t
| Date | 27 Jul 2023 |
| Time | 07:00:00 |
| Category | Annual Financial Report |
| ID | nsm:202307270200PR_NEWS_UKDISCLO_0012.html |
Disseminated via PRN on 27 July 2023
PR Newswire
LONDON, United Kingdom, July 27
27July 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.
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 4thJuly 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 | |
| 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.
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.
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.
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.
| 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) | ||
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:
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.
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.
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.
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.
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:
The Group’s activities expose it to several financial risks including cash flow risk, liquidity risk and foreign currency risk.
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.
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.
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.
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.
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.
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.
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.
The Directors present their Report and Financial Statements for the year ended 31 October 2022.
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.
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.
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)
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 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.
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.
No dividends will be distributed for the current year (2021 - nil).
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.
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% |
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.
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:
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.
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:
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.
Each person who is a Director at the date of approval of this Annual Report confirms that:
The Group head office is in London and Dynamic Intertrade (Pty) Limited’s office is located in South Africa.
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.
The information included in this report is not subject to audit other than where specifically indicated.
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.
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.
The two new Directors have service contracts with the Company.
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.
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 26thJuly 2023.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
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.
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 .
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.
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.
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.
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.
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:
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:
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:
|
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:
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:
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:
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
| 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 EquityFor the Year Ended 31 October 2022Group |
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 | 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 |
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 FlowFor 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 |
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.
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.
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.
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.
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.
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:
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.
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.
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.
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:
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:
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.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
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.
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.
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.
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.
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. |
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.
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.
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.
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.
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.
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.
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 |
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.
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.
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.
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.
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.
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.
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%).
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.
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.
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.
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.
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.
| 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 | - | - |
| 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 | - | - | - | |||
| 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 | ||||
| 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.
| 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 | ||
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 | ||
| 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.
| 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 |
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 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.
| 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.
| 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.
| 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.
| 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
| 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.
| 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 |
| 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.
| 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.
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.
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 |
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).
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.
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 | |
| 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.
| 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.
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.
| 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 |
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:
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.
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.
The following assumptions were made in calculating the sensitivity analysis:
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:
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.
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.
There is no single controlling party. Significant shareholders are listed in the Directors Report and Business Review.
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.
