REG - Kanabo Group PLC - Full Year Results 2022
02/05/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230502:nRSB9639Xa&default-theme=true
RNS Number : 9639X Kanabo Group PLC 02 May 2023
2 May 2023
Kanabo Group Plc
("Kanabo", the "Group" or the "Company")
FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2022
· Kanabo is now a fully focused health-tech company; combining a
digital healthcare platform and treatment portfolio with a focus on medicinal
cannabis products
· Successful integration of The GP Service and launch of an online
pain management clinic, a key strategic pivot for the Group
· Now building a substantial operational base for future growth
Kanabo Group plc (LSE: KNB), the patient focused healthcare technology and
medicinal cannabis company, announces results for the year results for the
year ended 31 December 2022 ("FY 2022").
Having delivered significant progress against its strategic objectives across
FY 2022, Kanabo uniquely combines a digital healthcare platform that
facilitates access to healthcare professionals, and a treatment portfolio
which includes medicinal cannabis products, providing seamless access to
high-quality medical treatments for pain management.
2022 Key Highlights:
· Ongoing progress to improve the financial stability of the Group:
o Revenues increased 726% to £603k (2021: £73k)
o Operating loss totaled £6.8m (2021: operating loss of £4.6m)
o Cash at 31 December 2022 of £3.2m (31 December 2021: £4.4m)
o Raised £2.25m (in February 2022), by way of an oversubscribed Placing
· Acquisition of The GP Service Ltd ("GP Service") now fully integrated
into the Group, expanding the Group's activities and skillset across the
digital health services arena
· Launched two new 'prescription only' cannabis-derived formulations
for pain management
· Launched a dedicated eCommerce platform, Kanabo. Store
(https://kanabo.store/) , focused initially at the UK market, with plans
already underway to expand into additional European markets
· Formation of Kanabo Agritec - in which Kanabo holds a 40% share -
dedicated to providing consulting services around the production, operation
and management of medical cannabis production facilities
Post Period End and Outlook:
· Launch of Treat It, the Company's new online clinic for pain
management. The service allows patients direct access to high-quality medical
treatments, including medicinal cannabis, and enables patients to take control
of their own personalised care
· Appointment of MHA MacIntyre Hudson as the Company's auditors
· Continue to deliver further ongoing strategic progress, which
includes the process of obtaining CE Mark certification for the Group's
cannabis inhaler which remains on track
· Through aligning the growing demand for digital medical access and
Kanabo's knowledge of the medicinal cannabis industry, the Board remains
confident in both short-term and medium-term growth prospects for the Company,
and remains committed to developing a scaled business capable of fully
exploiting a number of near term growth opportunities
Avihu Tamir, Chief Executive Officer of Kanabo, commented:
"2022 has proved to be one of the most strategically important years for our
business, as we seek to further expand our operational footprint across both
the medicinal cannabis and digital health services arenas.
"Our acquisition of GP Service will now provide the bedrock of our activities
as we continue to evolve Kanabo into a wellness and healthcare specialist,
whilst fully leveraging our market leading expertise in the development, and
distribution of cannabis-derived medicinal products.
"2023 has started well, and we were delighted to announce the launch of our
online medicinal cannabis clinic for pain management in March - leveraging our
proprietary technology to provide access to pain management treatments for
patients across the UK. I believe we now have the right strategic and
operational focus to deliver further financial progress and I look forward
updating all our key stakeholders throughout the year."
Enquiries:
Kanabo Group plc via Vigo Consulting
Avihu Tamir, Chief Executive Officer +44 (0)20 7390 0230
Assaf Vardimon, Chief Financial Officer
Peterhouse Capital Ltd (Financial Adviser) +44 (0)20 7469 0930
Eran Zucker / Lucy Williams / Charles Goodfellow
Vigo Consulting (Financial Public Relations/Investor Relations) +44 (0)20 7390 0230
Jeremy Garcia / Fiona Hetherington / Verity Snow
kanabo@vigoconsulting.com (mailto:kanabo@vigoconsulting.com)
About Kanabo Group Plc
Kanabo Group Plc (LSE:KNB) is a healthtech company committed to
revolutionising patient care through its innovative technology platform and
disruptive treatment offerings. Since its inception in 2017, Kanabo has been
focused on researching, developing, and commercialising regulated medicinal
cannabis-derived formulations and therapeutic inhalation devices.
Kanabo's NHS-approved online telehealth platform, The GP Service, provides
patients with video consultations, online prescriptions, and primary care
services. The Company is a leader in its field, focusing on improving patient
outcomes and providing more accessible healthcare experiences.
In March 2023, Kanabo successfully launched its Pain Clinic, Treat It, under
the expert guidance of its technological and product expertise. Treat It
initially focuses on chronic pain management using plant-based medicine and
treatments that are currently unavailable through traditional channels.
At Kanabo Group Plc, we are dedicated to providing patients with the highest
quality medical treatments and more accessible healthcare experiences.
Visit www.kanabogroup.com (http://www.kanabogroup.com) for more information.
Chair's Statement
I am delighted to report on the significant strategic progress of the Company.
Since the beginning of 2022 we have continued to further strengthen the
business, with the development and launch of new products, acquisitive growth
with the addition of The GP Service to the Group, and the launch of a Kanabo
Agritec Ltd ("Agritec"), a new, partly owned subsidiary offering one-stop-shop
consultancy services regarding the design, build, operation and management of
the production of medicinal cannabis. The Group is now well positioned to
leverage its skillset and products and capitalise on the market opportunity.
In February 2022, we announced the acquisition of The GP Service, and I would
like to take this opportunity to welcome the team from The GP Service to our
growing group - we look forward to working together to broaden our reach and
leveraging The GP Service's platform to expand our overall accessible market.
This collaboration will undoubtedly strengthen our position in the healthcare
sector and benefit our stakeholders.
The acquisition of The GP Service has been immediately boosted earnings,
contributing to an improved financial performance., We are pleased to report
revenue growth of £603 thousands, compared to £73 thousands the previous
year. This is before fully completing the post-merger integration, which
concluded in Q1 2023.
The acquisition of The GP Service has expanded the Group's service offering in
the healthcare space. With an existing network of over 40,000 patients and
approximately 4,500 registered pharmacies, the platform presents an
opportunity to leverage The GP Service to further promote the sales of the
Group's cannabis-derived products for medical patients and other specialised
treatment portfolios. We have already seen a significant increase in the
number of monthly consultations and look forward to further driving the reach
of the service.
In August, we announced the formation of a new subsidiary, Agritec, in which
the Group has a 40% shareholding. Kanabo Agritec will provides consultancy
services, leveraging the experience and knowledge of our team in areas such as
cultivation, processing, and production of cannabis products to advise other
cultivators on maximising their potential. Furthermore, these consultancy
services enable the Group to enhance the security of its cannabis supply by
diversifying its range of suppliers and generating a new revenue stream in the
short term.
The Group was pleased to complete a £2,250 thousands oversubscribed Placing
in February 2022, following strong demand from both new and existing
shareholders. Following the well-supported fundraising in February 2022, our
cash balance at 31 December 2022 was £3,204 thousands (31 December 2021:
£4,477 thousands).
Following the acquisition of The GP Service, the Group strengthened the team
with the appointment of Dr Mehran Afshar as Clinical Director of the Group. Dr
Afshar's primary role is to manage compliance policies and procedures
regarding the supply of medicinal cannabis through The GP Service.
In March 2022, Uziel Danino retired from the Board of Directors and in
December, it was announced that Andrew Morrison stood down as Non-Executive
Director. Both Uziel and Andrew were instrumental in the successful listing of
Kanabo on the London Stock Exchange. In March 2023, it was additionally
announced that Daniel Poulter had stepped down as Non-Executive Director, with
Kanabo confirming it was at an advanced stage of discussions regarding the
appointment of a UK-based NED. I would like to thank Uziel, Andrew and Daniel
for their support and contribution to Kanabo and wish them well with their
future endeavours. Gil Efron, who has considerable capital markets and
healthcare expertise was appointed to the Board of Directors in March 2022.
Following the year end, the Group was delighted to announce the launch of
Treat It, a dedicated online clinic for pain management, which leverages our
proprietary technology to extend our market reach for our medicinal cannabis
products. Furthermore, we announced the appointment of MHA MacIntyre Hudson as
the Group's auditors.
The Group remains focused on the following key strategic priorities:
· Continue to capitalise on demand for access to healthcare
professionals to drive growth of the GP Services business;
· Leverage a number of cross sell opportunities of the GP Service;
· Ongoing development of the Group's healthcare services, including our
recently launched online pain management clinic, to further grow market share;
· Maintain existing product development activities to further
strengthen the Group's medicinal cannabis product footprint;
· Focus on achieving medical device CE mark approval for our inhaler
product;
· Continue to explore opportunities to further expand Kanabo's sales
reach and online distribution channels.
The Kanabo team continue to be critical to the success and drive of the
business and to that end, I would like to extend my sincere thanks for their
contribution over the past year. It is testament to the team and their
continued drive that Kanabo is so well placed to capitalise on the market
opportunity in the provision of digital health services and cannabis products
across Europe.
The Chair's statement is an integral part of the Company's Strategic Repot.
David Tsur
Chair
27 April 2023
Chief Executive Officer's Review
2022 has been a year of significant progress for Kanabo. Not only have we
launched new products and seen further demand for our core products, but we
have also extended the Group's capabilities with the addition of the
telehealth services provided by The GP Service. Furthermore, we have leveraged
our in-house expertise through Kanabo Agritec, which adds strength and depth
to our supply chain for core products.
Having completed the acquisition of The GP Service, Kanabo is now uniquely
placed to provide access to high-quality medical treatment for pain
management. Kanabo combines a digital healthcare platform that allows patients
access to healthcare professionals, with a treatment portfolio which includes
medicinal cannabis and other products not usually available to patients.
The Group continues to provide a "product-to-patient" solution for
cannabis-derived products, now with a platform to prescribe medicinal products
directly to patients. The Group develops and commercialises high quality
cannabis formulas that are delivered to the patient via medical grade
vaporisers and non-combustible inhalation solutions, either through direct
sales or via prescription. Following the acquisition of The GP Service, we see
great potential to grow sales via the prescription channel. Furthermore,
through the Group's advisory and consultation services in Kanabo Agritec, we
are able to bolster and secure the supply of quality raw product. Our
pharmaceutical grade production standards ensure high quality, high potency
medical-grade products.
The corporate activity undertaken throughout the year demonstrates the Group's
continued focus on our strategy to be a digital healthcare provider and
leading supplier of innovative medical solutions to patients suffering from
conditions including chronic pain, anxiety and central nervous system
diseases.
The GP Service
We were delighted to announce the acquisition of The GP Service in February
2022. Utilising an online consultation platform, The GP Service offers the
services of online doctors to help diagnose and treat common conditions. The
system, already an approved provider on the NHS digital framework, allows
patients to consult with qualified doctors, who then are able to provide
prescriptions, referral letters and fit notes.
As well as providing access to GP appointments, The GP Service also partners
with certain UK corporations to provide services to employees as part of
benefits packages and in June 2022, it was confirmed it had extended its
contract with one of the UK's largest group of retail businesses. The service
now provides live video consultation appointments with registered GPs, and
prescriptions are available through the platform's partner network of over
4,000 pharmacies across the UK. Given the increasing pressure experienced by
the NHS, we anticipate seeing continued demand for our private GP appointments
through The GP Service as individuals seek access to medical advice.
Following the acquisition, we have invested in technology to support its suite
of digital tools, including video consultations, digital prescriptions and
access to primary care services. This investment supported the service in
seeing a steady growth in the number of monthly users of the digital health
services, with more an 100% increase in the number of consultations on a
monthly basis since the acquisition of the GP Service.
The GP Service (cont.)
Under the new management of Kanabo, The GP Service's core activities have
shown a growth of over 100% in monthly revenue from acquisition to the end of
the year. This growth is expected to continue as we add new treatments to the
platform and invest in additional IT developments.
The acquisition of The GP Service has provided the Group with a solid
foundation in the UK digital health market and presents an opportunity to
capitalise on the footprint to expand our activities and further strengthen
our UK market position.
Products
In March 2022, we unveiled our cutting-edge eCommerce platform, Kanabo.store.
Initially targeting the UK market, the platform allows customers to purchase
Kanabo's devices and pods directly. Our unique VapePod, a first-of-its-kind
medical-grade vaporiser, offers users a convenient and precise dosing
experience.
Since the launch, we have been dedicated to broadening our product offerings.
We introduced two new medical cannabis extract formulas for inhalation,
specifically designed for pain management and compatible with the VapePod. As
the only products of their kind currently available in the UK market, these
innovative solutions have garnered positive feedback from our customers.
We are making significant progress towards acquiring CE Mark approval for our
proprietary VapePod MD delivery device. Once approved, the VapePod MD will
become Europe's first medical device-certified cannabis inhaler of its kind,
paving the way for increased sales throughout Europe and rapid expansion into
Germany and other EU markets. In the coming months, we anticipate providing an
update on this development.
Our partnership with Medocann, a leading premium cultivator in Israel,
continues to strengthen as we collaborate on a unique, high-end product line
of cannabis-based products for medicinal use. The products in development will
target specific medical conditions, and Kanabo has exclusive distribution
rights to the co-developed products in the German and UK markets.
Agritec
As a Group, we have acquired extensive expertise in designing, building,
operating and managing medicinal cannabis facilities. By setting up Kanabo
Agritec, we can leverage this expertise to boost and diversify the supply
chain through key offtake agreements, reducing the risk of overreliance on any
particular supplier. Alongside the launch of Kanabo Agritech, we announced our
first contract for the subsidiary - an MoU for the design, build, and
operation of a 4,000kg per annum indoor cultivation and processing facility in
Madrid, Spain, dedicated exclusively to medicinal cannabis. The negotiations
to formalise the MoU with a signed contract continue to progress well.
Corporate activity
Our Placing in February 2022 was well supported by both existing shareholders
and new investors and we will use the £2,250 thousands proceeds to accelerate
our strategy to become one of Europe's leading digital healthcare providers,
with access to a broad treatment portfolio, including medicinal cannabis.
Early in 2022, we announced the decision not to proceed with the acquisition
of the European businesses of Canada-based Materia, comprising the Maltese EU
GMP certified facility, German medical cannabis wholesaler and a UK CBD
eCommerce platform, with the preference to proceed with a strategic
partnership instead. In March 2023, the Company received notice that 11157353
Canada Corp., which trades under the name Materia ("Materia"), has been put
into receivership.
On 25 July 2021, Kanabo signed a head of terms agreement for the acquisition
of Materia. As part of this agreement, the Group loaned Materia CAD$1,000
thousands, as announced on 6 June 2022, the loan given to Materia by the
Company was fully impaired based on the Directors' assessment of Materia's
ability to repay the debt. The Company will continue to work to extract as
much value as possible in the form of cash or assets for the benefit of
Kanabo.
Kanabo, as a Group, explores acquisition opportunities and strategic
partnerships that will help us improve our expertise, enhance our digital
healthcare services, and speed up bringing our products to market. Our
strategic preference is to acquire companies in the "last mile", which will
help us increase our sales and profits when integrated to the broader Group.
Broader industry involvement
Kanabo continues to be highly respected within the industry, which is
reflected in it being selected as a steering group member for the- development
of a British Standard for CBD non-tobacco Vape products. It is expected that a
Publicly Available Specifications ("PAS") document will be published in 2023,
with a standardisation document defining best practice in the industry. We
firmly believe regulation and policy are critical as the use of cannabis for
medical and wellness purposes continues to gain momentum. We want to ensure we
remain at the forefront of the industry, guaranteeing the highest standards in
both our production processes and final market products.
Post Period end
In March 2023, following the year end, we realised our plan to cross pollinate
our business, through leveraging The GP Service's fully compliant digital
framework to prescribe the Group's medicinal cannabis products with the launch
of our Treat It platform. Treat It is a dedicated online pain management
clinic, with access to a broad treatment portfolio including medicinal
cannabis. The clinic affords patients suffering from chronic pain conditions
greater access to our medicinal cannabis treatments.
In March 2023, the Group appointed MHA MacIntyre Hudson as the new auditors
for the Group after the Group was informed that Jeffreys Henry - the previous
auditor - was no longer eligible to undertake LSE audits.
Outlook
As we look forward to 2023, we believe the business is now well balanced with
both our core cannabis capabilities and The GP Services division. Since we
acquired The GP Service, we have seen a significant increase in demand for the
services, with demand for services up 72% when comparing Q1 2023 versus Q1
2022. We believe this demand will not abate in the near future for various
reasons including the continued pressure on nationalised services. We are also
cognizant of the opportunity to leverage the established and extensive network
within GP Service to expand the potential audience for our UK prescription
products.
There is significant opportunity in the medicinal cannabis market for
companies with innovative products, particularly as regulation is introduced
across more European markets. The Group's proprietary VapePod MD system has
been submitted for CE Mark approval and we hope to be in a position to
announce progress on the certification in the coming months. There is also the
potential for more markets - such as France and Spain, where any use of
cannabis is currently prohibited - to open up. Furthermore, The GP Service
platform has significant cross-selling potential for our wellness and medical
products.
We continue to recognise the importance of developing new products to bring to
market, and to that end, our scientists are focused on delivering innovative
formulas aimed at both the medical and wellness markets. In addition to
leveraging The GP Service platform, we are committed to introducing new
treatments to both primary and secondary care, ensuring that we stay at the
forefront of providing cutting-edge solutions to our customers.
We have made a positive start to 2023 and remain excited by the significant
market opportunity ahead of us. We believe the Group now has the capabilities
and potential to truly capitalise on it given our position as one of the
leading providers of cannabis for medical and wellness services.
We believe there is significant potential to drive our market share in both
the direct sale of cannabis products and our online GP platform, The GP
Service, alongside our recently launched Treat It platform, which combines
both elements of the business and provides access to medical professionals who
can prescribe medicinal cannabis.
As we head into 2023, we have a more diverse business proposition. The
combined expertise and offering presents a unified platform that uniquely
combines a digital healthcare platform and treatment portfolio, connecting
patients with accessible, affordable, and personalised healthcare.
The Board remains confident in both short-term and medium-term growth
prospects for the Company and remains committed to developing a scaled
business capable of fully exploiting a number of near-term growth
opportunities.
The Chief Executive Officer's review is an integral part of the Company's
Strategic Repot.
Avihu Tamir
Chief Executive Officer
27 April 2023
Chief Financial Officer's Review
Financial results for 2022 reflect a year of transition for Kanabo. Alongside
investment in the underlying business, with the launch of new products, a
dedicated online marketplace, and a more secure supply chain via Kanabo
Agritec, we have undertaken a strategically important acquisition, bringing
the GP Service into the Group. The acquisition not only provides an additional
revenue stream to the Group, but a significant network of GPs and pharmacies
which we can leverage to drive sales of our medicinal cannabis products. A
summary of the financial performance for the year is given below.
Kanabo revenues in 2022 totaled £603 thousands (2021: £73 thousands), an
increase of 726% compared to the previous year primarily due to the
contribution of revenues generated from The GP Service.
Operating loss for 2022 was £6,781 thousands (2021: operating loss of £4,574
thousands), representing a 48% increase, largely due to one off expenses,
including acquisition-related transaction costs which were expensed as
incurred.
During the period, the Company invested £597 thousands (2021: £242
thousands) in Research and Development, £361 thousands of which was directly
related to staff compensation, including salaries and share based payments.
Sales and Marketing expense increased during the period to £1,190 thousands
(2021: £569 thousands), £752 thousands of which was directly related to
staff compensation with the remainder due to the increased marketing costs for
wellness products following the launch of the Company's UK eCommerce site.
General and administration expenses for 2022 were £3,804 thousands (2021:
£2,000 thousands). General and administration expenses increased mainly due
to the increase in the Group's activity following the acquisition of GP
Service. Out of the General and administration expenses a total amount of
£1,581 thousands (2021: £443 thousands) was for non-cash expenses (i.e.,
amortisation, depreciation, and other share-based payments expenses).
Net financing expenses for 2022 were £89 thousands (2021: £23 thousands
gains), reflecting interest on interest bearing loans and finance cost over
lease.
At 31 December 2022, the Company had £3,204 thousands in cash (31 December
2021: £4,477 thousands). The decrease in cash balances can be primarily
attributed to the £3,776 thousands used in operating activities, offset by
£2,250 thousands raised in February 2022.
2022 was a significant year of progress for Kanabo. The acquisition of The GP
Service has created a second revenue stream for the business, but also
bolstered our business model by creating a robust, established and legitimate
route to market for our medicinal cannabis products through the significant GP
and pharmacy network. We have also launched our dedicated online marketplace,
and created Kanabo Agritec which seeks to both diversify and de-risk our
supply chain. We believe the business now has strong foundations and is well
placed to capitalise on the opportunity and provide access to GP services for
those who need it, and also enable chronic pain sufferers more access to
medicinal cannabis products. We have maintained the momentum as we have moved
into 2023 and remain optimistic about the Group's prospects in the years
ahead.
On 25 July 2021, Kanabo signed a head of terms agreement for the acquisition
of 11157353 Canada Corp., which trades under the name Materia ("Materia"). As
part of this agreement, the Group loaned Materia CAD$1.0m, as announced on 6
June 2022, the loan given to Materia by the Company was fully impaired based
on the Directors' assessment of Materia's ability to repay the debt.
Post-period end, the Company received notice that Materia, has been put into
receivership. The Company will continue to work to extract as much value as
possible in the form of cash or assets for the benefit of Kanabo.
The Chief Financial Officer's review is an integral part of the Company's
Strategic Repot.
Assaf Vardimon
Chief Financial Officer
27 April 2023
Consolidated Statement of Profit or Loss
For the year ended 31 December 2022 2021
Note £ 000 £ 000
Revenue 7 603 73
Cost of sales 8 404 66
Gross profit 199 7
Research and development expenses 9 597 242
Sales and marketing expenses 10 1,190 569
General and administration expenses 11 3,804 2,000
Impairment (reverse impairment) of financial assets carried at amortised cost 24 (59) 598
Other expenses - including acquisition and listing costs 13 1,448 1,172
Operating loss (6,781) (4,574)
Net finance income (expenses) 14 (89) 23
Loss for the year (6,870) (4,551)
Attributable to:
Equity holders of the parent (6,867) (4,551)
Non-controlling interests (3) -
(6,870) (4,551)
Loss (basic and diluted) per share from operations attributable to the equity
owners
Basic and diluted loss per share (pence per share) 16 (1.65) (1.40)
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Comprehensive Loss
For the year ended 31 December 2022 2021
Note £ 000 £ 000
Loss for the year (6,870) (4,551)
Other comprehensive income (loss) for the year
Foreign operations - foreign currency translation differences 21 (82)
Total items that may be reclassified to profit or loss 21 (82)
Total comprehensive loss (6,849) (4,633)
Attributable to:
Equity holders of the parent (6,846) (4,551)
Non-controlling interests (3) -
(6,849) (4,551)
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2022 2021
Note £ 000 £ 000
ASSETS
Non-current assets
Intangible assets and goodwill 17 10,044 -
Property, plant, and equipment 18 96 42
Right-of-use asset 31 282 -
Long-term deposit 31 31 -
Financial asset through profit or loss 20 - 750
10,453 792
Current assets
Inventories 21 81 63
Trade receivables 22 43 10
Other receivables 23 156 237
Financial asset through profit or loss 20 491 -
Short-term deposits 24 20
Cash and cash equivalents 26 3,204 4,477
3,999 4,807
Total assets 14,452 5,599
EQUITY AND LIABILITIES
Equity
Issued capital 27 10,573 9,249
Share premium account 27 6,850 (*) 5,169
Merger reserve 27 11,393 (*) 9,231
Share-based payments reserve 28 1,715 758
Share to be issued reserve 6.a, 6.c 10,476 2,500
Reverse acquisition reserve (14,968) (14,968)
Foreign currency translation reserve 10 (7)
Retained deficit (13,605) (6,748)
Equity attributable to equity holders of the parent 12,448 5,184
Non-controlling interests (3) -
Total equity 12,445 5,184
Non- current liabilities
Interest-bearing loan and borrowings 29 509 -
509 -
Current liabilities
Trade payables 153 42
Other payables 30 1,147 373
Interest-bearing loan and borrowings 29 198 -
1,497 415
Total liabilities 2,007 415
Total equity and liabilities 14,452 5,599
(*) Reclassified, see note 27.
The notes to the financial statements form an integral part of these financial
statements.
The financial statements were approved and authorised for issue by the Board
of Directors on 27 April 2023 and were signed on their behalf by:
David Tsur
Chair
Company's Statement of Financial Position
As at 31 December 2022 2021
Note £ 000 £ 000
ASSETS
Non-current assets
Property, plant, and equipment 18 17 21
Investments in subsidiary 19 23,746 14,676
Intercompany receivables 25 1,097 -
Financial asset through profit or loss 20 - 750
24,860 15,447
Current assets
Inventories 21 81 63
Trade receivables 22 35 10
Other receivables 23 69 210
Intercompany receivables 25 3,192 834
Financial asset through profit or loss 20 491 -
Cash and cash equivalents 26 937 4,148
4,805 5,265
Total assets 29,665 20,712
EQUITY AND LIABILITIES
Equity
Issued capital 27 10,573 9,249
Share premium account 27 6,850 (*) 5,169
Merger reserve 27 11,393 (*) 9,231
Share-based payments reserve 28 1,715 750
Share to be issued reserve 6.a, 6.c 10,476 2,500
Retained deficit (12,326) (6,360)
Total equity 28,681 20,539
Current liabilities
Trade payables 79 24
Other payables 30 905 149
984 173
Total liabilities 98 173
Total equity and liabilities 29,665 20,712
The notes to the financial statements form an integral part of these financial
statements.
As permitted by section 408 of the Companies Act 2006, the parent company's
income statement has not been included in these financial statements. The loss
for the parent Company was £5,976 thousands (2021: loss of £5,584
thousands).
The financial statements were approved and authorised for issue by the Board
of Directors on 27 April 2023 and were signed on their behalf by:
David Tsur
Chair
Company Registration No. 10485105
Consolidated Statement of Changes in Equity
Attributable to owners of the Company
Share capital Share premium account Merger reserve Share based payments reserve Shares to be issued reserve Reverse acquisition reserve Foreign currency translation reserve Retained deficit Total Non-controlling interests Total equity
Note £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
As at 1 January 2021 - 2,098 805 - - 75 (3,017) (39) - (39)
Loss for the year - - - - - - - (4,551) (4,551) - (4,551)
Other comprehensive loss - - - - - - (82) - (82) - (82)
Total comprehensive loss - - - - - - (82) (4,551) (4,633) - (4,633)
Transfer to reverse acquisition reserve 6.c - (2,098) - - - 2,098 - - - - -
Recognition of plc equity at acquisition date 6.c 735 592 - - - 434 - - 1,761 - 1,761
Acquisition of a subsidiary 6.c 5,769 - 9,231 - - (15,000) - - - - -
Issue of shares in settlement of fees 15 25 - - - - - - 40 - 40
Issue of share capital 27 2,600 4,775 - - - - - - 7,375 - 7,375
Shares to be issued 27 - - - - 2,500 (2,500) - - - - -
Cost of share issue - (634) - - - - - - (634) - (634)
Exercise of options 28 4 - - (820) - - - 820 4 - 4
Exercise of warrants 28 126 411 - - - - - - 537 - 537
Issue of warrants 28 - - - 113 - - - - 113 - 113
Share-based payments 28 - - - 660 - - - - 660 - 660
As at 31 December 2021 9,249 5,169 9,231 758 2,500 (14,968) (7) (6,748) 5,184 - 5,184
Loss for the year - - - - - - - (6,867) (6,867) (3) (6,870)
Other comprehensive income - - - - - - 21 - 21 - 21
Total comprehensive loss - - - - - - 21 (6,867) (6,846) (3) (6,849)
Acquisition of a subsidiary 6.a 533 - 2,162 - 7,976 - - - 10,671 - 10,671
Issue of share capital 27 703 1,434 - - - - - - 2,137 - 2,137
Exercise of options 28 7 5 - (10) - - - 10 12 - 12
Exercise of warrants 28 81 242 - - - - - - 323 - 323
Share-based payments 28 - - - 967 - - - - 967 - 967
As at 31 December 2022 10,573 6,850 11,393 1,715 10,476 (14,968) 14 (13,605) 12,448 (3) 12,445
The notes to the financial statements form an integral part of these financial
statements.
Company's Statement of Changes in Equity
Share capital Share premium account Merger reserve Shares based payments reserve Shares to be issued reserve Convertible loan notes reserve Retained deficit Total equity
Note £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
As at 1 January 2021 735 592 - 33 - 162 (784) 738
Total comprehensive loss - - - - - - (5,584) (5,584)
Acquisition of a subsidiary 6.c 83 79 - - - (162) - -
Issue of shares in settlement of fees 15 25 - - - - - 40
Issue of share capital 27 5,769 - 9,231 - - - - 15,000
Shares to be issued 6.c - - - - 2,500 - - 2,500
Cost of share issue - (634) - - - - - (634)
Exercise of options 28 2,455 4,634 - - - - - 7,089
Exercise of warrants 28 192 473 - (41) - - 8 632
Issue of warrants 28 - - - 113 - - - 113
Share-based payments 28 - - - 645 - - - 645
As at 31 December 2021 9,249 5,169 9,231 750 2,500 - (6,360) 20,539
Total comprehensive loss - - - - - - (5,976) (5,976)
Acquisition of a subsidiary 6.a 533 2,162 2,162 - 7,976 - - 10,671
Issue of share capital 27 703 1,434 - - - - - 2,137
Exercise of options 28 7 5 - (10) - - 10 12
Exercise of warrants 28 81 242 - - - - - 323
Share-based payments 28 - - - 975 - - - 975
As at 31 December 2022 10,573 6,850 11,393 1,715 10,476 - (12,326) 28,681
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022 2021
Note £ 000 £ 000
Operating activities
Loss before tax (6,870) (4,551)
Adjustments to reconcile profit before tax to net cash flows:
Reverse acquisition share-based payment expense 13,6.c - 1,172
Net impairment (reverse) losses on financial assets 24 (59) 598
Share-based payment expense 28 967 660
Depreciation of property, plant and equipment and right-of-use assets 18,31 69 7
Amortisation of intangible assets and impairment of goodwill 17 1,109 -
Impairment charge on receivables 22 3 -
Loss on current financial asset 13,20 259 -
Net finance expenses 56 13
Working capital changes:
Change in trade receivables (3) (10)
Change in other receivables 155 (194)
Change in inventories (18) (35)
Change in trade payables 92 6
Change in other payables 677 256
Change in long-term deposit (31) -
(3,727) (2,078)
Interest paid (52) -
Net cash flows used in operating activities (3,779) (2,078)
Investing activities
Purchase of property, plant, and equipment 18 (68) (35)
Purchase of financial asset 20 - (750)
Acquisition of a subsidiary, net of cash acquired 6 235 358
Investment in short term deposits (4) (2)
Development expenditures 17 (86) -
Net cash flows from/ (used in) investing activities 77 (429)
Financing activities
Share issue net of issuing cost 27 2,137 6,608
Proceeds from exercise of warrants 27 323 529
Proceeds from exercise of share options 27 12 102
Receipts of long-term loans 29 68 -
Repayment of borrowings - (582)
Repayment of lease liability 31 (37) -
Repayment of borrowings 29 (100) -
Net cash flows from financing activities 2,403 6,657
Net increase (decrease) in cash and cash equivalents (1,299) 4,150
Net foreign exchange difference 26 (53)
Cash and cash equivalents at 1 January 4,477 380
Cash and cash equivalents at 31 December 26 3,204 4,477
The notes to the financial statements form an integral part of these financial
statements.
Company's Statement of Cash Flows
For the year ended 31 December 2022 2021
Note £ 000 £ 000
Operating activities
Loss before tax (5,976) (*) (5,584)
Adjustments to reconcile profit before tax to net cash flows:
Net impairment (reverse) losses on financial assets 24 (59) 598
Share-based payment expense 28 205 193
Depreciation of property, plant, and equipment 18 4 2
Impairment charge on receivables 22 3 -
Loss on current financial asset 13,20 259 -
Net finance (expenses) income 54 (57)
Share of loss of an associate 19 2,371 (*) 3,275
Working capital changes:
Change in trade receivables (28) (10)
Change in other receivables 141 (200)
Change in inventories (18) (63)
Change in trade payables 55 9
Change in other payables 756 110
Change in intercompany receivables (3,509) (368)
Net cash flows used in operating activities (5,742) (2,095)
Investing activities
Purchase of property, plant, and equipment 18 - (23)
Purchase of financial asset 20 - (750)
Net cash flows used in investing activities - (773)
Financing activities
Share issue net of issuing cost 27 2,137 6,608
Proceeds from exercise of warrants 27 323 529
Proceeds from exercise of share options 27 12 102
Repayment of borrowings - (582)
Receipts of short-term loans 29 59 -
Net cash flows from financing activities 2,531 6,657
Net increase (decrease) in cash and cash equivalents (3,211) 3,789
Cash and cash equivalents at 1 January 4,148 359
Cash and cash equivalents at 31 December 26 937 4,148
(*) Reclassification of the share of loss Kanabo research Ltd.
The notes to the financial statements form an integral part of these financial
statements.
Notes to the Financial Statements
1. Corporate information
The consolidated financial statements of Kanabo Group Plc and its subsidiaries
(collectively, the Group) for the year ended 31 December 2022 were authorised
for issue in accordance with a resolution of the Directors on 27 April 2023.
Kanabo Group Plc (the Company or the parent) is a limited company incorporated
and domiciled in England and whose shares are publicly traded on the London
Stock Exchange in the standard segment. The registered office is located at
Churchill House 137-139 Brent Street London NW4 4DJ, United Kingdom.
The Group's principal activities are the distribution and development of
cannabis derived medical and wellness products.
2. Significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the periods presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the United Kingdom and those parts of the Companies Act 2006
applicable to companies reporting IFRS, expect as otherwise stated.
The consolidated financial statements are prepared under the historical cost
convention with the exception of certain investments which are carried at fair
value.
The consolidated financial statements are presented in GBP (£) and all values
are rounded to the nearest thousand (£000), except when otherwise indicated.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 December 2022. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has:
· Power over the investee (i.e., existing rights that give it the
current ability to direct the relevant activities of the investee).
· Exposure, or rights, to variable returns from its involvement with
the investee.
· The ability to use its power over the investee to affect its returns.
2. Significant accounting policies (cont.)
2.2 Basis of consolidation (cont.)
Generally, there is a presumption that a majority of voting rights results in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement(s) with the other vote holders of the
investee.
· Rights arising from other contractual arrangements.
· The Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income, and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies in line with the Group's accounting policies.
All intra-group assets and liabilities, equity, income, expenses, and cash
flows relating to transactions between members of the Group are eliminated in
full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control,
is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related
assets (including goodwill), liabilities, non-controlling interest, and other
components of equity, while any resultant gain or loss is recognised in profit
or loss. Any investment retained is recognised at fair value.
2.3 Going concern
The preparation of the financial statements requires an assessment on the
validity of the going concern assumption.
The Directors are required to satisfy themselves that it is reasonable for
them to conclude whether it is appropriate to prepare the financial statements
on a going concern basis, and as part of that process they have followed the
Financial Reporting Council's guidelines ("Guidance on the Going Concern Basis
of Accounting and Reporting on Solvency and Liquidity Risk" issued April
2016).
As at 31 December 2022, the Group's cash position was £3,204 thousands and it
was in a strong net current asset position. Based on the above, the Group's
current cash reserves and detailed cash forecasts produced, the Directors are
confident that the Group will be able to meet its obligations as they fall due
over the course of the next 12 months. Whilst the Group may seek to raise
further funds in the next 12 months, the Directors are confident that the
Group would be able to meet their obligations as they fall due in the event of
no further funding being obtained due to the low level of committed
expenditure relative to the forecasted discretionary expenditure, which could
be reduced or deferred.
2. Significant accounting policies (cont.)
2.3 Going concern (cont.)
The impact of the risk factors such as high interest rates and high inflation,
declining consumer power, Russia's invasion of Ukraine, and supply chain
disruptions had a little effect on the business of the Group during 2022
following that the Directors do not believe that these risks will have a
significantly adverse impact on the Group in the foreseeable future.
2.4 Estimates and assumptions
Significant accounting estimations
The Group's consolidated financial statements includes the use of estimates
and assumptions. The significant accounting estimates with a significant risk
of a material change to the carrying value of assets and liabilities within
the next year in terms of IAS 1 are:
· Depreciation of PPE and amortisation of intangible assets
The directors are required to review the estimated useful of PPE and
amortisation periods of intangible assets. Were useful lives and amortisation
periods to be shorter, or were there impairments of PPE or intangible assets,
this would cause an acceleration in depreciation and amortisation charges in
future periods. See note 17 for further information.
Other areas of judgement and accounting estimates
While these areas do not meet the definition under IAS 1 of significant
accounting estimates or critical accounting judgements, the recognition and
measurement of certain material assets and liabilities are based on
assumptions and/or are subject to longer term uncertainties. The other areas
of judgement and accounting estimates are:
· Share-based payments
In respect of service conditions, the company is required to assess how many
share options will eventually vest. As this estimation changes over time this
may require a re-estimation of share-based payment charges reflected in profit
or loss. The cumulative charge will reflect the amount of share options that
ultimately vest. See note 28 for more details including the company's approach
to valuing share options and the inputs to the valuations model.
· Impairments of financial and non-financial assets
See disclosures in note 2.5.o.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies
a) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration
transferred, which is measured at acquisition date fair value, and the amount
of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests
in the acquiree at fair value or at the proportionate share of the acquiree's
identifiable net assets. Acquisition-related costs are expensed as incurred
and included in administrative expenses.
The Group determines that it has acquired a business when the acquired set of
activities and assets include an input and a substantive process that together
significantly contribute to the ability to create outputs. The acquired
process is considered substantive if it is critical to the ability to continue
producing outputs, and the inputs acquired include an organised workforce with
the necessary skills, knowledge, or experience to perform that process or it
significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost,
effort, or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances, and pertinent
conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be
recognised at fair value at the acquisition date. Contingent consideration
classified as equity is not remeasured and its subsequent settlement is
accounted for within equity. Contingent consideration classified as an asset
or liability that is a financial instrument and within the scope of IFRS 9
Financial Instruments, is measured at fair value with the changes in fair
value recognised in the statement of profit or loss in accordance with IFRS 9.
Other contingent consideration that is not within the scope of IFRS 9 is
measured at fair value at each reporting date with changes in fair value
recognised in profit or loss.
3. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
a) Business combinations and goodwill (cont.)
Goodwill is initially measured at cost (being the excess of the aggregate of
the consideration transferred and the amount recognised for non-controlling
interests and any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group
re-assesses whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or
loss.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in
a business combination is, from the acquisition date, allocated to each of the
Group's cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of
the operation within that unit is disposed of, the goodwill associated with
the disposed operation is included in the carrying amount of the operation
when determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposed
operation and the portion of the cash-generating unit retained.
b) Reverse takeover accounting
On 16 February 2021, the Company acquired Kanabo Research Ltd via a reverse
takeover which resulted in the Company becoming the ultimate holding company
of the Group. The transaction was accounted for as a reverse acquisition since
it did not meet the definition of a business combination under IFRS 3. In
accordance with IFRS 2, a share-based payment expense equal to the deemed cost
of the acquisition less the fair value of the net assets of the Company at
acquisition was recognised.
When considering how the acquisition of Kanabo Research Ltd via a reverse
takeover should be accounted for, the Directors have been required to make a
judgment on whether the acquisition falls within the scope of IFRS 3 or not.
The Directors assessed the accounting acquiree, Kanabo Group Plc, at the time
of acquisition to not be a business as defined by IFRS 3. As a result, the
acquisition was assessed as falling outside the scope of IFRS 3. See note 6.c.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
c) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification. An asset is current when
it is:
· Expected to be realised or intended to be sold or consumed in the
normal operating cycle.
· Held primarily for the purpose of trading.
· Expected to be realised within twelve months after the reporting
period.
· Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when:
· It is expected to be settled in the normal operating cycle.
· It is held primarily for the purpose of trading.
· It is due to be settled within twelve months after the reporting
period.
· There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
The terms of the liability that could, at the option of the counterparty,
result in its settlement by the issue of equity instruments do not affect its
classification.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and
liabilities.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
d) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Fair value measurement is based on the assumption that the transaction will
take place in the asset's or the liability's principal market, or in the
absence of a principal market, in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
Fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, maximizing the use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities measured at fair value or for which fair value is
disclosed are categorised into levels within the fair value hierarchy based on
the lowest level input that is significant to the entire fair value
measurement:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable
directly or indirectly.
Level 3 - inputs that are not based on observable market data (valuation techniques
which use inputs that are not based on observable market data).
On 21 February 2022, the Company acquired 100% of the voting rights of
GP Service (UK) Limited ("GPS") a non-listed company based in UK. The
acquisition price was determine based on the closing bid prices which are
level 1 fair value measurements.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
e) Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods
or services are transferred to the customer at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services. The Group has generally concluded that it is the principal
in its revenue arrangements, except for the procurement services below,
because it typically controls the goods or services before transferring them
to the customer.
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.
Revenue from consultations:
The Group is 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 Group recognises revenue when it
transfers control of a s service to a customer. Revenue is recognised at a
point in time (i.e., upon receipt of the customer of the equipment) because
this is when the customer benefits from the Group's consultation services.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
f) Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received, and all attached conditions will be complied with.
When the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the expected useful life of the
related asset.
When the Group receives grants of non-monetary assets, the asset and the grant
are recorded at nominal amounts and released to profit or loss over the
expected useful life of the asset, based on the pattern of consumption of the
benefits of the underlying asset by equal annual instalments.
g) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates
(England's statutory income tax rate of 19% and Israel: 23%) and tax laws used
to compute the amount are those that are enacted or substantively enacted at
the reporting date in the countries where the Group operates and generates
taxable income.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the statement of profit or loss. Management
periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred tax liabilities
are recognised in full using the balance sheet liability method on temporary
differences except:
When the deferred tax liability arises from the initial recognition of
goodwill or 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.
· In respect of taxable temporary differences associated with
investments in subsidiaries, associates, and interests in joint arrangements,
when 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.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
g) Taxes (cont.)
Deferred tax (cont.)
Deferred tax assets are recognised for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred
tax assets are recognised to the extent that it 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:
· When the deferred tax asset relating to the deductible temporary
difference arises from the initial recognition 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.
· In respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint arrangements,
deferred tax assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be
utilised.
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 profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be recovered.
In assessing the recoverability of deferred tax assets, the Group relies on
the same forecast assumptions used elsewhere in the financial statements and
in other management reports, which, among other things, reflect the potential
impact of climate-related development on the business, such as increased cost
of production as a result of measures to reduce carbon emission.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised
outside profit or loss. Deferred tax items are recognised in correlation to
the underlying transaction either in other comprehensive income or directly in
equity.
Tax benefits acquired as part of a business combination, but not satisfying
the criteria for separate recognition at that date, are recognised
subsequently if new information about facts and circumstances change. The
adjustment is either treated as a reduction in goodwill (as long as it does
not exceed goodwill) if it was incurred during the measurement period or
recognised in profit or loss.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
g) Taxes (cont.)
Deferred tax (cont.)
The Group offsets deferred tax assets and deferred tax liabilities if and only
if it has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
h) Foreign currencies
The Group's consolidated financial statements are presented in British Pound
(£). For each entity, the Group determines the functional currency and items
included in the financial statements of each entity are measured using that
functional currency. The Group uses the direct method of consolidation and on
disposal of a foreign operation, the gain or loss that is reclassified to
profit or loss reflects the amount that arises from using this method.
(i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group's
entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are
translated at the functional currency spot rates of exchange at the reporting
date.
Differences arising on settlement or translation of monetary items are
recognised in profit or loss with the exception of monetary items that are
designated as part of the hedge of the Group's net investment in a foreign
operation. These are recognised in OCI until the net investment is disposed
of, at which time, the cumulative amount is reclassified to profit or loss.
Tax charges and credits attributable to exchange differences on those monetary
items are also recognised in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in OCI, or profit or loss
are also recognised in OCI or profit or loss, respectively).
In determining the spot exchange rate to use on initial recognition of the
related asset, expense, or income (or part of it) on the derecognition of a
non-monetary asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on which the Group
initially recognises the nonmonetary asset or non-monetary liability arising
from the advance consideration. If there are multiple payments or receipts in
advance, the Group determines the transaction date for each payment or receipt
of advance consideration.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
h) Foreign currencies (cont.)
(ii) Group companies
On consolidation, the assets and liabilities of foreign operations are
translated into British Pound (£) at the rate of exchange prevailing at the
reporting date and their statements of profit or loss are translated at
exchange rates prevailing at the dates of the transactions or average for the
required period. The exchange differences arising on translation for
consolidation are recognised in OCI and recognised in a separate reserve -
foreign currency translation reserve.. On disposal of a foreign operation, the
component of OCI relating to that particular foreign operation is reclassified
to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising on
the acquisition are treated as assets and liabilities of the foreign operation
and translated at the spot rate of exchange at the reporting date.
(iii) Financial Risk Management Objectives and Policies
The Company does not enter into any forward exchange rate contracts.
The main financial risks arising from the Company's activities are market
risk, interest rate risk, foreign exchange risk, credit risk, liquidity risk
and capital risk management. Further details on the risk disclosures can be
found in note 32.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
i) Property, plant, and equipment
Property, plant, and equipment are measured at cost, including directly
attributable costs, less accumulated depreciation, accumulated impairment
losses and excluding day-to-day servicing expenses. Cost includes spare parts
and auxiliary equipment that are used in connection with plant and equipment.
The cost of an item of property, plant and equipment comprises the initial
estimate of the costs of dismantling and removing the item and restoring the
site on which the item is located.
Depreciation is estimated to write off the cost of assets to their residual
value on straight line basis over the estimated useful lives of the assets as
follows:
%
Leasehold improvements 15%
Equipment and furnishing 15%
Computers and electronic equipment 15%-33%
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 proceeds with
carrying amount. These are included in profit or loss.
j) Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Group as a lessee The Group applies a single recognition and measurement
approach for all leases. The Group recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying
assets.
Right-of-use assets
The Group recognises 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 asset.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
j) Leases (cont.)
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 Group
exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in
the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date 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 for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the
underlying asset. The Group's lease liabilities are included in
Interest-bearing loans and borrowings.
k) Financial assets at fair value through profit and loss
Financial assets are stated at fair value, which reflects market conditions at
the reporting date. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which
they arise, including the corresponding tax effect. Fair values are determined
based on an annual valuation performed by an accredited external independent
valuer applying a valuation model recommended by the International Valuation
Standards Committee.
Financial assets are derecognised either when they have been disposed of
(i.e., at the date the recipient obtains control) or when they are permanently
withdrawn from use and no future economic benefit is expected from their
disposal. The difference between the net disposal proceeds and the carrying
amount of the asset is recognised in profit or loss in the period of
derecognition.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
l) Intangible assets
Intangible assets acquired separately are measured on initial recognition at
cost. The cost of intangible assets acquired in a business combination is
their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure
is recognised in profit or loss in the period in which the expenditure is
incurred.
The useful lives of intangible assets are assessed as either finite or
indefinite.
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least
at the end of each reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in
profit or loss in the expense category that is consistent with the function of
the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis.
An intangible asset is derecognised upon disposal (i.e., at the date the
recipient obtains control) or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising upon derecognition of the
asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an
individual project are recognised as an intangible asset when the Group can
demonstrate:
· The technical feasibility of completing the intangible asset so that
the asset will be available for use or sale.
· Its intention to complete and its ability and intention to use or
sell the asset.
· How the asset will generate future economic benefits.
· The availability of resources to complete the asset.
· The ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised over the period
of expected future benefit. Amortisation is recorded in cost of sales. During
the period of development, the asset is tested for impairment annually.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
m) Financial Assets
Classification
The Group classifies its financial assets in the following categories: at
amortised cost (including trade receivables and other financial assets at
amortised cost) fair value through other comprehensive income or fair value
through profit or loss. The classification depends on the financial asset's
contractual cash flow characteristics and the business model for managing
them. Management determines the classification of its financial assets at
initial recognition.
Financial assets at amortised cost
(i) Classification of financial assets at amortised cost
The Company classifies its financial assets as at amortised cost only if both
of the following criteria are met:
· the asset is held within a business model whose objective is to
collect the contractual cash flows; and
· the contractual terms give rise to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are initially measured at fair value and
subsequently measured using the effective interest rate method less
impairment.
(ii) Impairment and risk exposure
All of the financial assets at amortised cost are denominated in Pounds
Sterling. As a result, there is no exposure to foreign currency risk. There is
also no exposure to price risk.
For the Directors' justification for there being no expected credit loss
charge required in respect of the loan due from Materia and the amounts due
from the subsidiary, note 24.
There is no definition of default at present. This will be reassessed as and
when repayments are due in respect of financial assets at amortised cost held.
n) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition
are accounted for, as follows:
· Raw materials: purchase cost on a first-in/first-out basis.
· Finished goods and work in progress: cost of direct materials and
labour and a proportion of manufacturing overheads based on the normal
operating capacity but excluding borrowing costs.
Initial cost of inventories includes the transfer of gains and losses on
qualifying cash flow hedges, recognised in OCI, in respect of the purchases of
raw materials. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
o) Impairment of non-financial assets
The Group assesses at each reporting date, whether there is an indication that
an asset may be impaired. If any indication exists, or when annual impairment
testing for an asset is required, the Group estimates the asset's recoverable
amount. An asset's recoverable amount is the higher of an asset's or CGU's
fair value less costs of disposal and its value in use. The recoverable amount
is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of
assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount.
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. In
determining fair value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other
available fair value indicators.
The Group bases its impairment calculation on most recent budgets and forecast
calculations, which are prepared separately for each of the Group's CGUs to
which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. A long-term growth rate
is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the statement of
profit or loss in expense categories consistent with the function of the
impaired asset, except for properties previously revalued with the revaluation
taken to OCI. For such properties, the impairment is recognised in OCI up to
the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date to
determine whether there is an indication that previously recognised impairment
losses no longer exist or have decreased. If such indication exists, the Group
estimates the asset's or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset's recoverable amount since the last impairment
loss was recognised. The reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised
in the statement of profit or loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a revaluation increase.
Goodwill and intangible assets are tested for impairment annually and when
circumstances indicate that the carrying value may be impaired.
Depreciation of PPE and amortisation of intangible assets
The directors are required to review the estimated useful of PPE and
amortisation periods of intangible assets. Were useful lives and amortisation
periods to be shorter, or were there impairments of PPE or intangible assets,
this would cause an acceleration in depreciation and amortisation charges in
future periods. See notes 6.a and 17 for further information
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
o) Impairment of non-financial assets (cont.)
Impairment is determined for goodwill by assessing the recoverable amount of
each CGU (or group of CGUs) to which the goodwill relates. When the
recoverable amount of the CGU is less than it is carrying amount, an
impairment loss is recognised. Impairment losses relating to goodwill cannot
be reversed in future periods.
The Group assesses where climate risks could have a significant impact, such
as the introduction of emission-reduction legislation that may increase
manufacturing costs. These risks in relation to climate related matters are
included as key assumptions where they materially impact the measure of
recoverable amount, these assumptions have been included in the cash-flow
forecasts in assessing value-in-use amounts.
Recoverability of the investment in subsidiary (note 19)
As at 31 December 2022 the carrying value of the Company's investment in
Kanabo Research Ltd was £14,142 thousands (2021: £17,951 thousands). The
recoverable value of this investment is not considered to be less than it is
carrying value as at 31 December 2022 and therefore no impairment has been
have recognised. The Directors have made this assessment through reviewing
forecasts, other available financial information available and developments
during the year and since the year-end. The key inputs within the forecast
include revenue growth, gross profit margins and overheads.
Recoverability of amounts due from the subsidiary (note 25)
By 31 December 2022 the parent Company had advanced £506 thousands (including
interest) as a loan to Kanabo Research Ltd and £2,686 thousands as an ongoing
operational balance. The Directors expect this balance to be fully recoverable
and have thus not recognised any IFRS 9 expected credit loss charges. They
made this assessment through reviewing forecasts, other financial information
available and developments during the year and since the year-end. The Board
asset the loan on individual basis to examine impairment.
By 31 December 2022 the parent Company had advanced £1,097 thousands
(including interest) as a loan to GPS. The Directors expect this balance to be
fully recoverable and have thus not recognised any IFRS 9 expected credit loss
charges. They made this assessment through reviewing forecasts, other
financial information available and developments during the year and since the
year-end. The Board asset the loan on individual basis to examine impairment.
Recoverability of amounts due from Materia (note 24)
By 31 December 2022 the Group had advanced CAD 1,000 thousand (£582
thousands) to Materia Ventures ("Materia"), a company incorporated in Canada.
When assessing whether the loan receivable and accrued interest is recoverable
or not, the Directors identified a number of impairment indicators. Whilst no
repayments of the loan are due, or yet to have been received and whilst
through communications with Materia the Directors understand Materia is
willing to repay the balance, there is not sufficient evidence to demonstrate
that it is probable that Materia can make full repayment of the balance. The
Directors have therefore taken a prudent view and decided to fully impair the
loan, however, the Company and Materia will continue to discuss their future
collaboration and a strategic partnership through which the Company hope to
recover the loan balance.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
p) Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise
cash at banks and on hand and short-term highly liquid deposits with a
maturity of three months or less, that are readily convertible to a known
amount of cash and subject to an insignificant risk of changes in value.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits, as defined above, net of
outstanding bank overdrafts as they are considered an integral part of the
Group's cash management.
q) Provisions
A provision in accordance with IAS 37 is recognised when the Company has a
present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Company expects part or all of the expense
to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense is recognised in the statement of profit or loss net of
any reimbursement.
r) Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppliers. Accounts
payable are classified as current liabilities if payment is due within one
year or less (or in the normal operating cycle of the business if longer). If
not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective interest method.
s) Share-based payments
Employees (including Directors senior executives) of the Group receive
remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled
transactions).
That cost is recognised in employee benefits expense, together with a
corresponding increase in equity (other capital reserves), over the period in
which the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised for
equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group's
best estimate of the number of equity instruments that will ultimately vest.
The expense or credit in the statement of profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning
and end of that period.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
s) Share-based payments (cont.)
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the Group's best estimate of the
number of equity instruments that will ultimately vest. Market performance
conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service
requirement, are considered to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest because
non-market performance and/or service conditions have not been met. Where
awards include a market or non-vesting condition, the transactions are treated
as vested irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or service conditions are
satisfied.
When the terms of an equity-settled award are modified, the minimum expense
recognised is the grant date fair value of the unmodified award, provided the
original vesting terms of the award are met. An additional expense, measured
as at the date of modification, is recognised for any modification that
increases the total fair value of the share-based payment transaction, or is
otherwise beneficial to the employee. Where an award is cancelled by the
entity or by the counterparty, any remaining element of the fair value of the
award is expensed immediately through profit or loss.
The fair value is measured by use of the Black-Scholes model as the Directors
view this as providing the most reliable measure of valuation. The expected
life used in the model has been adjusted, based on management's best
estimates, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The market
price used in the model is the issue price of Company shares at the last
placement of shares immediately preceding the calculation date. The fair value
calculated is inherently subjective and uncertain due to the assumptions made
and the limitations of the calculation used.
t) Equity
Equity instruments issued by the Company are recorded at the value of net
proceeds after direct issue costs.
u) Shares to be issued
Obligations which are to be settled via the issue of the Company's shares at
the year-end which meet the definition of equity per IAS 32 are classified as
shares to be issue within equity and are held at fair value.
3. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
v) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees' services up to the end
of the reporting period and are measured at the amounts expected to be paid
when the liabilities are settled. Leave obligations are calculated by
multiplying the average days of outstanding leave at the period end by the
daily salary rate of the employee concerned. The liabilities are presented as
current employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
There are no other long-term employee benefit obligations.
Post-employment obligations
The Group operates one post-employment scheme, a defined contribution pension
plan available to all employees. The Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as employee
benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments
is available.
Share-based payments
Share-based compensation benefits are provided to employees via the Group
Employee Option Plan, an employee share scheme, the executive short term
incentive scheme and share appreciation rights. Information relating to these
schemes is set out in note 28.
Employee options
The fair value of options granted under the Group Employee Option Plan is
recognised as an employee benefit expense, with a corresponding increase in
equity. The total amount to be expensed is determined by reference to the fair
value of the options granted:
· including any market performance conditions (e.g. the Company's share
price);
· excluding the impact of any service and non-market performance
vesting conditions (e.g. profitability, sales growth targets and remaining an
employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (e.g. the
requirement for employees to save or hold shares for a specific period of
time).
The total expense is recognised over the vesting period, which is the period
over which all of the specified vesting conditions are to be satisfied. At the
end of each period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service
conditions. It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
2. Significant accounting policies (cont.)
2.5 Summary of significant accounting policies (cont.)
w) Employee benefits (cont.)
Employee options (cont.)
The Employee Option Plan is accounted for as detailed in note 28. When the
options are exercised, the appropriate amount of shares are transferred to the
employee. The proceeds received, net of any directly attributable transaction
costs, are credited directly to equity.
Bonus plans
Where contractually obliged or where there is a past practice that has created
a constructive obligation to give staff bonuses, the Group recognises a
liability and an expense for bonuses based on a formula that takes into
consideration certain financial and operational objectives.
3. Segment information
Following the acquisition of The GP Service (UK) Limited ("GPS") (see note
6.a), For management purposes, the Group is organised into business units
based on its products and services and has three reportable segments, as
follows:
· Primary Care - Tele pharma services provided by GPS.
· Secondary Care - Development and distribution of cannabis derived
medical and wellness products.
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 income taxes 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.
3. Segment information (cont.)
Year ended 31 December 2022:
Primary care Secondary care Total segments Adjustments and eliminations Consolidated
£ 000 £ 000 £ 000 £ 000 £ 000
Revenue
External customers 505 98 603 - 603
Inter-segment - - - - -
Total revenue 505 98 603 - 603
Expenses
Cost of sales (349) (55) (404) - (404)
Depreciation and amortisation (90) (955( (1,045) - (1,045)
Segment loss (1,185) (5,685) (6,870) - (6,870)
Total assets 496 13,956 14,452 - 14,452
Total liabilities 609 1,398 2,007 - 2,007
The Group's operation does not include any reconciling items.
Geographical location:
Primary care Secondary care Total segments
£ 000 £ 000 £ 000
Assets
United Kingdom 496 11,558 12,054
Israel - 2,398 2,398
Total assets 496 13,956 14,452
Liabilities
United Kingdom 609 987 1,596
Israel - 411 411
Total liabilities 609 1,398 2,007
4. Capital management
For the purpose of the Group's capital management, capital includes issued
capital, share premium and all other equity reserves attributable to the
equity holders of the parent. The primary objective of the Group's capital
management is to maximise the shareholder value.
The Group manages its capital structure and makes adjustments in light of
changes in economic conditions and the requirements of the financial
covenants. The Group includes within net debt, interest bearing loans and
borrowings, trade and other payables, less cash, and short-term deposits.
2022 2021
£ 000 £ 000
Interest-bearing loan and borrowings (note 29) 198 -
Trade payables 153 42
Other payables (note 30) 1,147 373
Less: cash and short-term deposits (3,228) (4,497)
Net asset (1,730) (4,082)
Total equity 12,445 5,184
Gearing ratio -14% -79%
There have been no breaches of the financial covenants of any interest-bearing
loans and borrowing in the current period.
No changes were made in the objectives, policies, or processes for managing
capital during the years ended 31 December 2022 and 2021.
5. Group information
The consolidated financial statements of the Group include:
% equity interest
Name Principal activities Country of incorporation 2022 2021
Kanabo Research Ltd. R&D Israel 100 100
Kanabo Agritec Ltd. Consulting Israel 40 -
The GP Service (UK) Limited Telemedicine UK 100 -
Kanabo GP Limited Holding company UK 100 -
(*) The Company holds 40% of the equity in Kanabo Agritec Ltd. but
consolidates 100% of this entity. See note 6.b for details on interest held in
Kanabo Agritec Ltd.
6. Business combinations and acquisition of non-controlling
interests
(a) Acquisition of The GP Service (UK) Limited
On 21 February 2022, the Company acquired 100% of the voting rights of
GP Service (UK) Limited ("GPS") a non-listed company based in UK and
specialising in care telemedicine provider in exchange for a net consideration
of £13,499 thousands ("Net Consideration") with a fair value of £10,671
thousands. The Net Consideration was satisfied by the allotment of 94,133,645
B ordinary shares of 0.00001 pence each in the capital of Kanabo GP Limited,
a subsidiary of Kanabo Group Plc, at a price of 12.65 pence per share
("Consideration Shares"). It has been agreed as part of the acquisition that
the principal and interest owed as at completion by GPS to MEIF WM Debt
LP (£1,591 thousands) will be repayable by the Company by the allotment of
12,574,931 ordinary shares within 18 months based on the same price of
£0.1265 per share.
The Group's acquisition of the GPS will facilitate the rapid growth of its
existing digital and telemedicine business and will establish a new and fully
compliant channel to market for THE Group's products for medical patients.
Through improved access to these products, the Group hopes to make a
substantial contribution to improving outcomes for thousands of patients in
the UK and Europe.
As of the signature date of the report, total amount of 85,406,117 shares have
not yet been issued and the contingent consideration has been included in the
"shares to issued" reserve within equity.
The fair values of the identifiable assets and liabilities of GPS as at the
date of acquisition were:
Fair value recognised on
acquisition
£000
Assets
Property, plant, and equipment 11
Intangible assets 116
Cash and cash equivalents 235
Trade receivables 33
Other receivables 74
469
Liabilities
Interest-bearing loan (500)
Trade payables (19)
Other payables (97)
(616)
Total identifiable net liabilities at fair value (147)
Other intangible assets arising on acquisition 6,763
Goodwill arising on acquisition 4,055
Fair value of purchase consideration transferred 10,671
6. Business combinations and acquisition of non-controlling interests
(cont.)
(a) Acquisition of The GP Service (UK) Limited (cont.)
Other intangible assets arising on acquisition include the technology which
was acquired through business combinations. The management assessment the
lifetime of these assets for a minimum of 7 years and as a result recorded
amortisations expenses in the amount of £891 thousands.
As agreed between the parties, the net liabilities recognised on the
acquisition date were based on GPS results as of 31 January 2022, starting 1
February 2022 the results of GPS are being consolidated in the Group's
financial statements.
The revenue of GPS and net loss for the period since acquisition were £505
thousands and £1,185 thousands respectively.
(b) Investment in an associate
In March 2022, Kanabo Research Ltd ("KNR") (a wholly owned subsidiary of the
Company) and a third-party partner formed an entity, Kanabo Agritec
Ltd. ("Agritec"), to enter into agreements with third parties at minimal cost
to leverage the Company's Intellectual Property for the cultivation,
processing, and production of cannabis products. KNR holds 40% of the voting
shares in this entity. The third-party hold the remaining 60% of the voting
shares. KNR committed to finance Agritec up to an amount equal to 75% of the
principal amount requested by Agritc, the other Founders, together, will lend
up to the remaining 25% of the principal amount in equal portions among them.
As of the reporting period KNR loaned Agritec total amount of ILS 100 thousand
(£24 thousands).
Under the contractual arrangement with the third-party partners, KNR has a
majority representation on the entity's board of Directors and the KNR's
approval is required for all major operational decisions, the KNR assessed
that the voting rights in Agritc are not the dominant factor in deciding who
controls the entity. Therefore, KNR concluded Agritc is a structured entity
under IFRS 10 Consolidated Financial Statements and that KNR controls it with
non-controlling interests. Therefore, Agritc is consolidated in the Group's
consolidated financial statements. The shares of the third-party partner are
recorded under the equity as non-controlling interests and the return on
investment is recorded as non-controlling interests under the profit and loss.
(c) Reverse acquisition
On 16 February 2021, the Company formerly known as Spinnaker Opportunities
Plc, acquired through a share for share exchange the entire share capital of
Kanabo Research Ltd ("KNR"), whose principal activity is the provision of
THC-Free retail CBD products and Vaporization devices.
Although the transaction resulted in KNR becoming a wholly owned subsidiary of
the Company, the transaction constituted a reverse acquisition, as the
previous shareholders of KNR own a substantial majority of the Ordinary Shares
of the Company and the executive management of KNR became the executive
management of Kanabo Group Plc.
In substance, the shareholders of KNR acquired a controlling interest in the
Company and the transaction has therefore been accounted for as a reverse
acquisition. As the Company's activities prior to the acquisition were purely
the maintenance of the LSE Listing, acquiring KNR and raising equity finance
to provide the required funding for the operation of the acquisition, it did
not meet the definition of a business in accordance with IFRS 3.
6. Business combinations and acquisition of non-controlling interests
(cont.)
(c) Reverse acquisition (cont.)
Accordingly, this reverse acquisition does not constitute a business
combination and was accounted for in accordance with IFRS 2 "Share-based
Payments" and associated IFRIC guidance. Although, the reverse acquisition is
not a business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial statements. The
Directors have prepared these financial statements using the reverse
acquisition methodology, but with the result that rather than recognising
goodwill, the difference between the equity value given up by KNR's
shareholders and the share of the fair value of net assets gained by these
shareholders, is charged to the consolidated statement of comprehensive income
as a share-based payment on reverse acquisition and represents in substance
the cost of acquiring an LSE listing.
On 16 February 2021, the Company issued 230,769,231 ordinary shares to acquire
the 237,261 ordinary shares of KNR based on a share price of £0.065 (the
price at which those shares issued as part of the placing that day were issued
at), the Company's investment in KNR is valued at £15,000 thousands prior to
the consideration of contingent consideration and share based payments charges
for the year recognised in the subsidiary - see note 2 for further commentary
regarding this component of the carrying value of the investment in the
subsidiary as at 31 December 2022.
On 16 November 2021, the Company achieved two of its deferred consideration
share milestones under the terms of the share purchase agreement. The
achievement entitles the sellers to 38,461,492 deferred consideration shares
with a total value of £2,500 thousands which increases the total investment
to £17,500 thousands. The Company had not issued the shares as at 31 December
2022 and as this obligation met the 'fixed for fixed' rule under IAS 32, the
contingent consideration has been included in the "shares to issued" reserve
within equity.
Because the legal subsidiary, KNR, was treated on consolidation as the
accounting acquirer and the legal Parent Company, Kanabo Group Plc, was
treated as the accounting subsidiary, the fair value of the shares deemed to
have been issued by KNR was calculated at £1,911 thousands based on an
assessment of the purchase consideration for a 100% holding of Kanabo Group
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 the acquisition date. During the period between 1 January 2021 to 16
February 2021 several shareholders exercised their warrants. The exercised
warrants indicated that in the event the RTO acquisition would not be
completed the funds would be returned to the shareholders. For that reason, it
was decided that it would be more appropriate to use the Company's value of
the net assets as of 1 January 2021.
£ 000
Deemed cost 1,911
Trade and other receivables 434
Cash and cash equivalents 359
Trade and other payables (54)
Total identifiable net liabilities at fair value 739
Total RTO expenses 1,172
6. Business combinations and acquisition of non-controlling interests
(cont.)
(c) Reverse acquisition (cont.)
The difference between the deemed cost (£1,911 thousands) and the fair value
of the net assets assumed per above of £739 thousands resulted in £1,172
thousands being expensed within "reverse acquisition expenses" in accordance
with IFRS 2, Share Based Payments, reflecting the economic cost to KNR's
shareholders of acquiring a quoted entity.
The reverse acquisition reserve which arose from the reverse takeover is made
up as follows:
£ 000
Pre-acquisition equity (a) (739)
Kanabo Research Ltd share capital at acquisition (b) 2,099
Investment in Kanabo Research Ltd (c) (17,500)
Reverse acquisition expense (d) 1,172
Total (14,968)
(a) Recognition of pre-acquisition equity of Kanabo Group Plc as at 1
January 2021.
(b) KNR had issued share capital of £2,099 thousands. As these financial
statements present the capital structure of the legal parent entity, the
equity of KNR is eliminated.
(c) The value of the shares issued by the Company in exchange for the
entire share capital of KNR, the entry is required to eliminate the balance
sheet impact of this transaction.
(d) The shares to be issued to the vendors upon the meeting of two of the
agreed milestones had not been issued as at 31 December 2022. Since the
obligation in question is to be settled by the Company through an issue of a
fixed number of shares for a fixed consideration, this obligation has been
treated as an equity instrument and has been included within equity under the
"shares to be issued reserve".
7. Revenues
2022 2021
£ 000 £ 000
Services 505 -
Sale of products 98 73
Total 603 73
During 2022 and 2021 the revenues were generated only from the sale of
products (sale of CBD and THC products) and services (primary care) and were
made to customers in the United Kingdom.
All revenues were recognised at a point in time.
8. Cost of sales
2022 2021
£ 000 £ 000
Salaries and related expenses 317 -
Share-based payment expense 13 -
Cost of sales 48 55
Depreciation - 2
IT Development and licenses 12 1
Impairment changes on receivables 3 -
Other 11 8
Total 404 66
9. Research and development expenses
2022 2021
£ 000 £ 000
Salaries and related expenses 293 163
Share-based payment expense 68 6
IT development 181 -
Lab expenses - 9
Rent and related expenses 39 36
Professional services 2 26
Other 14 2
Total 597 242
The GPS capitalise research and development expenses incurred during 2022 as
Management have taken the prudent view that it is probable that the technology
and products upon which the research and development expenditure related to
will bring in future economic benefits to the Group.
10. Sales and marketing expenses
2022 2021
£ 000 £ 000
Salaries and related expenses 403 144
Share-based payment expense 349 218
Subcontractors 60 14
Marketing expenses 364 129
Professional services - 31
Conferences 14 12
Business development - 16
Other - 5
Total 1,190 569
11. General and administration expenses
2022 2021
£ 000 £ 000
Salaries and related expenses 778 676
Share-based payment expense 537 436
Insurance 82 100
Professional services 1,005 599
Rent and related expenses (*) 81 52
Depreciation 69 7
Amortisation (note 17) 975 -
IT Development and licenses 45 12
Travel and accommodation 128 54
Patent - 13
Other 104 51
Total 3,804 2,000
(*) Rent and related expenses refer to expenses which are out of the scope of
IFRS 16, see note 31.
12. Auditor's remuneration
During the reporting period, the Company incurred the following costs in
respect of services provided by the current and previous auditor:
2022 2021
£ 000 £ 000
Fees payable to the Company's auditor for:
- The audit of parent company and consolidated financial statements 155 (a) 43 (c)
- Due diligence services in respect of acquisition targets - 15 (c)
- Interim review of the Group for the six-month period ended 30 June 2022 and 8 (b) 15 (c)
30 June 2021 in accordance with ISRE 2410
(a) The services for audit in 2022 were provided by MHA MacIntyre Hudson.
(b) The services for interim review in 2022 were provided by Jeffreys Henry
LLP.
(c) The services for audit and interim review in 2021 were provided by PKF
Littlejohn LLP.
13. Other operating expenses
2022 2021
£ 000 £ 000
Acquisition and listing costs 1,189 -
Reverse acquisition expenses (note 6.c) - 1,172
Loss on current financial asset (note 20) 259 -
Total 1,448 1,172
Other expenses comprise acquisition-related transaction costs which were
expensed as incurred and included (note 6.a) as other expenses and expenses
generated from the preparations of the Group's prospectus.
14. Net finance expenses (income)
2022 2021
£ 000 £ 000
Finance income
Interest on loans to related parties - (15)
- (15)
Finance costs
Bank charges 15 4
Interest on interest bearing loans 32 -
Interest on finance lease (note 31) 24 -
71 4
Net foreign exchange (gain) losses 18 (12)
Net finance (income) expenses recognised in profit or loss 89 (23)
15. Income tax
a. Analysis of charge in the year
Reconciliation of tax expense and the accounting profit multiplied by United
Kingdom's domestic tax rate for 2022 and 2021:
2022 2021
£ 000 £ 000
Accounting loss before income tax (6,870) (4,551)
At England's statutory income tax rate of 19% (2021: 19%) (1,305) (865)
Non-deductible expenses for tax purposes:
Non-deductible expenses (11) 336
Amortisation of intangible assets 169 -
Effect of higher tax rates in Israel (47) (43)
Current year losses for which no deferred tax asset is recognised 1,194 572
Income tax benefits reported in the statement of profit or loss - -
15. Income tax (cont.)
b. Reconciliation of deferred tax liabilities, net
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
As at 1 January - - - -
Deferred taxes acquired in business combinations (note 6.a) 1,651 - - -
Deferred tax asset on losses recognised due to offset of liability under IAS (1,651) - -
12
As at 31 December - - - -
The Group has accumulated tax losses of approximately £10,099 thousands
(2021: £4,646 thousands) that are available, under current legislation, to be
carried forward indefinitely against future profits.
A deferred tax asset has not been recognised in respect of these losses of the
Company due to the uncertainty of future profits. The amount of the deferred
tax asset not recognised is approximately £2,448 thousands (2021: £715
thousands).
16. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the year attributable to
ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year.
2022 2021
Loss attributable to ordinary equity holders of the parent (£000) (6,870) (4,551)
Weighted average number of ordinary shares for basic EPS 415,187,814 324,287,001
Basic and diluted loss per share (pence per share) (1.65) (1.40)
There is no difference between the basic and diluted earnings per share as a
loss has been made in the year.
17. Intangible assets and goodwill
Group:
Development costs Intangible asset Goodwill Total
£ 000 £ 000 £ 000 £ 000
Cost
At 1 January 2022 - - - -
Additions - internally developed 85 - - 85
Acquisition of a subsidiary (note 6.a) 1,352 6,764 5,959 14,075
Deduction against deferred tax asset on losses recognised due to offset of - - (1,904) (1,904)
liability under IAS 12
At 31 December 2022 1,437 6,764 4,055 12,256
Amortisation and impairment
At 1 January 2022 - - - -
Amortisation 85 891 - 976
Acquisition of a subsidiary (note 6.a) 1,236 - - 1,236
At 31 December 2022 1,321 891 - 2,212
Net book value
At 31 December 2022 116 5,873 4,055 10,044
At 31 December 2021 - - - -
17. Intangible assets and goodwill (cont.)
Acquisition during the year
Intangible asset arising on acquisition include the technology which was
acquired through business combinations. The management assessment the lifetime
of this asset for a minimum of seven (7) years and as a result recorded
amortisations expenses in the amount of £891 thousands.
Impairment review disclosures
Goodwill is allocated to the Group's cash-generating units (CGUs) identified
according to business segment. The carrying amounts of goodwill by segment as
at 31 December 2022 and 2021 are as follows:
2022 2021
£ 000 £ 000
PFS PFS
Goodwill 4,055 -
During the year, the acquired goodwill was tested for impairment in accordance
with IAS 36 on the basis of the relevant CGUs. Following the impairment tests
there has been no change to the carrying values. The recoverable amount of a
CGU is determined based on value-in-use calculations. These calculations use
cash flow projections based on current business plans. The key assumptions for
the value-in-use calculations are those regarding revenue growth rates,
discount rates & long-term growth rates over a period of five years from
the Statement of Financial Position date and thereafter. Management determined
revenue growth based on past performance and its expectations for the market
development. Discount rates were determined using pre-tax rates that reflect
current market assessments of the time value of money and the risks specific
to the CGUs. Terminal value is calculated as cash flows beyond the five-year
period extrapolated using estimated long-term growth rates. Additionally,
these value-in-use calculations were stress tested on a more prudent basis
(assuming a mixture of 75% or 95% of revenue growth dependent upon the
relevant CGU) and gave rise to no change in the carrying value of goodwill.
There are no reasonably possible changes to any key assumptions used within
the impairment reviews that would cause the carrying value of a CGU to exceed
its recoverable amount.
The revenue growth rate does not exceed the long-term average growth rate for
the businesses in which the CGUs operate.
2022 2021
% %
Post-tax discounted rates 28.3% -
Pre-tax discounted rates 37.7% -
Long-term growth rates 2% -
18. Property, plant, and equipment
Group:
Computers and electronic equipment Equipment and furnishing Leasehold improvement Total
£ 000 £ 000 £ 000 £ 000
Cost
At 1 January 2021 12 17 - 29
Additions 13 21 1 35
Exchange differences 1 1 - 2
At 31 December 2021 26 39 1 66
Acquisition of subsidiary (note 6.a) 13 16 - 29
Additions 18 19 31 68
Exchange differences - (2) (1) (3)
At 31 December 2022 57 72 31 160
Depreciation
At 1 January 2021 9 7 - 16
Depreciation charge for the year 3 4 - 7
Exchange differences 1 - - 1
At 31 December 2021 13 11 - 24
Acquisition of subsidiary (note 6.a) 7 11 - 18
Depreciation charge for the year 11 7 4 22
At 31 December 2022 31 29 4 64
Net book value
At 31 December 2021 13 28 1 42
At 31 December 2022 26 43 27 96
18. Property, plant, and equipment (cont.)
Company:
Computers and electronic equipment Total
£ 000 £ 000
Cost
At 1 January 2021 - -
Additions 23 23
At 31 December 2021 23 23
Additions - -
At 31 December 2022 23 23
Depreciation
At 1 January 2021 - -
Depreciation charge for the year 2 2
At 31 December 2021 2 2
Depreciation charge for the year 4 4
At 31 December 2022 6 6
Net book value
At 31 December 2021 21 21
At 31 December 2022 17 17
19. Investment in subsidiaries
Company:
2022 2021
£ 000 £ 000
As at 1 January 14,676 -
Additions 11,441 17,951
Equity results (2,371) (3,275)
As at 31 December 23,746 14,676
On 21 February 2022, the Company acquired 100% of the voting rights of The
GP Service (UK) Limited ("GPS"), an UK-based private company specialising in
care telemedicine, via a share-for-share exchange. The carrying value of
investment comprises of £13,499 thousands in respect of share consideration
(carry a fair value of £10,671 thousands), of which £2,135 thousands remains
unissued as at 31 December 2022.
During 2022, £122 thousands was recognised in respect of share-based payment
charges recognised in the subsidiary during the reporting period. As there is
no agreement in place for GPS to reimburse the Company for share options
issued to and exercised by employees of GPS, the share-based payment charged
recognised in the subsidiary in the year is recognised as a capital
contribution in the subsidiary and thus an investment in the Company.
No impairments have been recognised in the year as the Directors do not
believe the recoverable value of the investment to be below it is carrying
value.
The Company owns 100% of the share capital of GPS and the subsidiary's
registered address is Coventry University Technology Park the Technocentre,
CV1 2TT, Coventry, United Kingdom.
On 16 February 2021, the Company acquired 100% of the voting rights of Kanabo
Research Ltd ("KNG"), an Israeli-based private company operating the CBD
industry, via a share-for-share exchange. The carrying value of investment
comprises of £17,500 thousands in respect of share consideration, of which
£2,500 thousands remains unissued as at 31 December 2022.
During 2022, £648 thousands was recognised in respect of share-based payment
charges recognised in the subsidiary during the reporting period. As there is
no agreement in place for KNG to reimburse the Company for share options
issued to and exercised by employees of KNG, the share-based payment charged
recognised in the subsidiary in the year is recognised as a capital
contribution in the subsidiary and thus an investment in the Company.
No impairments have been recognised in the year as the Directors do not
believe the recoverable value of the investment to be below it is carrying
value.
The Company owns 100% of the share capital of KNG and the subsidiary's
registered address is 21A Habarzel street, Tel-Aviv, Israel.
20. Financial asset through profit or loss
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
As at 1 January 750 - 750 -
Additions - 750 - 750
Loss on financial asset at fair value through profit or loss (note 13) (259) - (259) -
As at 31 December 491 750 491 750
Current 491 - 491 -
Non-current - 750 - 750
On 24 May 2021, the Company entered into an agreement to receive shares in
Hellenic Dynamics S.A ("HD") following a reverse takeover by HD of a listed
company. HD is a company incorporated in Greece and is a medical cannabis
cultivator which is in the process of securing admission to the London Stock
Exchange through a Reverse Take Over ("RTO").
As part of the agreement, for consideration of £750 thousands the Company has
acquired 5,000 shares in HD's parent company, Samos Investments Ltd, and will
be entitled to receive shares in HD as part of HD's proposed listing on the
London Stock Exchange. The number of HD shares that will be issued to the
Company shall be calculated as £750 thousands divided by the RTO valuation
share price less a 30% discount.
On 15 November 2022, the Financial Conduct Authority ("FCA") has approved the
prospectus issued by UK SPAC in connection with its acquisition of Hellenic
and the proposed re-admission of UK SPAC (to be renamed Hellenic Dynamics
Plc) to the standard listing segment of the Official List and to trading on
the London Stock Exchange's Main Market.
Following the RTO, the Company received 357,142,857 shares in Hellenic
representing 2.9% of Hellenic share capital.
The fair value of the quoted notes is based on price quotations at the
reporting date.
21. Inventories
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Finished goods 61 49 61 49
Raw materials 20 17 20 17
Write-down of slow moving and obsolete inventory - (3) - (3)
Total 81 63 81 63
During 2021, £3 thousands was recognised as an expense for provision of slow
moving and obsolete inventory. The obsolete inventory has been eliminated
during 2022.
22. Trade receivables
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Trade receivables 48 10 38 10
Allowance for expected credit losses (5) - (3) -
Total 43 10 35 10
Trade receivables are non-interest bearing and are generally on terms of 30 to
90 days.
23. Other receivables
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Prepaid expenses 17 172 5 165
VAT recoverable 66 55 64 45
Tax receivables 73 10 - -
Total 156 237 69 210
24. Short term loan
Group and the Company:
31 December 31 December
2022 2021
Interest rate Currency £ 000 £ 000
Fixed rate loan 10% CAD 611 583
Accumulated interest 15 15
626 598
Less impermeant allowance/ECL (626) (598)
Total - -
On 25 July 2021 the Company signed a head of agreement with 11157353 Canada
Corp. a company incorporated in Canada ("Materia").
As part of the agreement the Company agreed to extend Materia a £1.7 million
(CAD 3 million) credit facility which was to be drawn down in tranches based
upon agreed uses.
Under the agreement, amounts loaned are due for repayment twelve months after
the drawdown date. No repayments were received in the year, and none have been
received post year-end.
According to the loan agreement, Materia is obliged to receive the Company's
approval for any additional investment from a 3rd party (excluding current
investors). The loan is secured by a General Security Agreement under which
all the Materia's assets from time to time constitute a floating collateral
for the Loan. The collateral is shared equally with another lender to Materia
(unconnected to the Group) and the relationship between the two lenders is
regulated by an inter-creditor agreement.
Additionally, the agreement states that should the proposed transaction not
complete within six months of the signing of the heads of terms, interest of
10% per annum would be charged on amounts drawn down from the date of
drawdown. As at the year-end the Directors believed the transaction would not
complete by 25 January 2022, and therefore, interest income at 10% per annum
has been recognised for the period from drawdown to the year-end.
As of 31 December 2021, the Company transferred Materia CAD 1,000 thousand
(£582 thousands) in three tranches. As of the reporting period the Company
recorded interest income in the total amount of £15 thousands. The loan
receivable has been impaired in full.
After the reporting period, the Group received notice that Materia, has been
put into receivership process in Canada.
25. Intercompany receivables
Company:
31 December 31 December
2022 2021
Interest rate Currency £ 000 £ 000
The GP Service (UK) Limited 9% GBP 1,097 -
Kanabo Research Ltd. - GBP 3,192 834
Total 4,289 834
Current 3,192 834
Non-current 1,097 -
When conducting their IFRS 9 expected credit loss assessment, the Directors
have assessed there are no indications that an impairment is required to be
recognised and thus the intercompany receivables remain at carrying value.
26. Cash and cash equivalents
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Cash at bank and in hand 3,204 4,477 937 4,148
Total 3,204 4,477 937 4,148
The Directors consider the carrying amount of cash and cash equivalents
approximates to their fair value.
27. Issued capital
a. Authorised shares
As at 31 December 2022 the Company had 422,916,056 allotted and fully paid
ordinary shares.
The ordinary shares have attached to them full voting, dividend, and capital
distribution rights (including on a winding up). The ordinary shares do not
confer any rights of redemption.
2022 2021
Number of ordinary shares of £0.025 each
As at 1 January 369,966,277 29,400,120
Shares issued in the year for RTO (a) - 230,769,210
Shares issued in placing and subscriptions (b) - 92,307,693
Shares issued to settled debt - 615,384
Share issued in placing and subscriptions (c) - 4,545,454
Shares issued due to option and warrant exercises 3,522,319 9,028,416
Shares issue to settle convertible loans - 3,300,000
Share issued in placing and subscriptions (d) 28,125,000 -
Issue of shares for acquisition of subsidiary (e) 21,302,460 -
As at 31 December 422,916,056 369,966,277
2022 2021
£ 000 £ 000
As at 1 January 9,249 734
Shares issued in the year for RTO (a) - 5,769
Shares issued in placing and subscriptions (b) - 2,308
Shares issued to settled debt - 15
Share issued in placing and subscriptions (c) - 114
Shares issued due to option and warrant exercises 88 226
Shares issue to settle convertible loans - 83
Share issued in placing and subscriptions (d) 703 -
Issue of shares for acquisition of subsidiary (e) 533 -
As at 31 December 10,573 9,249
27. Issued capital (cont.)
a. Authorised shares (cont.)
(a) On 16 February 2021, the company completed its reverse takeover ("RTO")
process with Spinnaker Opportunities Plc ("SOP"). The RTO was completed in the
form of a share for share exchange and the ratio was approximately 1:972.64.
(b) On 16 February 2021, the Company issued 92,307,693 ordinary shares
raising £6,000 thousands before costs.
(c) On 24 May 2021, the Company issued 4,545,454 ordinary shares raising
£1,000 thousands before costs.
(d) On 21 February 2022, the Company issued 28,125,000 ordinary shares
raising £2,250 thousands before costs.
(e) On 21 February 2022, the Company acquired 100% of the voting rights of
The GP Service (UK) Limited ("GPS"), note 6.a.
(f) As of 31 December 2022, 38,461,492 consideration shares and 85,406,117
share for the acquisition of GPS still need to be issued.
b. Share premium account
2022 2021
£ 000 £ 000
As at 1 January 5,169 592
Shares issued in placing and subscriptions 1,434 4,634
Shares issued to settled debt - 21
Shares issued to settle convertible loan notes - 83
Share issue costs - (634)
Shares issued due to option and warrant exercises 247 473
As at 31 December 6,850 5,169
27. Issued capital (cont.)
c. Merger reserve
2022 2021
£ 000 £ 000
As at 1 January 9,231 -
Shares issued in the year for RTO - 9,231
Shares issued in the year for subsidiary purchase 2,162 -
As at 31 December 11,393 9,231
Restatement - Group and Company
The directors have reviewed the accounting treatment of the shares issued in
the prior year revere takeover and have concluded that on the basis that this
was an acquisition of at least 90% of the equity shares of an undertaking for
the issue of equity shares, then under section 612 Companies Act 2006 the
excess of the fair value of the shares issued over their nominal value should
have been recorded in a merger reserve and that the prior recording of that
excess in the share premium account was precluded under that section of the
Companies Act 2006. This restatement has reduced the share premium account by
£9,231 which has been recorded in a merger reserve instead. There was no
other impacts on the financial statements.
Nature and purpose of each reserve in equity - disclosure under SOCIEs
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.
28. Share-based payments
Warrants
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, the granted warrants during the year:
2022 2021
Number WAEP Number WAEP
Outstanding at 1 January 13,505,931 0.09 - -
Granted 28,125,000 0.20 19,051,774 0.09
Realised (3,231,501) 0.10 (5,545,843) 0.10
Expired (6,422,711) 0.10 - -
Outstanding at 31 December 31,976,719 0.43 13,505,931 0.09
Exercisable at 31 December 31,976,719 0.43 13,505,931 0.09
28. Share-based payments (cont.)
Warrants (cont.)
a. On 21 February 2022 ("admission date"), the authorised share capital
was increased by £2,250 thousands (before costs) by the issue of 28,125,000
ordinary shares of £0.025 each. On the admission date, the Group additionally
granted a half warrant to the noteholders to subscribe for an additional half
a new ordinary share at an exercise price of £0.16 for period of 18 months
following Admission Date. And additional half warrant to the noteholders to
subscribe for an additional half a new ordinary share at an exercise price
of £0.24 for period of 18 months following Admission Date. Total warrants
issued sum to 28,125,000. 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.
As of 31 December 2022, none of the warrants have been converted into shares.
b. On 17 February 2021 ("date of admission") the Group granted a warrant
over one new Ordinary Share for every two Ordinary Shares registered in the
name of an existing Shareholder of the Company as at the date of the RTO. The
warrants granted under the terms of the RTO Warrant Instrument shall be
exercisable in the period commencing on the date of Admission until the date
12 months after the date of Admission. The warrants are exercisable at £0.1
per Ordinary Share. Total warrants issued sum to 14,700,055. The warrants were
not issued for goods or services provided and therefore fall outside the scope
of IFRS 2 and do not require fair valuing.
During the reporting period part of the warrants have been exercised and the
remaining has expired, following which as of 31 December 2022 the remaining
granted warrants is nil.
c. On 17 February 2021 ("date of admission") the Group granted a
warrant to the noteholders to subscribe for one Ordinary Shares for every two
Conversion Shares issued to the noteholder. The warrants are exercisable at
the Conversion Price (£0.05) and will be valid for a period of three years.
Total warrants issued sum to 1,650,000. The warrants were not issued for goods
or services provided and therefore fall outside the scope of IFRS 2 and do not
require fair valuing.
As of 31 December 2022, 1,150,000 warrants have not been yet converted into
shares.
d. On 27 January 2021, the Company entered a financial adviser warrant
deed entitling Peterhouse Capital Limited to warrants over a number of
ordinary shares, representing approximately 0.75 per cent of the enlarged
Issued Share Capital (the share capital on the date of the RTO) in accordance
with their engagement letter. The warrants are exercisable at the fundraising
price, exercisable for a period of 7 years from the date of admission. Total
warrants issued sum to 2,701,719. As the warrants were issued to the brokers
assisting with the raise upon re-listing, the fair value of these warrants,
£113 thousands, was treated as a share issue cost and debited against share
premium.
As of 31 December 2022, none of these warrants have been converted into
shares.
28. Share-based payments (cont.)
Warrants (cont.)
The following table list the inputs to the model used for the warrants plan
for the year ended 31 December 2021:
27 January 2021
Weighted average fair values at the measurement date £0.042
Dividend yield 0%
Expected volatility 70%
Risk-free interest rate (%) 0.32
Expected life of warrant (years) 7
Weighted average share price £0.065
Model used Black-Scholes
The expected volatility reflects the assumption that the historical volatility
over a period similar to the life of the options is indicative of future
trends, which may not necessarily be the actual outcome.
Share options
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year:
2022 2021
Number WAEP Number WAEP
Outstanding at 1 January 15,988,895 0.16 1,960,000 0.05
Granted 22,759,150 0.08 16,408,102 0.15
Forfeited and expired (1,555,211) - (273,555) -
Exercised (290,818) - (2,105,652) -
Outstanding at 31 December 36,902,016 0.12 15,988,895 0.16
Exercisable at 31 December 13,733,577 0.11 2,728,865 0.07
a. On 28 March 2021, the Group approved an Israeli appendix to the
share-based payment plan ("The Israeli new plan"). The plan will include a
replacing of existing options granted by Kanabo Research Ltd to three of its
employees and consultants and for future grants for Kanabo Research Ltd
employees. The plan is for 10 years forming the date of approval.
28. Share-based payments (cont.)
Share options (cont.)
b. During the period ended 31 December 2018, the Company had a
share-based payment plan. The plan was approved in February 2018 and has a
10-year duration. The terms of vesting vary according to the grant agreement
subject to approval by the Board of Directors. Some grants mature immediately,
and others vest over up to 4 years.
c. During the reporting period 290,818 options exercise to shares, the
net proceeds summed to £12 thousands.
d. On 30 August 2022, 22,759,150 share options were granted to employees
and senior executives under the options plans.
e. The following tables list the inputs to the models used for the three
plans for the years ended 31 December 2022 and 2021, respectively:
Year ended 31 December 2022
30 August 2022 30 August 2022 30 August 2022 30 August 2022 30 August 2022
Weighted average fair values at the measurement date £0.023 £0.022 £0.025 £0.022 £0.021
Dividend yield 0% 0% 0% 0% 0%
Expected volatility 91.3% 91.3% 91.3% 91.3% 91.3%
Risk-free interest rate (%) 2.7 2.7 2.7 2.7 2.7
Expected life of share option (years) 10 10 10 10 10
Weighted average share price £0.065 £0.08 £0.025 £0.1015 £0.1265
Model used Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
28. Share-based payments (cont.)
Share options (cont.)
e. (cont.)
Year ended 31 December 2021
27 January 2021 27 January 2021 28 19 24 October 2021
April July
2021 2021
Weighted average fair values at the measurement date £0.03 £0.022 £0.173 £0.11 £0.12
Dividend yield 0% 0% 0% 0% 0%
Expected volatility 105% 105% 105% 105% 105%
Risk-free interest rate (%) 0.18 0.18 1.63 1.19 1.66
Expected life of share option (years) 3 3 10 10 10
Weighted average share price £0.065 £0.1 £0.2721 £0.197 £0.165
Model used Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
The expected volatility reflects the assumption that the historical volatility
over a period similar to the life of the options is indicative of future
trends, which may not necessarily be the actual outcome.
The risk-free rate of return is based on zero yield government bonds for a
term consistent with the option life.
f. During the period the Group recognised total amount of £739
thousands (2021: £660 thousands) for share-based payment expenses.
The amount was recorded in the profit and loss as follows:
2022 2021
£ 000 £ 000
Cost of sales (note 8) 13 -
Research and development expenses (note 9) 68 6
Sales and marketing expenses (note 10) 349 218
General and administration expenses (note 11) 537 436
Total 967 660
29. Interest-bearing loans and borrowings
Group:
2022 2021
Interest rate Currency Maturity £ 000 £ 000
Current interest-bearing loans and borrowings
Lease liability (note 31) 7.5% ILS 2023 65 -
CBILS loan 9% GBP 2023 133 -
Total 198 -
Non-current interest-bearing loans and borrowings
Lease liability (note 31) 7.5% ILS 2024-2028 233 -
CBILS loan 9% GBP 2024-2025 267 -
Loans from a third parties' investors in subsidiary (note 6.b) 3.23% ILS No maturity date was set 9 -
Total 509 -
Total interest-bearing loans and borrowings 707 -
CBILS loan
On 22 January 2021, The GP Service (UK) Limited received a Coronavirus
Business Interruption Loan Scheme (CBILS) which carry a fixed rate interest of
9% and repayable by instalments over a 3-year period commencing March 2022.
The loan is recognised as a financial liability at amortised cost. Interest is
calculated under the effective interest method. The initial recognition at
fair value was not materially different to the proceeds received.
30. Other payables
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Payroll and related expenses 41 82 - -
Accrued expenses 991 186 859 149
Provision for accrued bonus 56 57 22 -
Provision for accrued vacation and convalescence 43 48 24 -
Other 16 - - -
Total 1,147 373 905 149
31. Leases
On 22 December 2021, Kanabo Research Ltd ("KNR") (a wholly owned subsidiary of
the Company) signed a lease agreement with a third party to rent space in
Israel, in exchange for a total ILS 24 thousand per month linked to the
Consumer Price Index. The start date of the rental agreement was agreed
between the parties on 17 March 2022. The lease agreement is for three years
and includes an extension option for three more years. If KNR exercising the
rent extension option, the monthly rent will be updated with an increase of
6%. KNR exercises significant discretion in examining whether it is reasonably
certain that extension option will be exercised. At date the lease began, the
company recognised a right of use in the property against a lease obligation
in the amount of £327 thousands (ILS 1,399 thousand). To secure the lease
agreement, the company provided a deposit in the amount of £31 thousands (ILS
132 thousand). The deposit is being classified as long-term deposit in the
Group's statements of financial position.
During 2022, the KNR recognised depreciation expenses in the amount of £47
thousands as well as financing expenses in the amount of £24 thousands. The
annual interest rate for capitalisation that was applied for the purpose of
calculating the obligation at the start of the lease was 7.5%.
Set out below are the carrying amounts of right-of-use asset recognised and
the movements during the period:
2022 2021
£ 000 £ 000
As at 1 January - -
Additions 327 -
Depreciation expense (47) -
Exchange differences 2 -
As at 31 December 282 -
31. Leases (cont.)
Set out below are the carrying amounts of lease liability (included under
interest-bearing loans and borrowings) and the movements during the period:
2022 2021
£ 000 £ 000
As at 1 January - -
Additions 327 -
Accretion of interest 24 -
Payments (57) -
Effect of movement in exchange rate 4 -
As at 31 December 298 -
Current 65 -
Non-current 233 -
32. Financial instruments risk management objectives and
policies
The Group's principal financial liabilities, comprise loans and borrowings,
and trade and other payables. The main purpose of these financial liabilities
is to finance the Group's operations. The Group's principal financial assets
include trade receivables, and cash and short-term deposits that derive
directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The
Group's senior management oversees the management of these risks. The Group's
senior management is supported by a financial risk committee that advises on
financial risks and the appropriate financial risk governance framework for
the Group. The financial risk committee provides assurance to the Group's
senior management that the Group's financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified,
measured, and managed in accordance with the Group's policies and risk
objectives. All derivative activities for risk management purposes are carried
out by specialist teams that have the appropriate skills, experience, and
supervision. It is the Group's policy that no trading in derivatives for
speculative purposes may be undertaken. The Board of Directors reviews and
agrees policies for managing each of these risks, which are summarised below.
32. Financial instruments risk management objectives and policies (cont.)
The following table sets out the categories of financial instruments held by
the Group as at 31 December 2022 and 31 December 2021:
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Financial assets
Financial assets held at amortised cost
Intercompany receivables - - 4,289 834
Trade receivables 43 10 35 10
Long term deposit 31 - - -
Short-term deposits 24 20 - -
Cash and cash equivalents 3,204 4,477 937 4,148
Financial assets held at fair value
Financial asset through profit or loss 491 750 491 750
Total financial assets 3,793 5,257 5,752 5,742
Current 3,762 4,507 5,752 4,992
Non-current 31 750 - 750
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Financial liabilities
Financial liabilities held at amortised cost
Trade payables 153 42 79 24
Other payables 1,147 373 905 149
Interest-bearing loan and borrowings 707 - - -
Total financial liabilities 2,007 415 984 173
Current 1,498 415 984 173
Non-current 509 - - -
32. Financial instruments risk management objectives and policies (cont.)
Market risk
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, deposits,
debt and equity investments and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as
at 31 December in 2022 and 2021.
The sensitivity analyses have been prepared on the basis that the amount of
net debt, the ratio of fixed to floating interest rates of debt and
derivatives and the proportion of financial instruments in foreign currencies
are all constant and on the basis of the hedge designations in place at 31
December 2022.
The analyses exclude the impact of movements in market variables on the
carrying values of provisions, and the non-financial assets and liabilities of
foreign operations. The Group is not materially exposed to market risk as it
has yet to commence trading.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Group's exposure to the risk of changes in market interest rates
relates primarily to the Group's long-term debt obligations with floating
interest rates.
The Group is not materially exposed to interest rate risk because it does not
have any funds at floating interest rates, all the Group borrowings are at
fixed interest rate.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of
an exposure will fluctuate because of changes in foreign exchange rates. The
Group's exposure to the risk of changes in foreign exchange rates relates
primarily to the Group's operating activities (when revenue or expense is
denominated in a foreign currency) and the Group's net investments in foreign
subsidiaries.
The Group doesn't hedge its exposure to fluctuations on the translation into
British Pound of its foreign operations.
The Directors do not believe that the Group have a material exposure to
foreign currency risk. The only notable foreign currency risk is that of the
loan receivable due from Materia. The loan receivable due from Materia does
represent a foreign currency risk as the balance is denominated in Canadian
Dollars. See note 24 for further commentary on the terms of this loan.
32. Financial instruments risk management objectives and policies (cont.)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations
under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risk from its operating activities
(primarily trade receivables) and from its financing activities, including
deposits with banks and financial institutions, foreign exchange transactions
and other financial instruments.
The Group's maximum exposure to credit risk in relation to each class of
recognised asset is the carrying amount of those assets as indicated in the
balance sheet. At the reporting date, there was no significant concentration
of credit risk. Receivables at the year-end were not past due, and the
Directors consider there to be no significant credit risk arising from these
receivables.
Liquidity risk
The Group monitors its risk of a shortage of funds using a liquidity planning
tool.
Cash flow working capital forecasting is performed for regular reporting to
the Directors. The Directors monitor these reports and forecasts to ensure the
Group has sufficient cash to meet its operational needs.
The table below summarises the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments:
Year ended 31 December 2022
On demand Less than 3 months 3 to 12 months 1 to 5 years > 5 years Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Interest-bearing loans and - - 133 267 9 409
borrowings
Lease liability - 11 36 251 - 298
Trade payables 153 - - - - 153
Other payables 1,147 - - - - 1,147
Total 1,300 11 169 518 9 2,007
Year ended 31 December 2021
On demand Less than 3 months 3 to 12 months 1 to 5 years > 5 years Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Trade payables 42 - - - - 42
Other payables 373 - - - - 373
Total 415 - - - - 415
32. Financial instruments risk management objectives and policies (cont.)
Capital risk management
The Company defines capital based on the total equity of the Company. The
Company manages its capital to ensure that the Company will be able to
continue as a going concern while maximising the return to stakeholders
through the optimisation of the debt and equity balance.
To maintain or adjust the capital structure, the Company may adjust the number
of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt, in the future.
33. Related party transactions
The Group is headed by Kanabo Group Plc, the ultimate parent entity. There is
no 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.
Key management personnel compensation
For the details of the Directors' remuneration in 2022 and 2021, please see
the Director's Remuneration Report on the annual report.
The amounts outstanding at the period end due to Non-Executive Directors was
£nil (2021: £nil).
During 2021, following the completion of the RTO, the Company paid bonuses to
the Directors Alan Hume, Andrew Morrison and Anthony Harpur totalling £180
thousands. The bonuses were paid directly to the Directors and to entities
which are wholly owned by them.
Trading transactions
During the year Group companies did not enter any transactions with related
parties who are not members of the Group.
Transactions with Group undertaking
2022 2021
£ 000 £ 000
With Kanabo Research Ltd:
Purchase of services 729 576
Purchase of inventories - 46
Total 729 622
Sale and purchases to the Group undertaking were carried out on commercial
terms and conditions based on the transfer price work.
34. Employees
The monthly average number of employees in the Group was 20 (2021: 10), which
excludes Non-Executive Directors and portion allocation between eth diff
departments.
Group Company
2022 2021 2022 2021
Number Number Number Number
Research and development 2 2 - -
Sales and marketing 3 3 - -
General and administration 15 5 2 -
Total number of employees 20 10 2 -
Their aggregate remuneration, including Executive Directors' remuneration,
comprised:
Group Company
2022 2021 2022 2021
£ 000 £ 000 £ 000 £ 000
Wages and salaries 1,345 396 116 -
Pension 51 19 6
Social security costs 113 24 18 -
Share-based payment 783 472 17 -
Total number of employees 2,292 911 157 -
35. Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group's financial statements are
disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
Newly effective EU-endorsed standards for 1 January 2022 to 31 December 2022
Standard Impact on initial application Effective date
Amendment to IFRS 16 COVID-19-Related Rent Concessions beyond 30 June 2021 1 April 2021
Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
IFRS Standards Annual Improvements to IFRS Standards 2018-2020 1 January 2022
Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use 1 January 2022
Amendments to IFRS 3 Reference to the Conceptual Framework 1 January 2022
Standards available for early adoption
Standard Impact on initial application Effective date
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
Amendments to IAS 8 Definition of Accounting Estimate 1 January 2023
36. Copies of the annual report
Copies of the annual report are available on the Company's website at
www.kanabogroup.com (http://www.kanabogroup.com) and from the Company's
registered office Churchill House, 137-139 Brent Street, London, NW4 4DJ,
United-Kingdom.
***
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR PPUQGCUPWGBRRecent news on Kanabo
See all newsREG - Kanabo Group PLC - Annual Financial Report
AnnouncementREG - Kanabo Group PLC - Expansion of Treat It to Mental Health Treatments
AnnouncementREG - Kanabo Group PLC ICU Holdings Limited - Holding(s) in Company
AnnouncementRCS - Kanabo Group PLC - Germany Medical Cannabis Legislation Reform
AnnouncementREG - Kanabo Group PLC - Agritec Update
Announcement