Anglo African
Agriculture plc
(“AAAP” or the
“Company”)
DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 OCTOBER 2019
Company Registration No. 07913053
(England and Wales)
Overview
The results today do not reflect the overall direction that AAA
is heading in. It has been known over the last few years that AAA
could operationally improve Dynamic Intertrade, despite this,
Dynamic Intertrade on its own could not sustain a Plc listing. In
order to diversify its revenue stream, 18 months ago in 2018, AAA
announced a $1 million loan to
Comarco Group and the subsequent intended acquisition of Comarco
Group by means of a Reverse Takeover. During 2019, a large amount
of work was expended to finalise the acquisition. AAA has assisted
the management team of Comarco Group to re-organise and prepare
themselves to have suitable controls and processes for a listed
Company having been a family owned business for 38 years. This
included the valuations of all Comarco Group assets, audited review
of all the financial accounts and the preparation and publication
of a Share Registration Document in anticipation of the
finalisation of the transaction and the associated equity
fundraise.
A combination of macroeconomic uncertainty resulting from the UK
General Election and Brexit as well as institutional capital flight
from the small cap market resulting from the demise of Woodford
Investment Management together created difficult capital market
conditions to raise the capital required to complete the RTO.
During the course of marketing Comarco Group globally, significant
interest was raised from major Private Equity firms and Strategic
Port operators. Conversations are currently underway and I am
pleased on the ongoing progress. The impact of such a structure
would mean less dilution for AAA shareholders and yet still provide
material exposure to the growth of the port and marine logistic
businesses.
However, this does mean that the transaction will follow a
different structure than originally anticipated and will require
further time for due diligence to be conducted by the interested
parties but to re-iterate, I believe ultimately, the future
of AAA is aligned to the Comarco Group. AAA and the management of
Comarco Group continue to believe that a listing is strategically
important and also wishes to deliver the value of the Port and its
associated operations to the AAA shareholders. The intention is
thus to simultaneously continue with the originally intended
acquisition by way of a traditional public equity raise but also
consider expanded structures where private equity or strategic
investors may invest in the Comarco Group assets at an asset level
alongside AAA.
The transaction long stop date was initially 31 December 2019, however AAA and Comarco Group
have agreed to extend the long stop date to 31 March 2020 and this demonstrates the
commitment from both sides to work together to consummate this
alignment. During the course of AAA’s assistance to Comarco Group,
the Comarco Port has achieved a major milestone of being gazetted
which is the authorisation by the Kenyan Port Authority to import
and export goods that it previously did not have the authority for.
In Mozambique, a world class
Liquefied Natural Gas project has at long last been initiated and
the project has an exceptionally strong necessity for barges and
landing craft. Project mobilization has started to take place and
the large scale on-shore and off-shore construction work should
provide a huge boost to the marine logistics revenue of Comarco
Group for the coming 10 years.
As we stand today, AAA’s primary operations and source of
revenue remains Dynamic Intertrade, our Cape Town based spice trader.. The objectives
of the past financial year remained focussed on value-added
products and the expanded market opportunities that arose, in
conjunction with targeted approaches to specific major food
manufacturers who would be able to provide long term stability for
our product lines. Group turnover for the year improved by 4.3% in
Pound Sterling (8.2% in local currency). Group operating losses
reduced from £558,417 in 2018 to £271,339 for the current year.
This has been achieved despite a very difficult economy in
South Africa.
The primary contributors to the group loss for 2019 were the
transaction fees associated with the Comarco Group transaction,
which amounted to £224,798 for the year, this is an investment for
the future of AAA.
George Roach resigned during the
course of the year. I would like to thank George for his service to
AAA. I would also like to take this opportunity to thank our
shareholders, directors, staff and consultants and customers for
their continued support.
David Lenigas
Non-Executive Chairman
Directors and Advisors
Directors:
David Lenigas
Robert Scott
Andrew Monk
Matthew Bonner
Secretary:
Stephen Clow
Company
Number:
07913053
Registered
Address:
New Liverpool House
15-17 Eldon Street
London
EC2M 7LD
Head
Office
New Liverpool House
15-17 Eldon Street
London
EC2M 7LD
Financial Advisor and
Broker
VSA Capital Limited
New Liverpool House
15-17 Eldon Street
London
EC2M 7LD
Auditors
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Solicitors to the Company
Keystone Law
48 Chancery Lane
London
WC2A 1JF
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands
B62 8HD
Overview
The primary objective of the strategic report is to provide
information for the shareholders and 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.
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'.
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 both the domestic and export markets.
Dynamic recorded an increase in top line revenue of 4.34% to
£1.8 million (2018: a decrease of 18% to £1.7 million) This
increase was partly due to a general price increase to our
customers for our core spice lines of commodity paprika and
chilli-based products as well as our value-added blended
products.
Gross profits decreased by 3.41% to £598,894 (2018: increase of
19.8% to £620,048) (ZAR10,95 million
(2018: ZAR10,93 million)) and
represents a 32.9% gross margin (2018: 35.6%) mainly as a result of
an exchange rate that averaged ZAR18.28: £1.00 for the year (2018: ZAR17.68: £1.00) together with increased economic
and market pressures that the South African economy faces.
Underlying losses for the year decreased to £271,339 (2018:
£558,417). This was primarily due to cost cutting initiatives
implemented in prior years in both the Dynamic Intertrade and the
holding company. Admission and regulatory expenses of £249,798
(2018: £276,306) were incurred during the year. These charges
primarily related to the Comarco transaction.
During the year, as part of the Comarco transaction, the company
consolidated its issued share capital on a 20:1 basis, whereby
every 20 shares held were consolidated into 1 new share. Basic and
diluted loss per share from continuing operations for the year was
(1.94p).
Financing
During the year, the company consolidated the number of shares
in issue on the basis of 20 existing shares for 1 new share. No new
convertible loan notes were issued. There were no other changes to
the capital structure of the holding company.
During the course of the year Dynamic Intertrade signed
agreements for new working capital loans. This was done as their
existing funders decided to wind their lending down. The new
facility is R2.5m larger than the old facility and should give it
the opportunity to increase its stock holding holding and improve
working capital management.
Acquisition Strategy
The Directors’ strategy is to develop the business of the Group
both organically and by acquisition. It is intended that the
Company completes the Comarco Group acquisition before embarking on
any other future acquisitions.
Key Performance Indicators
|
|
|
31
October |
31
October |
|
|
|
2019 |
2018 |
|
|
|
£ |
£ |
Turnover |
|
|
1,819,552 |
1,743,772 |
Gross Profit |
|
|
598,894 |
620,048 |
Cash on hand and in
bank |
|
|
5,218 |
945,823 |
Underlying operating
loss |
|
|
(271,467) |
(558,416) |
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 complete the Comarco transaction and 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 sector is a highly competitive market 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 agricultural 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 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.
The marine industry in east Africa has proved to be quite cyclical and
although there appears to be an improvement in the prospects it is
possible that the cycle could turn negative.
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 wholly owned subsidiary, Dynamic Intertrade operates a Food
Safety System Certification (“FSSC”) compliant facility in
Cape Town. The FSSC provides a
framework for effectively managing the organization's food safety
responsibilities and is fully recognized by the Global Food Safety
Initiative (GFSI) 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 AAA
and Dynamic and believe that Dynamic has adequate resources
available to meet its obligations to make capital repayments of the
loan to AAA.
If Dynamics’ trading performance is below that forecast, AAA
will exercise a degree of flexibility on the repayment timetable.
With the Dynamic turnover increasing and the Group forecasting
profitability there is no requirement for any impairment
charge.
x.
Liquidity Risk
The Directors have reviewed the working capital requirements of
AAA, Dynamic Intertrade and DIA and believe that, following stress
tests and variance analysis on the forecasts, there is sufficient
working capital to fund the business while expanding turnover and
achieving sustainable profitability. The directors further
highlight the inherent uncertainties involved in making the
assessment that the entity is a going concern.
xi.Market Risk
The group’s investments in an associate company comprise a
non-controlling shareholding in an unlisted company. The shares are
not readily tradable, and any monetisation of the shares is
dependent on finding a willing buyer.
xii.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.
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 improve its operations during
the year under review.
During the year, the Group raised no additional equity funding.
In the prior year the group raised £935,374 in gross funding
through share subscriptions to fund working capital and in the
latter part of the previous year, as announced, to fund a loan to
Comarco.
The Directors have prepared cash flow forecasts for the period
ended 28 February 2021, considering
forecast operating cash flows and capital expenditure requirements
for the Company and Dynamic Intertrade, available working capital
and forecast expenditure for the rest of the Group including
overheads and other costs. The forecasts include additional funding
requirements which the directors believe will be met.
If Dynamic Intertrade fails to meet revenue predictions and any
other relevant risk factors arise, the Group will need to obtain
additional debt finance or equity to fund its operations for the
period to 28 February 2021. The cash
flow forecast is dependent on production targets being met at
Dynamic Intertrade, maintaining the invoice financing arrangements,
generating future sales and the selling prices remaining stable
during the period to 28 February
2021.
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 28 February 2021 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.
On behalf of the Board
David Lenigas, Chairman
The Directors present their Report and Financial Statements for
the year ended 31 October 2019.
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. As a result, it is impractical to determine the carbon
emissions with any degree of accuracy.
Investing Policy
AAA 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
products.
Directors
The following Directors have held office in the year:
David Lenigas
Andrew Monk
George Roach (resigned
29 August 2019)
Robert Scott
Matthew Bonner
David Lenigas, Non-Executive
Chairman
David Lenigas is an experienced
executive and entrepreneur with a wide range of board experience in
both public and private companies. He has an extensive
knowledge of the African food manufacturing, processing and
marketing sector having previously served as the Executive Chairman
of Lonrho Plc and is currently the Executive Chairman of food
logistics and marketing group AfriAg Global Plc.
Andrew
Monk, Non- Executive Director
Andrew has a successful stock broking career spanning 33 years.
In that time, he has built up strong relationships with many major
UK institutions. He was employed by Hoare Govett ABN AMRO for 11
years before founding Oriel Securities as Joint CEO. Andrew later
became CEO of Blue Oar Plc, and Chief Executive of VSA Capital, an
investment banking and institutional broking firm.
Robert
Scott, Executive Director
Rob has over 20 years of finance experience, with the last ten
years specifically focused in Africa within the mining industry and general
investments. He has held executive and senior positions with
several companies, as well as having served on both public and
private company boards. He has been involved in companies with
locations in South Africa,
Angola, Mozambique, Zimbabwe, DRC, CAR, Tanzania, Kenya and Namibia amongst others. Rob has also
previously been involved in mining, hotels, agriculture and
construction industries.
Matthew
Bonner, Non-Executive Director
Matthew Bonner has significant
financial leadership experience within the mining, energy and
agriculture sectors. He is currently Chief Operating Officer at EAS
Advisors LLC, a New York based
corporate advisory firm focused on supporting public and private
companies operating in the natural resource and commodity sectors
in emerging markets.
Directors’ remuneration, shareholding
and options
The Directors’ remuneration in the year ended 31 October 2019 is set out in note 8 of the
accounts.
Shareholding
As at 17 February 2020, the
Directors of the Company held the following shares:
Shareholding |
|
|
|
|
|
2019 |
2019 |
2018 |
2018 |
Director |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
George Roach
(resigned)* |
1,687,567 |
8.7% |
33,751,333 |
8.7% |
David Lenigas |
1,119,400 |
5.8% |
22,388,000 |
5.8% |
Andrew Monk** |
606,338 |
3.1% |
12,126,761 |
3.1% |
Robert Scott |
84,654 |
0.4% |
1,693,078 |
0.4% |
Matthew Bonner |
37,331 |
0.2% |
746,629 |
0.2% |
* 814,432 of these shares are held by or on
behalf of Corestar Holdings Ltd and 250,000 of these shares are
held by or on behalf of Coc’Roach Limited. Corestar Holdings Ltd is
a BVI company which is wholly-owned by the Corestar Trust, a trust
established for the furtherance of certain purposes which could
include the provision of benefits to George
Roach and his family, at the discretion of the trustees of
the trust. Coc’roach Limited is owned by the Coc’roach Trust. The
Coc’roach Trust is a partial discretionary trust pursuant to the
terms of which George Roach and his
family may fall within the class of potential
beneficiaries.
** Andrew Monk’s entire shareholding is held within his SIPP
(Fitel Nominees Limited) and Hargreave Hale Limited
Share options
As at 17 February 2020 the
Directors share options were:
|
2019 |
2019 |
2018 |
2018 |
|
Options
at 20p |
Options
@ 11p |
Options
at 1p |
Options
@ 0.55p |
Director |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
George Roach
(resigned) |
91,952 |
100,000 |
1,839,046 |
2,000,000 |
Andrew Monk |
91,952 |
100,000 |
1,839,046 |
2,000,000 |
Robert Scott |
50,000 |
- |
1,000,000 |
- |
Matthew Bonner |
180,000 |
- |
3,600,000 |
- |
Total |
413,904 |
200,000 |
8,278,092 |
4,000,000 |
The total warrants and share options outstanding at 31 October 2019 were 9,235,875 (2018 –
184,717,514). Refer to note 25 for more detail.
Dividends
No dividends will be distributed for the current year (2018 -
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 issued Ordinary Shares of the Company
as at 31 October 2019:
|
2019 |
2019 |
2018 |
2018 |
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
|
|
|
|
|
Lynchwood Nominees
Limited |
5,468,567 |
28.2% |
- |
- |
Vidacos Nominees
Limited |
1,540,448 |
7.9% |
- |
- |
Pershing Nominees
Limited |
1,526,172 |
7.9% |
25,000,000 |
6.4% |
HSBC Global Custody
Nominee |
1,469,403 |
7.6% |
22,388,060 |
5.8% |
Mike Joseph |
- |
- |
100,000,000 |
25.8% |
JIM Nominees
Limited |
1,081,196 |
5.6% |
20,774,839 |
5.4% |
Interactive Investor
Services Nominees Limited |
925,058 |
4.8% |
- |
- |
CGWL Nominees
Limited |
756,338 |
3.9% |
- |
- |
Hargreaves Lansdown
(Nominees) Limited |
691,716 |
3.6% |
- |
- |
Barclays Direct
Investing Nominees Limited |
639,447 |
3.3% |
- |
- |
Hargreave Hale
Nominees Limited |
- |
- |
15,126,761 |
3.9% |
The Group has been informed of the following shareholdings that
represent 3% or more of the issued Ordinary Shares of the Company
as at 17 February 2020:
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
Lynchwood Nominees
Limited |
5,468,567 |
28.2% |
Vidacos Nominees
Limited |
1,532,671 |
7.9% |
Pershing Nominees
Limited |
1,526,172 |
7.9% |
HSBC Global Custody
Nominee (Uk) Limited |
1,469,403 |
7.6% |
JIM Nominees
Limited |
1,082,397 |
5.6% |
Interactive Investor
Services Nominees Limited |
885,201 |
4.6% |
Barclays Direct
Investing Nominees Limited |
779,480 |
4.0% |
CGWL Nominees
Limited |
756,338 |
3.9% |
Hargreaves Lansdown
(Nominees) Limited |
683,202 |
3.5% |
Auditors
Jeffreys Henry LLP has expressed its willingness to continue in
office and a resolution to reappoint them will be proposed at the
Annual General Meeting.
Post Balance Sheet Events
Further information on events after the reporting date is set
out in note 32.
The Directors’ have chosen to produce a Strategic Report that
discloses a fair review of the Group’s business, the key
performances metrics that the Directors review along with a review
of the key risks to the business.
Strategic Report
In accordance with Section 414C (1) 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 on page 6 to 10.
On Behalf of the Board
David Lenigas, Chairman
Remuneration Committee
The remuneration committee consists of Andrew Monk and George
Roach, prior to his resignation on 29
August 2019. 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.
The committee is also responsible for administering any share
option schemes. The table indicates share options held by the
current directors, directors of the subsidiary and former directors
of the company.
|
2019 |
2019 |
2018 |
2018 |
Director |
Warrants |
Options |
Warrants |
Options |
George Roach |
- |
191,952 |
- |
3,839,046 |
Andrew Monk |
- |
191,952 |
- |
3,839,046 |
Robert Scott |
- |
50,000 |
- |
1,000,000 |
Mark Nielsen |
- |
- |
- |
3,000,000 |
Matthew Bonner |
- |
180,000 |
- |
3,600,000 |
Totals |
- |
613,904 |
- |
15,278,092 |
The above options have been consolidated on the basis of 1 new
option for 20 existing options in line with the share
consolidation.
The Company has one executive director.
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 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 |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
David Lenigas |
12,000 |
12,000 |
12,000 |
12,000 |
George Roach
(resigned) |
10,000 |
12,000 |
10,000 |
12,000 |
Robert Scott |
12,000 |
12,000 |
12,000 |
12,000 |
Andrew Monk * |
13,896 |
13,696 |
13,896 |
13,696 |
Matt Bonner |
12,000 |
12,000 |
12,000 |
12,000 |
|
59,896 |
61,696 |
59,896 |
61,696 |
* Included in Andrew Monk’s remuneration is £1,896 for National
Insurance.
No pension contributions were made by the company on behalf of
its directors.
At the year-end a total of £158,006 (2018: £98,110) was
outstanding in respect of directors’ emoluments.
Statement of Comprehensive Income
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
Revenue from
Contracts with Customers |
6 |
1,819,552 |
1,743,772 |
- |
- |
|
|
|
|
|
|
Cost of Sales |
|
(1,220,658) |
(1,123,724) |
- |
- |
|
|
|
|
|
|
Gross Profit |
|
598,894 |
620,048 |
- |
- |
|
|
|
|
|
|
Other Income |
7 |
848 |
54 |
- |
- |
Share of profit/(loss)
of associate |
|
- |
6,933 |
- |
6,933 |
Administrative
expenses |
10 |
(621,411) |
(909,145) |
(178,778) |
(250,629) |
Admission
expenses |
10 |
(249,798) |
(276,306) |
(249,798) |
(276,306) |
|
|
|
|
|
|
Operating
loss |
|
(271,467) |
(558,416) |
(428,576) |
(520,002) |
|
|
|
|
|
|
Finance costs |
11 |
(114,034) |
(14,958) |
(30,000) |
(3,863) |
Finance income |
12 |
100,836 |
- |
111,807 |
- |
|
|
|
|
|
|
Loss for the year from
continuing operations |
|
(284,665) |
(573,374) |
(346,769) |
(523,865) |
Tax on loss on
ordinary activities |
13 |
- |
- |
- |
- |
|
|
|
|
|
|
Loss for the year
from continuing operations |
|
(284,665) |
(573,374) |
(346,769) |
(523,865) |
|
|
|
|
|
|
Other Comprehensive
Income impairment of investment in associate |
15 |
(90,825) |
- |
(90,825) |
- |
|
|
|
|
|
|
Total comprehensive
loss for the year from continuing operations |
|
(375,490) |
(573,374) |
(437,594) |
(523,865) |
|
|
|
|
|
|
Loss attributable
to ordinary shareholders |
|
(284,665) |
(573,374) |
(346,769) |
(523,865) |
|
|
|
|
|
|
Total comprehensive
loss attributable to ordinary shareholders |
|
(375,490) |
(573,374) |
(437,594) |
(523,865) |
|
|
|
|
|
|
Basic and diluted
earnings per share |
14 |
(1.47p) |
(0.26p) |
|
|
All amounts relate to continuing operations.
Company Statement of Changes in
Equity
Group |
Share
Capital |
Share
Premium |
Share
Based Payments Reserve |
Retained Earnings |
Total
Equity |
|
£ |
£ |
£ |
£ |
£ |
Balance at 1
November 2017 |
206,984 |
1,765,535 |
16,445 |
(1,847,545) |
141,419 |
Share Issue |
181,000 |
754,374 |
- |
- |
935,374 |
Share based payments
reserve |
- |
- |
66,932 |
- |
66,932 |
Loss for the year |
- |
- |
- |
(573,374) |
(573,374) |
Balance at 31
October 2018 |
387,984 |
2,519,909 |
83,377 |
(2,420,919) |
570,351 |
Loss for the year |
- |
- |
- |
(284,665) |
(284,665) |
Other comprehensive
loss |
- |
- |
- |
(90,825) |
(90,825) |
Balance at 31
October 2019 |
387,984 |
2,519,909 |
83,377 |
(2,796,409) |
194,861 |
|
|
|
|
|
|
Share capital is the amount subscribed for shares at nominal
value.
The share premium has arisen on the issue of shares at a premium
to their nominal value.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group
attributable to equity shareholders.
Company |
Share
Capital |
Share
Premium |
Share
Based Payments Reserve |
Retained Earnings |
Total
Equity |
|
£ |
£ |
£ |
£ |
£ |
Balance at 1
November 2017 |
206,984 |
1,765,535 |
16,445 |
(887,763) |
1,101,201 |
Share based payments
reserve |
- |
- |
66,932 |
- |
66,932 |
Share Issue |
181,000 |
754,374 |
- |
- |
935,374 |
Loss for the year |
- |
- |
- |
(523,865) |
(523,865) |
Balance at 31
October 2018 |
387,984 |
2,519,909 |
83,377 |
(1,411,628) |
1,579,642 |
Loss for the year |
- |
- |
- |
(346,769) |
(346,769) |
Other comprehensive
loss |
- |
- |
- |
(90,825) |
(90,825) |
Balance at 31
October 2019 |
387,984 |
2,519,909 |
83,377 |
(1,849,222) |
1,142,048 |
Statement of Financial Position
|
|
Group |
Group |
Company |
Company |
|
Notes |
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Assets |
|
|
|
|
|
Non-Current
Assets |
|
|
|
|
|
Investment in
Subsidiaries |
15 |
- |
- |
297,915 |
297,915 |
Investment in
Associate |
15 |
- |
96,979 |
- |
96,979 |
Long Term Intercompany
Loans |
16 |
- |
- |
842,437 |
831,338 |
Property, Plant and
Equipment |
17 |
30,838 |
53,555 |
- |
- |
Goodwill |
18 |
226,644 |
226,644 |
- |
- |
Loan receivable |
19 |
871,579 |
- |
871,579 |
- |
Total
Non-Current Assets |
|
1,129,061 |
377,178 |
2,011,931 |
1,226,232 |
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
Investment in
Associate
(held for sale) |
15 |
6,154 |
- |
6,154 |
- |
Inventories |
20 |
67,359 |
118,978 |
- |
- |
Trade and Other
Receivables |
21 |
422,775 |
468,679 |
25,662 |
41,915 |
Cash and Cash
Equivalents |
22 |
5,218 |
945,823 |
4,383 |
944,094 |
Total Current
Assets |
|
501,506 |
1,533,480 |
36,199 |
986,009 |
|
|
|
|
|
|
Total
Assets |
|
1,630,567 |
1,910,658 |
2,048,130 |
2,212,241 |
|
|
|
|
|
|
Equity and
Liabilities |
|
|
|
|
|
Share Capital |
24 |
387,984 |
387,984 |
387,984 |
387,984 |
Share Premium
Account |
24 |
2,519,909 |
2,519,909 |
2,519,909 |
2,519,909 |
Share-Based Payments
Reserve |
25 |
83,377 |
83,377 |
83,377 |
83,377 |
Retained Earnings |
|
(2,796,409) |
(2,420,919) |
(1,849,222) |
(1,411,628) |
Total
Equity |
|
194,861 |
570,351 |
1,142,048 |
1,579,642 |
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
|
Borrowings |
26 |
363,091 |
91,898 |
10,000 |
- |
Convertible Loan
Notes |
27 |
250,000 |
253,863 |
250,000 |
253,863 |
Total Non-Current
Liabilities |
|
613,091 |
345,761 |
260,000 |
253,863 |
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
Trade and Other
Payables |
23 |
822,615 |
994,546 |
646,082 |
378,736 |
Total Current
Liabilities |
|
822,615 |
994,546 |
646,082 |
378,736 |
|
|
|
|
|
|
Total Equity and
Liabilities |
|
1,630,567 |
1,910,658 |
2,048,130 |
2,212,241 |
|
|
|
|
|
|
Approved by the Board and authorised for issue on 27 February 2020.
Statement of Cash Flow
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Cash flows from
operating activities |
|
|
|
|
|
Operating loss |
|
(271,467) |
(558,416) |
(428,576) |
(520,002) |
Add: Depreciation |
17 |
24,245 |
48,993 |
- |
- |
Add: Foreign exchange
movements |
17 |
830 |
14,347 |
- |
- |
Add: Share Based
Payments Reserve |
|
- |
66,932 |
- |
66,932 |
Add: (Profit)/loss on
disposal of property, plant and equipment |
|
(128) |
32,194 |
- |
- |
Add: (Loss) from
equity accounted investment |
|
- |
(6,933) |
- |
(6,933) |
Finance costs |
|
(114,034) |
(14,958) |
(30,000) |
- |
Interest received |
|
100,836 |
1 |
111,807 |
- |
Changes in working
capital |
|
|
|
|
|
Decrease in
inventories |
|
51,619 |
84,804 |
- |
- |
(Increase) / decrease
in receivables |
|
45,904 |
(88,264) |
16,253 |
(23,445) |
(Decrease) / increase
in payables |
|
(175,794) |
22,848 |
263,483 |
234,133 |
Net cash flow from
operating activities |
|
(337,989) |
(398,452) |
(67,033) |
(249,315) |
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
Acquisition of
property, plant and equipment |
17 |
(2,411) |
(8,949) |
- |
- |
Disposal of property,
plant and equipment |
17 |
181 |
- |
- |
- |
Increase in
Intercompany Loans Receivable |
|
- |
- |
(11,099) |
(36,499) |
Loans Receivable
advanced |
19 |
(871,579) |
- |
(871,579) |
- |
Net cash flow from
investing activities |
|
(873,809) |
(8,949) |
(882,678) |
(36,499) |
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Net proceeds from
issue of shares |
|
- |
935,374 |
- |
935,374 |
Convertible loan notes
issued |
27 |
- |
250,000 |
- |
250,000 |
Increase in
borrowings |
|
271,193 |
91,898 |
10,000 |
1,235 |
Net cash flow from
financing activities |
|
271,193 |
1,277,272 |
10,000 |
1,186,609 |
|
|
|
|
|
|
Net cash flow for
the period |
|
(940,605) |
869,871 |
(939,711) |
900,795 |
Opening Cash and cash
equivalents |
|
945,823 |
75,952 |
944,094 |
43,299 |
Closing Cash and
cash equivalents |
|
5,218 |
945,823 |
4,383 |
944,094 |
|
|
|
|
|
|
|
|
|
|
|
|
General Information
Anglo African Agriculture plc is a company incorporated in the
United Kingdom. Details of the
registered office, the officers and advisors to the Company are
presented on the Directors and Advisors page at the beginning of
this report. The Company has a standard listing on the London Stock
Exchange main market. The information within these financial
statements and accompanying notes have been prepared for the year
ended 31 October 2019 with
comparatives for the year ended 31 October
2018.
1.Changes in significant accounting
policies
The Group has initially applied IFRS 15 (see 2.a below) and IFRS
9 (see 2.b below) from 1 January
2018. A number of other new standards are also effective
from 1 January 2018, but they do not
have a material effect on the Group’s financial statements.
Due to the transition methods chosen by the Group in applying
these standards, comparative information throughout these financial
statements has not been restated to reflect the requirements of the
new standards. There is no effect of initially applying these
standards.
a. IFRS 15 Revenue
from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. It replaces
existing revenue recognition guidance, including IAS 18 Revenue,
IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty
Programmes. Under IFRS 15, revenue will be recognised when a
customer obtains control of the goods. Determining the timing of
the transfer of control, at a point in time or over time, requires
judgement.
The Group has adopted IFRS 15 using the cumulative effect method
(without practical expedients), with the effect of initially
applying this standard recognised at the date of initial
application (i.e. 1 January 2018).
Accordingly, the information presented for 2018 has not been
restated, i.e. it is presented as previously reported under IAS 18,
IAS 11 and related interpretations. Additionally, the disclosure
requirements in IFRS 15 have been applied to the comparative
information.
Sales of goods
For the sale of goods, revenue was previously recognised when
the goods are delivered to the customers’ premises, which is taken
to be the point in time at which the customer accepts the goods and
the related risks and rewards of ownership transfer. Revenue was
recognised at this point provided that the revenue and costs can be
measured reliably, the recovery of the consideration is probable
and there is no continuing management involvement with the
goods.
Under IFRS 15, revenue will be recognised when a customer
obtains control of the goods, which for the sale of goods is when
the goods is delivered to the customer’s premises. Accordingly
there is no impact of IFRS 15 on the prior year figures, as all
contracts are concluded once the customer takes delivery of the
products sold.
IFRS 15 had no impact on the consolidated statements of
financial position nor the consolidated statement of profit and
loss and other comprehensive income for the year ended 31 October 2018 or 31
October 2019.
IFRS 15 requires additional disclosure in terms of the sources
of revenue as follows:
|
|
|
2018 |
2017 |
|
|
|
£ |
£ |
Major
product/service lines |
|
|
|
|
Sale of goods |
|
|
1,743,772 |
2,126,797 |
Total
revenue |
|
|
1,743,772 |
2,126,797 |
|
|
|
|
|
Primary
Geographical Markets |
|
|
|
|
Africa |
|
|
1,743,772 |
2,126,797 |
|
|
|
1,743,772 |
2,126,797 |
Timing of revenue
recognition |
|
|
|
|
Products transferred
at a point in time |
|
|
1,743,772 |
2,126,797 |
|
|
|
1,743,772 |
2,126,797 |
Sale of goods: Under IAS 18, revenue was recognised when
the significant risks and rewards of ownership had been transferred
to the customer, recovery of the consideration was probable, the
associated costs and possible return of goods could be estimated
reliably, there was no continuing management involvement with
the goods and the amount of revenue could be measured reliably.
Revenue was measured net of returns, trade discounts and volume
rebates. The timing of the transfer of risks and rewards varied
depending on the individual terms of the sales agreement.
b. IFRS 9 Financial
Instruments
IFRS 9 sets out requirements for recognising and measuring
financial assets, financial liabilities and some contracts to buy
or sell non-financial items. This standard replaces IAS 39
Financial Instruments: Recognition and Measurement.
As a result of the adoption of IFRS 9, the Group has adopted
consequential amendments to IAS 1 Presentation of Financial
Statements, which require impairment of financial assets to be
presented in a separate line item in the statement of profit or
loss and other comprehensive income. Previously, the Group’s
approach was to include the impairment of trade receivables in
other expenses. Impairment losses on other financial assets are
presented under “finance costs”, similar to the presentation under
IAS 39, and not presented separately in the statement of profit or
loss and other comprehensive income due to materiality
considerations.
Additionally, the Group has adopted consequential amendments to
IFRS 7 Financial Instruments: Disclosures that are applied to
disclosures about 2018 but have not been generally applied to
comparative information.
- Classification and measurement of financial assets and
financial liabilities
IFRS 9 contains three principle classifications of financial
assets, namely 1) measured at amortised costs; 2) Fair value
through other comprehensive income (FVOCI) and 3) fair value
through profit and loss (FVTPL). The classification of financial
assets under IFRS 9 is generally based on the business model in
which a financial asset is managed and its contractual cash flow
characteristics. IFRS 9 eliminates the previous IAS 39 categories
of held-to-maturity, loans and receivables and available-for-sale.
Under IFRS 9 derivatives embedded in contracts where the host is a
financial asset in the scope of the standard are never separated.
Instead, the financial instrument as a whole is assessed for
classification.
IFRS 9 largely retains the existing requirements in IAS 39 for
the classification and measurement of financial liabilities.
The adoption of IFRS 9 has not had a significant effect on the
Group’s accounting policies related to financial liabilities and
derivative financial instruments. The adoption by the Group of IFRS
9 did not require any changes to the amount or classification of
any financial instruments.
For an explanation of how the Group classifies and measures
financial instruments and accounts for related gains and losses
under IFRS 9, see Note 29.
The Group did not restate the carrying amounts of any financial
assets or financial liabilities on 1
November 2017.
ii.
Impairment of financial assets
IFRS 9 replaces the “incurred loss” model in IAS 39 with an
“expected credit loss (ECL)” model. The new impairment model
applies to financial assets measured at amortised cost, contract
assets and debt investments at FVOCI, but not to investments in
equity instruments. Under IFRS 9, credit losses are recognised
earlier than under IAS 39, see Note 29.
For assets in the scope of the IFRS 9 impairment model,
impairment losses are generally expected to increase and become
more volatile. The Group has determined that the application of
IFRS 9’s impairment requirements at 1
November 2018 results in no additional impairment.
2.Basis of Preparation and Significant
Accounting Policies
The consolidated financial statements of Anglo African
Agriculture plc have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS as adopted by the EU), 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.
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 4. This is the first set of the
Group’s financial statements in which IFRS 15 Revenue from
Contracts with Customers and IFRS 9 Financial Instruments have been
applied. Changes to significant accounting policies are described
in Note 2 above. 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.
During the year, the Group raised £nil in gross funding through
share subscriptions. In 2018, £1,055,000 was raised through share
subscriptions to fund working capital and in the latter part of the
prior year, as announced, to fund a loan to Comarco.
There remains an active and liquid market for the Group’s
shares.
As at 31 October 2019 the Group
held £5,218 (2018: £945,823) in cash and cash equivalents.
The Directors have prepared cash flow forecasts for the period
ended 28 February 2021, considering
forecast operating cash flows and capital expenditure requirements
for Dynamic Intertrade, available working capital and forecast
expenditure for the rest of the Group including overheads and other
costs. The forecasts include additional funding requirements,
which the directors believe will be met.
In the event that Dynamic Intertrade fails to meet revenue
predictions and any other relevant risk factors arise, the Group
will need to obtain additional debt finance or equity to fund its
operations for the period to 28 February
2021. The cash flow forecast is dependent on production
targets being met at Dynamic Intertrade, maintaining the invoice
financing arrangements, generating future sales and the selling
prices remaining stable during the period to 28 February 2021.
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 28 February 2021 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.
b. New and Amended Standards Adopted
by the Company
There are no IFRS and IFRIC interpretations that are effective
for the first time for the financial year beginning on or after
1 November 2019 that would be
expected to have a material impact on the Group.
Standards, Interpretations and
Amendments to Published Standards which Are Not
Yet Effective
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 November
2019 and have not been early adopted:
Reference |
Title |
Summary |
Application date of
standard (Periods commencing on or after) |
IFRS 16 |
Leases |
Original Issue |
1
November 2019 |
IFRS 17 |
Insurance
Contracts |
Establishes principles
for the recognition, measurement, presentation and disclosure of
insurance contracts issued. |
1 November 2021 |
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.
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 IAS 39 “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 AAA’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. AAA’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. Investments in
Subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
f.
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.
g. Impairment
Policy applicable after 1 November
2018
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 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 months 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 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.
h. Financial
Instruments
The Group classifies non-derivative financial assets into the
following categories: loans and receivables and FVTPL and 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 IAS 39. 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.
i.
Borrowings
Borrowings are presented as current liabilities unless the Group
has an unconditional right to defer settlement for at least 12
months after the balance sheet date, 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 balance sheet date are
included in current borrowings in the balance sheet 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 balance sheet date and before the
financial statements are authorised for issue.
j. Revenue
Recognition
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a
contract with a customer. The Group recognises revenue when it
transfers control over of goods or services to a customer.
The following table provides information about the nature and
timing of the satisfaction of performance obligations in contracts
with customers, including significant payment terms, and the
related revenue recognition policies.
Type of product/ service |
Nature and timing of satisfaction of
performance obligations, including significant payment
terms |
Revenue recognition under IFRS 15 (applicable
from 1 November 2018) |
Sale of goods |
Customers obtain
control of the goods when the goods have been delivered top them
and have been accepted at their premises or the agreed point of
delivery. Invoices are generated at that point in time net of
rebates and discounts. Invoices are generally payable within 30
days. No settlement discounts are provided for.
The sale of the goods are not subject to a return policy. |
Revenue is recognised when the goods
are delivered and have been accepted by the customers at their
premises or the agreed point of delivery. |
Interest revenue |
Interest income is recognised in the
income statement for all interest-bearing instruments
(whether classified as held-to-maturity, FVTOCI, FVTPL, derivatives
or other assets) on an accrual basis using the
effective interest method based on
the actual purchase price including
direct transaction costs. |
Once a financial asset has been
written down to its estimated recoverable amount, interest income
is thereafter recognised based on the effective interest rate that
was used to discount the future cash flows for the purpose of
measuring the recoverable amount. |
k. 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.
l. Finance
Income and Finance Costs
The Group’s finance income and finance costs include:
•
Interest income;
•
Interest expense;
•
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.
m. 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.
n. 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.
o. 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.
p. 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.
q. 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 into the presentation currency of the
Group (i.e. South African Rand) 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
2019 |
Year End Rate
2018 |
South African Rand |
19.53 |
18.66 |
US Dollar |
1.29 |
1.28 |
r. Finance
Leases
Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation.
Lease payments are treated as a reduction of the lease obligation
on the remaining balance of the liability.
Finance expenses are recognised immediately in profit or loss,
unless they are directly attributable to qualifying assets, in
which case they are capitalised. Contingent rentals are recognised
as expenses in the years in which they are incurred.
s. Operating
Leases
Where the Group has the use of assets held under operating
leases, payment made under the leases are charged to profit or loss
over the accounting years covered by the lease term except where an
alternative basis is more representative of the pattern of benefits
to be derived from the leased asset. Lease incentives received are
recognised in profit or loss as an integral part of the aggregate
net lease payments made. Contingent rentals are charged to profit
or loss in the accounting years in which they are incurred.
t. 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.
u. 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
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.
c. 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.
d. 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.
e. Depreciation and
Amortisation
The Group depreciates property, plant and equipment and
amortises the leasehold land 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 |
|
|
For
the year |
For
the year |
|
|
ending |
ending |
|
|
31
October |
31
October |
|
|
2019 |
2018 |
|
|
£ |
£ |
|
|
|
|
Major
product/service lines |
|
|
|
Sale of agricultural
materials |
|
1,819,552 |
1,743,772 |
|
|
|
|
Primary geographic
markets |
|
|
|
South Africa |
|
1,819,552 |
1,743,772 |
|
|
|
|
Timing of revenue
recognition |
|
|
|
Products transferred
at a point in time |
|
1,819,552 |
1,743,772 |
6.Other Income
|
|
Group |
Group |
|
|
For
the year |
For
the year |
|
|
ending |
ending |
|
|
31
October |
31
October |
|
|
2019 |
2018 |
|
|
£ |
£ |
|
|
|
|
Sundry income |
|
720 |
54 |
Profit on disposal of
Property Plant and Equipment |
|
128 |
- |
|
|
848 |
54 |
Other Income represents the bad debts recovered and sundry
income.
7.Personnel Expenses and Staff Numbers
(Including Directors)
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
Number |
|
31
October |
31
October |
31
October |
31
October |
|
|
2019 |
2018 |
2019 |
2018 |
The average number of
employees in the year were: |
|
|
|
|
|
Directors |
|
5 |
5 |
5 |
5 |
Management |
|
2 |
3 |
- |
- |
Accounts and Administration |
|
2 |
2 |
- |
- |
Sales |
|
3 |
3 |
- |
- |
Manufacturing/Warehouse |
|
13 |
18 |
- |
- |
Total |
|
25 |
31 |
5 |
5 |
|
|
£ |
£ |
£ |
£ |
The aggregate payroll
costs for these |
|
|
|
|
|
persons were: |
|
321,365 |
332,596 |
68,183 |
61,696 |
Average ratio of
executive pay verses average employee pay |
|
0.71 |
0.78 |
|
|
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
Fees |
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
David Lenigas |
|
12,000 |
12,000 |
12,000 |
12,000 |
George Roach |
|
10,000 |
12,000 |
10,000 |
12,000 |
Robert Scott |
|
12,000 |
12,000 |
12,000 |
12,000 |
Andrew Monk * |
|
13,896 |
13,696 |
13,896 |
13,696 |
Matt Bonner |
|
12,000 |
12,000 |
12,000 |
12,000 |
|
|
59,896 |
61,696 |
59,896 |
61,696 |
* Included in Andrew Monk’s remuneration is £1,896 for National
Insurance.
No pension contributions were made by the Company on behalf of
its directors.
At the year-end a total of £158,006 (2018: £98,110) was
outstanding in respect of directors’ emoluments.
9.Expenses - Analysis by Nature
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
Auditor's
remuneration for audit services: Parent |
11,000 |
11,000 |
11,000 |
11,000 |
Auditor's
remuneration for other services: Parent |
16,500 |
7,050 |
16,500 |
7,050 |
Auditor's
remuneration for audit services: Subsidiary |
3,016 |
3,373 |
- |
- |
Brokership fees |
|
20,115 |
31,200 |
20,116 |
31,200 |
Legal and professional
fees |
|
13,099 |
12,145 |
12,842 |
9,338 |
Registrar fees |
|
15,946 |
13,659 |
15,947 |
13,659 |
Depreciation on
property, plant and equipment |
|
24,245 |
48,993 |
- |
- |
(Gain) /loss on
exchange |
|
(128,675) |
12,190 |
2 |
- |
Personnel expenses
(Note 8) |
|
321,365 |
332,596 |
59,896 |
61,696 |
Share based
payments |
|
- |
66,932 |
- |
66,932 |
Other administrative
expenses |
|
324,800 |
370,007 |
42,475 |
49,754 |
Subtotal |
|
621,411 |
909,145 |
178,778 |
250,629 |
Admission and
regulatory expenses |
|
249,798 |
276,306 |
249,798 |
276,306 |
Profit from Associated
entity |
|
- |
(6,933) |
- |
(6,933) |
Total administrative
expenses |
|
871,209 |
1,178,518 |
428,576 |
520,002 |
|
|
|
|
|
|
10.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 |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Interest paid on
borrowings |
|
84,034 |
11,095 |
- |
- |
Interest
accrued on Convertible Loan Notes |
30,000 |
3,863 |
30,000 |
3,863 |
|
|
114,034 |
14,958 |
30,000 |
3,863 |
Finance costs represent interest and charges in respect of the
discounting of invoices and the interest accrual for the
Convertible Loan Notes issued.
11.Finance Income
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Interest earned on
loan receivable |
|
100,708 |
- |
100,708 |
- |
Interest earned on
intercompany loan receiveable |
|
- |
- |
11,099 |
- |
Interest earned on
favourable bank balances |
|
128 |
- |
- |
- |
|
|
100,836 |
- |
111,807 |
- |
12.Taxation
The charge for the year can be reconciled to the profit before
taxation per the consolidated statement of comprehensive income as
follows:
|
|
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 |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Tax Charge |
|
- |
- |
- |
- |
Factors affecting the
tax charge |
|
|
|
|
|
Loss on
ordinary activities before taxation |
(284,665) |
(573,374) |
(346,769) |
(523,865) |
Loss on
ordinary activities before taxation multiplied by standard rate of
UK corporation tax of 19.00% (2018: 19.00%) |
(54,086) |
(108,941) |
(65,886) |
(99,534) |
Tax effect
of expense not deductible for tax |
- |
- |
- |
68,169 |
Overseas
tax rate differences from the UK rate (26%) |
8,471 |
17,483 |
- |
- |
Tax effect of
utilisation of tax losses |
|
45,615 |
91,458 |
65,886 |
31,365 |
Tax Charge |
|
- |
- |
- |
- |
|
|
|
|
|
|
The Company has excess management expenses of £507,518 (2018 -
£392,764) available for carry forward against future trading
profits. The deferred tax asset in these tax losses at 17.0% of
£86,278 (2018 -19.00%, £74,625) has not been recognised due to the
uncertainty of recovery.
13.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 |
|
2019 |
2018 |
|
£ |
£ |
Loss after tax |
(284,665) |
(573,374) |
Weighted average
number of ordinary shares in issue |
19,399,198 |
220,465,924 |
Basic and diluted loss
per share (pence) |
(1.47p) |
(0.26p) |
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 2019 there were 19,399,198 (31 October 2018 - 197,094,655) outstanding share
warrants and 1,074,809 (2018 – 20,956,184) outstanding options,
both are potentially dilutive.
14.Investments
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Investment in
Subsidiary |
- |
- |
297,915 |
297,915 |
Equity accounted
profit for the period |
6,154 |
96,979 |
6,154 |
96,979 |
Carrying value |
6,154 |
96,979 |
304,069 |
394,894 |
15.1. Investment in Associate
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Investment in Dynamic
Intertrade Agri (Pty) Ltd |
96,979 |
90,046 |
96,979 |
90,046 |
Equity accounted
profit for the period |
- |
6,933 |
- |
6,933 |
Impairment of
investment |
(90,825) |
- |
(90,825) |
- |
Carrying value |
6,154 |
96,979 |
6,154 |
96,979 |
Management have committed to selling it’s 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 is anticipated that the sale will be concluded
within the current financial year ending 31
October 2020. 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.
Accordingly, the investment was impaired to reflect the fair
value.
As at 31 October 2019, the Company
directly and indirectly held the following subsidiary and
associate:
Name of
company |
Principal activities |
Country
of incorporation and place of business |
Proportion (%) of equity interest
2019 |
Proportion (%) of equity interest
2018 |
Dynamic Intertrade
(Pty) Limited |
Trading in
Agricultural Products |
South
Africa |
100% |
100% |
Dynamic Intertrade
Agri (Pty) Limited |
Agricultural commodity
trading and distribution |
South
Africa |
46.8%
Designated as
Held for Sale |
46.8% |
Summarised financial information of the associate company
|
|
£ |
£ |
Non-current
assets |
|
- |
4,600 |
Current assets |
|
- |
188,544 |
Cash and cash
equivalents |
|
- |
10,404 |
Total assets |
|
- |
203,548 |
Non-current
liabilities |
|
- |
44,982 |
Current
liabilities |
|
- |
107,118 |
Total liabilities |
|
- |
152,100 |
|
|
|
|
Turnover |
|
- |
2,314,269 |
Profit/ (Loss) before
taxation |
|
- |
20,576 |
Total comprehensive
income |
|
- |
14,815 |
Depreciation |
|
- |
3,473 |
Interest income |
|
- |
264 |
Interest expense |
|
- |
- |
Income tax (income)
expense |
|
- |
(4,082) |
|
|
|
|
15.Long Term Intercompany Loans
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Loan to Dynamic
Intertrade (Pty) Ltd |
- |
- |
842,437 |
831,338 |
|
|
|
|
|
Carrying value |
- |
- |
842,437 |
831,338 |
The loan is unsecured and bears interest at 7% p.a.
16.Property, Plant and Equipment
Group |
Leasehold Improve-ments |
Furniture and fixtures |
Plant
and machinery |
Total |
|
£ |
£ |
£ |
£ |
Cost |
|
|
|
|
As at 31 October
2018 |
21,845 |
4,746 |
298,800 |
325,391 |
Additions |
193 |
111 |
2,107 |
2,411 |
Disposals |
- |
- |
(2,339) |
(2,339) |
Exchange
difference |
(971) |
(210) |
(13,221) |
(14,402) |
As at 31 October
2019 |
21,067 |
4,647 |
285,347 |
311,061 |
|
|
|
|
|
Accumulated
depreciation |
|
|
|
|
As at 31 October
2018 |
17,378 |
3,165 |
251,293 |
271,836 |
Charge for the
year |
2,813 |
528 |
20,904 |
24,245 |
Released on
disposal |
- |
- |
(2,286) |
(2,286) |
Exchange
difference |
(948) |
(174) |
(12,450) |
(13,572) |
As at 31 October
2019 |
19,243 |
3,519 |
257,461 |
280,223 |
|
|
|
|
|
Net Book
Value |
|
|
|
|
As at 31 October
2018 |
4,467 |
1,581 |
47,507 |
53,555 |
As at 31 October
2019 |
1,824 |
1,128 |
27,886 |
30,838 |
The holding company held no tangible fixed assets at
31 October 2019 and 2018.
17.Goodwill
Goodwill has been calculated as £226,644 (2018: £226,644) and is
measured as the excess of the sum of the consideration paid and the
fair value of the acquirer’s previously held equity interest in the
acquiree over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
Goodwill has been tested for impairment as at the balance sheet
date. The recoverable amount of goodwill at 31 October 2019 and 2018 was assessed on the
basis of value in use. As this exceeded the carrying values no
impairment loss was recognised. The key assumptions in the
calculation to assess value in use are future revenues and the
ability to generate future cash flows.
The most recent financial results and forecasts for the next
year were used, followed by an extrapolation of future cash flows
using a price earnings ratio. The projected results were discounted
at a rate which is a prudent evaluation of the pre-tax rate that
reflects current market assessments of the time value of money and
risks specific to the cash-generating unit.
The key assumptions used in the value in use calculations in
2018 and 2019 were as follows:
- A discount rate of 10%
- Sales growth of 18%
- Weighting of probabilities assigned to potential earnings.
The Directors believe the significance of the earning potential
identified mean that the goodwill does not require impairment at
this early stage.
18.Loan Receivable
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Loan to Touchwood
Investments Ltd |
871,579 |
- |
871,579 |
- |
|
|
|
|
|
Carrying value |
871,579 |
- |
871,579 |
- |
The loan was advanced to Touchwood Investments Ltd, also known
as the Comarco Group, which operates a port in Mombasa. This loan
bears interest at 12% for the first 9 months, where after the rate
increased to 15%. The loan is for a period 24 months and is
repayable in full on 12 November
2020. The Comarco Group has provided the land of its port
operations, which is valued at $12,000,000, as security for the above loan.
19.Inventories
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Raw materials |
62,253 |
93,776 |
- |
- |
Finished goods |
5,106 |
25,202 |
- |
- |
Carrying value |
67,359 |
118,978 |
- |
- |
20.Trade and other receivables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Financial
instruments |
|
|
|
|
Trade receivables |
381,112 |
409,806 |
- |
- |
Deposits |
26,602 |
13,028 |
13,381 |
- |
Other receivables |
12,281 |
44,168 |
12,281 |
41,915 |
|
|
|
|
|
Non-financial
instruments |
|
|
|
|
Prepayments |
2,780 |
1,677 |
- |
- |
|
|
|
|
|
Carrying value |
422,775 |
468,679 |
25,662 |
41,915 |
Current |
422,775 |
468,679 |
25,662 |
41,915 |
Non-Current |
- |
- |
- |
- |
|
422,775 |
468,679 |
25,662 |
41,915 |
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 2019 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 2019, as all trade
receivables generated during the financial year were settled in
full prior to the year-end.
Information about the Group’s exposure to credit and market
risks and impairment losses for trade receivables is included in
Note 28.
The Directors consider that the carrying amount of trade
receivables and other receivables approximates their fair
value.
21.Cash and Cash Equivalents
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Cash on hand |
5,218 |
947,058 |
4,383 |
945,329 |
Bank overdraft |
- |
(1,235) |
- |
(1,235) |
|
5,218 |
945,823 |
4,383 |
944,094 |
22.Trade and Other Payables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Trade Payables |
768,246 |
913,690 |
640,263 |
378,736 |
Other Payables |
5,819 |
30,103 |
5,819 |
- |
Related Party
Payables |
48,550 |
50,753 |
- |
- |
|
822,615 |
994,546 |
646,082 |
378,736 |
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.
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 |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
G Roach |
22,214 |
23,242 |
- |
- |
M Bonner |
26,336 |
27,511 |
- |
- |
|
48,550 |
50,753 |
- |
- |
Terms:
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.
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.
23.Share Capital and Share Premium
Allotted, called up
and fully paid share capital and share premium |
Number of shares |
Nominal Value |
Share
Premium |
Total |
|
|
£ |
£ |
£ |
Balance at 31 October
2017 |
206,983,954 |
206,984 |
1,765,535 |
1,972,519 |
Issued during the
year |
181,000,000 |
181,000 |
754,374 |
935,374 |
Balance at 31 October
2018 |
387,983,954 |
387,984 |
2,519,909 |
2,907,893 |
Issued during the
year |
- |
- |
- |
- |
Share consolidation at
20:1 |
(368,584,756) |
- |
- |
- |
Balance at 31 October
2019 |
19,399,198 |
387,984 |
2,519,909 |
2,907,893 |
Share capital is the amount subscribed for shares at nominal
value.
During the 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 10% of the companies
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.
24.Share Based Payments Reserve
The Company has a share-ownership compensation scheme for senior
executives of the Company whereby senior executives may be granted
options to purchase Ordinary Shares in the Company.
Warrants
During the 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 8,188,066 warrants to subscribe for ordinary shares at
31 October 2019 (31 October 2018: 197,064,095).
|
|
Exercised / |
|
|
|
|
|
As at 1 |
Vested / |
As at 31 |
|
|
|
Date
of Grant |
November |
Share |
October |
Exercise |
Exercise/Vesting Date |
|
2018 |
Consolidation |
2019 |
Price |
From |
To |
Warrants |
|
|
|
|
|
|
09/05/2012 |
2,761,330 |
(2,623,264) |
138,066 |
20p |
09/05/2012 |
05/09/2022 |
27/11/2018 |
161,000,000 |
(152,950,000) |
8,050,000 |
20p |
27/11/2018 |
30/09/2020 |
|
163,761,330 |
(155,573,264) |
8,188,066 |
|
|
|
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 9,716,666 new
ordinary shares could potentially be issued in the event that all
Subscription Warrants and Loan Note warrants are exercised.
Options
At 1 November 2018 there were
20,956,144 share options issued to the directors and past directors
of the Company. During the current year no share options were
granted (2018: Nil). During the 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.
The movement on the share-based payment charge for the year was
£nil (2018 - £63,932) in respect of the issued options. The details
of warrants and options are as follows:
|
|
Exercised / |
|
|
|
|
|
As at 1 |
Vested / |
As at 31 |
|
|
|
Date
of Grant |
November |
Share |
October |
Exercise |
Exercise/Vesting Date |
|
2018 |
Consolidation |
2019 |
Price |
From |
To |
Options |
|
|
|
|
|
|
09/05/2012 |
20,956,184 |
(19,908,375) |
1,047,809 |
20p |
09/05/2012 |
05/09/2022 |
|
20,956,184 |
(19,908,375) |
1,047,809 |
|
|
|
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 2019
were as follows:
|
|
|
2019 |
2018 |
Director |
|
|
Options |
Options |
Andrew Monk |
|
|
191,952 |
3,839,046 |
George Roach
(resigned) |
|
|
191,952 |
3,839,046 |
Robert Scott |
|
|
50,000 |
1,000,000 |
Matthew Bonner |
|
|
180,000 |
3,600,000 |
Total |
|
|
613,905 |
12,278,092 |
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 2.5 years (2018: 3.5
years).
25.Borrowings
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Loan from director M.
Bonner |
5,000 |
- |
5,000 |
- |
Loan from director R.
Scott |
5,000 |
- |
5,000 |
- |
Bibby Apex
Financial services (Pty) Ltd |
|
|
|
|
- Inventory
Financing |
61,077 |
91,898 |
- |
- |
- Accounts
receivable financing |
251,450 |
- |
- |
- |
Euro Middle East
Trading (PTY) LTD |
|
|
|
|
- Inventory
Financing |
40,564 |
- |
- |
- |
Carrying value |
363,091 |
91,898 |
10,000 |
- |
The Group wholly owned subsidiary Dynamic Intertrade has entered
into a funding agreement with Bibby Apex Financial services (Pty)
Ltd whereby Bibby pay the suppliers directly and this is then
repaid by Dynamic Intertrade to purchase stock from suppliers where
deposits are required.
The borrowings are secured by a Security Agreement from the
Company. The loans bear interest at 14% per annum.
26.Convertible loan notes
|
Group |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
Convertible loan
notes |
250,000 |
253,863 |
250,000 |
253,863 |
Carrying value |
250,000 |
253,863 |
250,000 |
253,863 |
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.
After the 20:1 share consolidation, the new ordinary shares
issued as a result of conversion of all Loan Notes would represent
1,666,667 (2018: 33,333,333) ordinary shares, or 7.9 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. After the 20:1
share consolidation there are 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 1,666,667
(2018: 33,333,335) 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 9,716,667 (2018: 194,333,335)
New Ordinary Shares could potentially be issued in the event that
all New Ordinary Shares Warrants and Loan Conversion Warrants are
exercised.
However, under the terms of the Loan Note Instrument, the
maximum number of Loan Notes that can be converted into ordinary
shares at any one time will be restricted such that Mike Joseph’s
total voting rights cannot exceed 29.9 per cent. of the shares in
issue of the Company.
27.Operating lease
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
£ |
£ |
£ |
£ |
Premises |
|
100,285 |
96,948 |
- |
- |
Equipment |
|
5,108 |
5,022 |
- |
- |
|
|
105,393 |
101,970 |
- |
- |
|
|
|
|
|
|
Minimum lease
payments |
|
|
|
|
|
Not later than one
year |
|
68,732 |
103,118 |
- |
- |
Between one and five
years |
|
- |
71,914 |
- |
- |
Later than five
years |
|
- |
- |
- |
- |
|
|
68,732 |
175,032 |
- |
- |
28. Financial Instruments – Fair
values and risk management
The effect of initially applying IFRS 9 on the Group’s financial
instruments is described in Note 2. Due to the transition method
chosen, comparative information has not been restated to reflect
the new requirements.
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 2019 the Group did not
have any trade and other receivables nor any trade and other
payables that were classified as held-for-sale.
The Group has not disclosed the fair values of financial
instruments such as short-term trade receivables and payables,
because their carrying amounts are a reasonable approximation of
their fair value.
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
Group as at 31
October 2019 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan receivable |
|
871,579 |
- |
- |
871,579 |
|
- |
- |
871,579 |
871,579 |
|
|
877,733 |
- |
- |
877,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
Trade and other
receivables |
|
- |
422,775 |
- |
422,775 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
5,218 |
- |
5,218 |
|
|
|
|
|
|
|
- |
427,993 |
- |
427,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
Unsecured
borrowings |
- |
- |
(363,091) |
(363,091) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(250,000) |
(250,000) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(822,615) |
(822,615) |
|
|
|
|
|
|
|
- |
- |
(1,435,706) |
(1,435,706) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
Group as at 31
October 2018 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
96,979 |
- |
- |
96,979 |
|
- |
- |
96,979 |
96,979 |
Loan receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
96,979 |
- |
- |
96,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
Trade and other
receivables |
|
- |
468,678 |
- |
468,678 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
945,823 |
- |
945,823 |
|
|
|
|
|
|
|
- |
1,414,501 |
- |
1,414,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
Unsecured
borrowings |
- |
- |
(91,898) |
(91,898) |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
(253,863) |
(253,863) |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
(994,546) |
(994,546) |
|
|
|
|
|
|
|
- |
- |
(1,340,307) |
(1,340,307) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
Company as at 31
October 2019 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
Loan receivable |
|
871,579 |
- |
- |
871,579 |
|
- |
- |
871,579 |
871,579 |
|
|
877,733 |
- |
- |
877,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
Intercompany loans
receivable |
|
- |
842,437 |
- |
842,437 |
|
|
|
|
|
Trade and other
receivables |
|
- |
25,662 |
- |
25,662 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
4,383 |
- |
4,383 |
|
|
|
|
|
|
|
- |
872,482 |
- |
872,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
Unsecured
borrowings |
- |
- |
10,000 |
10,000 |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
250,000 |
250,000 |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
646,082 |
646,082 |
|
|
|
|
|
|
|
- |
- |
906,082 |
906,082 |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
Company as at 31
October 2018 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
Investment in
associate |
|
96,979 |
- |
- |
96,979 |
|
- |
- |
96,979 |
96,979 |
Loan receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
96,979 |
- |
- |
96,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
Intercompany loans
receivable |
|
- |
831,338 |
- |
831,338 |
|
|
|
|
|
Trade and other
receivables |
|
|
41,915 |
- |
41,915 |
|
|
|
|
|
Cash and cash
equivalents |
|
- |
944,094 |
- |
944,094 |
|
|
|
|
|
|
|
- |
1,817,347 |
- |
1,817,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
Unsecured
borrowings |
- |
- |
- |
- |
|
|
|
|
|
Convertible loan
notes |
|
- |
- |
253,863 |
253,863 |
|
|
|
|
|
Trade and other
payables |
|
- |
- |
378,736 |
378,736 |
|
|
|
|
|
|
|
- |
- |
632,599 |
632,599 |
|
|
|
|
|
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.h.
Financial instruments measured at fair value
Type |
Valuation technique |
Significant unobservable
inputs |
Inter-relationship between
significant unobservable inputs and fair value measurement |
Investment in Associate |
The value of the investment is
adjusted annually based upon the group’s share of the associates
profit or loss. |
None |
None |
Investment in Treasury
Shares |
The value of the investment is
adjusted annually based upon the market price of the shares as at
31 October each year. |
None |
None |
ii.
Transfers between Levels 1 and 2
There were no transfers between Levels 1 and 2 in either the
current financial year or in the prior financial year.
C. Financial Risk
Management
The Group has exposure to the following risks arising from
financial instruments:
- credit risk;
- liquidity 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 |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
As at
31 October the exposure to credit |
|
|
|
risk
for trade receivables by geographic |
|
|
|
region was
follows: |
|
|
|
|
South Africa |
381,112 |
409,806 |
- |
- |
Other |
- |
- |
- |
- |
|
381,112 |
409,806 |
- |
- |
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 |
381,112 |
409,806 |
- |
- |
|
381,112 |
409,806 |
- |
- |
Expected credit loss assessment for
corporate customers as at 1 November
2018 and 31 October 2019
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 2019.
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 2019, the Group
held £5,218 in cash and cash equivalents (2018: £947,058) and had a
bank overdraft of £nil (2018: £1,235). 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 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 risk
The following tables present the remaining contractual
maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted and include contractual interest
payments and exclude the impact of netting agreements.
|
|
|
|
Contractual cash flows |
|
|
Group as at
31 October 2018 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non-
derivative financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
Bank overdrafts |
1,235 |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
Convertible loan |
|
|
|
|
|
|
notes |
253,863 |
(253,863) |
- |
(3,863) |
- |
(250,000) |
- |
Secured loans |
91,898 |
(91,898) |
- |
(91,898) |
- |
- |
- |
Trade Payables |
913,690 |
(913,690) |
(913,690) |
- |
- |
- |
- |
Other Payables |
30,103 |
(30,103) |
- |
(30,103) |
- |
- |
- |
Related Party |
|
|
|
|
|
|
|
Payables |
- |
- |
- |
- |
- |
- |
- |
|
1,290,789 |
(1,289,554) |
(913,690) |
(125,864) |
- |
(250,000) |
- |
|
|
|
|
|
|
|
|
Derivative financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash flows |
|
|
Company as at
31 October 2019 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non-
derivative financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts |
- |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
10,000 |
(10,000) |
- |
(10,000) |
- |
- |
- |
Convertible loan |
|
|
|
|
|
|
notes |
250,000 |
(250,000) |
- |
- |
(250,000) |
- |
- |
Secured loans |
- |
- |
- |
- |
- |
- |
- |
Trade Payables |
640,263 |
(640,263) |
(640,263) |
- |
- |
- |
- |
Other Payables |
5,819 |
(5,819) |
- |
(5,819) |
- |
- |
- |
Related Party |
|
|
|
|
|
|
|
Payables |
- |
- |
- |
- |
- |
- |
- |
|
906,082 |
(906,082) |
(640,263) |
(15,819) |
(250,000) |
- |
- |
|
|
|
|
|
|
|
|
Derivative financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash flows |
|
|
Company as at
31 October 2018 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
Non-
derivative financial |
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts |
1,235 |
- |
- |
- |
- |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
Convertible loan |
|
|
|
|
|
|
notes |
253,863 |
(253,863) |
- |
(3,863) |
- |
(250,000) |
- |
Secured loans |
- |
- |
- |
- |
- |
- |
- |
Trade Payables |
378,736 |
(378,736) |
(378,736) |
- |
- |
- |
- |
Other Payables |
- |
- |
- |
- |
- |
- |
- |
Related Party |
|
|
|
|
|
|
|
Payables |
- |
- |
- |
- |
- |
- |
- |
|
633,834 |
(632,599) |
(378,736) |
(3,863) |
- |
(250,000) |
- |
|
|
|
|
|
|
|
|
Derivative financial |
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
The interest payments on the financial liabilities represent the
fixed interest rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash
equivalents and other highly marketable debt investments at an
amount in excess of expected cash outflows on financial liabilities
other than trade payables. The Group also monitors the level of
expected cash inflows on trade and other receivables together with
expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices – such as
foreign exchange rates, interest rates and equity prices – will
affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations
arise.
The carrying amounts of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
Exposure to currency risk
The summary quantitative data about the Group’s exposure to
currency risk as reported to the management of the Group is as
follows:
Group Foreign
exchange |
|
31
October |
2019 |
|
31
October |
2018 |
risk |
GBP |
USD |
ZAR |
GBP |
USD |
ZAR |
|
|
|
|
|
|
|
Loan receivable |
- |
1,127,997 |
- |
- |
- |
- |
Trade and other |
|
|
|
|
|
|
receivables |
11,448 |
- |
7,441,976 |
28,045 |
- |
7,648,257 |
Cash and cash
equivalents |
4,383 |
- |
16,314 |
944,094 |
- |
32,272 |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
(10,000) |
- |
- |
- |
- |
- |
Secured loans |
- |
- |
(6,894,845) |
- |
- |
(1,715,097) |
Convertible loan
notes |
(250,000) |
- |
- |
(253,863) |
- |
- |
Trade payables |
(646,083) |
- |
(5,111,050) |
(369,109) |
- |
(10,725,393) |
Net statement of
financial |
|
|
|
|
|
|
position
exposure |
(890,252) |
1,127,997 |
(4,547,605) |
349,167 |
- |
(4,759,961) |
|
|
|
|
|
|
|
Next 6 months
sales |
|
|
|
|
|
|
forecast |
- |
- |
18,559,430 |
- |
- |
17,675,648 |
Next 6 months
purchases |
|
|
|
|
|
|
forecast |
- |
- |
(17,001,391) |
- |
- |
(16,191,801) |
Net forecast
transaction |
|
|
|
|
|
|
exposure |
- |
- |
1,558,039 |
- |
- |
1,483,847 |
|
|
|
|
|
|
|
Net
exposure |
(890,252) |
1,127,997 |
(2,989,566) |
349,167 |
- |
(3,276,114) |
Company
Foreign |
|
31
October |
2019 |
|
31
October |
2018 |
exchange
risk |
GBP |
USD |
ZAR |
GBP |
USD |
ZAR |
|
|
|
|
|
|
|
Loan receivable |
- |
1,127,997 |
- |
- |
- |
- |
Trade and other |
|
|
|
|
|
|
receivables |
11,448 |
- |
- |
28,045 |
- |
- |
Cash and cash
equivalents |
4,383 |
- |
- |
944,094 |
- |
- |
Unsecured
shareholders' |
|
|
|
|
|
|
loans |
(10,000) |
- |
- |
- |
- |
- |
Secured loans |
- |
- |
- |
- |
- |
- |
Convertible loan
notes |
(250,000) |
- |
- |
(253,863) |
- |
- |
Trade payables |
(646,083) |
- |
- |
- |
- |
- |
Net statement of
financial |
|
|
|
|
|
|
position
exposure |
(890,252) |
1,127,997 |
- |
718,276 |
- |
- |
|
|
|
|
|
|
|
Next 6 months
sales |
|
|
|
|
|
|
forecast |
- |
- |
- |
- |
- |
- |
Next 6 months
purchases |
|
|
|
|
|
|
forecast |
(214,288) |
- |
- |
(214,288) |
- |
- |
Net forecast
transaction |
|
|
|
|
|
|
exposure |
(214,288) |
- |
- |
(214,288) |
- |
- |
|
|
|
|
|
|
|
Net
exposure |
(1,104,540) |
1,127,997 |
- |
503,988 |
- |
- |
The following significant exchange rates in relation to the
reporting currency are applicable:
|
Average
for the year |
Year
end spot rate |
|
2019 |
2018 |
2019 |
2018 |
|
|
|
|
|
United States Dollar
($) |
1.1109 |
1.1714 |
1.2936 |
1.2771 |
South African Rand
(ZAR) |
18.2842 |
17.6588 |
19.5271 |
18.6759 |
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
- 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
|
2019 |
2019 |
2018 |
2018 |
|
+10% |
-10% |
+10% |
-10% |
|
|
|
|
|
Base currency of
British pound Sterling: |
|
|
|
|
- United
States Dollar ($) |
0.1294 |
(0.1294) |
0.128 |
(0.128) |
- South
African Rand (ZAR) |
1.9527 |
(1.9527) |
1.868 |
(1.868) |
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
- 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 |
|
2,019 |
2,018 |
2,019 |
2,018 |
Fixed rate
instruments |
|
|
|
|
Financial assets |
871,579 |
- |
871,579 |
- |
Financial
liabilities |
(613,091) |
(345,761) |
(260,000) |
(253,863) |
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 (2018 available-for-sale) 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.
29.Related Party Transactions
Directors’
fees
The previous Chairman, Andrew
Monk, is a director of VSA Capital Limited and that company
provided services amounting to £118,389 (2018: £139,550) to the
Company during the year.
During the year ended 31 October
2019 £61,896 was paid to Directors of the company (2018:
£61,696). At the year-end a total of £168,772 (2018: £107,076) 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 |
|
2019 |
2018 |
2019 |
2018 |
|
£ |
£ |
£ |
£ |
G Roach |
22,214 |
23,242 |
- |
- |
M Bonner |
26,336 |
27,511 |
- |
- |
|
48,550 |
50,753 |
- |
- |
Terms:
G Roach: The loan bears interest at 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.
M Bonner: The loan bears interest at 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.
30.Controlling Party Note
There is no single controlling party. Significant shareholders
are listed in the Directors Report and Business Review.
31.Events Subsequent to 31 October 2019
Loan to Comarco
The agreement to acquire the Comarco Group expired on
31 December 2019 and both the vendors
and the Company have agreed to extend the agreement to 31 March 2020.
Renewal of Dynamic Intertrade (Pty)
Ltd’s lease Agreement
The directors have decided to renew Dynamic Intertrade (Pty)
Ltd’s property lease agreement for its operating premises. This
lease agreement will be signed after the date of these financial
statements.