THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014
AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION WILL BE CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
30 April
2024
Graft Polymer (UK)
Plc
(the
"Company")
Final Results for the year
ended 31 December 2023
I provide below the Chairman's
statement for Graft Polymer for the Company's audited results for
the year ended 31 December 2023 and wish to include some
commentary about the period in question and the Company's
prevailing plans.
Highlights
·
Cash and cash equivalents at year end were £0.155
million
·
Loss before taxation for the year was £3.120
million
·
Net cash outflow for the year was £1.486
million
·
The Group held net assets at year end of £2.026
million
Post period end
activities:
·
Nicholas Nelson appointed as Non-Executive
Chairman and co-provider of a £200,000 working capital loan
facility to enable the Company to prepare itself for a future
fund-raise
·
Appointment of Allenby Capital as broker to the
Company
We plan to announce the disposal
of the Slovenian entity due to the slow pick-up of revenue and
ongoing constraints. With a negative forecasted cash position in
the near future leading to an increase in liability rather than a
profit centre the Directors will be looking to dispose of the
subsidiary to a private consortium in Slovenia for nominal
consideration. Leaving our focus on, what we believe to be, the
highly prospective Graft Bio
division. More on that below.
Review of the year just ended
In July 2023 the Company announced
the commissioning of the production facility in Slovenia,
effectively doubling the Company's production capacity but
consequently increasing working capital costs. Throughout this time
the Company entered into several Research and Development
agreements harnessing its intellectual property for BIO and
pharmaceutical applications to broaden its commercial
portfolio.
However, conflicts in the Middle
East, Ukraine and the Red Sea significantly disrupted operations
and presented substantial challenges to the Board's ability to
manage the future. These conflicts particularly impacted trading
capabilities, resulting in elevated logistical costs for raw
materials imported from China along with cashflow risks. Added to
this was the general economic turmoil in Europe leading to reduced
overall demand.
As a result, the Company's
revenues continued to fall short of hopes for a second year running
thus depleting cash reserves. We have taken the view that these
woeful trading conditions for Graft Polymer's Slovenian
manufacturing facility will continue.
Pleasingly the Graft Bio division
continues to see ongoing interest and the potential demand we are
witnessing provides encouraging possibilities for the future. We
anticipate that this may position the Company as a multi-sector
specialist chemical firm offering expertise and R&D
capabilities to develop high-end solutions for refiners,
compounders and processors, rather than solely producing them
in-house.
I say more about our pipeline of
opportunities under 'Focus on the Graft Bio division'
below.
15th March 2024 announcement; directorate change,
loan facility and appointment of Allenby Capital as broker to the
Company
I joined the board as Chairman on
the above date replacing Roby Zomer and Alexander Brooks which was
necessary to enable me and another individual to provide a £200,000
working capital loan facility. It's worth my copying a relevant
paragraph from that announcement below:
Over recent months the Company has experienced very difficult
trading conditions due to the conflicts in the Middle East, Ukraine
and the Red Sea. As a consequence, the Company's cash
position has become extremely constrained thus necessitating the
need for the Company to enter into the Loan Facility. The
Loan Facility will allow the Company to continue to trade and will
permit the Company's audit for the year ended 31 December 2023 to
be completed.
The Board's principal task is to
take the Company through an equity fundraise in the near future for
working capital purposes and the development of a modified business
development strategy. This requires a Financial Conduct Authority
approved prospectus to be published by the Company to enable new
shares to be admitted to trading on the Main Market of the London
Stock Exchange. Any issue of new shares will also require
shareholder approval at a general meeting of the Company. Further
announcements will be made as appropriate regarding this
matter.
Write off of investment / intercompany loans with Graft
Polymer d.o.o
Today's accounts reveal that the
Company has impaired in full its investment and intercompany loan
in / with its Slovenia subsidiary, Graft Polymer d.o.o., due to the
slow pick up of revenue, ongoing constraints and reflecting a
growing liability on the Group's cash flow. Accordingly, we
plan to announce its disposal to a private consortium in Slovenia
for nominal consideration.
Focus on the IP and Graft Bio division
The Directors believe that the Bio
division represents significant value to investors based primarily
on the revenue generating capabilities of the Group's intellectual
property, intangible assets and sales contracts. As we can see
on-going interest and demand as well as potential revenues. We
believe this positions the Company as a multi-sector specialist
chemical company offering the knowledge and R&D to develop high
end solutions for the refiners, compounders and processors, rather
than producing them in house. Our key advantage in Graft Bio is our
knowledge and experience to create new innovative solutions for the
industry.
Outlook on R&D and Supply agreements
On 6 July 2023, the company
announced an R&D Supply Agreement with Gabriel Chemie, marking
the initiation of collaborative efforts with our partners. Graft
Bio since commenced work in conducting trials for various products.
Encouragingly, some of these trials have yielded positive results,
prompting us to transition towards industrial-scale production by
our clients.
The Company entered an R&D
Supply Agreement with Forpet Baltic, SIA, announced on 4 September
2023, has yet to initiate trials as well as entering similar
agreements with Empreas Wilher Mexico, announced on 30 August 2023.
The Company has been engaged in local activities and are in the
process of providing new formulations for EWM to produce its
samples to support additional projects.
The Company's agreement with the
Slovenian Faculty of Polymer Technology, announced on 11 September
2023, is designated as a development project. It is expected to
take approximately two years before yielding measurable
results.
The agreement with the European
consortium of the University of Belgrade announced on 9 October
2023, is also categorised as a development project. While progress
is underway, it is anticipated to take around two years to yield
results.
Summary
Following an extraordinarily
difficult two years for the Group, resulting in a huge depletion of
funds on account and severe constraints on the Group's ability to
continue trading, I joined the Board to oversee a strategic change
and progress a short term fundraise.
Despite the upcoming period
presenting challenges for the Group the Board are confident that
with the correct management approach we can safely navigate back to
prosperity and I look forward to keeping shareholders informed as
developments unfold.
Nicholas Nelson
Non-Executive Chairman
Principal Risks and Uncertainties
The Group operates in an uncertain
environment and is subject to a number of risk factors. The
Directors consider the following risk factors are of particular
relevance to the Group's activities although it should be noted
that this list is not exhaustive and that other risk factors not
presently known or currently deemed immaterial may
apply.
The Group is currently loss
making, recording a financial loss of £3,120,000 for the year ended
31 December 2023
To date, the Company has been loss
making and in the financial year ended 31 December 2023, the Group
sustained losses in the amount of £3,120,000 (2022: £2,705,000).
The Board has adopted measures to minimise costs and overheads to
ensure that the Group remains solvent and the Group is now focused
on nurturing and growing its Bio Division, as part of a strategic
review undertaken by the Board. The decision by the Board to
undertake the disposal was to ensure the ongoing financial
viability of the Group due to a forecasted negative cash position
in the near future, leading to an increase in liability rather than
a profit centre in the Slovenian entity. If the Company's
core business is unsuccessful, and the Company may be unable to
generate revenue from alternative sources, then the Company is
likely to remain loss making. This would have a material
adverse impact on the financial condition of the Group.
Investors should be aware that it is probably that the Company will
remain loss making for the immediate future.
Protection of intellectual
property rights
The Group relies substantially on
proprietary technology, patent rights, confidential information,
trade secrets, know-how and laboratory research data to conduct its
business and to attract and retain customers and licensees. The
success of the Group's business depends on its ability to protect
its know-how and its intellectual property portfolio, and maintain
and obtain patents without infringing the proprietary rights of
others. If the Group does not effectively protect its know-how and
intellectual property, its business and operating results could be
materially harmed.
Volatility or falls in its
share price may materially and adversely affect the operations of
the Group
As a company with its securities
admitted to trading on a public securities exchange, the price at
which its shares are trading may be subject to volatility or a
material decrease in value, either as a result of the performance
of the Group, rumour or speculation in the market, or due to
general or specific factors affecting the performance of capital
markets or the United Kingdom or global economies generally. Some
of these factors may be outside the control of the Company.
Volatility or a material decrease in the price or trading volume of
the Company's shares may make it more difficult for the Company to
attract future capital or result in suppliers, partners or
customers losing confidence in the operations or future of the
Group, if this were to continue for a period of time the business,
operations or financial condition of the Group could be materially
and adversely affected.
Statement of directors'
responsibilities
The Directors are responsible for
preparing the Annual Report and financial statements in accordance
with applicable laws and regulations.
Company law requires the directors
to prepare financial statements for each financial year. Under that
law the directors have prepared the financial statements in
accordance with UK-adopted international accounting standards for
the group and as regards to the Parent Company Financial
Statements, as applied in accordance with the Companies Act
2006. Under company law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and company
and the profit and loss of the group for that period.
In preparing the financial
statements the Directors are required to:
· Select suitable
accounting policies and then apply them consistently;
· Make judgements
and accounting estimates that are reasonable and
prudent;
· Ensure
statements comply with UK-adopted international accounting
standards, subject to any material departures disclosed and
explained in the Financial Statements; and
· prepare the
financial statements on the going concern basis unless it is
inappropriate to presume that the group and company will continue
in business.
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Group enabling
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The financial statements are
published on the Company's website www.graftpolymer.com. The work
carried out by the Auditor does not involve consideration of the
maintenance and integrity of this website and accordingly, the
Auditor accepts no responsibility for any changes that have
occurred to the financial statements since they were initially
presented on the website. Visitors to the website need to be aware
that legislation in the United Kingdom covering the preparation and
dissemination of the financial statements may differ from
legislation in their jurisdiction.
Nicholas Nelson
Non-Executive Chairman
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GRAFT POLYMER
(UK) PLC
Opinion
We have audited the financial
statements of Graft Polymer (UK) Plc (the 'parent company') and its
subsidiaries (the 'group') for the year ended 31 December 2023
which comprises the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Cashflows, the Consolidated
and Company Statements of Changes in Equity, and Notes to the
Consolidated Financial Statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
·
the financial statements give a true and fair
view of the state of the group's and of the parent company's
affairs as at 31 December 2023 and of the group's loss for the year
then ended;
·
the group financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards;
·
the parent company financial statements have been
properly prepared in accordance with UK-adopted international
accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and
·
the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in
accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our report. We
are independent of the group and parent company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going
concern
We draw attention to note 2.2 to
the financial statements, which indicates that further funding will
be required within the 12 months following the date of approval of
the financial statements in order to meet working capital needs. As
stated in note 2.2, these events or conditions, along with the
other matters as set forth in note 2.2, indicate that a material
uncertainty exists that may cast significant doubt on the group's
and parent company's ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue
to adopt the going concern basis of accounting included:
-
Obtaining and reviewing management's cash flow
forecasts up to the period December 2026 and challenging management
on the key assumptions and inputs based on 2023 actual
results;
-
Evaluating management's sensitivity analysis and
performing our own sensitivity analysis in respect of the key
assumptions and inputs underpinning the forecasts; and
-
Ensuring disclosures in relation to going concern
in the financial statements are appropriate.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
The scope of our audit was
influenced by our application of materiality. The quantitative and
qualitative thresholds for materiality determine the scope of our
audit and the nature, timing and extent of our audit procedures.
The materiality applied to the group financial statements was set
at £94,000 (2022: £134,000), with performance materiality set at
£65,000 (2022: £93,000).
Group materiality has been
calculated as 5% of loss for the year, adjusted for one-off costs
relating to impairment charges (2022: 7.5% of loss for the period).
We have determined, in our professional judgement, adjusted loss
for the year to be the principal benchmark within the financial
statements relevant to members of the parent company in assessing
financial performance. A benchmark of 70% was applied to calculate
the group performance materiality as we believed this would give
sufficient coverage of significant and residual risks within the
group financial statements.
The materiality applied to the
parent company financial statements was £70,000 (2022: £107,000).
The parent company performance materiality was £49,000 (2022:
£74,000). For each component in scope of our group audit, we
allocated a materiality that was less than our group materiality.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £4,000 (2022:
£6,000) at the group level, as well as any other misstatements
below that threshold that we believe warranted reporting on
qualitative grounds.
We applied the concept of
materiality both in planning and performing the audit, and in
evaluating the effect of misstatement.
Our approach to the audit
In designing our audit, we
determined materiality, as above, and assessed the risks of
material misstatement in the financial statements. We tailored the
scope of our audit to ensure that we performed enough work to be
able to give an opinion on the financial statements as a whole,
taking into account the structure of the group. We looked at areas
requiring the directors to make subjective judgements, for example
in respect of treatment of impairment of intangible assets
(identified as a key audit matter), carrying value of investments
and intragroup balances (identified as a key audit matter),
selection of accounting policies, compliance with accounting
policies and disclosure in accordance with UK-adopted international
accounting standards, the Companies Act 2006, Disclosure Guidance
and Transparency Rules and the Listing Rules, and the
consideration of future events that are inherently uncertain. We
also addressed the risk of management override of controls,
including evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatements due to
fraud. The group's key accounting function is based in the United
Kingdom and our audit was performed by our team in London with
specific experience of auditing listed public interest
entities.
Key audit matters
Key audit matters are those
matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the
current year and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern
section of our report, we have determined the matters described
below to be the key audit matters to be communicated in our
report.
Key Audit Matter
|
How our scope addressed this matter
|
Carrying value of Intangible Assets(refer to note
11)
The consolidated statement of financial position as at 31
December 2023 include intangible assets with a carrying value of
£2.068m in respect of capitalised cost relating to "process
technology and know-how" under IAS 38 Intangible Assets. An
impairment review was undertaken based on the impairment indicators
noted by the management.
Intangible assets with indefinite useful lives are tested
annually for impairment and whenever there is an indication of
impairment. An impairment review requires management's significant
estimation and judgement in determining the future cash
flows.
For this reason, as well as the material account balance, we
have assessed this to be a key audit matter and a significant risk
in relation to the valuation of the asset.
|
Our work
in this area included:
· Obtaining and
documenting an understanding of the procedures in place over the
impairment assessment of intangible assets.
· Ensuring
intangible asset recognition meets the criteria in IAS 38 and its
valuation is in accordance with the standard;
· Obtaining and
reviewing the impairment assessment prepared by
management;
· Discussions with
management over future plans of the use of 'know-how;
· Challenging the
assumptions used in the cashflow forecast model by corroborating
with supporting explanation and evidence; and
· Assessing the
adequacy of the financial statement disclosures, including the
accounting policies.
Based on the discussions with
management and review of the impairment assessment performed by
management, it was noted that the group expects to recover the
carrying value of Intangible asset through royalty revenue
generated from licensing its intellectual property to other
companies. From the work performed on the forecast and discussions
with management, we haven't noted anything that would indicate that
the asset should be impaired at the year end.
|
Carrying value of investments and intragroup balances (parent
company)
(refer to notes 15 and 27)
Investments in subsidiary and intra group loans were
significant assets in the parent company's financial statements.
The parent company had outstanding receivables of £2.044m due from
its 100% owned subsidiary, and the investments in subsidiary are
carried at £1.304m which were fully impaired to nil based on the
impairment indicators noted by the management.
We consider this to be a key audit matter given the
significant judgements are required in the impairment assessment
carried out by management.
|
Our work in this area
included:
·
Confirming ownership of investments.
·
Obtaining and review management's calculation of
expected credit losses in accordance with IFRS 9;
·
Considerations of recoverability of investments
and intragroup loans by reference to underlying net asset values
and future profitability;
·
Reviewing management's impairment, ensuring these
are in line the requirements of IAS 36 and challenging the
assumptions within; and
·
Ensuring disclosures made in the financial
statements in relation to critical accounting judgements are
adequate.
Based on the discussions with
management, it was noted that the disposal of Slovenian subsidiary
is planned after signing of annual report at a token consideration
of €1. Management performed an impairment assessment, and this was
noted as an impairment indicator under IAS 36 and as such it was
agreed with the management that year value of Investment and
Intragroup loan should be fully impaired.
|
Other information
The other information comprises
the information included in the annual report, other than the
financial statements and our auditor's report thereon. The
directors are responsible for the other information contained
within the annual report. Our opinion on the group and parent
company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this
regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the
directors' remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
·
the information given in the strategic report and
the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial
statements; and
·
the strategic report and the directors' report
have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and
understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors' report.
We have nothing to report in
respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our
opinion:
·
adequate accounting records have not been kept by
the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
·
the parent company financial statements and the
part of the directors' remuneration report to be audited are not in
agreement with the accounting records and returns; or
·
certain disclosures of directors' remuneration
specified by law are not made; or
·
we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the
Statement of directors' responsibilities, the directors are
responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the group and parent
company financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud,
are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is
detailed below:
·
We obtained an understanding of the group and
parent company and the sector in which they operate to identify
laws and regulations that could reasonably be expected to have a
direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management
and industry research.
·
We determined the principal laws and regulations
relevant to the group and parent company in this regard to be those
arising from the Companies Act 2006, the Disclosure Guidance and
Transparency Rules, the Listing Rules, Bribery Act 2010, anti money
laundering regulations, and local laws and regulations in
Slovenia.
·
We designed our audit procedures to ensure the
audit team considered whether there were any indications of
non-compliance by the group and parent company with those laws and
regulations. These procedures included, but were not limited
to:
o Making enquiries of management;
o Reviewing board meeting minutes;
o Reviewing Regulatory News Service publications;
and
o Reviewing legal expenses incurred during the year.
·
We also identified the risks of material
misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls, the
potential for management bias was identified in relation to the
impairment of intangible assets, carrying value of investments and
intragroup balances (parent company) and share based payments. We
addressed this by challenging the key assumptions and judgements
made by management when auditing those significant accounting
estimates.
·
As in all of our audits, we addressed the risk of
fraud arising from management override of controls by performing
audit procedures which included but were not limited to the testing
of journals; reviewing accounting estimates for evidence of bias;
and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of
business.
Because of the inherent
limitations of an audit, there is a risk that we will not detect
all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law
or regulation is removed from the events and transactions reflected
in the financial statements, as we will be less likely to become
aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our
responsibilities for the audit of the financial statements is
located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Other matters which we are required to
address
We were appointed by Board of
Directors on 27 July 2023 to audit the financial statements for the
year ending 31 December 2023 and subsequent financial periods. Our
total uninterrupted period of engagement is three years, covering
from the period ending 31 December 2021 to 31 December
2023.
The non-audit services prohibited
by the FRC's Ethical Standard were not provided to the group or the
parent company and we remain independent of the group and parent
company in conducting our audit.
Our audit opinion is consistent
with the additional report to the Audit Committee.
Use of our report
This report is made solely to the
company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone, other than the company and the
company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutoory Auditor
15 Westferry Circus,
Canary Wharf,
London E14 4HD
30 April 2024
GRAFT POLYMER (UK) PLC - COMPANY NUMBER
10776788
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1
GENERAL INFORMATION
Graft Polymer (UK) Plc ("the
Company" or "GPUK") was incorporated in England and Wales as a
limited company on 18 May 2017 as Graft Polymer (UK) Limited and
was re-registered as a public limited company on 1 July 2021. The
Company is domiciled in England and Wales with its registered
office at Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF.
The Company's registered number is 10776788.
The Group successfully completed
an IPO and admission to the standard segment of the London Stock
Exchange on 6 January 2022.
The principal activities of the
Company and all of its subsidiaries collectively referred to as
"the Group" are the research, development and polymer modification
technologies and polymer modification techniques.
The consolidated financial
statements ("financial statements") were approved for issue by the
Board of Directors on 30 April 2024.
2
ACCOUNTING POLICIES
IAS 8 requires that management
shall use its judgement in developing and applying accounting
policies that result in information which is relevant to the
economic decision-making needs of users, that are reliable, free
from bias, prudent, complete and represent faithfully the financial
position, financial performance and cash flows of the
entity.
2.1
Basis of preparation
The financial statements have been
prepared in accordance with UK-adopted international accounting
standards in conformity with the Companies Act 2006.
The financial statement have been
prepared under the historical cost convention unless stated
otherwise. The principal accounting policies are set out below and
have, unless otherwise stated, been applied consistently for all
periods presented in these financial
statements. The financial statements have
been prepared in £GBP and presented to the nearest
£'000.
The functional currency for each
entity in the Group is determined as the currency of the primary
economic environment in which it operates. The functional
currency of the Company is Pounds Sterling (£) as this is the
currency that finance was raised in.
The functional currency of the
operating subsidiary in Slovenia is the Euro (€) as this is the
currency that mainly influences labour, material and other costs of
providing services. The presentational currency of the Group is
Pounds Sterling (£). Foreign operations are translated in
accordance with the policies set out further below in the notes at
note 2.4.
The Group presents its financial
statements for the year ended 31 December 2023 and presents
comparatives for the year ending 31 December 2022.
2.2
Going concern
The Directors, having made due and
careful enquiry, are of the opinion that the Company and the Group
will have access to adequate working capital to execute its
operations over the next 12 months.
The Directors have assessed the
cash position of the Group as of the signing of this report and are
aware that these alone are not sufficient to meet the expenditure
requirements for the going concern period.
To supplement this the Group has
put in place a £200,000 loan facility with the intention that this
will support the Group as they prepare a prospectus which will in
turn facilitate a larger fundraise.
The Directors have prepared in
depth cash flow forecasts that would suggest on the expected
fundraise amount the Group would have significant headroom to
support the going concern assumption however should the actual
fundraise prove to be significantly lower than anticipated this
could raise concerns about going concern. The events or conditions
noted above indicate the existence of a material uncertainty that
may cast significant doubt on the Company's ability to continue as
a going concern and, therefore, that it may be unable to realize
its assets and discharge its liabilities in the normal course of
business. The financial statements do not include any adjustments
that may be necessary if the Company was not a going concern but
note that the auditors make reference to going concern by way of a
material uncertainty over the ability of the company to fund the
recurring and projected expenditure.
2.3
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 December each year. Per IFRS 10,
control is achieved when the Company:
· has the power
over the investee;
· is exposed, or
has rights, to variable returns from its involvement with the
investee; and
· has the ability
to use its power to affects its returns.
The Company reassesses whether or
not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of
control listed above. When the Company has less than a
majority of the voting rights of an investee, it considers that it
has power over the investee when the voting rights are sufficient
to give it the practical ability to direct the relevant activities
of the investee unilaterally. The Company considers all relevant
facts and circumstances in assessing whether or not the Company's
voting rights in an investee are sufficient to give it power,
including:
· the size of the
Company's holding of voting rights relative to the size and
dispersion of holdings of the other vote holders;
· potential voting
rights held by the Company, other vote holders or other
parties;
· rights arising from
other contractual arrangements; and
· any additional facts
and circumstances that indicate that the Company has, or does not
have, the current ability to direct the relevant
activities at the time that decisions need to be made, including
voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary
begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of
during the year are included in profit or loss from the date the
Company gains control until the date when the Company ceases to
control the subsidiary. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the accounting
policies used into line with the Group's accounting
policies.
All
intragroup assets and liabilities, equity, income, expenses and
cash flows relating to transactions between the members of the
Group are eliminated on consolidation.
2.4
Foreign currency translation
i.
Functional and presentation currency
Items included in the financial
statements for each of the Group's entities are measured using the
currency of the primary economic environment in which the entity
operates ('the functional currency'). The consolidated financial
statements is presented in £ Sterling, which is the Company's
presentation and functional currency. The individual financial
statements of each of the Company's wholly owned subsidiaries are
prepared in the currency of the primary economic environment in
which it operates (its functional currency). IAS 21 The Effects of
Changes in Foreign Exchange Rates requires that assets and
liabilities be translated using the exchange rate at period end,
and income, expenses and cash flow items are translated using the
rate that approximates the exchange rates at the dates of the
transactions (i.e. the average rate for the period). The foreign
exchange differences on translation is recognised in other
comprehensive income (loss).
ii.
Transactions and balances
Transactions denominated in a
foreign currency are translated into the functional currency at the
exchange rate at the date of the transaction. Assets and
liabilities in foreign currencies are translated to the functional
currency at rates of exchange ruling at balance date. Gains or
losses arising from settlement of transactions and from translation
at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement for the period.
iii. Group
companies
The results and financial position
of all the Group entities that have a functional currency different
from the presentation currency are translated into the presentation
currency as follows:
-
assets and liabilities for each balance sheet
presented are translated at the closing rate at the date of the
balance sheet;
-
income and expenses for each income statement are
translated at the average exchange rate; and all resulting exchange
differences are recognised as a separate component of
equity.
On consolidation, exchange
differences arising from the translation of the net investment in
foreign operations are taken to shareholders' equity. When a
foreign operation is partially disposed or sold, exchange
differences that were recorded in equity are recognised in the
income statement as part of the gain or loss on sale.
2.5
Segment reporting
Operating segments are reported in
a manner consistent with the internal reporting provided to the
chief operating decision makers. The chief operating decision
maker, who are responsible for allocating resources and assessing
performance of the operating segments, has been identified as the
executive Board of Directors.
2.6
Impairment of non-financial assets
Non-financial assets and
intangible assets not subject to amortisation are tested annually
for impairment at each reporting date and whenever events or
changes in circumstances indicate that the carrying amount may not
be recoverable.
An impairment review is based on
forecasted future cash flows. If the expected discounted future
cash flow from the use of the assets and their eventual disposal is
less than the carrying amount of the assets, an impairment loss is
recognised in profit or loss and not subsequently
reversed.
For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash flows (cash generating units or
'CGUs').
2.7
Inventory
Inventories are stated at the
lower of cost and net realisable value. Costs of inventories are
determined on a first-in-first out basis. Net realisable value
represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the
sale.
2.8
Cash and cash equivalents
Cash and cash equivalents comprise
cash at bank and in hand, and demand deposits with banks and
other financial institutions and bank overdrafts.
2.9
Financial instruments
IFRS 9 requires an entity to
address the classification, measurement and recognition of
financial assets and liabilities.
a) Classification
The Group classifies its financial
assets in the following measurement categories:
· those to be
measured at amortised cost; and
· those to be
measured subsequently at fair value through profit or
loss.
The classification depends on the
Group's business model for managing the financial assets
and the contractual terms of the cash flows.
The Group classifies financial
assets as at amortised cost only if both of the following criteria
are met:
· the asset is held within a business model whose objective is
to collect contractual cash flows; and
· the contractual terms give rise to cash flows that are solely
payment of principal and interest.
b) Recognition
Purchases and sales of financial
assets are recognised on trade date (that is, the date on
which the Group commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been
transferred and the Group has transferred substantially
all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group
measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL),
transaction costs that are directly attributable to the acquisition
of the financial asset.
Transaction costs of financial
assets carried at FVPL are expensed in profit or
loss.
Debt instruments
Amortised cost: Assets that are
held for collection of contractual cash flows, where those cash
flows represent solely payments of principal and interest, are
measured at amortised cost. Interest income from these
financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
d) Impairment
The Group assesses, on a forward
looking basis, the expected credit losses associated with
any debt instruments carried at amortised cost.
The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
2.10
Leases
The lease payments are discounted
using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in
the Company, the lessee's incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar
terms, security and conditions. In all instances the leases were
discounted using the incremental borrowing rate.
Lease payments are allocated
between principal and finance cost. The finance cost is charged to
profit or loss over the lease period. Right-of-use assets are
measured at cost which comprises the following:
-
The amount of the initial measurement of the
lease liability;
-
Any lease payments made at or before the
commencement date less any lease incentives received;
-
Any initial direct costs; and
-
Restoration costs.
Right-of-use assets are
depreciated over the shorter of the asset's useful life and the
lease term on a straight line basis. If the Company is reasonably
certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Lease payments to be made under
reasonably certain extension options are also included in the
measurement of the liability.
Payments associated with
short-term leases (term less than 12 months) and all leases of
low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss.
2.11
Equity
Share capital is determined using
the nominal value of shares that have been issued.
Share capital to be issued relates
to salaries foregone by Directors and other consultants. Upon the
issue publication of a prospectus shares will be issued to
compensate the necessary parties and will be allocated amongst the
share capital and share premium accounts.
The Share premium account includes
any premiums received on the initial issuing of the share capital.
Any transaction costs associated with the issuing of shares are
deducted from the Share premium account, net of any related income
tax benefits.
For the purposes of presenting
consolidated financial statements, the assets and liabilities of
group's foreign operations are translated at the exchange rates
prevailing at the balance sheet date and items of income and
expenditure are translated at the average exchange rate for the
period. Exchange differences arising are recognised in other
comprehensive income and accumulated in the Foreign Currency
Reserve within equity.
Equity-settled share-based
payments are credited to a share-based payment reserve as a
component of equity until related options or warrants are exercised
or lapse.
The foreign exchange reserve
policy is set out in note 2.5.
Capital reduction reserve
represents funds sent from the parent company to subsidiary that on
the approval of Directors was reclassified from a loan in the
subsidiary to an investment.
Retained losses includes all
current and prior period results as disclosed in the income
statement.
2.12 Share based
payments
The Group has made awards of
warrants and options on its unissued share capital to certain
parties in return for services provided to the Group. The valuation
of these warrants involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life
of the options and interest rates. These assumptions have been
integrated into the Black Scholes Option Pricing model and the
Monte Carlo valuation model to derive a value for any share-based
payments. These assumptions are described in more detail in note
21.
2.13 Earnings per
share
The Group presents basic and
diluted earnings per share data for its Ordinary Shares.
Basic earnings per Ordinary Share
is calculated by dividing the profit or loss attributable to
Shareholders by the weighted average number of Ordinary Shares
outstanding during the period.
Diluted earnings per Ordinary
Share is calculated by adjusting the earnings and number of
Ordinary Shares for the effects of dilutive potential Ordinary
Shares.
2.14
Revenue
Under IFRS 15, Revenue from
Contracts with Customers, five key points to recognise revenue have
been assessed:
Step 1: Identity the contract(s)
with a customer;
Step 2: Identity the performance
obligations in the contract;
Step 3: Determine the transaction
price;
Step 4: Allocate the transaction
price to the performance obligations in the contract;
and
Step 5: Recognise revenue when (or
as) the entity satisfies a performance obligation.
The Group recognises revenue when
the amount of revenue can be reliably measured and it is probable
that future economic benefits will flow to the entity. Revenue is
measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods provided in
the normal course of business, net of discounts, VAT and other
sales related taxes.
Revenue is reduced for estimated
customer returns, rebates and other similar allowances. Sales of
goods are recognised when the control of the goods is transferred
to the buyer at an amount that reflects the consideration to which
the Group expects to be entitled in exchange for those goods.
Control is considered to have transferred generally on despatch as
most items are sold on a cost includes freight basis; or on
delivery where Delivered Duty Paid ("DDP") Incoterms are used. The
normal credit terms are 30 to 60 days upon delivery. Invoices that
are issued before the transfer of control has occurred are
allocated as deferred income and then recognised as revenue when
the performance obligation has been satisfied.
The Group also derives revenue
from the rendering of services, whereby revenue from a contract to
provide services is recognised in the period in which the services
are provided in accordance with the stage of completion of the
contract when all of the following conditions are
satisfied:
-
the amount of revenue can be measured
reliably;
-
it is probable that the Company will receive the
consideration due under the contract;
-
the stage of completion of the contract at the
end of the reporting period can be measured reliably;
and
-
the costs incurred and the costs to complete the
contract can be measured reliably.
In arrangements where fees are
invoiced ahead of revenue being recognized, deferred income is
recorded.
2.15
Taxation
Tax currently payable is based on
taxable profit for the period. Taxable profit differs from profit
as reported in the income statement 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 liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is proved in full on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statement.
Deferred tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised of the deferred tax liability is settled.
2.16 Property,
plant and equipment
Property, plant and equipment are
stated at cost less accumulated depreciation and any accumulated
impairment losses.
When the Company acquires any
plant and equipment it is stated in the accounts at its cost of
acquisition less a provision.
Depreciation is charged to write
off the costs less estimated residual value of plant and equipment
on a straight basis over their estimated useful lives
being:
-
Plant and equipment: 5 - 7
years
-
Buildings and leasehold improvements: 20
years
Estimated useful lives and
residual values are reviewed each year and amended as
required.
2.17 Intangible
assets
Intangible assets acquired are
initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less
any impairment. The gains and losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as
the difference between net disposal proceeds and the carrying
amount of the intangible asset.
Intangible asset impairment
reviews are undertaken annually, or more frequently if events or
changes in circumstances indicate a potential impairment. The
method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by
changing the amortisation method or period.
2.18 Investments in
Subsidiaries
Investments in Group undertakings
are stated at cost.
2.19
Provisions
Provisions represent liabilities
of uncertain timing or amount that are recognized when an entity
has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the
obligation.
The provision is measured at the
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation. Where the
effect of the time value of money is material, the provision is
discounted using a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
Provisions are reviewed at the end
of each reporting period and adjusted to reflect the current best
estimate. If it is no longer probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation, the provision is reversed.
2.20 Financial
liabilities
Other financial liabilities are
initially recognised at fair values less any directly attributable
transaction costs. Subsequent to initial recognition, these
liabilities are measured at amortised cost using the effective
interest method.
2.21 Critical
judgements and key sources of estimation
uncertainty
The preparation of the
consolidated financial statements requires management to make
estimates and judgements and form assumptions that affects the
reported amounts of the assets, liabilities, revenue and costs
during the periods presented therein, and the disclosure of
contingent liabilities at the date of the financial information.
Estimates and judgements are continually evaluated and based on
management's historical experience and other factors, including
future expectations and events that are believed to be
reasonable.
Know-how as an intangible asset
(note 11)
The estimates and assumptions in
relation to the carrying value of the know-how intangible assets
are considered to have the most significant effect on the carrying
amounts of the financial statements.
Management have prepared a 5 year
financial forecast ending at December 2028 which looks at the
revenue generating ability of these intangible assets. They have
confidence in various networks and contracts that the know-how will
allow the Group to generate significant royalty and licensing
revenue with relatively low associated costs. The Directors have a
high level of confidence that these contracts will ultimately prove
to be highly lucrative for the Group and support the current
carrying value of the intangible assets.
As a result the intangible assets
were assessed and concluded that no impairment charge was
required.
Recoverability of the investment
in subsidiary and intercompany receivable (note 15)
As at 31 December 2022 the
carrying value of the Company's investment in its subsidiary Graft
Polymer d.o.o. was approximately £1,304,000. The Directors have
performed an impairment assessment on the value of the subsidiary
considering a number of factors and have determined that because of
the uncertainty related to the future profitability of the
subsidiary the value of the investment should be impaired to nil at
31 December 2023.
Post year end the Directors have
considered factors in the subsidiary such as slow pick up of
revenue, ongoing constraints and a net cash drain on the Group's
cash flow and accordingly plan to announce that they will dispose
of the subsidiary to a private consortium in Slovenia for nominal
consideration.
Impairment of operating assets in
Slovenian Subsidiary (Note 13 & 14)
On review of the Group's operating
division in Slovenia and the uncertainty relating to trading going
forward the Directors have taken the decision to impair the total
values of fixed assets (£736,000) and any unrecoverable inventory
(£117,000) at year end.
Share based payments (Note
21)
The Group issues options and
warrants to its employees, directors, investors and advisors.
These are valued in accordance with IFRS 2 "Share-based
payments". In calculating the related charge on issuing
shares and warrants the Group will use a variety of estimates and
judgements in respect of inputs used including share price
volatility, risk free rate, and expected life. Changes to
these inputs may impact the related charge. In the period the Group
did not perform any new valuations but released expenses to the
statement of other comprehensive income from valuations in prior
periods.
2.22 New standards
and interpretations not yet adopted
At the date of approval of these
financial statements, the following standards and interpretations
which have not been applied in these financial statements were in
issue but not yet effective (and in some cases have not yet been
adopted by the UK):
Standard
|
Effective
date
|
Overview
|
Amendments to IAS 1
Classification of Liabilities as Current or
Non-current
|
1 January
2024 (early adoption permitted)
|
The
standard has been amended to clarify that the classification of
liabilities as current or non-current should be based on rights
that exist at the end of the reporting period.
In order
to conclude a liability is non-current, the right to defer
settlement of a liability for at least 12 months after the
reporting date must exist as at the end of the reporting
period.
The
amendments also clarify that (for the purposes of classification as
current or non-current), settlement is the transfer of cash, the
entity's own equity instruments (except as described below), other
assets or services.
|
Amendments to IAS 1
Non-current Liabilities with Covenants
|
1 January
2024 (early adoption permitted)
|
The
standard confirms that only those covenants with which an entity
must comply on or before the end of the reporting period affect the
classification of a liability as current or non-current.
|
Amendments to IFRS 16
Lease
Liability in a Sale and Leaseback
|
1 January
2024 (early adoption permitted)
|
The
amendments address the accounting that should be applied by a
seller-lessee in a sale and leaseback transaction when the
leaseback contains variable lease payments, such as turnover
rentals, that do not depend on an index or rate.
Specifically, they confirm that the 'lease payments' or the
'revised lease payments' arising from the leaseback arrangement are
measured in such a way that no gain or loss is recognised on the
right of use retained by the seller-lessee.
|
Amendments to IAS 7 and IFRS 7
Supplier
Finance Arrangements
|
1 January
2024 (early adoption permitted)
|
The
amendments require an entity to disclose information about its
supplier finance arrangements to enable users of financial
statements to assess the effects of those arrangements on the
entity's liabilities and cash flows and on the entity's exposure to
liquidity risk.
|
Amendments to IAS 21 - Lack of Exchangeability
|
1 January
2025 (early adoption permitted)
|
The
amendments have been made to clarify:
- when a
currency is exchangeable into another currency; and
- how a
company estimates a spot rate when a currency lacks
exchangeability.
|
2.23 New standards
and interpretations adopted
The effect of these amended
Standards and Interpretations which are in issue have not had a
material effect on the financial statements.
Standard
|
Overview
|
IFRS 17
Insurance Contracts
|
IFRS 17
will replace IFRS 4 Insurance Contracts, a temporary standard which
permits a variety of accounting practices for insurance
contracts.
|
Amendments to IFRS 17 - Initial Application of IFRS 17 &
IFRS 9
Comparative
Information
|
Many
insurance entities will now be applying both IFRS 17 and IFRS 9 for
the first time in annual reporting periods beginning on or after 1
January 2023.
|
Amendments to IAS 1 and IFRS Practice Statement 2 - Making
Materiality Judgements
Disclosure of Accounting
Policies
|
The
amendments to IAS 1 will require an entity to disclose material
accounting policies. Accounting policy information is likely to be
considered material if users need the disclosure to understand
other material information in the accounts.
|
Amendments to IAS 8 - Accounting Policies, Changes in
Accounting Estimates and Errors
Definition of Accounting
Estimates
|
The
amendments introduce a definition for accounting estimates which is
'monetary amounts in financial statements that are subject to
measurement uncertainty'. Measurement uncertainty will arise when
monetary amounts required to apply an accounting policy cannot be
observed directly. In such cases, accounting estimates will need to
be developed using judgements and assumptions.
|
Amendments to IAS 12 - Income Taxes
Deferred Tax related to
Assets and Liabilities arising from a Single
Transaction
|
This
amendment to IAS 12 Income Taxes introduces an exception to the
"initial recognition exemption" when the transaction gives rise to
equal taxable and deductible temporary differences.
|
Amendments to IAS 12 - Income Taxes
International Tax Reform -
Pillar Two Model Rules
|
This
amendment to IAS 12 Income Taxes introduces disclosures to help
investors better understand a company's exposure to income taxes
arising from the reform, particularly before legislation
implementing the rules is in effect.
|
3.
SEGMENT
REPORTING
The following information is given
about the Group's reportable segments:
The Chief Operating Decision Maker
is the Board of Directors. The Board reviews the Group's internal
reporting in order to assess performance of the Group. Management
has determined the operating segment based on the reports reviewed
by the Board.
The Board considers that during
the year ended 31 December 2023 the Group operated in two business
segments being polymer development and production in Slovenia and
corporate functions in the UK.
|
United
Kingdom
|
|
Slovenia
|
|
Total
|
|
£'000
|
|
£'000
|
|
£'000
|
Revenue
|
-
|
|
587
|
|
587
|
Cost of sales
|
-
|
|
(329)
|
|
(329)
|
|
-
|
|
258
|
|
258
|
|
|
|
|
|
|
Operational costs
|
-
|
|
(213)
|
|
(213)
|
Depreciation &
amortisation
|
-
|
|
(179)
|
|
(179)
|
Administrative expenses
|
(1,736)
|
|
(409)
|
|
(2,145)
|
Impairment charge
|
-
|
|
(838)
|
|
(838)
|
Operating loss from continued
operations per reportable segment
|
(1,736)
|
|
(1,381)
|
|
(3,117)
|
Finance costs
|
-
|
|
(3)
|
|
(3)
|
Loss for the year from continuing
operations
|
(1,736)
|
|
(1,384)
|
|
(3,120)
|
|
|
|
|
|
|
Reportable segment
assets
|
2,111
|
|
323
|
|
2,434
|
Reportable segment
liabilities
|
(150)
|
|
(258)
|
|
(408)
|
Total
|
1,961
|
|
65
|
|
2,026
|
4.
REVENUE
|
|
Year ended 31 Dec 2023
£'000
|
Year ended 31 Dec 2022
£'000
|
Product Sales Revenue
|
|
|
|
Slovenia
|
|
5
|
41
|
Europe
|
|
355
|
415
|
Rest of the
world
|
|
66
|
-
|
|
|
426
|
456
|
Services Sales Revenue
|
|
|
|
Slovenia
|
|
161
|
86
|
|
|
161
|
86
|
Total Sales Revenue
|
|
587
|
542
|
5.
OPERATING COSTS
AND ADMINISTRATIVE EXPENDITURE
|
|
Year ended 31 Dec 2023
£'000
|
Year ended 31 Dec 2022
£'000
|
Operating costs
|
|
|
|
Depreciation
|
|
(179)
|
(113)
|
Operational costs
|
|
(213)
|
(238)
|
|
|
(392)
|
(351)
|
Administrative costs
|
|
|
|
Directors remuneration
|
|
(754)
|
(1,162)
|
Salary and wages
|
|
(276)
|
(111)
|
Professional and consulting
fees
|
|
(389)
|
(703)
|
Travel expenses
|
|
(21)
|
(6)
|
Foreign exchange
|
|
(69)
|
(10)
|
Other expenses
|
|
(267)
|
(336)
|
Share based payments*
|
|
(369)
|
(339)
|
|
|
(2,145)
|
(2,667)
|
*£268k of share based payments are shown in directors
remuneration to reconcile to the remuneration report on page 23.
Remaining amount relates to external consultants.
6.
AUDITORS
REMUNERATION
|
|
Year ended 31 Dec 2023
£'000
|
Year ended 31 Dec 2022
£'000
|
Fees payable to the Group's
auditor for the audit of parent company and consolidated financial
statements
|
|
(50)
|
(46)
|
|
|
(50)
|
(46)
|
7.
STAFF COSTS AND
DIRECTORS' EMOLUMENTS
Directors' remuneration and
staff costs are referenced below. Directors remuneration can also
be reference in the remuneration report:
|
Year ended 31 Dec 2023
£'000
|
Year ended 31 Dec 2022
£'000
|
Directors salaries
|
252
|
319
|
Directors bonus
|
-
|
103
|
Directors pension
|
1
|
1
|
Directors fees
|
233
|
220
|
Share based payments
|
268
|
519
|
Employee costs
|
204
|
111
|
|
958
|
1,273
|
On average, excluding directors,
the Group employed 3 technical staff members (31 December 2022:6)
and 4 administration staff members (31 December 2022:
3).
The highest paid director received
remuneration of approximately £224,000 (31 December 2022:
£454,000).
8.
FINANCE
COSTS
|
Year ended 31 Dec
2023
£'000
|
Year ended
31
Dec
2022
£'000
|
Finance charge on leased
assets
|
(3)
|
(4)
|
Finance
costs
|
(3)
|
(4)
|
9.
TAXATION
No liability to income taxes arise
in the period.
The current tax for the year
differs from the loss before tax at a standard rate of corporation
tax in the UK.
The differences are explained
below:
|
|
Year ended 31 Dec 2023
£'000
|
Year ended 31 Dec 2022
£'000
|
The charge for year is made up as
follows:
|
|
|
|
Corporation tax on the results for
the year
|
|
-
|
-
|
A reconciliation of the tax charge
appearing in the income statement to the tax that would result from
applying the standard rate of tax to the results for the year
is:
|
|
|
|
Loss per the financial
statements
|
|
(3,120)
|
(2,705)
|
Tax
credit at the weighted average of the standard rate of corporation
tax in Slovenia of 19% and UK of 19% - being 19% (31 Dec 2022:
19%)
Non-deductible
expenses
|
|
(592)
234
|
(514)
163
|
|
|
|
|
Current year losses for which no
deferred tax asset is recognised
|
|
(358)
|
(351)
|
Income tax charge for the
year
|
|
-
|
-
|
Deferred tax assets carried
forward have not been recognised in the accounts because there is
currently insufficient evidence of the timing of suitable future
taxable profits against which they can be recovered. The
accumulated tax losses are estimated to amount to approximately
£6,127,000 (31 Dec 2022: £1,958k) and the carried forward deferred
tax asset is estimated to amount to approximately
£1,164,000.
No deferred tax assets in respect
of tax losses have not been recognised in the accounts because
there is currently insufficient evidence of the timing of suitable
future taxable profits against which they can be
recovered.
10.
EARNINGS PER
SHARE
The calculation of the basic and
diluted earnings per share is calculated by dividing the profit or
loss for the year by the weighted average number of ordinary shares
in issue during the period.
|
Year ended 31 Dec
2023
|
Year ended 31 Dec
2022
|
Loss for the year/period from
continuing operations - £'000
|
(3,120)
|
(2,705)
|
Weighted number of ordinary shares
in issue
|
104,057,299
|
103,589,479
|
Basic earnings per share from
continuing operations - pence
|
(3.00)
|
(2.61)
|
There is no difference between the
diluted loss per share and the basic loss per share presented.
Share options and warrants could potentially dilute basic earnings
per share in the future but were not included in the calculation of
diluted earnings per share as they are anti-dilutive for the year
presented.
11.
INTANGIBLE
ASSETS
Group and Company
|
£'000
|
Cost and
carrying value - 1 January 2022
|
2,068
|
|
|
Additions
|
-
|
|
|
Impairment
|
-
|
At 31 December
2022
|
2,068
|
|
|
Additions
|
-
|
|
|
Impairment
|
-
|
|
|
At 31 December
2023
|
2,068
|
|
|
|
The additions in 2018 relates to
the issue of 22,500,000 shares to founding director Victor Bolduev
on the acquisition of his Know-how and patents that have been
transferred to the Group. In line with International Accounting
Standard 36 (IAS 36) the Directors have undertaken an assessment of
these intangible assets to discern whether they are
impaired.
The assessment encompasses various
aspects such as preparing detailed cashflow forecasts that
include revenue projections from agreements with entities
like Argent BioPharma and potential royalties from products such as
ArtemiC™ and CannEpil-IL™.
The Directors also considered that
despite challenges like lower than forecasted revenue from its
Slovenian subsidiary and competitive market pressures, several
factors indicate the assets retain significant value. These include
licensing agreements yielding royalties, such as with Argent
BioPharma for drug delivery systems; research and supply
partnerships; a major investment supporting commercial exploitation
of existing patents; and continuity with key personnel like Victor
Bolduev.
Although the Directors are
confident in the future revenues to be derived from the know-how
they do recognise the inherent risk in these forecasts. As a result
of this they have applied a conservative discount rate of 18% to
the forecasts giving them extra confidence over the
future revenues
Ultimately whilst recent
performance would suggest impairment indicators, management has
concluded the intangible assets should not be impaired given the
various factors mentioned above.
12.
LEASES
Group
|
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Right-of-use assets
|
|
|
|
Motor vehicles
|
|
39
|
27
|
|
|
39
|
27
|
Lease liabilities
|
|
|
|
Current
|
|
12
|
4
|
Non-current
|
|
22
|
18
|
|
|
34
|
22
|
Right of use
assets
A
reconciliation of the carrying amount of the right-of-use asset is
as follows:
|
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Motor vehicles
|
|
|
|
Opening balance
|
|
27
|
-
|
Additions
|
|
24
|
32
|
Amortisation
|
|
(12)
|
(5)
|
|
|
39
|
27
|
Lease
liabilities
A
reconciliation of the carrying amount of the lease liabilities is
as follows:
|
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Opening balance
|
|
22
|
-
|
Additions
|
|
25
|
28
|
Finance charge
|
|
3
|
2
|
Repayments
|
|
(16)
|
(8)
|
|
|
34
|
22
|
13.
PROPERTY, PLANT
AND EQUIPMENT
Group
|
|
Leasehold
improvements
£'000
|
Plant &
Equipment
£'000
|
|
Total
£'000
|
Cost
|
|
|
|
|
|
At 1 January 2022
|
|
-
|
537
|
|
537
|
Additions
|
|
85
|
352
|
|
437
|
Exchange impact
|
|
4
|
48
|
|
52
|
At 31 December 2022
|
|
89
|
937
|
|
1,026
|
Additions
|
|
15
|
201
|
|
216
|
Disposals
|
|
-
|
(27)
|
|
(27)
|
Impairment
|
|
(107)
|
(1,117)
|
|
(1,224)
|
Exchange impact
|
|
3
|
6
|
|
9
|
At 31 December 2023
|
|
-
|
-
|
|
-
|
Depreciation
|
|
|
|
|
At 1 January 2022
|
-
|
(227)
|
|
(227)
|
Charge for the period
|
(27)
|
(81)
|
|
(108)
|
Exchange impact
|
(2)
|
(15)
|
|
(17)
|
At 31 December 2022
|
(29)
|
(323)
|
|
(352)
|
Charge for the year
|
(11)
|
(143)
|
|
(154)
|
Disposals
|
-
|
6
|
|
6
|
Impairment
|
40
|
463
|
|
503
|
Exchange impact
|
-
|
(3)
|
|
(3)
|
At 31 December 2023
|
-
|
-
|
|
-
|
|
|
|
|
|
Net book value at 31 December 2022
|
60
|
614
|
|
674
|
Net book value at 31 December 2023
|
-
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
14.
INVENTORY
Group
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Raw materials
|
|
51
|
123
|
Finished goods
|
|
-
|
64
|
|
|
51
|
187
|
*An amount equal to approximately
£117,000 was impaired in the period
15.
INVESTMENTS
Company
|
£'000
|
Cost and
carrying value - 1 January 2022
|
1,304
|
|
|
Additions
|
-
|
Impairment
|
-
|
At 31 December
2022
|
1,304
|
|
|
Additions
|
-
|
Impairment
|
(1,304)
|
|
|
At 31 December
2023
|
-
|
|
|
|
*Immaterial investment in Graft Polymer IP Limited &
GraftBio Limited of £1 each
Investments in subsidiary relate to
the investment in Graft Polymer D.o.o which is the wholly owned
subsidiary operating out of Slovenia. At each period end, the
Directors assess the investment for any indicators of impairment
and have concluded that due to the recent performance of the
subsidiary that it needs to be fully impaired and hence the entire
value has been written off at period end.
Company subsidiary undertakings
The Group owned interests in the
following subsidiary undertakings, which are included in the
consolidated financial statements:
Name
|
Business
Activity
|
Country of
Incorporation
|
Registered
Address
|
Percentage
Holding
|
Graft
Polymer d.o.o.
|
Polymer
development and production
|
Slovenia
|
Emonska
Cesta 8, 1000, Ljubljana, Slovenia
|
100%
|
Graft
Polymer IP Limited
|
Intellectual property
|
England
and Wales
|
Eccleston Yards, 25 Eccleston Place, London, SW1W
9NF
|
100%
|
GRAFTBIO
Limited
|
Bio-Polymer development and production
|
England
and Wales
|
Eccleston Yards, 25 Eccleston Place, London, SW1W
9NF
|
100%
|
16.
TRADE AND OTHER
RECEIVABLES
GROUP
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Trade receivables
|
|
65
|
35
|
Other taxes and social
security
|
|
16
|
55
|
Prepayments
|
|
21
|
232
|
Other receivables
|
|
6
|
8
|
|
|
108
|
330
|
The carrying amounts of the
Group's trade and other receivables are denominated in the
following currencies:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
UK Pounds
|
|
30
|
45
|
Euros
|
|
78
|
285
|
|
|
108
|
330
|
COMPANY
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Other taxes and social
security
|
|
4
|
21
|
Prepayments
|
|
21
|
-
|
Other receivables
|
|
6
|
24
|
|
|
31
|
45
|
As at 31 December 2023 all
trade and other receivables were fully performing and hence no
provision has been processed. Trade receivables have the following
aging:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Current
|
|
65
|
39
|
|
1 - 3 months
|
|
-
|
-
|
|
3 - 6 months
|
|
-
|
-
|
|
> 6 months
|
|
-
|
6
|
|
|
|
65
|
45
|
|
|
|
|
|
|
|
|
|
17.
CASH AND CASH
EQUIVALENTS
Cash and cash equivalents consist
of cash on hand and short term deposits held with banks with a A-1+
rating. The carrying value of these approximates to their fair
value. Cash and cash equivalents included in the cash flow
statement comprise the following balance sheet amounts.
GROUP
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Cash and cash
equivalents
|
|
155
|
1,640
|
|
|
155
|
1,640
|
COMPANY
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Cash and cash
equivalents
|
|
12
|
1,548
|
|
|
12
|
1,548
|
18.
TRADE AND OTHER
PAYABLES
GROUP
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Trade payables
|
|
159
|
185
|
Accruals
|
|
68
|
114
|
VAT payable
|
|
22
|
23
|
|
|
249
|
322
|
COMPANY
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Trade payables
|
|
66
|
34
|
Accruals
|
|
51
|
114
|
|
|
117
|
148
|
19.
Provisions
GROUP
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
HMRC obligations
|
|
32
|
-
|
|
|
32
|
-
|
In the month of the December,
Directors and other senior management waived fees owed to them with
the intention of having shares issued at a later date. Directors
fees in their usual circumstance would attract tax and or national
insurance contributions. The shares have not been issued as of
period end so the Company has raised a provision to allow for
potential obligations that may occur in the future. The issue of
these shares is contingent on the preparation of a prospectus which
at the publishing of this has not been completed.
20.
SHARE
CAPITAL
|
31 Dec
2023
£'000
|
31 Dec
2022
£'000
|
Issued and fully paid ordinary
shares with a nominal value of 0.1p (31 Dec 2022: 0.1p)
|
|
|
Number of shares
|
104,097,299
|
104,097,299
|
Nominal value (£'000)
|
41
|
41
|
Change in issued Share Capital and Share
Premium:
|
Number of
shares
|
Share capital
|
Shares capital to
issue
|
Share
premium
|
Total
|
Ordinary shares
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Balance at 1 January 2023
|
104,097,229
|
41
|
-
|
7,001
|
7,042
|
Waiver of
fees1
|
-
|
-
|
175
|
-
|
-
|
Balance at 31 December 2023
|
104,097,229
|
41
|
175
|
7,001
|
7,042
|
1In the month of the December, Directors and other senior
management waived fees owed to them with the intention of having
shares issued at a later date. The issue of the shares is
contingent on the preparation of a prospectus to allow for
sufficient headroom in line with the London Stock Exchange general
rules.
The share premium represents the
difference between the nominal value of the shares issued and the
actual amount subscribed less; the cost of issue of the shares, the
value of the bonus share issue, or any bonus warrant
issue.
21.
SHARE BASED
PAYMENTS RESERVE
|
|
Company
£'000
|
|
Group
£'000
|
At 31 December 2021
|
|
-
|
|
-
|
Advisor warrants issued
|
|
143
|
|
143
|
Employee options
issued1
|
|
715
|
|
715
|
At 31 December
2022
|
|
858
|
|
858
|
Employee
options 1
|
|
369
|
|
369
|
At 31 December
2023
|
|
1,227
|
|
1,227
|
|
|
|
|
|
|
1On 6 January 2022, 11,173,611 employee options were granted
to a number of employees within the Group. These options have
different vesting conditions based on performance milestones. The
charge that relates to the 2023 year has been brought to account
above.
Warrants
|
As at 31 December
2023
|
|
Weighted average exercise
price
|
Number of
warrants
|
Brought
forward at 1 January 2023
|
22p
|
2,031,008
|
Granted
in period
|
|
-
|
Outstanding at 31 December 2023
|
22p
|
2,031,008
|
Exercisable at 31 December 2023
|
22p
|
2,031,008
|
The
weighted average time to expiry of the warrants as at 31 December
2023 is 233 days.
Options
|
As at 31 December
2023
|
|
Weighted average exercise
price
|
Number of
options
|
Brought
forward at 1 January 2023
|
-
|
11,000,000
|
Granted
in period
|
-
|
-
|
Outstanding at 31 December 2023
|
0.1p
|
11,000,000
|
Exercisable at 31 December 2023
|
-
|
-
|
The
weighted average time to expiry of the warrants as at 31 December
2023 is 7 days.
22.
FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to
ensure that entities in the Group will be able to continue as a
going concern while maximising the return to stakeholders. The
overall strategy of the Company and the Group is to minimise costs
and liquidity risk.
The capital structure of the Group
consists of equity attributable to equity holders of the parent,
comprising issued share capital, foreign exchange reserves and
retained earnings as disclosed in the Consolidated Statement of
Changes of Equity.
The Group is exposed to a number
of risks through its normal operations, the most significant of
which are interest, credit, foreign exchange, commodity and
liquidity risks. Sensitivity analysis has not been performed
because the potential impact is not considered material. The
management of these risks is vested to the Board of
Directors.
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.
Indicators that there is no reasonable expectation of recovery
include, amongst others, failure to make contractual payments for a
period of greater than 120 days past due.
The carrying amount of financial
assets represents the maximum credit exposure.
The principal financial assets of
the Company and Group are bank balances and trade receivables. The
Group deposits surplus liquid funds with counterparty banks that
have high credit ratings and the Directors consider the credit risk
to be minimal.
The Group's maximum exposure to
credit by class of individual financial instrument is shown in the
table below:
|
31 Dec
2023
Carrying
Value
|
31 Dec
2023
Maximum
Exposure
|
31 Dec
2022
Carrying
Value
|
31 Dec
2022
Maximum
Exposure
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Cash and cash
equivalents
|
155
|
155
|
1,640
|
1,640
|
Trade receivables
|
65
|
65
|
35
|
35
|
|
220
|
220
|
1,675
|
1,675
|
Currency Risk
The Group operates in a global
market with income and costs possibly arising in a number of
currencies and is exposed to foreign currency risk arising from
commercial transactions, translation of assets and liabilities and
net investment in foreign subsidiaries. Exposure to commercial
transactions arise from sales or purchases by operating companies
in currencies other than the Companies' functional currency.
Currency exposures are reviewed regularly.
The Group has a limited level of
exposure to foreign exchange risk through their foreign currency
denominated cash balances and a portion of the Group's costs being
incurred in US Dollars and Euros. Accordingly, movements in the
Sterling exchange rate against these currencies could have a
detrimental effect on the Group's results and financial condition.
Such changes are not considered likely to have a material effect on
the Group's financial position at 31 December 2023. Funds of the
parent company are held with HSBC which has the following credit
ratings (Fitch: A+, Stable, Moody's A3, Stable, S&P A-,
stable)
Currency risk is managed by
maintaining some cash deposits in currencies other than Sterling.
The table below shows the currency profiles of cash and cash
equivalents:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Cash and cash
equivalents
|
|
|
|
Sterling
|
|
12
|
1,548
|
Euro
|
|
143
|
92
|
|
|
155
|
1,640
|
The table below shows an analysis
of the currency of the monetary asset and liabilities in Sterling
being the functional currency of the Group:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Balance denominated
in
|
|
|
|
Sterling
|
|
(27)
|
1,520
|
Euro
|
|
50
|
(60)
|
|
|
23
|
1,460
|
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.
The Group seeks to manage
liquidity risk by regularly reviewing cash flow budgets and
forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
The Group deems there is sufficient liquidity for the foreseeable
future.
The Group had cash and cash
equivalents at period end as below:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Cash and cash
equivalents
|
|
155
|
1,640
|
|
|
155
|
1,640
|
The table below sets out the
maturity profile of the financial liabilities at 31
December:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Due in less than one
month
|
|
(34)
|
(56)
|
Due between one and three
months
|
|
(93)
|
(129)
|
Due between three months and one
year
|
|
(32)
|
-
|
|
|
(159)
|
(185)
|
Interest Rate Risk
The Group is exposed to interest
rate risk whereby the risk can be a reduction of interest received
on cash surpluses held and an increase in interest on borrowings
the Group may have. The maximum exposure to interest rate risk at
the reporting date by class of financial asset was:
|
|
31 Dec 2023
£'000
|
31 Dec 2022
£'000
|
Bank balances
|
|
155
|
1,640
|
|
|
155
|
1,640
|
The Group is not materially
reliant on interest revenue on cash and cash equivalents and
therefore represents a low volume of risk.
23.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
GROUP
31 Dec 2023
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / (liabilities)
|
|
|
£'000
|
£'000
|
£'000
|
Trade and other
receivables1
|
|
|
81
|
-
|
81
|
Cash and cash
equivalents
|
|
|
155
|
-
|
155
|
Trade and other
payables2
|
|
|
-
|
(159)
|
(159)
|
|
|
|
236
|
(159)
|
77
|
1 Trade and other receivables
excludes prepayments
2 Trade and other payables
excludes accruals, taxes and social security
GROUP
31 Dec 2022
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / (liabilities)
|
|
|
£'000
|
£'000
|
£'000
|
Trade and other
receivables1
|
|
|
90
|
-
|
90
|
Cash and cash
equivalents
|
|
|
1,640
|
-
|
1,640
|
Trade and other
payables2
|
|
|
-
|
(203)
|
(203)
|
|
|
|
1,730
|
(203)
|
1,527
|
COMPANY
31 Dec 2023
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / (liabilities)
|
|
|
£'000
|
£'000
|
£'000
|
Trade and other
receivables1
|
|
|
4
|
-
|
4
|
Cash and cash
equivalents
|
|
|
12
|
-
|
12
|
Trade and other
payables2
|
|
|
-
|
(66)
|
(66)
|
|
|
|
16
|
(66)
|
(50)
|
COMPANY
31 Dec 2022
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / (liabilities)
|
|
|
£'000
|
£'000
|
£'000
|
Trade and other
receivables1
|
|
|
45
|
-
|
45
|
Cash and cash
equivalents
|
|
|
1,548
|
-
|
1,548
|
Trade and other
payables2
|
|
|
-
|
(34)
|
(34)
|
|
|
|
1,593
|
(34)
|
1,559
|
24.
CAPITAL
COMMITMENTS
There were no capital commitments
at 31 December 2023.
25.
CONTINGENT
LIABILITIES
In December 2021 the Company
entered a royalty agreement with Victor was replaced by a Profit
Share Agreement, whereby Victor is due 7% of the Company's annual
operating profit that accrues on a monthly basis, up to an
aggregate amount of €3,500,000, which will commence upon the
Company achieving monthly operating profit of €20,000.
Other than above, there were no
further contingent liabilities at 31 December 2023.
26.
COMMITMENTS
UNDER OPERATING LEASES
There were no commitments under
operating leases at 31 December 2023.
27.
RELATED PARTY
TRANSACTIONS
The Group's investments in
subsidiaries have been disclosed in note 15.
During the year the Company
entered into the following transactions with other Group
companies:
|
|
Amounts owed by / (to) group
companies
|
|
|
Opening Balance
£'000
|
Movement in year
£'000
|
Provisions in year
£'000
|
|
Closing Balance
£'000
|
Graft Polymer d.o.o. - 31 Dec
2022
|
|
302
|
1,412
|
-
|
|
1,714
|
Graft Polymer d.o.o. - 31 Dec
2023
|
|
1,714
|
330
|
(2,044)
|
|
-
|
|
|
|
|
|
|
|
Graft Polymer IP Limited - 31 Dec
2022
|
|
(29)
|
-
|
-
|
|
(29)
|
Graft
Polymer IP Limited - 31 Dec 2023
|
|
(29)
|
29
|
-
|
|
-
|
At 31 December 2023 the Company
did not have any amounts receivable from Graft Polymer d.o.o. (31
Dec 2022 approximately £1,714k).
Details of directors' emoluments
are set out in the directors remuneration report.
Argent BioPharma
Ltd
During the period the Group
received €185,425 of revenue from Argent BioPharma Ltd (formerly
MGC Pharmaceuticals Ltd). Roby Zomer was a director of Graft
Polymer (UK) Plc before his resignation on 8 January 2024 and
remains a Director of Argent BioPharma Ltd.
28.
EVENTS
SUBSEQUENT TO PERIOD END
Issue of
equity
On 5 January 2024 the Company
issued 20,666,667 ordinary shares at a placing price of £0.006 to
CMC Markets Plc in turn raising £124,000.
Directorate
change
On 15 March 2024, Roby Zomer, the
Non-Executive Chairman of the Company, and Alex
Brooks a
Non-Executive Director resigned from the Board. Nicholas
Nelson was appointed as a director of the Company replacing Mr
Zomer as Non-Executive Chairman of the Company with immediate
effect.
Implementation of Loan
facility
On 15 March 2024 provision of a
£100,000 working capital loan facility to the Company by Nicholas
Nelson and another private individual (the "Loan
Facility"). The Loan Facility is intended to be drawn down in
full against expenses incurred by the Company as they arise, and it
attracts an interest rate of 10% per month. On 23 April 2024 the
loan facility was increased by a further £100,000.
29.
CONTROL
In the opinion of the Directors as
at the year end and the date of these financial statements there is
no single ultimate controlling party.