Final Results
10/01/2025 09:20
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RNS Number : 9128S S-Ventures PLC 10 January 2025
S-VENTURES PLC
("S-Ventures plc" or "the Company")
Group Strategic Report, Report of the Directors and
Consolidated Financial Statements
for the 15 Months Ended 31 December 2023
S-Ventures plc (AQSE: SVEN) (OTCQB: SVTPF), the Company investing in and
growing exciting brands across the natural, wellness and food-tech categories,
is pleased to announce the audited results of the Company for the 15-month
period ended 31 December 2023. These accounts have been delayed for the
reasons outlined in the Chairman's statement. The Company will soon be in a
position to publish its interim report for the six-month period ended 30 June
2024 at which time it will provide an update on its current plans. Following
publication of the interim results, the Company will apply for the lifting of
suspension in trading in the Company's shares.
For further information contact:
The Company
+44 (0) 203 475 0230
Scott Livingston
Stephen Argent
AQSE Corporate Advisor and Broker +44
(0) 20 3005 5000
VSA Capital Limited
Andrew Raca
Dylan Sadie
PAGE
Company Information 3
Chairman's Statement 4
Group Strategic Report 5
Section 172 Statement 10
Report of the Directors 11
Report of the Independent Auditors 17
Consolidated Statement of Profit or Loss and 24
Other Comprehensive Income
Consolidated Statement of Financial Position 25
Company Statement of Financial Position 27
Consolidated Statement of Changes in Equity 28
Company Statement of Changes in Equity 30
Consolidated Statement of Cash Flows 32
Company Statement of Cash Flows 33
Notes to the Consolidated Financial Statements 34
DIRECTORS:
S Argent (appointed 29 August 2023)
B Choudhrie
R D Hewitt
S P Livingston
D M Mitchell (resigned 15 January 2024)
N A D'Onofrio (resigned 26 July 2023)
A J B Phillips
SECRETARY:
R D Hewitt
FINANCIAL ADVISOR:
VSA Capital Limited, Park House, 16-18 Finsbury Circus, London, EC2M 7EB
AUDITORS:
RPG Crouch Chapman LLP, 40 Gracechurch Street, London EC3V 0BT
LAWYERS:
Hill Dickinson LLP, The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW
REGISTRARS:
Neville Registrars, Neville House, Steelpark Road, Halesowen, B62 8HD
REGISTERED OFFICE:
Suite 8, 3rd Floor, 121 Sloane Street, London, SW1X 9BW
REGISTERED NUMBER:
12723377 (England and Wales)
The Board is pleased to present the Company's audited results for the 15
months ended 31 December 2023. As previously announced, the year-end has
been extended to be coterminous with that of our largest subsidiary - Juvela
Limited - which we acquired in December 2022.
The Board regrets the late submission of these accounts which has been
occasioned by a difficult trading period and a change in auditors. We
anticipate releasing our Interim Accounts to June 2024 shortly to bring us
back in line with reporting requirements.
The results reflect the headwinds we have encountered with the closure of
Lizza GmbH (March 2023) and more recently the closure of Ohso Chocolate
(September 2023). Against these disappointments, we are very pleased with
the success of Juvela whose first-year results were in line with expectations.
Juvela supplies gluten free products largely to the prescription market and
has recently expanded its product range.
The turnaround at Pulsin has been slower than anticipated and the period to
December 2023 reflected considerable costs which we have now eliminated from
the business. This turnaround has continued through 2024 and we anticipate
that Pulsin will return to profitability in early 2025.
Growth has continued at Market Rocket which continues to tap into new and
developing marketing platforms.
Since the 2023 year-end, we have refined or expanded the ranges of products at
both Pulsin and Juvela which gives the Board renewed confidence for future
trading periods.
On 22 March 2024, we announced a £2 million debt fund-raising to bridge to a
potential purchase of assets and novation of liabilities by Riverfort Global
Opportunities plc ("RGO"). The Board continues to progress this important
potential transaction with the final phase of preparation now underway with
the issuance of these audited accounts. RGO have undertaken significant due
diligence and the Board anticipates being able to make a further statement
shortly after the publication of these accounts.
The Board continues to work closely with group companies, offering
operational, expertise and financial support, enabling them to grow faster
than otherwise might have been the case if standing alone.
I would like to express our gratitude to our employees, board members and
shareholders for their efforts and continued support and for making our
progress to date possible. I am also announcing my intention to stand down
as a director as the forthcoming AGM.
--------------------------------
R D Hewitt
Non Executive Chairman
CEO's REPORT
We are pleased to present our audited results for the period ended 31 December
2023. These have taken longer than expected and, similar to the prior year,
have been complex due to a number of factors. These include the liquidation of
our foreign German subsidiary, alongside impairment reviews across the
acquisitions we have made in the last 2 years.
It is safe to say that the environment remained very tough, with a combination
of issues such as wage and ingredients inflation, as well as general cost
increases and headwinds that have contributed to a difficult period. We can
now confirm that most areas have shown recent improvement and the businesses
are slowly returning to more stable trading with growth and opportunity coming
back into the plan. We have been focused on driving value from internal
efficiencies and the supply chain and managing financial risk as opposed to
aggressive growth plans in the recent market environment.
I am pleased to report a number of positives:
· 170% annualised revenue growth to £20m
· Launching of new products across the main brands Juvela and Pulsin
· Juvela remains on plan and profitable with an EBITDA in excess of
£2m
· Market Rocket grew revenues 210% and launched its Marketverse
platform
· Pulsin's cost-cutting exercise has concluded allowing for a return
to profitability in early 2025
· Key decisions taken to discontinue certain smaller,
capital-intensive businesses (OHSO, Livia's)
The first 3 years of the group's activity has seen significant growth in
revenues through acquisition in what has been a difficult trading period:
Split of the £20m revenue for the current
period
Juvela £8.0m
Pulsin £7.5m
Market Rocket £3.7m
Purely £0.4m
Discontinued operations £0.8m
2021 £1.6m
2022 £9.3m
2023 (15 months) £20.4m *
* includes discontinued operations revenue
In order to meet our obligations to Hero for the final deferred payment for
the acquisition of Juvela, to support central costs of a listed business and,
to a lesser extent, to support trading, we sought to raise funding of £2.5
million in the last quarter of 2023. With equity markets not offering
liquidity or value, we raised a total of £3 million of debt facilities in the
following months, including £1 million of facilities from a Middle Eastern
family office and £2 million of facilities from RGO alongside the
announcement of RGO's potential acquisition of our subsidiaries and novation
of liabilities. Given difficult market conditions, this was a testament to the
underlying operating prospects of our businesses.
The Board continues to progress this important potential transaction (the
"Transaction") in close collaboration with the Board of RGO. The Transaction
that is proposed is intended to raise enough capital to settle all of the
parent company's loans, leaving only the subsidiary loan at Juvela in place
and approximately halving the financial debt carried by our group of
businesses. The subsidiary loan at Juvela, which was used for its
acquisition, has been reduced significantly through operating cashflow and as
at December 2024 the amount owed to Shawbrook is now approximately £4m.
We continue to be very focused on the progress of our brands and, following
the release of these audited accounts, we will update the market on the new
products we are launching alongside recent and up-to-date progress for all the
divisions.
--------------------------------
S P Livingston
Chief Executive Officer
FINANCIAL REVIEW
Introduction
During the fifteen months ended 31 December 2023, the focus has continued to
be on restoring the existing businesses to profitability, whilst integrating
Juvela Limited into the group. Juvela and Market Rocket are both delivering
positive EBITDA on a monthly basis and Pulsin is expected to achieve that by
early 2025.
The group has grown its gross sales to £22.5m before trade discounts of £2m
resulting in net sales of £20.5m. but sustained losses of £6.6m after costs
of acquisition and impairments.
The loss includes some £0.5m of one-off costs comprising costs associated
with acquisitions (£0.4m) and impairment of goodwill (£0.1m).
Trading margins improved across the group from 33% to 45%.
The directors do not propose to declare a dividend. The resultant loss
represents a 5.04p (2022- 2.92p) loss per share in issue at the end of the
financial period.
Comments on performance of our owned businesses:
PLANT BASED NUTRITION
Pulsin
Pulsin (www.pulsin.co.uk) is a well-established and highly respected
plant-based nutrition company, excelling in plant-based nutrition technology,
manufacturing and sales, with a focus on healthy protein bars, nutritional
snacks and Keto bars. Pulsin formulates and produces high quality plant-based
products under its own brands as well as for third parties, from its
specialised facilities in Gloucester.
Pulsin's award-winning range of tasty snack bars, protein powders, keto
products and shakes are packed full of feelgood nutritional goodness and
balanced with the right amount of super ingredients. The Pulsin range is
gluten free and suitable for vegetarians, with the majority being plant-based
too. Pulsin never uses artificial ingredients, preservatives or palm oil. The
products are available at most large retailers such as Sainsbury's, Tesco,
Boots, Asda, Holland & Barrett and Ocado.
Pulsin had gross sales of approximately £7.5m in the fifteen months to 31
December 2023 (2022 - £7.5m). The lack of growth is a little disappointing,
but the focus in bringing the business back to profitability has delayed the
introduction of new products which were launched in 2024.
The business implemented a major shift in strategy during this period, moving
focus away from lower margin contract manufacturing work towards driving
growth and profitability of Pulsin-branded products. This involved a number of
key initiatives including the termination of a loss-making contract with the
largest private label customer, worth over £2m per annum in revenue.
The business was able to use this as an opportunity to fast track key Pulsin
new projects, including the launch of 3 new premium flavoured protein powder
products and the start of other projects to build on the success of the
best-selling range of keto bars and powders. There was an increase in
investment with key customer accounts, particularly Amazon, as part of a plan
to drive more branded sales through online channels, which is considered key
to the success of challenger food brands within the wellness sector.
Sales grew rapidly during this time but profitability dropped significantly as
a result of increased marketing investment and margin support. Towards the end
of this period the business undertook a major rationalisation of its
operations. The reduction in contract manufacturing work enabled the business
to exit the lease of a costly secondary storage and distribution site in
Brockworth resulting in major savings for following year. Accordingly, the
business has been able to start the next financial year with lower levels of
overhead and marketing investment with renewed focus on building branded
revenue and profitability as the key priority. The process of cost reduction
and review of the supply chain during 2024 was a continuing feature as the
business is moved to a more secure footing.
We Love Purely
We Love Purely is a UK-based plantain crisp brand with an emphasis on
sustainability and natural ingredients. Available at many leading stores
including Holland & Barrett, Ocado, Selfridges, Harvey Nichols, Harrods
and Planet Organic.
The year has been one of resilience and strategic progress for We Love Purely.
Despite facing several operational challenges, including production delays,
extended customer payment cycles, and global shipping disruptions, the company
has managed to mitigate the impact on its turnover. While EBITDA reflects
these operational pressures, the company has still achieved significant
milestones that position it for future growth.
We Love Purely achieved a turnover of £0.4m for the 15 months to 31 December
2023, with an EBITDA loss of £247k. This compares to a turnover of £0.4m for
the 12 months to 31 December 2022, with an EBITDA loss of £217k. Stabilising
turnover under challenging circumstances marks a notable achievement. Key to
this has been the strategic investment in launching products with major
supermarket chains such as Holland & Barrett in the UK and Benelux.
Additionally, the company secured new partnerships within the foodservice
sector, including collaborations in the private jet catering market. The
business's European footprint has also expanded significantly, with a stronger
presence in Switzerland, the Netherlands, and Portugal.
The operational challenges faced were primarily linked to supply chain issues
and the company has taken decisive steps to mitigate these risks in the
future. Plans are underway to diversify the supplier base, which will reduce
dependency on a single source and improve supply chain resilience. The
business is also preparing to launch a new product line in a category outside
snacking. This strategic move will not only differentiate the company's
offering but also balance its risk profile.
The company has also made infrastructure improvements by establishing new
storage and distribution arrangements and initiating discussions with a
potential supply chain partner. These measures aim to enhance cost efficiency
and operational effectiveness, setting the stage for a more profitable
business model in the near term. Looking forward to the upcoming year, We Love
Purely remains committed to driving growth through innovation, operational
excellence, and strategic expansion.
Ohso Chocolate
Following continuing technical difficulties with the manufacturing process of
the products and a consequential drop in sales revenues, it was decided that
Ohso should be absorbed into Pulsin Limited. The turnover for this period of
£0.09m was the result of winding down the company's operations and selling
off any remaining stock. The accounts include an impairment of the remaining
£0.03m of the original investment.
BAKERY DIVISION
Following the closure of Lizza in March 2023 any remaining net assets have
been fully impaired and all intercompany debt written off. This leaves
Juvela as the sole operating company within the bakery division, a business
acquired in mid-December 2022.
Juvela
Juvela is a specialist bakery company producing a range of gluten-free flours
and bakery products, mainly sold through the NHS prescription channel, where
the company has a greater than 50% share of the market.
The business continues to perform in line with expectations, generating a
turnover of £8m for the 12 months to 31 December 2023, with an EBITDA of
£2.4m
Following the purchase of Juvela in December 2022, 2023 has been very much a
stabilising year for the company and its markets, after leaving the Hero
Group, its previous owner. Juvela was able to migrate away from some
Hero-group suppliers for its bakery and consumer products and bring this
supply solely into the UK. This was reflected in the company's stable
turnover and EBITDA numbers for 2023.
2023 was the year that Juvela strengthened its team to get ready to attack the
UK retail market and diversify the portfolio further from its standard
prescription products. It developed a new NPD/Retail-focused team,
recruiting an NPD manager and Sales Manager. It also started a process to
build a new allergen-free bakery adjacent to its gluten-free bakery and this
was ready for the successful retail launches in September 2024.
TECHNICAL SERVICES
Market Rocket Limited continues to grow and develop its range of services,
especially its Marketverse platform, where it manages the online sales
strategies for other companies on Amazon and other online platforms.
The company has experienced significant growth during the 15-month period to
31 December 2023, with turnover increasing to £3.7m. This was driven by
strategic initiatives and operational expansion. While the EBITDA % for the
current period is down, compared to the previous comparable periods, this
reflects our ongoing investment in scaling the business to support future
growth.
Key drivers of this growth include the successful onboarding of both blue chip
and market-disrupting new clients through our dedicated sales team, which
leverages AI technology to prequalify leads and streamline the path to initial
meetings. Additionally, the expansion of our "Marketverse" direct selling
offering has opened new revenue streams, further solidifying our position as a
leader in D2C support.
Notably, the last 15 months have marked our transition into a full-service D2C
agency, offering off-Amazon services to complement our core Amazon expertise.
We have secured key partnerships and accreditations with TikTok, Meta, Google,
and Semrush, enhancing our capabilities alongside our established credentials
as a member of the Amazon Service Provider Network and Verified Advertising
Partner. These developments position us well for continued growth and
innovation in the years ahead.
Cash flow and cash position
Up until recently, funding for the group activities has come from shareholder
monies. The directors recognised the need for additional funding and organised
a bridging loan of £1m in November 2023, whilst the negotiations to raise
further capital of £2m, referred to in the CEO's report, were being
organised. Meanwhile, the Board continues to progress RGO's potential
acquisition of our subsidiaries and novation of liabilities in close
collaboration with the Board of RGO. This is intended to raise enough
capital to settle all of the parent companies loans, leaving only the
subsidiary loan at Juvela in place and approximately halving the financial
debt carried by our group of businesses.
INVESTMENTS
Coldpress Foods Limited
Coldpress continues to trade and there has been no impairment in the value of
this investment.
Plant Punk
Despite an optimistic start, we were disappointed that the business failed to
develop any products. Accordingly, the value of our 50% joint venture in
Plant Punk has been fully impaired in these accounts.
CURRENT TRADING
Since the balance sheet date, the growth in all companies, together with the
cost-cutting, efficiencies and rationalisations being implemented are all
beginning to bear fruit.
PRINCIPAL RISKS AND UNCERTAINTIES
Our key risks can be summarised as follows:
Risk Impact Mitigation
Foreign exchange Currency volatility impacts our cost of goods in We Love Purely as the product The Group does not hedge its foreign exchange exposures. We keep exchange
is sourced in US dollars. There is also some impact on European sales in risk under review and as sales grow for the Group we will be looking to lock
Euros for Pulsin, We Love Purely and Juvela. in exchange rates.
Key Suppliers Risk that failure of supply by a major supplier would impact on our ability to This is not an issue for the group save for We Love Purely which is reliant on
service our customers. mainly one supplier. The position is regularly reviewed.
War in Ukraine Initially the outbreak of war caused a temporary delay in supplies and also We continue to be aware and look for alternative sources of materials.
increased the prices. This has now receded.
Credit and Liquidity risks Lack of working capital would impact the group's ability to acquire goods and Where issues arise, we work with suppliers to ensure continued supply, in some
services. cases rescheduling the payment terms. The group is working on a capital
raising project that should leave it with access to additional funds to
alleviate this issue
Insurance / Regulatory risk Loss occasioned by product issues and normal commercial risks All our businesses carry appropriate insurance cover for product liability and
other risks.
SECTION 172 STATEMENT
The Board of Directors, in line with their duties under section 172 of the
Companies Act 2016, act in a way they consider, in good faith, would be most
likely to promote the success of the Company for the benefit of its members
as a whole, and in doing so have regard to a range of maters when making
decisions for the long term. Key decisions and maters that are of strategic
importance to the Company are appropriately informed by s172 factors.
Section 172 of the Companies Act 2006 requires Directors to take into
consideration the interests of stakeholders and other matters in their
decision making. The Directors continue to have regard to the interests of the
Company's employees and other stakeholders, the impact of its activities on
the community, the environment and the Company's reputation for good business
conduct, when making decisions. In this context, acting in good faith and
fairly, the Directors consider what is most likely to promote the success of
the Company for its members in the long term. We explain in this annual
report, and below, how the Board engages with stakeholders.
The Board regularly reviews the Company's principal stakeholders and how it
engages with them. This is achieved through information provided by management
and also by direct engagement with stakeholders themselves.
The table below sets out some examples of how the directors have exercised
this duty:
Stakeholder How we engage
Our Shareholders The Company proactively engages in dialogue with shareholders. Since the IPO
in September 2021, the CEO has participated in number of investor
The Board and Executive Management Team maintains strong relationships with presentations and at various other investment led events.
investors and supports open channels of communication.
Our next AGM will be held during the week commencing 3(rd) February 2025.
This will provide an opportunity for shareholders to meet the directors and
discuss the year's results.
Website and shareholder communications
Further details on the Group, our business and key financial dates can be
found on our corporate website: htps://www.s-venturesplc.com/
Our People Our employees are at the core of all that we do. At S-Ventures, we believe that our strength comes from our staff and success
comes from shared goals and values. We are proud to celebrate the diversity of
our employees and work hard to empower our workforce and to create a positive
and inclusive culture within which our teams can grow. The sustainable success
of the business is dependent upon the development of and investment in our
teams of highly talented and dedicated employees. Our teams are kept fully
informed of the business' performance, operational and strategic initiatives
through newsletters and quarterly townhalls. We continually strive to maintain
open communication and encourage collaboration from all our employees.
Our Customers and Brand partners Communication with our customers and brand The trust of our customers and partners is fundamental to our success. We are
partners is fundamental to understanding how we can continue to add value committed to building innovative customer-led technology solutions and
through the products and in the services we provide. products. We maintain a strong relationship with our partners through our
dedicated accounts management team. Through regular meetings and
conversations, we regularly review their feedback which enables us to improve
the services and solutions we provide.
Our Suppliers The relationship we have with our suppliers is key to ensuring We rely on suppliers and logistics partners across a number of geographical
that the quality of the products we deliver to our customers are maintained at locations. Throughout the year we continue to work closely with our key
a high standard and the delivery is managed for the smooth-running of our suppliers and logistics partners to manage those relationships with clear
business and its operations communications to ensure the high quality of our products and services are
maintained.
The directors present their report with the financial statements of the
company and the group for the 15 months ended 31 December 2023.
DIVIDENDS
No dividends will be distributed for the period ended 31 December 2023.
FUTURE DEVELOPMENTS
Details of the Group's future developments are contained in the Strategic
report set out above.
EVENTS SINCE THE END OF THE PERIOD
Information relating to events since the end of the period is given in Note 37
to the financial statements.
DIRECTORS
The directors who have held office during the period to the date of this
report are as follows:
S Argent (appointed 29 August 2023)
B Choudhrie
R D Hewitt
S P Livingston
D M Mitchell (resigned 15 January 2024)
N A D'Onofrio (resigned 26 July 2023)
A J B Phillips
REMUNERATION COMMITTEE REPORT
The Remuneration Committee has responsibility for determining, within the
agreed terms of reference, the Group's policy on the remuneration packages of
the Company's Chairman, and the executive directors and such other members of
the senior management as it is designated to consider. The Remuneration
Committee also has responsibility for determining (within the terms of the
Group's policy and in consultation with the Chairman of the board and/or the
Chief Executive Officer) the total individual remuneration package for each
executive director and other senior managers (including bonuses, incentive
payments and share options or other share awards). The remuneration of
non-executive directors is a matter for the independent board. No director or
manager will be allowed to partake in any discussions as to their own
remuneration. In exercising this role, the directors shall have regard to the
recommendations put forward in the relevant QCA Guidelines.
In the 15 months to 31 December 2023, the Remuneration Committee consisted of
the Non-Executive Chairman and two non-executive directors: David Mitchell,
Alex Phillips and Bhanu Choudhrie. The Remuneration Committee is convened not
less than twice a year and otherwise as required. The Committee met twice
during the period ended 31 December 2023.
Directors' Remuneration Policy
The Committee takes into account both Group and individual performance, market
value and sector conditions in determining director and senior employee
remuneration. The Committee has maintained a policy of paying salaries
comparable with peer companies in the sector in order to attract and retain
key personnel.
For the first part of the period under review, these costs were kept very low
reflecting the Group strategy of building for the future. In future periods,
salary costs are likely to rise.
Directors remuneration
15 months ended 31 December 2023
Executive directors Salary Pension Benefits Bonus Total
Scott Livingston 150,000 7,500 22,500 - 180,000
Robert Hewitt 75,000 - - - 75,000
Stephen Argent 40,000 - - - 40,000
Prior period year ended 30 September 2022:
Executive directors Salary Pension Benefits Bonus Total
Scott Livingston 124,333 - 1,894 - 126,226
Robert Hewitt 60,000 - - - 60,000
Fees payable
Non- executive directors 15 months ended Year ended
31 December 2023 30 September 2022
David Mitchell 50,168 30,000
Alex Phillips 20,758 12,000
Nick D'Onofrio - 12,000
Bhanu Choudhrie 23,000 12,000
Service Contracts and non-executive directors' Letters of Appointment
The executive directors have rolling contracts that are terminable on 12
months' notice. These contracts are not fixed term and will be reviewed
annually. The chairman has an agreement entitling him to £30,000 pa and the
other non-executive directors have agreements entitling them to fees of
£12,000 pa. Fees of £1,000 per month were accrued for services provided in
the current period.
During the 15 months ended 31 December 2023, there were 13 minuted Board
meetings plus a further 2 informal meetings.
Directors' interests as at 31 December 2023
Director Ordinary shares directly held % of Issued Share Capital Warrants at 25p Options
Scott Livingston 46,749,108 35.4% - -
Robert Hewitt 2,332,003 1.8% - -
David Mitchell 1,926,859 1.5% - -
Alex Phillips 2,746,000 2.1% - -
Nick D'Onofrio 2,750,000 2.1% - -
Bhanu Choudhrie - - - -
Number of shares in issue at 31 December 2023 132,215,587
Number in issue at date of this report 132,215,587
Share Options and Warrants
There is one set of warrants exercisable at 4p and an option exercisable at
15p.
As at 31 December 2023 As at the date of this report
Shares in issue 132,215,687 132,215,587
Warrants for shares 737,800 737,800
Share Options 66,666 66,666
Diluted number of shares 133,020,053 133,020,053
Percentage of Warrants and Options in expanded equity 0.6% 0.6%
Shareholder Approval of Directors' Remuneration Report
Shareholders are asked to approve this directors' Remuneration Report for the
period ended 31 December 2023 at the forthcoming Annual General Meeting. This
resolution is advisory in nature.
STATEMENT OF CORPORATE GOVERNANCE ARRANGEMENTS
Introduction
We are pleased to set out below the Corporate Governance Report for the 15
months ended 31 December 2023. As an AQSE quoted company, we recognise the
importance of sound corporate governance in supporting and delivering the
strategy of the Company and its subsidiaries (together the "Group"). This
involves managing the Group in an efficient manner for the benefit of its
shareholders and other stakeholders whilst maintaining a corporate culture
which is consistent with our values.
The Company adopted the QCA Corporate Governance Code ("QCA Code") on its
initial listing. The Company's Corporate Governance Statement is available to
view on the Company's website at www.s-venturesplc.com
(https://www.s-venturesplc.com/)
The board of directors is responsible for the long-term success of the Company
and, as such, devises the Group strategy and ensures that it is implemented.
The board is determined that the Company protects and respects the interests
of all stakeholders and in particular, is very focused upon creating the right
environment for its employees. We want a happy workplace and we want our
employees to be fully and properly rewarded and to feel that they are an
integral part of the S-Ventures family. A reward structure is in place which,
inter alia, allows for the grant of share options, enabling members of staff
to participate in the growth of the Company, as appropriate.
We want our suppliers, who are an essential part of the Company, to also feel
part of the S-Ventures family and we work closely with them to ensure that
this is the case. Above all, the Company wishes to ensure that shareholders
obtain a good return on their investment and that the Company is managed for
the long-term benefit of all shareholders and other stakeholders. Appropriate
Corporate Governance procedures will ensure that that is the case and reduce
the risk of failure.
The Development of the Code for S-Ventures
The QCA sets out 10 principles which the Board is working on to expand into an
effective document to cover all areas of the Group's business. During 2023 the
board reviewed whether the Quoted Companies Alliance (QCA) code remains
appropriate to continue following, the substitute that was considered was the
UK Corporate Governance Code published by the Financial Reporting Council
(FRC). Due to the size of the Company and the prescriptive nature of the UK
Corporate Governance Code a decision was made to continue abiding by the QCA
code.
The Group has a clear mandate to optimise the allocation of resources to
support its development and growth plans seeking to maintain a balance between
its resources and maintaining robust corporate governance practices. As the
Group evolves, the Board is committed to enhancing the Company's policies and
practices appropriate for the size and maturity of its business and
organisation.
Set out below are the Group's corporate governance practices for the 15 months
ended 31 December 2023.
1. Business strategy
The business model involves seeking out strong brands or products with a clear
market message within the wellness sector. To date this has meant focusing of
healthy snacks market. Conscious of present trends in plant-based foods, the
products should be both better for the consumer and also have a better carbon
and / or health benefit than competing products. By being in the forefront of
these trends, the Board considers that shareholder value will be promoted.
2. Shareholder needs
Other than promoting growth and thus shareholder value, we aim to develop ways
of communicating effectively with our shareholders to ensure we are developing
appropriately. As the group grows this will become more important; for the
time being, this is achieved by data on our website, press notices and the
full presentation of our annual accounts.
3. Wider responsibilities, such as social responsibility
With both our existing and new products, our teams are focused on bringing
products to market using responsibly sources raw materials and packaging
materials.
4. Risk Management
We consider risk management at two levels. Firstly, we ensure that all our
products are made to appropriate and up to date food hygiene standards.
Secondly, we have implemented reporting and management systems appropriate to
a Group of our size at both the operating company level and main board level.
We have ensured that the group carries appropriate insurance covers.
Secondly, the main Board has set up committees which include non-executive
directors for investment decisions, remuneration and audit. Whilst the
Investment Committee sift possible targets, all offers are approved by the
full main Board.
5. The Board
The Board members are listed on page 1. The board meets regularly online and
in person. During the 15 months ended 31 December 2023, there have been 13
minuted Board meetings plus a further 2 informal minuted meetings.
New board appointments would be considered by the CEO and Chairman before
consulting with the whole Board.
The full formal Board meetings have a formal structure covering recent
developments, present finance and funding issues, acquisition policies and
progress together with any shareholder or exchange issues reported by our
advisors or which need to be passed on to them.
6. Board skills
The Directors have a wide range of skills including experience of the retail
and online sales structures and the non-executive directors are able to bring
to bear their knowledge gained in the wider M&A marketplace. As the
Company is in the retail and online sector these are considered to the most
appropriate skills.
Below the board, we have skilled managers in the Manufacturing units and also
experts in online selling to manage the digital presence of the constituent
businesses of the group.
The Board regularly reviews the skills needed to run and develop the group's
activities.
7. Evaluate board performance
Based on clear and relevant objectives, seeking continuous improvement. Now
S-Ventures has been operating since July 2020, the Board plans to put in place
a more rigorous evaluation for the subsequent financial year. The proposed
evaluation is a formal internal evaluation consisting of the following:
• Attendance of directors to Board meetings;
• Questionnaires completed by each director to determine the boards
effectiveness; and
• One-on-one discussions with the Chairman
The questionnaire mentioned above is anonymised to promote honesty in
answering the questions that are being posed to the directors. Oversight and
implementation of actions identified from the questionnaire are to be
completed by the Company Secretary. Should external insight be required to
facilitate this evaluation then this will take place however, in the current
financial year this was not deemed necessary.
In addition to this, succession planning also forms part of our evaluation of
the Board to ensure all directors are aware of what would occur should a
prescribed scenario arise.
8. Promote a corporate culture
Based on ethical values and behaviours.
Since S-Ventures was founded the Board has been insistent on ensuring that
ethical values and good behaviour within the Company is promoted and
maintained throughout the organisation and that they guide the Company's
day-to-day operations, as well as business objectives and strategy.
S-Ventures ethical values are promoted to employees from inception at the
interview process through to employment regardless of the working arrangement.
S-Ventures ethical values also hold true for businesses which we acquire or
invest in, should customers, suppliers or partners not adhere to S-Ventures
ethical values business transactions will not cease. S-Ventures has an
open-door policy and a flat organisation structure to ensure all employees are
empowered to speak their opinion in a comfortable and accepting environment.
All employees' contracts whether employed directly by S-Ventures or by one of
our businesses contain further information on the values and behaviours
expected from staff.
9. Maintain governance structures
With processes that are fit for purpose and support good decision-making by
the board
The S-Ventures Chief Executive Officer, Chief Financial Officer and senior
management are accountable for the day-to-day operations of the business and
for the implementation of the strategic goals agreed by the Board of
directors. The Chairman leads the Board and is responsible for its governance
structures, performance, and effectiveness. The Chairman is also responsible
for ensuring that the links between the Board and the shareholders, are strong
and efficient.
10. Communication
Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
The board recognises that the AGM is an important opportunity to meet private
shareholders. Each substantial issue is the subject of a separate resolution
at the AGM and all shareholders have the opportunity to put questions to the
board. All board directors will endeavour to attend AGMs and answer questions
put to them which may be relevant to their responsibilities.
The share ownership of majority shareholders can be found on the S-Ventures
website using the following link (www. S-Ventures/Investor-Information)
shareholders are communicated through the Annual Report and Accounts,
full-year and half-year announcements, social media posts that are displayed
on the S-Ventures website and on acquired companies social media, the AGM and
individual/group meetings with existing or potential new shareholders. A
plethora of corporate information on S-Ventures and on acquired companies can
be found on the S-Ventures website using the above following link.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Group Strategic Report, the
Report of the Directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the Group
and Company Financial Statements in accordance with UK-adopted international
accounting standards and as regards the Company financial statements, as
applied in accordance with the requirements of the Companies Act 2006.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the company and the group and of the profit or loss of the group
and the Company for that period. In preparing these financial statements, the
directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and
prudent;
- state whether the applicable UK-adopted international accounting
standards have been followed subject to any material departures disclosed and
explained in the financial statements; and
- Prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's and the group's transactions and
disclose with reasonable accuracy at any time the financial position of the
company and the group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the company and the group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as
defined by Section 418 of the Companies Act 2006) of which the Group's
auditors are unaware, and each director has taken all the steps that he ought
to have taken as a director in order to make himself aware of any relevant
audit information and to establish that the Group's auditors are aware of that
information.
AUDITORS
The auditors, RPG Crouch Chapman LLP, will be proposed for re-appointment at
the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
-----------------------------
Stephen Argent
Chief Financial Officer
Date: 7 January 2025
AUDITORS' REPORT
Qualified Opinion
We have audited the financial statements of S-Ventures PLC (the 'Company') and
its subsidiaries (the 'Group') for the period ended 31 December 2023 which
comprise the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Statement of Changes in
Equity, the Consolidated Statement of Cash Flows, the Statement of Cash Flows
and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted international accounting
standards and as regards the Parent Company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion, except for the possible effects of the matter described in the
basis for qualified opinion section of our report:
· the financial statements give a true and fair view of the state of
the Group's and of the Parent Company's affairs as at 31 December 2023 and of
the Group's loss for the period then ended;
· the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
· the Parent Company financial statements have been properly prepared
in accordance with UK adopted international accounting standards and as
applied in accordance with the provisions of the Companies Act 2006, and
· The financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for qualified opinion
We were not appointed as auditor of the group and company until after 31
December 2023 and thus did not observe the counting of physical inventories at
the end of the year. We were unable to satisfy ourselves by alternative means
concerning the inventory quantities held by Pulsin Limited and Market Rocket
Limited at 31 December 2023, which are included in the consolidated balance
sheet at £1,074,886, by using other audit procedures. Consequently, we were
unable to determine whether any adjustment to this amount was necessary. Were
any adjustment to the inventory balance to be required, the strategic report
would also need to be amended.
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2.4 in the accounting policies, concerning the
Group's ability to continue as a going concern. The matters explained in Note
2.4 indicate that the directors have prepared working capital forecasts that
indicate that the Group has sufficient working capital, cash resources and
credit facilities to continue operating for the foreseeable future. These
forecasts anticipate the completion of a reverse takeover transaction in the
coming months. As at the date of approval of these financial statements there
are no legally binding agreements committing the parties to the reverse
takeover transaction. These events or conditions along with the matters set
forth in Note 2.4 indicate the existence of a material uncertainty which may
cast significant doubt over the Group's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
We have highlighted going concern as a key audit matter. In auditing the
financial statements, we have concluded that the Directors' use of the going
concern basis of accounting in the preparation of the financial statements is
appropriate. Our evaluation of the Directors' assessment of the Group and the
Parent Company's ability to continue to adopt the going concern basis of
accounting included:
· Analysing the Directors' cashflow forecast which forms the basis of
their assessment that the going concern basis of preparation remains
appropriate for the preparation of the Group and Company financial statements
for a period of at least twelve months from the date of approval of these
financial statements;
· Assessing the assumptions included within the cashflow forecast and
where available agreeing these costs to other evidence obtained during the
course of our audit work is in line with our expectations;
· Obtaining details of successful fundraising since the year end;
· Discussing with Management and the Board the Group's strategy to
continue fundraising, and any alternative sources of funds available to the
Group; and
· Reviewing and considering the adequacy of the disclosure within the
financial statements relating to the Directors' assessment of the going
concern basis of preparation.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our approach to the audit
In planning our audit, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular, we looked at
where the directors made subjective judgements, for example in respect of
significant accounting estimates. As in all of our audits, we also addressed
the risk of management override of internal controls, including evaluating
whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
We tailored the scope of our audit to ensure that we performed sufficient work
to be able to issue an opinion on the financial statements as a whole, taking
into account the structure of the Company, the accounting processes and
controls, and the industry in which they operate.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement we identified (whether or not due to fraud), including those
which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. The use of the going concern
basis of accounting was assessed as a key audit matter and has already been
covered in an earlier section of this report.
In addition to the matter described in the basis for qualified opinion
section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Key audit matter How our work addressed this matter
Management override of controls Our audit work included:
Management override of controls is a presumed risk of fraud under the · Obtaining a list of manual journals entered into the accounting
International Auditing Standards. system in the year and reviewing a sample of these against a range of
different criteria.
Professional standards require us to communicate the fraud risk from
management override of controls as significant because management is typically · Reviewing management estimates, judgements and significant
in a unique position to perpetrate fraud because of its ability to manipulate accounting policies for undue bias in the financial statements.
accounting records and prepare fraudulent financial statements by overriding
controls that otherwise appear to be operating effectively. · Develop an understanding of the internal financial procedures,
systems and controls in place across the Group.
· Reviewed unadjusted audit differences and proposed audit
adjustments for indications of management bias or deliberate misstatement.
Revenue recognition Our audit work included:
Revenue recognition is a presumed risk of fraud under the International · Obtaining an understanding of the sales systems in place across the
Auditing Standards. Group.
The Group has revenue from a variety of sources including food manufacturing · Testing cut-off for revenue by identifying dispatches of
and online marketing. inventories around the year end and verifying recognition of revenue is
consistent with IFRS 15: Revenue.
· Using a larger sample size for transaction testing of revenue to
address the elevated risk
· Reviewing accounting policies and disclosures.
Valuation of investments in subsidiaries and associated undertakings Our audit work included:
The Parent Company, and S-Ventures Acquisitions Limited, an intermediate
holding company within the Group, holds investments in subsidiaries and
associated undertakings. · Obtaining documentary evidence to support the ownership of
subsidiaries.
The carrying value of investments are ultimately dependent on the performance
of those subsidiaries and associates. · Considered the valuation of investments in the context of the net
assets and profitability of the companies.
The Group companies have receivable and payable balances with each other that
are material on a Group basis. · Reviewed other evidence from internal and external sources to
support the valuation of subsidiary companies.
The valuation and recoverability of these amounts is therefore a risk, on the
basis that their values may be impaired or not fully recoverable. · Reviewed management's impairment assessments and the completeness
of provisions made against investments in discontinued or aborted associates.
Valuation of intangible assets Our audit work included:
The consolidated balance sheet includes £3.5m of goodwill, £7.6m of acquired · Obtained management's PPA allocation assessment and reviewed the
intangible assets arising from the acquisition of Juvela Limited, and £613K valuation methods for reasonableness.
of internally developed assets with respect of Pulsin Limited.
· Ensured that internally generated assets are capitalised and
These intangible assets represent a substantial proportion of the Group's net measured in accordance with recognition criteria in IAS 38. Challenged the
assets. Valuing the intangible assets is a subjective exercise and significant continued existence of intangible assets based on internal and external
assumptions are required, which have a material impact on the valuation of evidence of commercial and technical feasibility via inquiry and discussion
those intangible assets. with management.
· Reviewed and assessed the assumptions implicit within impairment
reviews for reasonableness.
Valuation of inventories Our audit work included:
As described in note 2.15 the Group values inventory at the lower of cost and · Developing an understanding of the stock valuation policies in
realisable value, and provides for obsolete and slow moving inventory. place across the Group.
By its nature, the inventory held by the Group is perishable, which puts · Testing a sample of inventory items to the underlying costs
increased importance on the Group's processes for identifying inventory that involved in the purchase and production of inventory.
needs to be provided for or written off.
· Testing a sample of inventory items to sales after the year end to
support the valuation in the financial statements.
· Reviewing stock provisions at the year end, and reviewing
write-offs after the year end to assess whether subsequent inventory
write-offs revealed additional evidence of conditions prevailing at the year
end.
· Challenging management's assumptions as to recoverability of
packaging stock.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
We consider turnover to be the most significant determinant of the Group's
financial performance used by the users of the financial statements, and gross
assets to be the most significant determinant of the Parent Company's
financial performance. We have based materiality for the Group on 0.75% of
turnover and 1.5% of gross assets for the Parent Company. Overall materiality
was therefore set at £295,000 for the Group, and at £198,000 for the Parent
Company. Performance materiality was set at a threshold between 50% and 75% of
materiality depending on the determined audit risk of the financial statement
area in question. Significant audit risk areas (revenue recognition and
management override) were audited to a 50% performance materiality threshold
with remaining areas subject to a 75% performance materiality threshold.
We agreed with the Audit Committee that we would report on all differences in
excess of 5% of materiality relating to the financial statements. We also
report to the Audit Committee on financial statement disclosure matters
identified when assessing the overall consistency and presentation of the
financial statements.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors'
Report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the Strategic Report and the Directors' Report have been prepared
in accordance with applicable legal requirements.
· The part of the Director's Remuneration Report to be audited has
been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
Except for the matter described in the basis for qualified opinion section of
our report, in the light of the knowledge and understanding of the Company and
its environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report, the Directors' Report or the
Director's Remuneration Report.
Arising solely from the limitation on the scope of our work relating to
inventory, referred to as above:
· we have not obtained all the information and explanations that we
considered necessary for the purpose of our audit; and
· we were unable to determine whether adequate accounting records
have been kept.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· returns adequate for our audit have not been received from branches
not visited by us; or
· the financial statements are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on page XX to XX the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's
financial reporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below:
· Enquiries of management, including obtaining and reviewing
supporting documentation concerning the Company's policies and procedures
relating to;
- Identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of non-compliance
- Detecting to and responding to the risks of fraud and whether they
have knowledge of any actual, suspected or alleged fraud
· Discussions amongst the engagement team regarding how and where
fraud might occur in the financial statements and any potential indicators of
fraud.
We also obtained an understanding of the legal and regulatory framework that
the Group operates in, focusing on provisions of those laws and regulations
that had a direct effect on the determination of material amounts and
disclosures included within the financial statements. The key laws and
regulations we considered in this context included the UK Companies Act and
IFRS.
In addition we considered provisions of other laws and regulations that do not
have a direct effect on the financial statements but compliance with which may
be fundamental to the Group and Company's ability to operate or to avoid a
material penalty. These included food safety regulations, health and safety
regulations, employment law, data protection regulations and general trading
laws in the UK.
As a result of these procedures we consider the particular areas that were
susceptible to misstatement due to fraud were in respect of revenue
recognition, management override of controls, investment valuation, intangible
assets valuation, and inventories valuation.
Our procedures to respond to these risks identified included the following;
· Reviewing the financial statement disclosures and testing these to
supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial
statements,
· Enquiring with management concerning actual and potential
litigation claims,
· Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material misstatement due
to fraud,
· Agreeing investment and intangible valuations to supporting
documentation and recalculating,
· Reviewing management impairment assessments and challenging
assumptions made to ensure valuations of intangibles and investments are
reasonable,
· Reviewing the Group's methodology for valuing inventories,
particularly in relation to production overheads absorbed into inventory at
the year end, and reviewing the adequacy of provisions for slow moving
inventory,
· Reviewing board minutes and legal and professional fees during the
year and any subsequent to the year end to identify any potential litigation
not previously disclosed,
· Communicating with component auditors to ensure that the engagement
team collectively had the appropriate capabilities to identify or recognise
non-compliance with laws and regulations across the Group,
· In addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other adjustments
for evidence of management override/bias and agreeing these to supporting
documentation, and
· Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias and evaluating the rationale of
any significant transactions that are deemed unusual or outside of the normal
course of the Company's operations.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Auditor's Report.
Other matters that we are required to address
We were appointed on 21 June 2024 and this is the first year of our engagement
as auditors for the Group and Company.
We confirm that we are independent of the Group and Company and have not
provided any prohibited non-audit services, as defined by the Ethical Standard
issued by the Financial Reporting Council as applied to listed public interest
entities, and we have fulfilled our ethical responsibilities in accordance
with these requirements.
Our audit report is consistent with our additional report to the Audit
Committee explaining the results of our audit.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Paul Randall FCA (Senior Statutory Auditor)
For and on behalf of RPG Crouch Chapman LLP
Chartered Accountants
Registered Auditor
40 Gracechurch Street
London
EC3V 0BT
7 January 2025
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Note
Continuing operations
Revenue 4 19,658 7,628
Cost of sales (10,300) (5,040)
Gross profit 9,358 2,588
Other operating income 5 90 45
Gain / (loss) on disposal (111) -
Gain on settlement of loan notes 7 - 645
Operating expenses (9,929) (4,573)
Earnings before interest, taxation, depreciation and amortisation (592) (1,295)
Depreciation, amortisation and impairment (2,210) (862)
Finance costs - net 8 (1,243) (73)
Loss before taxation 9 (4,045) (2,230)
Income tax 11 (399) (152)
Loss for the period - continuing operations (4,444) (2,382)
Loss after tax from discontinued operations 30 (2,191) (1,074)
Loss for the period (6,635) (3,456)
Loss attributable to:
Owners of the parent (6,597) (3,323)
Non-controlling interests (38) (133)
Loss for the period (6,635) (3,456)
Other comprehensive income - -
Total comprehensive loss for the period (6,635) (3,456)
Total comprehensive loss attributable to:
Owners of the parent - continuing (4,406) (2,249)
Owners of the parent - discontinuing (2,191) (1,074)
Non-controlling interests (38) (133)
(6,635) (3,456)
Basic earnings per share - pence 13 (5.04) (2.92)
The accompanying notes on pages 34 to 65 form part of the financial
statements.
GROUP Note As at 31 December 2023 As at 30 September 2022
£'000
£'000
ASSETS
NON-CURRENT ASSETS
Goodwill 16 3,463 3,898
Intangible assets 17 7,619 2,990
Property, plant and equipment 18 2,204 2,027
Right of use asset 27 1,233 1,419
Investments 19 30 30
Total non-current assets 14,549 10,364
CURRENT ASSETS
Inventories 20 1,856 1,647
Trade and other receivables 21 2,882 2,599
Cash and cash equivalents 22 305 1,782
Total current assets 5,043 6,028
Assets from discontinued operations 30 60 -
TOTAL ASSETS 19,652 16,392
EQUITY
SHAREHOLDERS EQUITY
Called up share capital 23 132 126
Share premium 23 14,708 13,509
Share based payment reserve 24 8 11
Consideration for investment 24 112 112
Retained deficit (10,825) (4,228)
Total equity 4,135 9,530
Non-controlling interests (72) (34)
TOTAL EQUITY 4,063 9,496
GROUP Note As at 31 December 2023 As at 30 September 2022
£'000
£'000
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities:
Interest bearing loans and borrowings 26 6,369 192
Lease liability 29 336 1,686
Provision 440 -
Total non-current liabilities 7,145 1,878
CURRENT LIABILITIES
Trade and other payables 25 5,328 3,263
Financial liabilities - borrowings
Bank overdrafts 26 - 276
Interest bearing loans and borrowings 26 1,582 722
Lease liability 29 1,340 434
Tax payable 11 - 323
Total current liabilities 8,250 5,018
Liabilities from discontinued operations 30 194 -
TOTAL LIABILITIES 15,589 6,896
TOTAL EQUITY AND LIABILITIES 19,652 16,392
The financial statements were approved by the Board of Directors and
authorised for issue on 7 January 2025 and were signed on its behalf by:
____________________
S Argent - Director
The accompanying notes on pages 34 to 65 form part of the financial
statements.
COMPANY Note As at 31 December 2023 As at 30 September 2022
£'000
£'000
ASSSETS
NON-CURRENT ASSETS
Property, plant and equipment 18 17 22
Investments 19 3,456 8,403
3,473 8,425
CURRENT ASSETS
Trade and other receivables 21 5,683 3,064
Cash and cash equivalents 22 22 1,723
5,705 4,787
TOTAL ASSETS 9,178 13,212
EQUITY
SHAREHOLDERS EQUITY
Called up share capital 23 132 126
Share premium 23 14,708 13,509
Share based payment reserve 24 8 11
Consideration for investment 24 112 112
Retained deficit (10,783) (1,819)
TOTAL EQUITY 4,177 11,939
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 26 1,709 -
Provisions 354 -
2,063 -
CURRENT LIABILITIES
Borrowings 26 402 -
Trade and other payables 27 2,536 1,273
2,938 1,273
TOTAL LIABILITIES 5,001 1,273
TOTAL EQUITY AND LIABILITIES 9,178 13,212
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 from presenting the Parent Company profit and loss account.
The Parent Company loss for the period was £8,964,000 (2022: loss of
£1,350,000).
The financial statements were approved by the Board of Directors and
authorised for issue on 7 January 2025 and were signed on its behalf by:
____________________
S Argent - Director
The accompanying notes on pages 34 to 65 form part of the financial
statements.
GROUP Share capital Share premium Share based payment reserve Equity component of debt Contingent equity settled consideration for investment Retained deficit Total Non-controlling interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 October 2021 (restated) 111 6,490 40 2,058 34 (785) 7,948 (77) 7,871
Loss for the period - - - - - (3,323) (3,323) (133) (3,456)
Total comprehensive loss for the period - - - - - (3,323) (3,323) (133) (3,456)
Issue of share capital 7 4,993 - - - - 5,000 - 5,000
Share warrants exercised 1 24 (14) - - 14 25 - 25
Share options exercised 1 48 (15) - - 15 49 - 49
Shares issued for consideration for acq'n 5 1,905 - - - - 1,910 1,910
Share issue for services 1 49 - - - - 50 - 50
Equity consideration for step acquisition of non-controlling interest - - - - - (149) (149) 149 -
Reduction in non-controlling interest from step acquisition - - - - - - - (49) (49)
Shares issued in settlement of convertible loans - - - (1,013) - - (1,013) - (1,013)
Cash settlement of convertible loans - - - (400) - - (400) - (400)
Gain on settlement of convertible loans - - - (645) - - (645) - (645)
Consideration for subsidiary - - - - 112 - 112 - 112
Reversal of contingent consideration due to settlement agreement - - - - (34) - (34) - (34)
Price allocation adjustment to non-controlling interests proportion of net - - - - - - - 76 76
assets
Total transactions with owners 15 7,019 (29) (2,058) 78 (120) 4,905 176 5,081
Balance as at 30 September 2022 126 13,509 11 - 112 (4,228) 9,530 (34) 9,496
GROUP Share capital Share premium Share based payment reserve Contingent equity settled consideration for investment Retained deficit Total Non-controlling interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 30 September 2022 (cont.) 126 13,509 11 112 (4,228) 9,530 (34) 9,496
Loss for the period - - - - (6,597) (6,597) (38) (6,635)
Comprehensive loss - - - - - - - -
Total comprehensive loss for the period - - - - (6,597) (6,597) (38) (6,635)
Share warrants exercised 1 354 (3) - - 352 - 352
Shares issued for consideration for acq'n 5 845 - - - 850 - 850
Total transactions with owners 6 1,199 (3) - - 1,202 - 1,202
Balance as at 31 December 2023 132 14,708 8 112 (10,825) 4,135 (72) 4,063
The accompanying notes on pages 34 to 65 form part of the financial
statements.
COMPANY Share capital Share premium Share based payment reserve Equity component of debt Contingent equity settled consideration for investment Retained deficit Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 October 2021 (restated) 111 6,490 40 2,058 34 (498) 8,235
Loss for the period - - - - - (1,350) (1,350)
Total comprehensive loss for the period - - - - - (1,350) (1,350)
Issue of share capital 7 4,993 - - - - 5,000
Share warrants exercised 1 24 (14) - - 14 25
Share options exercised and expired 1 48 (15) - - 15 49
Shares issued for consideration for acq'n 5 1,905 - - - - 1,910
Share issue for services 1 49 - - - - 50
Shares issued in settlement of convertible loans - - - (1,013) - - (1,013)
Cash settlement of convertible loans - - - (400) - - (400)
Gain on settlement of convertible loans - - - (645) - - (645)
Contingent equity-settled consideration for subsidiary - - - - 112 - 112
Reversal of contingent consideration due to settlement agreement - - - - (34) - (34)
Total transactions with owners 15 7,019 (29) (2,058) 78 29 5,054
Balance as at 30 September 2022 126 13,509 11 - 112 (1,819) 11,939
COMPANY Share capital Share premium Share based payment reserve Contingent equity settled consideration for investment Retained deficit Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 October 2022 126 13,509 11 112 (1,819) 11,939
Loss for the period - - - - (8,964) (8,964)
Total comprehensive loss for the period - - - - (8,964) (8,964)
Share warrants exercised 1 354 (3) - - 352
Shares issued for consideration for acq'n 5 845 - - 850
Total transactions with owners 6 1,199 (3) - - 1,202
Balance as at 31 December 2023 132 14,708 8 112 (10,783) 4,177
The accompanying notes on pages 34 to 65 form part of the financial
statements.
GROUP Note 15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Cash flows from operating activities
Loss before income tax (6,635) (3,257)
Adjustments for:
Amortisation, depreciation and impairment charges 1,864 937
Profit on disposal of fixed assets - (3)
Gain on settlement of loan notes - (645)
Impairment of goodwill 1,657 569
Finance costs 1,254 94
Finance income (6) (16)
Tax paid - (126)
Interest paid (956) (73)
Lease interest paid (33) (41)
(2,855) (2,561)
Changes in working capital:
Increase in inventory 70 (637)
Decrease / (increase) in trade and other receivables 1,190 (99)
(Decrease) / increase in trade and other payables 192 662
Net cash from operating activities (1,403) (2,635)
Cash flows from investing activities
Cash acquired on acquisition 485 -
Acquisition of subsidiary undertakings (7,709) (100)
Purchase of intangible fixed assets (201) -
Purchase of tangible fixed assets (15) (366)
Interest received 1 14
Net cash from investing activities (7,439) (452)
Cash flows from financing activities
Payment of lease liabilities (611) (309)
Net proceeds on borrowings 7,210 (237)
Amount introduced / (withdrawn) by directors 690 172
Proceeds from issue of shares 352 5,073
Net cash from financing activities 7,641 4,699
(Decrease) / increase in cash and cash equivalents (1,201) 1,612
Cash and cash equivalents at beginning of the year 1,506 (106)
Cash and cash equivalents at end of the year 305 1,506
Note the cash and cash equivalents balance includes the bank overdraft of
£nil (2022: £276,000)
The accompanying notes on pages 34 to 65 form part of the financial
statements.
COMPANY Note 15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Cash flows from operating activities
Loss before income tax (8,964) (1,245)
Adjustments for:
Depreciation and impairment charges 6,465 4
Impairment of subsidiary investment 834 305
Gain on settlement of loan notes - (645)
Finance costs 159 (29)
Finance income (1) (16)
Interest paid (159) -
(1,666) (1,626)
Changes in working capital:
Increase in trade and other receivables (2,278) (2,221)
(Decrease) / increase in trade and other payables 519 324
Net cash from operating activities (3,425) (3,523)
Cash flows from investing activities
Purchase of tangible fixed assets - (22)
Net investment in subsidiaries (1,467) -
Purchase of fixed asset investments - (100)
Interest received - 16
Net cash from investing activities (1,467) (106)
Cash flows from financing activities
Amount introduced / (withdrawn) by directors 690 172
Proceeds from borrowings 1,296
Proceeds from issue of shares 1,205 5,073
Net cash from financing activities 3,191 5,245
(Decrease) / increase in cash and cash equivalents (1,701) 1,616
Cash and cash equivalents at beginning of the year 1,723 107
Cash and cash equivalents at end of the year 22 1,723
Major non-cash transactions
During the period the following non-cash share issues took place:
14 December 2022 Juvela Limited
Acquisition
£5,000,000
During the prior year the following non-cash share issues took place:
1 November 2021 Shares issued for
consultancy services £50,000
17 February 2022 For trade and
asset purchases
£225,000
11 April 2022 Market
Rocket Ltd Acquisition
£673,000
13 June 2022
Convertible loan note settlement £1,012,000
The accompanying notes on pages 34 to 65 form part of the financial
statements.
1 GENERAL INFORMATION
S-Ventures PLC is a private company, registered in England and Wales. The
company's registered number and registered office address can be found on the
General Information page. The Company's shares are traded on AQSE (ticker
SVEN) and the US OTCQB Venture market.
The principal activities for the group is to invest in and take majority
ownership in wellness and consumer brand businesses, to build a portfolio of
brands, share resources to accelerate growth and efficiencies and add value by
the provision of capital and management expertise.
The consolidated financial information was approved for issue by the Board of
Directors on 7 January 2025.
2 ACCOUNTING POLICIES
2.1 Basis of preparation
These financial statements have been prepared in accordance with UK-adopted
international accounting standards and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis,
except for certain financial assets and liabilities which are carried at fair
value or amortised cost as appropriate.
The financial statements are presented in £ unless otherwise stated (rounded
to the nearest £'000), which is the Company's functional currency and the
Group and Company's presentational currency.
During the period the Group changed its accounting period to 31 December to be
co-terminous with that of its largest subsidiary, Juvela Limited. Therefore,
the results for the current period are for the 15 months ended 31 December
2023, with the comparatives being for the year ended 30 September 2022.
2.2 New standards, amendments and interpretations
There has been no impact on The Group as a result of adopting any of the new
and amended standards and interpretations issued by the International
Accounting Standards Board that are relevant to its operations and effective
for accounting periods commencing on or after 1 October 2022.
2.3 New standards and interpretations not yet adopted
At the date of approval of these financial statements, the following standards
and interpretations which have not been applied in these financial statements
were in issue but not yet effective (and in some cases have not yet been
adopted by the UK):
Standard Impact on initial application Effective date
IFRS S1 General requirements for disclosure of sustainability-related financial 1 January 2024
(https://www.iasplus.com/en-gb/standards/ifrs-sds/ifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information) information
Climate-related disclosures
IFRS General requirements for disclosure of sustainability-related financial 1 January 2024
(https://www.iasplus.com/en-gb/standards/ifrs-sds/ifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information) information
S2
IFRS 7 (https://www.iasplus.com/en-gb/standards/ifrs-en-gb/ifrs1) (amendments) Amendments regarding supplier finance arrangements 1 January 2024
IFRS 16 (amendments) Measurement of sale and leaseback transactions 1 January 2024
IAS 1 (amendments) Presentation of Financial Statements: classification of liabilities 1 January 2024
IAS 1 (amendments) Non-Current Liabilities with Covenants 1 January 2024
IAS 7 (amendments) Supplier finance arrangements 1 January 2024
The effect of these new and amended Standards and Interpretations which are in
issue but not yet mandatorily effective is not expected to be material.
2.4 Going concern
As disclosed in the Chairman's Statement and CEO's Report, the directors
sought to raise funding of £2.5 million in the last quarter of 2023. This
was needed to meet the company's obligations to Hero for the final deferred
payment for the acquisition of Juvela, to support the central costs of a
listed business and, to a lesser extent, to support trading.
With equity markets not offering liquidity or value, a total of £3 million of
debt facilities was raised in the following months, including £1million of
facilities from a Middle Eastern family office and £2million of facilities
from Riverfort Global Opportunities plc ("RGO"). This was alongside the
announcement of RGO's potential acquisition of the company's active trading
subsidiaries and novation of liabilities.
The directors continue to progress this important potential transaction (the
"Transaction") in close collaboration with the Board of RGO. The Transaction
that is proposed is intended to raise enough capital to settle all of the
parent companies loans, leaving only the subsidiary loan in Juvela and
approximately halving the financial debt carried by our group of businesses.
The subsidiary loan at Juvela, which was used for its acquisition, has been
reduced significantly through operating cashflow and, as at the date of this
report, the amount owed to Shawbrook is now approximately £4m.
The directors recognise that additional capital is required to ensure that the
company can continue to discharge its liabilities as they fall due and have
concluded that the funding requirements represents a material uncertainty that
casts significant doubt upon the company's ability to continue as a going
concern. However, the directors believe that the transaction outlined above
will conclude successfully when these accounts are issued.
Accordingly, the Directors have concluded that it is reasonable to adopt a
going concern basis in preparing these financial statements. This is based on
a reasonable expectation that the Group has adequate resources to continue in
operational existence for at least twelve months from the date of signing of
these accounts.
2.5 Basis of consolidation
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and
its subsidiaries as if they formed a single entity. Intercompany transactions
and balances between group companies are therefore eliminated in full. All
subsidiaries either have or are in the process of changing their accounting
period ends to a reporting date of 31 December.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated statement
of comprehensive income from the date on which control is obtained. They are
deconsolidated from the date on which control ceases.
2.6 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred. At the acquisition date, the identifiable assets
(both tangible and intangible) acquired and the liabilities assumed are
recognised at their fair value at the acquisition date, except that deferred
tax assets or liabilities and assets or liabilities related to employee
benefit arrangements are recognised and measured in accordance with IAS 12 and
IAS 19 respectively.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the acquiree's previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. In the case of asset
acquisition, it is the excess of the sum of the consideration transferred over
the net of the acquisition date amounts of the identifiable assets acquired
and the liabilities assumed.
When the consideration transferred by the Group in a business combination
includes a contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of
the contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional
information obtained during the measurement period (which cannot exceed one
year from the acquisition date) about facts and circumstances that existed at
the acquisition date.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period or
additional assets or liabilities are recognised, to reflect new information
obtained about facts and circumstances that existed as of the acquisition date
that, if known, would have affected the amounts recognised as of that date.
2.7 Associates
Associates are all entities over which the Group has significant influence but
not control or joint control. This is generally the case where the Group holds
between 20% and 50% of the voting rights. Investments in associates are
accounted for using the equity method of accounting.
Under the equity method of accounting, the investments are initially
recognised at cost, including any directly attributable transaction costs, and
adjusted thereafter to recognise the Group's share of the post-acquisition
profits or losses of the investee in profit or loss. The Group's share of
movements in other comprehensive income of the investee are recognised in
other comprehensive income. Dividends received or receivable from associates
are recognised as a reduction in the carrying amount of the investment.
Where the Group's share of losses in an equity accounted investment equals or
exceeds its interest in the entity, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the
other entity.
2.8 Revenue recognition
Revenue is recognised at the fair value of the consideration received or
receivable for goods and services provided in the normal course of business
and is shown net of VAT and other sales related taxes. The fair value of
consideration takes into account trade discounts, settlement discounts and
volume rebates.
Performance obligations and timing of revenue recognition:
Goods
The majority of Group revenue is derived from selling goods with revenue
recognised at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are delivered to the customer.
There is limited judgement needed in identifying the point control passes:
once physical delivery of the products to the agreed location has occurred,
the Group no longer has physical possession, usually it will have a present
right to payment. Consideration is received in accordance with agreed terms of
sale.
Determining the contract price:
The Group revenue is derived from:
a) sale of goods with fixed price lists and therefore the amount of
revenue to be earned from each transaction is determined by reference to those
fixed prices; or
b) Individual identifiable contracts, where the price is defined
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product sold. Therefore,
there is no judgement involved in allocating the price to each unit ordered.
Services
Revenue is recognised on technical services over time as services are rendered
and performance obligations are satisfied
2.9 Cash and cash equivalents
Cash represents cash in hand and deposits held on demand with financial
institutions. Cash equivalents are short-term, highly liquid investments with
original maturities of three months or less (as at their date of acquisition).
Cash equivalents are readily convertible to known amounts of cash and subject
to an insignificant risk of change in that cash value.
In the presentation of the Statement of Cash Flows, cash and cash equivalents
also include bank overdrafts. Any such overdrafts are shown within borrowings
under current liabilities on the Statement of Financial Position.
2.10 Goodwill
Goodwill represents the excess of the cost of a business combination over the
Group interest in the fair value of identifiable assets and liabilities
acquired. Cost comprises the fair value of assets given, liabilities assumed,
and equity instruments issued, plus the amount of any non-controlling in the
acquiree. Contingent consideration is included in cost at its acquisition date
fair value.
Goodwill is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be
impaired and is carried at cost less accumulated impairment losses.
2.11 Intangible assets
Intangible assets acquired separately from a business are recognised at cost
and are subsequently
measured at cost less accumulated amortisation and accumulated impairment
losses.
Identified intangible assets arising on acquisition in business combinations
comprise; brand intellectual property and customer relationships.
Amortisation is recognised so as to write off the cost or valuation of assets
less their residual values over
their useful lives on the following bases:
- Development costs 10
years
- Brand intellectual property 10 years
- Customer relationships 10 years
- Contracts
10 years
2.12 Property, plant and equipment
Depreciation is provided at the following annual rates in order to write off
each asset over its estimated useful life or, if held under a finance lease,
over the lease term, whichever is the shorter.
- Lease hold additions over
remaining lease term
- Plant and machinery 25%
and 10% on cost
- Fixture and fittings
20% and 15% on cost
- Computer equipment 33% and
25% on cost
2.13 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured at amortised cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that
is, the date on which the Group commits to purchase or sell the asset).
Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at its fair
value.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in
profit or loss and presented in other gains/(losses). Impairment losses are
presented as a separate line item in the statement of comprehensive income.
d) Impairment
For trade receivables, the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. The Group's most significant clients are
public or regulated industry entities which generally have high credit ratings
or are of a high credit quality due to the nature of the client.
Expected credit losses are assessed on an individual customer basis, based on
the historical payment profiles of the customers, the current and historic
relationship with the customer, and the industry in which the customer
operates. There have been no impairments of trade receivables in the periods.
2.14 Compound instruments and borrowings
The component parts of compound instruments are classified separately as
financial liabilities and equity in accordance with the substance of the
contractual agreement. At the date of issue, the fair value of the liability
component is estimated using the prevailing market interest rate for similar
debt instruments. This amount is recorded as a liability on an amortised cost
basis until extinguished upon conversion or at the instrument's maturity date.
The equity component is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is
recognised and included in equity and is not subsequently remeasured.
For convertible debt where the parent has the option to convert the loan
principal into shares at its discretion, the principal is included within
equity. The only element that the company has an obligation to settle in cash
is the interest element, which is included in liabilities.
2.15 Inventories
Inventories are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.
Inventories are stated at the lower of cost and estimated selling price less
costs to complete and sell. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in
bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of
the carrying amount of stocks over its estimated selling price less costs to
complete and sell is recognised as an impairment loss in profit or loss.
Reversals of impairment losses are also recognised in profit or loss.
2.16 Research and development
Research expenditure is written off against profits in the year in which it is
incurred. Identifiable development expenditure is capitalised to the extent
that the technical, commercial and financial feasibility can be demonstrated.
2.17 Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at
the rates of exchange ruling at the statement of financial position date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of transaction. Exchange differences are taken
into account in arriving at the operating result.
2.18 Employee benefit costs
The group operates a defined contribution pension scheme. Contributions
payable to the group's pension scheme are charged to the income statement in
the period to which they relate
2.19 Taxation
The income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the statement of financial position date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are only recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised and there is reasonable certainty over the timing
of the taxable profits. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
2.20 Leases
Leases are recognised as a right-of-use asset and a corresponding lease
liability at the date at which the leased asset is available for use by the
Group.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- Fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
- Variable lease payments that are based on an index or a rate,
initially measured using the index or rate as at the commencement date;
- Amounts expected to be payable by the Group under residual value
guarantees;
- The exercise price of a purchase option if the Group is reasonably
certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease term
reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Company, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
In all instances the leases were discounted using the incremental borrowing
rate.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period. Right-of-use assets
are measured at cost which comprises the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date less any
lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight line basis. If the Company is reasonably
certain to exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss.
2.21 Government grants
Grants from the government are recognised at their fair value where there is
reasonable assurance that the grant will be received and the group will comply
with all attached conditions. Government grants which are revenue in nature
are recognised on a systematic basis within Other operating income in the
Statement Profit and Loss and Other Comprehensive income over the period in
which the group recognises as expenses the related costs for which the grants
are intended to compensate.
2.22 Investments (company accounting policy)
Investments in subsidiaries are measured at cost less impairment. If there is
objective evidence of impairment, an impairment loss is recognised in profit
or loss. A reversal of an impairment loss is recognised immediately in profit
or loss to the extent that it eliminates the impairment loss which has been
recognised for the asset in prior years.
2.23 Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, the Directors are
required to make judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical judgments and sources of estimation uncertainty that have the most
significant effect on the amounts recognised in the financial statements are
as follows:
Identified intangible assets
Identified intangible assets arising on acquisition comprise; brand
intellectual property, customer relationships and customer contracts.
Their value is estimated based on revenue and EBIT forecasts over 10 years.
Judgements are required regarding the discount rate and Weighted Average Cost
of Capital (WACC). Rates have been bench marked against similar companies in
the industry.
Carrying value of goodwill
Impairment reviews for non-current assets are carried out at each balance
sheet date in accordance with IAS 36 Impairment of assets. An annual
impairment review is undertaken for Goodwill for each operating subsidiary,
which are considered to be a separately identifiable cash generating units.
The impairment reviews are sensitive to various assumptions, including the
expected sales forecasts, cost assumptions, capital requirements, and discount
rate.
Right of use assets
Judgement is required regarding the incremental borrowing rate to apply to
leasehold assets to discount the cash flows to present value.
Contingent consideration
Contingent consideration, resulting from business combinations, is valued at
fair value at the acquisition date as part of the business combination. The
determination of fair value is based on key assumptions including estimation
of the level of sales compared to the performance target. Judgement is also
applied in relation to the discount rate used for deferred consideration.
Share based payments
Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which is dependent on
the terms and conditions of the grant of share options and warrants. This
estimate also requires determination of the most appropriate inputs to the
valuation model including the expected life, volatility and dividend yield and
making assumptions about them. The assumptions used for estimating fair value
for share-based payment transactions are disclosed in Note 29.
Impairment of investments and recoverability of loans to subsidiary
undertakings
Investments in subsidiary undertakings and the recoverability of receivables
from group undertakings. The impairment reviews are sensitive to various
assumptions, including the expected sales forecasts, cost assumption and
discount rate.
3. SEGMENT REPORTING
For the purpose of IFRS 8, the Chief Operating Decision Maker takes the form
of the board of directors. The Directors are of the opinion that the business
of the Group focused on four reportable segments as follows:
Included in Administration is the Parent company, which includes activities of
raising finance and seeking new investment opportunities, all based in the UK,
whilst S-Ventures Acquisitions Limited is a holding company which was
incorporated during the period and holds borrowings used to finance the
acquisition of Juvela Limited. and also included in Administration.
The other three segments relate to the subsidiary undertakings activities,
which include:
- Plant based nutrition (undertaken by Pulsin Limited, Ohso Chocolate
Limited * and We Love Purely Limited)
- Bakery (undertaken by Juvela Limited and Lizza Gmbh *, subsidiaries
acquired in the current period and prior year respectively)
- Technical services (undertaken by Market Rocket Limited, a subsidiary
acquired in the prior year)
* entities now regarded as discontinued operations - refer to note 30
The segmental information for the period ended 31 December 2023 is shown as
below:
Plant Based Nutrition Bakery Tech. Services Admin Segment Totals Consol. Adj. Disc Ops * Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 7,968 8,722 3,739 30 20,459 - 801 19,658
Gross profit 1,492 6,205 1,575 30 9,302 - (56) 9,358
EBITDA (1,789) 2,529 68 (1,481) (673) (2,019) (2,100) (592)
Operating profit / (loss) after tax (3,027) 1,729 62 (3,275) (4,511) (2,124) (2,191) (4,444)
Segment total assets (net of investments in subsidiaries) 3,757 8,767 774 567 13,865 5,787 60 19,592
Segment liabilities 3,270 1,031 701 10,587 15,589 - 194 15,395
* excluding the discontinued operations
The segmental information for the year ended 30 September 2022 is shown as
below:
Plant Based Nutrition Bakery Tech. Services Admin Segment Totals Consol. Adj. Disc Ops * Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 7,254 104 439 4 7,801 - 173 7,628
Gross profit 2,061 (83) 414 4 2,396 138 (54) 2,588
EBITDA (1,307) (184) 66 (1,305) (2,730) 1,058 (377) (1,295)
Operating profit / (loss) after tax (2,106) (210) 62 (1,350) (3,604) 148 (1,074) (2,382)
Segment total assets (net of investments in subsidiaries) 6,227 2,709 256 2,208 11,400 4,991 (181) 16,391
Segment liabilities 4,763 2,783 111 1,273 8,930 (2,035) (2,087) 6,896
4. REVENUE
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Sale of product 19,658 7,628
19,658 7,628
Within the sales revenue for both the current and previous period, there was
one customer that accounted for greater than 10% of total revenue. This ceased
to be the case shortly after the balance sheet date.
5. OTHER OPERATING INCOME
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Miscellaneous income 90 45
90 45
6. EMPLOYEES AND DIRECTORS
Staff costs, including directors' remuneration is set out below:
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Wages and salaries 3,680 2,639
Social security costs 303 234
Other pension costs 137 35
4,120 2,908
The average monthly number of employees, including the Directors, during the
year was as follows:
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Average number of employees 108 76
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Directors' remuneration (Please refer to the Remuneration Committee Report for 389 252
more details)
7. EXCEPTIONAL ITEMS
During the prior period the Company entered into a settlement deed which
included a combination of cash and share settlement that was less than the
value of the loan convertible notes resulting in a gain on settlement of the
convertible loans of £645,000 shown in the consolidated statement of profit
and loss statement.
8. NET FINANCE COSTS
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Finance income:
Deposit account interest 6 15
Interest on directors loan account - 1
6 16
Finance costs:
Bank loan interest 808 1
Other loan interest 38 (20)
IFRS 16 lease charges 153 108
Other financing costs 250 -
1,249 89
Net finance costs 1,243 73
9. LOSS BEFORE INCOME TAX
The loss before income tax of £4,045,000 (2022: £3,257,000) is stated after
charging / (crediting):
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Cost of inventories recognised as expense 10,653 5,218
Depreciation of tangible fixed assets 613 320
Depreciation of right of use assets 293 275
Amortisation of intangible assets 905 315
Foreign exchange differences (1) 29
10. AUDITORS' REMUNERATION
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Fees payable to the Group's auditor in relation to the audit of the 45 132
consolidated financial statements
Fees payable to the Group's auditors for other advisory services - -
45 132
11. TAXATION
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Current year tax credit / (charge)
Corporation income tax - -
Deferred tax movement 399 199
399 199
The charge for the year can be reconciled to the profit /(loss) before tax as
follows:
Loss before tax (4,045) (3,257)
Loss before tax calculated at the UK standard rate of tax of 19% 1 Jan 23 to (951) (619)
31 Mar 23 / 25% 1 Apr 23 - 31 Dec 23 (2022: 19%)
Tax effects of:
Expenses not deductible for tax 37 100
Research and development enhanced deductions 165 (60)
Gain on settlement of convertible loan notes - (645)
Consolidation adjustments not deductible for tax:
Goodwill impairment 30 569
Amortisation of intangible assets recognised on business combination 200 312
Depreciation of fixed assets revaluation on business combination - 74
Revaluation of inventory on business combination - (85)
Deferred tax asset not provided for 918 353
- -
Deferred tax assets written back from prior year (note 31) 399 199
Total tax charge / (credit) for the year 399 199
The corporation tax rate changed from 19% to 25% from 1 April 2023.
12. LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the income statement of
the parent company is not presented as part of these financial statements. The
parent company's loss for the financial period was £8,964,000 (2022 - loss
of £1,350,000).
13. EARNINGS PER SHARE
Basic Loss Per Share (LPS) is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
The weighted average diluted number of shares is stated below, but the diluted
LPS is not included as the loss would make it anti-dilutive.
15 mths ended Earnings Weighted average number of shares Per-share amount pence
£'000
31 December 2023
Basic earnings per share
Loss attributable to ordinary shareholders (6,597) 130,936,824 (5.04)
Warrants for shares 737,800
Weighted average diluted number of shares 131,674,624
Year ended Earnings Weighted average number of shares Per-share amount pence
£'000
30 September 2022
Basic earnings per share
Loss attributable to ordinary shareholders (3,456) 118,179,305 (2.92)
Warrants for shares 12,410,271
Weighted average diluted number of shares 130,589,576
14. SUBSIDIARIES
The Company holds shares in the following subsidiaries at the balance sheet
date:
Subsidiary % Holding 31 Dec 23 % Holding 30 Sep 22 Date of acquisition Nature of business
We Love Purely Limited * 85.1% 85.1% 22 Jan 2021 Plantain flavoured crisps
Ohso Chocolate Limited * 100% 100% 16 Feb 2021 Probiotic chocolate
Pulsin Limited 100% 100% 23 Jul 2021 Plant based foods
Pulsin BV 100% 100% 23 Jul 2021 Holding company (holds 100% of Lizza Gmbh)
Market Rocket Limited 100% 100% 8 Apr 2022 Marketing
ML Manufacturing Limited 100% 100% 20 Oct 2020 Manufacturing
Lizza Gmbh 100% 100% 29 Aug 2022 Bakery
S-Ventures Acquisitions Limited 100% - 14 Dec 2022 Bakery
All subsidiaries are incorporated in England & Wales, except for Pulsin BV
(incorporated in The Netherlands) and Lizza Gmbh (incorporated in Germany).
During the current period, the winding up process of Lizza GmbH by the German
liquidators continued. However, all Lizza's assets have been fully impaired in
these accounts.
Juvela Limited is the wholly-owned subsidiary of S-Ventures Acquisitions
Limited
* Step Acquisitions
During the prior period the parent company acquired an additional 24.9%
shareholding in Ohso Chocolate Limited and a further 10% in We Love Purely
Limited increasing the shareholding to 100% (Ohso) and 85.1% (We Love Purely).
15. PURCHASE PRICE ALLOCATION
Juvela Limited
On 14 December 2022, 100% of the share capital of Juvela Limited (formerly
Hero UK Limited) ("Juvela") was acquired for a mixture of cash, shares and
deferred consideration.
Juvela is a business manufacturing gluten-free and free-from products from its
factory in Pontypool, Wales. They have been manufacturing gluten free food for
people diagnosed with coeliac disease for over 25 years and are the leading
brand serving the UK coeliac community under the brand name Juvela.
The acquisition was made through a newly formed wholly owned subsidiary -
S-Ventures Acquisitions Limited. The consideration of £8.8 million was
satisfied as follows:
- cash consideration of £6.4 million, payable on completion. This was
funded by loans from Shawbrook Bank of £5.5m and the balance from the parent
company's own resources. One loan for £3.5m is fully amortising over the 4
year term and the second loan of £2m is repayable at the end of the 4 year
term. The coupon on these loans is SONIA + 5.95% and 7% respectively.; and
- the issue of 5 million Ordinary Shares, which had a fair value of
£0.85 million based on the closing share price on the day prior to
completion;
- deferred consideration payable in cash on 1 September 2023 of £1.585
m; and
- stamp duty payables of £0.044 m.
Following on from the acquisition, a purchase price allocation exercise was
performed with the allocation of the purchase price of acquisition of the
subsidiary undertaking during the period was as follows:
Juvela Limited £'000
Total consideration
Cash 6,367
Shares issued at market value 850
Deferred consideration - cash (including interest at 8%) 1,586
Other 44
Total consideration 8,847
Recognised amounts of assets and liabilities acquired
Cash and cash equivalents 485
Trade and other receivables 1,463
Inventories 355
Intangible assets recognised on business combination 5,517
Property, plant and equipment 858
Investments 255
Trade and other payables (886)
Borrowings (343)
Total identifiable net assets 7,704
Minority %age interest 0%
Net assets attributable to parent company 7,704
Goodwill 1,143
Total consideration 8,847
During the year a Purchase Price Allocation (PPA) measurement review was
undertaken to ascertain the fair value of the consideration and net assets of
the subsidiary undertaking acquired.
Juvela Limited
This included determining identifiable net assets not previously recognised.
Brand IP of £1,919,000 was calculated based on forecast revenue and estimated
royalty rates. Customer relationships of £2,498,000 were valued based on
revenue and EBIT forecasts and estimated customer attrition rates. Contract
based intangible assets of £1,100,000 were valued using the income approach
based on forecast attributable revenue and estimated royalty rates. All were
discounted at the weighted average cost of capital.
Deferred cash consideration of £1,500,000 to be settled by 30 September 2023
attracted an interest rate of 8%.
Shares issued in the parent company as part of the consideration are based on
the average market value per the AQSE stock exchange on the date of
acquisition.
The allocation of the purchase price of the subsidiary undertakings acquired
during the prior year was as follows:
Market Rocket Limited Lizza Gmbh £'000
£'000
Total consideration
Cash 100 -
Shares issued at market value 673 -
Deferred consideration - cash 350 -
Contingent consideration - shares 112 -
Total consideration 1,235 -
Recognised amounts of assets and liabilities acquired
Cash and cash equivalents 84 7
Trade and other receivables 46 146
Inventories - 356
Intangible assets recognised on business combination 430 -
Property, plant and equipment 21 -
Tax liabilities /asset (15) -
Trade and other payables (72) (114)
Borrowings - (650)
Total identifiable net assets 494 (255)
Minority %age interest 0% 0%
Net assets attributable to parent company 494 (255)
Goodwill 741 255
Total consideration 1,235 -
During the prior year a Purchase Price Allocation (PPA) measurement review was
undertaken to ascertain the fair value of the consideration and net assets of
the subsidiary undertakings acquired.
Market Rocket Limited
This included determining identifiable net assets not previously recognised.
Brand IP of £23,000 was calculated based on forecast revenue and estimated
royalty rates. Customer relationships of £407,000 were valued based on
revenue and EBIT forecasts and estimated customer attrition rates. Both were
discounted at the weighted average cost of capital.
Deferred and contingent consideration are discounted at the estimated cost of
debt of 9.6%. Contingent consideration is based on future performance
criteria, which was expected to be met at the date of acquisition.
Shares issued in the parent company as part of the consideration are based on
the average market value per the AQSE stock exchange on the date of
acquisition.
Lizza Gmbh
As referred to in note 30, Lizza Gmbh has been put into formal German
insolvency proceedings in April 2023, which was just 7 months after the date
of acquisition. The assets were therefore reviewed for impairment in
determining the fair values at acquisition. The fixed assets with a carrying
value of £683,000 at acquisition were impaired in full to reflect that they
have no value in use due to recurring losses. A review of stock sales after
date resulted in a stock impairment of £52,000. The goodwill of £255,000 has
been impaired in full.
During the prior year the purchase price allocation measurement review was
undertaken for subsidiaries acquired in the previous year. The following
purchase price allocation adjustments were made in the prior year as a result
of the review:
Pulsin Limited Ohso Chocolate Limited £'000 We Love Purely Limited £'000
£'000
Revaluation of tangible assets
Plant and machinery 741 - -
Identifiable intangible assets
Brand intellectual property 247 80 82
Customer relationships 2,116 105 61
Less:
Development cost intangibles derecognised (52) - -
Inventory (62) (23) -
Increase in identifiable net assets 2,990 162 143
Minority %age interest 0 24.90 24.90
Minority interest in net assets increase - (40) (36)
Increase in net assets attributable to parent 2,990 122 107
Reduction on deferred purchase consideration 34 - -
Reduction in Goodwill (3,024) (122) (107)
The total reduction in Goodwill as a result of the purchase price allocation
adjustments was £3,253,000.
A significant adjustment was the revaluation of Plant and Machinery in Pulsin
to fair value, taking into account the estimated market value at the date of
acquisition, resulting in an uplift from book value of £741,000.
Identifiable net assets not previously recognised were valued and recognised.
This included Brand IP, which was calculated based on forecast revenue and
estimated royalty rates. Customer relationships were valued based on revenue
and EBIT forecasts and estimated customer attrition rates. Both were
discounted at the weighted average cost of capital.
Stock was revalued to take account of selling costs. As the stock has been
sold in the prior year, the reduction in stock value was credited to the
profit and loss account.
16. GOODWILL
Group £'000
COST OR VALUATION
At 1 October 2021 6,658
Additions 1,062
Purchase price allocation adjustment (note 15) (3,253)
Impairments (569)
At 30 September 2022 3,898
Additions -
Purchase price allocation (note 15) 1,143
Impairments (1,578)
At 31 December 2023 3,463
NET BOOK VALUE
At 30 September 2022 3,898
At 31 December 2023 3,463
See note 15 in respect of the reduction in goodwill following the purchase
price allocation (PPA) review in the prior year. An impairment review was
undertaken in the current year, resulting in the write off of goodwill in full
for Lizza Gmbh and Ohso Chocolate Limited.
17. INTANGIBLE ASSETS
Group Brand intellectual property Development costs Customer Relationships £'000 Contracts £'000 Total
£'000 £'000 £'000
Cost
At 1 October 2021 5 53 - - 58
Additions 180 - - - 180
Disposals - (53) - - (53)
Recognition on subsidiary acquisitions (Purchase price allocation - note 15) 434 - 2,685 - 3,119
At 30 September 2022 619 - 2,685 - 3,304
Additions 201 - - - 201
Disposals - - - - -
Recognition on subsidiary acquisitions (Purchase price allocation - note 15) 2,980 - 3,879 1,708 8,567
At 31 December 2023 3,800 - 6,564 1,708 12,072
Amortisation
At 1 October 2021 - 3 - - 3
Amortisation for period 45 - 270 - 315
Eliminated on disposal - (3) - - (3)
At 30 September 2022 45 - 270 - 315
Amortisation 511 - 401 176 1,088
Disposals - - - - -
Recognition on subsidiary acquisitions (Purchase price allocation - note 15) 1,061 - 1,381 608 3,050
At 31 December 2023 1,617 - 2,052 784 4,453
Net book value
At 30 September 2022 394 - 2,415 - 2,989
At 31 December 2023 2,183 - 4,512 924 7,619
18. PROPERTY, PLANT AND EQUIPMENT
Group Leasehold improve-ments Plant & machinery £'000 Fixture and fittings £'000 Computer equipment £'000 Total
£'000 £'000
Cost
At 1 October 2021 76 1,025 18 166 1,285
Additions 28 255 10 76 369
Additions on acquisition of subsidiary undertaking - - 20 - 20
Disposals - (2) (4) - (6)
Acquisition revaluation to fair value (note 15) - 741 - - 741
At 30 September 2022 104 2,019 44 242 2,409
Additions 7 181 7 51 246
Disposals - (302) (9) (23) (334)
Transferred to discontinued operations - (61) (4) (9) (74)
Additions on acquisition of subsidiary undertaking (note 15) - 1,483 - 285 1,768
At 31 December 2023 111 3,320 38 546 4,015
Depreciation
At 1 October 2021 7 52 1 6 66
Charge for the year 33 202 8 77 320
Elimination on disposal - (2) (1) - (3)
At 30 September 2022 40 252 8 83 383
Charge for the period 46 567 17 103 733
Elimination on disposal - (157) (8) (13) (178)
Transferred to discontinued operations - (24) (4) (9) (37)
Additions on acquisition of subsidiary undertaking (note 15) - 641 - 269 910
At 31 December 2023 86 1,279 13 433 1,811
Net book value
At 30 September 2022 64 1,767 36 159 2,026
At 31 December 2023 25 2,041 25 113 2,204
Company Computer equipment £'000 Total
£'000
Cost
At 1 October 2021 5 5
Additions 22 22
At 30 September 2022 27 27
Additions - -
At 31 December 2023 27 27
Depreciation
At 1 October 2021 1 1
Charge for the year 4 4
At 30 September 2022 5 5
Charge for the period 5 5
At 31 December 2023 10 10
Net book value
At 30 September 2022 22 22
At 31 December 2023 17 17
19. INVESTMENTS
Group Associate £'000 Unlisted Investments £'000 Total
£'000
Cost
At 1 October 2021 - 30 30
Additions - - -
At 30 September 2022 - 30 30
Additions - - -
At 31 December 2023 - 30 30
Net book value
At 30 September 2022 - 30 30
At 31 December 2023 - 30 30
Company Shares in group undertakings £'000 Unlisted Investments £'000 Total
£'000
Cost
At 1 October 2021 7,394 30 7,424
Additions 1,284 - 1,284
Impairments (305) - (305)
At 30 September 2022 8,373 30 8,403
Additions 1,500 - 1,500
Impairments (6,447) - (6,417)
At 31 December 2023 3,426 30 3,456
Net book value
At 30 September 2022 8,373 30 8,403
At 31 December 2023 3,426 30 3,456
During the current year the Company incorporated S-Ventures Acquisitions
Limited for the purpose of acquiring 100% of the following subsidiary
undertaking:
Subsidiary Cost Acquisition date Principal activity Country of incorporation
£'000
Juvela Limited (formerly Hero UK Limited 8,847 14 December 2022 Bakery England
Additionally the Company invested a further £1,500,000 into Pulsin Limited
during the current year.
During the prior year the company acquired 100% of the following subsidiary
undertakings:
Subsidiary Cost Acquisition date Principal activity Country of incorporation
£'000
Market Rocket Limited 1,283 8 April 2022 Marketing England
Lizza GMBH - 29 August 2022 Bakery Germany
An impairment review was undertaken during the prior year and the investment
cost of £305,000 in Ohso Chocolate Limited has been impaired to £nil.
20. INVENTORY
31 Dec 2023 30 Sep 2022 £'000
£'000
Raw materials 680 471
Stocks 978 844
Packaging 198 332
1,856 1,647
21. TRADE AND OTHER RECEIVABLES
Group Company
31 Dec 2023 30 Sep 2022 £'000 31 Dec 2023 30 Sep 2022 £'000
£'000
£'000
Trade receivables 2,445 1,589 53 61
Amounts owed by group undertakings - - 5,621 2,632
Amounts owed by associates - 178 - 178
Other receivables 11 77 - 14
Directors' current accounts 98 - - -
VAT 33 62 - 17
Prepayments and accrued income 295 693 9 162
2,882 2,599 5,683 3,064
Amounts owed to group undertakings are net of expected credit losses of
£541,000 (2022: £680,000). Other receivables are net of expected credit
losses of £20,000, (2022: £20,000). Trade receivables do not include any
material past due debts and based on historic recoverability no impairment is
required in respect of expected credit losses.
22. CASH AND CASH EQUIVALENTS
Group Company
31 Dec 2023 30 Sep 2022 £'000 31 Dec 2023 30 Sep 2022 £'000
£'000
£'000
Bank accounts 305 1,782 22 1,723
305 1,782 22 1,723
23. CALLED UP SHARE CAPITAL
31 Dec 2023 30 Sep 2022
Ordinary Shares
Issued and fully allotted with a nominal value of 0.01p (2022: 0.01p)
Number of shares 132,215,587 125,571,687
Nominal value (£'000) 132 126
Share premium (£'000) 14,708 13,509
No. Nominal Value £'000 Share Premium £'000
Balance at 1 October 2021 111,377,947 111 6,490
Shares issued for cash 7,142,856 7 4,993
Shares issued in connection of acquisitions 5,107,142 5 1,905
Shares issued on the exercise of warrants 1,250,000 1 24
Shares issued for services 156,250 1 50
Shares issued on the exercise of options 537,492 1 47
Total issued during the year 14,193,740 15 7,019
Balance at 30 September 2022 125,571,687 126 13,509
Shares issued in connection of acquisitions 5,000,000 5 845
Shares issued on the exercise of warrants 1,643,900 1 354
Total issued during the year 6,643,900 6 1,199
Balance at 31 December 2023 132,215,587 132 14,708
Issue Date Price per share £ Number Consider-ation £'000 NominalValue £'000 Share Premium £'000
14 Dec 22 Juvela Limited acquisition 0.170 5,000,000 850 5 845
30 Jan 23 Warrants exercised 0.250 1,400,000 350 1 349
9 Feb 23 Warrants exercised 0.020 237,800 4 - 4
9 Feb 23 Warrants exercised 0.040 6,100 1 - 1
Issued in period ended 31 Dec 2023 6,643,900 1,205 6 1,199
Issue Date Price per share £ Number Consider-ation £'000 NominalValue £'000 Share Premium £'000
Oct-Dec 21 Warrants exercised 0.020 1,000,000 20 1 19
1 Nov 21 Consultancy services 0.320 156,250 50 - 50
1 Dec 21 Cash share issue 0.700 4,285,714 3,000 4 2,996
11 Feb 22 Warrants exercised 0.020 250,000 5 - 5
17 Feb 22 For trade and asset purchase 0.700 321,429 225 1 224
1 Mar 22 Share options exercised 0.090 268,746 24 - 24
11 Apr 22 Market Rocket Ltd acquisition 0.314 2,142,857 673 2 671
13 Jun 22 Convertible loan note settlement 0.383 2,642,856 1,012 3 1,009
13 Aug 22 Cash share issue 0.700 2,857,142 2,000 3 1,997
30 Sep 22 Share options exercised 0.090 268,746 24 - 24
Issued in year ended 30 Sep 2022 14,193,740 7,033 14 7,019
Warrants
The warrants in existence for the issue of new Ordinary Shares of £0.001 each
can be summarised as:
Issued for investment services Issued for investment services Issued with shares as part of fund raise Latest date for exercise Exercise price
Exercise Price £0.02 each Exercise Price £0.04 each
Number Number Number £
B/f as at 1 Oct 2021 1,487,800 743,900 - 1 Sep 2025
B/f as at 1 Oct 2022 - - 10,000,000 30 Apr 2023 0.25
Allotted in Dec 2021 raise 1,428,571 20 Dec 2023 2.00
Exercised in the period (1,250,000) - -
Balance at 30 Sept 2022 237,800 743,900 11,428,571
Exercised in the period (237,800) (6,100)
Exercised in the period - - (1,400,000) 0.25
Lapsed during the period - - (8,600,000) 0.25
Lapsed during the period - - (1,428,571) 2.00
Balance at 31 Dec 2023 - 737,800 -
The warrants exercised during the period realised a total of £355,000 (2022:
£25,000) cash to the Company.
24. RESERVES
The movement in reserves is set out in the Statement of changes in equity. The
group has the following reserves in addition to the retained deficit reserve:
Share based payment reserve
The share-based payment reserve arose from the share-based payment charge for
share options issued to group employees. The shares over which the options
were issued are that of the parent company. It also includes share warrants
issued to a supplier of the parent for services provided. Details of
share-based transactions are included in note 32.
Contingent equity settled consideration reserve
The contingent consideration reserve is the estimated fair value of the
consideration payable to a subsidiary, subject to performance targets, to be
settled by the issue of shares in the parent company. During the year two
subsidiaries were acquired with contingent equity settled consideration
totalling £112,131. The contingent equity settled consideration recognised in
the prior year of £34,484 was not payable as part of a settlement deed with
the sellers.
Equity component of convertible debt reserve
This represents the equity component of convertible loans. The parent had the
option to convert the loan principal into shares at its discretion. Originally
the loan notes were negotiated without a conversion option at the same coupon
rates, so the interest rates would be the same without the conversion option.
Therefore, no discounting was required and the full principal has been
classified as equity. The loan note interest was included in accruals. During
the year the company agreed a settlement deed for the company's loans, which
involved settlement by shares and cash as set out in the statement of changes
in equity. There was a gain in settlement of £645,064.
25. TRADE AND OTHER PAYABLES
Group Company
31 Dec 2023 30 Sep 2022 £'000 31 Dec 2023 30 Sep 2022 £'000
£'000
£'000
Deferred consideration for acquisition 1,091 366 1,091 366
Trade payables 2,240 1,913 680 437
Amounts owing to group undertakings - - 387 -
Social security and other taxes 853 233 1 48
Other payables 325 61 99 26
Accruals and deferred income 756 517 265 224
Directors' loan 63 172 13 172
5,328 3,262 2,536 1,273
26. BORROWINGS
Group
31 Dec 2023 30 Sep 2022 £'000
£'000
Current:
Bank overdrafts - 276
Bank loans 1,180 277
Other loans 402 445
1,582 998
Non-current:
Bank loans 5,910 192
Other loans 459 -
6,369 192
7,951 1,190
Debt repayment schedule
Issue Date 1 year or less £'000 1-2 years £'000 2-5 years £'000 More than 5 years £'000 Total £'000
Bank overdrafts - - - - -
Bank loans 1,180 1,314 4,596 - 7,090
Other loans 402 459 - - 861
1,582 1,773 4,596 7,951
Issue Date Carrying value at 31 Dec 23 £'000 Maturity dates Interest rates
Government backed bounce back loans 8 Aug 2026 to Apr 2027 2.5%
Shawbrook bank loans 5,500 Dec 2026 5.95-7.0%
Other bank loans 1,582 Dec 24-29 varying
7,090
All loans are repayable by instalments over the loan term.
27. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and the Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, foreign exchange
reserves and retained earnings as disclosed in the Consolidated Statement of
Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange, and
liquidity risks. The management of these risks is vested to the Board of
Directors.
Credit Risk
Credit risk arises on financial instruments such as trade receivables,
short-term bank deposits.
Policies and procedures exist to ensure that customers have an appropriate
credit history.
Counterparty exposure positions are monitored regularly so that credit
exposures to any one counterparty are within acceptable limits.
At the balance sheet date there were no significant concentrations of credit
risk.
Trade and other receivables and contract assets included in the balance sheet
are stated net of expected credit loss (ECL) provisions which have been
estimated on a customer-by-customer basis, based on the relationship with the
customer and its historical payment profile. There are no provisions held
against trade receivables at the balance sheet date.
The Group's maximum exposure to credit by class of individual financial
instrument is shown in the table below:
2023 2023 2022 2023
Carrying Value Maximum Exposure Carrying Value Maximum Exposure
£'000 £'000 £'000 £'000
Cash and cash equivalents 305 305 1,782 1,782
Trade receivables 2,716 2,716 1,589 1,589
3,021 3,021 3,371 3,371
Interest rate risk
Loans are at a fixed rate of interest so the company is not exposed to an
increase in interest rates.
Currency risk
A subsidiary has costs arising in US dollars. The group does not hedge its
foreign exposure currently but this kept under review and as the sales of the
subsidiary grow it will look into locking exchange rates. At 31 December 2023
and 30 September 2022 the Group did not have a material foreign currency
exposure.
Liquidity risk
Working capital is carefully managed to minimise liquidity risk. Management
continually monitor the Group's actual and forecast cash flows and cash
positions. Where issues arise, we work with the Supplier to ensure continued
supply in some cases rescheduling the payment terms. The CEO has provided a
line of credit of £0.5m to support the business as required at an interest
rate of 15% with no fixed repayment term.
28. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Group Financial assets at amortised cost Financial liabilities at amortised cost Total
2023
Financial assets / liabilities £'000 £'000 £'000
Trade and other receivables (1) 2,858 - 2,858
Cash and cash equivalents 305 - 305
Trade and other payables (2) - (4,572) (4,572
Lease liabilities (current and non-current) - (1,676) (1,676)
3,163 (6,248) (3,085)
( )
(1) Trade and other receivables excludes prepayments.
(2) Trade and other payables excludes accruals.
Group Financial assets at amortised cost Financial liabilities at amortised cost Total
2022
Financial assets / liabilities £'000 £'000 £'000
Trade and other receivables (1) 1,906 - 1,906
Cash and cash equivalents 1,782 - 1,782
Trade and other payables (2) - (2,745) (2,745)
Lease liabilities (current and non-current) - (2,121) (2,121)
3,688 (4,866) (1,178)
(1) Trade and other receivables excludes prepayments.
(2) Trade and other payables excludes accruals.
Company Financial assets at amortised cost Financial liabilities at amortised cost Total
2023
Financial assets / liabilities £'000 £'000 £'000
Trade and other receivables (1) 5,720 - 5,720
Cash and cash equivalents 22 - 22
Trade and other payables (2) - (2,271) (2,271)
5,742 (2,271) 3,471
(1) Trade and other receivables excludes prepayments.
(2) Trade and other payables excludes accruals.
Company Financial assets at amortised cost Financial liabilities at amortised cost Total
2022
Financial assets / liabilities £'000 £'000 £'000
Trade and other receivables (1) 2,902 - 2,902
Cash and cash equivalents 1,723 - 1,723
Trade and other payables (2) - (1,049) (1,049)
4,625 (1,049) 3,576
(1) Trade and other receivables excludes prepayments.
(2) Trade and other payables excludes accruals.
29. LEASES
The Group had the following lease assets and liabilities:
31 Dec 2023 30 Sep 2022 £'000
£'000
Right-of-use assets
Property plant and equipment 1,233 1,419
1,233 1,419
Lease liabilities
Current 1,340 434
Non-current 336 1,686
1,676 2,120
31 Dec 2023 30 Sep 2022 £'000
£'000
Maturity on the lease liabilities are as follows:
Current 1,340 434
Due between 1-5 years 336 1,122
Due beyond 5 years - 564
1,676 2,120
Right of use assets
A reconciliation of the carrying amount of the right-of-use asset is as
follows:
31 Dec 2023 30 Sep 2022 £'000
£'000
Opening balance 1,419 1,694
Additions 255 -
Depreciation (441) (275)
1,233 1,419
Lease liabilities
A reconciliation of the carrying amount of the lease liabilities is as
follows:
31 Dec 2023 30 Sep 2022 £'000
£'000
Opening balance 2,121 2,430
Additions 255 -
Payment made (853) (417)
Finance charge 153 108
1,676 2,121
30. DISCONTINUED OPERATIONS
During the year, the Board reviewed the commercial viability of a number of
the Group's operating subsidiaries and determined that a number of its
subsidiary operations forecast negative cashflows as a result of falling sales
and rising costs. As a result, the following subsidiaries have been classified
as discontinued operations:
- Lizza GmBH;
- Osho Chocolates Limited; and
- ML Manufacturing Limited.
In accordance with IFRS 5, the results of these discontinued operations are
presented as follows:
15 mths ended 31 December 2023 Year ended 30 September 2022
£'000
£'000
Continuing operations
Revenue 801 315
Cost of sales (857) (364)
Gross profit / (loss) (56) (49)
Gain / (loss) on disposal / administration (942) -
Operating expenses (1,102) (327)
Earnings before interest, taxation, depreciation and amortisation (2,100) (376)
Depreciation, amortisation and impairment (86) (645)
Finance costs - net (5) (6)
Loss before taxation (2,191) (1,027)
Income tax - (47)
Loss for the period (2,191) (1,074)
Assets and Liabilities of Discontinued Operations As at 31 December 2023 As at 30 September 2022
£
£
NON-CURRENT ASSETS
Intangible assets - 144
Property, plant and equipment - 37
- 181
CURRENT ASSETS
Trade and other receivables 53 229
Inventory 3 395
Cash and cash equivalents 4 17
60 641
TOTAL ASSETS 60 822
NON-CURRENT LIABILITIES
Borrowings - 33
- 33
CURRENT LIABILITIES
Borrowings 77 712
Trade and other payables 117 2,164
194 2,876
TOTAL LIABILITIES 194 2,909
NET ASSETS OF DISCONTINUED OPERATIONS (134) (2,087)
31. DEFERRED TAX
Due to uncertainty regarding the timing of future taxable profits to utilise
the losses carried forward, the deferred tax assets recognised in the prior
year, comprised of losses carried forward less accelerated capital allowances,
have been written off to the profit and loss account in the current year.
The total group deferred tax asset written off is £399,000 (2022: £199,000).
The total parent company deferred tax asset written off is £nil (2022:
£56,000).
32. DIRECTORS' ADVANCES, CREDITS AND GUARANTEES
The following advances and credits to a director subsisted during the period
ended 31 December 2023 and the year ended 30 September 2022:
31 Dec 2023 30 Sep 2022 £'000
£'000
S P Livingston:
Balance owed (from) / to the company at the start of the period (171) 45
Amounts advanced 502 4
Amounts repaid (733) (49)
Loans from the director to the company (459) (171)
Balance owed (from) / to the company at the end of the period (861) (171)
Loans to directors are subject to Interest at the HMRC beneficial loan rate of
2.25% and are repayable on demand. During the prior year, the director repaid
the previous year balance owed to the company in full and provided loans
totalling £171,000 to the company. At the balance sheet date, the company
owed the director £861,000. Loans from the director to the company are
interest free and repayable on demand.
33. RELATED PARTY DISCLOSURES
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
Loans from the directors during the period are disclosed within the Advances,
credits and guarantee note 32.
34. SHARE BASED PAYMENT TRANSACTIONS
Movements in the number of share based payment options and warrants and their
weighted average exercise prices are as follows:
Number of share based payment options Weighted average exercise price of options Number of share based payment warrants * Weighted average exercise price of warrants
Balance bought forward 2,407,928 2,231,700
Lapsed during the period (1,870,436) -
Exercised during the period (537,492) (1,250,000) £0.02
Balance at 30 Sep 2022 - - 981,700 £0.04
Exercised during the period (237,800) £0.02
Exercised during the period (6,100) £0.04
Balance at 31 Dec 2023 737,800 £0.0205
* The number of warrants relates to warrants issued as part of share based
payments. Warrants were also issued as part of a share fund raise. See note 22
for the total number of warrants in issue.
The weighted average remaining contractual life of the options is 10 years.
On 16 June 2021, the Company granted 2,407,928 share options to employees with
an exercise price of 9 pence each under an Enterprise Management Incentive
Scheme the Options were exercisable subject to certain performance conditions
being met.
The performance conditions are based on achievement of sales targets in
specific subsidiary undertakings.
Of the share options issued only 1,628,386 are expected to vest based on
performance conditions. At the date of grant, these options were valued using
the Black-Scholes option pricing model. The fair value per options granted and
the assumptions used in the calculations were as follows:
Expected annual volatility 10%
Time to maturity (years) 10 years
Risk free interest rate 1%
Fair value per option £0.016
During the prior year 537,492 options were exercised and the remaining options
have lapsed due to employees performance conditions not being met during the
current year.
On 1 September 2020 1,487,800 warrants with an exercise price of 2 pence each
and 743,900 with an exercise price of 4 pence each were issued in lieu of
professional fees. The professional fees have been estimated at £25,000,
resulting in a fair value per warrant of £0.011. During the prior year
1,250,000 of shares were exercised at a price of 2 pence per share, leaving
237,800 to exercise at 2 pence per share and 743,900 at 4 pence per share.
During the current period 237,800 2 pence warrants and 6,100 4 pence warrants
were exercised, leaving 737,800 to exercise at 4 pence per share.
During the prior year the company entered into a contract with the sister of
the director S Livingston, to provide consultancy fees of £50,000 (to be
settled by the issue of shares on commencement.
35. CAPITAL COMMITMENTS
There were no capital commitments at 31 December 2023 and 30 September 2022.
36. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 December 2023 and 30 September
2022.
37. EVENTS SUBSEQUENT TO PERIOD END
Proposed Transaction with Riverfort Global Opportunities plc ("RGO")
In addition to the £1 million of facilities raised from a Middle Eastern
family office in November 2023, on 28 March 2024, the company raised a further
£2 million of debt facilities from RGO to bridge the potential purchase of
assets and novation of liabilities by RGO announced to the market on 22 March
2024. The company continues to progress this important potential transaction
with the final phase of preparation now underway with the issuance of these
audited accounts. The transaction that is proposed is intended to raise
enough capital to settle all of the parent company's loans, leaving only the
subsidiary loan at Juvela in place and approximately halving the financial
debt carried by the group. RGO have undertaken significant due diligence and
the company anticipates being able to make a further statement shortly after
the publication of these accounts.
Suspension of Shares
On 1 July 2024, the AQSE share quote was suspended pending submission of these
audited accounts, the preparation of which had been delayed. The quote will be
restored once the accounts are filed.
38. ULTIMATE CONTROLLING PARTY
In the opinion of the directors there is no ultimate controlling party.
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