Acquisition of GP Service Ltd

Kanabo Group Plc

("Kanabo" or the "Company")

Acquisition of The GP Service Limited

Kanabo Group Plc (LSE:KNB), the pan-European medical cannabis company focusing on the development and distribution of cannabis-derived products for medical patients and wellness CBD consumers, announces the acquisition of The GP Service Limited (the "GP Service" or the "Target"), a UK-based private primary care telemedicine provider, for a net consideration of c. £13,498,634 ("Net Consideration"). Pursuant to a sale and purchase agreement between the Company (1) and the shareholders of the Target ("Sellers") (2) (the "Agreement") (details of which are described below) Kanabo will issue the Sellers 106,708,576 Ordinary Shares at a price of 12.65p which represent c. 22% of the issued share Capital of the Company.  

Whilst the acquisition will complete immediately, the consideration shares will be issued at a later date when the Company has the pre-requisite authorities.

Kanabo's acquisition of the GP Service will facilitate the rapid growth of its existing digital and telemedicine business and will establish a new and fully compliant channel to market for Kanabo's products for medical patients. Through improved access to these products, Kanabo hopes to make a substantial contribution to improving outcomes for thousands of patients in the UK and Europe.

Highlights:

·    The GP Service is an approved provider on the NHS digital framework for video and on-line consultations

·    The GP Service is able to able to electronically deliver prescriptions to a network of 4,200 pharmacies including major high street chains and independent pharmacies

·    The GP Service provides online GP video consultation services to corporate clients as an occupational health service for employers as well as pharmacies, including a major high street pharmacy chain

·    Kanabo intends to develop The GP Service platform to become one of Europe's first digitally led and legally compliant providers for Kanabo's products and wellness CBD services following regulatory approval

The GP Service offers the services of online doctors to help diagnose and treat common conditions using its internet-based consultation platform. The system allows patients to consult with qualified doctors via online assessment questionnaires and through secure video chat. As part of the consultation process, the GP Service doctors are able to provide prescriptions, as well as write referral letters for hospital care, and fit notes. The GP Service platform enables doctors to send electronic prescriptions to a network of 4,200 high street and supermarket pharmacies.

All the Doctors contracted by the GP Service are UK registered with the General Medical Council ("GMC"). All pharmacies affiliated with the services provided by the GP Service are also UK based and registered with the General Pharmaceutical Council ("GPhC").

The GP Service also offers a comprehensive 'white-label' service to several enterprises, including a leading high street chain of pharmacies in the UK. This enterprise offering complements its well-established direct to consumer service model.

In addition to growing the existing telemedicine business, Kanabo intends to further develop the GP Service digital technology, physician network and patient community, leveraging the platform for the sale of its own product and service offerings.

Avihu Tamir, founder and CEO of Kanabo, said: ""Today's acquisition of the GP Service is part of our strategy to use M&A alongside organic growth to build a pan-European company, offering help to medical patients and consumers for conditions including chronic pain, anxiety and central nervous system diseases. We are very much looking forward to working with the highly skilled team at GP Service to support the growth of their business in the rapidly growing tele-medicine market in the UK and beyond."

Atul Devani, CEO of the GP Service added: "The GP Service was incorporated with the aim of offering patients an innovative and cost-effective solution to access primary healthcare services conveniently and efficiently. We have invested heavily in our core systems and technologies to provide patients with treatment or advice following a remote video or with a GMC Registered Doctor and have successfully built one of the leading primary care telemedicine companies in the UK. With further support and investment from Kanabo we look forward to expanding our core service to cover a range of other medical conditions and further enhance our electronic prescription offerings in the coming months across a number of territories."

GP Directors

Atul Devani, Executive Chairman and co-founder. Atul is a serial technology entrepreneur and the founder of United Clearing, which was admitted to AIM in 2004, before being sold in 2006 for £25 million. He then served as CEO of BSG's wireless division prior to its trade sale to Syniverse Technologies for $290 million. Atul has a First Class Honours Degree in Electronic Engineering from the University College of North Wales (now Bangor University).

Suleman Sacranie, Director and co-founder. Suleman founded an e-commerce business in 2010 and went on to win the Young Entrepreneur of the Year awards in 2012 & 2013 and the Midlands Entrepreneur of the Year award in 2014. Suleman holds a BSc in Chemistry, from the University of Leicester.

Dr Alex Barber - Medical Director. MRCGP FRCA MRCP. Alex has a Degree in Neuroscience from The University of Nottingham followed by a degree in Medicine at St Bartholomew's and Royal London School of Medicine and Dentistry. After his initial training as a House Officer he joined the Imperial Anaesthetics Rotation gaining his 'Fellowship of the Royal College of Anaesthetists' followed by GP training gaining both his Membership of the Royal College of General Practitioners and Membership of the Royal College of Physicians. He is also a GP in A&E at Chelsea & Westminster Hospital

Details of the Agreement

Pursuant to the terms of the Agreement, Kanabo has today acquired the entire issued share capital of the GP Service for a total consideration of £13,498,634, following certain adjustments. The Net Consideration will be satisfied by the allotment of 94,133,645 B ordinary shares of 0.00001p each in the capital of Kanabo GP Limited, a subsidiary of Kanabo Group Plc, at a price of 12.65p per share ("Consideration Shares").  It has been agreed as part of the acquisition that the principal and interest due at completion by the GP Service of a fixed amount of £1,590,728.80 to MEIF WM Debt LP will be repayable by Kanabo Group Plc of 12,574,931 ordinary shares in 18 months based on the same price of 12.65p per share.

The Consideration Shares will be exchanged for ordinary shares in Kanabo Group Plc (on a one for one basis) (with such shares being referred to hereinafter as the "Kanabo Shares") within 13 months of closing ("Put Period") via a put/call option pursuant to which Kanabo has the right to serve notice ("Put Notice") to exercise an option to require the Sellers to exchange their Consideration Shares for Kanabo Shares ("Put Option") at any time during the Put Period. In the event Kanabo fails to exercise the Put Option before expiry of the Put Period, a single Seller or group of Sellers have the right to serve a call notice ("Call Notice"), requiring Kanabo to issue the Kanabo Shares in exchange for the Consideration Shares. In the event Kanabo fails to complete the issue of the Kanabo Shares in exchange for the Consideration Shares following service of a Put Notice or Call Notice, the Sellers have the right to receive the requisite number of existing ordinary shares from Avihu Tamir, in which case the Company will commit to issue Avihu Tamir replacement ordinary shares (in exchange for the Consideration Shares that Avihu Tamir exchanges for his existing ordinary shares) so that his holdings will remain unchanged.

The share price for these purposes is calculated based on VWAP for the period of 30 days prior to closing being 12.65p. When all Consideration Shares have been exchanged for Kanabo Shares (or otherwise as described above), they will represent c. 22% of the issued share capital post the deal.

Customary good leaver/bad leaver conditions are attached to Consideration Shares issued to employee Sellers.

The Company intends to issue certain employees and the management of the GP Service options for the value of £860,645 in order to incentivise them. Further information will be provided once the terms of those options have been agreed.

Additionally, the GP Service was granted a loan facility of £500,000 of which £547,110 remains outstanding. This facility is secured by a fixed and floating charge over the assets of the GP Service. This facility and the security will remain in place following completion.

Lock-in Arrangements

Other than set out below, those of the Sellers who will not, following closing, be employed by the GP Service or within the Kanabo Group have entered into lock-in arrangements with Kanabo pursuant to which they are prevented from disposing of any of the Kanabo Shares held by them (save in certain limited circumstance) for a period of 18 months from the date of the agreement ("Lock In Period") and will be subject to additional orderly market restrictions for a further period of 18 months thereafter.

The Lock-In Period is extended to 36 months for those Sellers who are joining Kanabo Group plc as employees and managers, with no orderly market restrictions thereafter. A small percentage of the equity in the GP Service (around 3.5% of the total Consideration Shares) is held via CrowdCube, a crowd-funding platform. CrowdCube are not subject to any of the lock in or orderly market restrictions in respect of the Kanabo Shares held by them.

Materia Update

Kanabo's acquisition of Materia's European business, including its Maltese EU GMP certified facility, German medical cannabis wholesaler and UK CBD e-commerce platform, is currently on-going. On 4th November 2021, Kanabo and Materia signed a revised term sheet, details of which were set out in the announcement made by the Company on that date. This transaction is still subject inter alia to the agreement of formal documentation and conditional on, among other things, the receipt of all necessary regulatory consents. An update will be provided to the market in due course, but the parties are currently negotiating a further investment by Kanabo.

Warrant Update

The Company confirms that the effective expiry date of the 2,300,040 RTO warrants held by Mr Andrew Morrison, a director of the Company has been extended from 16 February 2022 until 15 May 2022, in accordance with the terms of the corresponding warrant instrument as they apply to PDMRs. As was foreseen when the warrant instrument was prepared, the Company is in a closed period in the lead-up to the original expiry date of the warrants.

In the event that any dealings are contemplated by Mr Morrison during the extended validity that applies to him as a PDMR, these will be dealt with and notified according to the Company's share dealing policy.

For further information, please visit http://www.kanabogroup.com/ or contact the following:

GP Service Accounts For The Year Ended 31 January 2021

The information below is extracted directly from The GP Service (UK) Ltd audited accounts for the year ended 31 January 2021.

For the year ending 31 January 2021 the company was entitled to exemption from audit under section 477 of the  Companies Act 2006 relating to small companies.

Directors' responsibilities:

·    The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006.

·    The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

·    These accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies' regime.

·    The company has taken advantage of section 444(1) of the Companies Act 2006 and opted not to deliver to the registrar a copy of the company's Profit and Loss Account.

The financial statements were approved by the board of directors and authorised for issue on 10/06/21 and are signed on its behalf by:

..............................

A S Devani

Director

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JANUARY 2021

1    Accounting policies

Company information

The GP Service (UK) Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Coventry University Technology Park, The Technocentre, Puma Way, Coventry, West Midlands, United Kingdom, CV1 2TT. The company's principal activities and nature of its operations are disclosed in the directors' report.

1.1   Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

These financial statements for the year ended 31 January 2021 are the first financial statements of the company prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (ASB).

For periods up to an including the year ended 31 January 2020, the company prepared its financial statements in accordance with FRS 102. Accordingly, the company has prepared financial statements that comply with IFRS applicable as at 31 January 2021, together with the comparative period data for the year ended 31 January 2020. In preparing these financial statements, the company's opening statement of financial position was prepared as at 1 February 2019, the company's date of transition to IFRS.

There were no changes to the previously reported financial position and financial performance for those periods as a result of the transition to IFRS.

1.2   Going concern

The directors are satisfied, given funding in place and further support confirmed by existing stakeholders that the going concern basis remains appropriate.

1.3   Revenue

The company is in the business of providing online medical services. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a service to a customer.

1.4   Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

·    Computers      33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

1.5   Impairment of tangible and intangible assets

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6   Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.7   Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

1.8   Financial liabilities

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

·    it has been incurred principally for the purpose of selling or repurchasing it in the near term, or

·    on initial recognition it is part of a portfolio of identified financial instruments that the company manages together and has a recent actual pattern of short-term profit taking, or

·    it is a derivative that is not a financial guarantee contract or a designated and effective hedging instrument.

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company's obligations are discharged, cancelled, or they expire.

1.9   Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10 Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.

Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11 Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.13 Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

1.14 Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment.

The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

1.15 Grants

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

2    Adoption of new and revised standards and changes in accounting policies Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

·    Amendment to IFRS 16 Leases - COVID-19 related rent concessions (effective 1 June 2020)

·    Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform (effective 1 January 2021)

·    Amendments to IAS 1 Presentation of financial statements - Classification of liabilities (effective 1 January 2022)

·    Narrow scope amendments to IFRS 3, IAS 16, IAS 17 and annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective 1 January 2022)

The directors have considered the amendments above and do not believe there will be a significant impact on the company's financial statements when they are adopted.

3    Critical accounting estimates and judgements

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The directors do not consider there to be any estimates or assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities.

4    Property, plant and equipment

5    Trade and other receivables

6    Trade receivables - credit risk

Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

7    Borrowings

Bank loans represent a Coronavirus Business Interruption Loan Scheme (CBILS), repayable by instalments over a 3 year period commencing March 2022.

MEIF Debenture Loan of £1,220,111 (2020: £1,120,115), including accrued interest, is interest bearing at 10%pa and is repayable, other than by instalments, in 2023. The loan is secured by a first fixed and floating charge on the company's assets and undertaking.

Debenture loans of £1,071,334, (2020: £966,334) , including accrued interest, are interest bearing at 14%pa, and are repayable, other than by instalments, commencing March 2022 at the earliest. The debenture loan is secured by fixed and floating charges on the company's assets and undertaking.

8    Fair value of financial liabilities

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values

9    Liquidity risk

The following table details the remaining contractual maturity for the company's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the company may be required to pay.

Additional details of the bank loans, Debentures and MEIF Debentures can be found in Note 13.

Liquidity risk management

Liquidity risk is the risk that the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company's reputation.

10 Market risk

Market risk management

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings.

The company only trades in sterling and is not exposed to foreign exchange risk.

The company does not hold any investments in other companies or marketable securities and so is not exposed to other price risk.

Interest rate risk

The company has bank overdrafts, bank loans, debenture loans and MEIF debenture loans which all incur interest. The company manages the interest rate risk by limiting its exposure to floating interest rates. The company currently has fixed interest rates on all its borrowings, except for the bank overdraft which is floating. The exposure is minimal and the company looks to avoid using its overdraft where possible

11 Trade and other payables

12 Lease liabilities

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

13 Deferred taxation

14 Share Capital

15 Share premium account

16 Capital risk management

The company's objective when managing capital is to safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued operations. The company considers its capital to comprise equity capital plus accumulated profits.

The company is not subject to any externally imposed capital requirements.

Notes to reconciliation

The prior year results have been restated to correct the value of share capital shown as at 31 March 2020, which increased from £1,687 to £2,358. This restatement has resulted in a reduction in the profit and loss account reserve of £671.