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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Graft Polymer (uk) Plc | LSE:GPL | London | Ordinary Share | GB00BMD1Z199 | ORD GBP0.001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.14 | 0.13 | 0.15 | 0.14 | 0.14 | 0.14 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 542k | -2.71M | -0.0260 | -0.05 | 145.74k |
From Apr 2022 to Apr 2024
TIDMGPL
RNS Number : 6008Q
Graft Polymer (UK) PLC
29 June 2022
29 June 2022
Graft Polymer (UK) Plc
("Graft Polymer", the "Company", and together with its subsidiaries, the "Group")
Final Results
Graft Polymer (UK) Plc (LSE: GPL), a business focused on the development and commercial production of polymer modification, biological supplements, and nano-drug delivery systems, is pleased to announce its Final Results for the period ended 31 December 2021.
Highlights
-- Successful IPO on the Main Market of the LSE raising GBP4.15 million
-- Recently announced c ashflow reached positive through organic growth at R&D facility in Slovenia
-- Granting of various patents across different jurisdictions enhancing Graft Polymer's reach whilst also protecting IP and position in the industry
-- Awarded a HAACP certificate for our facility in Slovenia which will enable the Company to enter the B2C market further expanding our customer reach
-- Successful clinic trials by MGC Pharmaceuticals utilising the Company's subsidiary GraftBio IP, showcasing the value of the research that the Company has undertaken and will continue to undertake
-- Pre-payments on tailor-made equipment which are expected to be delivered in coming weeks and will double Graft Polymer's production capacities
Victor Bolduev, CEO, commented:
"I am pleased to present our Final Results for Graft Polymer, the first since our successful IPO in January this year. This has been a period of growth for us, particularly since listing, with a number of milestones reached. While a significant amount of work was undertaken in the lead up to the IPO, since the commencement of trading the granting of several key patents across different jurisdictions, being awarded a HACCP certificate at the Slovenian production facility, and our R&D facility in Slovenia becoming cash flow positive through organic growth alone, has put us in a very strong position as we continue to deliver against our objectives. With all of this and more occurring within the first few months of trading, Graft Polymer have a very exciting period ahead and we look forward to updating you on the Company's progress."
For more information, please visit https://www.graftpolymer.com or contact:
Graft Polymer (UK) Plc via Tavistock Roby Zomer, Chairman Yifat Steuer, CFO Turner Pope Investments (Broker) +44 20 3657 0050 James Pope Andy Thacker Tavistock (Public Relations) +44 207 920 3150 Heather Armstrong graftpolymer@tavistock.co.uk Katie Hopkins
Chairman's Statement
It gives me great pleasure to deliver my inaugural Chairman's Statement for Graft Polymer (UK) Plc ('Graft Polymer' of the 'Company' or the 'Group') following our Initial Public Offering ('IPO') in January this year. Graft Polymer has made significant progress since its inception in 2017 when it was established by a group of polymer technology experts and venture capitalists to develop polymer modification and drug delivery systems. Having developed a proprietary set of polymer modification technologies, which uses recycled raw materials and a closed loop system to reduce waste, our technology can improve existing products and processing methodologies by enhancing performance, simplifying manufacturing, reducing material consumption, widening the choice of feedstocks, and reducing costs. Our motto, "combine the incompatible", reveals the essence of Graft Polymer's business; the use of a diverse range of modification technologies to combine immiscible and incompatible components in polymer composites.
Being the highly innovative business that we are, significant progress was made leading up to our IPO having already introduced over 50 products to the market. Commercial sales were underway, global distribution relationships were established, and a licence agreement with Drug Delivery System ('DDS') platform IP to bio-pharma company MGC Pharmaceuticals was achieved. Our IPO, although a very exciting achievement, was a stepping-stone to the next phase as we continue this journey to develop new and innovative polymer modification technologies, both in-house and in conjunction with key industry players and customers.
Company's progress against IPO
We were thrilled with the support from investors at IPO, successfully raising net GBP4.15 million. This funding will position us to achieve the key objectives highlighted at the time of listing, including:
-- Additional production line and further expansion: the Group's research and production facility in Slovenia is to be expanded to meet customer demand, with an overall expansion in capacity of around 100 per cent. compared with current volume;
-- Investment in a HACCP and food grade 'GMP' certification at the Group's facility in Slovenia, where the Group will develop active pharmaceutical ingredients and DDS in its research and development laboratories;
-- Lab upgrades and research and development costs and future IP registration: the Group expects to upgrade a number of its production lines to meet specific customer production and research and development needs; and
-- Sales and marketing and general corporate purposes: the expected increase in the Group's sales over the course of the next two years is likely to lead to an increase in both inventory and marketing opportunities.
One objective set out and achieved was the recent granting of a Hazard Analysis and Critical Control Point ('HACCP') certificate at our R&D facility in Slovenia. The grant of this certificate to the Group's GraftBio division is a major milestone for your company which will enable Graft Polymer to enter the Business-to-Consumer ('B2C') market and commercialise its IP for bio/pharma applications, developing active pharmaceutical ingredients and drug delivery platforms for use in the food supplement market, thereby introducing a further revenue stream to its business.
Again, in line with the objectives set out at IPO, we have been recently granted several patents applied for, a critical element of our intellectual property strategy and one which will ensure the defence of profitability long into the future. Other patents have been, and will continue to be, applied for across jurisdictions which will only serve to solidify the value of our IP and our position in the industry.
Looking to the months ahead, we are confident of our strategy and our investment in production and laboratory equipment to support the growth of the Group continues allowing the ongoing development of new technologies to provide products and solutions to help customers improve their existing products and offer new product ranges. We have made pre-payments on tailor-made equipment which, due to the movement in steel prices, we will buy at a better price than originally planned, that will double Graft Polymer's production capacities, which when received and fully operational, will enable us to react quickly to market demand and position us as the leader in our field. As we announced recently, the Group has had confirmation from its suppliers of delivery of a number of pieces of this new equipment to Graft Polymer's research laboratory in Slovenia in the coming weeks. In February, in preparation to meet current and future demand, we moved to a two-shift operation at our Slovenia production facility to ensure order fulfilment. With the planned investment, full production capacity at the existing facilities will result in an output of 6,000 tonnes of product per annum, up from the current 4,000 tonnes per annum; a 50% boost to our production capacity and one which will further expand our product range, and in turn our distribution network, which I already consider the most comprehensive, innovative, and flexible product ranges in the field of polymer modification.
Our Slovenian site is now operating on a positive cash inflow through organic growth alone.
The next 12 to 18 months should also see us entering collaborations for mutual development and production of grafted products. This will help satisfy increasing demand on major international companies for new and enhanced products, with a particular focus on automotive projects where we have already undertaken a number of successful R&D projects with the likes of Cooper Standard Automotive Inc., Celenese Corporation and Dynasol Elastomeros, S.A.U, amongst other global corporations. In addition, investment in a food grade good manufacturing practice ('GMP') plant and R&D laboratories in Slovenia is planned to allow for the expansion of the Graft Polymer's GraftBio division. The GMP plant and laboratories will allow the Company to further develop these platforms based on customers' specifications. We aim to have the Group as a whole operating on a positive cash inflow as of July 2023.
Outlook
Our objective with the IPO was to raise capital to make improvements to our processes at our facilities and strengthen our IP thereby creating value for our shareholders. I believe with the achievements that we have made so far, including the patent award and the HAACP certificate and the new equipment which is en route to us, we have created a very strong foundation in the first few months of trading that will only serve to benefit us in the long-term. With a broad range of proprietary technologies and techniques, which we believe are broader than our peers, and a highly experienced team in the polymer industry to deliver them, I look forward to sharing updates and progress with you over the coming weeks and months as we continue to deliver on our strategy.
Finally, I would like to take this opportunity to thank the Board, management, and R&D team for their hard work over recent months as we look to the future with confidence.
Roby Zomer - Non-Executive Chair
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SEVEN MONTHSED 31 DECEMBER 2021 AND YEARED 31 MAY 2021
Hot Features
Premium
7 Mths Year to
to 31 Dec 31 May
2021 2021
(unaudited)
Note GBP'000 GBP'000
----------------------------------------------------- ------- ----------- --------------
Continuing operations
Revenue 4 219 520
Cost of sales (118) (30)
----------------------------------------------------- ------- ----------- --------------
Gross profit 101 490
Other revenue 1 98
Operational costs 5 (148) (379)
Administrative expenses 5 (900) (653)
----------------------------------------------------- ------- ----------- --------------
Operating loss (946) (444)
Finance costs 9 (8) (7)
----------------------------------------------------- ------- ----------- --------------
Loss before taxation (954) (451)
Income tax 8 - -
----------------------------------------------------- ------- ----------- --------------
Loss for the year from continuing operations (954) (451)
Total loss for the year attributable to equity
holders of the parent
Other comprehensive income / (loss) 19 (5)
----------------------------------------------------- ------- ----------- --------------
Total comprehensive loss for the year attributable
to equity holders of the parent (935) (456)
===================================================== ======= =========== ==============
Earnings per share (basic and diluted) - pence 10 (1.36) (0.65)
===================================================== ======= =========== ==============
The accompanying notes form part of the financial statements.
STATEMENT OF FINANCIAL POSITION
FOR THE SEVEN MONTHSED 31 DECEMBER 2021
GROUP As at As at
31 Dec 31 May
2021 2021
(unaudited)
Note GBP'000 GBP'000
---------------------------------------------- ------
Non-current assets
Property, plant and equipment 12 310 364
Intangible assets 11 2,068 2,068
Other non-current assets 12 12
Total non-current assets 2,390 2,444
---------------------------------------------- ------
Current assets
Cash and cash equivalents 15 598 39
Trade and other receivables 14 142 86
---------------------------------------------- ------
Total current assets 740 125
---------------------------------------------- ------ ---------- --------------
TOTAL ASSETS 3,130 2,569
============================================== ====== ========== ==============
Equity attributable to owners of the parent
Issued share capital 16 7 7
Share premium 16 942 942
Shares to be issued 16 500 -
Capital reduction reserve 16 2,500 2,500
Foreign exchange reserve 3 (16)
Retained earnings (3,140) (2,186)
---------------------------------------------- ------ ---------- --------------
Total equity 812 1,247
---------------------------------------------- ------ ---------- --------------
Current liabilities
Borrowings 17 958 654
Trade and other payables 18 1,360 668
Total current liabilities 2,318 1,322
---------------------------------------------- ------ ---------- --------------
Total liabilities 2,318 1,322
---------------------------------------------- ------ ---------- --------------
TOTAL EQUITY AND LIABILITIES 3,130 2,569
============================================== ====== ========== ==============
The accompanying notes form part of the financial statements.
The financial statements were approved by the board on [20] June 2022 by:
.......................................................
Yifat Steuer
STATEMENT OF CASHFLOWS
FOR THE SEVEN MONTHSED DECEMBER 31 2021 AND YEARED 31 MAY 2021
GROUP 7 Mths Year to
to 31 Dec 31 May
2021 2021
GBP'000 (unaudited)
Note GBP'000
----------- --------------
Cash flow from operating activities
Loss before tax- continuing operations (954) (451)
Adjustments for:
Depreciation 46 109
Finance expenses 8 7
Waiver of interest on convertible loans 17 - (77)
Foreign exchange loss - 3
Changes in working capital:
Increase in trade and other receivables (56) (29)
Increase in trade and other payables 702 272
Net cash inflow / (outflow) from operating
activities (254) (166)
---------------------------------------------- ------ ----------- --------------
Cash flow from investing activities
Purchase of property, plant and equipment (1) (15)
Net cash outflow from investing activities (1) (15)
---------------------------------------------- ------ ----------- --------------
Cash flows from financing activities
Proceeds from subscription of shares 500 -
Proceeds from borrowings 300 197
---------------------------------------------- ------ ----------- --------------
Net cash inflow from financing activities 800 197
---------------------------------------------- ------ ----------- --------------
Net increase / (decrease) in cash and cash
equivalents 545 16
Cash and cash equivalents at beginning of
period 39 25
Foreign exchange impact on cash 14 (2)
Cash and cash equivalents at the end of the
period 15 598 39
---------------------------------------------- ------ ----------- --------------
There were no material non-cash transactions in the period.
The accompanying notes form part of the financial statements.
GROUP STATEMENT OF CHANGE IN EQUITY
FOR THE YEAR DECEMBER 2021
GROUP Shares Capital Foreign
Share to be Share Reduction Exchange Accumulated Total
Capital Issued Premium Reserve Reserve Losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
May 2020 7 - 3,442 - (11) (1,735) 1,703
Loss for the year - - - - - (451) (451)
Other comprehensive
loss - - - - (5) - (5)
Total comprehensive
loss for the year - - - - (5) (451) (456)
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Reduction in capital 7 - (2,500) 2,500 - - -
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Total transaction
with owners 7 - (2,500) 2,500 - - -
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Balance at 31
May 2021 7 - 942 2,500 (16) (2,186) 1,247
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Loss for the
year - - - - - (954) (954)
Other comprehensive
income - - - - 19 - 19
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Total comprehensive
loss for the year - - - - 19 (954) (935)
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Shares to be
issued - 500 - - - 500
Total transaction
with owners - 500 - - - 500
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
Balance at 31
Dec 2021 7 500 942 2,500 3 (3,140) 812
----------------------- --------- -------- --------- ----------- ---------- ------------ --------
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIODED 31 DECEMBER 2021
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's principal activities are the research, development and polymer modification technologies and polymer modification techniques.
The consolidated financial statement were approved for issue by the Board of Directors on 28(th) June 2022.
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.
In publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. The Company loss for the year was GBP669,233 (2020: loss of GBP196,000).
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 GBPGBP and presented to the nearest GBP'000.
2.2 New standards, amendments and interpretations i. New and amended standards adopted by the Company
No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 July 2021 have had a material impact on the Company.
ii. New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early 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):
-- Amendments to IAS 1: Presentation of Financial Statements - Classification of Liabilities as Current or Non-current (effective date not yet confirmed)*
-- Amendments to IFRS 3: Business Combinations - Reference to Conceptual Framework (effective 1 January 2022)*
-- Amendments to IAS 16: Property, Plant and Equipment (effective 1 January 2022)*
-- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1 January 2022)*
-- Annual Improvements to IFRS Standards 2018-2020 Cycle (effective 1 January 2022)*
-- Amendments to IAS 8: Accounting Policies, Changes to Accounting Estimates and Errors (effective date not yet confirmed)*
-- Amendments to IAS 12: Income Taxes - Deferred Tax arising from a Single Transaction (effective date not yet confirmed)* *subject to UK endorsement
The Directors are evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the financial statements of the Company.
2.3 Going concern
The financial statement have prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.
The Group had a net cash outflow from operating activities for the period to 31 December 2021 of GBP254,000 (31 May 2021: GBP166,000 outflow) and at 31 December 2021 had cash and cash equivalents balance of GBP598,000 (31 May 2021: GBP39,000).
Subsequent to period end, the Group completed the successful admission to the London Stock Exchange, raising GBP5,000,000 before costs. The Directors prepared budgets and cash flow forecasts covering the going concern period and have stressed tested them under varying conditions and acknowledging the successful raise of GBP5,000,000 raise (before costs) subsequent to period end following admission to the London Stock Exchange. The Directors believe the Group has sufficient resources to meet its obligations for a period of at least 12 months from the date of approval of these financial statements.
Taking these matters into consideration, the Directors consider that the continued adoption of the going concern basis is appropriate having reviewed the forecasts for the coming 18 months and the financial statements do not reflect any adjustments that would be required if they were to be prepared other than on a going concern basis.
2.4 Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated.
2.5 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 GBP 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.
2.6 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.
2.7 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 discounted 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').
2.8 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
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
- Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
- Amounts expected to be payable by the Group under residual value guarantees;
- The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
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.
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.
Payments associated with short-term leases (term less than 12 months) and all leases of low-value assets (generally less than GBP5k) are recognised on a straight-line basis as an expense in profit or loss.
2.11 Convertible loan notes, borrowings and borrowing costs
Convertible loan notes classified as financial liabilities and borrowings are recognised initially at fair value, net of transaction costs. After initial recognition, loans 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 period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are capitalised as a prepayment for liquidity services and amortised over the period of the loan to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability or at least 12 months after the end of the reporting period.
2.12 Equity
Share capital is determined using the nominal value of shares that have been issued.
Share to be issued relates to monies received in advance ahead of the issue of shares that was completed post period end following the admission to the London Stock Exchange. Upon the issue of these shares this reserve will be split between share capital and share premium reserves.
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.
Retained losses includes all current and prior period results as disclosed in the income statement.
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.
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
Estimated useful lives and residual values are reviewed each year and amended as required.
2.17 Intangible assets
Intangible assets acquired as part of a business combination or asset acquisition, other than goodwill, are initially measured at their fair value at the date of acquisition. Intangible assets acquired separately 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 Research and Development
Research expenses are recognised as an expense. The costs incurred during the development projects are recognised as intangible assets if the following occurs:
-- The product or process is technically and commercially feasible
-- The company intends to and has sufficient resources to complete development and to use or sell the asset.
-- The product or process is ready for use or sale. -- Future economic benefits are likely. -- Development costs can be measured reliably.
-- The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use, as well as capitalised borrowing costs.
-- Capitalised development expenditure can be measured fairly. 2.19 Investments in Subsidiaries
Investments in Group undertakings are stated at cost.
2.20 Critical accounting 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 made a judgement in respect of the carrying value of the knowhow that was acquired as part of the acquisition of the subsidiary, using a discounted CF model over a 5 year life span; and a discount rate of 15%. In the current period these intangible assets were not impaired as they were considered recoverable
Recoverability of the investment in subsidiary (note 13)
At at 31 December 2021 the carrying value of the Company's investment in is subsidiary Graft Polymer d.o.o. was GBP1,304,000. The recoverable value of this investment is not considered to be less than it is carrying value as at 31 December 2021 and therefore no impairment has been have recognised. The Directors have made this assessment through reviewing forecasts, other available financial information available and developments during the period and since the period-end. The key inputs within the forecast include revenue growth, gross profit margins and overheads, couple with the successful capital raise that was completed subsequent to period-end, that is to be used to progress operations.
Recoverability of amounts due from the subsidiary (note 25)
By 31 December 2021 the parent Company had advanced GBP302,000 as a loan to Graft Polymer d.o.o. The Directors expect this balance to be fully recoverable and have thus not recognised any IFRS 9 expected credit loss charges. They made this assessment through reviewing forecasts, other financial information available and developments during the year and since the year-end.
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 seven month period ended 31 December 2021 the Group operated in the single business segment of polymer development and production.
United
Kingdom Europe 2021
GBP'000 GBP'000 GBP'000
-------------- --------- -------- --------
31 Dec 2021
Assets 2,725 405 3,130
--------- -------- --------
31 May 2021
Assets 2,099 470 2,569
--------- -------- --------
4. REVENUE
7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
------------------------ ---------- ----------
Product Sales Revenue
Slovenia - 3
Europe 131 255
Rest of the world 50 51
---------- ----------
181 309
Services Sales Revenue
Slovenia 9 211
Europe 29 -
38 211
---------- ----------
Total Sales Revenue 219 520
---------- ----------
Within the sales revenue, there were 3 customer that accounted for greater than 10% of total revenue of the Group contributing GBP123,000 (31 May 2021: 2 customers with total revenue of GBP394,000).
5. OPERATING COSTS AND ADMINISTRATIVE EXPITURE
7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
----------------------------------- ---------- ----------
Operating costs
Depreciation (46) (109)
Operating costs (102) (270)
---------- ----------
(148) (379)
---------- ----------
Administrative costs
Director and employee costs (206) (304)
Professional and consulting fees (656) (311)
Travel expenses (2) (3)
Foreign exchange - (2)
Other expenses (36) (33)
---------- ----------
(900) (653)
---------- ----------
6. AUDITORS REMUNERATION
7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Fees payable to the Company's auditor for
the audit of parent company and consolidated
financial statements (37) -
Corporate finance and company secretary fees (90) -
----------
(127) -
---------- ----------
7. STAFF COSTS AND DIRECTORS' EMOLUMENTS
Directors' remuneration and employee costs for the Group is set out below and as per Directors Remuneration report on pages 21 to 22:
7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
------------------------- ---------- ----------
Directors remuneration 154 249
Employee costs 52 55
----------
206 304
---------- ----------
On average, excluding non-executive directors, the Group employed 6 technical staff members (31 May 2021: 6) and 3 administration staff member (31 May 2021: 3).
On average, excluding non-executive directors, the Company employed 2 technical staff members (31 May 2021: 2) and 2 administration staff member (31 May 2021: 2).
The highest paid director received remuneration of GBP71,000 (31 May 2021: GBP119,000).
8. TAXATION
No liability to incomes 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: 7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
The charge for year is made up as follows:
Corporation tax on the results for the year - -
Income tax charge 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 (954) (451)
Tax credit at the weighted average of the standard
rate of corporation tax in Slovenia of 19%
and UK of 19% - being 19% (31 May 2020: 19%) (181) (85)
Non-deductible expenses 9
Current year losses for which no deferred tax
asset is recognised (172) (85)
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 GBP1524k (31 May 2021: GBP6196k)
On 11 March 2020 it was announced (and substantively enacted on 17 March 2020) that the UK corporation tax rate would remain at 19% and not reduce to 17% (the previously enacted rate) from 1 April 2020. On 3 March 2021, the Chancellor announced that the corporation tax rate will be increasing to 25% from 1 April 2023.
9. FINANCE COSTS - NET
7 Mths Year
to 31 to 31
Dec 2021 May 2021
GBP'000 GBP'000
----------------------------------- ---------- ----------
Interest expense - borrowings 8 -
Finance charge on leased assets - 7
---------- ----------
Finance costs - net 8 7
---------- ----------
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.
7 Mths Year to
to 31 Dec 31 May 2021
2021 GBP'000 GBP'000
------------------------------------------------ -------------- -------------
Loss for the year from continuing operations
- GBP (954,000) (451,000)
Weighted number of ordinary shares in issue 70,000,000 68,997,260
------------------------------------------------ -------------- -------------
Basic earnings per share from continuing
operations - pence (1.36) (0.65)
------------------------------------------------ -------------- -------------
There is no difference between the diluted loss per share and the basic loss per share presented.
11. INTANGIBLE ASSETS
31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------------- -------------- ---------
Opening balance 2,068 2,068
Additions - -
-------------- ---------
2,068 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. At each period end, the Directors assess the intangible assets for any indicators of impairment and have concluded no presence of such indicators, and additionally management have prepared a discounted CF model over a 5 year life span; and a discount rate of 15%.
Based on the discounted CF model and there being no presences of any impairment indicators the Directors have concluded that no impairment charge was necessary during the period.
12. PROPERTY, PLANT AND EQUIPMENT
Plant Total
& Equipment GBP'000
GBP'000
---------------------- ------------- ---------
Cost
At 31 May 2020 560 560
Additions 15 15
Exchange impact (25) (25)
------------- ---------
At 31 May 2021 550 550
Additions 1 1
Exchange impact (14) (14)
------------- ---------
At 31 December 2021 537 537
------------- ---------
Depreciation
At 31 May 2020 (112) (112)
Charge for the year (82) (82)
Exchange impact 8 8
------ ------
At 31 May 2021 (186) (186)
Charge for the year (46) (46)
Exchange impact 5 5
------ ------
At 31 December 2021 (227) (227)
------ ------
Net book value at 31 May 2021 364 364
------ ------
Net book value at 31 December 2021 310 310
------ ------
13. INVESTMENT
Company subsidiary undertakings
Country
Name Business Activity of Incorporation Registered Address
---------------------- -------------------- ------------------ ---------------------
Graft Polymer d.o.o. Polymer development Slovenia Emonska Cesta 8,
and production 1000, Ljubljana,
Slovenia
Graft Polymer IP Intellectual England and Eccleston Yards,
Limited property Wales 25 Eccleston Place,
London, SW1W 9NF
---------------------- -------------------- ------------------ ---------------------
The Group owned interests in the following subsidiary undertakings, which are included in the consolidated financial statements:
Holding
31 Dec 31 May
31 Dec 31 May 2021 2021
Name 2021 2021 GBP'000 GBP'000
--------------------------- ------- ------- --------- ---------
Graft Polymer d.o.o. 100% 100% 1,304 1,304
Graft Polymer IP Limited 100% 100% - -
--------------------------- ------- ------- --------- ---------
1,304 1,304
--------- ---------
14. TRADE AND OTHER RECEIVABLES
GROUP 31 May
31 Dec 2021
2021 GBP'000 GBP'000
----------------------------------- -------------- ---------
Trade receivables 20 43
Other taxes and social security 99 33
Prepayment and accrued income - -
Other receivables 23 10
-------------- ---------
142 86
-------------- ---------
The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:
31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------- -------------- ---------
UK Pounds 112 22
Euros 30 64
-------------- ---------
142 86
-------------- ---------
COMPANY 31 May
31 Dec 2021
2021 GBP'000 GBP'000
----------------------------------- -------------- ---------
Other taxes and social security 88 12
Other receivables 24 10
-------------- ---------
112 22
-------------- ---------
As at 31 December 2021 all trade and other receivables were fully performing. Trade receivables have the following aging:
31 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------- -------------- ---------
Current 20 43
1 - 3 months - -
3 - 6 months - -
> 6 months - -
-------------- ---------
20 43
-------------- ---------
15. 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 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------- -------------- ---------
Cash and cash equivalents 598 39
--------------
598 39
-------------- ---------
COMPANY 31 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------- -------------- ---------
Cash and cash equivalents 545 10
--------------
545 10
-------------- ---------
16. SHARE CAPITAL
31 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------------------------- -------------- -----------
Issued and fully paid ordinary shares with a
nominal value of 0.1p (31 May 2021: 0.01p)
Number of shares 70,000,000 70,000,000
Nominal value (GBP'000) 7 7
-------------- -----------
Change in issued Share Capital and Share Premium:
Number Share Share
of shares capital premium Total
Ordinary shares GBP'000 GBP'000 GBP'000
Balance at 31 May 2020 68,000,000 7 3,442 3,449
Shares issued as trust shares
(2) 2,000,000 - - -
Transfer from share premium
to capital reduction reserve
(3) - - (2,500) (2,500)
Balance at 31 May 2021 70,000,000 7 942 949
----------- --------- --------- --------
Balance at 31 December 2021 70,000,000 7 942 1,449
----------- --------- --------- --------
(1) Shares issued on 6 September 2020.
(2) The trust shares are to be allocated to various shareholders on the basis of the following two milestones:
- 1,000,000 shares to be allocated upon the Group generating EUR1,000,000 in revenue in a 12 month period; and
- 1,000,000 shares to be allocated upon the Group generation EUR5,000,000 in revenue in a 12 month period.
(3) During the prior year, the Directors approved a GBP2,500,000 reduction in capital resulting in a transfer being made from share premium to a capital reduction reserve.
(4) During the period, the Company received GBP500,000 in relation to the subscription of shares for the Company's Admission to the London Stock Exchange subsequent to period end on 6 January 2022.
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.
Capital and reserves
During the prior year, the Directors approved a GBP2,500,000 reduction in capital resulting in a transfer being made from share premium to the capital reduction reserve.
The Group statements of changes in equity are set out on page 4 of this report.
17. BORROWINGS
31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------------------------------- -------------- ---------
Convertible note borrowings 950 654
Convertible note accrued interest 8 -
--------------
958 4
-------------- ---------
31 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------- -------------- ---------
Opening balance 653 486
Convertible loans issued 300 197
Exchange impact (3) -
Interest accrued 8 48
Interest waived - (77)
--------------
Closing balance 958 653
-------------- ---------
During the period the Company raised GBP300,000, through convertible loan note agreements with interest of between 6 and 10% per annum. These loan notes will automatically convert on the earlier of:
- The Company completing a fundraise of at least GBP1,000,000 for one of the loan note holders;
- The Company completing a fundraise of at least GBP2,000,000 for the other loan note holder; or
- Admission to the London Stock Exchange.
During the prior year, the Company raised GBP197,000, through a convertible loan note and upon the Company completing a minimum capital raise of EUR500,000 or IPO, the loans shall be convertible at a price of 80% of the price per share of the capital raise or IPO.
During the prior year, the terms of the convertible note raised in previous periods were agreed with the convertible note holders as follows:
- No interest to accrue on the convertible notes (resulting in a reversal of the loan interest accrual);
- In the event the Company shall close an equity investment (or series of equity investments) in a minimum aggregate amount of EUR1,000,000, or consummate an IPO ("the Qualifying Financing Round"), the ensure loan shall convert into shares at a price per share of:
o if the price of the Qualifying Financing Round is equivalent to or higher than EUR0.15, then the price of conversion shall be EUR0.10; or
o if the price of the Qualifying Financing Round is lower than EUR0.15, then the price of conversion shall be calculated by dividing a fixed amount of EUR0.10 by the result of dividing a fixed amount of EUR0.15 by the price of the Qualifying Financing Round (for example: if price of qualifying financing round is EUR0.075, than the conversion price shall be EUR0.10 / (EUR0.15/EUR0.075) = EUR0.05).
- In addition, 2,000,000 shares were issued on 30 November 2020 and held in trust to be allocated to the convertible loan note holders upon the satisfaction of two milestones:
o 1,000,000 shares to be allocated upon the Group generating EUR1,000,000 in revenue in a 12 month period; and
o 1,000,000 shares to be allocated upon the Group generation EUR5,000,000 in revenue in a 12 month period.
Subsequent to period end, all of the outstanding convertible loan notes were repaid in full through the conversion into Ordinary Shares in the Company following on from the successful admission of the Company to the London Stock Exchange on 6 January 2022.
18. TRADE AND OTHER PAYABLES
GROUP 31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------------ -------------- ---------
Trade payables 841 420
Accruals 480 216
Other payables 39 32
-------------- ---------
1,360 668
-------------- ---------
COMPANY 31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------------ -------------- ---------
Trade payables 479 95
Accruals 439 151
918 246
-------------- ---------
19. 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. The management of these risks is vested to the Board of Directors.
The sensitivity has been prepared assuming the liability outstanding was outstanding for the whole period. In all cases presented, a negative number in profit and loss represents an increase in finance expense / decrease in interest income.
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 31 Dec 31 May 31 May
2021 2021 2021 2021
Carrying Maximum Carrying Maximum
Value Exposure Value Exposure
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ---------- ---------- ----------
Cash and cash equivalents 598 598 39 39
Trade receivables 20 20 43 43
618 618 82 82
---------- ---------- ---------- ----------
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 2021.
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 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------- -------------- ---------
Cash and cash equivalents
Sterling 540 4
Euro 58 35
598 39
-------------- ---------
The table below shows an analysis of the currency of the net monetary asset and liabilities in the Sterling functional currency of the Group:
31 May
31 Dec 2021
2021 GBP'000 GBP'000
------------------------- -------------- ---------
Balance denominated in
Sterling 459 (62)
Euro (319) (265)
(140) (327)
-------------- ---------
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 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------------------- -------------- ---------
Cash and cash equivalents 598 39
--------------
598 39
-------------- ---------
The table below sets out the maturity profile of the financial liabilities at 31 December:
31 May
31 Dec 2021
2021 GBP'000 GBP'000
--------------------------------------- -------------- ---------
Due in less than one month (880) (452)
Due between one and three months - -
Due between three months and one year - -
--------------
(880) (452)
-------------- ---------
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 May
31 Dec 2021
2021 GBP'000 GBP'000
---------------- -------------- ---------
Bank balances 598 39
--------------
598 39
-------------- ---------
Given the extremely low interest rate environment on bank balances, any probable movement in interest rates would have an immaterial effect.
20. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial Financial Total
assets at liabilities
GROUP amortised at amortised
31 Dec 2021 cost cost
Financial assets GBP'000 GBP'000 GBP'000
/ liabilities
Trade and other receivables 142 - 142
Cash and cash equivalents 598 - 598
Trade and other payables - (880) (880)
740 (880) (140)
----------- -------------- --------
Financial Financial Total
assets at liabilities
GROUP amortised at amortised
31 May 2021 cost cost
Financial assets GBP'000 GBP'000 GBP'000
/ liabilities
Trade and other receivables 86 - 86
Cash and cash equivalents 39 - 39
Trade and other payables - (452) (452)
125 (452) (327)
----------- -------------- --------
Financial Financial Total
assets at liabilities
COMPANY amortised at amortised
31 Dec 2021 cost cost
Financial assets GBP'000 GBP'000 GBP'000
/ liabilities
Trade and other receivables 112 - 112
Cash and cash equivalents 545 - 545
Trade and other payables - (479) (479)
657 (479) 178
----------- -------------- --------
Financial Financial Total
assets at liabilities
COMPANY amortised at amortised
31 May 2021 cost cost
Financial assets GBP'000 GBP'000 GBP'000
/ liabilities
Trade and other receivables 22 - 22
Cash and cash equivalents 10 - 10
Trade and other payables - (95) (95)
32 (95) (63)
----------- -------------- --------
21. RECONCILATION OF MOVEMENT OF NET DEBT
31 December 2021 At 1 May Non-cash At 31 December
2021 changes Cashflow 2021
-------------------------- --------- --------- --------- ---------------
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 39 14 545 598
Borrowings - current (653) (5) (300) (958)
Borrowings - non-current - - - -
Net Debt (614) 9 245 (360)
-------------------------- --------- --------- --------- ---------------
31 May 2021 At 1 May Non-cash At 31 December
2021 changes Cashflow 2021
-------------------------- --------- --------- --------- ---------------
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 25 (2) 16 39
Borrowings - current (486) 30 (197) (653)
Borrowings - non-current - - - -
Net Debt (461) 28 (181) (614)
-------------------------- --------- --------- --------- ---------------
22. CAPITAL COMMITMENTS
There were no capital commitments at 31 December 2021 and 31 May 2021.
23. CONTINGENT LIABILITIES
As part of the acquisition of know-how from founder Victor Bolduev, the Company is due to pay a royalty of 7% of Company Revenue, on a monthly basis up to an aggregate amount of EUR3,500,000, which will commence upon the Company achieving monthly revenue of EUR20,000. To date, no royalty has been paid / accrued.
In December 2021, the 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 EUR3,500,000, which will commence upon the Company achieving monthly operating profit of EUR20,000.
Other than above, there were no further contingent liabilities at 31 December 2021 and 31 May 2021.
24. COMMITMENTS UNDER OPERATING LEASES
There were no commitments under operating leases at 31 December 2021 and 31 May 2021.
25. RELATED PARTY TRANSACTIONS
The Group's investments in subsidiaries have been disclosed in note 13.
During the year the Company entered into the following transactions with other Group companies:
Amounts owed by / (to) group companies
---------------------------------------------
Opening Movement Provisions Closing
Balance in year in year Balance
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- --------- ----------- ---------
Graft Polymer d.o.o. - 31
May 2021 1,322 65 (1,296) 91
Graft Polymer d.o.o. - 31
Dec 2021 91 211 - 302
---------------------------- ---------- --------- ----------- ---------
Graft Polymer IP Limited
- 31 May 2021 - - - -
Graft Polymer IP Limited
- 31 Dec 2021 - (29) - (29)
---------------------------- ---------- --------- ----------- ---------
The Directors conducted an impairment review and are satisfied that the carrying value of intergroup loans is reasonable and no impairment is necessary
In 2018 the Company issued 22,500,000 shares to founding director Victor Bolduev on the acquisition of his Know-how, resulting in the intangible asset of GBP2,068,000 (Note 11).
On 23 April 2021, the Company converted GBP1,296,000 (EUR1,487,000) of the loan to Graft Polymer d.o.o. into a capital contribution, thus reducing the amount due from Graft Polymer d.o.o.
At 31 December 2021 the Company had an outstanding amount receivable from Graft Polymer d.o.o. of GBP257,000 (31 May 2021 GBP91,000) and owed Graft Polymer IP Limited GBP29,000 (31 May 2021: GBPnil). The Company has applied the expected credit loss model as required under IFRS 9 and are comfortable that there are no impairment indications. The amount owed is unsecured, interest free, and has no fixed terms of repayment. The balance will be settled in cash. No guarantees have been given or received.
During the period, the Group incurred fees of GBP7,000 (31 May 2021: GBP12,000) from Sputnik Enterprises Limited, an entity that Roby Zomer is a beneficial owner in.
Details of directors' emoluments are set out in note 7.
During the prior year, the Group entered into a collaboration agreement with MGC Pharmaceuticals doo ("MGC"), a Company in which Roby Zomer is a director, for the provision of services for the development of MGC proprietary drug development technology. Revenue earned by the Company from MGC during the period was GBP10,000 (31 May 2021: GBP210,000) with GBPnil owed by MGC to the Group at period end (31 May 2021: GBPnil).
26. EVENTS SUBSEQUENT TO PERIOD
Subsequent to period end, the Company successfully complete the Admission to the London Stock exchange and issued 34,000,000 Ordinary shares upon Admission.
The shares issued:
- raised GBP5,000,000 before costs of the Admission of GBP850,000. - converted the entire outstanding convertible loan note balance of GBP950,000; - settled accrued fees to directors and consultants of GBP498,000. 27. 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.
The full annual report will be available shortly on Graft Polymer's website: https://graftpolymer.com/
**Ends**
About Graft Polymer
Graft Polymer is a UK incorporated holding company with an innovative research and manufacturing facility, based in Slovenia. The core business of the Group comprises polymer modification and drug delivery systems developments. Established in 2017, the Group has already introduced more than 50 products to the market.
The Group has developed a proprietary set of polymer modification technologies, which can improve existing products and processing methodologies by enhancing performance, simplifying manufacturing, reducing material consumption, widening the choice of feedstocks, and reducing costs.
In particular, the Group's techniques allow the combination of otherwise incompatible polymers, facilitating the creation of polymer composites engineered at a molecular level, that combine the attractive properties of different input materials. This enables customers to receive a synergism of properties in polymer composites.
The solutions and products offered by the Group are designed to improve performance, reduce raw materials consumption, and enhance the physical characteristic values of finished products or improve or modify their chemical interaction. In the past several years, there has been increased emphasis by the industry as a whole on applications of grafted polymers, which are produced by monomers being covalently bonded and polymerised as side chains onto the main polymer chain (the backbone).
In 2020, the Group launched a new division named GraftBio to develop IP for Bio/Pharma applications. This includes a drug delivery system to support and provide solutions to the market, which had been heavily impacted by the COVID-19 pandemic. The GraftBio division has been granted HACCP certification for its production facility. The Group has developed a set of drug delivery platforms that enable it to licence its DDS platform (IP) to MGC Pharmaceuticals Limited ("MGC"; LSE: MXC) in relation to MGC's CimetrA(TM) and CannEpil-IL(TM) products. The Group expects to receive royalty payments resulting from the sale by MGC of CimetrA(TM) and CannEpil-IL(TM) products.
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