 years Total
month
£ £ £
At 31 January 2020
Debentures - 966,334 966,334
MEIF Debentures - 1,120,115 1,120,115
_______ _______ _______
- 2,086,449 2,086,449
_______ _______ _______
At 31 January 2021
Bank overdrafts 2,387 - 2,387
Accruals - 500,000 500,000
Debentures - 1,071,334 1,071,334
MEIF Debentures - 1,220,111 1,220,111
_______ _______ _______
2,387 2,791,445 2,793,832
_______ _______ _______
Additional details of the bank loans, Debentures and MEIF Debentures can be
found in Note 13.
Liquidity risk management
Liquidity risk is the risk that the company will encounter difficulty in
meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The company's approach
to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when they become due, under
both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the company's reputation.
10 Market risk
Market risk management
Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, currency risk
and other price risk, such as equity price risk and commodity risk. Financial
instruments affected by market risk include loans and borrowings.
The company only trades in sterling and is not exposed to foreign exchange
risk.
The company does not hold any investments in other companies or marketable
securities and so is not exposed to other price risk.
Interest rate risk
The company has bank overdrafts, bank loans, debenture loans and MEIF
debenture loans which all incur interest. The company manages the interest
rate risk by limiting its exposure to floating interest rates. The company
currently has fixed interest rates on all its borrowings, except for the bank
overdraft which is floating. The exposure is minimal and the company looks to
avoid using its overdraft where possible
11 Trade and other payables
2021 2020
£ £
Trade payables 146,134 133,657
Accruals 35,980 15,136
Social security and other taxation 20,622 5,374
Other payables 4,416 2,362
_______ _______
207,152 156,529
_______ _______
12 Lease liabilities
2021 2020
Maturity analysis £ £
Within one year 5,036 5,352
_______ _______
Lease liabilities are classified based on the amounts that are expected to be
settled within the next 12 months and after more than 12 months from the
reporting date, as follows:
2021 2020
£ £
Current liabilities 4,266 5,352
_______ _______
2021 2020
£ £
Amounts recognised in profit or loss include the following:
Interest on lease liabilities 6,129 13,943
_______ _______
13 Deferred taxation
ACAs
£
Deferred tax liability at 1 February 2019 10,869
_______
Deferred tax liability at 1 February 2020 10,869
Deferred tax movements in current year
Credit to profit or loss (10,869)
_______
Deferred tax liability at 31 January 2021 -
_______
14 Share Capital
2021 2020 2021 2020
Ordinary share capital Number Number £ £
Issued and fully paid
A Ordinary shares of 0.001p each 11,283,310 11,283,310 1,129 2,146
B Ordinary shares of0.0001p each 14,756,588 14,756,588 15 15
C Ordinary shares of 0.01p each 1,966,000 1,966,000 197 197
D Ordinary shares of0.0001p each 2,596,987 - 3 -
_______ _______ _______ ______
30,602,885 28,005,898 1,344 2,358
_______ _______ _______ ______
15 Share premium account
2021 2020
£ £
At the beginning of the year 2,874,814 2,874,814
Issue of new shares 907,737 -
Share capital reduction 643 -
_______ _______
At the end of the year 3,783,194 2,874,814
_______ _______
16 Capital risk management
The company's objective when managing capital is to safeguard its accumulated
capital in order to provide an adequate return to shareholders by maintaining
a sufficient level of funds, in order to support continued operations. The
company considers its capital to comprise equity capital plus accumulated
profits.
The company is not subject to any externally imposed capital requirements.
Notes to reconciliation
The prior year results have been restated to correct the value of share
capital shown as at 31 March 2020, which increased from £1,687 to £2,358.
This restatement has resulted in a reduction in the profit and loss account
reserve of £671.
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