S-VENTURES PLC

("S-Ventures plc" or "the Company")

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the 15 Months Ended 31 December 2023

​

S-Ventures plc (AQSE: SVEN) (OTCQB: SVTPF), the Company investing in and growing exciting brands across the natural, wellness and food-tech categories, is pleased to announce the audited results of the Company for the 15-month period ended 31 December 2023. These accounts have been delayed for the reasons outlined in the Chairman's statement. The Company will soon be in a position to publish its interim report for the six-month period ended 30 June 2024 at which time it will provide an update on its current plans.  Following publication of the interim results, the Company will apply for the lifting of suspension in trading in the Company's shares.

For further information contact:

The Company                                                                 +44 (0) 203 475 0230

Scott Livingston

Stephen Argent

AQSE Corporate Advisor and Broker                          +44 (0) 20 3005 5000

VSA Capital Limited

Andrew Raca

Dylan Sadie

DIRECTORS:

S Argent (appointed 29 August 2023)

B Choudhrie

R D Hewitt

S P Livingston

D M Mitchell (resigned 15 January 2024)

N A D'Onofrio (resigned 26 July 2023)

A J B Phillips

SECRETARY:

R D Hewitt

FINANCIAL ADVISOR:

VSA Capital Limited, Park House, 16-18 Finsbury Circus, London, EC2M 7EB

AUDITORS:

RPG Crouch Chapman LLP, 40 Gracechurch Street, London EC3V 0BT

LAWYERS:

Hill Dickinson LLP, The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW

REGISTRARS:

Neville Registrars, Neville House, Steelpark Road, Halesowen, B62 8HD

REGISTERED OFFICE:

Suite 8, 3rd Floor, 121 Sloane Street, London, SW1X 9BW

REGISTERED NUMBER:

12723377 (England and Wales)

The Board is pleased to present the Company's audited results for the 15 months ended 31 December 2023.  As previously announced, the year-end has been extended to be coterminous with that of our largest subsidiary - Juvela Limited - which we acquired in December 2022.

The Board regrets the late submission of these accounts which has been occasioned by a difficult trading period and a change in auditors.  We anticipate releasing our Interim Accounts to June 2024 shortly to bring us back in line with reporting requirements.

The results reflect the headwinds we have encountered with the closure of Lizza GmbH (March 2023) and more recently the closure of Ohso Chocolate (September 2023).  Against these disappointments, we are very pleased with the success of Juvela whose first-year results were in line with expectations. Juvela supplies gluten free products largely to the prescription market and has recently expanded its product range.

The turnaround at Pulsin has been slower than anticipated and the period to December 2023 reflected considerable costs which we have now eliminated from the business.  This turnaround has continued through 2024 and we anticipate that Pulsin will return to profitability in early 2025.

Growth has continued at Market Rocket which continues to tap into new and developing marketing platforms.

Since the 2023 year-end, we have refined or expanded the ranges of products at both Pulsin and Juvela which gives the Board renewed confidence for future trading periods.

On 22 March 2024, we announced a £2 million debt fund-raising to bridge to a potential purchase of assets and novation of liabilities by Riverfort Global Opportunities plc ("RGO").  The Board continues to progress this important potential transaction with the final phase of preparation now underway with the issuance of these audited accounts.  RGO have undertaken significant due diligence and the Board anticipates being able to make a further statement shortly after the publication of these accounts.

The Board continues to work closely with group companies, offering operational, expertise and financial support, enabling them to grow faster than otherwise might have been the case if standing alone.

I would like to express our gratitude to our employees, board members and shareholders for their efforts and continued support and for making our progress to date possible.  I am also announcing my intention to stand down as a director as the forthcoming AGM.

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R D Hewitt

Non Executive Chairman

CEO's REPORT

We are pleased to present our audited results for the period ended 31 December 2023. These have taken longer than expected and, similar to the prior year, have been complex due to a number of factors. These include the liquidation of our foreign German subsidiary, alongside impairment reviews across the acquisitions we have made in the last 2 years.

It is safe to say that the environment remained very tough, with a combination of issues such as wage and ingredients inflation, as well as general cost increases and headwinds that have contributed to a difficult period.  We can now confirm that most areas have shown recent improvement and the businesses are slowly returning to more stable trading with growth and opportunity coming back into the plan. We have been focused on driving value from internal efficiencies and the supply chain and managing financial risk as opposed to aggressive growth plans in the recent market environment.

I am pleased to report a number of positives:

·      170% annualised revenue growth to £20m

·      Launching of new products across the main brands Juvela and Pulsin

·      Juvela remains on plan and profitable with an EBITDA in excess of £2m

·      Market Rocket grew revenues 210% and launched its Marketverse platform

·      Pulsin's cost-cutting exercise has concluded allowing for a return to profitability in early 2025

·      Key decisions taken to discontinue certain smaller, capital-intensive businesses (OHSO, Livia's)

The first 3 years of the group's activity has seen significant growth in revenues through acquisition in what has been a difficult trading period:

                                                                        Split of the £20m revenue for the current period

* includes discontinued operations revenue

In order to meet our obligations to Hero for the final deferred payment for the acquisition of Juvela, to support central costs of a listed business and, to a lesser extent, to support trading, we sought to raise funding of £2.5 million in the last quarter of 2023.  With equity markets not offering liquidity or value, we raised a total of £3 million of debt facilities in the following months, including £1 million of facilities from a Middle Eastern family office and £2 million of facilities from RGO alongside the announcement of RGO's potential acquisition of our subsidiaries and novation of liabilities. Given difficult market conditions, this was a testament to the underlying operating prospects of our businesses.

The Board continues to progress this important potential transaction (the "Transaction") in close collaboration with the Board of RGO.  The Transaction that is proposed is intended to raise enough capital to settle all of the parent company's loans, leaving only the subsidiary loan at Juvela in place and approximately halving the financial debt carried by our group of businesses.  The subsidiary loan at Juvela, which was used for its acquisition, has been reduced significantly through operating cashflow and as at December 2024 the amount owed to Shawbrook is now approximately £4m.

We continue to be very focused on the progress of our brands and, following the release of these audited accounts, we will update the market on the new products we are launching alongside recent and up-to-date progress for all the divisions.

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S P Livingston

Chief Executive Officer

FINANCIAL REVIEW

Introduction

During the fifteen months ended 31 December 2023, the focus has continued to be on restoring the existing businesses to profitability, whilst integrating Juvela Limited into the group.  Juvela and Market Rocket are both delivering positive EBITDA on a monthly basis and Pulsin is expected to achieve that by early 2025.

The group has grown its gross sales to £22.5m before trade discounts of £2m resulting in net sales of £20.5m. but sustained losses of £6.6m after costs of acquisition and impairments.

The loss includes some £0.5m of one-off costs comprising costs associated with acquisitions (£0.4m) and impairment of goodwill (£0.1m).

Trading margins improved across the group from 33% to 45%.

The directors do not propose to declare a dividend. The resultant loss represents a 5.04p (2022- 2.92p) loss per share in issue at the end of the financial period.

Comments on performance of our owned businesses:

PLANT BASED NUTRITION

Pulsin

Pulsin (www.pulsin.co.uk) is a well-established and highly respected plant-based nutrition company, excelling in plant-based nutrition technology, manufacturing and sales, with a focus on healthy protein bars, nutritional snacks and Keto bars. Pulsin formulates and produces high quality plant-based products under its own brands as well as for third parties, from its specialised facilities in Gloucester.

Pulsin's award-winning range of tasty snack bars, protein powders, keto products and shakes are packed full of feelgood nutritional goodness and balanced with the right amount of super ingredients. The Pulsin range is gluten free and suitable for vegetarians, with the majority being plant-based too. Pulsin never uses artificial ingredients, preservatives or palm oil. The products are available at most large retailers such as Sainsbury's, Tesco, Boots, Asda, Holland & Barrett and Ocado.

Pulsin had gross sales of approximately £7.5m in the fifteen months to 31 December 2023 (2022 - £7.5m). The lack of growth is a little disappointing, but the focus in bringing the business back to profitability has delayed the introduction of new products which were launched in 2024.

The business implemented a major shift in strategy during this period, moving focus away from lower margin contract manufacturing work towards driving growth and profitability of Pulsin-branded products. This involved a number of key initiatives including the termination of a loss-making contract with the largest private label customer, worth over £2m per annum in revenue.

The business was able to use this as an opportunity to fast track key Pulsin new projects, including the launch of 3 new premium flavoured protein powder products and the start of other projects to build on the success of the best-selling range of keto bars and powders. There was an increase in investment with key customer accounts, particularly Amazon, as part of a plan to drive more branded sales through online channels, which is considered key to the success of challenger food brands within the wellness sector.

Sales grew rapidly during this time but profitability dropped significantly as a result of increased marketing investment and margin support. Towards the end of this period the business undertook a major rationalisation of its operations. The reduction in contract manufacturing work enabled the business to exit the lease of a costly secondary storage and distribution site in Brockworth resulting in major savings for following year. Accordingly, the business has been able to start the next financial year with lower levels of overhead and marketing investment with renewed focus on building branded revenue and profitability as the key priority.  The process of cost reduction and review of the supply chain during 2024 was a continuing feature as the business is moved to a more secure footing.

We Love Purely

We Love Purely is a UK-based plantain crisp brand with an emphasis on sustainability and natural ingredients. Available at many leading stores including Holland & Barrett, Ocado, Selfridges, Harvey Nichols, Harrods and Planet Organic.

The year has been one of resilience and strategic progress for We Love Purely.  Despite facing several operational challenges, including production delays, extended customer payment cycles, and global shipping disruptions, the company has managed to mitigate the impact on its turnover.  While EBITDA reflects these operational pressures, the company has still achieved significant milestones that position it for future growth.

We Love Purely achieved a turnover of £0.4m for the 15 months to 31 December 2023, with an EBITDA loss of £247k. This compares to a turnover of £0.4m for the 12 months to 31 December 2022, with an EBITDA loss of £217k. Stabilising turnover under challenging circumstances marks a notable achievement. Key to this has been the strategic investment in launching products with major supermarket chains such as Holland & Barrett in the UK and Benelux. Additionally, the company secured new partnerships within the foodservice sector, including collaborations in the private jet catering market. The business's European footprint has also expanded significantly, with a stronger presence in Switzerland, the Netherlands, and Portugal.

The operational challenges faced were primarily linked to supply chain issues and the company has taken decisive steps to mitigate these risks in the future. Plans are underway to diversify the supplier base, which will reduce dependency on a single source and improve supply chain resilience. The business is also preparing to launch a new product line in a category outside snacking. This strategic move will not only differentiate the company's offering but also balance its risk profile.

The company has also made infrastructure improvements by establishing new storage and distribution arrangements and initiating discussions with a potential supply chain partner. These measures aim to enhance cost efficiency and operational effectiveness, setting the stage for a more profitable business model in the near term. Looking forward to the upcoming year, We Love Purely remains committed to driving growth through innovation, operational excellence, and strategic expansion.

Ohso Chocolate

Following continuing technical difficulties with the manufacturing process of the products and a consequential drop in sales revenues, it was decided that Ohso should be absorbed into Pulsin Limited.  The turnover for this period of £0.09m was the result of winding down the company's operations and selling off any remaining stock.  The accounts include an impairment of the remaining £0.03m of the original investment.

BAKERY DIVISION

Following the closure of Lizza in March 2023 any remaining net assets have been fully impaired and all intercompany debt written off.  This leaves Juvela as the sole operating company within the bakery division, a business acquired in mid-December 2022.

Juvela

Juvela is a specialist bakery company producing a range of gluten-free flours and bakery products, mainly sold through the NHS prescription channel, where the company has a greater than 50% share of the market.

The business continues to perform in line with expectations, generating a turnover of £8m for the 12 months to 31 December 2023, with an EBITDA of £2.4m

Following the purchase of Juvela in December 2022, 2023 has been very much a stabilising year for the company and its markets, after leaving the Hero Group, its previous owner.  Juvela was able to migrate away from some Hero-group suppliers for its bakery and consumer products and bring this supply solely into the UK.  This was reflected in the company's stable turnover and EBITDA numbers for 2023.

2023 was the year that Juvela strengthened its team to get ready to attack the UK retail market and diversify the portfolio further from its standard prescription products.  It developed a new NPD/Retail-focused team, recruiting an NPD manager and Sales Manager.  It also started a process to build a new allergen-free bakery adjacent to its gluten-free bakery and this was ready for the successful retail launches in September 2024.

TECHNICAL SERVICES

Market Rocket Limited continues to grow and develop its range of services, especially its Marketverse platform, where it manages the online sales strategies for other companies on Amazon and other online platforms.

The company has experienced significant growth during the 15-month period to 31 December 2023, with turnover increasing to £3.7m. This was driven by strategic initiatives and operational expansion. While the EBITDA % for the current period is down, compared to the previous comparable periods, this reflects our ongoing investment in scaling the business to support future growth.

Key drivers of this growth include the successful onboarding of both blue chip and market-disrupting new clients through our dedicated sales team, which leverages AI technology to prequalify leads and streamline the path to initial meetings. Additionally, the expansion of our "Marketverse" direct selling offering has opened new revenue streams, further solidifying our position as a leader in D2C support.

Notably, the last 15 months have marked our transition into a full-service D2C agency, offering off-Amazon services to complement our core Amazon expertise. We have secured key partnerships and accreditations with TikTok, Meta, Google, and Semrush, enhancing our capabilities alongside our established credentials as a member of the Amazon Service Provider Network and Verified Advertising Partner. These developments position us well for continued growth and innovation in the years ahead.

Cash flow and cash position

Up until recently, funding for the group activities has come from shareholder monies. The directors recognised the need for additional funding and organised a bridging loan of £1m in November 2023, whilst the negotiations to raise further capital of £2m, referred to in the CEO's report, were being organised.  Meanwhile, the Board continues to progress RGO's potential acquisition of our subsidiaries and novation of liabilities in close collaboration with the Board of RGO.  This is intended to raise enough capital to settle all of the parent companies loans, leaving only the subsidiary loan at Juvela in place and approximately halving the financial debt carried by our group of businesses.

INVESTMENTS

Coldpress Foods Limited

Coldpress continues to trade and there has been no impairment in the value of this investment.

Plant Punk

Despite an optimistic start, we were disappointed that the business failed to develop any products.  Accordingly, the value of our 50% joint venture in Plant Punk has been fully impaired in these accounts.

CURRENT TRADING

Since the balance sheet date, the growth in all companies, together with the cost-cutting, efficiencies and rationalisations being implemented are all beginning to bear fruit.

PRINCIPAL RISKS AND UNCERTAINTIES

Our key risks can be summarised as follows:

SECTION 172 STATEMENT

The Board of Directors, in line with their duties under section 172 of the Companies Act 2016, act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard to a range of maters when making decisions for the long term. Key decisions and maters that are of strategic importance to the Company are appropriately informed by s172 factors.

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's employees and other stakeholders, the impact of its activities on the community, the environment and the Company's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term. We explain in this annual report, and below, how the Board engages with stakeholders.

The Board regularly reviews the Company's principal stakeholders and how it engages with them. This is achieved through information provided by management and also by direct engagement with stakeholders themselves.

The table below sets out some examples of how the directors have exercised this duty:

The directors present their report with the financial statements of the company and the group for the 15 months ended 31 December 2023.

DIVIDENDS

No dividends will be distributed for the period ended 31 December 2023.

FUTURE DEVELOPMENTS

Details of the Group's future developments are contained in the Strategic report set out above.

EVENTS SINCE THE END OF THE PERIOD

Information relating to events since the end of the period is given in Note 37 to the financial statements.

DIRECTORS

The directors who have held office during the period to the date of this report are as follows:

S Argent (appointed 29 August 2023)

B Choudhrie

R D Hewitt

S P Livingston

D M Mitchell (resigned 15 January 2024)

N A D'Onofrio (resigned 26 July 2023)

A J B Phillips

REMUNERATION COMMITTEE REPORT

The Remuneration Committee has responsibility for determining, within the agreed terms of reference, the Group's policy on the remuneration packages of the Company's Chairman, and the executive directors and such other members of the senior management as it is designated to consider. The Remuneration Committee also has responsibility for determining (within the terms of the Group's policy and in consultation with the Chairman of the board and/or the Chief Executive Officer) the total individual remuneration package for each executive director and other senior managers (including bonuses, incentive payments and share options or other share awards). The remuneration of non-executive directors is a matter for the independent board. No director or manager will be allowed to partake in any discussions as to their own remuneration. In exercising this role, the directors shall have regard to the recommendations put forward in the relevant QCA Guidelines.

In the 15 months to 31 December 2023, the Remuneration Committee consisted of the Non-Executive Chairman and two non-executive directors: David Mitchell, Alex Phillips and Bhanu Choudhrie. The Remuneration Committee is convened not less than twice a year and otherwise as required. The Committee met twice during the period ended 31 December 2023.

Directors' Remuneration Policy

The Committee takes into account both Group and individual performance, market value and sector conditions in determining director and senior employee remuneration. The Committee has maintained a policy of paying salaries comparable with peer companies in the sector in order to attract and retain key personnel.

For the first part of the period under review, these costs were kept very low reflecting the Group strategy of building for the future. In future periods, salary costs are likely to rise.

Directors remuneration

15 months ended 31 December 2023

Prior period year ended 30 September 2022:

Fees payable

Service Contracts and non-executive directors' Letters of Appointment

The executive directors have rolling contracts that are terminable on 12 months' notice. These contracts are not fixed term and will be reviewed annually. The chairman has an agreement entitling him to £30,000 pa and the other non-executive directors have agreements entitling them to fees of £12,000 pa. Fees of £1,000 per month were accrued for services provided in the current period.

During the 15 months ended 31 December 2023, there were 13 minuted Board meetings plus a further 2 informal meetings.

Directors' interests as at 31 December 2023

Share Options and Warrants

There is one set of warrants exercisable at 4p and an option exercisable at 15p.

Shareholder Approval of Directors' Remuneration Report

Shareholders are asked to approve this directors' Remuneration Report for the period ended 31 December 2023 at the forthcoming Annual General Meeting. This resolution is advisory in nature.

STATEMENT OF CORPORATE GOVERNANCE ARRANGEMENTS

Introduction

We are pleased to set out below the Corporate Governance Report for the 15 months ended 31 December 2023. As an AQSE quoted company, we recognise the importance of sound corporate governance in supporting and delivering the strategy of the Company and its subsidiaries (together the "Group"). This involves managing the Group in an efficient manner for the benefit of its shareholders and other stakeholders whilst maintaining a corporate culture which is consistent with our values.

The Company adopted the QCA Corporate Governance Code ("QCA Code") on its initial listing. The Company's Corporate Governance Statement is available to view on the Company's website at www.s-venturesplc.com

The board of directors is responsible for the long-term success of the Company and, as such, devises the Group strategy and ensures that it is implemented. The board is determined that the Company protects and respects the interests of all stakeholders and in particular, is very focused upon creating the right environment for its employees. We want a happy workplace and we want our employees to be fully and properly rewarded and to feel that they are an integral part of the S-Ventures family. A reward structure is in place which, inter alia, allows for the grant of share options, enabling members of staff to participate in the growth of the Company, as appropriate.

We want our suppliers, who are an essential part of the Company, to also feel part of the S-Ventures family and we work closely with them to ensure that this is the case. Above all, the Company wishes to ensure that shareholders obtain a good return on their investment and that the Company is managed for the long-term benefit of all shareholders and other stakeholders. Appropriate Corporate Governance procedures will ensure that that is the case and reduce the risk of failure.

The Development of the Code for S-Ventures

The QCA sets out 10 principles which the Board is working on to expand into an effective document to cover all areas of the Group's business. During 2023 the board reviewed whether the Quoted Companies Alliance (QCA) code remains appropriate to continue following, the substitute that was considered was the UK Corporate Governance Code published by the Financial Reporting Council (FRC). Due to the size of the Company and the prescriptive nature of the UK Corporate Governance Code a decision was made to continue abiding by the QCA code.

The Group has a clear mandate to optimise the allocation of resources to support its development and growth plans seeking to maintain a balance between its resources and maintaining robust corporate governance practices. As the Group evolves, the Board is committed to enhancing the Company's policies and practices appropriate for the size and maturity of its business and organisation.

Set out below are the Group's corporate governance practices for the 15 months ended 31 December 2023.

1.   Business strategy

The business model involves seeking out strong brands or products with a clear market message within the wellness sector. To date this has meant focusing of healthy snacks market. Conscious of present trends in plant-based foods, the products should be both better for the consumer and also have a better carbon and / or health benefit than competing products. By being in the forefront of these trends, the Board considers that shareholder value will be promoted.

2.   Shareholder needs

Other than promoting growth and thus shareholder value, we aim to develop ways of communicating effectively with our shareholders to ensure we are developing appropriately. As the group grows this will become more important; for the time being, this is achieved by data on our website, press notices and the full presentation of our annual accounts.

3.   Wider responsibilities, such as social responsibility

With both our existing and new products, our teams are focused on bringing products to market using responsibly sources raw materials and packaging materials.

4.   Risk Management

We consider risk management at two levels. Firstly, we ensure that all our products are made to appropriate and up to date food hygiene standards. Secondly, we have implemented reporting and management systems appropriate to a Group of our size at both the operating company level and main board level. We have ensured that the group carries appropriate insurance covers.

Secondly, the main Board has set up committees which include non-executive directors for investment decisions, remuneration and audit. Whilst the Investment Committee sift possible targets, all offers are approved by the full main Board.

5.   The Board

The Board members are listed on page 1. The board meets regularly online and in person. During the 15 months ended 31 December 2023, there have been 13 minuted Board meetings plus a further 2 informal minuted meetings.

New board appointments would be considered by the CEO and Chairman before consulting with the whole Board.
The full formal Board meetings have a formal structure covering recent developments, present finance and funding issues, acquisition policies and progress together with any shareholder or exchange issues reported by our advisors or which need to be passed on to them.

6.   Board skills

The Directors have a wide range of skills including experience of the retail and online sales structures and the non-executive directors are able to bring to bear their knowledge gained in the wider M&A marketplace. As the Company is in the retail and online sector these are considered to the most appropriate skills. 

Below the board, we have skilled managers in the Manufacturing units and also experts in online selling to manage the digital presence of the constituent businesses of the group.

The Board regularly reviews the skills needed to run and develop the group's activities.

7.   Evaluate board performance

Based on clear and relevant objectives, seeking continuous improvement. Now S-Ventures has been operating since July 2020, the Board plans to put in place a more rigorous evaluation for the subsequent financial year. The proposed evaluation is a formal internal evaluation consisting of the following:

•      Attendance of directors to Board meetings;

•      Questionnaires completed by each director to determine the boards effectiveness; and

•      One-on-one discussions with the Chairman

The questionnaire mentioned above is anonymised to promote honesty in answering the questions that are being posed to the directors. Oversight and implementation of actions identified from the questionnaire are to be completed by the Company Secretary. Should external insight be required to facilitate this evaluation then this will take place however, in the current financial year this was not deemed necessary.

In addition to this, succession planning also forms part of our evaluation of the Board to ensure all directors are aware of what would occur should a prescribed scenario arise.

8.   Promote a corporate culture

Based on ethical values and behaviours.

Since S-Ventures was founded the Board has been insistent on ensuring that ethical values and good behaviour within the Company is promoted and maintained throughout the organisation and that they guide the Company's day-to-day operations, as well as business objectives and strategy.

S-Ventures ethical values are promoted to employees from inception at the interview process through to employment regardless of the working arrangement. S-Ventures ethical values also hold true for businesses which we acquire or invest in, should customers, suppliers or partners not adhere to S-Ventures ethical values business transactions will not cease. S-Ventures has an open-door policy and a flat organisation structure to ensure all employees are empowered to speak their opinion in a comfortable and accepting environment. All employees' contracts whether employed directly by S-Ventures or by one of our businesses contain further information on the values and behaviours expected from staff.

9.   Maintain governance structures

With processes that are fit for purpose and support good decision-making by the board

The S-Ventures Chief Executive Officer, Chief Financial Officer and senior management are accountable for the day-to-day operations of the business and for the implementation of the strategic goals agreed by the Board of directors. The Chairman leads the Board and is responsible for its governance structures, performance, and effectiveness. The Chairman is also responsible for ensuring that the links between the Board and the shareholders, are strong and efficient.

10.  Communication

Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The board recognises that the AGM is an important opportunity to meet private shareholders. Each substantial issue is the subject of a separate resolution at the AGM and all shareholders have the opportunity to put questions to the board. All board directors will endeavour to attend AGMs and answer questions put to them which may be relevant to their responsibilities.

The share ownership of majority shareholders can be found on the S-Ventures website using the following link (www. S-Ventures/Investor-Information) shareholders are communicated through the Annual Report and Accounts, full-year and half-year announcements, social media posts that are displayed on the S-Ventures website and on acquired companies social media, the AGM and individual/group meetings with existing or potential new shareholders. A plethora of corporate information on S-Ventures and on acquired companies can be found on the S-Ventures website using the above following link.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group and Company Financial Statements in accordance with UK-adopted international accounting standards and as regards the Company financial statements, as applied in accordance with the requirements of the Companies Act 2006.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group and the Company for that period. In preparing these financial statements, the directors are required to:

-     select suitable accounting policies and then apply them consistently;

-     make judgements and accounting estimates that are reasonable and prudent;

-     state whether the applicable UK-adopted international accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and

-     Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Group's auditors are aware of that information.

AUDITORS

The auditors, RPG Crouch Chapman LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD

-----------------------------

Stephen Argent

Chief Financial Officer

Date: 7 January 2025

AUDITORS' REPORT

Qualified Opinion

We have audited the financial statements of S-Ventures PLC (the 'Company') and its subsidiaries (the 'Group') for the period ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report:

·      the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2023 and of the Group's loss for the period then ended;

·      the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

·      the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006, and

·      The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for qualified opinion

We were not appointed as auditor of the group and company until after 31 December 2023 and thus did not observe the counting of physical inventories at the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held by Pulsin Limited and Market Rocket Limited at 31 December 2023, which are included in the consolidated balance sheet at £1,074,886, by using other audit procedures. Consequently, we were unable to determine whether any adjustment to this amount was necessary. Were any adjustment to the inventory balance to be required, the strategic report would also need to be amended.

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 2.4 in the accounting policies, concerning the Group's ability to continue as a going concern. The matters explained in Note 2.4 indicate that the directors have prepared working capital forecasts that indicate that the Group has sufficient working capital, cash resources and credit facilities to continue operating for the foreseeable future. These forecasts anticipate the completion of a reverse takeover transaction in the coming months. As at the date of approval of these financial statements there are no legally binding agreements committing the parties to the reverse takeover transaction. These events or conditions along with the matters set forth in Note 2.4 indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

We have highlighted going concern as a key audit matter. In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

·      Analysing the Directors' cashflow forecast which forms the basis of their assessment that the going concern basis of preparation remains appropriate for the preparation of the Group and Company financial statements for a period of at least twelve months from the date of approval of these financial statements;

·      Assessing the assumptions included within the cashflow forecast and where available agreeing these costs to other evidence obtained during the course of our audit work is in line with our expectations;

·      Obtaining details of successful fundraising since the year end;

·      Discussing with Management and the Board the Group's strategy to continue fundraising, and any alternative sources of funds available to the Group; and

·      Reviewing and considering the adequacy of the disclosure within the financial statements relating to the Directors' assessment of the going concern basis of preparation.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 

Our approach to the audit

In planning our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to issue an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which they operate.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement we identified (whether or not due to fraud), including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The use of the going concern basis of accounting was assessed as a key audit matter and has already been covered in an earlier section of this report.

In addition to the matter described in the basis for qualified opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

We consider turnover to be the most significant determinant of the Group's financial performance used by the users of the financial statements, and gross assets to be the most significant determinant of the Parent Company's financial performance. We have based materiality for the Group on 0.75% of turnover and 1.5% of gross assets for the Parent Company. Overall materiality was therefore set at £295,000 for the Group, and at £198,000 for the Parent Company. Performance materiality was set at a threshold between 50% and 75% of materiality depending on the determined audit risk of the financial statement area in question. Significant audit risk areas (revenue recognition and management override) were audited to a 50% performance materiality threshold with remaining areas subject to a 75% performance materiality threshold.

We agreed with the Audit Committee that we would report on all differences in excess of 5% of materiality relating to the financial statements. We also report to the Audit Committee on financial statement disclosure matters identified when assessing the overall consistency and presentation of the financial statements.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report.  Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·      the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

·      The part of the Director's Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report, the Directors' Report or the Director's Remuneration Report.

Arising solely from the limitation on the scope of our work relating to inventory, referred to as above:

·      we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

·      we were unable to determine whether adequate accounting records have been kept.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

·      returns adequate for our audit have not been received from branches not visited by us; or

·      the financial statements are not in agreement with the accounting records and returns; or

·      certain disclosures of directors' remuneration specified by law are not made.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page XX to XX the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

·      Enquiries of management, including obtaining and reviewing supporting documentation concerning the Company's policies and procedures relating to;

-     Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance

-     Detecting to and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud

·      Discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures included within the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and IFRS.

In addition we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group and Company's ability to operate or to avoid a material penalty. These included food safety regulations, health and safety regulations, employment law, data protection regulations and general trading laws in the UK.

As a result of these procedures we consider the particular areas that were susceptible to misstatement due to fraud were in respect of revenue recognition, management override of controls, investment valuation, intangible assets valuation, and inventories valuation.

Our procedures to respond to these risks identified included the following;

·      Reviewing the financial statement disclosures and testing these to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements,

·      Enquiring with management concerning actual and potential litigation claims,

·      Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud,

·      Agreeing investment and intangible valuations to supporting documentation and recalculating,

·      Reviewing management impairment assessments and challenging assumptions made to ensure valuations of intangibles and investments are reasonable,

·      Reviewing the Group's methodology for valuing inventories, particularly in relation to production overheads absorbed into inventory at the year end, and reviewing the adequacy of provisions for slow moving inventory,

·      Reviewing board minutes and legal and professional fees during the year and any subsequent to the year end to identify any potential litigation not previously disclosed,

·      Communicating with component auditors to ensure that the engagement team collectively had the appropriate capabilities to identify or recognise non-compliance with laws and regulations across the Group,

·      In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments for evidence of management override/bias and agreeing these to supporting documentation, and

·      Assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the rationale of any significant transactions that are deemed unusual or outside of the normal course of the Company's operations.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.

Other matters that we are required to address

We were appointed on 21 June 2024 and this is the first year of our engagement as auditors for the Group and Company.

We confirm that we are independent of the Group and Company and have not provided any prohibited non-audit services, as defined by the Ethical Standard issued by the Financial Reporting Council as applied to listed public interest entities, and we have fulfilled our ethical responsibilities in accordance with these requirements.

Our audit report is consistent with our additional report to the Audit Committee explaining the results of our audit.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Paul Randall FCA (Senior Statutory Auditor)

For and on behalf of RPG Crouch Chapman LLP

Chartered Accountants                                                                                                 

Registered Auditor

40 Gracechurch Street

London

EC3V 0BT

7 January 2025

The accompanying notes on pages 34 to 65 form part of the financial statements.

The financial statements were approved by the Board of Directors and authorised for issue on 7 January 2025 and were signed on its behalf by:

____________________

S Argent - Director

The accompanying notes on pages 34 to 65 form part of the financial statements.

The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company profit and loss account. The Parent Company loss for the period was £8,964,000 (2022: loss of £1,350,000).

The financial statements were approved by the Board of Directors and authorised for issue on 7 January 2025 and were signed on its behalf by:

____________________

S Argent - Director

The accompanying notes on pages 34 to 65 form part of the financial statements.