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
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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