27
July
2023
Everest Global
plc
(“Everest” or the
“Company”)
Final
Results
The Board
of Everest is pleased to announce its final results for the year
ended 31 October
2022.
Chief Executive Officer’s
Statement
Overview
Following from 2021 and the withdrawal by Comarco
from the marine and port transaction, on 3
October 2022 the Company (Anglo African Agriculture Plc)
entered into a transaction which saw the purchase of 65% of the
outstanding convertible loan notes by Golden Nice International
Limited. The remainder of the convertible loan notes (35%) were
converted by the note holders to shares in the Company. In
addition, Golden Nice International Limited invested £650,000 in
the Company to recapitalise it by the subscription of 13 million
new ordinary shares. The company then changed its name to Everest
Global Plc at this time. In addition, both Andrew Monk and Matt
Bonner resigned from the Board and Simon Grant-Rennick and I were appointed to the
Board. Robert Scott remains on the
Board. I would like to thank both Andrew
Monk and Matt Bonner for
their services to the
company.
As mentioned in the previous Annual Financial
Statements the Company’s subsidiary, Dynamic Intertrade (Pty)
Limited (“Dynamic”), on its own could not sustain a London Stock
Exchange listing. During the period under review the Company and
VSA NEX Investments Limited (“VSA NEX”) entered into certain
related party arrangements in relation to Dynamic. At the time the
arrangements were entered into VSA NEX was a 100% subsidiary of VSA
Capital. Also at the time the arrangements were entered into
Andrew Monk was a director of the
Company, VSA Capital and VSA NEX and is deemed to have significant
influence over VSA Capital and VSA NEX. Pursuant to the
arrangements, VSA NEX subscribed for such number of new shares in
the capital of Dynamic resulting in VSA NEX holding 49% of the
enlarged issued share capital of Dynamic for a consideration of
ZAR10,982; the Company agreed to
assign certain debts owing by Dynamic, amounting to £4.2 million
which had been fully impaired in prior years, to the Company and
certain other parties to VSA NEX in consideration for VSA NEX
paying to the Company £100,001 and agreeing to fund Dynamic so as
to enable Dynamic to carry on its business in the ordinary course
until such time as the Company ceases to hold any further shares in
Dynamic. This assignment agreement resulted in VSA NEX having a
non-controlling interest in Dynamic and as such its share of the
current year profits amounted to £522, its share of accumulated
losses prior to acquisition amounted to £2,305,905. Additionally,
the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of £3.1 million. VSA NEX has signed
a subordination agreement in relation to the loans due by Dynamic
to VSA NEX with an expiry date of 31 October
2023. Should VSA NEX choose to request the repayment of the
loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. Upon consolidation of the
VSA NEX loans, the borrowings have increased by
£4.1 million. Under a put and call option agreement the Company
granted to VSA NEX the option to acquire 11,430 shares in Dynamic
Intertrade, being the remaining 51% of Dynamic held by the Company,
subject to the satisfaction of certain conditions and subject to
certain time restrictions for £1. At 31 October
2022 Dynamic was still controlled by Everest Global and has
been consolidated in the group financial
statements
The Company’s present primary operations and source
of revenue remains it 51% holding in Dynamic, our Cape Town based spice blender and trader. The
Company was still loss making for the year under review but has
since improved its performance during the six-months ended
April 2023. Group turnover increased
by 20.98% (2021: a reduction of 20.8%). Group operating losses
amounted to £1,152,170 (2021: £515,660) for the current year. The
total Group comprehensive loss for the year amounted to £4,570,562
(2021: £584,633), including the finance charge on consolidation
referred to above, amounting to
£3,131,890.
The Company will now be actively looking at new
opportunities to bolster its current operating assets and will no
doubt in the near future seeks to raise more funds and acquire more
assets. As announced on the 4th July 2023, the Company announced that it had
invested £200,000 by way of a loan into Precious Link (UK) Limited, a wine retailer,
located within the Southeast of England. The Board believe that Precious Link operates in a complementary sector
and that the loan could assist the Company in expanding its
activities into the wider food and beverage
sector.
Post year end our previous auditor resigned as they
were no longer in a position to audit Public Interest Entity
(“PIE”) companies and due to capacity constraints with many other
auditors there was a delay in appointing a PIE registered auditor.
As a result, the Company could not complete their statutory audit,
publication of results or statutory filing at Companies House on
time. As such, trading in the Company’s ordinary shares and its
listing on the Official List of the Financial Conduct Authority was
suspended pending the publication of the Company’s audited results
for the year ended 31 October 2022. The Company was granted
an extension of its filing obligations by Companies
House.
On the 24th of January 2023, the Company announced a
subscription for 12,726,000 new Ordinary Shares. The Company raised
net proceeds totalling £699,930 at a subscription price of
5.5 pence per
share.
COVID-19 which had a devastating effect on the world
economy and social fabric, has now been declared by the head of the
UN World Health Organization (WHO) as no longer a public health
emergency, however stressing that it does not mean the disease is
no longer a global threat. As a result the Company will not report
on initiatives or effects of COVID-19 in its Annual Financial
Statements.
The financial information set
out below does not constitute the Company's statutory accounts for
the years ended 31 October 2021 or
2022 within the meaning of Section 434 of the Companies Act 2006,
but is derived from those accounts. Statutory accounts for 2021
have been delivered to the Registrar of Companies and those for
2022 will be delivered in due course. The auditor’s report on the
statutory accounts for the years ended 31
October 2021 were unqualified and the auditor’s report on
the statutory accounts for the years ended 31 October 2022 contained a qualification in
respect of inventory as the auditor was appointed after the year
end and therefore could not attend the stock
take.
The audit report also includes
a material uncertainty in relation to going concern. Excerpts
of the basis for the qualification in respect of inventory and the
material uncertainty are as follows with the full audit report and
related notes being set out in the body of this
announcement:
Basis for qualified
opinion
The Group recorded closing
inventory of £175,875. We were appointed after the balance sheet
date and were unable to arrange attendance at the year-end counting
of inventory. We were therefore unable to verify the closing value
of inventory and the associated impact on cost of
sales.
Material uncertainty related to
going
concern
We draw attention to note 2a in
the financial statements, which indicates events or conditions
identified that may cast significant doubt over the Company’s
ability to continue as a going concern. As stated in note 2a, these
events or conditions, along with other matters set forth in note
2a, indicate that a material uncertainty exists that may cast
significant doubt on the Company’s ability to continue as a going
concern. Our opinion is not modified in respect of this
matter.
The announcement has been
prepared on the basis of the accounting policies as stated in the
financial statements for the year ended 31
October 2022. The information included in this announcement
is based on the Company's financial statements which are prepared
in accordance with International Financial Reporting Standards
("IFRS"). The Company will publish full financial statements that
comply with IFRS on its website in due
course.
The annual report and accounts
for the year ended 31 October 2022
will be posted to shareholders in due course. An announcement will
be made regarding the posting of these documents as
appropriate.
Once
published, hard copies will be available to shareholders upon
request to the Company Secretary at 48 Chancery Lane, London WC2A 1JF, and soft copies will be
available for download and inspection from the Company's website
at www.everestglobalplc.com.
The
annual report and accounts for the year ended 31 October 2022 will be made available from the
FCA's National Storage Mechanism at www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism in
due course, following which, the temporary suspension of the
Company’s listing on the Official List of the FCA of its ordinary
shares of 2 pence each will be lifted
and trading on the Main Market of the London Stock Exchange will
recommence.
A further announcement will be
made in due course
This announcement
contains inside information for the purposes of Article 7 of EU
Regulation 596/2014 (which forms part of domestic UK law pursuant
to the European Union (Withdrawal) Act
2018).
The Directors of the
Company take responsibility for the contents of this
announcement.
For further information
please contact the
following:
Everest
Global plc |
|
|
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Andy
Sui, Chief Executive OfficerRob
Scott, Non-Executive
Director |
+44 (0) 776 775
1787+27 (0)84 6006
001 |
|
|
Cairn
Financial Advisers
LLP |
|
Jo
Turner / Emily Staples |
+44
(0) 20 7213 0885 / +44 (0)20 7213
0897 |
|
|
|
|
|
|
Caution regarding forward
looking
statements
Certain statements in this
announcement, are, or may be deemed to be, forward looking
statements. Forward looking statements are identified by their use
of terms and phrases such as ''believe'', ''could'', "should"
''envisage'', ''estimate'', ''intend'', ''may'', ''plan'',
''potentially'', "expect", ''will'' or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements reflect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
Strategic
ReportFor
the Year Ended 31 October
2022Overview
The primary objective of the strategic report is to
provide information for the shareholders to help them to assess how
the Directors have performed their duty, under section 172 of the
Act, to promote the success of the Company and to provide context
for the related financial statements as well as assist them in
their decision
making.
The duty of a director, as set out in section 172 of
the Act, is to act in the way he considers, in good faith, would be
most likely to promote the success of the Company for the benefit
of its members, and in doing so have regard (amongst other matters)
to:
(a) the likely consequences of any decision in the
long term;
(b) the interests of the Company's
employees;
(c) the need to foster the Company's business
relationships with suppliers, customers and
others;
(d) the impact of the Company's operations on the
community and the
environment;
(e) the desirability of the Company maintaining a
reputation for high standards of business conduct;
and
(f) the need to act fairly as between members of the
Company.
As a Board, we must always seek and be open to
feedback from anyone affected by our activities. This enables the
Board to understand the impact of its decisions on key
stakeholders, but also ensures that we are aware of any significant
changes in the market or the external environment, including the
identification of emerging risks, which can be fed into our
strategy discussions and our risk management process. The Board
considers our strategic stakeholders as
follows:
Customers
We listened to our customers and endeavoured to
supply them with relevant product. This entailed continuous
discussions with our existing and potential customers as well as
product development.
Suppliers
We have worked with a number of our suppliers for
many years, and any loss of our sales or product mix impacts their
business. We communicated to them where possible to reduce the
impact on their
businesses.
Shareholders and
Lenders
We have a clear responsibility to engage with
shareholders and lenders of our business and their views are an
important driver of our strategy. We keep our shareholders
regularly informed while lenders receive regular updates on the
performance of the
organisation.
Staff
During the year under review the Group had 17
(2021-24) staff and Directors. The Company had 3 male Directors.
Noting that there was a total of 5 with 3 at any one stage. The
subsidiary had 1 female and 3 male directors of which 1 male
director was a director of both the Company and Dynamic. The
subsidiary had 5 female and 9 male staff excluding managers and
directors.
Social, community and human rights
issues
The Company and its subsidiary comply with all
national and international laws and regulations pertaining to human
rights and social interaction. Additionally, the South African
subsidiary is ensuring, where possible, with Broad Based Black
Economic Empowerment legislation (“BBBEE”) to address the social,
community and economic issues within the South African
context.
Review of the Group’s
Business
Dynamic Intertrade (Pty) Ltd (“Dynamic”) is based in
Cape Town, South Africa and is
involved in the importation, milling, blending and packaging of
products that include herbs, spices, seasonings and confectionary
for the domestic market. On 3 October
2023 a new shareholder, the Company and VSA NEX Investments
Limited (“VSA NEX”) entered into certain related party arrangements
in relation to Dynamic Intertrade (Pty) Ltd (“Dynamic”). VSA NEX
was a 100% subsidiary of VSA Capital. At the time the arrangements
were entered into Andrew Monk was a
director of the Company, VSA Capital and VSA NEX and is deemed to
have significant influence over VSA Capital and VSA NEX. Pursuant
to the arrangements, VSA NEX subscribed for such number of new
shares in the capital of Dynamic resulting in VSA NEX holding 49%
of the enlarged issued share capital of Dynamic for a consideration
of ZAR10,982; the Company agreed to
assign certain debts owing by Dynamic, amounting to £4.2 million
which had been fully impaired in prior years, to the Company and
certain other parties to VSA NEX in consideration for VSA NEX
paying to the Company £100,001 and agreeing to fund Dynamic so as
to enable Dynamic to carry on its business in the ordinary course
until such time as the Company ceases to hold any further shares in
Dynamic. This assignment agreement resulted in VSA NEX having a
non-controlling interest in Dynamic and as such its share of the
current year profits amounted to £522, its share of accumulated
losses prior to acquisition amounted to £2,305,905. Additionally,
the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of £3.1 million. VSA NEX has signed
a subordination agreement in relation to the loans due by Dynamic
to VSA NEX with an expiry date of 31 October
2023. Should VSA NEX choose to request the repayment of the
loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. Under a put and call option
agreement the Company granted to VSA NEX the option to acquire
11,430 shares in Dynamic Intertrade, being the remaining 51% of
Dynamic held by the Company, subject to the satisfaction of certain
conditions and subject to certain time restrictions for £1. At
31 October 2022, the total amount due
by Dynamic to VSA NEX amounted to
£4,174,538.
During the year to 31 October
2022, Dynamic recorded an increase of 20.98% in turnover to
£1.698 million (2021: decrease of 20.8). In the subsidiary’s
functional currency of South African Rand, it recorded turnover of
R34.8 million, an increase of R6.4 million from the prior year. The
required product mix changed and lower margin commodities saw
general price increases which could not be passed on to customers
for our core spice lines of commodity paprika and chilli-based
products as well as our value-added blended
products.
Gross profits for the Group increased by 10.68% to
£420,358 (2021: decreased by 10.3% to £379,804) and represents a
24.74% (2021: 27.05%) gross
margin.
Group operating losses for the year increased
£1,152,170 (2021: £515,660). Total Group comprehensive loss
amounted to £4,570,562 (2021: £584,633) after incurring a finance
charge consolidation, resulting from the assignment of the loans to
VSA NEX, of £3.1
million.
Basic and diluted loss per share from continuing
operations for the year was 17.79p
(2021:2.66p).
As at 31 October 2022
the Group held £925,814 (2021: £1,109,774) in cash and cash
equivalents.
The Company will now be actively looking at new
opportunities to bolster its current operating assets and will no
doubt in the near future seek to raise more funds and acquire more
assets. As announced on 4 July 2023,
the Company invested £200,000 by way of a loan into Precious Link (UK) Limited, a wine retailer,
located within the Southeast of England. The Board believes that Precious Link operates in a complementary sector
and that the loan could assist the Company in expanding its
activities into the wider food and beverage
sector.
Financing And Capital
Structure
During the year under review, the Company issued
3,823,627 new ordinary shares to VSA Capital Limited in settlement
of the outstanding fees of
£152,945.08.
In addition, the Company issued 13,000,000 new
ordinary shares in order to raise £650,000. As part of this
transaction the Company also converted £581,951.52 owing to the
convertible note holders into 7,373,141 new ordinary
shares.
As detailed above, the Company assigned certain
debts, amounting to £4,174,538, due by Dynamic to VSA NEX. In prior
years these loan were eliminated upon consolidation, however with
the loans now being due to VSA NEX, the consolidated values include
these loans and represent an increase in borrowings of
£4,174,538.
Acquisition
Strategy
The Company will be actively looking for new
acquisitions to bolster its operations and will as a result in all
likelihood seek to raise more capital by way of both debt and
equity.
Key Performance
Indicators
|
|
|
31
October |
31
October |
|
|
|
2022 |
2021 |
|
|
|
£ |
£ |
Turnover |
|
|
1,698,839 |
1,404,234 |
Gross
profit |
|
|
420,368 |
379,804 |
Cash on hand
and in
bank |
|
|
925,814 |
1,109,774 |
Underlying
operating
loss |
|
|
(1,152,170) |
(515,660) |
|
|
|
|
|
Principal Risks and
Uncertainties
The Directors consider the following risk factors to
be of relevance to the Group’s activities. It should be noted that
the list is not exhaustive and that other risk factors not
presently known or currently deemed immaterial may apply. The risk
factors are summarised
below:
i. Development
Risk
The Group’s development will be, in part, dependent
on the ability of the Directors to continue to improve the current
business, to identify suitable investment opportunities and to
implement the Group’s strategy. There is no assurance that the
Group will be successful in acquiring suitable
investments.
ii. Sector
Risk
The agriculture and agri-processing sectors are
highly competitive markets and many of the competitors will have
greater financial and other resources than the Company and as a
result may be in a better position to compete for
opportunities.
The development of these enterprises involves
significant uncertainties and risks including unusual climatic
conditions such as drought, improper use of pesticides,
availability of labour and seasonality of produce, any one of which
could result in security of supply, damage to, or destruction of
crops, environmental damage or pollution. Each of these could have
a material adverse impact on the business, operations and financial
performance of the
Group.
The market price of agricultural products and crops
is volatile and affected by numerous factors which are beyond the
Group’s control. These include international supply and
demand, the level of consumer product demand, international
economic trends, currency exchange rate fluctuations, the level of
interest rates, the rate of inflation, global or regional political
events, as well as a range of other market forces. Sustained
downward movements in agricultural prices could render less
economic, or un-economic, any development or investing activities
to be undertaken by the Group. Certain agricultural projects
involve high capital costs and associated risks. Unless such
projects enjoy long term returns, their profitability will be
uncertain resulting in potentially high investment
risk.
iii. Political and Regulatory
Risk
African countries experience varying degrees of
political instability. There can be no assurance that political
stability will persist in those countries where the Group may have
operations going forward. In the event of political instability or
changes in government policies in those countries where the Group
may operate, the operations and financial condition of the Group
could be adversely
affected.
iv. Environmental Risks and
Hazards
All phases of the Group’s operations are subject to
environmental regulation in the areas in which it operates.
Environmental legislation is evolving in a manner that may require
stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for
companies and their officers, Directors and
employees.
There is no assurance that existing or future
environmental regulation will not materially adversely affect the
Group’s business, financial condition and results of operations.
Environmental hazards may exist on the properties on which the
Group holds interests that are unknown to the Group at present. The
Board manages this risk by working with environmental consultants
and by engaging with the relevant governmental departments and
other concerned
stakeholders.
v. Internal Control and
Financial Risk
Management
The Board has overall responsibility for the Group’s
systems of internal control and for reviewing their effectiveness.
The Group maintains systems which are designed to provide
reasonable but not absolute assurance against material loss and to
manage rather than eliminate
risk.
The key features of the Group’s systems of internal
control are as
follows:
-
-
Management structure with clearly identified
responsibilities;
-
Production of timely and comprehensive historical
management information presented to the
Board;
-
Detailed budgeting and
forecasting;
-
Day to day hands on involvement of the Executive
Director and Senior Management;
and
-
Regular Board meetings and discussions with the
Non-Executive
Directors.
The Group’s activities expose it to several financial
risks including cash flow risk, liquidity risk and foreign currency
risk.
vi. Environmental
Policy
The Group is aware of the potential impact that its
subsidiary and associate companies may have on the environment. The
Group ensures that it complies with all local regulatory
requirements and seeks to implement a best practice approach to
managing environmental
aspects.
The subsidiary, Dynamic Intertrade operates a Food
Safety System Certification (“FSSC”) compliant facility in
Cape Town. The FSSC provides a
framework for effectively managing the organisation's food safety
responsibilities and is fully recognized by the Global Food Safety
Initiative and is based on existing ISO
Standards.
-
Health and
Safety
The Group’s aim is to achieve and maintain a high
standard of workplace safety. In order to achieve this objective,
the Group provides ongoing training and support to employees and
sets demanding standards for workplace
safety.
viii.
Financing Risk
The development of the Group’s business may depend
upon the Group’s ability to obtain financing primarily through the
raising of new equity capital or debt. The Group’s ability to raise
further funds may be affected by the success of existing and
acquired investments. The Group may not be successful in procuring
the requisite funds on terms which are acceptable to it (or at all)
and, if such funding is unavailable, the Group may be required to
reduce the scope of its investments or the anticipated expansion.
Further, Shareholders’ holdings of Ordinary Shares may be
materially diluted if debt financing is not
available.
ix. Credit
Risk
The Directors have reviewed the forecasts prepared by
both the Company and Dynamic and believe that Dynamic has adequate
resources available to meet its obligations to the Company and its
lenders.
x. Liquidity
Risk
The Directors have reviewed the working capital
requirements of the Company and Dynamic and believe that, following
stress tests and variance analysis on the forecasts, there is
sufficient working capital to fund the business while expanding
turnover. The Directors further highlight the inherent
uncertainties involved in making the assessment that the entity is
a going concern.
-
Capital
Risk
The Group manages its capital resources to ensure
that entities in the Group will be able to continue as a going
concern, while maximising shareholder
return.
The capital structure of the Group consists of equity
attributable to shareholders, comprising issued share capital and
reserves. The availability of new capital will depend on many
factors including a positive operating environment, positive stock
market conditions, the Group’s track record, and the experience of
management. There are no externally imposed capital requirements.
The Directors are confident that adequate cash resources exist or
will be made available to finance operations and controls over
expenditure are carefully
managed.
To manage the above risks, management are in regular
contact with our customers and are actively exploring new markets
and customers in order to diversify these
risks.
Shareholders should refer to Note 2 and Note 29 of
the accounts for a summary of the Group’s use of financial
instruments and its exposure to market risk, credit risk, liquidity
risk and cash flow
risk.
Going
Concern
After making enquiries, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Further details are given in Note 2 to the financial statements.
For this reason, the Directors continue to adopt the going concern
basis in preparing the financial
statements.
During the year, the Group raised additional equity
funding of £650,000 (2021: £Nil) in gross funding through share
subscriptions to fund working capital. In addition, the Company
converted £581,951.52 of convertible loan notes into new ordinary
shares.
The Directors have prepared cash flow forecasts.
These forecasts consider operating cash flows and capital
expenditure requirements for the Company and Dynamic, available
working capital and forecast expenditure, including overheads and
other costs. The Directors are of the opinion that the Group has
sufficient working capital and that no additional funding is
required. As part of the assignment of certain debts to VSA NEX,
VSA NEX have agreed to fund Dynamic so as to enable Dynamic to
carry on its business in the ordinary course until such time as the
Company ceases to hold any further shares in Dynamic. . VSA NEX has
signed a subordination agreement in relation to the loans due by
Dynamic to VSA NEX with an expiry date of 31
October 2023. Should VSA NEX choose to request the repayment
of the loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. However, post year end the
Group did raise £699,930 in additional equity capital. Based upon
the Company’s forecast, it has sufficient cash for the foreseeable
future.
After careful consideration of the matters set out
above, the Directors are of the opinion that the Group will be able
to undertake its planned activities for the period to 31 July 2024 from production and from additional
funds raising and have prepared the consolidated financial
statements on the going concern basis. Nevertheless, due to the
uncertainties inherent in meeting its revenue predictions and
obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern. For this reason, the Directors believe that
there is a material uncertainty relating to the Group’s going
concern.
It the intention of the Directors to look for
acquisitions to make the Company more
sustainable.
Directors’
ReportFor
the Year Ended 31 October
2022
The Directors present their Report and Financial
Statements for the year ended 31 October
2022.
Principal
Activities
The principal activity of the Group in the year was
investing and trading in the agriculture and ancillary sectors in
Africa.
Emissions
The Group is not an intensive user of fossil fuels or
electricity. During the year Dynamic Intertrade consumed an average
of 18,828kwh (2021: 8,418 kwh) per month based on using actual
charges levied by the Cape Town City Council. As per the University
of Cape Town’s assessment of the South African average of
1.015kg/kwh, the Group contributed 229,325kg (2012: 102,539kg) of
carbon emissions during the financial year. Due to the nature of
the business, there is limited scope to reduce emissions materially
as all power is sourced from the Cape Town City Council. There were
no operations in the UK and as such no emissions in the
UK.
Investing
Policy
The Company was established to invest in or acquire
companies engaged in the agriculture and ancillary sectors in
Africa. The Directors intend to
use their collective experience to identify appropriate investment
opportunities in the production, transportation and trading of food
and beverage products and ancillary
industries.
Directors
The following Directors have held office in the
year:
Robert Scott -
Non-Executive
Director
Xin ‘Andy’ Sui (Appointed 3
October 2022) – Chief Executive
Officer
Simon Grant-Rennick
(Appointed 3 October 2022) –
Non-Executive
Director
Andrew Monk (Resigned
3 October
2022)
Matthew Bonner
(Resigned 3 October
2022)
Xin ‘Andy’
Sui Chief Executive
Officer
Andy Sui has over 11
years of investment banking experience. Andy started his career at
Barclays Capital under the trading desk. He eventually became Chief
Risk Officer (CRO) at Union Bank of India (UK) managing a balance sheet of over
$1 billion asset. Andy is also a
Co-Founder of London Capital Homes Ltd managing over 120
residential properties and focusing on UK northern cities property
development projects. Andy has a Masters Degree from the
London School of Economics (LSE) in
Finance and a number of financial market
qualifications.
Robert Scott, Executive
Director
Robert has principal responsibility as being the
director responsible for the overview of the management of Dynamic,
the Group’s spice manufacturing business. He has over 30 years’
financial and investment management experience with the last twenty
years specifically focussed on, executive management, finance,
corporate governance, acquisitions and investor management. Rob is
a Chartered Accountant (CA(SA)) by profession. He served as Country
Manager for Lonrho and has served as the General Manager of
Uramin’s South African operations. He held executive and senior
positions with a number of companies across a number of countries
in Southern Africa. He has been
involved in such broad industries as mining, food manufacturing,
hotels, agriculture, shipping, consumer products and construction
amongst many other industries. Robert has been a Director of
Dynamic for 12 years and is responsible for setting the strategy
for Dynamic with management and ensuring implementation. He has an
intimate understanding of its day-to-day operations. He has served
on a number of other public and private Company boards. Robert
began his career and qualified with Deloitte South Africa after obtaining his
Certificate of Theory of Accounting (CTA) from the University of
Cape Town. Rob’s broad
understanding of finance, markets, acquisitions and corporate
governance will greatly assist the Group in its growth
plans.
Simon
Grant-Rennick, Non-Executive
DirectorSimon
graduated from Camborne School of Mines (BSc Hons Mining
Engineering, ACSM) and has been actively involved in the mining and
metal trading industry for over 40 years . He has also been active
in the agriculture space in Southern Africa, from the growing of
Macadamia nuts to Chillies and Paprika, amongst other crops and
game farming with his own game farm Simon has served as Chairman
and executive director of various private and public companies in
Australia, America and UK (LSE, ASX) over various global industries
in agriculture, mining, property and
technology.
Directors’
remuneration, shareholding and
options
The Directors’ remuneration for the year ended
31 October 2022 is set out in note 8
of the accounts. None of the Directors receive share options, long
term incentives, bonus or the like as part of their remuneration
packages. Remuneration for all Directors, both executive and
non-executive, is £1,000 per month. There are contracts for the new
company directors.
Shareholding
As at 31 October 2022,
the Directors of the Company held the following
shares:
|
2022 |
2022 |
2021 |
2021 |
Director |
Shareholding |
Percentage of the Company’s Ordinary Share
Capital |
Shareholding |
Percentage of the Company’s Ordinary Share
Capital |
David Lenigas
(resigned) |
- |
0.00% |
1,119,403 |
2.42% |
Andrew Monk
(resigned) |
- |
0.00% |
1,106,338 |
5.04% |
Robert
Scott |
552,599 |
1.20% |
213,231 |
0.97% |
Matthew Bonner
(resigned) |
- |
0.00% |
165,891 |
0.76% |
Simon Grant-Rennick
and Xin (Andy) Sui do not have any
shares in the
Company.
Share options and
warrants
As at 31 October 2022
the Directors share options and warrants
were:
|
|
|
|
2022 |
|
|
|
|
Warrants @
5p |
Director |
|
|
|
(expiring
23 March
2023) |
Andrew Monk
(resigned) |
|
|
|
4,240,000 |
Robert
Scott |
|
|
|
820,000 |
Matthew Bonner
(resigned) |
|
|
|
840,000 |
|
|
|
|
5,900,000 |
|
|
|
|
2021 |
|
|
|
|
Warrants @
5p |
Director |
|
|
|
(expiring
23 March
2023) |
Andrew Monk
(resigned) |
|
|
|
4,240,000 |
Robert
Scott |
|
|
|
820,000 |
Matthew Bonner
(resigned) |
|
|
|
840,000 |
|
|
|
|
5,900,000 |
|
|
|
|
|
|
2021 |
2021 |
2021 |
2021 |
|
Options at
20p |
Options @
11p |
Warrants @
20p |
Warrants @
5p |
Director |
(expiring
5 September
2022) |
(expiring
5 September
2022) |
(expiring
5 September
2022) |
(expiring
24 July
2022) |
Andrew Monk
(resigned) |
91,952 |
100,000 |
69,033 |
622,233 |
Robert
Scott |
50,000 |
- |
|
128,578 |
Matthew Bonner
(resigned) |
180,000 |
- |
- |
128,578 |
|
321,952 |
100,000 |
69,033 |
879,389 |
The total warrants outstanding for the directors at
31 October 2022 were 5,900,00 (2021:
7,779,844). There are no outstanding options for the directors as
at 31 October 2022 (2021: 421,952).
Refer to note 24 for more
detail.
Dividends
No dividends will be distributed for the current year
(2021 - nil).
Supplier Payment
Policy
It is the Group’s payment policy to pay its suppliers
in conformance with industry norms. Trade payables are paid in a
timely manner within contractual terms, which is generally 30 to 45
days from the date an invoice is
received.
Substantial
Interests
The Group has been informed of the following
shareholdings that represent 3% or more of the 46,162,855 issued Ordinary Shares of
the Company as at 31 October
2022:
Substantial Interests @ 31
October
2022 |
|
|
|
|
2022 |
2022 |
2021 |
2021 |
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary
Share
Capital |
Shareholding |
Percentage of the Company’s Ordinary
Share
Capital |
|
|
|
|
|
Golden Nice International
Limited |
13,000,000 |
28.16% |
- |
0.00% |
HSBC Global Custody Nominee (UK)
Limited |
5,315,474 |
11.51% |
1,591,847 |
7.25% |
Interactive Investor Services Nominees
Limited |
3,311,851 |
7.17% |
2,943,459 |
13.40% |
JIM Nominees
Limited |
1,597,718 |
3.46% |
1,625,041 |
7.40% |
Lynchwood Nominees
Limited |
8,773,542 |
19.01% |
5,150,000 |
23.45% |
Pershing Nominees
Limited |
1,526,172 |
3.31% |
1,026,172 |
4.67% |
Vidacos Nominees
Limited |
1,950,918 |
4.23% |
1,701,856 |
7.75% |
Vsa Capital
Limited |
1,754,779 |
3.80% |
|
|
Barclays Direct Investing Nominees
Limited |
- |
0.00% |
726,113 |
3.31% |
CGWL Nominees
Limited |
- |
0.00% |
1,256,338 |
5.72% |
Hargreaves Lansdown (Nominees)
Limited |
- |
0.00% |
1,121,892 |
5.11% |
|
|
|
|
|
The Group has been informed of the following
shareholdings that represent 3% or more of the issued Ordinary
Shares of the Company as at 30th of June
2023:
Substantial Interests as at 30 June
2023 |
|
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary Share
Capital |
Golden Nice International
Limited |
19,000,000 |
29.28% |
Lynchwood Nominees
Limited |
8,773,542 |
13.52% |
Mr Xiangyu
An |
6,363,000 |
9.81% |
Ms Fangling
Chen |
6,363,000 |
9.81% |
HSBC Global Custody Nominee (Uk)
Limited |
5,315,474 |
8.20% |
Interactive Investor Services Nominees
Limited |
3,204,468 |
4.94% |
Vidacos Nominees
Limited |
1,958,918 |
3.02% |
Auditors
RPG Crouch Chapman LLP (“RPG”), act as auditor to the
Company. The appointment of RPG follows the resignation of Jeffreys
Henry LLP as auditors to the Company. Section 519 of the Companies
Act 2006 (the "Act") requires Jeffreys Henry LLP to send a
statement of the reasons for ceasing to hold office. They have
stated that in accordance with Section 519 of the Act, they are
ceasing to hold office on the grounds that the firm has taken the
decision not to register as an auditor eligible to undertake Public
Interest Entity (PIE)
audits.
There are no circumstances connected with Jeffreys
Henry LLP ceasing to hold office as auditor which it considers
should be brought to the attention of the Company’s members or
creditors. RPG has expressed its willingness to continue in office
and a resolution to reappoint them will be proposed at the next
Annual General
Meeting.
Statement of
Directors’
Responsibilities
The Directors are responsible for preparing the
Directors’ Report 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 have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the United
Kingdom. 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 Company and the Group and of the profit
or loss of the Company and the Group for that year. 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 Group and Parent Company financial statements
have been prepared in accordance with IFRS as adopted by the
United Kingdom, 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 enough to show and explain the Group
and Parent Company's transactions, 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.
The Directors are responsible for
safeguarding the assets of the Group and Parent Company 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 Group’s website.
Responsibility
Statement
The Directors, whose names and functions are set out
in this Directors’ Report under the sub-heading ‘Directors’ with
registered office located at 48 Chancery Lane, London WC2A 1JF, accept responsibility for the
information contained in this annual report and accounts for the
period ended 31 October
2022.
To the best of the knowledge of the
Directors:
-
the financial statements are prepared in accordance
with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of Everest Group Plc and the undertakings included in the
consolidation taken as a whole;
and
-
the management report includes a fair review of the
development and performance of the business and the position of
Everest Group Plc and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they
face.
Everest Group Plc acknowledges that it is responsible
for all information drawn up and made public in this report and
accounts for the period ended 31 October
2022.
Statement of
Disclosure to
Auditors
Each person who is a Director at the date of approval
of this Annual Report confirms
that:
-
so far as the Directors are aware, there is no relevant audit
information of which the Group and Parent Company’s auditors are
unaware;
-
each Director has taken all the steps he ought as Director, in
order to make himself aware of any relevant audit information and
to establish that the Group and Parent Company’s auditors are aware
of that information,
and
-
each Director is aware of and concurs with the information included
in the Strategic
Report.
Branches Outside the
UK
The Group head office is in London and Dynamic Intertrade (Pty) Limited’s
office is located in South
Africa.
Events after the
Reporting Period
Further information on events after the reporting
date is set out in note
33.
Strategic
Report
In accordance with Section 414C (11) of the Companies
Act 2006, the Group chooses to report the review of the business,
the outlook and the risk and uncertainties faced by the Company in
the Strategic Report.. The Directors’ assessment of the risks faced
by the Group are set out in the Strategic Report and in Note 30 to
the financial
statements.
Directors’ Remuneration
ReportFor
the Year Ended 31 October
2022Introduction
The information included in this report is not
subject to audit other than where specifically
indicated.
Remuneration
Committee
The remuneration committee consists of all the Board
members. This committee's primary function is to review the
performance of Executive Directors and senior employees and set
their remuneration and other terms of employment. Simon Grant- Rennick is the Chairman of the
committee.
The committee is also responsible for administering
any share option schemes and for granting warrants to the existing
directors. The table indicates share options held by the current
directors, Directors of the subsidiary and former Directors of the
Company.
|
2022 |
2022 |
2021 |
2021 |
Director |
Warrants |
Options |
Warrants |
Options |
Andrew Monk
** |
4,240,000 |
- |
4,931,266 |
191,952 |
Robert
Scott |
820,000 |
- |
820,000 |
50,000 |
Matthew Bonner
** |
840,000 |
- |
968,578 |
180,000 |
Totals |
5,900,000 |
- |
7,779,844 |
421,952 |
** Director resigned 3 October
2022.
The warrants outstanding as at 31 October 2022 may be exercised by the directors
on or before 23 March 2023 at 5p per
share.
The Company has one Executive Director. Robert Scott became a Non-Executive Director
when Xin ‘Andy’ Sui was appointed as Chief Executive
Officer.
The remuneration
policy
It is the aim of the committee to remunerate
Executive Directors competitively and to reward performance. The
remuneration committee determines the Company's policy for the
remuneration of executive directors, having regard to the UK
Corporate Governance Code
2018.
Service agreements
and terms of
appointment
The two new Directors have service contracts with the
Company.
Directors'
interests
The Directors' interests in the share capital of the
Company are set out in the Directors’
report.
Directors'
emoluments
Salaries and
Fees |
Group |
Group |
Company |
Company |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
David Lenigas
** |
- |
9,000 |
- |
9,000 |
Robert
Scott |
12,000 |
12,000 |
12,000 |
12,000 |
Andrew Monk
** |
12,923 |
13,966 |
12,923 |
13,966 |
Matt Bonner
** |
11,000 |
12,000 |
11,000 |
12,000 |
|
35,923 |
46,966 |
35,923 |
46,966 |
* Included in Andrew Monk’s remuneration is £1,923
(2021: £1,966) for National
Insurance.
** Director has
resigned.
No pension contributions were made by the Company on
behalf of its Directors other than for Andrew Monk. Andrew Monk’s pension contribution
for 2022 was £330 (2021:
£360).
At the year-end a total of £33,587 (2021: £62,126)
was outstanding in respect of Directors’
emoluments.
Approval by
shareholders
At the next annual general meeting of the Company a
resolution approving this report is to be proposed as an ordinary
resolution.
This report was approved by the Board on
26th July
2023.
Corporate Governance
StatementFor
The Year Ended 31 October
2022
The Directors recognise the importance of sound
corporate governance while taking into account the Group’s size and
stage of development. We recognise that we require the Company
to:
-
provide details of a recognised corporate governance
code that the Board of Directors has decided to
apply
-
explain how the Company complies with that code, and
where it departs from its chosen corporate governance code provide
an explanation of the reasons for doing
so.
The corporate governance disclosures need to be
reviewed annually, and the Company is also required to state the
date on which these disclosures were last reviewed. This Corporate
Governance Statement sets out how Everest Global Plc seeks to
comply with these requirements. The Directors acknowledge that they
have overall responsibility for the Company’s system of internal
control and for reviewing its effectiveness. Such a system is
designed to manage rather than eliminate the risk of failure to
achieve business objectives and even the most effective system can
provide only reasonable, and not absolute, assurance with respect
to the preparation of financial information and the safeguarding of
assets. The close involvement of the Directors in all decisions and
actions undertaken by the Company is intended to ensure that the
risks to the Company are
minimised.
This Corporate Governance Statement forms part of the
Directors’ report for the purposes of the Disclosure Guidance and
Transparency Rules of the Financial Conduct
Authority.
OverviewAs
Chief Executive Office it is my responsibility to ensure that the
Company has both sound corporate governance and an effective Board.
The Company is admitted to the Official List of the FCA and to
trading on the main market of the London Stock Exchange and its
principal activity is as a holding company for its subsidiary,
Dynamic Intertrade (Pty) Limited, which in involved in the
importation, milling, blending and packaging of products that
include herbs, spices, seasonings and confectionary for the
domestic market, being South Africa where Dynamic is
located.The
Company’s Board has adopted the principles of the Quoted Companies
Alliance Corporate Governance Code 2018 Edition (QCA Code). A copy
of the QCA Code is publicly available at https://www.theqca.com/.
The QCA Code identifies ten principles to be followed in order for
companies to deliver growth in long term shareholder value,
encompassing an efficient, effective and dynamic management
framework accompanied by communication to promote confidence and
trust. This report follows the structure of these guidelines and
explains how we have applied the guidance as well as disclosing any
areas of non-compliance. We will provide annual updates on our
compliance with the QCA Code. The Board considers that the Group
complies with the QCA Code so far as it is practicable having
regard to the size, nature and current stage of development of the
Company, and will disclose any areas of non-compliance in the text
below.The
sections below set out the ways in which the Group applies the ten
principles of the QCA Code in support of the Group’s medium to
long-term success and provides reasons for any departures from the
QCA
Code.QCA
Principles
-
Establish a strategy and business model which
promotes long-term value for
shareholders
Everest Global Plc is a holding Company with an
operating business on the African continent. The Company currently
has a subsidiary in the food sector in South Africa. The Company is actively seeking
allied investments is similar sectors that will enhance long term
shareholder value.
The Company may exploit a wide range of investment
opportunities within the target sectors as they arise and, to this
end, the Company has complete flexibility in selecting the specific
investment and trading strategies that it sees fit in order to
achieve its investment objective. In this regard, the Company may
seek to gain Board representation and/or managerial control in its
underlying investments if it deems to be the best way of generating
value for Shareholders. Opportunities will be chosen through a
careful selection process which will appraise both the fundamental
factors specific to the opportunity as well as wider economic
considerations. Typical factors that will be considered are the
strength of management, the quality of the asset base, the
investment’s scale and growth potential, the commodity price
outlook, any geopolitical concerns, the underlying financial
position, future working capital requirements as well as potential
exit routes. Investments may be in the form of buy-outs,
controlling positions (whether initially or as a result of
additional or follow-on investments) or strategic minority
investments. There is no fixed limit on the number of projects or
companies into which the Company may invest, nor the proportion of
the Company’s gross assets that any investment may represent at any
time. No material change will be made to the Company’s investing
policy without the approval of
Shareholders.
Challenges to delivering strategy, long-term goals
and capital appreciation are uncertain in relation to
organisational, operational, financial and strategic risks, all of
which are outlined in the Strategic Report, as well as steps the
Board takes to protect the Company by mitigating these risks and
secure a long-term future for the
Company.
-
Seek to understand and meet shareholder needs
and
expectations
The Board recognises the importance of communication
with its stakeholders and is committed to establishing constructive
relationships with investors and potential investors in order to
assist it in developing an understanding of the views of its
shareholders. The Company also maintains a dialogue with
shareholders through formal meetings such as the AGM, which
provides an opportunity to meet, listen and present to
shareholders, and shareholders are encouraged to attend in order to
express their views on the Company’s business activities and
performance. Members who have queries regarding the Company’s AGM
can contact the Company’s Registrars, Neville Registrars or the
Company Secretary. The Board welcomes feedback from key
stakeholders and the Chief Executive Officer is the shareholder
liaison, who meets shareholders regularly, and informs other
Directors of their views and suggestions. Analysts provide the
Board with updates on the Company’s business and how strategy is
being implemented, as well as to hear views and expectations from
shareholders. The views of the shareholders expressed during these
meetings are reported to the Board, ensuring that all members of
the Board are fully aware of the thoughts and opinions of
shareholders. The Company maintains effective contact with its
principal shareholders and welcomes communications from its private
investors. Information on the Investor Relations section of the
Company’s website is kept updated and contains details of relevant
developments, Annual and Interim Results, Regulatory News Service
announcements, presentations and other key
information.
-
Take into account wider stakeholder and
social responsibilities and their implications for long-term
success
The Board recognises that the long-term success of
the Company is reliant upon the efforts of employees, regulators
and many other stakeholders. The Board has put in place a range of
processes and systems to ensure that there is close oversight and
contact with its key resources and relationships. The Company
prepares and updates its strategic plan regularly together with a
detailed rolling budget and financial projections which consider a
wide range of key resources including staffing, consultants and
utility providers. The Board is kept updated on questions / issues
raised by stakeholders and incorporates information and feedback
into future decision making. The Group fully abides by the
provisions of the 2015 Modern Slavery Act. In accordance with its
Code of Business Conduct and Ethics, the Company opposes the crime
of slavery in all of its forms, including child labour, servitude,
forced or compulsory labour and human
trafficking.
All employees within the Group are valued members of
the team, and the Board seeks to implement provisions to retain and
incentivise all its employees. The Group offers equal opportunities
regardless of race, gender, gender identity or reassignment, age,
disability, religion or sexual orientation. The Directors are in
constant contact with employees and seek to provide continual
opportunities in which issues can be raised allowing for the
provision of feedback. This feedback process helps to ensure that
new issues and opportunities that arise may be used to further the
success of the Company. The Company complies fully with all
employment legislation where it has
operations.
-
Embedded effective risk management,
considering both opportunities and threats, throughout the
organisation
The Board recognises the need for an effective and
well-defined risk management process and it oversees and regularly
reviews the current risk management and internal control
mechanisms. The Board regularly reviews the risks facing the
Company as detailed in the Strategic Report and seeks to exploit,
avoid or mitigate those risks as appropriate. The Board is
responsible for the monitoring of financial performance against
budget and forecast and the formulation of the Company’s risk
appetite including the identification, assessment and monitoring of
the Company’s principal risks. Additionally, the Board reviews the
mechanisms of internal control and risk management it has
implemented on an annual basis and assesses both for effectiveness.
On the wider aspects of internal control, relating to operational
and compliance controls and risk management, the Board, in setting
the control environment, identifies, reviews, and regularly reports
on the key areas of business risk facing the
Group.
The Group Board and subsidiary Boards maintain close
day to day involvement in all of the Group’s activities which
enables control to be achieved and maintained. This includes the
comprehensive review of both management and technical reports, the
monitoring of interest rates, environmental considerations,
government and fiscal policy issues, employment and information
technology requirements and cash control procedures. In this way,
the key risk areas can be monitored effectively, and specialist
expertise applied in a timely and productive
manner.
The effectiveness of the Group’s system of internal
financial controls, for the year to 31
October 2022 and for the period to the date of approval of
the financial statements, has been reviewed by the Directors.
Whilst they are aware that although no system can provide for
absolute assurance against material misstatement or loss, they are
satisfied that effective controls are in place. The Group’s
internal controls are primarily detailed oversight by the Directors
of the transactions of both the Company and the Subsidiary in
addition there are monthly management reports detailing actual
versus budget which are reviewed by the
Directors.
-
Maintain the Board as a well-functioning,
balanced team led by the
Chair
The Board recognises the QCA code recommendation for
a balance between Executive and Non-Executive Directors and the
recommendation that there be at least two Independent
Non-Executives. The Board currently comprises of one Executive
Director, two Non-Executive Directors, of which, Simon Grant-Rennick, is deemed independent. The
Board will take this into account when considering future
appointments. It is the Company’s intention to appoint a Chairman
when its size warrants it. However, all Directors are encouraged to
use their judgement and to challenge matters, whether strategic or
operational, enabling the Board to discharge its duties and
responsibilities effectively. The Board maintains that the Board’s
composition will be frequently reviewed as the Company develops.
The Company is small and as a result has only two committees, an
audit and risk committee and a remuneration and nominations
committee, all of which comprise the entire Board as its members.
The Company does not have a separate nominations committee at this
time. The Board does not deem it appropriate to have more
committees.
The Group is controlled and led by the Board of
Directors with an established schedule of matters reserved for
their specific approval. The Board meets regularly throughout the
year and is responsible for the overall Group strategy, acquisition
and divestment policy, approval of major capital expenditure and
consideration of significant financial matters. It reviews the
strategic direction of the Company and its individual subsidiaries,
their annual budgets, their progress towards achievement of these
budgets and their capital expenditure programmes. The role of the
CEO (Chairman once appointed) is to supervise the Board and to
ensure its effective control of the business, and that of the
Executive Director is to manage the Group on the Board’s behalf.
All Board members have access, at all times, to sufficient
information about the business, to enable them to fully discharge
their duties. Also, procedures exist covering the circumstances
under which the Directors may need to obtain independent
professional advice. The Board meets regularly and is responsible
for formulating, reviewing and approving the Group’s strategy,
budgets, performance, major capital expenditure and corporate
actions. Detailed biographies of the Board members can be found on
the website and summaries can be found in the Directors’
Report.
Throughout the year, there have been seventeen Board
meetings, with all meetings being quorate. The Directors of the
Company are committed to sound governance of the business and each
devotes enough time to ensure this
happens.
Directors’ conflict of
interest
The Board is aware of the other commitments and
interests of its Directors, and changes to these commitments and
interests are reported to and, where appropriate, agreed with the
rest of the Board.
-
Ensure that between them the Directors have
the necessary up-to-date experience, skills and
capabilities
The Company believes that the current balance of
skills in the Board as a whole reflects a very broad range of
personal, commercial and professional skills, and notes the range
of financial and managerial skills. The Non-Executive Directors
maintain ongoing communications with the Executive between formal
Board meetings. Biographical details of the Directors can be found
on the Company’s website and in the Directors’ Report of this
report.
Stephen Clow is the
Company Secretary and helps the Company comply with all applicable
rules, regulations and obligations governing its operation.
The Company can also draw on the advice of its solicitors and
corporate and financial advisors Cairn Financial Advisers LLP (who
were appointed post period end). The Directors have access to all
advisers, Company Secretary, lawyers and auditors as and when
required and are able to obtain advice from other external bodies
when necessary. If required, the Directors are entitled to take
independent legal advice and if the Board is informed in advance,
the cost of the advice will be reimbursed by the Company. Board
composition is always a factor for consideration in relation to
succession planning. The Board will seek to consider any Board
imbalances for future nominations, with areas considered including
Board independence and gender balance. The Group considers however
that at this stage of its development and given the current size of
its Board, it is not necessary to establish a formal Nominations
Committee. Instead, the appointments to the Board are made by the
Board as a whole and this position is reviewed on a regular basis
by the Board.
-
Evaluate Board performance based on clear and
relevant objectives, seeking continuous
improvement
The Directors consider that the Company and Board are
not yet of a sufficient size for a full Board evaluation to make
commercial and practical sense. In the frequent Board
meetings/calls, the Directors can discuss any areas where they feel
a change would benefit the Company, and the Company Secretary
remains on hand to provide impartial advice. As the Company grows,
it expects to expand the Board and with the Board expansion,
re-consider the need for Board evaluation. The Board continues to
conduct internal and external Board evaluations which consider the
balance of skills, experience, independence and knowledge of the
Company. The evaluation process, the Board refreshment, use of
third-party search companies and succession planning elements are
discussed. The Board evaluation of the Executives’ performance is
carried out on a regular basis. Given the level of activity and
size of the Company, no other evaluation is seen as appropriate. In
view of the size of the Board, the responsibility for proposing and
considering candidates for appointment to the Board as well as
succession planning is retained by the Board. All Directors submit
themselves for re-election at the AGM at regular
intervals.
-
Promote a corporate culture that is based on
ethical values and
behaviours
The Board recognises that its decisions regarding
strategy and risk will impact the corporate culture of the Company
as a whole and that this will impact the performance of the
Company. The Board is aware that the tone and culture set by the
Board will greatly impact all aspects of the Company as a whole and
the way that employees behave. The corporate governance
arrangements that the Board has adopted are designed to ensure that
the Company delivers long term value to its shareholders, and that
shareholders have the opportunity to express their views and
expectations for the Company in a manner that encourages open
dialogue with the Board. Therefore, the importance of sound ethical
values and behaviours is crucial to the ability of the Company to
successfully achieve its corporate objectives. The Board places
great importance on their responsibility for producing accurate
financial statements. The Board also places great importance on
accuracy and honesty and seeks to ensure that this aspect of
corporate life flows through all that the Company does. A large
part of the Company’s activities is centred upon an open and
respectful dialogue with employees, clients and other stakeholders.
Therefore, the importance of sound ethical values and behaviours is
crucial to the ability of the Company to successfully achieve its
corporate objectives. The Directors consider that the Company has
an open culture facilitating comprehensive dialogue and feedback
and enabling positive and constructive challenge. Whilst the
Company has a small number of employees, the Board maintains that
as the Company grows it intends to maintain and develop strong
processes which promote ethical values and behaviours across all
hierarchies.
The Board has adopted an anti-corruption and bribery
policy (Bribery Policy). The Bribery Policy applies to all
Directors and employees of the Group, and sets out their
responsibilities in observing and upholding a zero-tolerance
position on bribery and corruption, as well as providing guidance
to those working for the Company on how to recognise and deal with
bribery and corruption issues and the potential
consequences.
The Board complies with Rules relating to dealings in
the Company’s securities by the Directors and other such persons
discharging managerial responsibility. To this end, the Company has
adopted a code for Directors’ dealings appropriate for a Company
whose shares are admitted to trading on the London Stock Exchange
and takes all reasonable steps to ensure compliance by the
Directors and any relevant
employees.
-
Maintain governance structures and processes
that are fit for purpose and support good decision-making by the
Board
The Board is committed to, and ultimately responsible
for, high standards of corporate governance. The Board reviews the
Company’s corporate governance arrangements regularly and expect to
evolve this over time, in line with the Company’s
growth.
The Board would delegate responsibilities to
committees and individuals as it sees fit. However due to the size
of the Board and Company the Board considers it appropriate that
all committees, namely the audit and remuneration committee are
populated by the full Board with invitees as and when. The auditors
as an example are invited to the audit
committee.
The Boards’ principal responsibility is to ensure
that the Company and its Board are acting in the best interests of
shareholders.
The Executive Director is responsible for the general
day-to-day running of the business and developing corporate
strategy.
The Executive Director has, through powers delegated
by the Board, the responsibility for leadership of the management
team in the execution of the Group’s strategies and policies and
for the day-to-day management of the business. He is responsible
for the general day-to-day running of the business and developing
corporate strategy while the Non-Executive Directors are tasked
with constructively challenging the decisions of executive
management and satisfying themselves that the systems of business
risk management and internal financial controls are
robust.
All Directors participate in the key areas of
decision-making, including the following
matters:
-
Strategy
-
Budgets
-
Performance
-
Major Capital
Expenditure
-
Corporate
Actions
The Board would normally delegate authority to a
number of specific Committees to assist in meeting its business
objectives, and the Committees, comprising of at least two
independent Non-Executive Directors, would meet independently of
Board meetings.
However, the current Board structure does not permit
this, and the Directors will seek to take this into account when
considering future appointments. As a result, matters that would
normally be referred to the Nominations Committee are dealt with by
the combined Remuneration and Nominations
Committee.
The CEO and the Board continue to monitor and evolve
the Company’s corporate governance structures and processes, and
maintain that these will evolve over time, in line with the
Company’s growth and
development.
-
Communicate how the Company is governed and
is performing by maintaining a dialogue with shareholders and other
relevant
stakeholders
The Board is committed to maintaining effective
communication and having constructive dialogue with its
stakeholders. The Company intends to have ongoing relationships
with both its private and institutional shareholders (through
meetings and presentations), and for them to have the opportunity
to discuss issues and provide feedback at meetings with the
Company. In addition, all shareholders are encouraged to attend the
Company’s Annual General Meeting. The Board already discloses the
result of General Meetings by way of announcement and discloses the
proxy voting numbers to those attending the meetings. In order to
improve transparency, the Board has committed to publishing proxy
voting results on its website in the
future.
The Company communicates with shareholders through
the Annual Report and Accounts, full-year and half-year results
announcements and the Annual General Meeting (AGM). Information on
the Investor Relations section of the Group’s website is kept
updated and contains details of relevant developments, regulatory
announcements, financial reports and shareholder circulars. A range
of corporate information (including all Company announcements and
presentations) is also available to shareholders, investors and the
public on the Company’s corporate
website.
Shareholders with a specific enquiry can contact us
on the website contact page. The Company uses electronic
communications with shareholders in order to maximise
efficiency.
Corporate Governance
ReportFor
the Year Ended 31 October
2022Introduction
The Board continues to recognise that an effective
governance framework is fundamental in ensuring that the Group’s
ability to deliver long term shareholder value. The Group continues
to comply with the principles of the QCA Code
.
Board
composition
It is critical that the Board has the right
composition, so it can provide the best possible leadership for the
Group and discharge its duties to shareholders. This includes the
right balance of skills and experience, ensuring that all Directors
have a good working knowledge of the Group’s business and that the
Board retains its independence and
objectivity.
The Board currently comprises of two Non-Executive
Directors, of which one, being Simon
Grant-Rennick, is considered to be independent, and one
executive director. Xin (Andy) Sui
was appointed CEO on 3 October 2022.
At that time it was decided that due to the size of the Board and
the business a Chairman would not be
appointed.
The articles of association require a third, but not
greater than a third, of the Directors to retire by rotation each
year.
There are regular Board meetings each year and other
meetings are held as required to direct the overall Company
strategy and operations. Board meetings follow a formal agenda
covering matters specifically reserved for decision by the Board.
These cover key areas of the Company's affairs including overall
strategy, acquisition policy, approval of budgets, major capital
expenditure and significant transactions and financing
issues.
The Board has delegated certain responsibilities,
within defined terms of reference, to the audit committee and the
remuneration committee as described below. The appointment of new
Directors is made by the Board as a whole. During the year ended
31 October 2022, there were seventeen
Board meetings, two audit committee meeting and no remuneration
committee meetings. All meetings were fully attended and
quorate.
The Board undertakes an annual evaluation of its own
performance and that of its committees and individual Directors,
through discussions and one-to-one
reviews.
Board
effectiveness
The Board is unanimous in its view that the Board
appointments have a range of experience, skills and strength of
leadership. The Company’s procedures for new Directors include
undergoing a full induction process, and will continue with ongoing
training, tailored to their knowledge and previous experience. A
short biography of all Directors can be found in the Directors’
Report herein.
Shareholder
engagement
As CEO, I am responsible for the effective
communication between shareholders and the Company and for ensuring
the Board understands the views of major
shareholders.
I look forward to listening to the views of our
shareholders at the Company’s next AGM. Directors regularly meet
with a cross section of the Company shareholders to ensure an
ongoing dialogue is maintained and report to the Board on feedback
received from shareholders. I also make myself available to meet
any of our shareholders who wish to discuss matters regarding the
Company.
Audit
committee
The audit committee is currently headed by
Robert Scott, the Chairman of the
committee, and comprises Xin (Andy)
Sui and Simon Grant-Rennick.
The committee's terms of reference are in accordance with the UK
Corporate Governance Code. The committee reviews the Company's
financial and accounting policies, interim and final results and
annual report prior to their submission to the Board, together with
management reports on accounting matters and internal control and
risk management systems. It reviews the auditor’s management letter
and considers any financial or other matters raised by both the
auditors and
employees.
During the year under review the Company announced
the appointment of RPG Crouch Chapman (“RPG”) Jones, as auditor to
the Company. The appointment of RPG will be subject to
approval by shareholders at the next Annual General Meeting of the
Company. The appointment of RPG follows the resignation of Jeffreys
Henry LLP as auditors to the Company. Section 519 of the Companies
Act 2006 (the "Act") requires Jeffreys Henry LLP to send a
statement of the reasons for ceasing to hold office. They have
stated that in accordance with Section 519 of the Act, they are
ceasing to hold office on the grounds that the firm has taken the
decision not to register as an auditor eligible to undertake Public
Interest Entity
audits.
There are no circumstances connected with Jeffreys
Henry LLP ceasing to hold office as auditor which it considers
should be brought to the attention of the Company’s members or
creditors.
While searching for a PIE registered auditor the
committee approached many auditors to perform the audit however by
and large each one had capacity constraints and could not accept
the appointment. The Company further notes that it announced on
15 December 2022 that Jones Hunt & Keelings ("JH&K") had been
appointed as auditor of the Company however their registration as a
Public Interest Entity auditor has not come through and as such,
they were not in a position to accept the
audit.
Due to delays in appointing a PIE registered auditor,
the Company could not complete its statutory audit or publication
of results or statutory filing at Companies House on time. As such,
trading in the Company’s ordinary shares and its listing on the
Official List of the Financial Conduct Authority was suspended
pending the publication of these audited results. The Company was
granted an extension of its filing obligations by Companies
House.
The committee considers the independence of the
external auditors and ensures that, before any non-audit services
are provided by the external auditors, they will not impair the
auditor’s objectivity and independence. During the year, non-audit
services totalled £Nil (2021:
£Nil).
There is currently no internal audit function within
the Group. The Directors consider that this is appropriate of a
Group of this size.
The committee has primary responsibility for making
recommendations to the Board in respect of the appointment,
re-appointment and removal of the external
auditors.
Independent Auditor’s
ReportTo
the Members of Everest Global
Plc
Qualified
Opinion
We have audited the
financial statements of Everest Global Plc (the ‘Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 October 2022 which comprise the Group and
Company statements of comprehensive income, statements of changes
in equity, statements of financial position, statements of cash
flows and notes to the financial statements, 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 International Financial
Reporting Standards as adopted in the United Kingdom
(IFRS).
In our opinion, except
for 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 Company’s affairs as at
31 December 2022 and of the Group’s
loss for the year then
ended;
-
have been properly
prepared in accordance with IFRS;
and;
-
have been prepared in
accordance with the requirements of the Companies Act
2006.
Basis for qualified
opinion
The Group recorded
closing inventory of £175,875. We were appointed after the balance
sheet date and were unable to arrange attendance at the year-end
counting of inventory. We were therefore unable to verify the
closing value of inventory and the associated impact on cost of
sales.
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 qualified
opinion.
Material uncertainty related to going
concern
We draw attention to
note 2a in the financial statements, which indicates events or
conditions identified that may cast significant doubt over the
Company’s ability to continue as a going concern. As stated in note
2a, these events or conditions, along with other matters set forth
in note 2a, indicate that a material uncertainty exists that may
cast significant doubt on the Company’s ability to continue as a
going concern. Our opinion is not modified in respect of this
matter.
In auditing the
financial statements, we have concluded that the 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 entity’s ability to continue to adopt
the going concern basis of accounting
included:
-
Review budgets and
cash flows projections up to 31 December
2024;
-
Comparison of budget
to past
performance;
-
Sensitise cash flows
for variations in trading performance and working capital
requirements;
-
Consider if there is
any other information brought to light during the audit that would
impact on the going concern
assessment;
-
Review of working
capital facilities and assess headroom available in the
projections;
and
-
Review of adequacy and
completeness of disclosures in the financial statements in respect
of the going concern
assumption.
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 group and the parent company, the
accounting processes and controls, and the industry in which they
operate.
We performed the audit of
the Company and reviewed the work performed by the component
auditor in addition to performing our own tests on the Company’s
subsidiary.
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. The matter identified was
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 the previous section of this report.
The other key audit matters identified are listed
below.
Key audit
matter |
How our work addressed this
matter |
Revenue
recognitionRevenue recognition is a
presumed risk of fraud under International Auditing
Standards.Given the subjectivity of
estimates involved, we consider the carrying value of property to
be a key audit matter. |
Our work
included:
-
Reviewing accounting policies adopted and
ensuring these are in accordance with
IFRS;
-
Confirming revenue has been recognised in
accordance with the accounting
policies;
-
Reconciling expected income for a sample of
contracts to amounts reported in the
accounts.
-
Reviewing settlement of contract values after
the period end;
and
-
Where no post year end settlement has occurred,
for amounts agreed in the period consider the accuracy of past
estimates.
|
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 gross assets
to be the most significant determinant of the Group’s financial
performance used by the users of the financial statements. We have
based materiality on 1.5% of gross assets for each of the operating
components. Overall materiality for the Group was therefore set at
£28,000. For each component, the materiality set was lower than the
overall group
materiality.
We agreed with the
Audit Committee that we would report on all differences in excess
of 5% of materiality relating to the Group financial statements. We
also report to the Audit Committee on financial statement
disclosure matters identified when assessing the overall
consistency and presentation of the consolidated financial
statements.
Other
information
The directors are
responsible for the other information. The other information
comprises the information included in the annual report, other than
the financial statements and our auditor’s report thereon. 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.
Matters on which we are required to report by
exception
In the light of the
knowledge and understanding of the group and the parent company and
its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors’
report.
We have nothing to report
in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our
opinion:
-
adequate accounting
records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not
visited by us;
or
-
the parent company
financial statements are not in agreement with the accounting
records and returns;
or
-
certain disclosures of
directors’ remuneration specified by law are not made;
or
-
we have not received
all the information and explanations we require for our
audit.
Responsibilities of
directors
As explained more fully in
the directors’ responsibilities statement set out in the Directors’
Report, 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 group’s
and the parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
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:
-
We obtained an
understanding of the legal and regulatory frameworks within which
the Group operates focusing on those laws and regulations that have
a direct effect on the determination of material amounts and
disclosures in the financial
statements.
-
We identified the
greatest risk of material impact on the financial statements from
irregularities, including fraud, to be the override of controls by
management. Our audit procedures to respond to these risks included
enquiries of management about their own identification and
assessment of the risks of irregularities, sample testing on the
posting of journals and reviewing accounting estimates for
biases.
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
12 April 2023 and this is the first
year of our engagement as auditors for the
Group.
We confirm that we are
independent of the Group and have not provided any prohibited
non-audit services, as defined by the Ethical Standard issued by
the Financial Reporting
Council.
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
5th Floor,
14-16 Dowgate Hill
London
EC4R
2SU
26
July 2023
Statement of Comprehensive
IncomeFor
the Year Ended 31 October
2022
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
Revenue from contracts with
customers |
5 |
1,698,839 |
1,404,234 |
- |
- |
Cost of
sales |
|
(1,278,471) |
(1,024,430) |
- |
- |
|
|
|
|
|
|
Gross
profit |
|
420,368 |
379,804 |
- |
- |
|
|
|
|
|
|
Other
income |
6 |
1,264 |
- |
- |
- |
Administrative
expenses |
9 |
(1,573,802) |
(895,464) |
21,587 |
(345,735) |
Impairments |
10 |
- |
- |
(227,939) |
(161,091) |
|
|
|
|
|
|
Operating
loss |
|
(1,152,170) |
(515,660) |
(206,352) |
(506,826) |
|
|
|
|
|
|
Finance
costs |
11 |
(3,418,549) |
(224,631) |
(135,775) |
(99,785) |
Finance
income |
12 |
157 |
155,658 |
20,439 |
158,568 |
|
|
|
|
|
|
Loss for the year from continuing
operations |
|
(4,570,562) |
(584,633) |
(321,688) |
(448,043) |
Tax on loss on ordinary
activities |
13 |
|
|
|
|
|
|
|
|
|
|
Loss for the year from continuing
operations |
|
(4,570,562) |
(584,633) |
(321,688) |
(448,043) |
Other comprehensive
income |
|
- |
- |
- |
- |
Total comprehensive loss for the year from
continuing
operations |
|
(4,570,562) |
(584,633) |
(321,688) |
(448,043) |
|
|
|
|
|
|
Loss attributable to ordinary
shareholders |
(4,571,084) |
(584,633) |
(321,688) |
(448,043) |
Loss attributable to non-controlling
interest |
|
522 |
- |
- |
- |
|
|
|
|
|
|
Total comprehensive loss attributable to
ordinary
shareholders |
|
(4,570,562) |
(584,633) |
(321,688) |
(448,043) |
Total comprehensive loss attributable to
non-controlling
interest |
|
- |
- |
- |
- |
|
|
|
|
|
|
Basic and diluted earnings per
share |
14 |
(17.79p) |
(2.66p) |
|
|
All amounts relate to continuing
operations.
Group Statement of Changes in
Equity
For the Year Ended 31 October
2022
Group |
Share
capital |
Share
premium |
Share based payments
reserve |
Equity portion of convertible loan
notes |
Retained
earnings |
Total
equity |
Non-controlling
interest |
Total
equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Balance at 31 October
2020 |
439,322 |
2,571,247 |
83,377 |
- |
(3,831,894) |
(737,948) |
- |
(737,948) |
Equity portion of Convertible Loan Notes issued
during the
year |
- |
- |
- |
74,935 |
- |
74,935 |
- |
74,935 |
Loss for the
year |
- |
- |
- |
- |
(584,633) |
(584,633) |
- |
(584,633) |
Balance at 31 October
2021 |
439,322 |
2,571,247 |
83,377 |
74,935 |
(4,416,527) |
(1,247,646) |
- |
(1,247,646) |
Shares
issued |
260,000 |
390,000 |
- |
- |
- |
650,000 |
- |
650,000 |
Shares issued on conversion of Convertible Loan
Notes |
147,463 |
221,194 |
- |
- |
- |
368,657 |
- |
368,657 |
Settlement of debt by the issue of
shares |
76,473 |
76,473 |
- |
- |
- |
152,946 |
- |
152,946 |
Extension of date of conversion of the Convertible
Loan Notes |
- |
- |
- |
(32,396) |
- |
(32,396) |
- |
(32,396) |
Warrants issued during the
year |
- |
(218,799) |
218,799 |
- |
- |
- |
- |
- |
Loss attributable to non-controlling interest on
disposal of 49% of
subsidiary |
- |
- |
- |
- |
2,305,905 |
2,305,905 |
(2,305,905) |
- |
Loss for the
year |
- |
- |
- |
- |
(4,571,084) |
(4,571,084) |
522 |
(4,570,562) |
Balance at 31 October
2022 |
923,258 |
3,040,115 |
302,176 |
42,539 |
(6,681,706) |
(2,373,618) |
(2,305,383) |
(4,679,001) |
Share capital is the amount subscribed for shares at
nominal value.
The share premium has arisen on the issue of shares
at a premium to their nominal
value.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS
2.
Retained earnings represent the cumulative loss of
the Group attributable to equity
shareholders.
Company Statement of Changes in
EquityFor
the Year Ended 31 OCTOBER
2021
Company |
Share
capital |
Share
premium |
Share based payments
reserve |
Equity portion of convertible loan
notes |
Retained
earnings |
Total
equity |
Non-controlling
interest |
Total
equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Balance at 31 October
2020 |
439,322 |
2,571,247 |
83,377 |
- |
(3,469,230) |
(375,284) |
- |
(375,284) |
Equity portion of Convertible Loan Notes issued
during the year |
- |
- |
- |
74,935 |
- |
74,935 |
- |
74,935 |
Loss for the
year |
- |
- |
- |
- |
(448,043) |
(448,043) |
- |
(448,043) |
Balance at 31 October
2021 |
439,322 |
2,571,247 |
83,377 |
74,935 |
(3,917,273) |
(748,392) |
- |
(748,392) |
Shares
issued |
260,000 |
390,000 |
- |
- |
- |
650,000 |
- |
650,000 |
Shares issued on conversion of Convertible Loan
Notes |
147,463 |
221,194 |
- |
- |
- |
368,657 |
- |
368,657 |
Settlement of debt by the issue of
shares |
76,473 |
76,473 |
- |
- |
- |
152,946 |
- |
152,946 |
Extension of date of conversion of the Convertible
Loan Notes |
- |
- |
- |
(32,396) |
- |
(32,396) |
- |
(32,396) |
Warrants issued during the
year |
- |
(218,799) |
218,799 |
- |
- |
- |
- |
- |
Loss for the
year |
- |
- |
- |
- |
(321,688) |
(321,688) |
- |
(321,688) |
Balance at 31 October
2022 |
923,258 |
3,040,115 |
302,176 |
42,539 |
(4,238,961) |
69,127 |
- |
69,127 |
Statement of the Financial
Position
As at
31 October
2022
|
|
Group |
Group |
Company |
Company |
|
Notes |
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Assets |
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Investment in
subsidiaries |
15 |
- |
- |
- |
- |
Long term intercompany
loans |
16 |
- |
- |
- |
- |
Property, plant and
equipment |
17 |
13,884 |
13,769 |
- |
- |
Right of use
asset |
28 |
250,446 |
341,905 |
- |
- |
Total non-current
assets |
|
264,330 |
355,674 |
- |
- |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Investment in associate
(held for
sale) |
15 |
6,154 |
6,154 |
6,154 |
6,154 |
Inventories |
18 |
175,875 |
42,682 |
- |
- |
Trade and other
receivables |
19 |
282,529 |
297,800 |
11,219 |
28,737 |
Cash and cash
equivalents |
20 |
925,814 |
1,109,774 |
922,613 |
1,108,476 |
Total current
assets |
|
1,390,372 |
1,456,410 |
939,986 |
1,143,367 |
|
|
|
|
|
|
Total
assets |
|
1,654,702 |
1,812,084 |
939,986 |
1,143,367 |
|
|
|
|
|
|
Equity and
liabilities |
|
|
|
|
|
Share
capital |
22 |
923,258 |
439,322 |
923,258 |
439,322 |
Share
premium |
22 |
3,040,115 |
2,571,247 |
3,040,115 |
2,571,247 |
Share-based payments
reserve |
23 |
302,176 |
83,377 |
302,176 |
83,377 |
Equity portion of convertible loan
notes |
25 |
42,539 |
74,935 |
42,539 |
74,935 |
Retained
earnings |
|
(6,681,706) |
(4,416,527) |
(4,238,961) |
(3,917,273) |
Total owners'
equity |
|
(2,373,618) |
(1,247,646) |
69,127 |
(748,392) |
Non-controlling
interest |
24 |
(2,305,383) |
- |
- |
- |
Total
equity |
|
(4,679,001) |
(1,247,646) |
69,127 |
(748,392) |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
Non-current lease
liabilities |
28 |
166,070 |
269,215 |
- |
- |
Borrowings |
27 |
4,732,492 |
466,064 |
- |
- |
Convertible loan
notes |
26 |
710,274 |
778,065 |
710,274 |
778,065 |
Total non-current
liabilities |
|
5,608,836 |
1,513,344 |
710,274 |
778,065 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Current lease
liabilities |
28 |
100,485 |
77,887 |
- |
- |
Trade and other
payables |
21 |
624,382 |
1,468,499 |
160,585 |
1,113,694 |
Total current
liabilities |
|
724,867 |
1,546,386 |
160,585 |
1,113,694 |
|
|
|
|
|
|
Total equity and
liabilities |
|
1,654,702 |
1,812,084 |
939,986 |
1,143,367 |
Statement of Cash
Flow
For the
year ended 31 October
2022 |
|
|
Group |
Group |
Company |
Company |
|
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
|
2022 |
2021 |
2022 |
2021 |
|
|
|
£ |
£ |
£ |
£ |
Cash flows from operating
activities |
|
|
|
|
|
|
Operating
loss |
|
|
(1,152,170) |
(515,660) |
(206,352) |
(506,826) |
Adjustments
for: |
|
|
|
|
|
|
Add:
Depreciation |
17,28 |
|
84,960 |
78,109 |
- |
- |
Add: Impairment of
investment |
10 |
|
- |
- |
227,939 |
161,091 |
Add: (Profit)/loss on disposal of property, plant and
equipment |
17 |
|
- |
139 |
- |
- |
Add: unrealised foreign exchange
loss |
|
|
(41,293) |
(65,301) |
- |
- |
Finance costs
paid |
11 |
|
(124,889) |
(93,378) |
- |
- |
Interest
received |
12 |
|
157 |
155,658 |
- |
149,359 |
Profit on disposal of loans
receivable |
|
|
1 |
- |
1 |
- |
Changes in working
capital |
|
|
|
|
|
|
(Increase)/Decrease in
inventories |
|
|
(133,193) |
137,401 |
- |
- |
Decrease/(Increase) in
receivables |
|
|
15,271 |
(8,363) |
17,518 |
(16,574) |
(Decrease) / Increase in
payables |
|
|
(538,038) |
262,565 |
(647,030) |
212,409 |
Net cash flow from operating
activities |
|
|
(1,889,194) |
(48,830) |
(607,924) |
(541) |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
Acquisition of property, plant and
equipment |
17 |
|
(5,541) |
(8,767) |
- |
- |
Foreign exchange
movements |
17 |
|
(7) |
433 |
- |
- |
Increase in Intercompany Loans
Receivable |
|
|
- |
- |
(227,939) |
(80,611) |
Loans Receivable
repaid |
18 |
|
- |
944,004 |
- |
944,004 |
Net cash flow from investing
activities |
|
|
(5,548) |
935,670 |
(227,939) |
863,393 |
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
Net proceeds from issue of
shares |
23 |
|
650,000 |
- |
650,000 |
- |
Convertible loan notes
issued |
26 |
|
- |
220,000 |
- |
220,000 |
Increase / (decrease) in
borrowings |
29 |
|
1,134,015 |
32,973 |
- |
- |
Foreign exchange
movements |
29 |
|
- |
(8,043) |
- |
- |
Capital repayments of lease
liability |
|
|
(73,233) |
(67,071) |
- |
- |
Net cash flow from financing
activities |
|
|
1,710,782 |
177,859 |
650,000 |
220,000 |
|
|
|
|
|
|
|
Net cash flow for the
period |
29 |
|
(183,960) |
1,064,699 |
(185,863) |
1,082,852 |
Opening cash and cash
equivalents |
|
|
1,109,774 |
45,251 |
1,108,476 |
25,624 |
Foreign exchange
movements |
29 |
|
- |
(176) |
- |
- |
Closing cash and cash
equivalents |
21/29 |
|
925,814 |
1,109,774 |
922,613 |
1,108,476 |
Notes to Group Annual Financial
StatementsFor
the Year Ended 31 October
2022
-
General
Information
Everest Global plc is a company incorporated in the
United Kingdom. Details of the
registered office, the officers and advisers to the Company are
presented on the Directors and Advisers page at the beginning of
the annual report. The Company is admitted to the Official List (by
way of a Standard Listing under Chapter 14 of the Listing Rules)
and to trading on the London Stock Exchange’s Main Market for
listed securities. The information within these financial
statements and accompanying notes has been prepared for the year
ended 31 October 2022 with
comparatives for the year ended 31 October
2021.
-
Basis of
Preparation and Significant Accounting
Policies
The consolidated financial statements of Everest
Global Plc have been prepared in accordance with International
Financial Reporting Standards as adopted by the United Kingdom (IFRS as adopted by the UK),
IFRS Interpretations Committee and the Companies Act 2006
applicable to companies reporting under
IFRS.
The consolidated financial statements have been
prepared under the historical cost convention in the Group’s
reporting currency of Pound
Sterling.
The preparation of financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in
the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3. The preparation of
financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the
application of accounting policies and reported amounts of assets,
liabilities, income and expenses. Although these estimates are
based on management’s experience and knowledge of current events
and actions, actual results may ultimately differ from these
estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimates are revised if the
revision affects only that year or in the year of the revision and
future year if the revision affects both current and future
year.
a.
Going Concern
These consolidated financial statements
are prepared on the going concern basis. The going concern basis
assumes that the Group will continue in operation for the
foreseeable future and will be able to realise its assets and
discharge its liabilities and commitments in the normal course of
business. The Group has incurred significant operating losses and
negative cash flows from operations as the Group continued to
expand its operations during the year under
review.
There remains an active and liquid market
for the Group’s
shares.
As at 31 October
2022 the Group held £925,814 (2021: £1,109,774) in cash and
cash equivalents.
During the year, the Group raised additional equity
funding of £650,000 (2021: £Nil) in gross funding through share
subscriptions to fund working capital. In addition, the Company
converted £581,951.52 of convertible loan notes into new ordinary
shares. As part of the assignment of certain debts to VSA NEX, VSA
NEX have agreed to fund Dynamic so as to enable Dynamic to carry on
its business in the ordinary course until such time as the Company
ceases to hold any further shares in Dynamic. VSA NEX has signed a
subordination agreement in relation to the loans due by Dynamic to
VSA NEX with an expiry date of 31 October
2023. Should VSA NEX choose to request the repayment of the
loans due by Dynamic this will severely impact the Company's
ability to continue as a going
concern.
VSA NEX have agreed to subordinate the loans due to
themselves. The subordination agreement expires on 31 October 2023. In the event that VSA NEX do not
extend their subordination agreement and ask for repayment of their
loans, this would cast significant doubt on the Group’s ability to
continue as a going
concern.
The Directors have prepared cash flow forecasts.
These forecasts consider operating cash flows and capital
expenditure requirements for the Company and Dynamic, available
working capital and forecast expenditure, including overheads and
other costs. The Directors are of the opinion that the Group has
sufficient working capital and that no additional funding is
required. However, post year end the Group did raise £700,000 in
additional capital. Based upon the Company’s forecast, it has
sufficient cash for the foreseeable
future.
After careful consideration of the
matters set out above, the Directors are of the opinion that the
Group will be able to undertake its planned activities for the
period to 31 July 2024 from
production and from additional fund raising and have prepared the
consolidated financial statements on the going concern basis.
Nevertheless, due to the uncertainties inherent in meeting its
revenue predictions and obtaining additional fund raising there can
be no certainty in these respects. The financial statements do not
include any adjustments that would result if the Group was unable
to continue as a going concern. For this reason, the Directors
believe that there is a material uncertainty relating to the
Group’s going
concern.
b. New and Amended
Standards Adopted by the
Company
The Group has implemented IFRS as adopted by the
UK. At the point of transition from IFRS as adopted by the EU the
underlying requirements were identical. The following standards,
amendments and interpretations are new and effective for the year
ended 31 October 2022 and have been
adopted. None of the IFRS standards below had a material impact on
the financial
statements.
Reference |
Title |
Summary |
Application date of standard (Periods
commencing on or
after) |
IFRS
16 |
Leases |
COVID-19 related rent concessions Extension of the
practical expedient |
1 April
2021 |
IFRS 4,
IAS 7 and
IFRS 16 |
|
Interest rate benchmark reform – Phase 2.
The Phase 2 amendments address issues that arise from the
implementation of the reforms, including the replacement of one
benchmark with an alternative one. The Phase 2 amendments provide
additional temporary reliefs from applying specific IAS 39 and IFRS
9 hedge accounting requirements to hedging relationships directly
affected by IBOR
reform. |
1 January
2021 |
The following new standards, amendments to standards
and interpretations have been issued, but are not effective for the
financial year beginning 1 November
2022 and have not been early
adopted:
Reference |
Title |
Summary |
Application date of standard (Periods
commencing on or
after) |
IFRS
3 |
Business
Combinations |
Updating a reference in IFRS 3 to the Conceptual
Framework for Financial Reporting without changing the accounting
requirements for business
combinations. |
1 January
2022 |
IAS
16 |
Property, Plant and
Equipment |
Prohibits a Company from deducting from the cost of
property, plant and equipment amounts received from selling items
produced while the Company is preparing the asset for its intended
use. Instead, a Company will recognise such sales proceeds and
related cost in profit or
loss. |
1 January
2022 |
IAS
37 |
Provisions, contingent liabilities and contingent
assets |
Specifies which costs a Company includes when
assessing whether a contract will be
loss-making. |
1 January
2022 |
IAS
1 |
Presentation of Financial
Statements |
Clarifies that liabilities are classified as either
current or noncurrent, depending on the rights that exist at the
end of the reporting period. Classification is unaffected by the
expectations of the entity or events after the reporting date (for
example, the receipt of a waiver or a breach of covenant). The
amendment also clarifies what IAS 1 means when it refers to the
‘settlement’ of a
liability. |
1 January
2023 |
IAS 1 and IAS
8 |
‘Presentation of Financial Statements’ and
‘Accounting policies, changes in accounting estimates and
errors’ |
Amendments to improve accounting policy disclosures
and to help users of the financial statements to distinguish
between changes in accounting estimates and changes in accounting
policies. |
1 January
2023 |
IAS
12 |
Deferred
Taxation |
These amendments require companies to recognise
deferred tax on transactions that, on initial recognition give rise
to equal amounts of taxable and deductible temporary
differences. |
1 January
2023 |
IFRS17 |
Insurance
contracts |
This standard replaces IFRS 4, which currently
permits a wide variety of practices in accounting for insurance
contracts. IFRS 17 will fundamentally change the accounting by all
entities that issue insurance contracts and investment contracts
with discretionary participation
features. |
1 January
2023 |
The Directors anticipate that the adoption of these
standards and the interpretations in future periods will not have a
material impact on the financial statements of the
Group.
c.
Basis of
Consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 October each year. Control
is achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its
activities.
The results of subsidiaries acquired or disposed of
during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up
to the effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by other
members of the Group. All intra-Group transactions, balances,
income and expenses are eliminated on
consolidation.
Non-controlling interests in subsidiaries are
identified separately from the Group’s equity therein. Those
interests of non-controlling shareholders that are present
ownership interests entitling their holders to a proportionate
share of net assets upon liquidation may initially be measured at
fair value or at the non-controlling interests’ proportionate share
of the fair value of the acquiree’s identifiable net assets. The
choice of measurement is made on an acquisition-by-acquisition
basis. Other non-controlling interests are initially measured at
fair value. Subsequent to acquisition, the carrying amount of
non-controlling interests is the amount of those interests at
initial recognition plus the non-controlling interests’ share of
subsequent changes in
equity.
Profit or loss and each component of other
comprehensive income are attributed to the owners of the Company
and to the non-controlling interests. Total comprehensive income of
the subsidiaries is attributed to the owners of the Company and to
the non-controlling interests even if this results in the
non-controlling interests having a deficit
balance.
Changes in the Group’s ownership interests in
subsidiaries that do not result in the Group losing control over
the subsidiaries are accounted for as equity transactions. The
carrying amounts of the Group’s interests and the non-controlling
interests are adjusted to reflect the changes in their relative
interests in the
subsidiaries.
When the Group loses control of a subsidiary, the
profit or loss on disposal is calculated as the difference between
(i) the aggregate of the fair value of the consideration received
and the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities
of the subsidiary and any non-controlling interests. Where certain
assets of the subsidiary are measured at revalued amounts or fair
values and the related cumulative gain or loss has been recognised
in other comprehensive income and accumulated in equity, the
amounts previously recognised in other comprehensive income and
accumulated in equity are accounted for as if the Company had
directly disposed of the related assets (i.e. reclassified to
profit or loss or transferred directly to retained earnings). The
fair value of any investment retained in the former subsidiary at
the date when control is lost is regarded as the fair value on
initial recognition for subsequent accounting under IFRS 9
“Financial Instruments: Recognition and Measurement” or, when
applicable, the cost on initial recognition of an investment in an
associate or a jointly controlled
entity.
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 the assets transferred
by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests 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
acquired, and the liabilities assumed are recognised at their fair
value at the acquisition date, except
that:
-
deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits
respectively;
-
liabilities or equity instruments related to share-based payment
transactions of the acquiree or the replacement of an acquiree’s
share-based payment transactions with share-based payment
transactions of the Group are measured in accordance with IFRS 2
Share-based Payment at the acquisition date;
and
-
assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill
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 acquirer’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. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase
gain.
Joint Ventures and
Associates
A joint venture is a contractual agreement under
which two or more parties conduct an economic activity and
unanimous approval is required for the financial and operating
policies. Associates are all entities over which the Group has
significant influence but not control, generally accompanying a
shareholding between 20% and 50% of the voting rights. Joint
ventures and associates are accounted for using the equity method,
which involves recognition in the consolidated income statement of
EG’s share of the net result of the joint ventures and associates
for the year. Accounting policies of joint ventures and associates
have been changed where necessary to ensure consistency with the
policies adopted by the Group. EG’s interest in a joint venture or
associate is carried in the statement of financial position at its
share in the net assets of the joint venture or associate together
with goodwill paid on acquisition, less any impairment loss. When
the share in the losses exceeds the carrying amount of an
equity-accounted Company (including any other receivables forming
part of the net investment in the Company), the carrying amount is
written down to nil and recognition of further losses is
discontinued, unless we have incurred legal or constructive
obligations relating to the Company in
question.
d.
Property, Plant and
Equipment
Property, plant and equipment are stated at
historical cost less subsequent accumulated depreciation and
accumulated impairment losses, if any. Historical cost includes
expenditure that is directly attributable to the acquisition of the
items. Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial year in which they are incurred.
Depreciation on property, plant and equipment is calculated using
the straight-line method to write off their cost over their
estimated useful lives at the following annual
rates:
Leasehold
improvements |
33.3% |
Furniture, fixtures and
equipment |
17% |
Plant and
machinery |
20% and
33.3% |
Useful lives and depreciation method are reviewed and
adjusted if appropriate, at the end of each reporting
year.
An item of property, plant and equipment is
derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or
loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is
derecognised.
e.
Leased assets
The Group leases various offices and equipment.
Rental contracts are typically made for fixed periods of 3 years
but may have extension options for an additional 2 years. Lease
terms are negotiated on an individual basis and contain a wide
range of different terms and conditions. The lease agreements do
not impose any covenants, but leased assets may not be used as
security for borrowing
purposes.
The right-of use asset is depreciated over the
shorter of the asset's useful life and the lease term as per the
table below:
1st year of the
lease |
15% |
2nd year of the
lease |
17% |
3rd year of the
lease |
20% |
4th year of the
lease |
22% |
5th year of the
lease |
26% |
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.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and
conditions.
Right-of-use assets are measured at cost comprising
the following:
-
the amount of the initial measurement of lease
liability
-
any lease payments made at or before the commencement
date less any lease incentives received any initial direct costs,
and
-
restoration
costs.
Payments associated with short term leases and leases
of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise moving
equipment rented on a day to day
basis.
f. Investments in
Subsidiaries
Investments in subsidiaries are stated at cost less,
where appropriate, provisions for impairment.
g.
Inventories
Inventories are carried at the lower of cost and net
realisable value. Cost is determined using specific identification
and in the case of work in progress and finished goods, comprises
the cost of purchase, cost of conversion and other costs incurred
in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated cost of
completion and applicable selling
expenses.
When the inventories are sold, the carrying amount of
those inventories is recognised as an expense in the year in which
the related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the year in which the write-down or
loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the
reversal occurs.
h.
Impairment
Non-derivative financial
assets
Credit-impaired financial
assets
At each reporting date, the Group assesses whether
financial assets carried at amortised cost and debt securities at
Fair Value through Other Comprehensive Income (“FVOCI”) are
credit-impaired. A financial asset is “credit-impaired” when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial assets have
occurred.
Evidence that a financial asset is
credit-impaired includes the following observable
data:
•
significant financial difficulty of the borrower or
issuer;
• a
breach of contract such as a default or being more than 90 days
past due;
• the
restructuring of a loan or advance by the Group on terms that the
Group would not consider
otherwise;
• it
is probable that the borrower will enter bankruptcy or other
financial reorganisation;
or
• the
disappearance of an active market for a security because of
financial
difficulties.
A 12 month approach is followed in determining the
Expected Credit Loss
(“ECL”).
Presentation of allowance for ECL in the
statement of financial
position
Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying amount of the
assets.
For debt securities at FVOCI, the loss allowance is
charged to profit or loss and is recognised in Other Comprehensive
Income (“OCI”).
Write-off
The gross carrying amount of a financial asset is
written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
For corporate customers, the Group individually makes an assessment
with respect to the timing and amount of write-off based on whether
there is a reasonable expectation of recovery from the amount
written off. However, financial assets that are written off could
still be subject to enforcement activities in order to comply with
the Group’s procedures of recovery of the amounts
due.
i. Financial
Instruments
The Group classifies non-derivative financial assets
into the following categories: loans and receivables and Fair Value
through Profit and Loss (“FVTPL”) and Fair Value through OCI
(“FVTOCI”) financial
assets.
The Group classifies non-derivative financial
liabilities into the following category: other financial
liabilities.
i.
Non-derivative financial assets and financial liabilities –
Recognition and
derecognition
The Group initially recognises loans and receivables
on the date when they are originated. All other financial assets
and financial liabilities are initially recognised on the trade
date when the entity becomes a party to the contractual provisions
of the instrument.
The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred, or it neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control over the transferred asset.
Any interest in such derecognised financial assets that is created
or retained by the Group is recognised as a separate asset or
liability.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire.
Gains or losses on derecognition of financial liabilities are
recognised in profit or loss as a finance
charge.
Financial assets and financial liabilities are
offset, and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally
enforceable right to offset the amounts and intends either to
settle them on a net basis or to realise the asset and settle the
liability
simultaneously.
ii. Loans and
receivables-
Measurement
These assets are initially measured at fair value
plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at amortised cost using the
effective interest
method.
iii. Assets at FVOCI
-
Measurement
These assets are initially measured at fair value
plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at fair value and changes
therein, other than impairment losses, are recognised in OCI and
accumulated in the revaluation
reserve.
When these assets are derecognised, the gain or loss
accumulated in equity is reclassified to profit or
loss.
iv. Non-derivative
financial liabilities –
Measurement
Other non-derivative financial liabilities are
initially measured at fair value less any directly attributable
transaction costs. Subsequent to initial recognition, these
liabilities are measured at amortised cost using the effective
interest method.
v. Convertible
loan notes and derivative financial
instruments
The presentation and measurement of loan
notes for accounting purposes is governed by IAS 32 and IFRS 9.
These standards require the loan notes to be separated into two
components:
• a
derivative liability;
and
• a debt host
liability.
This is because the loan notes are convertible into
an unknown number of shares, therefore failing the
‘fixed-for-fixed’ criterion under IAS 32. This requires the
‘underlying option component’ of the loan note to be valued first
(as an embedded derivative), with the residual of the face value
being allocated to the debt host liability (refer financial
liabilities policy
above).
Compound financial instruments issued by the Group
comprise convertible notes denominated in British pounds that can
be converted to ordinary shares at the option of the holder, when
the number of shares to be issued is fixed and does not vary with
changes in fair
value.
The liability component of compound financial
instruments is initially recognised at the fair value of a similar
liability that does not have an equity conversion option. The
equity component is initially recognised at the difference between
the fair value of the compound financial instrument as a whole and
the fair value of the liability component. Any directly
attributable transaction costs are allocated to the liability and
equity components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability
component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity
component of a compound financial instrument is not
remeasured.
Interest related to the financial liability is
recognised in profit or loss. On conversion at maturity, the
financial liability is reclassified to equity and no gain or loss
is recognised.
The Group’s financial liabilities include amounts due
to a director, trade payables and accrued liabilities. These
financial liabilities are classified as FVTPL are stated at fair
value with any gains or losses arising on re-measurement recognised
in profit or loss. Other financial liabilities, including
borrowings are initially measured at fair value, net of transaction
costs.
j.
Borrowings
Borrowings are presented as current liabilities
unless the Group has an unconditional right to defer settlement for
at least 12 months after the reporting period, in which case they
are presented as non-current
liabilities.
Borrowings are initially recorded at fair value, net
of transaction costs and subsequently carried for at amortised
costs using the effective interest method. Any difference between
the proceeds (net of transaction costs) and the redemption value is
recognised in profit or loss over the year of the borrowings using
the effective interest method. Borrowings which are due to be
settled within twelve months after the reporting period are
included in current borrowings in the statement of financial
position even though the original term was for a period longer than
twelve months and an agreement to refinance, or to reschedule
payments, on a long-term basis is completed after the reporting
period and before the financial statements are authorised for
issue.
k.
Revenue
Recognition
Performance obligations and service recognition
policies
Revenue is measured based on the consideration
specified in a contract with a customer. The Group recognises
revenue when it transfers control over of goods or services to a
customer.
The following table provides information about the
nature and timing of the satisfaction of performance obligations in
contracts with customers, including significant payment terms, and
the related revenue recognition
policies.
Type of product/
service |
Nature and timing of satisfaction
of performance obligations, including significant payment
terms |
Revenue recognition under IFRS
15 |
Sale of
goods |
Customers obtain control of the goods
when the goods have been delivered to them and have been accepted
at their premises or the agreed point of delivery. Invoices are
generated at that point in time net of rebates and discounts.
Invoices are generally payable within 30 days. No settlement
discounts are provided
for.
The sale of the goods are not subject to
a return
policy. |
Revenue is recognised when the goods are
delivered and have been accepted by the customers at their premises
or the agreed point of
delivery. |
Interest
revenue |
Interest income is recognised in the
income statement for all interest-bearing instruments (whether
classified as held-to-maturity, FVTOCI, FVTPL, derivatives or other
assets) on an accrual basis using the effective
interest method based on the
actual purchase price including
direct transaction
costs. |
Once a financial asset has been written
down to its estimated recoverable amount, interest income is
thereafter recognised based on the effective interest rate that was
used to discount the future cash flows for the purpose of measuring
the recoverable
amount. |
l. Cost of
Sales
Cost of sales consists of all costs of purchase and
other directly incurred
costs.
Cost of purchase comprises the purchase price, import
duties and other taxes (other than those subsequently recoverable
by the Group from the taxing authorities), if any, and transport,
handling and other costs directly attributable to the acquisition
of goods. Trade discounts, rebates and other similar items are
deducted in determining the costs of purchase. Cost of conversion
primarily consists of hiring charges of subcontractors incurred
during conversion.
m.
Finance Income and Finance
Costs
The Group’s finance income and finance
costs include:
•
interest income;
•
interest expense; and
• dividend
income.
Interest income and expense is recognised using the
effective interest method. Dividend income is recognised in profit
or loss on the date on which the Group’s right to receive payment
is established.
The “effective interest rate” is the rate
that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument
to:
• the
gross carrying amount of the financial asset;
or
• the amortised
cost of the financial
liability.
In calculating interest income and expense, the
effective interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to the
amortised cost of the liability. However, for financial assets that
have become credit-impaired subsequent to initial recognition,
interest income is calculated by applying the effective interest
rate to the amortised cost of the financial asset, if the asset is
no-longer credit-impaired, then the calculation of interest income
reverts to the gross
basis.
n.
Taxation
Income tax expense represents the sum of the tax
currently payable and deferred
tax.
The tax currently payable is based on taxable profit
for the year. Taxable profit differs from net profit as reported in
the statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years,
and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the
reporting year.
Deferred tax is recognised on temporary differences
between the carrying amount of assets and liabilities in the
consolidated financial statements and the corresponding tax bases
used in the computation of taxable profit. Deferred tax liabilities
are generally recognised for all taxable temporary
differences.
Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those
deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable
profit nor the accounting
profit.
Deferred tax liabilities are recognised for taxable
temporary differences associated with investments in subsidiaries,
except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated
with such investments are only recognised to the extent that it is
probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they
are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting year 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 assets and liabilities are measured at
the tax rates that are expected to apply in the year in which the
liability is settled or the asset realised. The measurement of
deferred tax assets and liabilities reflects the tax consequences
that would follow from the manner in which the Group expects, at
the end of the reporting year, to recover or settle the carrying
amount of its assets and
liabilities.
Current or deferred tax for the year is recognised in
profit or loss, except when it relates to items that are recognised
in other comprehensive income or directly in equity, in which case
the current and deferred tax is also recognised in other
comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for
a business combination, the tax effect is included in the
accounting for the business
combination.
o.
Cash and Cash
Equivalents
Cash and cash equivalents comprise cash at bank and
on hand, demand deposits with banks and other financial
institutions, and short-term, highly liquid investments that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value, having been
within three months of maturity at acquisition. Bank overdrafts
that are repayable on demand and form an integral part of the
Group’s cash management are also included as a component of cash
and cash equivalents for the purpose of the consolidated statement
of cash flows.
p.
Provisions and
Contingencies
Provisions are recognised when the Group has a
present obligation as a result of a past event, and it is probable
that the Group will be required to settle that obligation.
Provisions are measured at the Directors’ best estimate of the
expenditure required to settle the obligation at the statement of
financial position date and are discounted to present value where
the effect is material. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A
provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations
may be small.
When the effect of discounting is material, the
amount recognised for a provision is the present value at the
reporting date of the future expenditures expected to be required
to settle the obligation. The increase in the discounted present
value amount arising from the passage of time is included in
finance costs in the statement of comprehensive
income.
Contingent liabilities are not recognised in the
financial statements. They are disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote. A
contingent asset is not recognised in the financial statements but
disclosed when an inflow of economic benefits is
probable.
q.
Share Capital
Ordinary shares are classified as equity. Proceeds
from issuance of ordinary shares are classified as equity.
Incremental costs directly attributable to the issuance of new
ordinary shares are deducted against share capital and share
premium.
r. Foreign
Currencies
In preparing the financial statements of each
individual group entity, transactions in currencies other than the
functional currency of that entity (foreign currencies) are
recorded in the respective functional currency (i.e. the currency
of the primary economic environment in which the entity operates)
at the rates of exchanges prevailing on the dates of the
transactions. At the end of the reporting year, monetary items
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical costs
in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of
monetary items, and on translation of monetary items, are
recognised in profit or loss in the year in which they arise.
Exchange differences arising on the retranslation of non-monetary
items carried at fair value are included in profit or loss for the
year except for differences arising on the retranslation of
non-monetary items in respect of which gains, and losses are
recognised directly in other comprehensive income, in which cases,
the exchange differences are also recognised directly in other
comprehensive income.
For the purposes of presenting the consolidated
financial statements, assets and liabilities of the Group’s foreign
operations are translated from South African Rand into the
presentation currency of the Group of Pound Sterling at the rate of
exchange prevailing at the end of the reporting year, and their
income and expenses are translated at the average exchange rates
for the year, unless exchange rates fluctuate significantly during
that year, in which case, the exchange rates prevailing at the
dates of transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and accumulated
in equity.
The principal exchange rates during the year are set
out in the table
below:
Rate compared to
£ |
Year End Rate
2022 |
Year End Rate
2021 |
South African
Rand |
21.04 |
20.83 |
US
Dollar |
1.15 |
1.37 |
s.
Employee
Benefits
Salaries, annual bonuses, paid annual leave and the
cost to the Group of non-monetary benefits are accrued in the year
in which employees of the Group render the associated services.
Where payment or settlement is deferred and the effect would be
material, these amounts are stated at their present
values.
t. Segmental
Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision-maker, who
is responsible for allocating resources and assessing performance
of the operating segments, has been identified as the executive
Director who makes strategic
decisions.
-
Critical
Accounting Estimates and
Judgements
Estimates and judgements are continually evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the
circumstances.
In the application of the Group’s accounting
policies, which are described above, management is required to make
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and assumptions that had a significant risk of causing a
material adjustment to the carrying amount of assets and
liabilities are discussed
below.
a.
Inventory
Valuation
Inventory is valued at the lower of cost and net
realisable value. Net realisable value of inventories is the
estimated selling price in the ordinary course of business, less
estimated costs of completion and selling expenses. These estimates
are based on the current market conditions and the historical
experience of selling products of a similar nature. It could change
significantly as a result of competitors’ actions in response to
severe industry cycles. The Group reviews its inventories in order
to identify slow-moving merchandise and uses markdowns to clear
merchandise. Inventory value is reduced when the decision to
markdown below cost is
made.
b.
Impairment of long term Inter-Company
Receivables
The Group’s management reviews long-term
inter-Company receivables on a regular basis to determine if any
provision for impairment is necessary. The policy for the
impairment of long-term inter-Company receivables of the Group is
based on, where appropriate, the evaluation of collectability, the
trading performance of the relevant subsidiary and on management’s
judgement. A considerable amount of judgement is required in
assessing the ultimate realisation of these outstanding amounts,
including the current and estimated future trading performance of
the relevant subsidiary. If the financial conditions of
inter-Company debtors of the Group were to deteriorate, resulting
in an impairment of their ability to make payments, a provision for
impairment may be
required.
c.
Impairment of
Receivables
The Group’s management reviews receivables on a
regular basis to determine if any provision for impairment is
necessary. The policy for the impairment of receivables of the
Group is based on, where appropriate, the evaluation of
collectability and ageing analysis of the receivables and on
management’s judgement. A considerable amount of judgement is
required in assessing the ultimate realisation of these outstanding
amounts, including the current creditworthiness and the past
collection history of each debtor. If the financial conditions of
debtors of the Group were to deteriorate, resulting in an
impairment of their ability to make payments, provision for
impairment may be
required.
d Incremental borrowing
cost of Right of Use Assets and Lease
Liabilities
In assessing the Group’s right of use assets and
lease liabilities, the Group has to assess its incremental
borrowing costs. As an approximation of the Group’s incremental
long term borrowing costs, the Group estimated the borrowing costs
associated with similar long term, asset based financing
arrangements. The Group based the implied incremental borrowing
costs on the South African prime lending rate applicable at the
date of commencement of the agreement and added an appropriate
lending premium that would be typically applied by lenders. At the
year end the estimated incremental borrowing costs used amounted to
8.5% (2021: 8.5%).
e.
Income Taxes
The Group is subject to income taxes in South Africa and the UK. The South African
income taxes are administered by South African accountants.
Significant judgement is required in determining the provision for
income taxes and the timing of payment of the related tax. There
are certain transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of
business. The Group recognises liabilities for anticipated tax
based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact
the income tax provision in the year in which such determination is
made.
f. Share Based
Payments
The fair value of share-based payments recognised in
the income statement is measured by use of the Black Scholes model,
which considers conditions attached to the vesting and exercise of
the equity instruments. The expected life used in the model is
adjusted; based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management’s best estimate of future
share price behaviour based on past experience, future expectations
and benchmarked against peer companies in the
industry.
g.
Equity portion of Convertible Loan
Notes
The Group provides for the equity portion of
convertible loan notes by applying an estimated interest rate in
determining the present values of the convertible loan notes and
the interest payable thereon over the life of the convertible loan
notes.
h.
Depreciation and
Amortisation
The Group depreciates property, plant and
equipment and amortises the leasehold buildings and land use rights
on a straight-line method over the estimated useful lives. The
estimated useful lives reflect the Directors’ estimate of the years
that the Group intends to derive future economic benefits from the
use of the Group’s property, plant and
equipment.
-
Segmental
Reporting
In the opinion of the Directors, the
Group has one class of business, being the trading of agricultural
materials. The Group’s primary reporting format is determined by
the geographical segment according to the location of its
establishments. There is currently only one geographic reporting
segment, which is South Africa.
All revenues and costs are derived from the single
segment.
-
Revenue
|
|
Group |
Group |
Company |
Company |
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
Major product/service
lines |
|
|
|
|
|
Sale of agricultural
materials |
|
1,698,839 |
1,404,234 |
- |
- |
|
|
|
|
|
|
Primary geographic
markets |
|
|
|
|
|
South
Africa |
|
1,698,839 |
1,404,234 |
- |
- |
|
|
|
|
|
|
Timing of revenue
recognition |
|
|
|
|
|
Products transferred at a point in
time |
|
1,698,839 |
1,404,234 |
- |
- |
-
Other
Income
|
|
Group |
Group |
Company |
Company |
|
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
|
ending |
ending |
ending |
ending |
|
|
|
31
October |
31
October |
31
October |
31
October |
|
|
|
2022 |
2021 |
2022 |
2021 |
|
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
Settlement discounts
received |
|
(1) |
- |
(1) |
- |
|
Profit on disposal of loan to
subsidiary |
|
1 |
|
1 |
|
Profit on disposal of property plant and
equipment |
|
1,264 |
- |
- |
- |
|
|
|
1,264 |
- |
- |
- |
|
-
Personnel Expenses
and Staff Numbers (Including
Directors)
|
|
Group |
Group |
Company |
Company |
|
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
|
ending |
ending |
ending |
ending |
|
Number |
|
31
October |
31
October |
31
October |
31
October |
|
|
|
2022 |
2021 |
2022 |
2021 |
|
The average number of employees in the year
were: |
|
|
|
|
Directors |
|
3 |
4 |
3 |
4 |
|
Management |
|
3 |
2 |
- |
- |
|
Accounts and
administration |
|
2 |
2 |
- |
- |
|
Sales |
|
1 |
3 |
- |
- |
|
Manufacturing/warehouse |
|
8 |
13 |
- |
- |
|
Total |
|
17 |
24 |
3 |
4 |
|
|
|
£ |
£ |
£ |
£ |
|
The aggregate payroll costs for
these |
|
|
|
|
|
|
persons
were: |
|
232,273 |
278,499 |
59,032 |
68,681 |
|
Average ratio of executive pay verses average
employee pay |
|
0.85 |
1.01 |
|
|
|
|
|
|
|
|
|
|
Average
Directors |
|
11,974 |
11,742 |
|
|
|
Average of all
employees |
|
13,663 |
11,604 |
|
|
|
Average of non-director
employees |
|
14,025 |
11,577 |
|
|
|
-
Directors’
Remuneration
|
|
Group |
Group |
Company |
Company |
|
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
|
ending |
ending |
ending |
ending |
|
|
|
31
October |
31
October |
31
October |
31
October |
|
Salaries and
Fees |
|
2022 |
2021 |
2022 |
2021 |
|
|
|
£ |
£ |
£ |
£ |
|
David Lenigas
(resigned) |
|
- |
9,000 |
- |
9,000 |
|
Robert
Scott |
|
12,000 |
12,000 |
12,000 |
12,000 |
|
Andrew Monk
(resigned)* |
|
12,923 |
13,966 |
12,923 |
13,966 |
|
Matt Bonner
(resigned) |
|
11,000 |
12,000 |
11,000 |
12,000 |
|
|
|
35,923 |
46,966 |
35,923 |
46,966 |
|
* Included in Andrew Monk’s remuneration
is £1,923 for National
Insurance.
No pension contributions were made by the
Company on behalf of its directors other than for Andrew Monk. Included in Andrew Monk’s
remuneration are pension contributions amounting to £330 (2021:
£360).
At the year-end a total of £33,587 (2021:
£62,126) was outstanding in respect of directors’
emoluments.
-
Expenses -
Analysis by
Nature
|
|
Group |
Group |
Company |
Company |
|
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
|
ending |
ending |
ending |
ending |
|
|
|
31
October |
31
October |
31
October |
31
October |
|
|
|
2022 |
2021 |
2022 |
2021 |
|
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
Auditor's remuneration for audit services:
Parent |
45,000 |
27,256 |
45,000 |
27,256 |
|
Auditor's remuneration for audit related
services |
|
- |
1,500 |
- |
1,500 |
|
Under-provision of prior year audit
fee |
11,530 |
- |
11,530 |
- |
|
Auditor's remuneration for audit services:
Subsidiary |
17,308 |
3,536 |
- |
- |
|
Brokership
fees |
|
15,000 |
39,724 |
15,000 |
39,724 |
|
Legal and professional
fees |
|
(269,522) |
36,089 |
(269,522) |
34,261 |
|
Registrar
fees |
|
3,034 |
5,138 |
3,034 |
5,138 |
|
Depreciation on property, plant and equipment (Note
17) |
|
5,419 |
10,590 |
- |
- |
|
Depreciation on IFRS 16 Right of Use Asset (Note
28) |
|
79,541 |
67,519 |
- |
- |
|
(Gain) /loss on
exchange |
|
1,061,452 |
145,055 |
305 |
50,725 |
|
Personnel expenses (Note
7) |
|
232,273 |
278,499 |
59,032 |
68,681 |
|
Other administrative
expenses |
|
372,767 |
280,558 |
114,034 |
118,450 |
|
Subtotal |
|
1,573,802 |
895,464 |
(21,587) |
345,735 |
|
Admission and regulatory
expenses |
|
- |
- |
- |
- |
|
Total administrative
expenses |
|
1,573,802 |
895,464 |
(21,587) |
345,735 |
|
-
Impairments
During the financial year, the
recoverability of the investment was evaluated and in management’s
estimation, it was considered necessary to impair the goodwill on
consolidation, the investment in the subsidiary and the
intercompany loans
receivable.
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Impairment of
goodwill |
|
- |
- |
- |
- |
Impairment of investment in
subsidiary |
- |
- |
- |
- |
Impairment of inter-company loans
receivable |
- |
- |
227,939 |
161,091 |
|
|
- |
- |
227,939 |
161,091 |
-
Finance
Costs
|
|
Group |
Group |
Company |
Company |
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Interest paid on
borrowings |
|
124,889 |
93,378 |
- |
- |
Interest accrued on convertible loan
notes |
135,775 |
99,785 |
135,775 |
99,785 |
Lease
liability |
|
25,995 |
31,468 |
- |
- |
Finance charges associated with disposal of
intercompany loan to VSA NEX Investments Limited (note
1) |
|
3,131,890 |
- |
- |
|
|
|
3,418,549 |
224,631 |
135,775 |
99,785 |
Finance costs represent interest and
charges in respect of the discounting of invoices, the interest
accrual for the Convertible Loan Notes issued and the interest
charged on capitalised right-of use lease
liability.
Note 1: These finance charges relate to
the disposal of an inter-company loan to VSA NEX. Refer to Note 30
for more information.
-
Finance
Income
|
|
Group |
Group |
Company |
Company |
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Interest earned on loan
receivable |
|
- |
149,359 |
- |
149,359 |
Interest earned on intercompany loan
receivable |
|
- |
- |
20,439 |
9,209 |
Interest earned on favourable bank
balances |
|
157 |
6,299 |
- |
- |
|
|
157 |
155,658 |
20,439 |
158,568 |
-
Taxation
The charge for the year can be reconciled to the
profit before taxation per the consolidated statement of
comprehensive income as
follows:
Taxation |
|
|
|
|
|
|
|
|
|
Group |
Group |
Company |
Company |
|
|
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
|
|
ending |
ending |
ending |
ending |
|
|
|
|
31
October |
31
October |
31
October |
31
October |
|
|
|
|
2022 |
2021 |
2022 |
2021 |
|
|
|
|
£ |
£ |
£ |
£ |
|
|
Tax
Charge |
|
- |
- |
- |
- |
|
|
Factors affecting the tax
charge |
|
|
|
|
|
|
Loss on ordinary activities before
taxation |
(584,633) |
(584,633) |
(389,553) |
(389,553) |
|
|
Loss on ordinary activities before taxation
multiplied by standard rate of UK corporation tax of 19,00% (2019:
19,00%) |
(111,080) |
(111,080) |
(74,015) |
(74,015) |
|
|
Tax effect of expenses not deductible for
tax |
10,569 |
1,934 |
- |
- |
|
|
Overseas tax rate differences from the UK rate
(26%) |
85,096 |
16,296 |
- |
- |
|
|
Tax effect of utilisation of tax
losses |
|
15,415 |
92,850 |
74,015 |
74,015 |
|
|
The Company has excess management
expenses of £1,043,509 (2021: £1,043,509) available for carry
forward against future trading profits. The deferred tax asset in
these tax losses at 19.0% of £193,369 (2021: 19.0% of £193,369) has
not been recognised due to the uncertainty of
recovery.
-
Loss Per
Share
Loss per share data is based on the Group result for
the year and the weighted average number of shares in
issue.
Basic loss per share is calculated by
dividing the loss attributable to equity shareholders by the
weighted average number of ordinary shares in issue during the
year:
|
Year
ended |
Year
ended |
|
31
October |
31
October |
|
2022 |
2021 |
|
£ |
£ |
Loss after
tax |
(4,570,562) |
(584,633) |
Weighted average number of ordinary
shares in
issue |
25,690,228 |
21,966,087 |
Basic and diluted loss per share
(pence) |
(17.79p) |
(2.66p) |
Basic and diluted loss per share are the same, since
where a loss is incurred the effect of outstanding share options
and warrants is considered anti-dilutive and is ignored for the
purpose of the loss per share calculation. As at 31 October 2022 there were 46,162,855 (2021:
21,966,087) shares in issue, 38,363,171 (2021: 14,988,511)
outstanding share warrants and 38,363,171 (2021: 897,809)
outstanding options, both are potentially
dilutive.
-
Investments
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Investment in
subsidiary |
|
|
|
|
- Cost of
investment |
- |
- |
297,915 |
297,915 |
- Impairment of
investment |
- |
- |
(297,915) |
(297,915) |
Carrying
value |
- |
- |
- |
- |
15.1.
Investment in
Associate
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Investment in Dynamic Intertrade Agri (Pty) Ltd
(held for
sale) |
6,154 |
6,154 |
90,046 |
90,046 |
Equity accounted profit for the
period |
- |
- |
- |
- |
Impairment of
investment |
- |
- |
- |
- |
Carrying
value |
6,154 |
6,154 |
90,046 |
90,046 |
Management have committed to selling its
investment in the associate, Dynamic Intertrade Agri (Pty) Ltd. The
asset is available for immediate sale to a willing buyer. A buyer
for the asset has been identified and a preliminary price of £6,154
has been discussed. It was anticipated that the sale will be
concluded within the last financial year ending 31 October 2021, however COVID-19 delayed the
process. The investment is still being held for sale to the
existing buyer. Accordingly, for the current year the investment is
reflected under current assets as held for sale. As part of the
process of selling the group’s investment in the associate a fair
value exercise was undertaken. Management considered the financial
performance of the Company, the price that a willing buyer was
prepared to pay for the investment as well as the prevailing market
conditions. Based on the above, the directors are of the opinion
that the fair value of the Company is
£6,154.
As at 31 October
2022, the Company directly and indirectly held the following
subsidiary and
associate:
Name of
Company |
Principal
activities |
Country of
incorporation and place of
business |
Proportion (%) of
equity interest
2022 |
Proportion (%) of
equity interest
2021 |
Dynamic Intertrade
(Pty) Limited |
Trading in
Agricultural
Products |
South
Africa |
51% |
100% |
Dynamic Intertrade
Agri (Pty)
Limited |
Agricultural
commodity trading and
distribution |
South
Africa |
46.8%Designated
as Held for
Sale |
46.8%Designated
as Held for
Sale |
15.2. Investment
in Subsidiary
Information about the Group’s
shareholding in Dynamic Intertrade (Pty) Ltd at the end of the
reporting period is as
follows:
|
|
2022 |
2021 |
Dynamic
Intertrade (Pty)
Ltd |
|
|
|
Percentage
Held |
|
|
|
As at 1
November |
|
100% |
100% |
Percentage disposed of
on subsidiary issuing
shares |
|
|
|
on 3 October
2022 |
|
49% |
0% |
|
|
|
|
Percentage held at 31
October |
|
51% |
100% |
The Group acquired 100% of Dynamic
Intertrade (Pty) Ltd in 2012 from Corestar Holdings Ltd. On
3 October 2022, Dynamic Intertrade
issued shares to a VSA NEX Investments Limited such that Everest
Global retains 51% interest in Dynamic Intertrade and VSA NEX
Investments Limited now holds 49% of Dynamic
Intertrade.
|
|
2022 |
2021 |
Dynamic
Intertrade (Pty)
Ltd |
|
|
|
Proportion of ownership
interests and voting rights held by non-controlling interests at 31
October |
|
51% |
100% |
|
|
|
|
|
|
2022 |
2021 |
|
|
£ |
£ |
Profit / (Loss)
allocated to non-controlling interests for the
year |
|
522 |
- |
Non-controlling
Interests |
|
(2,305,383) |
- |
The reconciliation of non-controlling
interests in note 25 includes an analysis of the profit or loss
allocated to non-controlling interests of each subsidiary where the
non-controlling interest is material. There are no significant
restrictions on the ability of the Group to access or use assets
and settle
liabilities.
During the year, the Group disposed of a
49 per cent of its interest in Dynamic Intertrade (Pty) Ltd. There
were no proceeds on disposal as described above. An amount of
£2.903 million (being the proportion share of the carrying amount
of net assets in Dynamic Intertrade (Pty) Ltd has been transferred
to non-controlling interests (see note 51). There was no gain or
loss on disposal of Dynamic Intertrade (Pty)
Ltd.
-
Long Term InterCompany
Loans
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Loan to Dynamic Intertrade (Pty)
Ltd |
|
|
|
|
- Amount
receivable |
- |
- |
- |
1,002,918 |
- Impairment of
loan |
- |
- |
- |
(1,002,918) |
Carrying
value |
- |
- |
- |
- |
The loan is unsecured and bears interest
at rates linked to LIBOR +2% p.a. As indicated in Note 10, both the
capital and the interest elements of the above loan have been fully
impaired during the year ended 31 October
2020. The additional loan provided to the subsidiary was
impaired during the current year. During the year, the Company
assigned certain debts to VSA NEX. VSA NEX has signed a
subordination agreement in relation to the loans due by Dynamic to
VSA NEX with an expiry date of 31 October 2023.Refer to Note 31 for
more information.
-
Property, Plant
and
Equipment
Group |
Leasehold
Improve-ments |
Furniture, fixtures and
equipment |
Plant and
machinery |
Total |
|
£ |
£ |
£ |
£ |
Cost |
|
|
|
|
As at 31 October
2020 |
19,571 |
4,317 |
268,512 |
292,400 |
Additions |
- |
- |
8,767 |
8,767 |
Disposals |
- |
- |
(298) |
(298) |
Exchange
difference |
175 |
39 |
2,401 |
2,615 |
As at 31 October
2021 |
19,746 |
4,356 |
279,382 |
303,484 |
Additions |
- |
- |
5,541 |
5,541 |
Disposals |
- |
- |
- |
- |
Exchange
difference |
(194) |
(56) |
(29,986) |
(30,236) |
As at 31 October
2022 |
19,552 |
4,300 |
254,937 |
278,789 |
|
|
|
|
|
Accumulated
depreciation |
|
|
|
|
As at 31 October
2020 |
19,085 |
3,674 |
254,343 |
277,102 |
Charge for the
year |
477 |
363 |
9,750 |
10,590 |
Released on
disposal |
- |
- |
(159) |
(159) |
Exchange
difference |
158 |
23 |
2,001 |
2,182 |
As at 31 October
2021 |
19,720 |
4,060 |
265,935 |
289,715 |
Charge for the
year |
24 |
173 |
5,222 |
5,419 |
Released on
disposal |
- |
- |
- |
- |
Exchange
difference |
(194) |
(40) |
(29,995) |
(30,229) |
As at 31 October
2022 |
19,550 |
4,193 |
241,162 |
264,905 |
|
|
|
|
|
Net book
value |
|
|
|
|
As at 31 October
2021 |
26 |
296 |
13,447 |
13,769 |
As at 31 October
2022 |
2 |
107 |
13,775 |
13,884 |
The holding Company held no tangible fixed assets at
31 October 2022 and
2021.
-
Inventories
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Raw
materials |
175,875 |
40,116 |
- |
- |
Finished
goods |
- |
2,566 |
- |
- |
Carrying
value |
175,875 |
42,682 |
- |
- |
The Group’s subsidiary Dynamic Intertrade (Pty) Ltd
has entered into a funding agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers directly and
this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over
the inventory and a cession of the
debtors
-
Trade and other
receivables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Financial
instruments |
|
|
|
|
Trade
receivables |
256,824 |
257,332 |
- |
- |
Deposits |
14,360 |
2,028 |
- |
- |
Other
receivables |
11,219 |
28,737 |
11,219 |
28,737 |
|
|
|
|
|
Non-financial
instruments |
|
|
|
|
Prepayments |
126 |
9,703 |
- |
- |
|
|
|
|
|
Carrying
value |
282,529 |
297,800 |
11,219 |
28,737 |
|
|
|
|
|
Current |
282,529 |
297,800 |
11,219 |
28,737 |
Non-Current |
- |
- |
- |
- |
|
282,529 |
297,800 |
11,219 |
28,737 |
The Group’s subsidiary Dynamic Intertrade
(Pty) Ltd has entered into a funding agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers directly and
this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over
the inventory and a cession of the
debtors
The receivables are considered to be held within a
held-to-collect business model consistent with the Group’s
continuing recognition of the
receivables.
As at 31 October 2022
the Group does not have any contract assets nor any contract
liabilities arising out of contracts with customers relating to the
Group’s right to receive consideration for agricultural products
sold but not billed. Group Trade receivables represent amounts
receivable on the sale of agricultural products and are included
after provisions for doubtful
debts.
Credit and market risks, and impairment
losses
The Group did not impair any of its trade receivables
as at 31 October 2022, as all trade
receivables generated during the financial year, and outstanding at
31 October 2022 are considered to be
recoverable during the ordinary course of
business.
Information about the Group’s exposure to credit and
market risks and impairment losses for trade receivables is
included in Note 30.
The Directors consider that the carrying
amount of trade receivables and other receivables approximates
their fair value.
-
Cash and Cash
Equivalents
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Cash on
hand |
925,814 |
1,109,774 |
922,613 |
1,108,476 |
|
925,814 |
1,109,774 |
922,613 |
1,108,476 |
-
Trade and Other
Payables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Trade
payables |
582,180 |
1,274,105 |
160,585 |
981,000 |
Other
payables |
- |
153,515 |
- |
132,694 |
Related party
payables |
42,202 |
40,879 |
- |
- |
|
624,382 |
1,468,499 |
160,585 |
1,113,694 |
Trade payables represent amounts due for the purchase
of agriculture materials and administrative expenses. The Directors
consider that the carrying amount of trade payables approximates to
their fair value.
Included in Other payables is a loan from
G Roach: The loan bears interest at the South African prime
overdraft rate. The interest will be calculated and paid when the
loan is repaid. The loan is repayable as decided upon from time to
time.
The related party financial liabilities
comprise:
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
M
Bonner |
25,357 |
24,562 |
- |
- |
R
Scott |
16,845 |
16,317 |
- |
- |
|
42,202 |
40,879 |
- |
- |
Terms:
M Bonner: The loan bears interest at the
South African prime overdraft rate. The interest is calculated and
paid quarterly. The loan is repayable as decided upon from time to
time.
R Scott: The loan bears interest at the
South African prime overdraft rate. The interest is calculated and
paid quarterly. The loan is repayable as decided upon from time to
time.
-
Share Capital and Share
Premium
Allotted, called up and fully
paid share capital and share
premium |
Number of
shares |
Nominal
value |
Share
premium |
Total |
|
|
£ |
£ |
£ |
Balance at 31 October
2020 |
21,966,087 |
439,322 |
2,571,247 |
3,010,569 |
Share
issue |
- |
- |
- |
- |
Balance at 31 October
2021 |
21,966,087 |
439,322 |
2,571,247 |
3,010,569 |
Share issue on settlement of debt 29
April
2022 |
3,823,627 |
76,473 |
76,473 |
152,946 |
Share issue on conversion of convertible
loan notes 3 October
2022 |
7,373,140 |
147,463 |
221,194 |
368,657 |
Share issue 3 October
2022 |
13,000,000 |
260,000 |
390,000 |
650,000 |
Warrants issued during the
year |
- |
- |
-218,799 |
-218,799 |
Balance at 31 October
2022 |
46,162,854 |
923,258 |
3,040,115 |
3,963,373 |
Share capital is the amount subscribed for shares at
nominal value.
During the 2019 financial year the Company
consolidated all existing and issued shares and share options on
the basis of 20 existing shares/options for 1 new
share/option.
Retained losses represent the cumulative loss of the
Group attributable to equity
shareholders.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS
2.
During the prior year the Company placed these shares
and as the number of placing shares comprised more than 20% of the
Company’s issued share capital, and although the placing shares has
been allotted, admission of the placing shares required publication
of a Prospectus within a twelve-month
period.
-
Share Based
Payments
Reserve
The Company does not have a share-ownership
compensation scheme for senior executives of the Company. However
senior executives may be granted options to purchase Ordinary
Shares in the
Company.
Warrants
During the 2019 financial year the Company
consolidated all existing and issued shares and share options on
the basis of 20 existing shares/options for 1 new
share/option.
There are 38,363,171 warrants to subscribe for
ordinary shares at 31 October 2022
(2021:
14,988,511).
|
|
Expired
/ |
|
|
|
|
|
As at
1 |
exercised
/ |
As at
31 |
|
|
|
Date of
Grant |
November |
vested
/ |
October |
Exercise |
Exercise/vesting
date |
|
2021 |
issued |
2022 |
price |
From |
To |
Warrants |
|
|
|
|
|
|
09/05/2012 |
138,066 |
(138,066) |
- |
20p |
09/05/2012 |
05/09/2022 |
27/11/2018 |
8,050,000 |
|
8,050,000 |
20p |
27/11/2018 |
30/09/2024 |
24/07/2020 |
4,233,556 |
(4,233,556) |
- |
5p |
24/07/2020 |
27/07/2022 |
23/03/2021 |
2,566,889 |
|
2,566,889 |
5p |
23/03/2021 |
23/03/2024 |
03/10/2022 |
- |
13,000,000 |
13,000,000 |
5p |
03/10/2022 |
31/12/2024 |
03/10/2022 |
- |
7,373,141 |
7,373,141 |
5p |
03/10/2022 |
31/12/2024 |
03/10/2022 |
- |
7,373,141 |
7,373,141 |
10p |
03/10/2022 |
31/12/2024 |
|
14,988,511 |
23,374,660 |
38,363,171 |
|
|
|
Warrants were attached to the convertible
loan notes issued on 23 March 2021,
with an exercise price of 5.0p per ordinary share and expire 12
months from allotment of the Subscription Shares. These warrants
will only be issued once the convertible loan notes are converted
into shares.
Warrants were attached to the
subscription shares on 24 July 2020 a
1-for-1 basis, with an exercise price of 5.0p per ordinary share
and expire 12 months from allotment of the subscription shares.
Further warrants were attached to any new ordinary shares that are
issued as a result of conversion of any loan notes, on a 1-for-1
basis on the same terms as the subscription
warrants.
Warrants were attached to the
Subscription Shares on 14 September
2018 a 1-for-1 basis, with an exercise price of 20.0p per
ordinary share and expire 12 months from allotment of the
subscription shares. Further warrants were attached to any new
ordinary shares that are issued as a result of conversion of any
loan notes, on a 1-for-1 basis on the same terms as the
subscription warrants. A maximum of 20,450,222 new ordinary shares
could potentially be issued in the event that all subscription
warrants and loan note warrants are
exercised.
An Investor has subscribed for 13,000,000
new ordinary shares in the Company at a price of 5p per share,
representing a capital injection of £650,000 (gross and net) into
the Company. The new ordinary shares will be accompanied by 1 for 1
warrants at 5p in the Company’s ordinary shares, equating to
13,000,000 warrants exercisable at any time before 31 December
2024.
The Company has agreed with 35% of the
convertible loan note holders to accelerate the conversion of
5,971,000 CLNs and accrued but unpaid interest into 7,373,141 New
Ordinary Shares in the Company at a conversion price of 5p. As
such, the conversion of 5,971,000 CLNs plus accrued but unpaid
interest resulted in the issue of 7,373,141 5p Warrants and
7,373,141 10p Warrants, all of which will expire on 31 December
2024.
The estimated fair value of the options
in issue was calculated by applying the Black-Scholes option
pricing model.
The assumptions used in the calculation
were as follows:
Share price at date of
grant |
£0.0040 |
Exercise
price |
£0.05 to
£0.10 |
Expected
volatility |
49% |
Expected
dividend |
0% |
Contractual
life |
2.25
years |
Risk free rate (based on 2 year UK Bond
market) |
4.00% |
Estimated fair value of each
option |
£0.002845 –
£0.009710 |
Options
At 31 October 2022
there were nil share options issued to the directors and past
directors of the Company. During the current year nil share options
were granted (2021:
897,809).
The movement on the share-based payment
charge for the year was £nil (2021 - £nil) in respect of the issued
options. The details of warrants and options are as
follows:
|
As at
1 |
Exercised
/ |
As at
31 |
|
|
|
Date of
Grant |
November |
vested
/ |
October |
Exercise |
Exercise/vesting
date |
|
2021 |
(forfeited) |
2022 |
Price |
From |
To |
Options |
|
|
|
|
|
|
09/05/2012 |
897,809 |
(897,809) |
- |
20p |
09/05/2012 |
05/09/2022 |
|
897,809 |
(897,809) |
- |
|
|
|
The remuneration committee’s aim is to
remunerate executive directors competitively and to reward
performance. The remuneration committee determines the Company's
policy for the remuneration of executive directors, having regard
to the UK Corporate Governance Code and its provisions on
directors'
remuneration.
The number of options outstanding to the
Directors that served in the year, as at 31
October 2022 were as
follows:
|
|
|
2022 |
2021 |
Director |
|
|
Options |
Options |
Andrew
Monk |
|
|
- |
191,952 |
Robert
Scott |
|
|
- |
50,000 |
Matthew
Bonner |
|
|
- |
180,000 |
Total |
|
|
- |
421,952 |
The estimated fair value of the options
in issue was calculated by applying the Black-Scholes option
pricing model.
The assumptions used in the calculation
were as follows:
Share price at date of
grant |
£0.0050 |
Exercise
price |
£0.0075 to
£0.01 |
Expected
volatility |
65% |
Expected
dividend |
0% |
Contractual
life |
1.1
years |
Risk free
rate |
1.63% |
Estimated fair value of each
option |
£0.003764 –
£0.0378 |
The share options outstanding at the
year-end had a weighted average remaining contractual life of nil
years (2021: 0.5
years).
-
Non-controlling
interests
Summarised financial information in respect of each
of the Group’s subsidiaries that has material non-controlling
interests is set out below. The summarised financial information
below represents amounts before intragroup
eliminations.
|
|
2022 |
2021 |
Dynamic
Intertrade (Pty)
Ltd |
|
£ |
£ |
|
|
|
|
Current
assets |
|
450,386 |
313,043 |
Non-current
assets |
|
264,330 |
355,674 |
Current
liabilities |
|
(522,082) |
(391,816) |
Non-current
liabilities |
|
(4,898,562) |
(4,066,056) |
|
|
(4,705,928) |
(3,789,155) |
|
|
|
|
Equity attributable to
the owners of the
company |
|
(4,705,928) |
(3,789,155) |
Non-controlling
interests |
|
- |
- |
|
|
(4,705,928) |
(3,789,155) |
|
|
2022 |
2021 |
Dynamic
Intertrade (Pty)
Ltd |
|
£ |
£ |
|
|
|
|
Revenue |
|
1,698,839 |
1,404,234 |
Expenses |
|
2,615,612 |
1,585,303 |
|
|
|
|
Loss for the
year |
|
(916,773) |
(181,069) |
Loss attributable to
owners of the
Company |
|
(916,773) |
(181,069) |
Loss attributable to the
non-controlling
interests |
|
- |
- |
Loss for the
year |
|
(916,773) |
(181,069) |
|
|
|
|
Other comprehensive
income attributable to owners of the
Company |
- |
- |
Other comprehensive
income attributable to the non-controlling
interests |
|
- |
- |
Other
comprehensive income for the
year |
|
- |
- |
|
|
|
|
Total comprehensive
income attributable to owners of the
Company |
(916,773) |
(181,069) |
Total comprehensive
income attributable to the non-controlling
interests |
- |
- |
Total
comprehensive income for the
year |
|
(916,773) |
(181,069) |
|
|
|
|
Net cash outflows from
operating
activities |
|
(786,055) |
(98,062) |
Net cash outflows from
investing
activities |
|
(4,415) |
(8,876) |
Net cash inflows from
financing
activites |
|
792,436 |
87,906 |
Net cash inflow
/
(outflow) |
|
1,966 |
(19,032) |
Further information about non-controlling
interests is given in note
15.
|
|
2022 |
2021 |
|
|
£ |
£ |
Non-controlling
interest |
|
|
|
Balance at 1
November |
|
- |
- |
Equity attributable to non-controlling interest
on disposal of 49% of
Dynamic |
|
(2,305,905) |
|
Share of profits for the
year |
|
522 |
- |
Balance at 31
October |
|
(2,305,383) |
- |
During the period under review the
Company and VSA NEX Investments Limited (“VSA NEX”) entered into
certain related party arrangements in relation to Dynamic
Intertrade (Pty) Ltd (“Dynamic”). VSA NEX was a 100% subsidiary of
VSA Capital. At the time the arrangements were entered into
Andrew Monk was a director of the
Company, VSA Capital and VSA NEX and is deemed to have significant
influence over VSA Capital and VSA NEX. Pursuant to the
arrangements, VSA NEX subscribed for such number of new shares in
the capital of Dynamic resulting in VSA NEX holding 49% of the
enlarged issued share capital of Dynamic for a consideration of
ZAR10,982; the Company agreed to
assign certain debts owing by Dynamic, amounting to £4.2 million
which had been fully impaired in prior years, to the Company and
certain other parties to VSA NEX in consideration for VSA NEX
paying to the Company £100,001 and agreeing to fund Dynamic so as
to enable Dynamic to carry on its business in the ordinary course
until such time as the Company ceases to hold any further shares in
Dynamic. This assignment agreement resulted in VSA NEX having a
non-controlling interest in Dynamic and as such its share of the
current year profits amounted to £522, its share of accumulated
losses prior to acquisition amounted to £2,305,905. Additionally,
the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of £3.1 million. VSA NEX has signed
a subordination agreement in relation to the loans due by Dynamic
to VSA NEX with an expiry date of 31 October
2023. Should VSA NEX choose to request the repayment of the
loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. Under a put and call option
agreement the Company granted to VSA NEX the option to acquire
11,430 shares in Dynamic Intertrade, being the remaining 51% of
Dynamic held by the Company, subject to the satisfaction of certain
conditions and subject to certain time restrictions for
£1.
-
Equity portion of
convertible loan
notes
During the 2021 financial year, on the
23rd of March 2021, the
Company converted £383,000 owed to the directors and a Company
owned by a director for 7,660,000 convertible loan notes and,
simultaneously, issued 4,400,000 convertible loan notes to the
value of £220,000 for cash. During the current financial year the
Company extended the conversion date of the CLNs to 31 December 2024. The equity portion of the
convertible loan notes is presented
below.
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
Equity portion of convertible loan
notes |
|
|
|
|
issued during the year (per note
26) |
42,539 |
74,935 |
42,539 |
74,935 |
|
Carrying
value |
42,539 |
74,935 |
42,539 |
74,935 |
|
-
Convertible loan
notes
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
Convertible loan
notes |
710,274 |
778,065 |
710,274 |
778,065 |
|
Carrying
value |
710,274 |
778,065 |
710,274 |
778,065 |
|
The loan notes holder will be paid an
annual interest rate of 12 per cent in cash, semi-annually, with a
term of 24 months. The loan notes will not be admitted to trading
on any exchange.
During the 2021 financial year, on the
23rd of March 2021, the
Company converted £383,000 owed to the directors and a Company
owned by a director for 7,660,000 convertible loan notes and,
simultaneously, issued 4,400,000 convertible loan notes to the
value of £220,000 for
cash.
During the 2020 financial year, as part of the
subscription dated 24 July 2020,
3,333,333 additional share warrants were allocated to the capital
portion of the convertible loan notes and 750,000 additional share
warrants were allocated to the outstanding interest portion of the
convertible loan notes, which at the subscription date was
£37,500.
The new ordinary shares issued as a result of
conversion of all Loan Notes would represent 17,060,000 ordinary
shares, or 43.71 per cent of the issued share capital of the
Company, as enlarged by the 2018 Fundraising. On 14 September 2018 issued £250,000 of convertible
loan notes for 50,000,000 loan notes of 0.50p (the “Loan Notes”)
with a conversion price of 0.75p (the “Conversion Price”). The
Subscription Price was at the last closing price of 0.50p per
ordinary share as at 13 September
2018. Further, the Conversion Price represents a premium of
50.0 per cent to this same closing price. The Subscription included
the issue of 50,000,000 Convertible Loan Notes of 0.50p with a
conversion price of 0.75p which after the 20:1 share consolidation
of 2018 resulted in there being 2,500,000 Convertible Loan Notes of
10.0p with a conversion price of
15.0p.
If the Convertible Loan Notes were converted, up to
17,810,000 new Ordinary Shares will be issued (“Loan Conversion
Shares”). Further, Warrants will be attached to any Loan Conversion
Shares that are issued on a 1-for-1 basis on the same terms as the
Warrants attached to the New Ordinary Shares (“Loan Conversion
Warrants”). A maximum of 32,510,222 New Ordinary Shares could
potentially be issued in the event that all New Ordinary Shares
Warrants and Loan Conversion Warrants are
exercised.
The fair value of the liability component, included
in non-current liabilities, is calculated using a market interest
rate for an equivalent non-convertible loan note at the date of
issue. The residual amount, representing the value of the equity
conversion component, is included in shareholder’s equity in Equity
portion of convertible loan notes (Note
25).
The carrying amount of the liability component of the
convertible loan notes at the balance sheet date are derived as
follows:
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Liability component at the
beginning |
|
|
|
|
of the financial
year |
910,759 |
282,909 |
910,759 |
282,909 |
Face value of the convertible loan
notes |
|
|
|
|
issued on 23 March
2021 |
- |
603,000 |
- |
603,000 |
Conversion of convertible loan notes
to |
|
|
|
|
shares on 3 October
2022 |
(368,656) |
- |
(368,656) |
- |
Equity portion on extension of
conversion
date |
32,396 |
- |
32,396 |
- |
Equity conversion
component |
- |
(74,935) |
- |
(74,935) |
Accumulated amortisation of
interest |
|
|
|
|
expense |
135,775 |
99,785 |
135,775 |
99,785 |
Accumulated payments of
interest |
- |
- |
- |
- |
Liability component at the end of
the |
|
|
|
|
financial
year |
710,274 |
910,759 |
710,274 |
910,759 |
Current portion included in
current |
|
|
|
|
liabilities |
- |
132,694 |
- |
132,694 |
Long term portion included in long
term |
|
|
|
|
liabilities |
710,274 |
778,065 |
710,274 |
778,065 |
Liability component at the end of
the |
|
|
|
|
financial
year |
710,274 |
910,759 |
710,274 |
910,759 |
As part of the of 3 October
2022 investment agreement, the Company has agreed with the
CLN holders to accelerate the conversion of 5,971,000 CLNs and
accrued but unpaid interest into 7,373,141 New Ordinary Shares in
the Company at a conversion price of
5p.
-
Borrowings
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
Euro 2 Afrisko
Ltd |
|
|
|
|
- Inventory
financing |
417,891 |
401,696 |
- |
- |
Onga Wari CRS (PTY)
LTD |
|
|
|
|
- Inventory
financing |
- |
16,560 |
- |
- |
Working Capital
Partners |
|
|
|
|
- Accounts receivable
financing |
140,063 |
47,808 |
- |
- |
Loan from VSA NEX Investments
Ltd |
4,174,538 |
- |
|
|
Carrying
value |
4,732,492 |
466,064 |
- |
- |
The Group’s subsidiary Dynamic Intertrade
(Pty) Ltd has entered into a funding agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers directly and
this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over
the inventory and a cession of the
debtors.
The borrowings are secured by a security
agreement from the Company. The loans bear interest at 14% per
annum.
During the period under review the Company and VSA
NEX Investments Limited (“VSA NEX”) entered into certain related
party arrangements in relation to Dynamic Intertrade (Pty) Ltd
(“Dynamic”). VSA NEX was a 100% subsidiary of VSA Capital. At the
time the arrangements were entered into Andrew Monk was a director of the Company, VSA
Capital and VSA NEX and is deemed to have significant influence
over VSA Capital and VSA NEX. Pursuant to the arrangements, VSA NEX
subscribed for such number of new shares in the capital of Dynamic
resulting in VSA NEX holding 49% of the enlarged issued share
capital of Dynamic for a consideration of ZAR10,982; the Company agreed to assign certain
debts owing by Dynamic, amounting to £4.2 million which had been
fully impaired in prior years, to the Company and certain other
parties to VSA NEX in consideration for VSA NEX paying to the
Company £100,001 and agreeing to fund Dynamic so as to enable
Dynamic to carry on its business in the ordinary course until such
time as the Company ceases to hold any further shares in Dynamic.
This assignment agreement resulted in VSA NEX having a
non-controlling interest in Dynamic and as such its share of the
current year profits amounted to £522, its share of accumulated
losses prior to acquisition amounted to £2,305,905. Additionally,
the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of £3.1 million. VSA NEX has signed
a subordination agreement in relation to the loans due by Dynamic
to VSA NEX with an expiry date of 31 October
2023. Should VSA NEX choose to request the repayment of the
loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. Under a put and call option
agreement the Company granted to VSA NEX the option to acquire
11,430 shares in Dynamic Intertrade, being the remaining 51% of
Dynamic held by the Company, subject to the satisfaction of certain
conditions and subject to certain time restrictions for
£1.
-
Leases
Right of use assets and lease
liability
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Operating
lease
commitments |
|
|
|
|
|
disclosed as
at 31
October |
|
347,102 |
410,502 |
- |
- |
Discounted
using the
incremental |
|
|
|
|
|
borrowing
rate at date of initial
application |
|
- |
- |
- |
- |
Additions to
leases during the
year |
|
- |
- |
- |
- |
Lease
payments |
|
(73,233) |
(67,072) |
- |
- |
Exchange
difference |
|
(7,313) |
3,672 |
|
|
Lease liability recognised in
the |
|
|
|
|
|
statement of financial
position |
|
266,556 |
347,102 |
- |
- |
|
|
|
|
|
|
Of
which: |
|
|
|
|
|
Current
lease
liabilities |
|
100,485 |
77,887 |
- |
- |
Non-current
lease
liabilities |
|
166,070 |
269,215 |
- |
- |
|
|
266,555 |
347,102 |
- |
- |
Right-of use assets were measured at the
amount equal to the lease liability, adjusted by the amount of any
prepaid or accrued lease payments relating to that lease recognised
in the statement of financial position as at 31 October 2019. There were no onerous lease
contracts that would have required an adjustment to the
right-of-use assets at the date of initial application. The
recognised right of-use assets relate to the following types of
assets:
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
Properties |
|
250,446 |
341,905 |
- |
- |
On the 3rd of March
2020 a new lease was signed for the Group’s main trading
address, 104 Bofors Circle, Epping Industrial 2, Cape Town, South Africa with commencement date
of 1 July 2020. On the commencement
date, the Group recognised a lease liability and right-of-use asset
of £430,973.
Impact on earnings per
share
Depreciation on the right-of-use asset amounting to
£73,233 (2021: £67,072) and interest on the right-of-use lease
liability of £25,995 (2021: £31,468) were charged to the statement
of profit and loss for the current year. As a result, the earnings
per share decreased by
0.005p.
-
Notes to the
Statement of Cash
Flows
|
|
Group |
Group |
Company |
Company |
|
|
For the
year |
For the
year |
For the
year |
For the
year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
Cash and
cash
equivalents |
|
925,814 |
1,109,774 |
922,613 |
1,108,476 |
Borrowings |
|
(4,732,492) |
(466,064) |
- |
- |
Convertible
loan
notes |
|
(710,274) |
(910,759) |
(710,274) |
(910,759) |
Right of use
lease
liability |
|
(266,555) |
(347,102) |
- |
- |
Net
debt |
|
(4,783,507) |
(614,151) |
212,339 |
197,717 |
|
|
|
|
|
|
Cash and
liquid
investments |
|
925,814 |
1,109,774 |
922,613 |
1,108,476 |
Fixed rate
instruments |
|
(5,709,321) |
(1,723,925) |
(710,274) |
(910,759) |
Net
debt |
|
(4,783,507) |
(614,151) |
212,339 |
395,434 |
Net Debt Reconciliation for the
Group
|
Cash
and |
|
|
Right of
use |
|
|
|
cash |
|
Convertible |
lease |
Total |
|
|
equivalents |
Borrowings |
loan
notes |
liability |
debt |
Net
debt |
|
£ |
£ |
£ |
£ |
£ |
£ |
Net debt as
at 31 October
2020 |
45,251 |
(428,719) |
(250,000) |
(410,502) |
(1,089,221) |
(1,043,970) |
Cash
flows |
1,064,699 |
(32,973) |
(220,000) |
67,071 |
(185,902) |
878,797 |
Non-cash
transactions |
- |
- |
(515,694) |
- |
(515,694) |
(515,694) |
Equity
portion of convertible loan
notes |
- |
- |
74,935 |
- |
74,935 |
74,935 |
Foreign
exchange
adjustments |
(176) |
(4,372) |
- |
(3,671) |
(8,043) |
(8,219) |
Net debt as
at 31 October
2021 |
1,109,774 |
(466,064) |
(910,759) |
(347,102) |
(1,723,925) |
(614,151) |
Cash
flows |
(183,960) |
(1,134,015) |
- |
73,233 |
(1,060,782) |
(1,244,742) |
Non-cash
transactions |
- |
(3,131,890) |
200,485 |
- |
(2,931,405) |
(2,931,405) |
Foreign
exchange
adjustments |
- |
- |
- |
7,313 |
7,313 |
7,313 |
Net debt as
at 31 October
2022 |
925,814 |
(4,731,969) |
(710,274) |
(266,556) |
(5,708,799) |
(4,782,985) |
The non-cash transactions of £3,131,890
relates to the finance charges incurred by the Group on assignment
of certain debts owed by Dynamic to VSA
NEX.
Net Debt Reconciliation for the
Company
|
Cash
and |
|
|
Right of
use |
|
|
|
cash |
|
Convertible |
lease |
Total |
|
|
equivalents |
Borrowings |
loan
notes |
liability |
debt |
Net
debt |
|
£ |
£ |
£ |
£ |
£ |
£ |
Net debt as at 31
October 2020 |
25,624 |
- |
(250,000) |
- |
(250,000) |
(224,376) |
Cash
flows |
1,082,852 |
- |
(703,298) |
- |
(703,298) |
379,554 |
Non-cash
transactions |
- |
|
(383,000) |
|
(383,000) |
(383,000) |
Equity portion of
convertible loan
notes |
|
|
42,539 |
- |
42,539 |
42,539 |
Foreign exchange
adjustments |
- |
- |
- |
- |
- |
- |
Net debt as at 31
October 2021 |
1,108,476 |
- |
(910,759) |
- |
(910,759) |
197,717 |
Cash
flows |
(185,863) |
- |
- |
- |
- |
(185,863) |
Non-cash
transactions |
- |
|
200,485 |
|
200,485 |
200,485 |
Foreign exchange
adjustments |
- |
- |
- |
- |
- |
- |
Net debt as at 31
October 2022 |
922,613 |
- |
(710,274) |
- |
(710,274) |
212,339 |
-
Financial
Instruments – Fair values and risk
management
The following table shows the carrying amounts and
fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy. It does not
include fair value information for financial assets and financial
liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair
value.
Trade and other receivables and trade and other
payables classified as held-for-sale are not included in the table
below. As at 31 October 2021 the
Group did not have any trade and other receivables nor any trade
and other payables that were classified as
held-for-sale.
The Group has not disclosed the fair values of
financial instruments such as short-term trade receivables and
payables, because their carrying amounts are a reasonable
approximation of their fair
value.
|
|
Carrying
value |
|
|
|
|
Fair
value |
|
|
Group as at 31 October
2022 |
Note |
FVOCI - equity
instruments |
Financial assets at amortised
cost |
Other financial
liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair
value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair
value |
|
|
|
|
|
|
|
|
|
Trade and other
receivables |
|
- |
271,184 |
- |
271,184 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
925,814 |
- |
925,814 |
|
|
|
|
|
|
|
- |
1,196,998 |
- |
1,196,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair
value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair
value |
|
|
|
|
|
|
|
|
|
Lease
Liability |
|
- |
- |
(266,555) |
(266,555) |
|
|
|
|
|
Unsecured
borrowings |
|
- |
- |
(4,732,492) |
(4,732,492) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(710,274) |
(710,274) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(624,382) |
(624,382) |
|
|
|
|
|
|
|
- |
- |
(6,333,703) |
(6,333,703) |
|
|
|
|
|
|
|
Carrying
value |
|
|
|
|
Fair
value |
|
|
Group as at 31 October
2021 |
Note |
FVOCI - equity
instruments |
Financial assets at amortised
cost |
Other financial
liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair
value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair
value |
|
|
|
|
|
|
|
|
|
Trade and other
receivables |
|
- |
259,360 |
- |
259,360 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
1,109,774 |
- |
1,109,774 |
|
|
|
|
|
|
|
- |
1,369,134 |
- |
1,369,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair
value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair
value |
|
|
|
|
|
|
|
|
|
Lease
Liability |
|
- |
- |
(347,102) |
(347,102) |
|
|
|
|
|
Unsecured
borrowings |
|
- |
- |
(466,064) |
(466,064) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(778,065) |
(778,065) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(1,468,499) |
(1,468,499) |
|
|
|
|
|
|
|
- |
- |
(3,059,730) |
(3,059,730) |
|
|
|
|
|
|
|
Carrying
value |
|
|
|
|
Fair
value |
|
|
Company as at 31 October
2022 |
Note |
FVOCI - equity
instruments |
Financial assets at amortised
cost |
Other financial
liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair
value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair
value |
|
|
|
|
|
|
|
|
|
Intercompany loans
receivable |
|
- |
- |
- |
- |
|
|
|
|
|
Trade and other
receivables |
|
- |
- |
- |
- |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
922,613 |
- |
922,613 |
|
|
|
|
|
|
|
- |
922,613 |
- |
922,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair
value |
|
|
|
|
|
|
|
|
|
Loans payable to VSA
NEX |
|
- |
- |
(4,174,538) |
(4,174,538) |
|
|
|
|
|
|
|
- |
- |
(4,174,538) |
(4,174,538) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair
value |
|
|
|
|
|
|
|
|
|
Lease
Liability |
|
- |
- |
- |
- |
|
|
|
|
|
Unsecured
borrowings |
|
- |
- |
(557,954) |
(557,954) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(710,274) |
(710,274) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(160,585) |
(160,585) |
|
|
|
|
|
|
|
- |
- |
(1,428,813) |
(1,428,813) |
|
|
|
|
|
|
|
Carrying
value |
|
|
|
|
Fair
value |
|
|
Company as at 31 October
2021 |
Note |
FVOCI - equity
instruments |
Financial assets at amortised
cost |
Other financial
liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair
value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair
value |
|
|
|
|
|
|
|
|
|
Intercompany loans
receivable |
|
- |
- |
- |
- |
|
|
|
|
|
Trade and other
receivables |
|
- |
- |
- |
- |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
1,108,476 |
- |
1,108,476 |
|
|
|
|
|
|
|
- |
1,108,476 |
- |
1,108,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair
value |
|
|
|
|
|
|
|
|
|
Loans payable to VSA
NEX |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair
value |
|
|
|
|
|
|
|
|
|
Lease
Liability |
|
- |
- |
- |
- |
|
|
|
|
|
Unsecured
borrowings |
|
- |
- |
(466,064) |
(466,064) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(778,065) |
(778,065) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(1,113,694) |
(1,113,694) |
|
|
|
|
|
|
|
- |
- |
(2,357,823) |
(2,357,823) |
|
|
|
|
|
Financial
instruments – Fair values and risk
management
B. Measurement of fair
values
i. Valuation
techniques and significant unobservable
inputs
The following tables show the valuation techniques
used in measuring Level 3 fair values for financial instruments
measured at fair value in the statement of financial position, as
well as the significant unobservable inputs used. Related valuation
processes are described in Note
3.
Financial instruments measured at fair
value
Type |
Valuation
technique |
Significant
unobservable
inputs |
Inter-relationship between significant
unobservable inputs and fair value
measurement |
Investment in
Associate |
The value of the
investment is adjusted annually based upon the group’s share of the
associates profit or
loss. |
None |
None |
ii. Transfers between
Levels 1 and 2
There were no transfers between Levels 1 and 2 in
either the current financial year or in the prior financial
year.
C. Financial Risk
Management
The Group has exposure to the following risks arising
from financial instruments:
-
credit risk;
-
liquidity and cash flow risk;
and
-
market risk.
Risk
management
framework
The Company’s Board of Directors has overall
responsibility for the establishment and oversight of the Group’s
risk management framework.
The Group’s risk management policies are established
to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the
Group’s activities.
The Group’s audit committee oversees how management
monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group. The Group’s
audit committee undertake ad hoc reviews of risk management
controls and procedures, the results of which are reported to the
audit committee.
Credit
risk
Credit risk is the risk of financial loss to the
Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations and arises principally from the
Group’s receivables from customers and investments in debt
securities.
The carrying amounts of financial assets represent
the maximum credit exposure. There was no impairment loss in the
current year nor in the prior
year.
Trade
receivables
The Group’s exposure to credit risk is influenced
mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit
risk of its customer base, including the default risk associated
with the industry and country in which its customers operate.
Details of concentration of revenue are included in Note
6.
The Group has established a credit policy under which
each new customer is analysed individually for creditworthiness
before the Group’s standard payment terms and conditions are
offered. The Group’s review includes external ratings, if they are
available, financial statements, credit agency information,
industry information and in some cases bank references. Sales
limits are established for each customer and are reviewed
regularly.
The Group limits its exposure to credit risk from
trade receivables by establishing a maximum payment period of one
month.
The Group does not require collateral in respect of
trade and other receivables. The Group does not have trade
receivables for which a no allowance is recognised because of
collateral.
|
Group |
Group |
Company |
Company |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
As at 31 October the exposure to
credit |
|
|
|
risk for trade receivables by
geographic |
|
|
|
region was
follows: |
|
|
|
|
South
Africa |
256,824 |
257,332 |
- |
- |
Other |
- |
- |
- |
- |
|
256,824 |
257,332 |
- |
- |
As at 31 October the exposure to
credit |
|
|
|
risk for trade receivables
by |
|
|
|
|
counterparty was
follows: |
|
|
|
|
Other |
- |
- |
- |
- |
|
- |
- |
- |
- |
As at 31 October the exposure to
credit |
|
|
|
risk for trade receivables by
credit |
|
|
|
|
rating was
follows: |
|
|
|
|
External credit
ratings |
- |
- |
- |
- |
Other |
256,824 |
257,332 |
- |
- |
|
256,824 |
257,332 |
- |
- |
Expected credit loss assessment for corporate
customers as at 31 October 2022 and
31 October
2021
The Group allocates each exposure to a credit risk
grade based on data that is determined to be predictive of the risk
of loss (including but not limited to external ratings, audited
financial statements, management accounts and cash flow projections
and available press information about customers) and applying
experienced credit judgement. Credit risk grades are defined using
qualitative and quantitative factors that are indicative of the
risk of default.
The Company had no exposure to credit risk for the
year ended 31 October
2021.
Movements in the allowance for impairment in
respect of trade
receivables
The movement in the allowance for impairment in
respect of trade receivables during the year amounted to
nil.
Cash and cash
equivalents
As at 31 October 2022,
the Group held £925,814 in cash and cash equivalents (2021:
£1,109,774) and had a bank overdraft of £nil. The cash and cash
equivalents are held with bank and financial institution
counterparties which are rated Baa3 to A1+ by
Moody’s.
Impairment on cash and cash equivalents has been
measured on a 12-month expected loss basis and reflects the short
maturities of the exposures. The Group considers that its cash and
cash equivalents have low credit risk based on the external credit
ratings of the counterparties. On the implementation of IFRS 9 the
Group did not impair any of its cash and cash
equivalents.
Liquidity
and cash flow
risk
Liquidity risk is the risk that the Group will
encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Group’s approach to managing liquidity
is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both
normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s
reputation.
Exposure to liquidity and cash flow
risk
The following tables present the remaining
contractual maturities of financial liabilities at the reporting
date. The amounts are gross and undiscounted and include
contractual interest payments and exclude the impact of netting
agreements.
|
|
|
|
Contractual cash
flows |
|
|
Group as at
31 October
2022 |
Carrying
value |
Total |
2 Months or
less |
2 to 12
Months |
1 to 2
Years |
2 to 5
Years |
More than 5
years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non- derivative
financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans (VSA
NEX) |
(4,174,538) |
(4,174,538) |
- |
- |
- |
- |
(4,174,538) |
Convertible
loan |
|
|
|
|
|
|
notes |
(710,274) |
(710,274) |
- |
- |
(710,274) |
- |
- |
Secured
loans |
(557,954) |
(557,954) |
- |
(557,954) |
- |
- |
- |
Right-of-use
finance |
|
|
|
|
|
|
lease |
(266,555) |
(307,998) |
(17,634) |
(89,933) |
(112,945) |
(87,486) |
- |
Trade
payables |
(582,180) |
(582,180) |
(582,180) |
- |
- |
- |
- |
Other
payables |
- |
- |
- |
- |
- |
- |
- |
Related
party |
|
|
|
|
|
|
|
payables |
(42,202) |
(42,202) |
- |
(42,202) |
- |
- |
- |
|
(6,333,703) |
(6,375,146) |
(599,814) |
(690,089) |
(823,219) |
(87,486) |
(4,174,538) |
|
|
|
|
|
|
|
|
Derivative
financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
As noted elsewhere the loan subordination agreement
expires on 31 October 2023 but the
loan does not have a fixed contract date. If Dynamic Intertrade
stays within the group, the directors expect the loans to be
repayable greater than 5
years.
|
|
|
|
Contractual cash
flows |
|
|
Group as at
31 October
2021 |
Carrying
value |
Total |
2 Months or
less |
2 to 12
Months |
1 to 2
Years |
2 to 5
Years |
More than 5
years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non- derivative
financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans (VSA
NEX) |
- |
- |
- |
- |
- |
- |
- |
Convertible
loan |
|
|
|
|
|
|
notes |
(778,065) |
(778,065) |
- |
- |
(778,065) |
- |
- |
Secured
loans |
(466,064) |
(466,064) |
- |
(466,064) |
- |
- |
- |
Right-of-use
finance |
|
|
|
|
|
|
lease |
(347,102) |
(410,502) |
(10,446) |
(56,031) |
(77,196) |
(266,829) |
- |
Trade
payables |
(1,274,105) |
(1,274,105) |
(1,274,105) |
- |
- |
- |
- |
Other
payables |
(153,515) |
(153,515) |
- |
(153,515) |
- |
- |
- |
Related
party |
|
|
|
|
|
|
|
payables |
(40,879) |
(40,879) |
- |
(40,879) |
- |
- |
- |
|
(3,059,730) |
(3,123,130) |
(1,284,551) |
(716,489) |
(855,261) |
(266,829) |
- |
|
|
|
|
|
|
|
|
Derivative
financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash
flows |
|
|
Company as at
31 October
2022 |
Carrying
value |
Total |
2 Months or
less |
2 to 12
Months |
1 to 2
Years |
2 to 5
Years |
More than 5
years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non- derivative
financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
Convertible
loan |
|
|
|
|
|
|
notes |
(710,274) |
(710,274) |
- |
- |
(710,274) |
- |
- |
Secured
loans |
- |
- |
- |
- |
- |
- |
- |
Right-of-use
finance |
|
|
|
|
|
|
lease |
- |
- |
- |
- |
- |
- |
- |
Trade
payables |
(160,585) |
(160,585) |
(160,585) |
- |
- |
- |
- |
Other
payables |
- |
- |
- |
- |
- |
- |
- |
Related
party |
|
|
|
|
|
|
|
payables |
- |
- |
- |
- |
- |
- |
- |
|
(870,859) |
(870,859) |
(160,585) |
- |
(710,274) |
- |
- |
|
|
|
|
|
|
|
|
Derivative
financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash
flows |
|
|
Company as at
31 October
2021 |
Carrying
value |
Total |
2 Months or
less |
2 to 12
Months |
1 to 2
Years |
2 to 5
Years |
More than 5
years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non- derivative
financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
Convertible
loan |
|
|
|
|
|
|
notes |
(778,065) |
(778,065) |
- |
- |
(778,065) |
- |
- |
Secured
loans |
- |
- |
- |
- |
- |
- |
- |
Right-of-use
finance |
|
|
|
|
|
|
lease |
- |
- |
- |
- |
- |
- |
- |
Trade
payables |
(981,000) |
(981,000) |
(981,000) |
- |
- |
- |
- |
Other
payables |
(132,694) |
(132,694) |
- |
(132,694) |
- |
- |
- |
Related
party |
|
|
|
|
|
|
|
payables |
- |
- |
- |
- |
- |
- |
- |
|
(1,891,759) |
(1,891,759) |
(981,000) |
(132,694) |
(778,065) |
- |
- |
|
|
|
|
|
|
|
|
Derivative
financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
The interest payments on the financial liabilities
represent the fixed interest rates as per the respective
contracts.
The Group aims to maintain the level of its cash and
cash equivalents and other highly marketable debt investments at an
amount in excess of expected cash outflows on financial liabilities
other than trade payables. The Group also monitors the level of
expected cash inflows on trade and other receivables together with
expected cash outflows on trade and other
payables.
Market
risk
Market risk is the risk that changes in market prices
– such as foreign exchange rates, interest rates and equity prices
– will affect the Group’s income or the value of its holdings of
financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable
parameters, while optimising the
return.
Foreign currency
risk
The Group undertakes certain transactions denominated
in foreign currencies. Hence, exposures to exchange rate
fluctuations arise.
The carrying amounts of the Group’s foreign currency
denominated monetary assets and monetary liabilities at the
reporting date are as
follows:
Exposure to currency
risk
The summary quantitative data about the Group’s
exposure to currency risk as reported to the management of the
Group is as follows:
Group Foreign
exchange |
31
October |
2022 |
31
October |
2021 |
risk |
GBP |
ZAR |
GBP |
ZAR |
|
|
|
|
|
|
|
|
|
|
Trade and
other |
|
|
|
|
receivables |
- |
5,708,637 |
- |
5,605,406 |
Cash and cash
equivalents |
922,613 |
67,345 |
1,108,476 |
27,042 |
Unsecured
shareholders' |
|
|
|
|
loans |
- |
(87,836,461) |
- |
- |
Secured
loans |
- |
(11,739,909) |
- |
(9,709,568) |
Convertible loan
notes |
(710,274) |
- |
(778,065) |
- |
Right-of-use finance
lease |
- |
(5,608,577) |
- |
(7,231,199) |
Trade
payables |
(160,587) |
(9,758,757) |
(1,113,694) |
(8,771,247) |
Net statement of
financial |
|
|
|
|
position
exposure |
51,752 |
(109,167,723) |
(783,283) |
(20,079,566) |
|
|
|
|
|
Next 6 months
sales |
|
|
|
|
forecast |
1,434,073 |
30,816,695 |
- |
14,750,700 |
Next 6 months
purchases |
|
|
|
|
forecast |
(1,231,550) |
(26,464,641) |
(131,337) |
(10,763,660) |
Net forecast
transaction |
|
|
|
|
exposure |
202,523 |
4,352,054 |
(85,642) |
5,014,204 |
|
|
|
|
|
Net
exposure |
254,275 |
(104,815,669) |
(868,925) |
(15,065,362) |
Company
Foreign |
31
October |
2022 |
31
October |
2021 |
exchange
risk |
GBP |
ZAR |
GBP |
ZAR |
|
|
|
|
|
|
|
|
|
|
Trade and
other |
|
|
|
|
receivables |
- |
- |
- |
- |
Cash and cash
equivalents |
922,613 |
- |
1,108,476 |
- |
Unsecured
shareholders' |
|
|
|
|
loans |
- |
- |
- |
- |
Secured
loans |
- |
- |
- |
- |
Convertible loan
notes |
(710,274) |
- |
(778,065) |
- |
Right-of-use finance
lease |
- |
- |
- |
- |
Trade
payables |
(160,587) |
- |
(1,113,694) |
- |
Net statement of
financial |
|
|
|
|
position
exposure |
51,752 |
- |
(783,283) |
- |
|
|
|
|
|
Next 6 months
sales |
|
|
|
|
forecast |
- |
- |
- |
- |
Next 6 months
purchases |
|
|
|
|
forecast |
(1,231,550) |
- |
(85,642) |
- |
Net forecast
transaction |
|
|
|
|
exposure |
(1,231,550) |
- |
(85,642) |
- |
|
|
|
|
|
Net
exposure |
(1,179,798) |
- |
(868,925) |
- |
The following significant exchange rates in
relation to the reporting currency are
applicable:
|
Average for the
year |
Year end spot
rate |
|
2022 |
2021 |
2022 |
2021 |
|
|
|
|
|
United States Dollar
($) |
1.2610 |
1.3747 |
1.1469 |
1.3683 |
South African Rand
(ZAR) |
20.5000 |
20.2550 |
21.0410 |
20.8331 |
The presentation currency of the Group is British
Pound Sterling.
The Group is exposed primarily to movements in USD
and ZAR, the currency in which the Group receives most of its
funding, against other currencies in which the Group incurs
liabilities and
expenditure.
Sensitivity
analysisFinancial
instruments affected by foreign currency risk include cash and cash
equivalents, trade other receivables and trade and other payables.
The following analysis, required by IFRS 7 Financial Instruments:
Disclosures, is intended to illustrate the sensitivity of the
Group’s financial instruments (at year end) to changes in market
variables, being exchange
rates.
The following assumptions were made in calculating
the sensitivity
analysis:
-
all income statement sensitivities also impact
equity; and
-
translation of foreign subsidiaries and operations
into the Group’s presentation currency have been excluded from this
sensitivity as they have no monetary effect on the
results.
Income Statement /
Equity
|
2022 |
2022 |
2021 |
2021 |
|
+10% |
-10% |
+10% |
-10% |
|
|
|
|
|
Base currency of British Pound
Sterling: |
|
|
|
|
- United States Dollar
($) |
0.1147 |
(0.1147) |
0.1368 |
(0.1368) |
- South African Rand
(ZAR) |
2.1041 |
(2.1041) |
2.0833 |
(2.0833) |
The above sensitivities are calculated with reference
to a single moment in time and will change due to a number of
factors including:
-
fluctuating other receivable and trade payable
balances;
-
fluctuating cash balances;
and
-
changes in currency
mix.
Interest
rate risk
The Group has entered into fixed rate agreements for
its finance leases and shareholders loans. The Group does not hedge
its interest rate exposure by entering into variable interest rate
swaps.
Exposure to interest rate
risk
The interest rate profile of the Group’s
interest-bearing financial instruments as reported to the
management of the Group is as per the table
below.
|
Group |
Group |
Company |
Company |
|
2022 |
2021 |
2022 |
2021 |
Fixed rate
instruments |
|
|
|
|
Financial
assets |
- |
- |
- |
- |
Financial
liabilities |
(5,608,836) |
(1,513,344) |
(710,274) |
(778,065) |
Fair value sensitivity analysis for
fixed-rate
instruments
The Group does not account for any fixed-rate
financial assets of financial liabilities at FVTPL. Therefore, a
change in interest rates at the reporting date would not affect
profit or loss.
Other
market price
risk
The Group is exposed to equity price risk, which
arises from equity securities at FVOCI are held as a long-term
investment.
The Group’s investments in equity securities comprise
small shareholdings in unlisted companies. The shares are not
readily tradable and any monetisation of the shares is dependent on
finding a willing buyer.
Valuation techniques and assumptions applied
for the purposes of measuring fair
valueThe
fair value of cash and receivables and liabilities approximates the
carrying values disclosed in the financial
statements.
Capital
managementThe
Group manages its capital resources to ensure that entities in the
Group will be able to continue as a going concern, while maximising
shareholder
return.
The capital
structure of the Group consists of equity attributable to
shareholders, comprising issued share capital and reserves. The
availability of new capital will depend on many factors including a
positive operating environment, positive stock market conditions,
the Group’s track record, and the experience of management. There
are no externally imposed capital requirements. The Directors
are confident that adequate cash resources exist or will be made
available to finance operations but controls over expenditure are
carefully
managed.
-
Related Party
Transactions
Directors’
fees
Andrew Monk, a
non-executive director of the Company, is a director of VSA Capital
Limited and that Company provided services amounting to £36,000
(2021: £57,384) to the Company during the
year.
During the year ended 31
October 2022 £35,923 was paid to Directors of the Company
(2021: £46,966). At the year-end a total of £33,587 (2021: £62,126)
was outstanding in respect of directors’
emoluments.
Other related party
transactions
Included in trade and other payables are the
following related party financial
liabilities:
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2022 |
2021 |
2022 |
2021 |
|
£ |
£ |
£ |
£ |
M
Bonner |
25,357 |
24,562 |
- |
- |
R
Scott |
16,845 |
16,317 |
- |
- |
|
42,202 |
40,879 |
- |
- |
Terms:
M Bonner and R Scott: The loan bears interest at the
South African prime overdraft rate. The interest will be calculated
and paid when the loan is repaid. The loan is repayable as decided
upon from time to time.
Outstanding director’s salaries and
related party
transactions
Included in trade and other payables are the
following outstanding directors’ salaries and fees payable to
related parties for other
services:
|
Group |
Group |
Company |
Company |
|
|
As
at |
As
at |
As
at |
As
at |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Company controlled by a former
director: |
|
|
|
|
VSA
Capital |
46,587 |
227,082 |
46,587 |
356,934 |
|
|
|
|
|
|
|
Included in the amount due to VSA Capital are
director's salaries owed to A.
Monk |
|
|
|
|
|
|
|
|
|
Directors' salaries
outstanding |
|
|
|
|
|
|
- A. Monk
(resigned) |
10,587 |
37,126 |
10,587 |
31,266 |
|
|
- M. Bonner
(resigned) |
11,000 |
12,000 |
11,000 |
42,000 |
|
|
- D. Lenigas
(resigned) |
- |
5,000 |
- |
49,000 |
|
|
- R.
Scott |
12,000 |
8,000 |
12,000 |
37,000 |
|
|
|
33,587 |
62,126 |
33,587 |
159,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arrangements with VSA NEX Investments
Limited
During the period under review the Company and VSA
NEX Investments Limited (“VSA NEX”) entered into certain related
party arrangements in relation to Dynamic Intertrade (Pty) Ltd
(“Dynamic”) as outlined below. VSA NEX is a 100% subsidiary of VSA
Capital. At the time the arrangements were entered into
Andrew Monk was a director of the
Company, VSA Capital and VSA NEX and is deemed to have significant
influence over VSA Capital and VSA
NEX.
Disposal of 49% equity interest in
Dynamic to VSA
NEX
VSA NEX subscribed for such number of new shares in
the capital of Dynamic resulting in VSA NEX holding 49% of the
enlarged issued share capital of Dynamic for a consideration of
ZAR10,982 and therefore became a
significant shareholder in Dynamic representing the non-controlling
interest disclosed in the group financial
statements;
Put and call option for VSA Nex to
acquire remaining 51% of
Dynamic
At the same time a put and call option agreement was
entered into with the Company granting to VSA NEX the option to
acquire 11,430 shares in Dynamic Intertrade, which represents the
remaining 51% equity interest currently owned by the Company. This
is subject to the satisfaction of certain conditions and a time
restrictions of 31 December 2023 for
a consideration of £1.
Disposal of group loans in Dynamic from
the Company to VSA Nex and entry into a loan subordination
agreement
Simultaneously with the above subscription and to
allow the equity in Dynamic to be issued to VSA NEX, the Company
agreed to assign certain debts owing by Dynamic, amounting to £ 4.2
million which had been fully impaired in prior years, to the
Company and certain other parties to VSA NEX in consideration for
VSA NEX paying to the Company £100,001 and agreeing to fund Dynamic
so as to enable Dynamic to carry on its business in the ordinary
course until such time as the Company ceases to hold any further
shares in Dynamic. This assignment agreement resulted in VSA NEX
having a non-controlling interest in Dynamic and as such its share
of the current year profits amounted to £522, its share of
accumulated losses prior to acquisition amounted to
£2,305,905.
Additionally, the assignment of the loans resulted in
the Group incurring a finance charge on consolidation of
£3.1 million. VSA NEX has signed a subordination agreement in
relation to the loans due by Dynamic to VSA NEX with an expiry date
of 31 October 2023. Should VSA NEX
choose to request the repayment of the loans due by Dynamic this
will severely impact the Company's ability to continue as a going
concern.
-
Controlling Party
Note
There is no single controlling party. Significant
shareholders are listed in the Directors Report and Business
Review.
-
Events Subsequent
to 31 October
2022
Subsequent to year end the Company appointed a new
auditor as disclosed previously in this
report.
On 24 January 2023, the
Company announced the subscription (the "Subscription") for
12,726,000 new Ordinary Shares the Company raised net proceeds
totalling £699,930 at 5.5 pence per
share representing a premium of 119 per cent to the closing price
of 2.51 pence on 20 January 2023, being the business day prior to
agreement of the
subscription.
On 24 January 2023 the
convertible loan note holder converted £300,000 of its debt to
6,000,000 new ordinary shares. In addition, the Company issued an
additional 12,726,000 new ordinary shares to two new shareholders
for an investment of £699,930 in February
2023.
On the 4th of July
2023, the Company entered into an agreement to provide a
loan to Precious Link (UK) Limited
(“Precious Link”), a wine retailer, incorporated and registered in
England and Wales, located within the Southeast of
England. The loan is for a sum of
£200,000, is unsecured and attracts interest at 10 per cent. per
annum payable monthly in arrears. The loan is repayable on demand
by the Company and is repayable on 5 business days’ notice from
Precious
Link.
On the 20th of July
2023, the Company sold its 46.8% equity stake in Dynamic
Intertrade Agriculture (Pty) Ltd (“DIA”). As such, the investment
has been held in the balance sheet of the Group as an asset held
for sale since that decision was made. The Company announced that
it has now reached agreement with Athena Trading Worldwide Limited,
a private company, for the sale of its 46.8% stake in DIA, for a
consideration of £15,384.62, payable in cash on completion The
contractual completion date is 31 July
2023.