TIDMEVST
27 July 2023
Everest Global plc
("Everest" or the "Company")
Final Results
The Board of Everest is pleased to announce its final results for the year ended
31 October 2022.
Chief Executive Officer's Statement
Overview
Following from 2021 and the withdrawal by Comarco from the marine and port
transaction, on 3 October 2022 the Company (Anglo African Agriculture Plc)
entered into a transaction which saw the purchase of 65% of the outstanding
convertible loan notes by Golden Nice International Limited. The remainder of
the convertible loan notes (35%) were converted by the note holders to shares in
the Company. In addition, Golden Nice International Limited invested £650,000 in
the Company to recapitalise it by the subscription of 13 million new ordinary
shares. The company then changed its name to Everest Global Plc at this time. In
addition, both Andrew Monk and Matt Bonner resigned from the Board and Simon
Grant-Rennick and I were appointed to the Board. Robert Scott remains on the
Board. I would like to thank both Andrew Monk and Matt Bonner for their services
to the company.
As mentioned in the previous Annual Financial Statements the Company's
subsidiary, Dynamic Intertrade (Pty) Limited ("Dynamic"), on its own could not
sustain a London Stock Exchange listing. During the period under review the
Company and VSA NEX Investments Limited ("VSA NEX") entered into certain related
party arrangements in relation to Dynamic. At the time the arrangements were
entered into VSA NEX was a 100% subsidiary of VSA Capital. Also at the time the
arrangements were entered into Andrew Monk was a director of the Company, VSA
Capital and VSA NEX and is deemed to have significant influence over VSA Capital
and VSA NEX. Pursuant to the arrangements, VSA NEX subscribed for such number of
new shares in the capital of Dynamic resulting in VSA NEX holding 49% of the
enlarged issued share capital of Dynamic for a consideration of ZAR10,982; the
Company agreed to assign certain debts owing by Dynamic, amounting to £4.2
million which had been fully impaired in prior years, to the Company and certain
other parties to VSA NEX in consideration for VSA NEX paying to the Company
£100,001 and agreeing to fund Dynamic so as to enable Dynamic to carry on its
business in the ordinary course until such time as the Company ceases to hold
any further shares in Dynamic. This assignment agreement resulted in VSA NEX
having a non-controlling interest in Dynamic and as such its share of the
current year profits amounted to £522, its share of accumulated losses prior to
acquisition amounted to £2,305,905. Additionally, the assignment of the loans
resulted in the Group incurring a finance charge on consolidation of £3.1
million. VSA NEX has signed a subordination agreement in relation to the loans
due by Dynamic to VSA NEX with an expiry date of 31 October 2023. Should VSA NEX
choose to request the repayment of the loans due by Dynamic this will severely
impact the Company's ability to continue as a going concern. Upon consolidation
of the VSA NEX loans, the borrowings have increased by
£4.1 million. Under a put and call option agreement the Company granted to VSA
NEX the option to acquire 11,430 shares in Dynamic Intertrade, being the
remaining 51% of Dynamic held by the Company, subject to the satisfaction of
certain conditions and subject to certain time restrictions for £1. At 31
October 2022 Dynamic was still controlled by Everest Global and has been
consolidated in the group financial statements
The Company's present primary operations and source of revenue remains it 51%
holding in Dynamic, our Cape Town based spice blender and trader. The Company
was still loss making for the year under review but has since improved its
performance during the six-months ended April 2023. Group turnover increased by
20.98% (2021: a reduction of 20.8%). Group operating losses amounted to
£1,152,170 (2021: £515,660) for the current year. The total Group comprehensive
loss for the year amounted to £4,570,562 (2021: £584,633), including the finance
charge on consolidation referred to above, amounting to £3,131,890.
The Company will now be actively looking at new opportunities to bolster its
current operating assets and will no doubt in the near future seeks to raise
more funds and acquire more assets. As announced on the 4[th] July 2023, the
Company announced that it had invested £200,000 by way of a loan into Precious
Link (UK) Limited, a wine retailer, located within the Southeast of England. The
Board believe that Precious Link operates in a complementary sector and that the
loan could assist the Company in expanding its activities into the wider food
and beverage sector.
Post year end our previous auditor resigned as they were no longer in a position
to audit Public Interest Entity ("PIE") companies and due to capacity
constraints with many other auditors there was a delay in appointing a PIE
registered auditor. As a result, the Company could not complete their statutory
audit, publication of results or statutory filing at Companies House on time. As
such, trading in the Company's ordinary shares and its listing on the Official
List of the Financial Conduct Authority was suspended pending the publication of
the Company's audited results for the year ended 31 October 2022. The Company
was granted an extension of its filing obligations by Companies House.
On the 24[th] of January 2023, the Company announced a subscription for
12,726,000 new Ordinary Shares. The Company raised net proceeds totalling
£699,930 at a subscription price of 5.5 pence per share.
COVID-19 which had a devastating effect on the world economy and social fabric,
has now been declared by the head of the UN World Health Organization (WHO) as
no longer a public health emergency, however stressing that it does not mean the
disease is no longer a global threat. As a result the Company will not report on
initiatives or effects of COVID-19 in its Annual Financial Statements.
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 October 2021 or 2022 within the
meaning of Section 434 of the Companies Act 2006, but is derived from those
accounts. Statutory accounts for 2021 have been delivered to the Registrar of
Companies and those for 2022 will be delivered in due course. The auditor's
report on the statutory accounts for the years ended 31 October 2021 were
unqualified and the auditor's report on the statutory accounts for the years
ended 31 October 2022 contained a qualification in respect of inventory as the
auditor was appointed after the year end and therefore could not attend the
stock take.
The audit report also includes a material uncertainty in relation to going
concern. Excerpts of the basis for the qualification in respect of inventory
and the material uncertainty are as follows with the full audit report and
related notes being set out in the body of this announcement:
Basis for qualified opinion
The Group recorded closing inventory of £175,875. We were appointed after the
balance sheet date and were unable to arrange attendance at the year-end
counting of inventory. We were therefore unable to verify the closing value of
inventory and the associated impact on cost of sales.
Material uncertainty related to going concern
We draw attention to note 2a in the financial statements, which indicates events
or conditions identified that may cast significant doubt over the Company's
ability to continue as a going concern. As stated in note 2a, these events or
conditions, along with other matters set forth in note 2a, indicate that a
material uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
The announcement has been prepared on the basis of the accounting policies as
stated in the financial statements for the year ended 31 October 2022. The
information included in this announcement is based on the Company's financial
statements which are prepared in accordance with International Financial
Reporting Standards ("IFRS"). The Company will publish full financial statements
that comply with IFRS on its website in due course.
The annual report and accounts for the year ended 31 October 2022 will be posted
to shareholders in due course. An announcement will be made regarding the
posting of these documents as appropriate.
Once published, hard copies will be available to shareholders upon request to
the Company Secretary at 48 Chancery Lane, London WC2A 1JF, and soft copies will
be available for download and inspection from the Company's website at
www.everestglobalplc.com.
The annual report and accounts for the year ended 31 October 2022 will be made
available from the FCA's National Storage Mechanism
at www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national
-storage-mechanism in due course, following which, the temporary suspension of
the Company's listing on the Official List of the FCA of its ordinary shares of
2 pence each will be lifted and trading on the Main Market of the London Stock
Exchange will recommence.
A further announcement will be made in due course
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018).
The Directors of the Company take responsibility for the contents of this
announcement.
For further information please contact the following:
Everest Global plc
Andy Sui, Chief Executive +44 (0) 776 775 1787+27 (0)84 6006 001
OfficerRob Scott, Non-Executive
Director
Cairn Financial Advisers LLP
Jo Turner / Emily Staples +44 (0) 20 7213 0885 / +44 (0)20 7213 0897
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identi?ed by their use of
terms and phrases such as "believe", "could", "should" "envisage",
"estimate", "intend", "may", "plan", "potentially", "expect", "will"
or the negative of those, variations or comparable expressions, including
references to assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations and
assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount, nature
and sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward looking statements re?ect the Directors' current
beliefs and assumptions and are based on information currently available to the
Directors.
Strategic Report
For the Year Ended 31 October 2022
Overview
The primary objective of the strategic report is to provide information for the
shareholders to help them to assess how the Directors have performed their duty,
under section 172 of the Act, to promote the success of the Company and to
provide context for the related financial statements as well as assist them in
their decision making.
The duty of a director, as set out in section 172 of the Act, is to act in the
way he considers, in good faith, would be most likely to promote the success of
the Company for the benefit of its members, and in doing so have regard (amongst
other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company's employees;
(c) the need to foster the Company's business relationships with suppliers,
customers and others;
(d) the impact of the Company's operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards
of business conduct; and
(f) the need to act fairly as between members of the Company.
As a Board, we must always seek and be open to feedback from anyone affected by
our activities. This enables the Board to understand the impact of its decisions
on key stakeholders, but also ensures that we are aware of any significant
changes in the market or the external environment, including the identification
of emerging risks, which can be fed into our strategy discussions and our risk
management process. The Board considers our strategic stakeholders as follows:
Customers
We listened to our customers and endeavoured to supply them with relevant
product. This entailed continuous discussions with our existing and potential
customers as well as product development.
Suppliers
We have worked with a number of our suppliers for many years, and any loss of
our sales or product mix impacts their business. We communicated to them where
possible to reduce the impact on their businesses.
Shareholders and Lenders
We have a clear responsibility to engage with shareholders and lenders of our
business and their views are an important driver of our strategy. We keep our
shareholders regularly informed while lenders receive regular updates on the
performance of the organisation.
Staff
During the year under review the Group had 17 (2021-24) staff and Directors. The
Company had 3 male Directors. Noting that there was a total of 5 with 3 at any
one stage. The subsidiary had 1 female and 3 male directors of which 1 male
director was a director of both the Company and Dynamic. The subsidiary had 5
female and 9 male staff excluding managers and directors.
Social, community and human rights issues
The Company and its subsidiary comply with all national and international laws
and regulations pertaining to human rights and social interaction. Additionally,
the South African subsidiary is ensuring, where possible, with Broad Based Black
Economic Empowerment legislation ("BBBEE") to address the social, community and
economic issues within the South African context.
Review of the Group's Business
Dynamic Intertrade (Pty) Ltd ("Dynamic") is based in Cape Town, South Africa and
is involved in the importation, milling, blending and packaging of products that
include herbs, spices, seasonings and confectionary for the domestic market. On
3 October 2023 a new shareholder, the Company and VSA NEX Investments Limited
("VSA NEX") entered into certain related party arrangements in relation to
Dynamic Intertrade (Pty) Ltd ("Dynamic"). VSA NEX was a 100% subsidiary of VSA
Capital. At the time the arrangements were entered into Andrew Monk was a
director of the Company, VSA Capital and VSA NEX and is deemed to have
significant influence over VSA Capital and VSA NEX. Pursuant to the
arrangements, VSA NEX subscribed for such number of new shares in the capital of
Dynamic resulting in VSA NEX holding 49% of the enlarged issued share capital of
Dynamic for a consideration of ZAR10,982; the Company agreed to assign certain
debts owing by Dynamic, amounting to £4.2 million which had been fully impaired
in prior years, to the Company and certain other parties to VSA NEX in
consideration for VSA NEX paying to the Company £100,001 and agreeing to fund
Dynamic so as to enable Dynamic to carry on its business in the ordinary course
until such time as the Company ceases to hold any further shares in Dynamic.
This assignment agreement resulted in VSA NEX having a non-controlling interest
in Dynamic and as such its share of the current year profits amounted to £522,
its share of accumulated losses prior to acquisition amounted to £2,305,905.
Additionally, the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of £3.1 million. VSA NEX has signed a
subordination agreement in relation to the loans due by Dynamic to VSA NEX with
an expiry date of 31 October 2023. Should VSA NEX choose to request the
repayment of the loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. Under a put and call option agreement
the Company granted to VSA NEX the option to acquire 11,430 shares in Dynamic
Intertrade, being the remaining 51% of Dynamic held by the Company, subject to
the satisfaction of certain conditions and subject to certain time restrictions
for £1. At 31 October 2022, the total amount due by Dynamic to VSA NEX amounted
to £4,174,538.
During the year to 31 October 2022, Dynamic recorded an increase of 20.98% in
turnover to £1.698 million (2021: decrease of 20.8). In the subsidiary's
functional currency of South African Rand, it recorded turnover of R34.8
million, an increase of R6.4 million from the prior year. The required product
mix changed and lower margin commodities saw general price increases which could
not be passed on to customers for our core spice lines of commodity paprika and
chilli-based products as well as our value-added blended products.
Gross profits for the Group increased by 10.68% to £420,358 (2021: decreased by
10.3% to £379,804) and represents a 24.74% (2021: 27.05%) gross margin.
Group operating losses for the year increased £1,152,170 (2021: £515,660). Total
Group comprehensive loss amounted to £4,570,562 (2021: £584,633) after incurring
a finance charge consolidation, resulting from the assignment of the loans to
VSA NEX, of £3.1 million.
Basic and diluted loss per share from continuing operations for the year was
17.79p (2021:2.66p).
As at 31 October 2022 the Group held £925,814 (2021: £1,109,774) in cash and
cash equivalents.
The Company will now be actively looking at new opportunities to bolster its
current operating assets and will no doubt in the near future seek to raise more
funds and acquire more assets. As announced on 4 July 2023, the Company invested
£200,000 by way of a loan into Precious Link (UK) Limited, a wine retailer,
located within the Southeast of England. The Board believes that Precious Link
operates in a complementary sector and that the loan could assist the Company in
expanding its activities into the wider food and beverage sector.
Financing And Capital Structure
During the year under review, the Company issued 3,823,627 new ordinary shares
to VSA Capital Limited in settlement of the outstanding fees of £152,945.08.
In addition, the Company issued 13,000,000 new ordinary shares in order to raise
£650,000. As part of this transaction the Company also converted £581,951.52
owing to the convertible note holders into 7,373,141 new ordinary shares.
As detailed above, the Company assigned certain debts, amounting to £4,174,538,
due by Dynamic to VSA NEX. In prior years these loan were eliminated upon
consolidation, however with the loans now being due to VSA NEX, the consolidated
values include these loans and represent an increase in borrowings of
£4,174,538.
Acquisition Strategy
The Company will be actively looking for new acquisitions to bolster its
operations and will as a result in all likelihood seek to raise more capital by
way of both debt and equity.
Key Performance Indicators
31 October 31 October
2022 2021
£ £
Turnover 1,698,839 1,404,234
Gross profit 420,368 379,804
Cash on hand and in bank 925,814 1,109,774
Underlying operating loss (1,152,170) (515,660)
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of relevance to the
Group's activities. It should be noted that the list is not exhaustive and that
other risk factors not presently known or currently deemed immaterial may apply.
The risk factors are summarised below:
i. Development Risk
The Group's development will be, in part, dependent on the ability of the
Directors to continue to improve the current business, to identify suitable
investment opportunities and to implement the Group's strategy. There is no
assurance that the Group will be successful in acquiring suitable investments.
ii. Sector Risk
The agriculture and agri-processing sectors are highly competitive markets and
many of the competitors will have greater financial and other resources than the
Company and as a result may be in a better position to compete for
opportunities.
The development of these enterprises involves significant uncertainties and
risks including unusual climatic conditions such as drought, improper use of
pesticides, availability of labour and seasonality of produce, any one of which
could result in security of supply, damage to, or destruction of crops,
environmental damage or pollution. Each of these could have a material adverse
impact on the business, operations and financial performance of the Group.
The market price of agricultural products and crops is volatile and affected by
numerous factors which are beyond the Group's control. These include
international supply and demand, the level of consumer product demand,
international economic trends, currency exchange rate fluctuations, the level of
interest rates, the rate of inflation, global or regional political events, as
well as a range of other market forces. Sustained downward movements in
agricultural prices could render less economic, or un-economic, any development
or investing activities to be undertaken by the Group. Certain agricultural
projects involve high capital costs and associated risks. Unless such projects
enjoy long term returns, their profitability will be uncertain resulting in
potentially high investment risk.
iii. Political and Regulatory Risk
African countries experience varying degrees of political instability. There can
be no assurance that political stability will persist in those countries where
the Group may have operations going forward. In the event of political
instability or changes in government policies in those countries where the Group
may operate, the operations and financial condition of the Group could be
adversely affected.
iv. Environmental Risks and Hazards
All phases of the Group's operations are subject to environmental regulation in
the areas in which it operates. Environmental legislation is evolving in a
manner that may require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, Directors and employees.
There is no assurance that existing or future environmental regulation will not
materially adversely affect the Group's business, financial condition and
results of operations. Environmental hazards may exist on the properties on
which the Group holds interests that are unknown to the Group at present. The
Board manages this risk by working with environmental consultants and by
engaging with the relevant governmental departments and other concerned
stakeholders.
v. Internal Control and Financial Risk Management
The Board has overall responsibility for the Group's systems of internal control
and for reviewing their effectiveness. The Group maintains systems which are
designed to provide reasonable but not absolute assurance against material loss
and to manage rather than eliminate risk.
The key features of the Group's systems of internal control are as follows:
·
· Management structure with clearly identified responsibilities;
· Production of timely and comprehensive historical management information
presented to the Board;
· Detailed budgeting and forecasting;
· Day to day hands on involvement of the Executive Director and Senior
Management; and
· Regular Board meetings and discussions with the Non-Executive Directors.
The Group's activities expose it to several financial risks including cash flow
risk, liquidity risk and foreign currency risk.
vi. Environmental Policy
The Group is aware of the potential impact that its subsidiary and associate
companies may have on the environment. The Group ensures that it complies with
all local regulatory requirements and seeks to implement a best practice
approach to managing environmental aspects.
The subsidiary, Dynamic Intertrade operates a Food Safety System Certification
("FSSC") compliant facility in Cape Town. The FSSC provides a framework for
effectively managing the organisation's food safety responsibilities and is
fully recognized by the Global Food Safety Initiative and is based on existing
ISO Standards.
vii. Health and Safety
The Group's aim is to achieve and maintain a high standard of workplace safety.
In order to achieve this objective, the Group provides ongoing training and
support to employees and sets demanding standards for workplace safety.
viii. Financing Risk
The development of the Group's business may depend upon the Group's ability to
obtain financing primarily through the raising of new equity capital or debt.
The Group's ability to raise further funds may be affected by the success of
existing and acquired investments. The Group may not be successful in procuring
the requisite funds on terms which are acceptable to it (or at all) and, if such
funding is unavailable, the Group may be required to reduce the scope of its
investments or the anticipated expansion. Further, Shareholders' holdings of
Ordinary Shares may be materially diluted if debt financing is not available.
ix. Credit Risk
The Directors have reviewed the forecasts prepared by both the Company and
Dynamic and believe that Dynamic has adequate resources available to meet its
obligations to the Company and its lenders.
x. Liquidity Risk
The Directors have reviewed the working capital requirements of the Company and
Dynamic and believe that, following stress tests and variance analysis on the
forecasts, there is sufficient working capital to fund the business while
expanding turnover. The Directors further highlight the inherent uncertainties
involved in making the assessment that the entity is a going concern.
xi. Capital Risk
The Group manages its capital resources to ensure that entities in the Group
will be able to continue as a going concern, while maximising shareholder
return.
The capital structure of the Group consists of equity attributable to
shareholders, comprising issued share capital and reserves. The availability of
new capital will depend on many factors including a positive operating
environment, positive stock market conditions, the Group's track record, and the
experience of management. There are no externally imposed capital requirements.
The Directors are confident that adequate cash resources exist or will be made
available to finance operations and controls over expenditure are carefully
managed.
To manage the above risks, management are in regular contact with our customers
and are actively exploring new markets and customers in order to diversify these
risks.
Shareholders should refer to Note 2 and Note 29 of the accounts for a summary of
the Group's use of financial instruments and its exposure to market risk, credit
risk, liquidity risk and cash flow risk.
Going Concern
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. Further details are given in Note 2 to the financial
statements. For this reason, the Directors continue to adopt the going concern
basis in preparing the financial statements.
During the year, the Group raised additional equity funding of £650,000 (2021:
£Nil) in gross funding through share subscriptions to fund working capital. In
addition, the Company converted £581,951.52 of convertible loan notes into new
ordinary shares.
The Directors have prepared cash flow forecasts. These forecasts consider
operating cash flows and capital expenditure requirements for the Company and
Dynamic, available working capital and forecast expenditure, including overheads
and other costs. The Directors are of the opinion that the Group has sufficient
working capital and that no additional funding is required. As part of the
assignment of certain debts to VSA NEX, VSA NEX have agreed to fund Dynamic so
as to enable Dynamic to carry on its business in the ordinary course until such
time as the Company ceases to hold any further shares in Dynamic. . VSA NEX has
signed a subordination agreement in relation to the loans due by Dynamic to VSA
NEX with an expiry date of 31 October 2023. Should VSA NEX choose to request the
repayment of the loans due by Dynamic this will severely impact the Company's
ability to continue as a going concern. However, post year end the Group did
raise £699,930 in additional equity capital. Based upon the Company's forecast,
it has sufficient cash for the foreseeable future.
After careful consideration of the matters set out above, the Directors are of
the opinion that the Group will be able to undertake its planned activities for
the period to 31 July 2024 from production and from additional funds raising and
have prepared the consolidated financial statements on the going concern basis.
Nevertheless, due to the uncertainties inherent in meeting its revenue
predictions and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any adjustments that
would result if the Group was unable to continue as a going concern. For this
reason, the Directors believe that there is a material uncertainty relating to
the Group's going concern.
It the intention of the Directors to look for acquisitions to make the Company
more sustainable.
Directors' Report
For the Year Ended 31 October 2022
The Directors present their Report and Financial Statements for the year ended
31 October 2022.
Principal Activities
The principal activity of the Group in the year was investing and trading in the
agriculture and ancillary sectors in Africa.
Emissions
The Group is not an intensive user of fossil fuels or electricity. During the
year Dynamic Intertrade consumed an average of 18,828kwh (2021: 8,418 kwh) per
month based on using actual charges levied by the Cape Town City Council. As per
the University of Cape Town's assessment of the South African average of
1.015kg/kwh, the Group contributed 229,325kg (2012: 102,539kg) of carbon
emissions during the financial year. Due to the nature of the business, there is
limited scope to reduce emissions materially as all power is sourced from the
Cape Town City Council. There were no operations in the UK and as such no
emissions in the UK.
Investing Policy
The Company was established to invest in or acquire companies engaged in the
agriculture and ancillary sectors in Africa. The Directors intend to use their
collective experience to identify appropriate investment opportunities in the
production, transportation and trading of food and beverage products and
ancillary industries.
Directors
The following Directors have held office in the year:
Robert Scott - Non-Executive Director
Xin `Andy' Sui (Appointed 3 October 2022) - Chief Executive Officer
Simon Grant-Rennick (Appointed 3 October 2022) - Non-Executive Director
Andrew Monk (Resigned 3 October 2022)
Matthew Bonner (Resigned 3 October 2022)
Xin `Andy' Sui Chief Executive Officer
Andy Sui has over 11 years of investment banking experience. Andy started his
career at Barclays Capital under the trading desk. He eventually became Chief
Risk Officer (CRO) at Union Bank of India (UK) managing a balance sheet of over
$1 billion asset. Andy is also a Co-Founder of London Capital Homes Ltd managing
over 120 residential properties and focusing on UK northern cities property
development projects. Andy has a Masters Degree from the London School of
Economics (LSE) in Finance and a number of financial market qualifications.
Robert Scott, Executive Director
Robert has principal responsibility as being the director responsible for the
overview of the management of Dynamic, the Group's spice manufacturing business.
He has over 30 years' financial and investment management experience with the
last twenty years specifically focussed on, executive management, finance,
corporate governance, acquisitions and investor management. Rob is a Chartered
Accountant (CA(SA)) by profession. He served as Country Manager for Lonrho and
has served as the General Manager of Uramin's South African operations. He held
executive and senior positions with a number of companies across a number of
countries in Southern Africa. He has been involved in such broad industries as
mining, food manufacturing, hotels, agriculture, shipping, consumer products and
construction amongst many other industries. Robert has been a Director of
Dynamic for 12 years and is responsible for setting the strategy for Dynamic
with management and ensuring implementation. He has an intimate understanding of
its day-to-day operations. He has served on a number of other public and private
Company boards. Robert began his career and qualified with Deloitte South Africa
after obtaining his Certificate of Theory of Accounting (CTA) from the
University of Cape Town. Rob's broad understanding of finance, markets,
acquisitions and corporate governance will greatly assist the Group in its
growth plans.
Simon Grant-Rennick, Non-Executive Director
Simon graduated from Camborne School of Mines (BSc Hons Mining Engineering,
ACSM) and has been actively involved in the mining and metal trading industry
for over 40 years . He has also been active in the agriculture space in Southern
Africa, from the growing of Macadamia nuts to Chillies and Paprika, amongst
other crops and game farming with his own game farm Simon has served as Chairman
and executive director of various private and public companies in Australia,
America and UK (LSE, ASX) over various global industries in agriculture, mining,
property and technology.
Directors' remuneration, shareholding and options
The Directors' remuneration for the year ended 31 October 2022 is set out in
note 8 of the accounts. None of the Directors receive share options, long term
incentives, bonus or the like as part of their remuneration packages.
Remuneration for all Directors, both executive and non-executive, is £1,000 per
month. There are contracts for the new company directors.
Shareholding
As at 31 October 2022, the Directors of the Company held the following shares:
2022 2022 2021 2021
Director Shareholding Percentage Shareholding Percentage
of the of the
Company's Company's
Ordinary Ordinary
Share Share
Capital Capital
David 0.00% 1,119,403 2.42%
Lenigas -
(resigned)
Andrew 0.00% 1,106,338 5.04%
Monk -
(resigned)
Robert 552,599 1.20% 213,231 0.97%
Scott
Matthew 0.00% 165,891 0.76%
Bonner -
(resigned)
Simon Grant-Rennick and Xin (Andy) Sui do not have any shares in the Company.
Share options and warrants
As at 31 October 2022 the Directors share options and warrants were:
2022
Warrants @ 5p
Director (expiring
23 March 2023)
Andrew Monk (resigned) 4,240,000
Robert Scott 820,000
Matthew Bonner (resigned) 840,000
5,900,000
2021
Warrants @ 5p
Director (expiring
23 March 2023)
Andrew Monk 4,240,000
(resigned)
Robert Scott 820,000
Matthew 840,000
Bonner
(resigned)
5,900,000
2021 2021 2021 2021
Options Options @ 11p Warrants @ 20p Warrants @ 5p
at 20p
Director (expiring (expiring (expiring (expiring
5 Septembe 5 September 2022) 5 September 2022) 24 July 2022)
r 2022)
Andrew Monk 91,952 100,000 69,033 622,233
(resigned)
Robert Scott 50,000 - 128,578
Matthew 180,000 - - 128,578
Bonner
(resigned)
321,952 100,000 69,033 879,389
The total warrants outstanding for the directors at 31 October 2022 were
5,900,00 (2021: 7,779,844). There are no outstanding options for the directors
as at 31 October 2022 (2021: 421,952). Refer to note 24 for more detail.
Dividends
No dividends will be distributed for the current year (2021 - nil).
Supplier Payment Policy
It is the Group's payment policy to pay its suppliers in conformance with
industry norms. Trade payables are paid in a timely manner within contractual
terms, which is generally 30 to 45 days from the date an invoice is received.
Substantial Interests
The Group has been informed of the following shareholdings that represent 3% or
more of the 46,162,855 issued Ordinary Shares of the Company as at 31 October
2022:
Substantial
Interests @
31 October
2022
2022 2022 2021 2021
Shareholder Shareholding Percentage Shareholding Percentage
of the of the
Company's Company's
Ordinary Ordinary
Share Share
Capital Capital
Golden Nice 13,000,000 28.16% - 0.00%
International
Limited
HSBC Global 5,315,474 11.51% 1,591,847 7.25%
Custody
Nominee (UK)
Limited
Interactive 3,311,851 7.17% 2,943,459 13.40%
Investor
Services
Nominees
Limited
JIM Nominees 1,597,718 3.46% 1,625,041 7.40%
Limited
Lynchwood 8,773,542 19.01% 5,150,000 23.45%
Nominees
Limited
Pershing 1,526,172 3.31% 1,026,172 4.67%
Nominees
Limited
Vidacos 1,950,918 4.23% 1,701,856 7.75%
Nominees
Limited
Vsa Capital 1,754,779 3.80%
Limited
Barclays 0.00% 726,113 3.31%
Direct -
Investing
Nominees
Limited
CGWL Nominees 0.00% 1,256,338 5.72%
Limited -
Hargreaves 0.00% 1,121,892 5.11%
Lansdown -
(Nominees)
Limited
The Group has been informed of the following shareholdings that represent 3% or
more of the issued Ordinary Shares of the Company as at 30[th] of June 2023:
Substantial Interests
as at 30 June 2023
Shareholder Shareholding Percentage of the
Company's Ordinary Share
Capital
Golden Nice 19,000,000 29.28%
International Limited
Lynchwood Nominees 8,773,542 13.52%
Limited
Mr Xiangyu An 6,363,000 9.81%
Ms Fangling Chen 6,363,000 9.81%
HSBC Global Custody 5,315,474 8.20%
Nominee (Uk) Limited
Interactive Investor 3,204,468 4.94%
Services Nominees
Limited
Vidacos Nominees 1,958,918 3.02%
Limited
Auditors
RPG Crouch Chapman LLP ("RPG"), act as auditor to the Company. The appointment
of RPG follows the resignation of Jeffreys Henry LLP as auditors to the Company.
Section 519 of the Companies Act 2006 (the "Act") requires Jeffreys Henry LLP to
send a statement of the reasons for ceasing to hold office. They have stated
that in accordance with Section 519 of the Act, they are ceasing to hold office
on the grounds that the firm has taken the decision not to register as an
auditor eligible to undertake Public Interest Entity (PIE) audits.
There are no circumstances connected with Jeffreys Henry LLP ceasing to hold
office as auditor which it considers should be brought to the attention of the
Company's members or creditors. RPG has expressed its willingness to continue in
office and a resolution to reappoint them will be proposed at the next Annual
General Meeting.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations. Company
law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors have elected to prepare the financial
statements in accordance with International Financial Reporting Standards (IFRS)
as adopted for use in the United Kingdom. Under Company law the Directors must
not approve the financial statements unless they are satisfied that they give a
true and fair view of the Company and the Group and of the profit or loss of the
Company and the Group for that year. In preparing these financial statements,
the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether the Group and Parent Company financial statements have been
prepared in accordance with IFRS as adopted by the United Kingdom, subject to
any material departures disclosed and explained in the Financial Statements; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
enough to show and explain the Group and Parent Company's transactions, disclose
with reasonable accuracy at any time the financial position of the Company and
the Group and enable them to ensure that the financial statements comply with
the Companies Act 2006.
The Directors are responsible for safeguarding the assets of the Group and
Parent Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Group's website.
Responsibility Statement
The Directors, whose names and functions are set out in this Directors' Report
under the sub-heading `Directors' with registered office located at 48 Chancery
Lane, London WC2A 1JF, accept responsibility for the information contained in
this annual report and accounts for the period ended 31 October 2022.
To the best of the knowledge of the Directors:
· the financial statements are prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of Everest Group Plc and the undertakings
included in the consolidation taken as a whole; and
· the management report includes a fair review of the development and
performance of the business and the position of Everest Group Plc and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
Everest Group Plc acknowledges that it is responsible for all information drawn
up and made public in this report and accounts for the period ended 31 October
2022.
Statement of Disclosure to Auditors
Each person who is a Director at the date of approval of this Annual Report
confirms that:
· so far as the Directors are aware, there is no relevant audit information of
which the Group and Parent Company's auditors are unaware;
· each Director has taken all the steps he ought as Director, in order to make
himself aware of any relevant audit information and to establish that the Group
and Parent Company's auditors are aware of that information, and
· each Director is aware of and concurs with the information included in the
Strategic Report.
Branches Outside the UK
The Group head office is in London and Dynamic Intertrade (Pty) Limited's office
is located in South Africa.
Events after the Reporting Period
Further information on events after the reporting date is set out in note 33.
Strategic Report
In accordance with Section 414C (11) of the Companies Act 2006, the Group
chooses to report the review of the business, the outlook and the risk and
uncertainties faced by the Company in the Strategic Report.. The Directors'
assessment of the risks faced by the Group are set out in the Strategic Report
and in Note 30 to the financial statements.
Directors' Remuneration Report
For the Year Ended 31 October 2022
Introduction
The information included in this report is not subject to audit other than where
specifically indicated.
Remuneration Committee
The remuneration committee consists of all the Board members. This committee's
primary function is to review the performance of Executive Directors and senior
employees and set their remuneration and other terms of employment. Simon Grant-
Rennick is the Chairman of the committee.
The committee is also responsible for administering any share option schemes and
for granting warrants to the existing directors. The table indicates share
options held by the current directors, Directors of the subsidiary and former
Directors of the Company.
2022 2022 2021 2021
Director Warrants Options Warrants Options
Andrew Monk ** 4,240,000 - 4,931,266 191,952
Robert Scott 820,000 - 820,000 50,000
Matthew Bonner ** 840,000 - 968,578 180,000
Totals 5,900,000 - 7,779,844 421,952
** Director resigned 3 October 2022.
The warrants outstanding as at 31 October 2022 may be exercised by the directors
on or before 23 March 2023 at 5p per share.
The Company has one Executive Director. Robert Scott became a Non-Executive
Director when Xin `Andy' Sui was appointed as Chief Executive Officer.
The remuneration policy
It is the aim of the committee to remunerate Executive Directors competitively
and to reward performance. The remuneration committee determines the Company's
policy for the remuneration of executive directors, having regard to the UK
Corporate Governance Code 2018.
Service agreements and terms of appointment
The two new Directors have service contracts with the Company.
Directors' interests
The Directors' interests in the share capital of the Company are set out in the
Directors' report.
Directors' emoluments
Salaries and Fees Group Group Company Company
2022 2021 2022 2021
£ £ £ £
David Lenigas ** - 9,000 - 9,000
Robert Scott 12,000 12,000 12,000 12,000
Andrew Monk ** 12,923 13,966 12,923 13,966
Matt Bonner ** 11,000 12,000 11,000 12,000
35,923 46,966 35,923 46,966
* Included in Andrew Monk's remuneration is £1,923 (2021: £1,966) for National
Insurance.
** Director has resigned.
No pension contributions were made by the Company on behalf of its Directors
other than for Andrew Monk. Andrew Monk's pension contribution for 2022 was £330
(2021: £360).
At the year-end a total of £33,587 (2021: £62,126) was outstanding in respect of
Directors' emoluments.
Approval by shareholders
At the next annual general meeting of the Company a resolution approving this
report is to be proposed as an ordinary resolution.
This report was approved by the Board on 26[th] July 2023.
Corporate Governance Statement
For The Year Ended 31 October 2022
The Directors recognise the importance of sound corporate governance while
taking into account the Group's size and stage of development. We recognise that
we require the Company to:
· provide details of a recognised corporate governance code that the Board of
Directors has decided to apply
· explain how the Company complies with that code, and where it departs from
its chosen corporate governance code provide an explanation of the reasons for
doing so.
The corporate governance disclosures need to be reviewed annually, and the
Company is also required to state the date on which these disclosures were last
reviewed. This Corporate Governance Statement sets out how Everest Global Plc
seeks to comply with these requirements. The Directors acknowledge that they
have overall responsibility for the Company's system of internal control and for
reviewing its effectiveness. Such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives and even the most
effective system can provide only reasonable, and not absolute, assurance with
respect to the preparation of financial information and the safeguarding of
assets. The close involvement of the Directors in all decisions and actions
undertaken by the Company is intended to ensure that the risks to the Company
are minimised.
This Corporate Governance Statement forms part of the Directors' report for the
purposes of the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
Overview
As Chief Executive Office it is my responsibility to ensure that the Company has
both sound corporate governance and an effective Board. The Company is admitted
to the Official List of the FCA and to trading on the main market of the London
Stock Exchange and its principal activity is as a holding company for its
subsidiary, Dynamic Intertrade (Pty) Limited, which in involved in the
importation, milling, blending and packaging of products that include herbs,
spices, seasonings and confectionary for the domestic market, being South Africa
where Dynamic is located.
The Company's Board has adopted the principles of the Quoted Companies Alliance
Corporate Governance Code 2018 Edition (QCA Code). A copy of the QCA Code is
publicly available at https://www.theqca.com/. The QCA Code identifies ten
principles to be followed in order for companies to deliver growth in long term
shareholder value, encompassing an efficient, effective and dynamic management
framework accompanied by communication to promote confidence and trust. This
report follows the structure of these guidelines and explains how we have
applied the guidance as well as disclosing any areas of non-compliance. We will
provide annual updates on our compliance with the QCA Code. The Board considers
that the Group complies with the QCA Code so far as it is practicable having
regard to the size, nature and current stage of development of the Company, and
will disclose any areas of non-compliance in the text below.
The sections below set out the ways in which the Group applies the ten
principles of the QCA Code in support of the Group's medium to long-term success
and provides reasons for any departures from the QCA Code.
QCA Principles
1. Establish a strategy and business model which promotes long-term value for
shareholders
Everest Global Plc is a holding Company with an operating business on the
African continent. The Company currently has a subsidiary in the food sector in
South Africa. The Company is actively seeking allied investments is similar
sectors that will enhance long term shareholder value.
The Company may exploit a wide range of investment opportunities within the
target sectors as they arise and, to this end, the Company has complete
flexibility in selecting the specific investment and trading strategies that it
sees fit in order to achieve its investment objective. In this regard, the
Company may seek to gain Board representation and/or managerial control in its
underlying investments if it deems to be the best way of generating value for
Shareholders. Opportunities will be chosen through a careful selection process
which will appraise both the fundamental factors specific to the opportunity as
well as wider economic considerations. Typical factors that will be considered
are the strength of management, the quality of the asset base, the investment's
scale and growth potential, the commodity price outlook, any geopolitical
concerns, the underlying financial position, future working capital requirements
as well as potential exit routes. Investments may be in the form of buy-outs,
controlling positions (whether initially or as a result of additional or follow
-on investments) or strategic minority investments. There is no fixed limit on
the number of projects or companies into which the Company may invest, nor the
proportion of the Company's gross assets that any investment may represent at
any time. No material change will be made to the Company's investing policy
without the approval of Shareholders.
Challenges to delivering strategy, long-term goals and capital appreciation are
uncertain in relation to organisational, operational, financial and strategic
risks, all of which are outlined in the Strategic Report, as well as steps the
Board takes to protect the Company by mitigating these risks and secure a long
-term future for the Company.
2. Seek to understand and meet shareholder needs and expectations
The Board recognises the importance of communication with its stakeholders and
is committed to establishing constructive relationships with investors and
potential investors in order to assist it in developing an understanding of the
views of its shareholders. The Company also maintains a dialogue with
shareholders through formal meetings such as the AGM, which provides an
opportunity to meet, listen and present to shareholders, and shareholders are
encouraged to attend in order to express their views on the Company's business
activities and performance. Members who have queries regarding the Company's AGM
can contact the Company's Registrars, Neville Registrars or the Company
Secretary. The Board welcomes feedback from key stakeholders and the Chief
Executive Officer is the shareholder liaison, who meets shareholders regularly,
and informs other Directors of their views and suggestions. Analysts provide the
Board with updates on the Company's business and how strategy is being
implemented, as well as to hear views and expectations from shareholders. The
views of the shareholders expressed during these meetings are reported to the
Board, ensuring that all members of the Board are fully aware of the thoughts
and opinions of shareholders. The Company maintains effective contact with its
principal shareholders and welcomes communications from its private investors.
Information on the Investor Relations section of the Company's website is kept
updated and contains details of relevant developments, Annual and Interim
Results, Regulatory News Service announcements, presentations and other key
information.
3. Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon
the efforts of employees, regulators and many other stakeholders. The Board has
put in place a range of processes and systems to ensure that there is close
oversight and contact with its key resources and relationships. The Company
prepares and updates its strategic plan regularly together with a detailed
rolling budget and financial projections which consider a wide range of key
resources including staffing, consultants and utility providers. The Board is
kept updated on questions / issues raised by stakeholders and incorporates
information and feedback into future decision making. The Group fully abides by
the provisions of the 2015 Modern Slavery Act. In accordance with its Code of
Business Conduct and Ethics, the Company opposes the crime of slavery in all of
its forms, including child labour, servitude, forced or compulsory labour and
human trafficking.
All employees within the Group are valued members of the team, and the Board
seeks to implement provisions to retain and incentivise all its employees. The
Group offers equal opportunities regardless of race, gender, gender identity or
reassignment, age, disability, religion or sexual orientation. The Directors are
in constant contact with employees and seek to provide continual opportunities
in which issues can be raised allowing for the provision of feedback. This
feedback process helps to ensure that new issues and opportunities that arise
may be used to further the success of the Company. The Company complies fully
with all employment legislation where it has operations.
4. Embedded effective risk management, considering both opportunities and
threats, throughout the organisation
The Board recognises the need for an effective and well-defined risk management
process and it oversees and regularly reviews the current risk management and
internal control mechanisms. The Board regularly reviews the risks facing the
Company as detailed in the Strategic Report and seeks to exploit, avoid or
mitigate those risks as appropriate. The Board is responsible for the monitoring
of financial performance against budget and forecast and the formulation of the
Company's risk appetite including the identification, assessment and monitoring
of the Company's principal risks. Additionally, the Board reviews the mechanisms
of internal control and risk management it has implemented on an annual basis
and assesses both for effectiveness. On the wider aspects of internal control,
relating to operational and compliance controls and risk management, the Board,
in setting the control environment, identifies, reviews, and regularly reports
on the key areas of business risk facing the Group.
The Group Board and subsidiary Boards maintain close day to day involvement in
all of the Group's activities which enables control to be achieved and
maintained. This includes the comprehensive review of both management and
technical reports, the monitoring of interest rates, environmental
considerations, government and fiscal policy issues, employment and information
technology requirements and cash control procedures. In this way, the key risk
areas can be monitored effectively, and specialist expertise applied in a timely
and productive manner.
The effectiveness of the Group's system of internal financial controls, for the
year to 31 October 2022 and for the period to the date of approval of the
financial statements, has been reviewed by the Directors. Whilst they are aware
that although no system can provide for absolute assurance against material
misstatement or loss, they are satisfied that effective controls are in place.
The Group's internal controls are primarily detailed oversight by the Directors
of the transactions of both the Company and the Subsidiary in addition there are
monthly management reports detailing actual versus budget which are reviewed by
the Directors.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
The Board recognises the QCA code recommendation for a balance between Executive
and Non-Executive Directors and the recommendation that there be at least two
Independent Non-Executives. The Board currently comprises of one Executive
Director, two Non-Executive Directors, of which, Simon Grant-Rennick, is deemed
independent. The Board will take this into account when considering future
appointments. It is the Company's intention to appoint a Chairman when its size
warrants it. However, all Directors are encouraged to use their judgement and to
challenge matters, whether strategic or operational, enabling the Board to
discharge its duties and responsibilities effectively. The Board maintains that
the Board's composition will be frequently reviewed as the Company develops. The
Company is small and as a result has only two committees, an audit and risk
committee and a remuneration and nominations committee, all of which comprise
the entire Board as its members. The Company does not have a separate
nominations committee at this time. The Board does not deem it appropriate to
have more committees.
The Group is controlled and led by the Board of Directors with an established
schedule of matters reserved for their specific approval. The Board meets
regularly throughout the year and is responsible for the overall Group strategy,
acquisition and divestment policy, approval of major capital expenditure and
consideration of significant financial matters. It reviews the strategic
direction of the Company and its individual subsidiaries, their annual budgets,
their progress towards achievement of these budgets and their capital
expenditure programmes. The role of the CEO (Chairman once appointed) is to
supervise the Board and to ensure its effective control of the business, and
that of the Executive Director is to manage the Group on the Board's behalf. All
Board members have access, at all times, to sufficient information about the
business, to enable them to fully discharge their duties. Also, procedures exist
covering the circumstances under which the Directors may need to obtain
independent professional advice. The Board meets regularly and is responsible
for formulating, reviewing and approving the Group's strategy, budgets,
performance, major capital expenditure and corporate actions. Detailed
biographies of the Board members can be found on the website and summaries can
be found in the Directors' Report.
Throughout the year, there have been seventeen Board meetings, with all meetings
being quorate. The Directors of the Company are committed to sound governance of
the business and each devotes enough time to ensure this happens.
Directors' conflict of interest
The Board is aware of the other commitments and interests of its Directors, and
changes to these commitments and interests are reported to and, where
appropriate, agreed with the rest of the Board.
6. Ensure that between them the Directors have the necessary up-to-date
experience, skills and capabilities
The Company believes that the current balance of skills in the Board as a whole
reflects a very broad range of personal, commercial and professional skills, and
notes the range of financial and managerial skills. The Non-Executive Directors
maintain ongoing communications with the Executive between formal Board
meetings. Biographical details of the Directors can be found on the Company's
website and in the Directors' Report of this report.
Stephen Clow is the Company Secretary and helps the Company comply with all
applicable rules, regulations and obligations governing its operation. The
Company can also draw on the advice of its solicitors and corporate and
financial advisors Cairn Financial Advisers LLP (who were appointed post period
end). The Directors have access to all advisers, Company Secretary, lawyers and
auditors as and when required and are able to obtain advice from other external
bodies when necessary. If required, the Directors are entitled to take
independent legal advice and if the Board is informed in advance, the cost of
the advice will be reimbursed by the Company. Board composition is always a
factor for consideration in relation to succession planning. The Board will seek
to consider any Board imbalances for future nominations, with areas considered
including Board independence and gender balance. The Group considers however
that at this stage of its development and given the current size of its Board,
it is not necessary to establish a formal Nominations Committee. Instead, the
appointments to the Board are made by the Board as a whole and this position is
reviewed on a regular basis by the Board.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
The Directors consider that the Company and Board are not yet of a sufficient
size for a full Board evaluation to make commercial and practical sense. In the
frequent Board meetings/calls, the Directors can discuss any areas where they
feel a change would benefit the Company, and the Company Secretary remains on
hand to provide impartial advice. As the Company grows, it expects to expand the
Board and with the Board expansion, re-consider the need for Board evaluation.
The Board continues to conduct internal and external Board evaluations which
consider the balance of skills, experience, independence and knowledge of the
Company. The evaluation process, the Board refreshment, use of third-party
search companies and succession planning elements are discussed. The Board
evaluation of the Executives' performance is carried out on a regular basis.
Given the level of activity and size of the Company, no other evaluation is seen
as appropriate. In view of the size of the Board, the responsibility for
proposing and considering candidates for appointment to the Board as well as
succession planning is retained by the Board. All Directors submit themselves
for re-election at the AGM at regular intervals.
8. Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact
the corporate culture of the Company as a whole and that this will impact the
performance of the Company. The Board is aware that the tone and culture set by
the Board will greatly impact all aspects of the Company as a whole and the way
that employees behave. The corporate governance arrangements that the Board has
adopted are designed to ensure that the Company delivers long term value to its
shareholders, and that shareholders have the opportunity to express their views
and expectations for the Company in a manner that encourages open dialogue with
the Board. Therefore, the importance of sound ethical values and behaviours is
crucial to the ability of the Company to successfully achieve its corporate
objectives. The Board places great importance on their responsibility for
producing accurate financial statements. The Board also places great importance
on accuracy and honesty and seeks to ensure that this aspect of corporate life
flows through all that the Company does. A large part of the Company's
activities is centred upon an open and respectful dialogue with employees,
clients and other stakeholders. Therefore, the importance of sound ethical
values and behaviours is crucial to the ability of the Company to successfully
achieve its corporate objectives. The Directors consider that the Company has an
open culture facilitating comprehensive dialogue and feedback and enabling
positive and constructive challenge. Whilst the Company has a small number of
employees, the Board maintains that as the Company grows it intends to maintain
and develop strong processes which promote ethical values and behaviours across
all hierarchies.
The Board has adopted an anti-corruption and bribery policy (Bribery Policy).
The Bribery Policy applies to all Directors and employees of the Group, and sets
out their responsibilities in observing and upholding a zero-tolerance position
on bribery and corruption, as well as providing guidance to those working for
the Company on how to recognise and deal with bribery and corruption issues and
the potential consequences.
The Board complies with Rules relating to dealings in the Company's securities
by the Directors and other such persons discharging managerial responsibility.
To this end, the Company has adopted a code for Directors' dealings appropriate
for a Company whose shares are admitted to trading on the London Stock Exchange
and takes all reasonable steps to ensure compliance by the Directors and any
relevant employees.
9. Maintain governance structures and processes that are fit for purpose and
support good decision-making by the Board
The Board is committed to, and ultimately responsible for, high standards of
corporate governance. The Board reviews the Company's corporate governance
arrangements regularly and expect to evolve this over time, in line with the
Company's growth.
The Board would delegate responsibilities to committees and individuals as it
sees fit. However due to the size of the Board and Company the Board considers
it appropriate that all committees, namely the audit and remuneration committee
are populated by the full Board with invitees as and when. The auditors as an
example are invited to the audit committee.
The Boards' principal responsibility is to ensure that the Company and its Board
are acting in the best interests of shareholders.
The Executive Director is responsible for the general day-to-day running of the
business and developing corporate strategy.
The Executive Director has, through powers delegated by the Board, the
responsibility for leadership of the management team in the execution of the
Group's strategies and policies and for the day-to-day management of the
business. He is responsible for the general day-to-day running of the business
and developing corporate strategy while the Non-Executive Directors are tasked
with constructively challenging the decisions of executive management and
satisfying themselves that the systems of business risk management and internal
financial controls are robust.
All Directors participate in the key areas of decision-making, including the
following matters:
· Strategy
· Budgets
· Performance
· Major Capital Expenditure
· Corporate Actions
The Board would normally delegate authority to a number of specific Committees
to assist in meeting its business objectives, and the Committees, comprising of
at least two independent Non-Executive Directors, would meet independently of
Board meetings.
However, the current Board structure does not permit this, and the Directors
will seek to take this into account when considering future appointments. As a
result, matters that would normally be referred to the Nominations Committee are
dealt with by the combined Remuneration and Nominations Committee.
The CEO and the Board continue to monitor and evolve the Company's corporate
governance structures and processes, and maintain that these will evolve over
time, in line with the Company's growth and development.
10. Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining effective communication and having
constructive dialogue with its stakeholders. The Company intends to have ongoing
relationships with both its private and institutional shareholders (through
meetings and presentations), and for them to have the opportunity to discuss
issues and provide feedback at meetings with the Company. In addition, all
shareholders are encouraged to attend the Company's Annual General Meeting. The
Board already discloses the result of General Meetings by way of announcement
and discloses the proxy voting numbers to those attending the meetings. In order
to improve transparency, the Board has committed to publishing proxy voting
results on its website in the future.
The Company communicates with shareholders through the Annual Report and
Accounts, full-year and half-year results announcements and the Annual General
Meeting (AGM). Information on the Investor Relations section of the Group's
website is kept updated and contains details of relevant developments,
regulatory announcements, financial reports and shareholder circulars. A range
of corporate information (including all Company announcements and presentations)
is also available to shareholders, investors and the public on the Company's
corporate website.
Shareholders with a specific enquiry can contact us on the website contact page.
The Company uses electronic communications with shareholders in order to
maximise efficiency.
Corporate Governance Report
For the Year Ended 31 October 2022
Introduction
The Board continues to recognise that an effective governance framework is
fundamental in ensuring that the Group's ability to deliver long term
shareholder value. The Group continues to comply with the principles of the QCA
Code .
Board composition
It is critical that the Board has the right composition, so it can provide the
best possible leadership for the Group and discharge its duties to shareholders.
This includes the right balance of skills and experience, ensuring that all
Directors have a good working knowledge of the Group's business and that the
Board retains its independence and objectivity.
The Board currently comprises of two Non-Executive Directors, of which one,
being Simon Grant-Rennick, is considered to be independent, and one executive
director. Xin (Andy) Sui was appointed CEO on 3 October 2022. At that time it
was decided that due to the size of the Board and the business a Chairman would
not be appointed.
The articles of association require a third, but not greater than a third, of
the Directors to retire by rotation each year.
There are regular Board meetings each year and other meetings are held as
required to direct the overall Company strategy and operations. Board meetings
follow a formal agenda covering matters specifically reserved for decision by
the Board. These cover key areas of the Company's affairs including overall
strategy, acquisition policy, approval of budgets, major capital expenditure and
significant transactions and financing issues.
The Board has delegated certain responsibilities, within defined terms of
reference, to the audit committee and the remuneration committee as described
below. The appointment of new Directors is made by the Board as a whole. During
the year ended 31 October 2022, there were seventeen Board meetings, two audit
committee meeting and no remuneration committee meetings. All meetings were
fully attended and quorate.
The Board undertakes an annual evaluation of its own performance and that of its
committees and individual Directors, through discussions and one-to-one reviews.
Board effectiveness
The Board is unanimous in its view that the Board appointments have a range of
experience, skills and strength of leadership. The Company's procedures for new
Directors include undergoing a full induction process, and will continue with
ongoing training, tailored to their knowledge and previous experience. A short
biography of all Directors can be found in the Directors' Report herein.
Shareholder engagement
As CEO, I am responsible for the effective communication between shareholders
and the Company and for ensuring the Board understands the views of major
shareholders.
I look forward to listening to the views of our shareholders at the Company's
next AGM. Directors regularly meet with a cross section of the Company
shareholders to ensure an ongoing dialogue is maintained and report to the Board
on feedback received from shareholders. I also make myself available to meet any
of our shareholders who wish to discuss matters regarding the Company.
Audit committee
The audit committee is currently headed by Robert Scott, the Chairman of the
committee, and comprises Xin (Andy) Sui and Simon Grant-Rennick. The committee's
terms of reference are in accordance with the UK Corporate Governance Code. The
committee reviews the Company's financial and accounting policies, interim and
final results and annual report prior to their submission to the Board, together
with management reports on accounting matters and internal control and risk
management systems. It reviews the auditor's management letter and considers any
financial or other matters raised by both the auditors and employees.
During the year under review the Company announced the appointment of RPG Crouch
Chapman ("RPG") Jones, as auditor to the Company. The appointment of RPG will
be subject to approval by shareholders at the next Annual General Meeting of the
Company. The appointment of RPG follows the resignation of Jeffreys Henry LLP as
auditors to the Company. Section 519 of the Companies Act 2006 (the "Act")
requires Jeffreys Henry LLP to send a statement of the reasons for ceasing to
hold office. They have stated that in accordance with Section 519 of the Act,
they are ceasing to hold office on the grounds that the firm has taken the
decision not to register as an auditor eligible to undertake Public Interest
Entity audits.
There are no circumstances connected with Jeffreys Henry LLP ceasing to hold
office as auditor which it considers should be brought to the attention of the
Company's members or creditors.
While searching for a PIE registered auditor the committee approached many
auditors to perform the audit however by and large each one had capacity
constraints and could not accept the appointment. The Company further notes that
it announced on 15 December 2022 that Jones Hunt & Keelings ("JH&K") had been
appointed as auditor of the Company however their registration as a Public
Interest Entity auditor has not come through and as such, they were not in a
position to accept the audit.
Due to delays in appointing a PIE registered auditor, the Company could not
complete its statutory audit or publication of results or statutory filing at
Companies House on time. As such, trading in the Company's ordinary shares and
its listing on the Official List of the Financial Conduct Authority was
suspended pending the publication of these audited results. The Company was
granted an extension of its filing obligations by Companies House.
The committee considers the independence of the external auditors and ensures
that, before any non-audit services are provided by the external auditors, they
will not impair the auditor's objectivity and independence. During the year, non
-audit services totalled £Nil (2021: £Nil).
There is currently no internal audit function within the Group. The Directors
consider that this is appropriate of a Group of this size.
The committee has primary responsibility for making recommendations to the Board
in respect of the appointment, re-appointment and removal of the external
auditors.
Independent Auditor's Report
To the Members of Everest Global Plc
Qualified Opinion
We have audited the financial statements of Everest Global Plc (the `Company')
and its subsidiaries (the `Group') for the year ended 31 October 2022 which
comprise the Group and Company statements of comprehensive income, statements of
changes in equity, statements of financial position, statements of cash flows
and notes to the financial statements, and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards as adopted in the United Kingdom
(IFRS).
In our opinion, except for the matter described in the "Basis for qualified
opinion" section of our report, the financial statements:
· give a true and fair view of the state of the Group's and of the Company's
affairs as at 31 December 2022 and of the Group's loss for the year then ended;
· have been properly prepared in accordance with IFRS; and;
· have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for qualified opinion
The Group recorded closing inventory of £175,875. We were appointed after the
balance sheet date and were unable to arrange attendance at the year-end
counting of inventory. We were therefore unable to verify the closing value of
inventory and the associated impact on cost of sales.
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the group in
accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC's Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our qualified
opinion.
Material uncertainty related to going concern
We draw attention to note 2a in the financial statements, which indicates events
or conditions identified that may cast significant doubt over the Company's
ability to continue as a going concern. As stated in note 2a, these events or
conditions, along with other matters set forth in note 2a, indicate that a
material uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
In auditing the financial statements, we have concluded that the directors' use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors' assessment of the entity's ability to continue
to adopt the going concern basis of accounting included:
· Review budgets and cash flows projections up to 31 December 2024;
· Comparison of budget to past performance;
· Sensitise cash flows for variations in trading performance and working
capital requirements;
· Consider if there is any other information brought to light during the audit
that would impact on the going concern assessment;
· Review of working capital facilities and assess headroom available in the
projections; and
· Review of adequacy and completeness of disclosures in the financial
statements in respect of the going concern assumption.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our approach to the audit
In planning our audit, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular, we looked at
where the directors made subjective judgements, for example in respect of
significant accounting estimates. As in all of our audits, we also addressed the
risk of management override of internal controls, including evaluating whether
there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
We tailored the scope of our audit to ensure that we performed sufficient work
to be able to issue an opinion on the financial statements as a whole, taking
into account the structure of the group and the parent company, the accounting
processes and controls, and the industry in which they operate.
We performed the audit of the Company and reviewed the work performed by the
component auditor in addition to performing our own tests on the Company's
subsidiary.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of
most significance in our audit of the financial statements of the current period
and include the most significant assessed risks of material misstatement we
identified (whether or not due to fraud), including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. The matter identified was
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. The use of the Going Concern basis of accounting was assessed as
a key audit matter and has already been covered in the previous section of this
report. The other key audit matters identified are listed below.
Key audit matter How our work addressed this matter
Revenue Our work included:
recognitionRevenue · Reviewing accounting policies adopted and ensuring
recognition is a these are in accordance with IFRS;
presumed risk of · Confirming revenue has been recognised in accordance
fraud under with the accounting policies;
International · Reconciling expected income for a sample of contracts
Auditing to amounts reported in the accounts.
Standards.Given · Reviewing settlement of contract values after the
the subjectivity period end; and
of estimates · Where no post year end settlement has occurred, for
involved, we amounts agreed in the period consider the accuracy of past
consider the estimates.
carrying value of
property to be a
key audit matter.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole.
We consider gross assets to be the most significant determinant of the Group's
financial performance used by the users of the financial statements. We have
based materiality on 1.5% of gross assets for each of the operating components.
Overall materiality for the Group was therefore set at £28,000. For each
component, the materiality set was lower than the overall group materiality.
We agreed with the Audit Committee that we would report on all differences in
excess of 5% of materiality relating to the Group financial statements. We also
report to the Audit Committee on financial statement disclosure matters
identified when assessing the overall consistency and presentation of the
consolidated financial statements.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of
the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors' report for
the financial year for which the financial statements are prepared is consistent
with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
· the parent company financial statements are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require for our
audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out in
the Directors' Report, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's
financial reporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue our opinion in an auditor's report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material
if, individually or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below:
· We obtained an understanding of the legal and regulatory frameworks within
which the Group operates focusing on those laws and regulations that have a
direct effect on the determination of material amounts and disclosures in the
financial statements.
· We identified the greatest risk of material impact on the financial
statements from irregularities, including fraud, to be the override of controls
by management. Our audit procedures to respond to these risks included enquiries
of management about their own identification and assessment of the risks of
irregularities, sample testing on the posting of journals and reviewing
accounting estimates for biases.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation. This
risk increases the more that compliance with a law or regulation is removed from
the events and transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than error, as
fraud involves intentional concealment, forgery, collusion, omission or
misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Auditor's Report.
Other matters that we are required to address
We were appointed on 12 April 2023 and this is the first year of our engagement
as auditors for the Group.
We confirm that we are independent of the Group and have not provided any
prohibited non-audit services, as defined by the Ethical Standard issued by the
Financial Reporting Council.
Our audit report is consistent with our additional report to the Audit Committee
explaining the results of our audit.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Paul Randall FCA (Senior Statutory Auditor)
For and on behalf of RPG Crouch Chapman LLP
Chartered
Accountants
Registered Auditor
5[th] Floor, 14-16 Dowgate Hill
London
EC4R 2SU
26 July 2023
Statement of Comprehensive Income
For the Year Ended 31 October 2022
Group Group Company Company
Year ended Year ended Year Year
ended ended
31 October 31 October 31 31
October October
Notes 2022 2021 2022 2021
£ £ £ £
Revenue from 5 1,698,839 1,404,234 - -
contracts with
customers
Cost of sales (1,278,471) (1,024,430) - -
Gross profit 420,368 379,804 - -
Other income 6 1,264 - - -
Administrative 9 (1,573,802) (895,464) 21,587 (345,735)
expenses
Impairments 10 - - (227,939) (161,091)
Operating loss (1,152,170) (515,660) (206,352) (506,826)
Finance costs 11 (3,418,549) (224,631) (135,775) (99,785)
Finance income 12 157 155,658 20,439 158,568
Loss for the (4,570,562) (584,633) (321,688) (448,043)
year from
continuing
operations
Tax on loss on 13
ordinary
activities
Loss for the (4,570,562) (584,633) (321,688) (448,043)
year from
continuing
operations
Other - - - -
comprehensive
income
Total (4,570,562) (584,633) (321,688) (448,043)
comprehensive
loss for the
year from
continuing
operations
Loss (4,571,084) (584,633) (321,688) (448,043)
attributable to
ordinary
shareholders
Loss 522 - - -
attributable to
non
-controlling
interest
Total (4,570,562) (584,633) (321,688) (448,043)
comprehensive
loss
attributable to
ordinary
shareholders
Total - - - -
comprehensive
loss
attributable to
non-controlling
interest
Basic and 14 (17.79p) (2.66p)
diluted earnings
per
share
All amounts relate to continuing operations.
Group Share Share Share Equity Retained Total
Non Total
Statement of capital premium based portion of earnings equity
-controlling equity
Changes in payments convertible
Equity reserve loan
notes
For the Year
interest
Ended
31 October
2022
Group
£ £ £ £ £ £
£ £
Balance at 439,322 2,571,247 83,377 - (3,831,894)
(737,948) - (737,948)
31
October 2020
Equity - - - 74,935 -
74,935 - 74,935
portion of
Convertible
Loan
Notes issued
during
the year
Loss for the - - - - (584,633)
(584,633) - (584,633)
year
Balance at 439,322 2,571,247 83,377 74,935 (4,416,527)
(1,247,646) - (1,247,646)
31
October 2021
Shares 260,000 390,000 - - -
650,000 - 650,000
issued
Shares 147,463 221,194 - - -
368,657 - 368,657
issued on
conversion
of
Convertible
Loan
Notes
Settlement 76,473 76,473 - - -
152,946 - 152,946
of debt
by the issue
of
shares
Extension of - - - (32,396) -
(32,396) - (32,396)
date
of
conversion
of
the
Convertible
Loan
Notes
Warrants - (218,799) 218,799 - -
- - -
issued
during the
year
Loss - - - - 2,305,905
2,305,905 (2,305,905) -
attributable
to non
-controlling
interest on
disposal of
49% of
subsidiary
Loss for the - - - - (4,571,084)
(4,571,084) 522 (4,570,562)
year
Balance at 923,258 3,040,115 302,176 42,539 (6,681,706)
(2,373,618) (2,305,383) (4,679,001)
31
October 2022
Share capital is the amount subscribed for shares at nominal value.
The share premium has arisen on the issue of shares at a premium to their
nominal value.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Company Statement of Changes in Equity
For the Year Ended 31 OCTOBER 2021
Company Share Share Share Equity Retained Total
Non Total
capital premium based portion of earnings equity
-controlling equity
payments convertible
reserve loan
notes
interest
£ £ £ £ £ £
£ £
Balance at 439,322 2,571,247 83,377 - (3,469,230) (375,284)
- (375,284)
31
October
2020
Equity - - - 74,935 - 74,935
- 74,935
portion
of
Convertible
Loan Notes
issued
during
the
year
Loss for - - - - (448,043) (448,043)
- (448,043)
the
year
Balance at 439,322 2,571,247 83,377 74,935 (3,917,273) (748,392)
- (748,392)
31
October
2021
Shares 260,000 390,000 - - - 650,000
- 650,000
issued
Shares 147,463 221,194 - - - 368,657
- 368,657
issued
on
conversion
of
Convertible
Loan Notes
Settlement 76,473 76,473 - - - 152,946
- 152,946
of
debt by the
issue
of shares
Extension - - - (32,396) - (32,396)
- (32,396)
of
date of
conversion
of the
Convertible
Loan Notes
Warrants - (218,799) 218,799 - - -
- -
issued
during the
year
Loss for - - - - (321,688) (321,688)
- (321,688)
the
year
Balance at 923,258 3,040,115 302,176 42,539 (4,238,961) 69,127
- 69,127
31
October
2022
Statement of the Financial Position
As at 31 October 2022
Group Group Company Company
Notes 2022 2021 2022 2021
£ £ £ £
Assets
Non-current assets
Investment in 15 - - - -
subsidiaries
Long term 16 - - - -
intercompany loans
Property, plant and 17 13,884 13,769 - -
equipment
Right of use asset 28 250,446 341,905 - -
Total non-current 264,330 355,674 - -
assets
Current assets
Investment in 15 6,154 6,154 6,154 6,154
associate
(held for sale)
Inventories 18 175,875 42,682 - -
Trade and other 19 282,529 297,800 11,219 28,737
receivables
Cash and cash 20 925,814 1,109,774 922,613 1,108,476
equivalents
Total current 1,390,372 1,456,410 939,986 1,143,367
assets
Total assets 1,654,702 1,812,084 939,986 1,143,367
Equity and
liabilities
Share capital 22 923,258 439,322 923,258 439,322
Share premium 22 3,040,115 2,571,247 3,040,115 2,571,247
Share-based payments 23 302,176 83,377 302,176 83,377
reserve
Equity portion of 25 42,539 74,935 42,539 74,935
convertible loan
notes
Retained earnings (6,681,706) (4,416,527) (4,238,961) (3,917,273)
Total owners' equity (2,373,618) (1,247,646) 69,127 (748,392)
Non-controlling 24 (2,305,383) - - -
interest
Total equity (4,679,001) (1,247,646) 69,127 (748,392)
Non-current
liabilities
Non-current lease 28 166,070 269,215 - -
liabilities
Borrowings 27 4,732,492 466,064 - -
Convertible loan 26 710,274 778,065 710,274 778,065
notes
Total non-current 5,608,836 1,513,344 710,274 778,065
liabilities
Current liabilities
Current lease 28 100,485 77,887 - -
liabilities
Trade and other 21 624,382 1,468,499 160,585 1,113,694
payables
Total current 724,867 1,546,386 160,585 1,113,694
liabilities
Total equity and 1,654,702 1,812,084 939,986 1,143,367
liabilities
Statement of Group Group Company Company
Cash Flow
For the year
ended 31
October
2022
Year ended Year Year Year
ended ended ended
31 October 31 31 31
October October October
Notes 2022 2021 2022 2021
£ £ £ £
Cash flows from
operating
activities
Operating loss (1,152,170) (515,660) (206,352) (506,826)
Adjustments
for:
Add: 17,28 84,960 78,109 - -
Depreciation
Add: Impairment 10 - - 227,939 161,091
of investment
Add: 17 - 139 - -
(Profit)/loss
on disposal
of property,
plant and
equipment
Add: unrealised (41,293) (65,301) - -
foreign
exchange loss
Finance costs 11 (124,889) (93,378) - -
paid
Interest 12 157 155,658 - 149,359
received
Profit on 1 - 1 -
disposal of
loans
receivable
Changes in
working capital
(Increase)/Decre (133,193) 137,401 - -
ase in
inventories
Decrease/(Increa 15,271 (8,363) 17,518 (16,574)
se) in
receivables
(Decrease) / (538,038) 262,565 (647,030) 212,409
Increase in
payables
Net cash flow (1,889,194) (48,830) (607,924) (541)
from operating
activities
Investing
activities
Acquisition of 17 (5,541) (8,767) - -
property, plant
and equipment
Foreign 17 (7) 433 - -
exchange
movements
Increase in - - (227,939) (80,611)
Intercompany
Loans
Receivable
Loans 18 - 944,004 - 944,004
Receivable
repaid
Net cash flow (5,548) 935,670 (227,939) 863,393
from investing
activities
Cash flows from
financing
activities:
Net proceeds 23 650,000 - 650,000 -
from issue of
shares
Convertible 26 - 220,000 - 220,000
loan notes
issued
Increase / 29 1,134,015 32,973 - -
(decrease) in
borrowings
Foreign 29 - (8,043) - -
exchange
movements
Capital (73,233) (67,071) - -
repayments of
lease
liability
Net cash flow 1,710,782 177,859 650,000 220,000
from financing
activities
Net cash flow 29 (183,960) 1,064,699 (185,863) 1,082,852
for the period
Opening cash 1,109,774 45,251 1,108,476 25,624
and cash
equivalents
Foreign 29 - (176) - -
exchange
movements
Closing cash 21/29 925,814 1,109,774 922,613 1,108,476
and cash
equivalents
Notes to Group Annual Financial Statements
For the Year Ended 31 October 2022
1. General Information
Everest Global plc is a company incorporated in the United Kingdom. Details of
the registered office, the officers and advisers to the Company are presented on
the Directors and Advisers page at the beginning of the annual report. The
Company is admitted to the Official List (by way of a Standard Listing under
Chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's
Main Market for listed securities. The information within these financial
statements and accompanying notes has been prepared for the year ended 31
October 2022 with comparatives for the year ended 31 October 2021.
2. Basis of Preparation and Significant Accounting Policies
The consolidated financial statements of Everest Global Plc have been prepared
in accordance with International Financial Reporting Standards as adopted by the
United Kingdom (IFRS as adopted by the UK), IFRS Interpretations Committee and
the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under the historical
cost convention in the Group's reporting currency of Pound Sterling.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3. The preparation of financial
statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and
reported amounts of assets, liabilities, income and expenses. Although these
estimates are based on management's experience and knowledge of current events
and actions, actual results may ultimately differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimates are revised if the revision affects only that year or in the year of
the revision and future year if the revision affects both current and future
year.
a. Going Concern
These consolidated financial statements are prepared on the going concern basis.
The going concern basis assumes that the Group will continue in operation for
the foreseeable future and will be able to realise its assets and discharge its
liabilities and commitments in the normal course of business. The Group has
incurred significant operating losses and negative cash flows from operations as
the Group continued to expand its operations during the year under review.
There remains an active and liquid market for the Group's shares.
As at 31 October 2022 the Group held £925,814 (2021: £1,109,774) in cash and
cash equivalents.
During the year, the Group raised additional equity funding of £650,000 (2021:
£Nil) in gross funding through share subscriptions to fund working capital. In
addition, the Company converted £581,951.52 of convertible loan notes into new
ordinary shares. As part of the assignment of certain debts to VSA NEX, VSA NEX
have agreed to fund Dynamic so as to enable Dynamic to carry on its business in
the ordinary course until such time as the Company ceases to hold any further
shares in Dynamic. VSA NEX has signed a subordination agreement in relation to
the loans due by Dynamic to VSA NEX with an expiry date of 31 October 2023.
Should VSA NEX choose to request the repayment of the loans due by Dynamic this
will severely impact the Company's ability to continue as a going concern.
VSA NEX have agreed to subordinate the loans due to themselves. The
subordination agreement expires on 31 October 2023. In the event that VSA NEX do
not extend their subordination agreement and ask for repayment of their loans,
this would cast significant doubt on the Group's ability to continue as a going
concern.
The Directors have prepared cash flow forecasts. These forecasts consider
operating cash flows and capital expenditure requirements for the Company and
Dynamic, available working capital and forecast expenditure, including overheads
and other costs. The Directors are of the opinion that the Group has sufficient
working capital and that no additional funding is required. However, post year
end the Group did raise £700,000 in additional capital. Based upon the Company's
forecast, it has sufficient cash for the foreseeable future.
After careful consideration of the matters set out above, the Directors are of
the opinion that the Group will be able to undertake its planned activities for
the period to 31 July 2024 from production and from additional fund raising and
have prepared the consolidated financial statements on the going concern basis.
Nevertheless, due to the uncertainties inherent in meeting its revenue
predictions and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any adjustments that
would result if the Group was unable to continue as a going concern. For this
reason, the Directors believe that there is a material uncertainty relating to
the Group's going concern.
b. New and Amended Standards Adopted by the Company
The Group has implemented IFRS as adopted by the UK. At the point of transition
from IFRS as adopted by the EU the underlying requirements were identical. The
following standards, amendments and interpretations are new and effective for
the year ended 31 October 2022 and have been adopted. None of the IFRS standards
below had a material impact on the financial statements.
Reference Title Summary Application date of standard
(Periods commencing on or
after)
IFRS 16 Leases COVID-19 1 April 2021
related rent
concessions
Extension of
the practical
expedient
IFRS 4, Interest rate 1 January 2021
IAS 7 and benchmark
IFRS 16 reform - Phase
2.
The Phase 2
amendments
address issues
that arise
from the
implementation
of the
reforms,
including the
replacement of
one benchmark
with an
alternative
one. The Phase
2 amendments
provide
additional
temporary
reliefs from
applying
specific IAS
39 and IFRS 9
hedge
accounting
requirements
to hedging
relationships
directly
affected by
IBOR reform.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 November
2022 and have not been early adopted:
Reference Title Summary Application date of standard
(Periods commencing on or
after)
IFRS 3 Business Updating a 1 January 2022
Combinations reference in
IFRS 3 to the
Conceptual
Framework for
Financial
Reporting
without
changing the
accounting
requirements
for business
combinations.
IAS 16 Property, Prohibits a 1 January 2022
Plant and Company from
Equipment deducting from
the cost of
property,
plant and
equipment
amounts
received from
selling items
produced while
the Company is
preparing the
asset for its
intended use.
Instead, a
Company will
recognise such
sales proceeds
and related
cost in profit
or loss.
IAS 37 Provisions, Specifies 1 January 2022
contingent which costs a
liabilities Company
and includes when
contingent assessing
assets whether a
contract will
be loss
-making.
IAS 1 Presentation Clarifies that 1 January 2023
of Financial liabilities
Statements are classified
as either
current or
noncurrent,
depending on
the rights
that exist at
the end of the
reporting
period.
Classification
is unaffected
by the
expectations
of the entity
or events
after the
reporting date
(for example,
the receipt of
a waiver or a
breach of
covenant). The
amendment also
clarifies what
IAS 1 means
when it refers
to the
`settlement'
of a
liability.
IAS 1 and `Presentation Amendments to 1 January 2023
IAS 8 of Financial improve
Statements' accounting
and policy
`Accounting disclosures
policies, and to help
changes in users of the
accounting financial
estimates and statements to
errors' distinguish
between
changes in
accounting
estimates and
changes in
accounting
policies.
IAS 12 Deferred These 1 January 2023
Taxation amendments
require
companies to
recognise
deferred tax
on
transactions
that, on
initial
recognition
give rise to
equal amounts
of taxable and
deductible
temporary
differences.
IFRS17 Insurance This standard 1 January 2023
contracts replaces IFRS
4, which
currently
permits a wide
variety of
practices in
accounting for
insurance
contracts.
IFRS 17 will
fundamentally
change the
accounting by
all entities
that issue
insurance
contracts and
investment
contracts with
discretionary
participation
features.
The Directors anticipate that the adoption of these standards and the
interpretations in future periods will not have a material impact on the
financial statements of the Group.
c. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
31 October each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated statement of comprehensive income from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by other members of
the Group. All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that are
present ownership interests entitling their holders to a proportionate share of
net assets upon liquidation may initially be measured at fair value or at the
non-controlling interests' proportionate share of the fair value of the
acquiree's identifiable net assets. The choice of measurement is made on an
acquisition-by-acquisition basis. Other non-controlling interests are initially
measured at fair value. Subsequent to acquisition, the carrying amount of non
-controlling interests is the amount of those interests at initial recognition
plus the non-controlling interests' share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests. Total
comprehensive income of the subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non
-controlling interests having a deficit balance.
Changes in the Group's ownership interests in subsidiaries that do not result in
the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the non
-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries.
When the Group loses control of a subsidiary, the profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and liabilities of
the subsidiary and any non-controlling interests. Where certain assets of the
subsidiary are measured at revalued amounts or fair values and the related
cumulative gain or loss has been recognised in other comprehensive income and
accumulated in equity, the amounts previously recognised in other comprehensive
income and accumulated in equity are accounted for as if the Company had
directly disposed of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded
as the fair value on initial recognition for subsequent accounting under IFRS 9
"Financial Instruments: Recognition and Measurement" or, when applicable, the
cost on initial recognition of an investment in an associate or a jointly
controlled entity.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities incurred by the Group to the former owners
of the acquiree and the equity interests issued by the Group in exchange for
control of the acquiree. Acquisition-related costs are recognised in profit or
loss as incurred.
At the acquisition date, the identifiable assets acquired, and the liabilities
assumed are recognised at their fair value at the acquisition date, except that:
· deferred tax assets or liabilities and liabilities or assets related to
employee benefit arrangements are recognised and measured in accordance with IAS
12 Income Taxes and IAS 19 Employee Benefits respectively;
· liabilities or equity instruments related to share-based payment
transactions of the acquiree or the replacement of an acquiree's share-based
payment transactions with share-based payment transactions of the Group are
measured in accordance with IFRS 2 Share-based Payment at the acquisition date;
and
· assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations are measured in accordance with that standard.
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred,
the amount of any non-controlling interests in the acquiree, and the fair value
of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed. If, after assessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the
sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Joint Ventures and Associates
A joint venture is a contractual agreement under which two or more parties
conduct an economic activity and unanimous approval is required for the
financial and operating policies. Associates are all entities over which the
Group has significant influence but not control, generally accompanying a
shareholding between 20% and 50% of the voting rights. Joint ventures and
associates are accounted for using the equity method, which involves recognition
in the consolidated income statement of EG's share of the net result of the
joint ventures and associates for the year. Accounting policies of joint
ventures and associates have been changed where necessary to ensure consistency
with the policies adopted by the Group. EG's interest in a joint venture or
associate is carried in the statement of financial position at its share in the
net assets of the joint venture or associate together with goodwill paid on
acquisition, less any impairment loss. When the share in the losses exceeds the
carrying amount of an equity-accounted Company (including any other receivables
forming part of the net investment in the Company), the carrying amount is
written down to nil and recognition of further losses is discontinued, unless we
have incurred legal or constructive obligations relating to the Company in
question.
d. Property, Plant and Equipment
Property, plant and equipment are stated at historical cost less subsequent
accumulated depreciation and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss during the financial year in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight
-line method to write off their cost over their estimated useful lives at the
following annual rates:
Leasehold improvements 33.3%
Furniture, fixtures and equipment 17%
Plant and machinery 20% and 33.3%
Useful lives and depreciation method are reviewed and adjusted if appropriate,
at the end of each reporting year.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset and is recognised in
profit or loss in the year in which the asset is derecognised.
e. Leased assets
The Group leases various offices and equipment. Rental contracts are typically
made for fixed periods of 3 years but may have extension options for an
additional 2 years. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. The lease agreements do
not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
The right-of use asset is depreciated over the shorter of the asset's useful
life and the lease term as per the table below:
[][][][][]
1[st] year of the lease 15%
2[nd] year of the lease 17%
3[rd] year of the lease 20%
4[th] year of the lease 22%
5[th] year of the lease 26%
Assets and liabilities arising from a lease are initially measured on a present
value basis. Lease liabilities include the net present value of the following
lease payments:
· fixed payments (including in-substance fixed payments), less any lease
incentives receivable.
The lease payments are discounted using the interest rate implicit in the lease.
If that rate cannot be determined, the lessee's incremental borrowing rate is
used, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability
· any lease payments made at or before the commencement date less any lease
incentives received any initial direct costs, and
· restoration costs.
Payments associated with short term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less. Low-value assets
comprise moving equipment rented on a day to day basis.
f. Investments in Subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate,
provisions for impairment.
g. Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is
determined using specific identification and in the case of work in progress and
finished goods, comprises the cost of purchase, cost of conversion and other
costs incurred in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and applicable selling
expenses.
When the inventories are sold, the carrying amount of those inventories is
recognised as an expense in the year in which the related revenue is recognised.
The amount of any write-down of inventories to net realisable value and all
losses of inventories are recognised as an expense in the year in which the
write-down or loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the reversal
occurs.
h. Impairment
Non-derivative financial assets
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at
amortised cost and debt securities at Fair Value through Other Comprehensive
Income ("FVOCI") are credit-impaired. A financial asset is "credit-impaired"
when one or more events that have a detrimental impact on the estimated future
cash flows of the financial assets have occurred.
Evidence that a financial asset is credit-impaired includes the following
observable data:
· significant financial difficulty of the borrower or issuer;
· a breach of contract such as a default or being more than 90 days past
due;
· the restructuring of a loan or advance by the Group on terms that the
Group would not consider otherwise;
· it is probable that the borrower will enter bankruptcy or other
financial reorganisation; or
· the disappearance of an active market for a security because of
financial difficulties.
A 12 month approach is followed in determining the Expected Credit Loss ("ECL").
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted
from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss
and is recognised in Other Comprehensive Income ("OCI").
Write-off
The gross carrying amount of a financial asset is written off when the Group has
no reasonable expectations of recovering a financial asset in its entirety or a
portion thereof. For corporate customers, the Group individually makes an
assessment with respect to the timing and amount of write-off based on whether
there is a reasonable expectation of recovery from the amount written off.
However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group's procedures of
recovery of the amounts due.
i. Financial Instruments
The Group classifies non-derivative financial assets into the following
categories: loans and receivables and Fair Value through Profit and Loss
("FVTPL") and Fair Value through OCI ("FVTOCI") financial assets.
The Group classifies non-derivative financial liabilities into the following
category: other financial liabilities.
i. Non-derivative financial assets and financial liabilities - Recognition
and derecognition
The Group initially recognises loans and receivables on the date when they are
originated. All other financial assets and financial liabilities are initially
recognised on the trade date when the entity becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the risks
and rewards of ownership of the financial asset are transferred, or it neither
transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control over the transferred asset. Any interest in such
derecognised financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled or expire. Gains or losses on derecognition of
financial liabilities are recognised in profit or loss as a finance charge.
Financial assets and financial liabilities are offset, and the net amount
presented in the statement of financial position when, and only when, the Group
currently has a legally enforceable right to offset the amounts and intends
either to settle them on a net basis or to realise the asset and settle the
liability simultaneously.
ii. Loans and receivables- Measurement
These assets are initially measured at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, they are measured at
amortised cost using the effective interest method.
iii. Assets at FVOCI - Measurement
These assets are initially measured at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, they are measured at fair
value and changes therein, other than impairment losses, are recognised in OCI
and accumulated in the revaluation reserve.
When these assets are derecognised, the gain or loss accumulated in equity is
reclassified to profit or loss.
iv. Non-derivative financial liabilities - Measurement
Other non-derivative financial liabilities are initially measured at fair value
less any directly attributable transaction costs. Subsequent to initial
recognition, these liabilities are measured at amortised cost using the
effective interest method.
v. Convertible loan notes and derivative financial instruments
The presentation and measurement of loan notes for accounting purposes is
governed by IAS 32 and IFRS 9. These standards require the loan notes to be
separated into two components:
· a derivative liability; and
· a debt host liability.
This is because the loan notes are convertible into an unknown number of shares,
therefore failing the `fixed-for-fixed' criterion under IAS 32. This requires
the `underlying option component' of the loan note to be valued first (as an
embedded derivative), with the residual of the face value being allocated to the
debt host liability (refer financial liabilities policy above).
Compound financial instruments issued by the Group comprise convertible notes
denominated in British pounds that can be converted to ordinary shares at the
option of the holder, when the number of shares to be issued is fixed and does
not vary with changes in fair value.
The liability component of compound financial instruments is initially
recognised at the fair value of a similar liability that does not have an equity
conversion option. The equity component is initially recognised at the
difference between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound
financial instrument is measured at amortised cost using the effective interest
method. The equity component of a compound financial instrument is not
remeasured.
Interest related to the financial liability is recognised in profit or loss. On
conversion at maturity, the financial liability is reclassified to equity and no
gain or loss is recognised.
The Group's financial liabilities include amounts due to a director, trade
payables and accrued liabilities. These financial liabilities are classified as
FVTPL are stated at fair value with any gains or losses arising on re
-measurement recognised in profit or loss. Other financial liabilities,
including borrowings are initially measured at fair value, net of transaction
costs.
j. Borrowings
Borrowings are presented as current liabilities unless the Group has an
unconditional right to defer settlement for at least 12 months after the
reporting period, in which case they are presented as non-current liabilities.
Borrowings are initially recorded at fair value, net of transaction costs and
subsequently carried for at amortised costs using the effective interest method.
Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the year of the borrowings
using the effective interest method. Borrowings which are due to be settled
within twelve months after the reporting period are included in current
borrowings in the statement of financial position even though the original term
was for a period longer than twelve months and an agreement to refinance, or to
reschedule payments, on a long-term basis is completed after the reporting
period and before the financial statements are authorised for issue.
k. Revenue Recognition
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a contract with a
customer. The Group recognises revenue when it transfers control over of goods
or services to a customer.
The following table provides information about the nature and timing of the
satisfaction of performance obligations in contracts with customers, including
significant payment terms, and the related revenue recognition policies.
Type of Nature and Revenue recognition under IFRS 15
product/ timing of
service satisfaction
of
performance
obligations,
including
significant
payment
terms
Sale of Customers Revenue is recognised when the goods are delivered
goods obtain and have been accepted by the customers at their
control of premises or the agreed point of delivery.
the goods
when the
goods have
been
delivered to
them and
have been
accepted at
their
premises or
the agreed
point of
delivery.
Invoices are
generated at
that point
in time net
of rebates
and
discounts.
Invoices are
generally
payable
within 30
days. No
settlement
discounts
are provided
for. The
sale of the
goods are
not subject
to a return
policy.
Interest Interest Once a financial asset has been written down to
revenue income is its estimated recoverable amount, interest income
recognised is thereafter recognised based on the effective
in the interest rate that was used to discount the future
income cash flows for the purpose of measuring the
statement recoverable amount.
for all
interest
-bearing
instruments
(whether
classified
as held-to
-maturity,
FVTOCI,
FVTPL,
derivatives
or other
assets) on
an accrual
basis using
the
effective
interest
method
based on
the actual
purchase
price
including
direct
transaction
costs.
l. Cost of Sales
Cost of sales consists of all costs of purchase and other directly incurred
costs.
Cost of purchase comprises the purchase price, import duties and other taxes
(other than those subsequently recoverable by the Group from the taxing
authorities), if any, and transport, handling and other costs directly
attributable to the acquisition of goods. Trade discounts, rebates and other
similar items are deducted in determining the costs of purchase. Cost of
conversion primarily consists of hiring charges of subcontractors incurred
during conversion.
m. Finance Income and Finance Costs
The Group's finance income and finance costs include:
· interest income;
· interest expense; and
· dividend income.
Interest income and expense is recognised using the effective interest method.
Dividend income is recognised in profit or loss on the date on which the Group's
right to receive payment is established.
The "effective interest rate" is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial
instrument to:
· the gross carrying amount of the financial asset; or
· the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is
applied to the gross carrying amount of the asset (when the asset is not credit
-impaired) or to the amortised cost of the liability. However, for financial
assets that have become credit-impaired subsequent to initial recognition,
interest income is calculated by applying the effective interest rate to the
amortised cost of the financial asset, if the asset is no-longer credit
-impaired, then the calculation of interest income reverts to the gross basis.
n. Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of comprehensive
income because it excludes items of income and expense that are taxable or
deductible in other years, and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the
reporting year.
Deferred tax is recognised on temporary differences between the carrying amount
of assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
associated with investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at the end of each
reporting year and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year in which the liability is settled or the asset
realised. The measurement of deferred tax assets and liabilities reflects the
tax consequences that would follow from the manner in which the Group expects,
at the end of the reporting year, to recover or settle the carrying amount of
its assets and liabilities.
Current or deferred tax for the year is recognised in profit or loss, except
when it relates to items that are recognised in other comprehensive income or
directly in equity, in which case the current and deferred tax is also
recognised in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the
business combination.
o. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits
with banks and other financial institutions, and short-term, highly liquid
investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value, having been within
three months of maturity at acquisition. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are also
included as a component of cash and cash equivalents for the purpose of the
consolidated statement of cash flows.
p. Provisions and Contingencies
Provisions are recognised when the Group has a present obligation as a result of
a past event, and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the Directors' best estimate of the
expenditure required to settle the obligation at the statement of financial
position date and are discounted to present value where the effect is material.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
When the effect of discounting is material, the amount recognised for a
provision is the present value at the reporting date of the future expenditures
expected to be required to settle the obligation. The increase in the discounted
present value amount arising from the passage of time is included in finance
costs in the statement of comprehensive income.
Contingent liabilities are not recognised in the financial statements. They are
disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote. A contingent asset is not recognised in the financial
statements but disclosed when an inflow of economic benefits is probable.
q. Share Capital
Ordinary shares are classified as equity. Proceeds from issuance of ordinary
shares are classified as equity. Incremental costs directly attributable to the
issuance of new ordinary shares are deducted against share capital and share
premium.
r. Foreign Currencies
In preparing the financial statements of each individual group entity,
transactions in currencies other than the functional currency of that entity
(foreign currencies) are recorded in the respective functional currency (i.e.
the currency of the primary economic environment in which the entity operates)
at the rates of exchanges prevailing on the dates of the transactions. At the
end of the reporting year, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried at
fair value that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined. Non-monetary
items that are measured in terms of historical costs in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary items, and on
translation of monetary items, are recognised in profit or loss in the year in
which they arise. Exchange differences arising on the retranslation of non
-monetary items carried at fair value are included in profit or loss for the
year except for differences arising on the retranslation of non-monetary items
in respect of which gains, and losses are recognised directly in other
comprehensive income, in which cases, the exchange differences are also
recognised directly in other comprehensive income.
For the purposes of presenting the consolidated financial statements, assets and
liabilities of the Group's foreign operations are translated from South African
Rand into the presentation currency of the Group of Pound Sterling at the rate
of exchange prevailing at the end of the reporting year, and their income and
expenses are translated at the average exchange rates for the year, unless
exchange rates fluctuate significantly during that year, in which case, the
exchange rates prevailing at the dates of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive income and
accumulated in equity.
The principal exchange rates during the year are set out in the table below:
Rate compared to £ Year End Rate 2022 Year End Rate 2021
South African Rand 21.04 20.83
US Dollar 1.15 1.37
s. Employee Benefits
Salaries, annual bonuses, paid annual leave and the cost to the Group of non
-monetary benefits are accrued in the year in which employees of the Group
render the associated services. Where payment or settlement is deferred and the
effect would be material, these amounts are stated at their present values.
t. Segmental Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
Director who makes strategic decisions.
3. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
In the application of the Group's accounting policies, which are described
above, management is required to make estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and assumptions that had a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities
are discussed below.
a. Inventory Valuation
Inventory is valued at the lower of cost and net realisable value. Net
realisable value of inventories is the estimated selling price in the ordinary
course of business, less estimated costs of completion and selling expenses.
These estimates are based on the current market conditions and the historical
experience of selling products of a similar nature. It could change
significantly as a result of competitors' actions in response to severe industry
cycles. The Group reviews its inventories in order to identify slow-moving
merchandise and uses markdowns to clear merchandise. Inventory value is reduced
when the decision to markdown below cost is made.
b. Impairment of long term Inter-Company Receivables
The Group's management reviews long-term inter-Company receivables on a regular
basis to determine if any provision for impairment is necessary. The policy for
the impairment of long-term inter-Company receivables of the Group is based on,
where appropriate, the evaluation of collectability, the trading performance of
the relevant subsidiary and on management's judgement. A considerable amount of
judgement is required in assessing the ultimate realisation of these outstanding
amounts, including the current and estimated future trading performance of the
relevant subsidiary. If the financial conditions of inter-Company debtors of the
Group were to deteriorate, resulting in an impairment of their ability to make
payments, a provision for impairment may be required.
c. Impairment of Receivables
The Group's management reviews receivables on a regular basis to determine if
any provision for impairment is necessary. The policy for the impairment of
receivables of the Group is based on, where appropriate, the evaluation of
collectability and ageing analysis of the receivables and on management's
judgement. A considerable amount of judgement is required in assessing the
ultimate realisation of these outstanding amounts, including the current
creditworthiness and the past collection history of each debtor. If the
financial conditions of debtors of the Group were to deteriorate, resulting in
an impairment of their ability to make payments, provision for impairment may be
required.
d Incremental borrowing cost of Right of Use Assets and Lease Liabilities
In assessing the Group's right of use assets and lease liabilities, the Group
has to assess its incremental borrowing costs. As an approximation of the
Group's incremental long term borrowing costs, the Group estimated the borrowing
costs associated with similar long term, asset based financing arrangements. The
Group based the implied incremental borrowing costs on the South African prime
lending rate applicable at the date of commencement of the agreement and added
an appropriate lending premium that would be typically applied by lenders. At
the year end the estimated incremental borrowing costs used amounted to 8.5%
(2021: 8.5%).
e. Income Taxes
The Group is subject to income taxes in South Africa and the UK. The South
African income taxes are administered by South African accountants. Significant
judgement is required in determining the provision for income taxes and the
timing of payment of the related tax. There are certain transactions and
calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated
tax based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax provision in the year in
which such determination is made.
f. Share Based Payments
The fair value of share-based payments recognised in the income statement is
measured by use of the Black Scholes model, which considers conditions attached
to the vesting and exercise of the equity instruments. The expected life used in
the model is adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations. The
share price volatility percentage factor used in the calculation is based on
management's best estimate of future share price behaviour based on past
experience, future expectations and benchmarked against peer companies in the
industry.
g. Equity portion of Convertible Loan Notes
The Group provides for the equity portion of convertible loan notes by applying
an estimated interest rate in determining the present values of the convertible
loan notes and the interest payable thereon over the life of the convertible
loan notes.
h. Depreciation and Amortisation
The Group depreciates property, plant and equipment and amortises the leasehold
buildings and land use rights on a straight-line method over the estimated
useful lives. The estimated useful lives reflect the Directors' estimate of the
years that the Group intends to derive future economic benefits from the use of
the Group's property, plant and equipment.
4. Segmental Reporting
In the opinion of the Directors, the Group has one class of business, being the
trading of agricultural materials. The Group's primary reporting format is
determined by the geographical segment according to the location of its
establishments. There is currently only one geographic reporting segment, which
is South Africa. All revenues and costs are derived from the single segment.
5. Revenue
Group Group Company Company
For the year For the year For the year For the year
ending ending ending ending
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Major
product/service
lines
Sale of 1,698,839 1,404,234 - -
agricultural
materials
Primary geographic
markets
South Africa 1,698,839 1,404,234 - -
Timing of revenue
recognition
Products 1,698,839 1,404,234 - -
transferred at a
point in time
6. Other Income
Group Group Company Company
For the For the For the year For the year
year year
ending ending ending ending
31 31 31 October 31 October
October October
2022 2021 2022 2021
£ £ £ £
Settlement discounts (1) - (1) -
received
Profit on disposal of 1 1
loan to subsidiary
Profit on disposal of 1,264 - - -
property plant and
equipment
1,264 - - -
7. Personnel Expenses and Staff Numbers (Including Directors)
Group Group Company Company
For the year For the year For the For the
year year
ending ending ending ending
Number 31 October 31 October 31 31
October October
2022 2021 2022 2021
The average
number of
employees in
the year were:
Directors 3 4 3 4
Management 3 2 - -
Accounts 2 2 - -
and
administration
Sales 1 3 - -
8 13 - -
Manufacturing/w
arehouse
Total 17 24 3 4
£ £ £ £
The aggregate
payroll costs
for these
persons were: 232,273 278,499 59,032 68,681
Average ratio
of executive 0.85 1.01
pay verses
average
employee
pay
Average 11,974 11,742
Directors
Average of all 13,663 11,604
employees
Average of non 14,025 11,577
-director
employees
8. Directors' Remuneration
Group Group Company Company
For the year For the year For the year For the year
ending ending ending ending
31 October 31 October 31 October 31 October
Salaries and 2022 2021 2022 2021
Fees
£ £ £ £
David - 9,000 - 9,000
Lenigas
(resigned)
Robert Scott 12,000 12,000 12,000 12,000
Andrew Monk 12,923 13,966 12,923 13,966
(resigned)*
Matt Bonner 11,000 12,000 11,000 12,000
(resigned)
35,923 46,966 35,923 46,966
* Included in Andrew Monk's remuneration is £1,923 for National Insurance.
No pension contributions were made by the Company on behalf of its directors
other than for Andrew Monk. Included in Andrew Monk's remuneration are pension
contributions amounting to £330 (2021: £360).
At the year-end a total of £33,587 (2021: £62,126) was outstanding in respect of
directors' emoluments.
9. Expenses - Analysis by Nature
Group Group Company Company
For the For the For the For the year
year year year
ending ending ending ending
31 31 31 31 October
October October October
2022 2021 2022 2021
£ £ £ £
Auditor's remuneration for 45,000 27,256 45,000 27,256
audit services: Parent
Auditor's remuneration for - 1,500 - 1,500
audit related services
Under-provision of prior 11,530 - 11,530 -
year audit fee
Auditor's remuneration for 17,308 3,536 - -
audit services: Subsidiary
Brokership fees 15,000 39,724 15,000 39,724
Legal and professional fees (269,522) 36,089 (269,522) 34,261
Registrar fees 3,034 5,138 3,034 5,138
Depreciation on property, 5,419 10,590 - -
plant and equipment (Note
17)
Depreciation on IFRS 16 79,541 67,519 - -
Right of Use Asset (Note
28)
(Gain) /loss on exchange 1,061,452 145,055 305 50,725
Personnel expenses (Note 7) 232,273 278,499 59,032 68,681
Other administrative 372,767 280,558 114,034 118,450
expenses
Subtotal 1,573,802 895,464 (21,587) 345,735
Admission and regulatory - - - -
expenses
Total administrative 1,573,802 895,464 (21,587) 345,735
expenses
10. Impairments
During the financial year, the recoverability of the investment was evaluated
and in management's estimation, it was considered necessary to impair the
goodwill on consolidation, the investment in the subsidiary and the intercompany
loans receivable.
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Impairment - - - -
of goodwill
Impairment - - - -
of
investment
in
subsidiary
Impairment - - 227,939 161,091
of inter
-company
loans
receivable
- - 227,939 161,091
11. Finance Costs
Group Group Company Company
For the year For the year For the year For the year
ending ending ending ending
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Interest paid on 124,889 93,378 - -
borrowings
Interest accrued on 135,775 99,785 135,775 99,785
convertible loan
notes
Lease liability 25,995 31,468 - -
Finance charges 3,131,890 - -
associated with
disposal of
intercompany loan to
VSA NEX Investments
Limited (note 1)
3,418,549 224,631 135,775 99,785
Finance costs represent interest and charges in respect of the discounting of
invoices, the interest accrual for the Convertible Loan Notes issued and the
interest charged on capitalised right-of use lease liability.
Note 1: These finance charges relate to the disposal of an inter-company loan to
VSA NEX. Refer to Note 30 for more information.
12. Finance Income
Group Group Company Company
For the For the year For the year For the year
year
ending ending ending ending
31 31 October 31 October 31 October
October
2022 2021 2022 2021
£ £ £ £
Interest earned on loan - 149,359 - 149,359
receivable
Interest earned on - - 20,439 9,209
intercompany loan
receivable
Interest earned on 157 6,299 - -
favourable bank
balances
157 155,658 20,439 158,568
13. Taxation
The charge for the year can be reconciled to the profit before taxation per the
consolidated statement of comprehensive income as follows:
Taxation
Group Group Company Company
For the For the For the For the
year year year year
ending ending ending ending
31 31 31 31
October October October October
2022 2021 2022 2021
£ £ £ £
Tax Charge - - - -
Factors
affecting
the tax
charge
Loss on (584,633) (584,633) (389,553) (389,553)
ordinary
activities
before
taxation
Loss on (111,080) (111,080) (74,015) (74,015)
ordinary
activities
before
taxation
multiplied
by standard
rate of UK
corporation
tax
of 19,00%
(2019:
19,00%)
Tax effect 10,569 1,934 - -
of expenses
not
deductible
for tax
Overseas tax 85,096 16,296 - -
rate
differences
from the UK
rate (26%)
Tax effect 15,415 92,850 74,015 74,015
of
utilisation
of tax
losses
The Company has excess management expenses of £1,043,509 (2021: £1,043,509)
available for carry forward against future trading profits. The deferred tax
asset in these tax losses at 19.0% of £193,369 (2021: 19.0% of £193,369) has not
been recognised due to the uncertainty of recovery.
14. Loss Per Share
Loss per share data is based on the Group result for the year and the weighted
average number of shares in issue.
Basic loss per share is calculated by dividing the loss attributable to equity
shareholders by the weighted average number of ordinary shares in issue during
the year:
Year ended Year ended
31 October 31 October
2022 2021
£ £
Loss after tax (4,570,562) (584,633)
Weighted average number of ordinary shares in issue 25,690,228 21,966,087
Basic and diluted loss per share (pence) (17.79p) (2.66p)
Basic and diluted loss per share are the same, since where a loss is incurred
the effect of outstanding share options and warrants is considered anti-dilutive
and is ignored for the purpose of the loss per share calculation. As at 31
October 2022 there were 46,162,855 (2021: 21,966,087) shares in issue,
38,363,171 (2021: 14,988,511) outstanding share warrants and 38,363,171 (2021:
897,809) outstanding options, both are potentially dilutive.
15. Investments
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Investment in subsidiary
- Cost of investment - - 297,915 297,915
- Impairment of investment - - (297,915) (297,915)
Carrying value - - - -
15.1. Investment in Associate
Group Group Company Company
As at As at As at As at
31 31 October 31 October 31 October
October
2022 2021 2022 2021
£ £ £ £
Investment in Dynamic Intertrade 6,154 6,154 90,046 90,046
Agri (Pty) Ltd (held for sale)
Equity accounted profit for the - - - -
period
Impairment of investment - - - -
Carrying value 6,154 6,154 90,046 90,046
Management have committed to selling its investment in the associate, Dynamic
Intertrade Agri (Pty) Ltd. The asset is available for immediate sale to a
willing buyer. A buyer for the asset has been identified and a preliminary price
of £6,154 has been discussed. It was anticipated that the sale will be concluded
within the last financial year ending 31 October 2021, however COVID-19 delayed
the process. The investment is still being held for sale to the existing buyer.
Accordingly, for the current year the investment is reflected under current
assets as held for sale. As part of the process of selling the group's
investment in the associate a fair value exercise was undertaken. Management
considered the financial performance of the Company, the price that a willing
buyer was prepared to pay for the investment as well as the prevailing market
conditions. Based on the above, the directors are of the opinion that the fair
value of the Company is £6,154.
As at 31 October 2022, the Company directly and indirectly held the following
subsidiary and associate:
Name of Principal Country of Proportion (%) Proportion (%) of
Company activities incorporation of equity interest
and place equity interest 2021
of business 2022
Dynamic Trading in South Africa 51% 100%
Intertrade Agricultural
(Pty) Products
Limited
Dynamic Agricultural South Africa 46.8%Designated 46.8%Designated as
Intertrade commodity as Held for Sale
Agri (Pty) trading and Held for Sale
Limited distribution
15.2. Investment in Subsidiary
Information about the Group's shareholding in Dynamic Intertrade (Pty) Ltd at
the end of the reporting period is as follows:
2022 2021
Dynamic Intertrade (Pty) Ltd
Percentage Held
As at 1 November 100% 100%
Percentage disposed of on subsidiary issuing shares
on 3 October 2022 49% 0%
Percentage held at 31 October 51% 100%
The Group acquired 100% of Dynamic Intertrade (Pty) Ltd in 2012 from Corestar
Holdings Ltd. On 3 October 2022, Dynamic Intertrade issued shares to a VSA NEX
Investments Limited such that Everest Global retains 51% interest in Dynamic
Intertrade and VSA NEX Investments Limited now holds 49% of Dynamic Intertrade.
2022 2021
Dynamic Intertrade (Pty) Ltd
Proportion of ownership interests and voting rights held 51% 100%
by non-controlling interests at 31 October
2022 2021
£ £
Profit / (Loss) allocated to non-controlling interests 522 -
for the year
Non-controlling Interests (2,305,383) -
The reconciliation of non-controlling interests in note 25 includes an analysis
of the profit or loss allocated to non-controlling interests of each subsidiary
where the non-controlling interest is material. There are no significant
restrictions on the ability of the Group to access or use assets and settle
liabilities.
During the year, the Group disposed of a 49 per cent of its interest in Dynamic
Intertrade (Pty) Ltd. There were no proceeds on disposal as described above. An
amount of £2.903 million (being the proportion share of the carrying amount of
net assets in Dynamic Intertrade (Pty) Ltd has been transferred to non
-controlling interests (see note 51). There was no gain or loss on disposal of
Dynamic Intertrade (Pty) Ltd.
16. Long Term InterCompany Loans
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Loan to Dynamic
Intertrade (Pty)
Ltd
- Amount - - - 1,002,918
receivable
- Impairment of - - - (1,002,918)
loan
Carrying value - - - -
The loan is unsecured and bears interest at rates linked to LIBOR +2% p.a. As
indicated in Note 10, both the capital and the interest elements of the above
loan have been fully impaired during the year ended 31 October 2020. The
additional loan provided to the subsidiary was impaired during the current year.
During the year, the Company assigned certain debts to VSA NEX. VSA NEX has
signed a subordination agreement in relation to the loans due by Dynamic to VSA
NEX with an expiry date of 31 October 2023.Refer to Note 31 for more
information.
17. Property, Plant and Equipment
Group Leasehold Furniture, Plant and machinery Total
Improve fixtures and
-ments equipment
£ £ £ £
Cost
As at 31 19,571 4,317 268,512 292,400
October 2020
Additions - - 8,767 8,767
Disposals - - (298) (298)
Exchange 175 39 2,401 2,615
difference
As at 31 19,746 4,356 279,382 303,484
October 2021
Additions - - 5,541 5,541
Disposals - - - -
Exchange (194) (56) (29,986) (30,236)
difference
As at 31 19,552 4,300 254,937 278,789
October 2022
Accumulated
depreciation
As at 31 19,085 3,674 254,343 277,102
October 2020
Charge for 477 363 9,750 10,590
the year
Released on - - (159) (159)
disposal
Exchange 158 23 2,001 2,182
difference
As at 31 19,720 4,060 265,935 289,715
October 2021
Charge for 24 173 5,222 5,419
the year
Released on - - - -
disposal
Exchange (194) (40) (29,995) (30,229)
difference
As at 31 19,550 4,193 241,162 264,905
October 2022
Net book
value
As at 31 26 296 13,447 13,769
October 2021
As at 31 2 107 13,775 13,884
October 2022
The holding Company held no tangible fixed assets at 31 October 2022 and 2021.
18. Inventories
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Raw materials 175,875 40,116 - -
Finished goods - 2,566 - -
Carrying value 175,875 42,682 - -
The Group's subsidiary Dynamic Intertrade (Pty) Ltd has entered into a funding
agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers
directly and this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over the
inventory and a cession of the debtors
19. Trade and other receivables
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Financial instruments
Trade receivables 256,824 257,332 - -
Deposits 14,360 2,028 - -
Other receivables 11,219 28,737 11,219 28,737
Non-financial instruments
Prepayments 126 9,703 - -
Carrying value 282,529 297,800 11,219 28,737
Current 282,529 297,800 11,219 28,737
Non-Current - - - -
282,529 297,800 11,219 28,737
The Group's subsidiary Dynamic Intertrade (Pty) Ltd has entered into a funding
agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers
directly and this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over the
inventory and a cession of the debtors
The receivables are considered to be held within a held-to-collect business
model consistent with the Group's continuing recognition of the receivables.
As at 31 October 2022 the Group does not have any contract assets nor any
contract liabilities arising out of contracts with customers relating to the
Group's right to receive consideration for agricultural products sold but not
billed. Group Trade receivables represent amounts receivable on the sale of
agricultural products and are included after provisions for doubtful debts.
Credit and market risks, and impairment losses
The Group did not impair any of its trade receivables as at 31 October 2022, as
all trade receivables generated during the financial year, and outstanding at 31
October 2022 are considered to be recoverable during the ordinary course of
business.
Information about the Group's exposure to credit and market risks and impairment
losses for trade receivables is included in Note 30.
The Directors consider that the carrying amount of trade receivables and other
receivables approximates their fair value.
20. Cash and Cash Equivalents
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Cash on hand 925,814 1,109,774 922,613 1,108,476
925,814 1,109,774 922,613 1,108,476
21. Trade and Other Payables
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Trade payables 582,180 1,274,105 160,585 981,000
Other payables - 153,515 - 132,694
Related party payables 42,202 40,879 - -
624,382 1,468,499 160,585 1,113,694
Trade payables represent amounts due for the purchase of agriculture materials
and administrative expenses. The Directors consider that the carrying amount of
trade payables approximates to their fair value.
Included in Other payables is a loan from G Roach: The loan bears interest at
the South African prime overdraft rate. The interest will be calculated and paid
when the loan is repaid. The loan is repayable as decided upon from time to
time.
The related party financial liabilities comprise:
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
M Bonner 25,357 24,562 - -
R Scott 16,845 16,317 - -
42,202 40,879 - -
Terms:
M Bonner: The loan bears interest at the South African prime overdraft rate. The
interest is calculated and paid quarterly. The loan is repayable as decided upon
from time to time.
R Scott: The loan bears interest at the South African prime overdraft rate. The
interest is calculated and paid quarterly. The loan is repayable as decided upon
from time to time.
22. Share Capital and Share Premium
Allotted, Number of shares Nominal value Share premium
Total
called
up and
fully
paid share
capital and
share
premium
£ £
£
Balance at 21,966,087 439,322
2,571,247 3,010,569
31
October
2020
Share issue
- -
- -
Balance at 21,966,087 439,322
2,571,247 3,010,569
31
October
2021
Share issue 3,823,627 76,473
76,473 152,946
on
settlement
of
debt
29 April
2022
Share issue 7,373,140 147,463
221,194 368,657
on
conversion
of
convertible
loan
notes 3
October
2022
Share issue 13,000,000 260,000
390,000 650,000
3
October
2022
Warrants
-218,799 -218,799
issued - -
during the
year
Balance at 46,162,854 923,258
3,040,115 3,963,373
31
October
2022
Share capital is the amount subscribed for shares at nominal value.
During the 2019 financial year the Company consolidated all existing and issued
shares and share options on the basis of 20 existing shares/options for 1 new
share/option.
Retained losses represent the cumulative loss of the Group attributable to
equity shareholders.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
During the prior year the Company placed these shares and as the number of
placing shares comprised more than 20% of the Company's issued share capital,
and although the placing shares has been allotted, admission of the placing
shares required publication of a Prospectus within a twelve-month period.
23. Share Based Payments Reserve
The Company does not have a share-ownership compensation scheme for senior
executives of the Company. However senior executives may be granted options to
purchase Ordinary Shares in the Company.
Warrants
During the 2019 financial year the Company consolidated all existing and issued
shares and share options on the basis of 20 existing shares/options for 1 new
share/option.
There are 38,363,171 warrants to subscribe for ordinary shares at 31 October
2022 (2021: 14,988,511).
Expired /
As at 1 exercised As at 31
/
Date of November vested / October Exercise Exercise/
Grant vesting
date
2021 issued 2022 price From To
Warrants
09/05/201 138,066 (138,066) - 20p 09/05/201 05/09/2022
2 2
27/11/201 8,050,000 8,050,000 20p 27/11/201 30/09/2024
8 8
24/07/202 4,233,556 (4,233,556) - 5p 24/07/202 27/07/2022
0 0
23/03/202 2,566,889 2,566,889 5p 23/03/202 23/03/2024
1 1
03/10/202 - 13,000,000 13,000,000 5p 03/10/202 31/12/2024
2 2
03/10/202 - 7,373,141 7,373,141 5p 03/10/202 31/12/2024
2 2
03/10/202 - 7,373,141 7,373,141 10p 03/10/202 31/12/2024
2 2
14,988,511 23,374,660 38,363,171
Warrants were attached to the convertible loan notes issued on 23 March 2021,
with an exercise price of 5.0p per ordinary share and expire 12 months from
allotment of the Subscription Shares. These warrants will only be issued once
the convertible loan notes are converted into shares.
Warrants were attached to the subscription shares on 24 July 2020 a 1-for-1
basis, with an exercise price of 5.0p per ordinary share and expire 12 months
from allotment of the subscription shares. Further warrants were attached to any
new ordinary shares that are issued as a result of conversion of any loan notes,
on a 1-for-1 basis on the same terms as the subscription warrants.
Warrants were attached to the Subscription Shares on 14 September 2018 a 1-for-1
basis, with an exercise price of 20.0p per ordinary share and expire 12 months
from allotment of the subscription shares. Further warrants were attached to any
new ordinary shares that are issued as a result of conversion of any loan notes,
on a 1-for-1 basis on the same terms as the subscription warrants. A maximum of
20,450,222 new ordinary shares could potentially be issued in the event that all
subscription warrants and loan note warrants are exercised.
An Investor has subscribed for 13,000,000 new ordinary shares in the Company at
a price of 5p per share, representing a capital injection of £650,000 (gross and
net) into the Company. The new ordinary shares will be accompanied by 1 for 1
warrants at 5p in the Company's ordinary shares, equating to 13,000,000 warrants
exercisable at any time before 31 December 2024.
The Company has agreed with 35% of the convertible loan note holders to
accelerate the conversion of 5,971,000 CLNs and accrued but unpaid interest into
7,373,141 New Ordinary Shares in the Company at a conversion price of 5p. As
such, the conversion of 5,971,000 CLNs plus accrued but unpaid interest resulted
in the issue of 7,373,141 5p Warrants and 7,373,141 10p Warrants, all of which
will expire on 31 December 2024.
The estimated fair value of the options in issue was calculated by applying the
Black-Scholes option pricing model.
The assumptions used in the calculation were as follows:
Share price at date of grant £0.0040
Exercise price £0.05 to £0.10
Expected volatility 49%
Expected dividend 0%
Contractual life 2.25 years
Risk free rate (based on 2 year UK Bond market) 4.00%
Estimated fair value of each option £0.002845 - £0.009710
Options
At 31 October 2022 there were nil share options issued to the directors and past
directors of the Company. During the current year nil share options were granted
(2021: 897,809).
The movement on the share-based payment charge for the year was £nil (2021 -
£nil) in respect of the issued options. The details of warrants and options are
as follows:
As at 1 Exercised / As at 31
Date of November vested / October Exercise Exercise/vesting date
Grant
2021 (forfeited) 2022 Price From To
Options
09/05/20 897,809 (897,809) - 20p 09/05/2012 05/09/2022
12
897,809 (897,809) -
The remuneration committee's aim is to remunerate executive directors
competitively and to reward performance. The remuneration committee determines
the Company's policy for the remuneration of executive directors, having regard
to the UK Corporate Governance Code and its provisions on directors'
remuneration.
The number of options outstanding to the Directors that served in the year, as
at 31 October 2022 were as follows:
2022 2021
Director Options Options
Andrew Monk - 191,952
Robert Scott - 50,000
Matthew Bonner - 180,000
Total - 421,952
The estimated fair value of the options in issue was calculated by applying the
Black-Scholes option pricing model.
The assumptions used in the calculation were as follows:
Share price at date of grant £0.0050
Exercise price £0.0075 to £0.01
Expected volatility 65%
Expected dividend 0%
Contractual life 1.1 years
Risk free rate 1.63%
Estimated fair value of each option £0.003764 - £0.0378
The share options outstanding at the year-end had a weighted average remaining
contractual life of nil years (2021: 0.5 years).
24. Non-controlling interests
Summarised financial information in respect of each of the Group's subsidiaries
that has material non-controlling interests is set out below. The summarised
financial information below represents amounts before intragroup eliminations.
2022 2021
Dynamic Intertrade (Pty) Ltd £ £
Current assets 450,386 313,043
Non-current assets 264,330 355,674
Current liabilities (522,082) (391,816)
Non-current liabilities (4,898,562) (4,066,056)
(4,705,928) (3,789,155)
Equity attributable to the owners of the company (4,705,928) (3,789,155)
Non-controlling interests - -
(4,705,928) (3,789,155)
2022 2021
Dynamic Intertrade (Pty) Ltd £ £
Revenue 1,698,839 1,404,234
Expenses 2,615,612 1,585,303
Loss for the year (916,773) (181,069)
Loss attributable to owners of the (916,773) (181,069)
Company
Loss attributable to the non - -
-controlling interests
Loss for the year (916,773) (181,069)
Other comprehensive income - -
attributable to owners of the
Company
Other comprehensive income - -
attributable to the non-controlling
interests
Other comprehensive income for the - -
year
Total comprehensive income (916,773) (181,069)
attributable to owners of the
Company
Total comprehensive income - -
attributable to the non-controlling
interests
Total comprehensive income for the (916,773) (181,069)
year
Net cash outflows from operating (786,055) (98,062)
activities
Net cash outflows from investing (4,415) (8,876)
activities
Net cash inflows from financing 792,436 87,906
activites
Net cash inflow / (outflow) 1,966 (19,032)
Further information about non-controlling interests is given in note 15.
2022 2021
£ £
Non-controlling interest
Balance at 1 November - -
Equity attributable to non-controlling interest (2,305,905)
on disposal of 49% of Dynamic
Share of profits for the year 522 -
Balance at 31 October (2,305,383) -
During the period under review the Company and VSA NEX Investments Limited ("VSA
NEX") entered into certain related party arrangements in relation to Dynamic
Intertrade (Pty) Ltd ("Dynamic"). VSA NEX was a 100% subsidiary of VSA Capital.
At the time the arrangements were entered into Andrew Monk was a director of the
Company, VSA Capital and VSA NEX and is deemed to have significant influence
over VSA Capital and VSA NEX. Pursuant to the arrangements, VSA NEX subscribed
for such number of new shares in the capital of Dynamic resulting in VSA NEX
holding 49% of the enlarged issued share capital of Dynamic for a consideration
of ZAR10,982; the Company agreed to assign certain debts owing by Dynamic,
amounting to £4.2 million which had been fully impaired in prior years, to the
Company and certain other parties to VSA NEX in consideration for VSA NEX paying
to the Company £100,001 and agreeing to fund Dynamic so as to enable Dynamic to
carry on its business in the ordinary course until such time as the Company
ceases to hold any further shares in Dynamic. This assignment agreement resulted
in VSA NEX having a non-controlling interest in Dynamic and as such its share of
the current year profits amounted to £522, its share of accumulated losses prior
to acquisition amounted to £2,305,905. Additionally, the assignment of the loans
resulted in the Group incurring a finance charge on consolidation of £3.1
million. VSA NEX has signed a subordination agreement in relation to the loans
due by Dynamic to VSA NEX with an expiry date of 31 October 2023. Should VSA NEX
choose to request the repayment of the loans due by Dynamic this will severely
impact the Company's ability to continue as a going concern. Under a put and
call option agreement the Company granted to VSA NEX the option to acquire
11,430 shares in Dynamic Intertrade, being the remaining 51% of Dynamic held by
the Company, subject to the satisfaction of certain conditions and subject to
certain time restrictions for £1.
25. Equity portion of convertible loan notes
During the 2021 financial year, on the 23[rd] of March 2021, the Company
converted £383,000 owed to the directors and a Company owned by a director for
7,660,000 convertible loan notes and, simultaneously, issued 4,400,000
convertible loan notes to the value of £220,000 for cash. During the current
financial year the Company extended the conversion date of the CLNs to 31
December 2024. The equity portion of the convertible loan notes is presented
below.
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Equity portion of
convertible loan
notes
issued during the 42,539 74,935 42,539 74,935
year (per note 26)
Carrying value 42,539 74,935 42,539 74,935
26. Convertible loan notes
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Convertible loan notes 710,274 778,065 710,274 778,065
Carrying value 710,274 778,065 710,274 778,065
The loan notes holder will be paid an annual interest rate of 12 per cent in
cash, semi-annually, with a term of 24 months. The loan notes will not be
admitted to trading on any exchange.
During the 2021 financial year, on the 23[rd] of March 2021, the Company
converted £383,000 owed to the directors and a Company owned by a director for
7,660,000 convertible loan notes and, simultaneously, issued 4,400,000
convertible loan notes to the value of £220,000 for cash.
During the 2020 financial year, as part of the subscription dated 24 July 2020,
3,333,333 additional share warrants were allocated to the capital portion of the
convertible loan notes and 750,000 additional share warrants were allocated to
the outstanding interest portion of the convertible loan notes, which at the
subscription date was £37,500.
The new ordinary shares issued as a result of conversion of all Loan Notes would
represent 17,060,000 ordinary shares, or 43.71 per cent of the issued share
capital of the Company, as enlarged by the 2018 Fundraising. On 14 September
2018 issued £250,000 of convertible loan notes for 50,000,000 loan notes of
0.50p (the "Loan Notes") with a conversion price of 0.75p (the "Conversion
Price"). The Subscription Price was at the last closing price of 0.50p per
ordinary share as at 13 September 2018. Further, the Conversion Price represents
a premium of 50.0 per cent to this same closing price. The Subscription included
the issue of 50,000,000 Convertible Loan Notes of 0.50p with a conversion price
of 0.75p which after the 20:1 share consolidation of 2018 resulted in there
being 2,500,000 Convertible Loan Notes of 10.0p with a conversion price of
15.0p.
If the Convertible Loan Notes were converted, up to 17,810,000 new Ordinary
Shares will be issued ("Loan Conversion Shares"). Further, Warrants will be
attached to any Loan Conversion Shares that are issued on a 1-for-1 basis on the
same terms as the Warrants attached to the New Ordinary Shares ("Loan Conversion
Warrants"). A maximum of 32,510,222 New Ordinary Shares could potentially be
issued in the event that all New Ordinary Shares Warrants and Loan Conversion
Warrants are exercised.
The fair value of the liability component, included in non-current liabilities,
is calculated using a market interest rate for an equivalent non-convertible
loan note at the date of issue. The residual amount, representing the value of
the equity conversion component, is included in shareholder's equity in Equity
portion of convertible loan notes (Note 25).
The carrying amount of the liability component of the convertible loan notes at
the balance sheet date are derived as follows:
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Liability component
at the beginning
of the financial 910,759 282,909 910,759 282,909
year
Face value of the
convertible loan
notes
issued on 23 March - 603,000 - 603,000
2021
Conversion of
convertible loan
notes to
shares on 3 (368,656) - (368,656) -
October 2022
Equity portion on 32,396 - 32,396 -
extension of
conversion
date
Equity conversion - (74,935) - (74,935)
component
Accumulated
amortisation of
interest
expense 135,775 99,785 135,775 99,785
Accumulated payments - - - -
of interest
Liability component
at the end of the
financial year 710,274 910,759 710,274 910,759
Current portion
included in current
liabilities - 132,694 - 132,694
Long term portion
included in long
term
liabilities 710,274 778,065 710,274 778,065
Liability component
at the end of the
financial year 710,274 910,759 710,274 910,759
As part of the of 3 October 2022 investment agreement, the Company has agreed
with the CLN holders to accelerate the conversion of 5,971,000 CLNs and accrued
but unpaid interest into 7,373,141 New Ordinary Shares in the Company at a
conversion price of 5p.
27. Borrowings
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Euro 2 Afrisko
Ltd
- Inventory 417,891 401,696 - -
financing
Onga Wari CRS
(PTY) LTD
- Inventory - 16,560 - -
financing
Working Capital
Partners
- Accounts 140,063 47,808 - -
receivable
financing
Loan from VSA 4,174,538 -
NEX Investments
Ltd
Carrying value 4,732,492 466,064 - -
The Group's subsidiary Dynamic Intertrade (Pty) Ltd has entered into a funding
agreement with Euro 2 Afrisko Ltd whereby Euro 2 Afrisko pay the suppliers
directly and this is then repaid by Dynamic to purchase stock from suppliers
where deposits are required. This funding is secured by a lien over the
inventory and a cession of the debtors.
The borrowings are secured by a security agreement from the Company. The loans
bear interest at 14% per annum.
During the period under review the Company and VSA NEX Investments Limited ("VSA
NEX") entered into certain related party arrangements in relation to Dynamic
Intertrade (Pty) Ltd ("Dynamic"). VSA NEX was a 100% subsidiary of VSA Capital.
At the time the arrangements were entered into Andrew Monk was a director of the
Company, VSA Capital and VSA NEX and is deemed to have significant influence
over VSA Capital and VSA NEX. Pursuant to the arrangements, VSA NEX subscribed
for such number of new shares in the capital of Dynamic resulting in VSA NEX
holding 49% of the enlarged issued share capital of Dynamic for a consideration
of ZAR10,982; the Company agreed to assign certain debts owing by Dynamic,
amounting to £4.2 million which had been fully impaired in prior years, to the
Company and certain other parties to VSA NEX in consideration for VSA NEX paying
to the Company £100,001 and agreeing to fund Dynamic so as to enable Dynamic to
carry on its business in the ordinary course until such time as the Company
ceases to hold any further shares in Dynamic. This assignment agreement resulted
in VSA NEX having a non-controlling interest in Dynamic and as such its share of
the current year profits amounted to £522, its share of accumulated losses prior
to acquisition amounted to £2,305,905. Additionally, the assignment of the loans
resulted in the Group incurring a finance charge on consolidation of £3.1
million. VSA NEX has signed a subordination agreement in relation to the loans
due by Dynamic to VSA NEX with an expiry date of 31 October 2023. Should VSA NEX
choose to request the repayment of the loans due by Dynamic this will severely
impact the Company's ability to continue as a going concern. Under a put and
call option agreement the Company granted to VSA NEX the option to acquire
11,430 shares in Dynamic Intertrade, being the remaining 51% of Dynamic held by
the Company, subject to the satisfaction of certain conditions and subject to
certain time restrictions for £1.
28. Leases
Right of use assets and lease liability
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Operating lease
commitments
disclosed as at 31 347,102 410,502 - -
October
Discounted using the
incremental
borrowing rate at date - - - -
of initial application
Additions to leases - - - -
during the year
Lease payments (73,233) (67,072) - -
Exchange difference (7,313) 3,672
Lease liability
recognised in the
statement of financial 266,556 347,102 - -
position
Of which:
Current lease 100,485 77,887 - -
liabilities
Non-current lease 166,070 269,215 - -
liabilities
266,555 347,102 - -
Right-of use assets were measured at the amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments relating to that
lease recognised in the statement of financial position as at 31 October 2019.
There were no onerous lease contracts that would have required an adjustment to
the right-of-use assets at the date of initial application. The recognised right
of-use assets relate to the following types of assets:
Group Group Company Company
Year ended Year ended Year ended Year ended
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Properties 250,446 341,905 - -
On the 3[rd] of March 2020 a new lease was signed for the Group's main trading
address, 104 Bofors Circle, Epping Industrial 2, Cape Town, South Africa with
commencement date of 1 July 2020. On the commencement date, the Group recognised
a lease liability and right-of-use asset of £430,973.
Impact on earnings per share
Depreciation on the right-of-use asset amounting to £73,233 (2021: £67,072) and
interest on the right-of-use lease liability of £25,995 (2021: £31,468) were
charged to the statement of profit and loss for the current year. As a result,
the earnings per share decreased by 0.005p.
29. Notes to the Statement of Cash Flows
Group Group Company Company
For the year For the year For the year For the year
ending ending ending ending
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Cash and cash 925,814 1,109,774 922,613 1,108,476
equivalents
Borrowings (4,732,492) (466,064) - -
Convertible (710,274) (910,759) (710,274) (910,759)
loan notes
Right of use (266,555) (347,102) - -
lease
liability
Net debt (4,783,507) (614,151) 212,339 197,717
Cash and 925,814 1,109,774 922,613 1,108,476
liquid
investments
Fixed rate (5,709,321) (1,723,925) (710,274) (910,759)
instruments
Net debt (4,783,507) (614,151) 212,339 395,434
Net Debt Reconciliation for the Group
Cash and Right of
use
cash Convertible lease Total
equivalents Borrowings loan notes liability debt
Net debt
£ £ £ £ £
£
Net debt as 45,251 (428,719) (250,000) (410,502) (1,089,221)
(1,043,970)
at 31
October 2020
Cash flows 1,064,699 (32,973) (220,000) 67,071 (185,902)
878,797
Non-cash - - (515,694) - (515,694)
(515,694)
transactions
Equity - - 74,935 - 74,935
74,935
portion of
convertible
loan
notes
Foreign (176) (4,372) - (3,671) (8,043)
(8,219)
exchange
adjustments
Net debt as 1,109,774 (466,064) (910,759) (347,102) (1,723,925)
(614,151)
at 31
October 2021
Cash flows (183,960) (1,134,015) - 73,233 (1,060,782)
(1,244,742)
Non-cash - (3,131,890) 200,485 - (2,931,405)
(2,931,405)
transactions
Foreign - - - 7,313 7,313
7,313
exchange
adjustments
Net debt as 925,814 (4,731,969) (710,274) (266,556) (5,708,799)
(4,782,985)
at 31
October 2022
The non-cash transactions of £3,131,890 relates to the finance charges incurred
by the Group on assignment of certain debts owed by Dynamic to VSA NEX.
Net Debt Reconciliation for the Company
Cash and Right of
use
cash Convertible lease Total
equivalents Borrowings loan notes liability debt Net
debt
£ £ £ £ £ £
Net debt as 25,624 - (250,000) - (250,000)
(224,376)
at 31
October 2020
Cash flows 1,082,852 - (703,298) - (703,298)
379,554
Non-cash - (383,000) (383,000)
(383,000)
transactions
Equity 42,539 - 42,539
42,539
portion of
convertible
loan
notes
Foreign - - - - -
-
exchange
adjustments
Net debt as 1,108,476 - (910,759) - (910,759)
197,717
at 31
October 2021
Cash flows (185,863) - - - -
(185,863)
Non-cash - 200,485 200,485
200,485
transactions
Foreign - - - - -
-
exchange
adjustments
Net debt as 922,613 - (710,274) - (710,274)
212,339
at 31
October 2022
30. Financial Instruments - Fair values and risk management
The following table shows the carrying amounts and fair values of financial
assets and financial liabilities, including their levels in the fair value
hierarchy. It does not include fair value information for financial assets and
financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value.
Trade and other receivables and trade and other payables classified as held-for
-sale are not included in the table below. As at 31 October 2021 the Group did
not have any trade and other receivables nor any trade and other payables that
were classified as held-for-sale.
The Group has not disclosed the fair values of financial instruments such as
short-term trade receivables and payables, because their carrying amounts are a
reasonable approximation of their fair value.
Carrying Fair
value value
Group as at Note FVOCI - Financial Other Total Level
Level Level Total
31 October equity assets financial 1
2 3
2022 instruments at liabilities
amortised
cost
£ £ £ £ £
£ £ £
Financial
assets
measured at
fair value
Investment 6,154 - - 6,154 -
- 6,154 6,154
in
associate
Loan - - - - -
- - -
receivable
6,154 - - 6,154
Financial
assets not
measured at
fair value
Trade and - 271,184 - 271,184
other
receivables
Cash and - 925,814 - 925,814
cash
equivalents
- 1,196,998 - 1,196,998
Financial
liabilities
measured at
fair value
- - - -
- - - -
Financial
liabilities
not
measured
at fair
value
Lease - - (266,555) (266,555)
Liability
Unsecured - - (4,732,492) (4,732,492)
borrowings
Convertible - - (710,274) (710,274)
loan notes
Trade and - - (624,382) (624,382)
other
payables
- - (6,333,703) (6,333,703)
Carrying Fair
value value
Group as at Note FVOCI - Financial Other Total Level
Level Level Total
31 October equity assets financial 1
2 3
2021 instruments at liabilities
amortised
cost
£ £ £ £ £
£ £ £
Financial
assets
measured at
fair value
Investment 6,154 - - 6,154 -
- 6,154 6,154
in
associate
Loan - - - - -
- - -
receivable
6,154 - - 6,154
Financial
assets not
measured at
fair value
Trade and - 259,360 - 259,360
other
receivables
Cash and - 1,109,774 - 1,109,774
cash
equivalents
- 1,369,134 - 1,369,134
Financial
liabilities
measured at
fair value
- - - -
- - - -
Financial
liabilities
not
measured
at fair
value
Lease - - (347,102) (347,102)
Liability
Unsecured - - (466,064) (466,064)
borrowings
Convertible - - (778,065) (778,065)
loan notes
Trade and - - (1,468,499) (1,468,499)
other
payables
- - (3,059,730) (3,059,730)
Carrying Fair
value value
Company as Note FVOCI - Financial Other Total Level
Level Level Total
at equity assets financial 1
2 3
31 October instruments at liabilities
2022 amortised
cost
£ £ £ £ £
£ £ £
Financial
assets
measured at
fair value
Investment 6,154 - - 6,154 -
- 6,154 6,154
in
associate
Loan - - - - -
- - -
receivable
6,154 - - 6,154
Financial
assets not
measured at
fair value
Intercompany - - - -
loans
receivable
Trade and - - - -
other
receivables
Cash and - 922,613 - 922,613
cash
equivalents
- 922,613 - 922,613
Financial
liabilities
measured at
fair value
Loans - - (4,174,538) (4,174,538)
payable
to VSA NEX
- - (4,174,538) (4,174,538)
Financial
liabilities
not measured
at fair
value
Lease - - - -
Liability
Unsecured - - (557,954) (557,954)
borrowings
Convertible - - (710,274) (710,274)
loan notes
Trade and - - (160,585) (160,585)
other
payables
- - (1,428,813) (1,428,813)
Carrying Fair
value value
Company as Note FVOCI - Financial Other Total Level
Level Level Total
at equity assets financial 1
2 3
31 October instruments at liabilities
2021 amortised
cost
£ £ £ £ £
£ £ £
Financial
assets
measured at
fair value
Investment 6,154 - - 6,154 -
- 6,154 6,154
in
associate
Loan - - - - -
- - -
receivable
6,154 - - 6,154
Financial
assets not
measured at
fair value
Intercompany - - - -
loans
receivable
Trade and - - - -
other
receivables
Cash and - 1,108,476 - 1,108,476
cash
equivalents
- 1,108,476 - 1,108,476
Financial
liabilities
measured at
fair value
Loans - - - -
payable
to VSA NEX
- - - -
Financial
liabilities
not measured
at fair
value
Lease - - - -
Liability
Unsecured - - (466,064) (466,064)
borrowings
Convertible - - (778,065) (778,065)
loan notes
Trade and - - (1,113,694) (1,113,694)
other
payables
- - (2,357,823) (2,357,823)
Financial instruments - Fair values and risk management
B. Measurement of fair values
i. Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 3
fair values for financial instruments measured at fair value in the statement of
financial position, as well as the significant unobservable inputs used. Related
valuation processes are described in Note 3.
Financial instruments measured at fair value
Type Valuation Significant Inter-relationship between significant
technique unobservable unobservable inputs and fair value
inputs measurement
Investment The value None None
in of the
Associate investment
is
adjusted
annually
based upon
the
group's
share of
the
associates
profit or
loss.
ii. Transfers between Levels 1 and 2
There were no transfers between Levels 1 and 2 in either the current financial
year or in the prior financial year.
C. Financial Risk Management
The Group has exposure to the following risks arising from financial
instruments:
· credit risk;
· liquidity and cash flow risk; and
· market risk.
Risk management framework
The Company's Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the
risks faced by the Group, to set appropriate risk limits and controls and to
monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group's
activities.
The Group's audit committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by the Group. The
Group's audit committee undertake ad hoc reviews of risk management controls and
procedures, the results of which are reported to the audit committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual obligations
and arises principally from the Group's receivables from customers and
investments in debt securities.
The carrying amounts of financial assets represent the maximum credit exposure.
There was no impairment loss in the current year nor in the prior year.
Trade receivables
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. However, management also considers the factors
that may influence the credit risk of its customer base, including the default
risk associated with the industry and country in which its customers operate.
Details of concentration of revenue are included in Note 6.
The Group has established a credit policy under which each new customer is
analysed individually for creditworthiness before the Group's standard payment
terms and conditions are offered. The Group's review includes external ratings,
if they are available, financial statements, credit agency information, industry
information and in some cases bank references. Sales limits are established for
each customer and are reviewed regularly.
The Group limits its exposure to credit risk from trade receivables by
establishing a maximum payment period of one month.
The Group does not require collateral in respect of trade and other receivables.
The Group does not have trade receivables for which a no allowance is recognised
because of collateral.
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
As at 31 October the exposure to credit
risk for trade receivables by geographic
region was follows:
South Africa 256,824 257,332 - -
Other - - - -
256,824 257,332 - -
As at 31 October the exposure to credit
risk for trade receivables by
counterparty was follows:
Other - - - -
- - - -
As at 31 October the exposure to credit
risk for trade receivables by credit
rating was follows:
External credit ratings - - - -
Other 256,824 257,332 - -
256,824 257,332 - -
Expected credit loss assessment for corporate customers as at 31 October 2022
and 31 October 2021
The Group allocates each exposure to a credit risk grade based on data that is
determined to be predictive of the risk of loss (including but not limited to
external ratings, audited financial statements, management accounts and cash
flow projections and available press information about customers) and applying
experienced credit judgement. Credit risk grades are defined using qualitative
and quantitative factors that are indicative of the risk of default.
The Company had no exposure to credit risk for the year ended 31 October 2021.
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables
during the year amounted to nil.
Cash and cash equivalents
As at 31 October 2022, the Group held £925,814 in cash and cash equivalents
(2021: £1,109,774) and had a bank overdraft of £nil. The cash and cash
equivalents are held with bank and financial institution counterparties which
are rated Baa3 to A1+ by Moody's.
Impairment on cash and cash equivalents has been measured on a 12-month expected
loss basis and reflects the short maturities of the exposures. The Group
considers that its cash and cash equivalents have low credit risk based on the
external credit ratings of the counterparties. On the implementation of IFRS 9
the Group did not impair any of its cash and cash equivalents.
Liquidity and cash flow risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to
the Group's reputation.
Exposure to liquidity and cash flow risk
The following tables present the remaining contractual maturities of financial
liabilities at the reporting date. The amounts are gross and undiscounted and
include contractual interest payments and exclude the impact of netting
agreements.
Contractual
cash flows
Group as at Carrying Total 2 Months 2 to 12 1 to 2 2 to
5 More than 5
31 October value or less Months Years
Years years
2022
£ £ £ £ £ £
£
Non-
derivative
financial
liabilities
Bank - - - - -
- -
overdrafts
Unsecured
shareholders'
loans (VSA (4,174,538) (4,174,538) - - -
- (4,174,538)
NEX)
Convertible
loan
notes (710,274) (710,274) - - (710,274)
- -
Secured loans (557,954) (557,954) - (557,954) -
- -
Right-of-use
finance
lease (266,555) (307,998) (17,634) (89,933) (112,945)
(87,486) -
Trade (582,180) (582,180) (582,180) - -
- -
payables
Other - - - - -
- -
payables
Related party
payables (42,202) (42,202) - (42,202) -
- -
(6,333,703) (6,375,146) (599,814) (690,089) (823,219)
(87,486) (4,174,538)
Derivative
financial
liabilities - - - - -
- -
- - - - -
- -
As noted elsewhere the loan subordination agreement expires on 31 October 2023
but the loan does not have a fixed contract date. If Dynamic Intertrade stays
within the group, the directors expect the loans to be repayable greater than 5
years.
Contractual
cash flows
Group as at Carrying Total 2 Months or 2 to 12 1 to 2 2
to 5 More
31 October value less Months Years
Years than 5
2021
years
£ £ £ £ £
£ £
Non-
derivative
financial
liabilities
Bank - - - - -
- -
overdrafts
Unsecured
shareholders'
loans (VSA - - - - -
- -
NEX)
Convertible
loan
notes (778,065) (778,065) - - (778,065)
- -
Secured loans (466,064) (466,064) - (466,064) -
- -
Right-of-use
finance
lease (347,102) (410,502) (10,446) (56,031) (77,196)
(266,829) -
Trade (1,274,105) (1,274,105) (1,274,105) - -
- -
payables
Other (153,515) (153,515) - (153,515) -
- -
payables
Related party
payables (40,879) (40,879) - (40,879) -
- -
(3,059,730) (3,123,130) (1,284,551) (716,489) (855,261)
(266,829) -
Derivative
financial
liabilities - - - - -
- -
- - - - -
- -
Contractual
cash flows
Company as at Carrying Total 2 Months 2 to 12 1 to 2 2 to 5
More
31 October value or less Months Years Years than
5
2022
years
£ £ £ £ £ £ £
Non-
derivative
financial
liabilities
Bank - - - - - -
-
overdrafts
Unsecured
shareholders'
loans - - - - - -
-
Convertible
loan
notes (710,274) (710,274) - - (710,274) -
-
Secured loans - - - - - -
-
Right-of-use
finance
lease - - - - - -
-
Trade (160,585) (160,585) (160,585) - - -
-
payables
Other - - - - - -
-
payables
Related party
payables - - - - - -
-
(870,859) (870,859) (160,585) - (710,274) -
-
Derivative
financial
liabilities - - - - - -
-
- - - - - -
-
Contractual
cash flows
Company as at Carrying Total 2 Months 2 to 12 1 to 2 2 to
More
31 October value or less Months Years 5
than
2021 Years
5
years
£ £ £ £ £ £
£
Non-
derivative
financial
liabilities
Bank - - - - - -
-
overdrafts
Unsecured
shareholders'
loans - - - - - -
-
Convertible
loan
notes (778,065) (778,065) - - (778,065) -
-
Secured loans - - - - - -
-
Right-of-use
finance
lease - - - - - -
-
Trade (981,000) (981,000) (981,000) - - -
-
payables
Other (132,694) (132,694) - (132,694) - -
-
payables
Related party
payables - - - - - -
-
(1,891,759) (1,891,759) (981,000) (132,694) (778,065) -
-
Derivative
financial
liabilities - - - - - -
-
- - - - - -
-
The interest payments on the financial liabilities represent the fixed interest
rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash equivalents and other
highly marketable debt investments at an amount in excess of expected cash
outflows on financial liabilities other than trade payables. The Group also
monitors the level of expected cash inflows on trade and other receivables
together with expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices - such as foreign exchange
rates, interest rates and equity prices - will affect the Group's income or the
value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise.
The carrying amounts of the Group's foreign currency denominated monetary assets
and monetary liabilities at the reporting date are as follows:
Exposure to currency risk
The summary quantitative data about the Group's exposure to currency risk as
reported to the management of the Group is as follows:
Group Foreign 31 October 2022 31 October 2021
exchange
risk GBP ZAR GBP ZAR
Trade and
other
receivables - 5,708,637 - 5,605,406
Cash and cash 922,613 67,345 1,108,476 27,042
equivalents
Unsecured
shareholders'
loans - (87,836,461) - -
Secured loans - (11,739,909) - (9,709,568)
Convertible (710,274) - (778,065) -
loan notes
Right-of-use - (5,608,577) - (7,231,199)
finance lease
Trade (160,587) (9,758,757) (1,113,694) (8,771,247)
payables
Net statement
of financial
position 51,752 (109,167,723) (783,283) (20,079,566)
exposure
Next 6 months
sales
forecast 1,434,073 30,816,695 - 14,750,700
Next 6 months
purchases
forecast (1,231,550) (26,464,641) (131,337) (10,763,660)
Net forecast
transaction
exposure 202,523 4,352,054 (85,642) 5,014,204
Net exposure 254,275 (104,815,669) (868,925) (15,065,362)
Company Foreign 31 October 2022 31 October 2021
exchange risk GBP ZAR GBP ZAR
Trade and other
receivables - - - -
Cash and cash equivalents 922,613 - 1,108,476 -
Unsecured shareholders'
loans - - - -
Secured loans - - - -
Convertible loan notes (710,274) - (778,065) -
Right-of-use finance lease - - - -
Trade payables (160,587) - (1,113,694) -
Net statement of financial
position exposure 51,752 - (783,283) -
Next 6 months sales
forecast - - - -
Next 6 months purchases
forecast (1,231,550) - (85,642) -
Net forecast transaction
exposure (1,231,550) - (85,642) -
Net exposure (1,179,798) - (868,925) -
The following significant exchange rates in relation to the reporting currency
are applicable:
Average for the year Year end spot rate
2022 2021 2022 2021
United States Dollar ($) 1.2610 1.3747 1.1469 1.3683
South African Rand (ZAR) 20.5000 20.2550 21.0410 20.8331
The presentation currency of the Group is British Pound Sterling.
The Group is exposed primarily to movements in USD and ZAR, the currency in
which the Group receives most of its funding, against other currencies in which
the Group incurs liabilities and expenditure.
Sensitivity analysis
Financial instruments affected by foreign currency risk include cash and cash
equivalents, trade other receivables and trade and other payables. The following
analysis, required by IFRS 7 Financial Instruments: Disclosures, is intended to
illustrate the sensitivity of the Group's financial instruments (at year end) to
changes in market variables, being exchange rates.
The following assumptions were made in calculating the sensitivity analysis:
· all income statement sensitivities also impact equity; and
· translation of foreign subsidiaries and operations into the Group's
presentation currency have been excluded from this sensitivity as they have no
monetary effect on the results.
Income Statement / Equity
2022 2022 2021 2021
+10% -10% +10% -10%
Base currency of British Pound Sterling:
- United States Dollar ($) 0.1147 (0.1147) 0.1368 (0.1368)
- South African Rand (ZAR) 2.1041 (2.1041) 2.0833 (2.0833)
The above sensitivities are calculated with reference to a single moment in time
and will change due to a number of factors including:
· fluctuating other receivable and trade payable balances;
· fluctuating cash balances; and
· changes in currency mix.
Interest rate risk
The Group has entered into fixed rate agreements for its finance leases and
shareholders loans. The Group does not hedge its interest rate exposure by
entering into variable interest rate swaps.
Exposure to interest rate risk
The interest rate profile of the Group's interest-bearing financial instruments
as reported to the management of the Group is as per the table below.
Group Group Company Company
2022 2021 2022 2021
Fixed rate instruments
Financial assets - - - -
Financial liabilities (5,608,836) (1,513,344) (710,274) (778,065)
Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets of financial
liabilities at FVTPL. Therefore, a change in interest rates at the reporting
date would not affect profit or loss.
Other market price risk
The Group is exposed to equity price risk, which arises from equity securities
at FVOCI are held as a long-term investment.
The Group's investments in equity securities comprise small shareholdings in
unlisted companies. The shares are not readily tradable and any monetisation of
the shares is dependent on finding a willing buyer.
Valuation techniques and assumptions applied for the purposes of measuring fair
value
The fair value of cash and receivables and liabilities approximates the carrying
values disclosed in the financial statements.
Capital management
The Group manages its capital resources to ensure that entities in the Group
will be able to continue as a going concern, while maximising shareholder
return.
The capital structure of the Group consists of equity attributable to
shareholders, comprising issued share capital and reserves. The availability of
new capital will depend on many factors including a positive operating
environment, positive stock market conditions, the Group's track record, and the
experience of management. There are no externally imposed capital requirements.
The Directors are confident that adequate cash resources exist or will be made
available to finance operations but controls over expenditure are carefully
managed.
31. Related Party Transactions
Directors' fees
Andrew Monk, a non-executive director of the Company, is a director of VSA
Capital Limited and that Company provided services amounting to £36,000 (2021:
£57,384) to the Company during the year.
During the year ended 31 October 2022 £35,923 was paid to Directors of the
Company (2021: £46,966). At the year-end a total of £33,587 (2021: £62,126) was
outstanding in respect of directors' emoluments.
Other related party transactions
Included in trade and other payables are the following related party financial
liabilities:
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
M Bonner 25,357 24,562 - -
R Scott 16,845 16,317 - -
42,202 40,879 - -
Terms:
M Bonner and R Scott: The loan bears interest at the South African prime
overdraft rate. The interest will be calculated and paid when the loan is
repaid. The loan is repayable as decided upon from time to time.
Outstanding director's salaries and related party transactions
Included in trade and other payables are the following outstanding directors'
salaries and fees payable to related parties for other services:
Group Group Company Company
As at As at As at As at
31 October 31 October 31 October 31 October
2022 2021 2022 2021
£ £ £ £
Company controlled by a former director:
VSA Capital 46,587 227,082 46,587 356,934
Included in the amount due to VSA Capital are director's salaries owed to A.
Monk
Directors' salaries outstanding
- A. Monk (resigned) 10,587 37,126 10,587
31,266
- M. Bonner (resigned) 11,000 12,000 11,000
42,000
- D. Lenigas (resigned) - 5,000 -
49,000
- R. Scott 12,000 8,000 12,000
37,000
33,587 62,126 33,587
159,266
Arrangements with VSA NEX Investments Limited
During the period under review the Company and VSA NEX Investments Limited ("VSA
NEX") entered into certain related party arrangements in relation to Dynamic
Intertrade (Pty) Ltd ("Dynamic") as outlined below. VSA NEX is a 100% subsidiary
of VSA Capital. At the time the arrangements were entered into Andrew Monk was a
director of the Company, VSA Capital and VSA NEX and is deemed to have
significant influence over VSA Capital and VSA NEX.
Disposal of 49% equity interest in Dynamic to VSA NEX
VSA NEX subscribed for such number of new shares in the capital of Dynamic
resulting in VSA NEX holding 49% of the enlarged issued share capital of Dynamic
for a consideration of ZAR10,982 and therefore became a significant shareholder
in Dynamic representing the non-controlling interest disclosed in the group
financial statements;
Put and call option for VSA Nex to acquire remaining 51% of Dynamic
At the same time a put and call option agreement was entered into with the
Company granting to VSA NEX the option to acquire 11,430 shares in Dynamic
Intertrade, which represents the remaining 51% equity interest currently owned
by the Company. This is subject to the satisfaction of certain conditions and a
time restrictions of 31 December 2023 for a consideration of £1.
Disposal of group loans in Dynamic from the Company to VSA Nex and entry into a
loan subordination agreement
Simultaneously with the above subscription and to allow the equity in Dynamic to
be issued to VSA NEX, the Company agreed to assign certain debts owing by
Dynamic, amounting to £ 4.2 million which had been fully impaired in prior
years, to the Company and certain other parties to VSA NEX in consideration for
VSA NEX paying to the Company £100,001 and agreeing to fund Dynamic so as to
enable Dynamic to carry on its business in the ordinary course until such time
as the Company ceases to hold any further shares in Dynamic. This assignment
agreement resulted in VSA NEX having a non-controlling interest in Dynamic and
as such its share of the current year profits amounted to £522, its share of
accumulated losses prior to acquisition amounted to £2,305,905.
Additionally, the assignment of the loans resulted in the Group incurring a
finance charge on consolidation of
£3.1 million. VSA NEX has signed a subordination agreement in relation to the
loans due by Dynamic to VSA NEX with an expiry date of 31 October 2023. Should
VSA NEX choose to request the repayment of the loans due by Dynamic this will
severely impact the Company's ability to continue as a going concern.
32. Controlling Party Note
There is no single controlling party. Significant shareholders are listed in the
Directors Report and Business Review.
33. Events Subsequent to 31 October 2022
Subsequent to year end the Company appointed a new auditor as disclosed
previously in this report.
On 24 January 2023, the Company announced the subscription (the "Subscription")
for 12,726,000 new Ordinary Shares the Company raised net proceeds totalling
£699,930 at 5.5 pence per share representing a premium of 119 per cent to the
closing price of 2.51 pence on 20 January 2023, being the business day prior to
agreement of the subscription.
On 24 January 2023 the convertible loan note holder converted £300,000 of its
debt to 6,000,000 new ordinary shares. In addition, the Company issued an
additional 12,726,000 new ordinary shares to two new shareholders for an
investment of £699,930 in February 2023.
On the 4[th] of July 2023, the Company entered into an agreement to provide a
loan to Precious Link (UK) Limited ("Precious Link"), a wine retailer,
incorporated and registered in England and Wales, located within the Southeast
of England. The loan is for a sum of £200,000, is unsecured and attracts
interest at 10 per cent. per annum payable monthly in arrears. The loan is
repayable on demand by the Company and is repayable on 5 business days' notice
from Precious Link.
On the 20[th] of July 2023, the Company sold its 46.8% equity stake in Dynamic
Intertrade Agriculture (Pty) Ltd ("DIA"). As such, the investment has been held
in the balance sheet of the Group as an asset held for sale since that decision
was made. The Company announced that it has now reached agreement with Athena
Trading Worldwide Limited, a private company, for the sale of its 46.8% stake in
DIA, for a consideration of £15,384.62, payable in cash on completion The
contractual completion date is 31 July 2023.
This information was brought to you by Cision http://news.cision.com
END
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