Results for year ended 31 Dec 2021 & Notice of AGM

RNS Number : 7054Q
Nanosynth Group PLC
30 June 2022
 

30 June 2022

 

nanosynth group plc

 

("nanosynth", the "Company" or the "Group")

 

Results for the year ended 31 December 2021 and Notice of AGM

 

nanosynth, the AIM quoted company specialising in the synthesis and application of nanoparticles to create new and improve existing products, is pleased to announce its final audited results for the year ended 31 December 2021.

 

The Company also announces that the Company's Annual General Meeting ('AGM') will be held at 9am on 22 July 2022 at the London Marriott Hotel Maida Vale, Plaza Parade, Maida Vale, NW6 5RP.

 

The Company's annual report and accounts, Notice of AGM and Forms of Proxy will be dispatched to shareholders later today and will shortly be available on the website at www.nanosynthgroup.com

 

CHAIRMAN'S STATEMENT

 

Overview

 

The last eighteen months has been a period of major change at nanosynth group plc (nnn) with a new name, a new board and a new direction. During the year the Group refocused on the development and commercialisation of its core nano-particle platform technology and dispensed with non-core activities, including the return of Cloudveil Limited to its founders and, the disposal of the majority of Gyrometric Systems Ltd. The Group also announced a strategic review and has emerged in a stronger position than this time last year with a healthy balance sheet, a clear and achievable business strategy and a new team positioned to deliver against the Group's strategic goals.

 

Board changes

 

The Company implemented a number of board changes in the period.  The major challenge for the new board was a complete strategic review.  The Board was also keen to build on the innovations behind the anti-viral face mask and develop further products using the same technology, alongside the development of products for the agricultural sector, which had been the founding principle behind Pharm2Farm (P2F).

 

Financials

 

With a year of substantial change and complete refocus, the results for the 2021 financial year provide limited meaningful insight into the future of the business and in fact incorporate costs associated with the required strategic shift.

 

Operating expenses related to continuing operations before current asset impairments increased to £2,538k from £960k in 2020 reflecting the greater activity within the Group and incorporating a number of one-off costs required to reposition the business. Revenue from continuing operations increased to £209k in 2021 from £1k in 2020, which was derived solely from the P2F division. 

 

During the period the Company raised £939,225 net of costs through the issue of new shares as a result of the exercise of warrants and options. In addition, £1,505,000 was received during this financial year in respect of shares issued in the previous period.

 

Cash as at 31st December 2021 was £3.8m, and at the date of this report, the Group had net cash of £1.8m which is considered to be more than sufficient to cover the expected working capital requirements of the Group for at least the next twelve months.

 

Strategic review

 

As a result of the deep strategic review, the decision was made to evolve the Group's mask strategy to focus on licensing the core anti-viral technology into the market rather than manufacturing masks directly.  As a result of market changes it was not considered financially viable to continue manufacturing masks and, as previously notified, the mask machine was disposed of and the existing stock has been fully provided for in these accounts given the likely incremental cost of readying that stock for commercial sale.  The remaining masks that have been manufactured will be made available to good causes including local hospitals and care homes.

 

The ground-breaking technology that was developed for the anti-viral face masks is being further refined for use in the HVAC market through a joint venture company, Virosynth, that has been formed with a leading vertically integrated media manufacturer, Volz Luftfilter GmbH. Through the JV arrangement, nanosynth expects to benefit from the heightened awareness of, and demand for, cleaner air in all public environments.

 

Beyond HVAC, there are seven additional specific market verticals that have been identified for the development and application of nanoparticle technology with strategic partners. These areas include animal health and wellbeing, cosmetics, medical, plants, food and drink, functional coatings and electronics.  In each of these areas, specific use-cases and development projects have been defined and strategic partners have been identified. The Company is currently in discussion with a number of major companies and trading partners within the seven identified markets and will be progressing these discussions in order to target the conclusion of successful commercial agreements within the second half of 2022, galvanising the confidence and clear value the Board see in nanosynth group and its new commercial strategy. 

 

At this point, it is noted the future strategy shared on 1 June 2022 is not impacted by the current situation surrounding Ukraine nor the associated sanctions imposed on Russia other than the global shift in commodity prices, a risk we aim to manage with our target trading partners and supply agreements.

 

Richard Clarke

Non-Executive Chairman

29 June 2022

 

 

Mark Duffin, Chief Executive of nanosynth, commented :

 

"I would like to thank all of the Company's shareholders for their support. The Board is firmly focused on delivering concrete agreements with commercial parties and looks forward to updating shareholders as it progresses its various initiatives. At the beginning of the year, the Board was considering various M&A opportunities however, in the current economic climate this is not now a near term focus though the Company will always consider opportunities where it can deliver value to shareholders and build scale to its operations.  After the groundwork that has been carried out during the year to date, I am confident that the second half of 2022 will see further positive developments at nanosynth and we look forward with renewed optimism."

 

 

 

 

ENQUIRIES:

 

nanosynth Group plc

 

Mark Duffin (Chief Executive Officer)

 

via IFC Advisory

SP Angel Corporate Finance LLP (Nominated Adviser & Broker)

 

Stuart Gledhill

 

Caroline Rowe

 

+44 20 3470 0470

 

IFC Advisory Ltd (Financial PR & IR)

 

Graham Herring

 

Zach Cohen

 

+44 20 3934 6630

 

 

 



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021


 

 


Note

2021

£

  2020

£

Revenue from contracts with customers

5

208,778

600

Cost of sales


(164,027)

(14,943)

Gross profit/(loss)


44,751

(14,343)

Administrative expenses

6

(2,537,934)

(960,357)

Other operating income


2,000

9,841

Impairments

6

(687,656)

-

Operating loss


(3,178,839)

(964,859)

Finance costs

10

(545)

(4,085)

Finance income


-

39

Loss before income tax


(3,179,384)

(968,905)

Income tax

11

-

-

Loss for the year from continuing operations


(3,179,384)

(968,905)

Loss for the year from discontinued operations

12

(173,266)

(479,817)

Total comprehensive income for the year


(3,352,650)

(1,448,722)

 


 


Loss and total comprehensive income attributable to:


 


Equity holders of the parent


(3,340,894)

(1,416,088)

Non-controlling interests


(11,756)

(32,634)



 


Earnings per ordinary share attributable to owners of the parent during the year (expressed in pence per share)

13

 


Basic and diluted - continuing operations


(0.15)

(0.12)

Basic and diluted - discontinued operations


(0.01)

(0.05)

Basic and diluted - total


(0.16)

(0.17)

 

The loss for the financial year dealt with in the financial statements of the Parent Company, nanosynth group plc, was £1,445,525 (2020 £1,543,714). As permitted by Section 408 of the Companies Act 2006, no separate statement of comprehensive income is presented in respect of the Parent Company.

 

The notes form part of these Financial Statements.

 

 



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2021


 

 


Note

2021

£

  2020

£

Non-current assets

 

 

 

 

Intangible assets


14

1,764,419

1,764,419

Property, plant and equipment


15

42,391

25,661

Total non-current assets


 

1,806,810

1,790,080

Current Assets


 

 


Trade and other receivables


18

80,348

1,925,987

Corporation tax


 

1,396

1,396

Inventories


 

16,679

63,491

Cash and cash equivalents


19

3,760,992

3,741,135

Total current assets


 

3,859,415

5,732,009

Total assets


 

5,666,225

7,522,089

Equity attributable to owners of the parent


 

 


Share capital


20

5,805,331

5,795,751

Share premium


20

13,674,215

12,445,569

Convertible loan stock


22

-

2,000

Other reserves


23

1,405,836

1,675,276

Translation reserve


 

92,181

92,181

Retained loss


 

(16,017,896)

(13,033,293)

equity ATTRIBUTABLE TO OWNERS OF THE PARENT


 

4,959,667

6,977,484

Non-controlling interests


24

-

(80,679)

TOTAL EQUITY


 

4,959,667

6,896,805

Current liabilities


 

 


Trade and other payables


25

462,483

333,087

Social security and other taxes


 

244,075

242,322

Lease liabilities


26

-

29,500

Total current liabilities


 

706,558

604,909

Non-current liabilities


 

 


Lease liabilities


26

-

7,375

Provisions


27

-

13,000

Deferred tax liabilities


28

-

-

Total non-current liabilities


 

-

20,375

TOTAL LIABILITIES


 

706,558

625,284

TOTAL EQUITY AND LIABILTIES


 

5,666,225

7,522,089

 

The notes form part of these Financial Statements.

These Financial Statements were approved by the Board of Directors and authorised for issue on 29 June 2022 and were signed on its behalf by:

 

Mark Duffin

Chief Executive Officer

 

 



 

 

The notes form part of these Financial Statements.

These Financial Statements were approved by the Board of Directors and authorised for issue on 29 June 2022 and were signed on its behalf by:

 

Mark Duffin

Chief Executive Officer

 

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 31 December 2021

 

Share

capital

£

 

Share Convertible

premium  loan stock

£ £

Other reserves

£

Translation reserve

£

Retained

loss

£

Total

£

Non- controlling

interests

£

Total equity

£

As at 1 January 2020

5,128,124

6,822,694

103,000

(475,153)

92,181

(11,642,051)

28,795

(48,045)

(19,250)

Loss and total comprehensive income for the year

-

-

-

-

-

(1,416,088)

(1,416,088)

(32,634)

(1,448,722)

Shares issued1

667,627

5,612,964

(71,752)

-

-

-

6,208,839

-

6,208,839

Warrants issued

-

-

-

10,712

-

-

10,712

-

10,712

Warrants exercised

-

9,911

-

(9,911)

-

-

-

-

-

Convertible loan stock issued2

-

-

4,085

-

-

-

4,085

-

4,085

Convertible loan stock redeemed

-

-

(33,333)

-

-

-

(33,333)

-

(33,333)

Share based payments arising

-

-

-

434,474

-

-

434,474

-

434,474

Share based payments expired

-

-

-

(24,846)

-

24,846

-

-

-

Merger relief on acquisition

-

-

-

1,740,000

-

-

1,740,000

-

1,740,000

As at 31 December 2020

5,795,751

12,445,569

2,000

1,675,276

92,181

(13,033,293)

6,977,484

(80,679)

6,896,805

 

 

 

 

 

 

 

 

 

 

As at 1 January 2021

5,795,751

12,445,569

2,000

1,675,276

92,181

(13,033,293)

6,977,484

(80,679)

6,896,805

Loss and total comprehensive income for the year

 

 

-

 

 

-

-

-

-

(3,340,894)

(3,340,894)

(11,756)

(3,352,650)

Shares issued1

9,580

1,149,662

-

-

-

-

1,159,242

-

1,159,242

Disposal of subsidiary

-

-

-

-

-

-

-

92,435 

92,435

Interest waived

-

-

(2,000)

-

-

-

(2,000)

-

(2,000)

Warrants exercised

-

801

-

(801)

-

-

-

-

-

Share based payments arising

-

-

-

165,835

-

-

165,835

-

165,835

Share based payments  exercised

-

78,183

-

(434,474)

-

356,291

-

-

-

As at 31 December 2021

5,805,331

13,674,215

-

1,405,836

92,181

(16,017,896)

4,959,667

-

4,959,667

 

1 Shares issued are net of costs

 

2 Convertible loan stock includes cumulative interest payable by the issue of shares

 

The notes form part of these Financial Statements.

 

 



 

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

As at 31 December 2021

 

 

Share

capital

£

Share

premium

£

Convertible

loan stock

£

Share option and warrant reserve

£

 

Retained

loss

£

Total

£

As at 1 January 2020

5,128,124

6,822,694

103,000

24,846

(11,715,744)

362,920

Loss and total comprehensive income for the year

-

-

-

-

(1,543,714)

(1,543,714)

Shares issued1

667,627

5,612,964

(71,752)

-

-

6,208,839

Convertible loan stock issued2

-

-

4,085

-

-

4,085

Warrants issued

-

-

-

10,712

-

10,712

Warrants exercised

-

9,911

-

(9,911)

-

-

Convertible loan stock redeemed

-

-

(33,333)

-

-

(33,333)

Share based payments arising

-

-

-

434,474

-

434,474

Share based payments expired

-

-

-

(24,846)

24,846

-

As at 31 December 2020

5,795,751

12,445,569

2,000

435,275

(13,234,612)

5,443,983

 

 

As at 1 January 2021

5,795,751

12,445,569

2,000

435,275

(13,234,612)

5,443,983

Loss and total comprehensive income for the year

-

-

-

-

(1,445,525)

(1,445,525)

Shares issued1

9,580

1,149,662

-

-

-

1,159,242

Interested waived

-

-

(2,000)

-

-

(2,000)

Warrants exercised

-

801

-

(801)

-

-

Share based payments arising

-

-

-

165,835

-

165,835

Share based payments exercised

-

78,183

-

(434,474)

356,291

-

As at 31 December 2021

5,805,331

13,674,215

-

165,835

(14,323,846)

5,321,535

 

 

1 Shares issued are net of costs

2 Convertible loan stock includes cumulative interest payable by the issue of shares.

 

The notes form part of these Financial Statements.

 

 



 

 

The notes form part of these Financial Statements.

 

 

 

 

The notes form part of these Financial Statements.

 

 



 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2021

 

1. Ge neral information

 

nanosynth group plc (the "Company") and its subsidiaries (together the "Group") conducted three main activities during the year, as detailed in note 12, two of these were discontinued. The Company is incorporated and domiciled in the UK and its registered office is 27-28 Eastcastle Street, London W1W 8DH.  During the year the company changed its name to reflect the continuing activity of the Group.

 

The Company's shares are quoted on the Alternative Investment Market ("AIM") of the London Stock Exchange plc.

 

2. Summary of accounting policies

 

The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied in the year presented, unless otherwise stated.

 

a) Basis of preparation

 

These Financial Statements have been prepared with UK-adopted International Accounting Standards ("UK-adopted IAS") and the Companies Act 2006.  These accounting policies comply with each IAS that is mandatory for accounting periods ending on 31 December 2021 except for, in order to present fairly the acquisition of Pharm 2 Farm Limited, the Group has departed from the requirements within IFRS 3 relating to the value of the consideration as detailed in note 17.

 

As a result of the UK leaving the EU, the company has applied UK-adopted IAS.  In the previous year the company applied EU-adopted IFRS.  On 1 January 2021 these were identical and no restatements made.

 

The Financial Statements are presented in GBP (£) rounded to the nearest pound.

 

The preparation of financial statements in conformity with IAS 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 judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.

 

b) Going concern basis

 

At the date of this report the Group had net cash of £1.8m.  The Directors have reviewed the Group's strategy with regard to future investment in its business.

The Directors have considered the impact of Covid-19 and are closely monitoring the situation.

 

The Group's business activities together with the factors likely to affect its future development performance and position are set out in the Strategic Report. 

 

For the year ended 31 December 2021, the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposure to credit and liquidity risk can be found in the Strategic Report and in Notes 3 and 29.

 

Based on these assumptions, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and therefore have adopted the going concern basis of preparation in these Financial Statements.

 

c) New and amended standards

 

Changes in accounting policy

 

For the purpose of the preparation of these consolidated financial statements, apart from that detailed in 2(a) above the Group and Parent Company have applied all standards and interpretations that are effective for accounting periods beginning on or after 1 January 2021.

 

There were no new standards, amendments and interpretations effective for the first time on or after 1 January 2021 that had a material impact on the Group or Parent Company.

 

New standards, interpretations and amendments not yet effective

 

Standards, amendments and interpretations that have been published and will be mandatory for accounting periods beginning on or after 1 January 2022 are not expected to have a material impact on the Group's or Parent Company's results or shareholders' funds.

 

d) Basis of consolidation

 

Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

 

•

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee).

•

Exposure, or rights, to variable returns from its involvement with the investee

•

The ability to use its power over the investee to affect its returns.

 

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

•

The contractual arrangement with the other vote holders of the investee.

•

Rights arising from other contractual arrangements.

•

The Group's voting rights and potential voting rights.

 

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. The acquisition method is used to account for the acquisition of subsidiaries.

 

Acquisition related costs are expensed as incurred.

 

The Group measures goodwill at the acquisition date as the excess of the fair value of the consideration transferred, plus the recognised amount of any non-controlling interests, less the recognised amount of the identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All intercompany transactions and balances between group entities are eliminated on consolidation.

 

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Gains or losses on disposals to non-controlling interests are recorded in equity.

 

Where considered appropriate, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All intercompany transactions and balances between Group enterprises are eliminated on consolidation.

 

The Company's UK subsidiaries use UK GAAP rules to prepare and report their financial statements. The Group reports using IFRS standards and in order to comply with the Group's reporting standards, management of these subsidiaries processed several adjustments to ensure the financial information included at a Group level complies with IFRS. These subsidiaries will continue to prepare their company financial statements in line with UK GAAP rules.

 

e) Segmental reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ("CODM"). The CODM is deemed to be the Chief Executive Officer and the Chief Financial Officer.

 

Operating segments are identified on the basis of internal reports that are regularly reviewed by the CODM to allocate resources and to assess performance. Using the Group's internal management reporting as a starting point, only one continuing reporting segment set out in note 5 has been identified.

 

The individual financial statements of each Group company are measured in the currency of the primary economic environment in which it operates (its functional currency) being US dollar or pounds sterling. For the purpose of the Group Financial Statements, the results and financial position are expressed in pounds sterling GBP, which is the presentation currency for the Group and Company.

 

f) Discontinued operations

 

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

 

•

represents a separate major line of business or geographic area of operations;

•

is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or

•

is a subsidiary acquired exclusively with a view to re-sale.


Discontinued operations are presented in the income statement as a separate line and are shown net of tax.  Comparative information in relation to the Consolidated Statement of Comprehensive Income and Consolidated Cashflow Statement has been restated to reflect this presentation.

 

Foreign currencies

 

Functional and presentation currency

 

Pounds sterling GBP is considered to be the functional currency. 

 

Transactions and balances

 

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At the Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the Statement of Financial Position date. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items at the Statement of Financial Position date, are included in the Statement of Comprehensive Income for the year.

 

g) Intangible assets

 

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the Statement of Comprehensive Income.

 

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

 

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

 

Customer lists and intellectual property rights are shown at fair value at date of acquisition, less amortisation and impairments. Costs associated with these are recognised as an expense as incurred.

 

Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the Company are recognised as intangible assets when the following criteria are met:

 

•

it is technically feasible to complete the product so that it will be available for use;

•

management intends to complete the product and use or sell it;

•

there is an ability to use or sell the product;

•

it can be demonstrated how the product will generate probable future economic benefits;

•

adequate technical, financial and other resources to complete the development and use or sell the product are available; and

•

the expenditure attributable to the product during its development can be reliably measured.

 

The Group's Intangible assets, other than goodwill acquired on acquisition, are amortised at 20% per annum on a straight line basis.

 

At each year end date, the Group reviews the carrying amounts of its intangible assets other than goodwill if there is an indication of impairment to determine if those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

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

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

 

h) Property, plant and equipment

 

All property, plant and equipment are shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of 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. The carrying amount of any replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial year in which they are incurred.

 

Depreciation is charged so as to write off the cost of assets over their useful economic lives, using the straight-line method, which is considered to be as follows:

 

•

Plant and equipment

 5 years

•

Motor Vehicles

 3 to 5 years

•

Software

 3 years

 

The assets' residual values and useful lives are reviewed, and, if appropriate, asset values are written down to their estimated recoverable amounts, at each Statement of Financial Position date.

 

Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in the Statement of Comprehensive Income.

 

i) Financial assets

 

The Group and Company has classified all of its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.

 

Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method, less provision for impairment.

 

j) Impairment of financial assets

 

The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

 

The criteria that the Group and Company uses to determine that there is objective evidence of an impairment loss include:

 

•

significant financial difficulty of the issuer or obligor;

•

a breach of contract, such as a default or delinquency in interest or principal repayments.

 

The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the profit or loss.

 

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.

 

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the trade and other receivables credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income.

 

k) Trade and other receivables

 

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

 

l) Cash and cash equivalents

 

Cash and cash equivalents comprise cash in hand and deposits held at call with banks.

 

m) Share capital and reserves

 

Equity comprises the following:

 

•

Share Capital represents ordinary shares issued at par value and includes "Deferred Shares" below

•

Deferred Shares represents notional shares arising on the redenomination of the nominal share capital at various times and have no voting rights.  The Deferred Shares form part of the Share Capital balance shown in the Statement of Financial Position.

•

Share Premium represents the premium paid on shares issued above par value net of issue costs.

•

Retained earnings represents retained losses.

•

Merger reserve represents the difference between the carrying value of the investment and the nominal value of the shares of subsidiaries upon consolidation under merger accounting. The merger reserve is presented in "other reserves".

•

Merger relief reserve represents the difference between the nominal value of shares issued accounted under merger relief and the consideration attributed to the shares issued.

•

Share option and warrants reserve represents the fair value of unexpired warrants.

•

Convertible loan stock represents fair value of consideration received together with interest thereon.

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

n) Share-based payments

 

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives goods or services from employees or third party suppliers as consideration for equity instruments of the Company. The fair value of the equity-settled share based payments are recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the services provided or instruments issued.

 

o) Trade and other payables

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

 

p) Borrowings

 

Borrowings are recognised initially at fair value, net of transaction costs incurred.  Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Statement of Comprehensive Income over the year of the borrowings using the effective interest method.

 

q) Revenue recognition

 

The Group recognises revenue in accordance with IFRS 15 which includes five key steps: 

 

Step 1: Identify the contracts with a customer;  Step 2: Identify 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, it is probable that future economic benefits will flow to the entity, and specific criteria have been met for each of the Group's activities, as described below: if revenue has been billed but the specific performance obligations are not met then this is recognised as deferred revenue.

 

From the Group's remaining activity of utilisation of functional nanoparticles, revenues are recognised on delivery of the goods.

 

The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Where the Group makes sales relating to a future financial period, these are deferred and recognised under 'deferred revenue' on the Statement of Financial Position. 

 

r) Current and deferred income tax

 

Income tax represents tax currently payable and deferred tax.  The tax currently payable is based on taxable profit for the year. Taxable profit differs from the loss for the year as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of 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 loss.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on 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 is calculated at the tax rates that are expected to apply in the relevant jurisdiction in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is not discounted.

 

Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

 

s) Leases

 

Prior to 1 January 2019: Leases in which a significant portion of the risks and rewards were retained by the lessor were classified as operating leases.  Payments made under operating leases were charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

 

Assets held under finance leases were recognised as assets of the Group at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments.  The related liability to the lessor was included in the Statement of Financial Position as a finance lease obligation.  Lease payments were apportioned between interest expenses and capital redemption of the liability.  Interest was recognised immediately in the Statement of Comprehensive Income, unless attributable to qualifying assets, in which case they were capitalised to the cost of those assets.

 

Post 1 January 2019: Assets held under leases are recognised as assets of the Group at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments.  The related liability to the lessor is included in the Statement of Financial Position as a finance lease obligation.  Lease payments are apportioned between interest expenses and capital redemption of the liability.  Interest is recognised immediately in the Statement of Comprehensive Income, unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets.

 

Exemptions are applied for short life leases and low value assets, with payments made under operating leases charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

 

3) Financial risk management

 

Group financial risk factors

 

The Group's activities expose it to a variety of financial risks. The Group's finance function monitors and manages the financial risks relating to the operations of the Group. The Group is exposed to market risks (including foreign exchange risk and price risk) and credit risk and to a very limited amount interest rate risk and liquidity risk.

 

Risk management is carried out by the Board of Directors.  The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, to mitigate financial risk exposures.

 

Market risk

 

a) Foreign exchange risk

 

The Group has closed its operations located in parts of the world whose functional currency is not the same as the Group's functional currency (GBP Sterling), therefore the foreign exchange risk is low. The Group's net assets arising from closed US operations are exposed to currency risk resulting in gains and losses on retranslation from US Dollar. Due to the minimal amount of transactions in US dollars, the Group does not consider hedging its net investments beneficial because the cash flow risk created from such hedging techniques would outweigh the risk of foreign currency exposure. It is the Group's policy to hold surplus funds over and above working capital requirements in the Parent Company. The Group considers this policy minimises any unnecessary foreign exchange exposure.

 

In order to monitor the continuing effectiveness of this policy the Board through their approval of both corporate and capital expenditure budgets, and review of the currency profile of cash balances and management accounts, considers the effectiveness of the policy on an ongoing basis.

 

b) Price risk

 

The Group is not exposed to commodity price risk as a result of its operations. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.

 

Credit risk

 

Credit risk arises from the Group's trade receivables. Where no independent rating of customers is available, credit control assesses the quality of customers by reference to their financial position, past experience and any other relevant factors.

 

Interest rate risk management

 

The Group is not exposed to interest rate risk on financial liabilities.

 

Liquidity risk management

 

The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

 

Capital risk management

 

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group's capital structure primarily consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses.

 

4) 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.

 

The Group makes estimates and judgements concerning the future. The resulting accounting estimates and judgements will, by definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are addressed below:

 

Intangible assets

Intangible assets comprise of goodwill and Intellectual Property acquired on acquisitions.  Goodwill is not amortised, Intellectual Property is amortised at 20% per annum on a straight-line basis.

 

Useful lives are based on management's estimates of the period that the assets will generate revenues with such records being periodically reviewed for continual appropriation.

 

On acquisitions the group values intangible assets excluding goodwill. 

 

The Group test annually whether goodwill has suffered any impairment, and of other intangible assets where there is an indication of impairment, in accordance with the accounting policy.  Where applicable, the recoverable amounts of cash generating units have been determined based on value in use calculations.  The value in use calculations require the entity to estimate future cash flows expected to arise from the cash generating unit and apply a suitable discount rate in order to calculate present value. These calculations require the use of estimates (note 14).

 

Inventory

The Group carries its inventory at the lower of cost of net realisable value.  Net realisable value for the inventory of masks and their components was considered to have no net realisable value at 31 December 2021 as detailed in the Chairman's Statement, leading to an impairment of £586,013 (note 6).

 

Share Options

The Group issued employee share options during the year.

 

The valuation of options used is the Black Scholes model and is detailed in Note 21. Changes to inputs and assumptions, in particular concerning the volatility of the Company's share price and the time to exercise can have a significant effect on the valuation.

 

5) Segmental analysis

Management considers that during 2021 there was only one continuing activity as set out below.  The revenue below excludes that of the discontinued operations (note 12).

 

Total revenue from continuing operations is recognised at a point in time and comprises:

 

Revenue from external customers:

 

 


2021

£

2020

£

Utilisation of functional nanoparticles

208,778

600

 

Revenues from continuing operations are generated by geographical areas as follows:


2021

£

2020

£

United Kingdom

178,082

600

Europe

9,467

-

Rest of World

21,229

-


208,778

600

 

The following customers generated more than 10% of the Group's revenue from continuing operations:


2021

£

2020

£

Customer 1

50,350

600

Customer 2

50,278

-

 

Carrying amount of assets:


2021

£

2020

£

United Kingdom

5,666,225

7,552,089

United States of America

-

-


5,666,225

7,552,089

 

Carrying amount of liabilities:


2021

£

2020

£

United Kingdom

496,320

423,337

United States of America

210,238

201,947


706,558

625,284

 

The segmental analysis of the balance sheet is not part of routine management reporting and consequently no activity segmental analysis of assets is shown.

 

6) Administrative expenses and impairments

 

The following have been charged in arriving at operating loss:


2021

£

2020

£

Staff costs

992,237

144,603

Foreign exchange gains and losses

(19,200)

13,985

Depreciation

13,714

6,211

Audit fees (note 9)

34,130

22,500

Share based payments expense - share options

165,835

434,474

Other expenses

1,351,218

338,584


2,537,934

960,357

 

Impairments relate to impairment provisions of £586,013 against the carrying value of inventory of masks and their components and of £101,643 against other receivables.

 

7) Staff costs

 

The average number of employees, including Directors, was:

 

 


2021

Total

 

No.

2021

Continuing operations

No.

2020

Total

 

No.

2020

Continuing operations

No.

Directors (including subsidiaries)

14

6

12

4

Sales and development

8

7

2

-

Administration

2

2

-

-


24

15

14

4

 

Employees', including Directors' costs comprise:


2021

Total

 

No.

2021

Continuing operations

No.

2020

Total

 

No.

2020

Continuing operations

No.

Wages, salaries and other staff costs

951,404

901,145

319,697

134,746

Share option expense

165,835

165,835

434,474

434,474

Social security costs

78,158

73,388

23,876

9,569

Pension costs

18,786

17,704

3,358

288


1,214,183

1,158,072

781,405

579,077

 

Pension costs represent contributions to defined contribution pension schemes.

 

8) Directors

 

The Directors during the year, together with Jeremy McNamara, were considered to be the Key Management of the Group.

 

 

2021

2020

Group

Short term employee benefits

£

Pension

£

Share option expense

£

Total

£

Short term employee benefits

£

Pension

£

Share option expense

£

Total

£

Nigel Burton

-

-

-

-

(9,182)

-

-

(9,182)

Paul Ryan

1,032

-

-

1,032

48,000

-

217,237

265,237

Trevor Brown

42,500

-

-

42,500

54,167

-

217,237

271,404

John Richardson

204,290

660

-

204,950

85,000

1,500

-

86,500

Antony Legge

79,399

729

-

80,128

-

-

-

-

Richard Clarke

35,532

610

-

36,142

-

-

-

-

Alexander Vergopoulos  -

-

63,479

63,479

-

-

-

-

Gareth Cave

51,028

595

-

51,623

-

-

-

-

Felicity Sartain

25,385

595

-

25,980

-

-

-

-

Mark Duffin

65,644

7,770

86,622

160,036

-

-

-

-

Jeremy McNamara

41,575

2,350

-

43,925

-

-

-

-


546,385

13,309

150,101

709,795

177,985

1,500

434,474

613,959

 

Included in the above charges are amounts paid to Nottingham Trent University totalling £25,643 in respect of the services of Gareth Cave.

 

In addition to the above the company issued shares valuing £113,600 to Ordian Limited and paid fees of £150,000 to FortOak Rolls Limited, companies owned by Alex Vergopoulos, for work and related expenses relating to the mask machine and securing supplies.

 

Paul Ryan was paid his short term employee benefits through a service company, Warande1970 BVBA.  In the prior year Nigel Burton agreed to waive some of his accrued benefits on his resignation.

 

During the year share options were exercised by the directors with an aggregate differential between exercise price and mid market price on the issue date totalling £759,501.

 

The share option expense is detailed further in note 21.

 

9) Auditors remuneration

 


2021

£

2020

£

Fees payable for the audit of the Group and Parent Company's Financial Statements

30,000

22,500

Additional fees in respect of the audit for the prior year

1,350

-

Fees payable for other services during the current year

2,780

-



34,130

22,500

 

10) Finance costs

 


2021

£

2020

£

Interest payable and other finance costs

545

4,085

 

11) Tax

 


2021

£

2020

£

Group

 


Income tax

 


Current tax

 


UK Corporation tax credit

-

-

Deferred tax 

 


Current year

-

-

Tax credit

-

-

 

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits/(losses) of the consolidated entities as follows:

 


2021

£

2020

£

Group

 

 

Loss before tax

(3,179,384)

(968,905)

Tax at the applicable rate of 19.00% (2020 19.00%):

(604,083)

(184,092)

Effect of:

 


Expenses/income not deductible/chargeable for tax purposes

883

11,572

Advanced capital allowances over depreciation

(3,422)

1,180

Enhanced capital allowances

(1,771)

-

Expense timing differences

1,881

-

Net tax effect of losses carried forward

606,512

171,340

Tax credit for the year

-

-

 

The tax rate used for 2021 is the standard rate of corporation tax in the UK.

 

The Group has tax losses of approximately £8,300,000 (2020 £5,200,000) available to carry forward against future taxable profits.  No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset.

 

12) Discontinued operations

 

As detailed in note 17, during the year the Group disposed of 74% of its interest in Gyrometric Systems Ltd and its entire interest in Cloudveil Ltd. 

 

During December 2019 the group reached agreement to sell the fixed assets and goodwill within Geocurve Limited. At the same time, a formal plan was made to discontinue the Geocurve business. The disposal was completed in January 2020 with the company being dissolved in the current year. 

 

In addition, the purchaser agreed to pay a finders fee as a percentage of sales arising from existing customers of the Geocurve business for a limited period. These amounts will be credited to income when the respective sales are settled and shown within discontinued operations.

 

Results of the discontinued operations were as follows:

 

 


2021

£

2020

£

Revenue

5,938

109,841

Cost of sales

(8,025)

(48,364)

Depreciation and amortisation

(658)

(15,289)

Goodwill impairment

-

(324,812)

Other costs

(120,557)

(331,664)

Other income

18,883

10,000

Income tax

-

120,471


(104,419)

(479,817)

Loss on disposal (see below)

(68,847)

-


(173,266)

(479,817)

 

Included in the Group Cash Flow Statement are the following amounts relating to discontinued operations:


2021

£

2020

£

Cash flow from operating activities

(165,286)

(513,629)

Cash flow from investing activities

(833)

160,275

Cash flow from financing activities

(20,000)

(90,325)


 

2021

£

 

2020

£

Disposal of discontinued operations

 


Property, plant and equipment

2,490

-

Trade, other receivables and inventories

13,658

-

Cash

43,548

-

Trade and other payables

(83,283)

-


(23,587)

-

Non controlling interests

92,435

-

Proceeds received

(1)

-

Loss on disposal

68,847

-

 

13) Earnings per share

 

Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the Company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted loss per share on loss making operations.

 

Basic and Diluted

2021

£

2020

 

Loss after taxation - continuing operations

(3,179,384)

(968,905)

(Loss)/profit after taxation - discontinued operations

(161,510)

(447,183)

Loss after taxation - total

(3,340,894)

(1,416,088)

Weighted average number of shares

2,069,455,379

813,456,106

Earnings per share (pence) - continuing operations

(0.15)

(0.12)

Earnings per share (pence) - discontinued operations

(0.01)

(0.05)

Earnings per share (pence) - total

(0.16)

(0.17)

 

14) Intangible assets

 

 

2021

£

2020

£

Goodwill - Group

 

 

 

Cost

At 1 January

 

2,215,214

450,795

Additions (note 17)

 

-

1,764,419

Disposals (note 17)

 

(450,795)

-

At 31 December

 

1,764,419

2,215,214

Impairment

 

 


At 1 January

 

450,795

125,983

Arising during the year

 

-

324,812

Disposals

 

(450,795)

-

At 31 December

 

-

450,795

Net book value at 31 December

 

1,764,419

1,764,419

 

At the year end, management has reassessed the recoverable amount of the goodwill relating to Pharm 2 Farm Limited based on forecast NPV calculations. Management budgeted operating margin based upon current estimated costing and its expectations of market development.  The discount rates reflect specific risks relating to the relevant operating segment. The value in use calculations and headroom is sensitive to any change in the key assumptions.  Management concluded that the goodwill is not impaired.

 

The key assumptions used for the Pharm 2 Farm value-in-use calculations were as follows:

 

EBITDA

Specific rates to year 4 then 54% thereafter

Growth rate

Specific annual estimates to year 5 then nil thereafter

Discount rate

20%

 

 

 

 

 

 

 

Intellectual Property

£

Other intangibles - Group

 

 

 

 

 

Cost






At 1 January 2020





73,000

At 31 December 2020

 

 

 

 

73,000

Disposals

 

 

 

 

(73,000)

At 31 December 2021

 

 

 

 

-

Amortisation

 

 

 

 

 

At 1 January 2020





19,467

Amortisation





14,600

Impairment





38,933

At 31 December 2020

 

 

 

 

73,000

Disposals

 

 

 

 


(73,000)

At 31 December 2020

 

 

 

 

-

 

 

 

 

 

 

Net book value






At 31 December 2020

 

 

 

 

-

At 31 December 2021

 

 

 

 

-

 

15) Property, Plant and Equipment

 

 

 

Right of use leasehold

£

Plant & equipment

£

 

Software

£

 

Total

£

Group

 

 

 

 

 

Cost






At 1 January 2020


95,875

38,137

13,050

 147,062

Acquisition of subsidiary


-

24,377

-

24,377

Additions


-

518

-

518

Disposals


-

(28,956)

-

(28,956)

At 31 December 2020

 

95,875

34,076

13,050

143,001

Additions

 

-

37,562

-

37,562

Disposals

 

(95,875)

(5,667)

-

(101,542)

On disposals of subsidiaries

 

-

(5,787)

-

(5,787)

At 31 December 2021

 

-

60,184

13,050

73,234

Accumulated depreciation






At 1 January 2020


95,875

35,134

5,075

136,084

Acquisition of subsidiary


-

3,312

-

3,312

Charge for the year


-

2,550

4,350

6,900

Disposals


-

(28,956)

-

(28,956)

At 31 December 2020

 

95,875

12,040

9,425

117,340

Charge for the year


-

10,089

3,625

13,714

Disposals


(95,875)

(1,039)

-

(96,914)

On disposal of subsidiaries


-

(3,297)

-

(3,297)

At 31 December 2021

 

-

17,793

13,050

30,843

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 December 2020

 

-

22,036

3,625

25,661

At 31 December 2021

 

-

42,391

-

42,391

 

 

 

Plant &

equipment

£

Software

£

 

Total

£

Company

 

 

 

Cost




At 1 January 2020

4,226

13,050

17,276

Additions

-

-

-

At 31 December 2020

4,226

13,050

17,276

Additions

16,797

-

16,797

At 31 December 2021

21,023

13,050

34,073

Accumulated depreciation




At 1 January 2020

4,226

5,075

9,301

Charge for the year

-

4,350

4,350

At 31 December 2020

4,226

9,425

13,651

Charge for the year

1,091

3,625

4,716

At 31 December 2021

5,317

13,050

18,367

 

 

 

 

Net book value

 

 

 

At 31 December 2020

-

3,625

3,625

At 31 December 2021

15,706

-

15,706

 

16) Investment in subsidiary undertakings

 

 

2021

£

2020

£

Company

 

 

 

 

As at 1 January

 

 

60,000

384,601

Additions (note 17)


 

51

60,000

Impairment

 

 

-

(384,601)

Cost at 31 December

 

 

60,051

60,000

 

The impairment in 2020 relates to the company's investments in GyroMetric Limited and Strat Aero International, Inc.

 

The following are the principal subsidiaries of the Company at 31 December 2021 and at the date of these Financial Statements.  All these were incorporated in the UK.  Where applicable these subsidiaries are taking advantage in their individual financial statements of audit exemption.  Whilst Virosynth Limited commenced activity during December 2021, there were no financial transactions during the period to 31 December 2021.

 

Name of company

 

Registered Address

Parent company

Class of shares

Share capital held

Nature of business

Pharm 2 Farm Limited

27-28 Eastcastle Street, London

W1W 8DH, UK

nanosynth group plc

Ordinary

100%

Nanoparticle applications

Virosynth Limited

Biocity Pennyfoot Street

Nottingham, NG1 1GF, UK

nanosynth group plc

Ordinary

51%

Anti-pathogenic product development

 

In addition to the above the company has non trading fully owned subsidiaries at 31 December 2021 as follows:

 

Incorporated in the UK

Nanosynth Limited

Nanosynth (Medical) Limited

 

Incorporated and Registered in United States of America

Strat Aero International, Inc.

 

17) Acquisition and disposal of subsidiary undertakings

 

Acquisitions

In November 2020 the entire issued share capital of Pharm 2 Farm Limited was acquired. 

 

In the share purchase agreement dated 21 August 2020 the purchase consideration was stated as £1,800,000 to be settled through the issue of 600,000,000 ordinary shares.  Due to the need for regulatory and shareholder approval the consideration shares were not issued until 5 November 2020 when control of Pharm 2 Farm Limited was obtained.  Under IFRS 3 the consideration would be based on the market value of those shares at the point of issue which would equate to £17,700,000.  Management does not believe this fairly reflects the acquisition given the volatility of the share price leading up to 5 November 2020 and have used the consideration within the agreement of £1,800,000 as a fairer reflection of the agreement.  Pharm 2 Farm is based in the UK and its principal activity is that of utilisation of functional nano particles.

 



£

Purchase consideration


1,800,000

Fair value of net assets acquired


35,581

Goodwill


1,764,419

 

At acquisition Pharm 2 Farm Limited had rights over intellectual property under 15 year licences signed in 2019.  Whilst management believe there is now significant intrinsic value of these licences, at the time of acquisition the estimate of timing and value of income generation was insufficiently robust for a reasonable estimate of the valuation of these rights at acquisition to be made.

 

The goodwill acquired also includes employee knowledge and expertise with regard to nano particle technology applications.

 

There were no adjustments processed during the year to the fair value of the net assets acquired on the acquisition.

 

Disposals

In August 2021 the Company returned 74% of its interest in Gyrometric Systems Limited back to its founders for nominal consideration.  The interest retained represents 15% of the share capital and is included within investments at its estimated fair value of nil.

 

In November 2021 the Company returned its entire interest in Cloudveil Limited back to its founder for nominal consideration.

 

Both disposals were made following a strategic review of the Group's operations and future investment objectives.

 

18) Trade and other receivables

 


2021

2020


Group

Company

Group

Company


£

£

£

£

Amounts due from group undertakings

-

1,858,024

-

430,124

Trade receivables

11,362

-

11,535

-

VAT receivable

50,436

30,008

68,424

23,035

Other receivables

15,990

-

1,813,877

1,505,000

Prepayments

2,560

1,373

32,151

28,841

At 31 December

80,348

1,889,405

1,925,987

1,987,000

Less: non-current portion

-

(1,858,024)

-

(428,974)

Current portion

80,348

31,381

1,925,987

1,558,026

 

Amounts due from group undertakings were impaired by a further net £85,972 (2020 £255,600) during the year within the Company.

 

Other receivables for the Group were impaired during the year by £101,643 (Company £24,750) (2020 Group and Company - nil).

 

The fair value of all receivables is the same as their carrying values stated above.

 

 

2021

£

2020

£

Ageing of trade receivables net of provisions - Group:

 


Not due

867

630

0 - 30 days

-

-

Over 30 days

10,495

10,905


11,362

11,535

 

The carrying amount of the Group's trade receivables are all denominated in GB pounds. 

 

The maximum exposure to credit risk at the reporting date is the carrying value reported above. The Group does not hold collateral as security. Provisions totalling £2,451 (2020 £20,345) have been made at the year end in respect of trade receivables.

 

19) Cash and cash equivalents

 

Cash at bank is held with credit institutions with an A credit rating.  The carrying amount of the Group's cash and cash equivalents are all denominated in GB pounds.

 

20) Share capital

 

Group and Company

2021

2020

Issued equity share capital

Number

£

Number

£

Is sued and fully paid

 

 



Ordinary shares of 0.01p each

2,079,071,986

207,907

1,983,270,231

198,327

Deferred shares of 0.1p each

2,358,954,414

2,358,954

2,358,954,414

2,358,954

Deferred shares of 0.19p each

774,006,790

1,470,613

774,006,790

1,470,613

A Deferred shares of 0.001p each

17,678,567,358

1,767,857

17,678,567,358

1,767,857



5,805,331


5,795,751

 

Group and Company

 

Number of

deferred

shares

 

Number of ordinary

shares

 

 

Share capital

£

Share premium

£

Total

£

As at 1 January 2020

20,037,521,772

500,656,790

5,128,124

6,822,694

11,950,818

Issue of new shares 17 and 20 April 2020

-

160,400,000

320,800

53,488

374,288

Issue of new shares 10 July 2020

-

112,950,000

225,900

46,086

271,986

Share subdivision

774,006,790

-

-

-

-

Loan note conversion 27 October 2020

-

12,801,543

1,280

34,564

35,844

Exercise of warrants 27 October 2020

-

12,618,928

1,262

34,071

35,333

Exercise of warrants






  26 October 2020 to 2 November 2020

-

97,200,000

9,720

476,280

486,000

Issue of new shares 5 November 2020

-

600,000,000

60,000

(12,200)

47,800

Exercise of warrants






  11 to 13 November 2020

-

51,200,000

5,120

250,880

256,000

Exercise of warrants 12 November 2020

-

12,618,928

1,262

34,071

35,333

Loan note conversion 12 November 2020

-

12,824,042

1,283

34,624

35,907

Issue of new shares 16 November 2020

-

10,000,000

1,000

24,000

25,000

Issue of new shares 18 December 2020

-

400,000,000

40,000

4,637,100

4,677,100

Release of warrants reserve

-

-

-

9,911

9,911

As at 31 December 2020

20,811,528,562

1,983,270,231

5,795,751

12,445,569

18,241,320

 

Group and Company

 

Number of

deferred

shares

 

Number of ordinary

shares

 

 

Share capital

£

Share premium

£

Total

£

As at 1 January 2021

20,811,528,562

1,983,270,231

5,795,751

12,445,569

18,241,320

Issue of new shares






  13 January to 12 February 2021

-

62,801,755

6,280

872,944

879,224

Exercise of warrants 29 January 2021

-

6,000,000

600

29,400

30,000

Issue of new shares 23 February 2021

-

21,000,000

2,100

296,100

298,200

Exercise of warrants 15 April 2021

-

6,000,000

600

29,400

30,000

Release of warrants reserve

-

-

-

801

801

As at 31 December 2021

20,811,528,562

2,079,071,986

5,805,331

13,674,214

19,479,545

 

Between 13 January 2021 and 12 February 2021 the Company issued 62,801,755 new ordinary shares of 0.01p each at a price of 1.4p per share raising gross proceeds of £879,224 on the exercise of options by two directors. 

 

On 29 January 2021 6,000,000 warrants for shares were exercised at a price of 0.5p each.

 

On 23 February 2021 the Company issued 21,000,000 new ordinary shares of 0.01p each in settlement of services provided by two directors and compensation and in place of options held by another director.

 

On 15 April 2021 6,000,000 warrants for shares were exercised at a price of 0.5p each.

 

Share options in the Company

 

At 31 December 2020 there were 77,603,512 outstanding share options which had been issued on 9 November 2020.  The options vested on issue, had a term of 5 years and an option price of 1.4 pence per share.  All these options were either exercised or forfeited during 2021.

 

At 31 December 2021 there were the following options that were outstanding that had been issued during the year, all of which had vested:

 

Number

Exercise price

Expiry date

7,000,000

1.85p

17 February 2024

2,000,000

1.50p

22 August 2024

 

In addition 2,000,000 options had been issued during the year which had subsequently been forfeited.

 

During the year agreement had been made for share options to be issued under the 2021 incentive plan at prices between 1p and 4p.  At 31 December 2021 all the 103,953,600 options were outstanding and had not vested at that date.  The expiry date of these options was 31 August 2028.  As detailed in note 35 these options were varied after 31 December 2021.

 

Warrants

 

Warrants to subscribe for new Ordinary Shares in the Company were in issue as follows:


2021

2020


 

No. of
warrants

Weighted average price

£

 

No. of warrants

Weighted average price

£

At 1 January

12,000,000

0.0047

49,451

0.0500

Issued during the year

-

-

185,637,856

0.0047

Lapsed during the year

-

-

(49,451)

0.0500

Exercised during the year

(12,000,000)

0.0047

(173,637,856)

0.0047

Outstanding at 31 December

-

-

12,000,000

0.0047

 

The warrants outstanding at 31 December 2020 had a weighted average remaining contractual life of 4 months.

 

The fair value of the warrants granted in the prior year were calculated using the Black Scholes model.

 

Share options in GyroMetric Systems Limited

 

At 31 December 2020 share options were in issue relating to shares in GyroMetric Systems Limited.  There was no exercise of these options prior to the disposal of 74% of the holding in GyroMetric Systems Limited detailed in note 17.

 

21) Share-based payments

 

Share option plan

During the year 7,000,000 share options were granted to Alex Vergopoulus, a director of the company, under the existing incentive plan at that time.  The options vested immediately.  In addition 4,000,000 share options were granted to employees.  Details of the options are set out below.

 

Agreement was also made for the issue of 103,953,600 share options to Mark Duffin under the 2021 incentive plan.  There were varying vesting and exercise conditions on the options as set out below.

 

Fair value of share options

The fair value of the share options granted in the year have been calculated using the Black Scholes model assuming the inputs shown below:

 

Grant date

18 February 2021

23 February 2021

1 September 2021

No of options granted

7,000,000

4,000,000

103,953,600

Share price on date of grant

1.85p

1.50p

1.25p

Exercise price

1.85p

1.50p

1.00p - 4.00p

Continuous growth rate

0.00%

0.00%

0.00%

Dividend yield

0.00%

0.00%

0.00%

Volatility

75.49%

75.63%

76.71%

Time to maturity

3 years

3.5 years

7 years

Value of option in accounts

0.9068p

0.7867p

0.6192p - 0.9088p

 

Volatility was measured over a 3 year period.

 

22) Convertible loan stock

 

Group and Company

 

 

2021

£

2020

£

As at 1 January

 

 

2,000

103,000

Repayment/conversion of loan stock and interest


 

-

(105,085)

Interest waived


 

(2,000)

-

Accrued interest

 

 

-

4,085

At 31 December

 

 

-

2,000

 

23) Other reserves

 

The measurement requirements of IFRS 2 have been implemented in respect of share options and warrants granted.

 

Group

 

 


 

Share option

 and warrants

reserve

Merger relief reserve

Merger

reserve

 

 

Total


 

£

£

£

£

At 1 January 2020


24,846

-

(499,999)

(475,153)

Share based payments arising 

434,474

-

-

434,474

Share warrants issued


10,712

-

-

10,712

Share warrants exercised


(9,911)

-

-

(9,911)

Share warrants lapsed


(24,846)

-

-

(24,846)

Arising on consolidation


-

1,740,000

-

1,740,000

At 31 December 2020


435,275

1,740,000

(499,999)

1,675,276

At 1 January 2021


435,275

1,740,000

(499,999)

1,675,276

Share based payments arising 

165,835

-

-

165,835

Share based payments exercised

(434,474)

-

-

(434,474)

Share warrants exercised


(801)

-

-

(801)

At 31 December 2021


165,835

1,740,000

(499,999)

1,405,836

 

Company

Other reserves comprised share option and warrants reserve as above.

 

24) Non controlling interest

 


 

 

 

Total

Group

 

 

 

£

As at 1 January 2020

 

 

 

(48,045)

Non controlling interest in share of losses for the year

 

 

(32,634)

At 31 December 2020

 

 

 

(80,679)

Non controlling interest in share of losses for the year



(11,756)

Disposal of non controlling interest

 

 

 

92,435

At 31 December 2021

 

 

 

-

 

25) Trade and other payables

 


2021

2020


Group

Company

Group

Company


£

£

£

£

Trade payables

153,881

121,714

115,648

69,673

VAT payable

-

-

1,755

-

Corporation tax

-

-

-

-

Accruals

291,841

171,146

94,265

84,376

Other creditors

16,761

15,548

121,419

38,574


462,483

308,408

333,087

192,623

 

26) Lease obligations

 

 

 

 

 

2021

2020

Group - Lease liabilities

 

 

£

£

Total at 31 December

 

 

-

36,875

Less: non-current portion

 

 

-

(7,375)

Current portion

 

 

-

29,500

 

Payment was made during the year in full and final settlement of the lease obligation.

 

27) Provisions

 


 

 

2021

2020

Group

 

 

£

£

Closure costs in respect of the Geocurve business

 

 

-

13,000

 

28) Deferred tax

 


2021

2020


Group

Company

Group

Company


£

£

£

£

Deferred tax liabilities

 

 



Deferred tax liability

-

-

-

-

 

There was no movement in the deferred tax account in either period.

 

29) Financial instruments

 

Categories of financial instruments

 

 

 

 

 

2021

2021

 

 

Group

Company


 

£

£

Assets - Amortised cost

 



  Trade and other receivables (excluding prepayments)

 

27,352

1,882,774

  Cash and cash equivalents

 

3,760,992

3,719,134


 

3,788,344

5,601,908

Liabilities - At amortised cost

 

 


Trade and other payables (excluding non-financial liabilities)

 

170,642

191,615

 

 

 

2020

2020

 

 

Group

Company


 

£

£

Assets - Amortised cost

 



  Trade and other receivables (excluding prepayments)

 

1,825,412

1,935,124

  Cash and cash equivalents

 

3,741,135

3,590,521


 

5,566,547

5,525,645

Liabilities - At amortised cost

 



Trade and other payables (excluding non-financial liabilities)

 

237,067

112,787

Lease liabilities

 

36,875

-


 

273,942

112,787

 

30) Notes to the cash flow statement

 

Changes in liabilities arising from financing activities

 

 

Group

 

 


1 January 2021

Cash flows from financing activities

Non cash flows

31 December 2021


 

Repayments

Lease payments waived

 


£

£

£

£

Lease liabilities (note 26)

36,875

(20,000)

(16,875)

-

Total liabilities from financing activities

36,875

(20,000)

(16,875)

-

 


 

1 January 2020

Cash flows from financing activities

31 December 2020


 

 

Repayments

 


 

£

£

£

Lease liabilities (note 26)

 

66,375

(29,500)

36,875

Finance lease obligations

 

60,825

(60,825)

-

Total liabilities from financing activities

 

127,200

(90,325)

36,875

 

Company

There were no liabilities arising from financing activities in the Company.

 

31) Financial commitments

 

Operating leases

 

The Group had no significant operating lease obligations at 31 December 2021 or 31 December 2020.

 

Other commitments

 

At 31 December 2021 the Group had no capital commitments.  At 31 December 2020 the Group had capital commitments of £250,381 of which £227,904 had been paid and is included within other receivables.  The Company had no capital commitments at 31 December 2021 or 31 December 2020.

 

32) Contingent liabilities

 

The Group has received a claim made against its subsidiary in the US following the dismissal of an employee. The claim is in the hands of the Group's lawyers and the outcome has not yet been reached, however the Directors believe that the claim is without merit. In the event of a settlement, the exact level of compensation is unknown at this stage. On this basis, the contingent liability cannot be quantified.

 

33) Related party transactions

 

Directors' transactions

 

Directors' remuneration is disclosed in note 8.

 

At 31 December 2021 Paul Ryan, a former director owed the Company £24,750 (2020 £nil).  A provision for impairment against the loan has been made.

 

Paul Ryan is the owner of Warande1970 BVBA which the Group pays in relation to Paul's director fee. £8,000 was outstanding at 31 December 2020 which was paid during the current year.

 

Trevor Brown is a former director and significant shareholder of Braveheart Investment Group plc.  During the prior year the Company purchased a 51.73% interest in Pharm 2 Farm Limited from Braveheart Investment Group plc settled through the issue of 310,354,815 ordinary shares.

 

During the previous year Hugo Gillum-Webb, a Director of that Company repaid a loan made to him of £11,038.

 

Various amounts have been advanced by the Directors of the Parent Company and Subsidiaries. The following amounts were outstanding:

 


2021

At disposal

 

2020

At year end

P & R Orton

6,312


6,312

A Ferguson

19,200


19,200

 

Parent Company transactions with subsidiary companies

 

At the year end £1,858,024 (2020 £430,124) was due from the subsidiary companies after provisions.

 

During the year the Company waived balances of £168,569 and £229,000 which were due from GyroMetric Systems Ltd and Cloudveil Limited as part of the disposal of interests in these entities.  Impairments of £141,600 and £114,000 respectively had been made to the balances at 31 December 2020.

 

During the year the Company wrote off the balance of £930,667 due to Geocurve Limited when it was dissolved.  Impairment of £986,664 had been made at 31 December 2020 resulting on a credit to the income statement of the company in the current year.

 

34) Ultimate controlling party

 

There is not considered to be a controlling party.  For details of major shareholdings please refer to the Director's Report. 

 

35) Events after the reporting year

 

On 10 February 2022 it was announced that in recognition of Mark Duffin's significant additional hours being worked and also to further incentivise him to continue to work towards raising value for the shareholders, the terms of the share options agreed to be issued in 2021 detailed in note 21 were amended such that the exercise price was reduced to 1 pence per share and the options were to vest immediately with all being exercisable up until 1 September 2028.

 

In addition, as announced on that date, in order to incentivise the key acquisitions management team options and cash bonuses have been granted exercisable/payable on the successful completion of a significant acquisition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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