TIDMSOP
RNS Number : 6884F
Spinnaker Opportunities PLC
11 March 2020
11 March 2020
Spinnaker Opportunities plc
("Spinnaker" or the "Company")
Annual Report & Financial Statements for the Year Ended 31
December 2019
Spinnaker Opportunities plc (LON: SOP), the Standard Listed cash
shell focused on delivering a material acquisition in the cannabis
processing industry, is pleased to announce its Full Year Audited
Results for the year ended 31 December 2019.
Period Highlights
-- The Company's shares were suspended from trading on the
London Stock Exchange on 27 February 2019 following signature of
Heads of Terms to acquire the entire issued share capital of Kanabo
Research ("Kanabo") and trading remained suspended through the rest
of the period and to date
-- A Share Purchase Agreement covering the acquisition of Kanabo was signed on 2 December 2019
-- The Company entered into a contractual investment commitment,
for up to GBP1.4 million from a single professional investor,
conditional on completion of the acquisition of Kanabo and
re-admission to trading of the so-enlarged Group.
Spinnaker Chairman, Andy Morrison, said :
"The year under review has been focused on delivery of the
acquisition of Kanabo. Along with the management of Kanabo, we very
much look forward to bringing the business to the London market to
enable it to achieve its growth potential. The transaction has
taken longer than expected, and is still not completed, but the
Company remains positioned to be one of the first cannabis-related
businesses to list on the London Stock Exchange."
For further information, please visit
http://www.spinnakeropportunities.uk/ or contact the following:
Peterhouse Capital (Financial Adviser and Joint Broker)
Tel: +44 (0)20 7469 0930
Guy Miller/ Lucy Williams / Eran Zucker
SI Capital (Joint Broker)
Tel: +44 (0)1483 413 500 / +44 (0) 203 871 4038
Nick Emerson / Greg Mahoney
Blytheweigh (Financial PR)
Tel: +44 (0) 207 138 3224
Camilla Horsfall / Megan Ray
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Spinnaker Opportunities Plc
Annual Report & Financial Statements
for the year ended 31 December 2019
Company Registration No. 10485105 (England and Wales)
Contents
Page
Company Information 1
Chairman's Statement 3
Board of Directors and Senior Management 6
Directors' Report 7
Strategic Report 11
Governance Report 16
Remuneration Committee Report 23
Audit Committee Report 27
Nomination Committee Report 29
Independent Auditors' Report 30
Statement of Comprehensive Income 35
Statement of Financial Position 36
Statement of Changes in Equity 37
Statement of Cash Flows 38
Notes to the Financial Statements 39
Company information
Directors
Andrew Morrison
Anthony Harpur
Alan Hume
Company Secretary
David Little
Registered Office
59-60 Russell Square
London
WC1B 4HP
Registered Number
10485105
Brokers
Peterhouse Capital Limited
3(rd) Floor
80 Cheapside
London
EC2V 6EE
SI Capital Limited
46 Bridge Street
Godalming
GU7 1HL
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Solicitors
Bishop & Sewell
50-60 Russell Square
London
WC1B 4HP
Principal Bankers
Metro Bank
One Southampton Row
London
WC1 5HA
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Chairman's Statement
I am pleased to present the audited financial statements to
shareholders for the year ended 31 December 2019.
The year under review was dominated, as far as the Company was
concerned, by preparations for the proposed acquisition of Kanabo
Research Ltd ("Kanabo") and re-admission of the enlarged Company to
trading on the Standard List segment of the London Stock Exchange.
Preparations are now well advanced, we are confident, and we look
forward to the next exciting phase for the Company, one that we
believe will reward the patience of our investors.
The key transaction milestones passed during the year were:
-- On 27 February 2019, the Company announced that it had signed
a non-binding Heads of Terms to acquire the entire issued share
capital of Kanabo. As the acquisition of Kanabo will constitute a
Reverse Take Over ("RTO") under the London Stock Exchange Listing
Rules, the Company requested an immediate suspension of its listing
which took effect from the same date.
-- On 19 July 2019, the Company announced the terms of a
contractual investment commitment, via Peterhouse Capital Limited,
for a maximum of GBP1.4 million from a single professional
investor, conditional on the completion of the acquisition of
Kanabo and re-admission to trading by an agreed long-stop date.
This commitment remains valid.
-- On 2 December 2019, the Company announced the execution of
the Share Purchase Agreement covering the acquisition of Kanabo,
following receipt of the provisional approval granted by the
competent Israeli authority responsible for the regulation of
cannabis-related businesses for the proposed acquisition by
Spinnaker and my continuation as a director.
-- On the same date, Spinnaker and Kanabo entered into a Loan
Facility Agreement under which Spinnaker agreed to advance
GBP200,000 to Kanabo in order to provide additional working capital
to support sales growth pending completion of the acquisition
transaction. The second tranche of GBP100,000 under the agreement
was disbursed on 21 January 2020.
The acquisition of Kanabo will be satisfied by the issue and
allotment of new ordinary shares in the capital of the Company (the
"Consideration Shares"), such Consideration Shares to be issued at
an agreed placing price, and within certain agreed target valuation
parameters. The placing price will be determined following the
completion of fundraising activities being undertaken by the
Company's brokers in connection with the RTO.
Whilst the terms of the acquisition have been agreed, completion
remains subject to the satisfaction of certain conditions,
including inter alia:
-- The transaction will constitute a reverse takeover under the
Listing Rules and will be subject to approval by shareholders of
the Company at a general meeting
-- The Company having obtained a waiver from the Takeover Panel
under Rule 9 of the Takeover Code
-- The successful completion of fundraising activities to be
undertaken by way of a placing and direct subscriptions by new and
existing investors
-- Re-listing of the enlarged group on the London Stock Exchange
Accordingly, there can be no absolute certainty that the
transaction will proceed.
A prospectus setting out final details of the acquisition and
re-admission transaction is expected to be published shortly,
together with a notice of meeting convening and setting out the
resolutions required to be endorsed by members at a general meeting
in order to complete the transaction.
It is fair to say, I think, that the transaction with Kanabo has
taken longer to complete than we initially expected. In early 2019,
many industry commentators were looking over the Atlantic towards
Canada and predicting the arrival of a cohort of new
cannabis-related businesses to the London Stock Exchange before
summer 2019. In the event, this did not happen, and it remains
possible, even likely, that the Company will be first to have such
a prospectus approved. As a cash shell, with the objective of
making a single acquisition, the Company has been well positioned
to adopt a patient approach in order to help pioneer a dynamic new
sector. We have been admirably supported in this approach by our
legal advisers Hill Dickinson, our financial advisers Peterhouse
Capital and the whole transaction team. Their efforts and stamina
have been much appreciated.
That we have progressed as far as we have is not all down to
patience and stamina. Luck has played its part too! We were
fortunate to select a business model in Kanabo that involves
vaporisation rather than ingestion and therefore is not subject to
the EU Novel Foods regime that complicated the picture for some
others. By focusing on operations in Israel, the UK and Germany, we
have not had to convince regulators about the adequacy of cannabis
sector regulation in unfamiliar jurisdictions.
The main challenges have been in working with Kanabo and the
regulatory framework to shape the business into one that is capable
of being listed in London and navigating the new prospectus rules
that came into force during the year. With the sector being new and
dynamic, both Kanabo and the regulatory framework have at times
presented moving targets. We also saw a vaporisation scare in North
America which for a time threatened user acceptance of vaporisation
as a safe delivery method for cannabis-related products. Kanabo are
supportive of and can expect to benefit from proper regulation of
the industry.
The business development activities during the year were
undertaken for Spinnaker by a team comprising the Directors and
retained advisers. Retained advisers provide the benefit of their
experience on issues such as target quality, potential capital
expenditure requirements, commodity market dynamics and business
development to assist the Directors in formulating an investment
decision. The role of the retained adviser is to advise the Board
on a discretionary, part-time consultancy basis as the Board
assesses potential acquisitions. In common with the Directors,
retained advisers do not receive any fees for their ordinary duties
prior to completion of an acquisition transaction. I take this
opportunity to thank each of them for their dedication and hard
work.
Overall, what we particularly like about Kanabo are the strength
in depth of the management team and the foundation of science that
underpins the business. In a fast-changing business, these are
strengths that we believe will enable the enlarged group to thrive.
If the experience in Canada is anything to go by, the early movers
will do well.
................................
Andrew Morrison
Chairman
10 March 2020
Board of Directors and Senior Management
Andrew Morrison - Non-Executive Chairman
An outcome -- focused Director, General Manager and Chief
Executive of growth businesses with successful experience in both
major multi -- national corporations and smaller public companies.
A background in strategic business development combined with
technical literacy and an entrepreneurial mind -- set and a record
of commercial delivery across energy and process industries. Andrew
will be responsible for commercial matters and the overall
management of Spinnaker Opportunities ('SOPlc'), and in particular
in the sourcing and negotiation of a pipeline of RTO opportunities
for the business to action.
Anthony Harpur - Non-Executive Director
A senior oil executive in the oil trading units of BP and Shell
and ex -- CEO of an oil and chemicals trading company based in the
Middle East. Anthony is now retired and is a volunteer expedition
and walks leader. He welcomes the opportunity to use his knowledge
and experience to help SOPlc seek an acquisition of a material
business opportunity. In addition to his overall duties, Anthony
will contribute to the origination, screening and due diligence on
the RTO acquisition inventory.
Alan Hume - Non-Executive Director
Alan is a dynamic and highly developed CFO with significant
experience in the oil and gas exploration and production sector as
well as the broader energy market. Alan has also held senior
finance, commercial and operational roles in the oilfield services,
engineering, construction and energy production sectors.
Alan's career has seen him hold many domestic, as well as
international, financial responsibilities. He has experience in
bringing companies to market as well as leading acquisition and
disposal activities. His expertise encompasses blue chip American
organisations, AIM listed companies, a TSX -- V listed company and
start -- up ventures.
Alan is a Fellow of the Chartered Institute of Management
Accountants.
Directors' Report
The Directors present their report with the audited financial
statements of the Company for the year ended 31 December 2019. A
commentary on the business for the year is included in the
Chairman's Statement on page 3. A review of the business is also
included in the Strategic Report on pages 11 to 14.
The Company's Ordinary Shares were admitted to listing on the
London Stock Exchange, on the Official List pursuant to Chapters 14
of the Listing Rules, which sets out the requirements for Standard
Listings.
Directors
The Directors of the Company during the year and their
beneficial interest in the Ordinary shares of the Company at 31
December 2019 were as follows:
Director Position Appointed Resigned Ordinary Options Warrants
shares
Non-Executive
Andrew Morrison* Chairman 17/11/2016 - 4,600,080 1,250,000 3,400,000
Anthony Non-Executive
Harpur Director 21/02/2017 - 1,400,000 350,000 1,000,000
Non-Executive
Alan Hume Director 17/09/2018 - 400,000 - 400,000
* The shares and warrants held by Andrew Morrison are held by
HSBC Global Custody Nominee (UK) Ltd on behalf of his Self-Invested
Personal Pension (SIPP) and Individual Savings Account (ISA).
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party
indemnity policy in place for all three Directors.
Directors' Report (continued)
Substantial shareholders
As at 31 December 2019, the total number of issued Ordinary
Shares with voting rights in the Company was 29,400,120. Details of
the Company's capital structure and voting rights are set out in
note 10 to the financial statements.
The Company has been notified of the following interests of 3
per cent or more in its issued share capital as at the date of
approval of this report.
Number of Ordinary % of
Party Name Shares Share Capital
Share Nominees Ltd 5,934,262 20.2%
HSBC Global Custody Nominee (UK)
Ltd 4,600,080 15.6%
Hargreaves Lansdowne (Nominees) Ltd 3,073,575 10.5%
JIM Nominees Ltd 2,651,088 9.0%
Thomas Grant & Co Nominees Ltd 1,495,940 5.1%
Anthony Harpur 1,400,000 4.8%
Fiske Nominees Ltd 1,230,000 4.2%
Interactive Investor Services Nominees
Ltd 1,184,291 4.0%
HSDL Nominees Ltd 1,029,476 3.5%
Mr Gerwyn Williams 1,000,000 3.4%
Barclays Direct Investing Nominees
Ltd 990,034 3.4%
Financial instruments
Details of the use of the Company's financial risk management
objectives and policies as well as exposure to financial risk are
contained in the Accounting policies and note 14 of the financial
statements.
Greenhouse Gas (GHG) Emissions
The Company is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, given the very limited nature of its operations
during the year under review, it has not been practical to measure
its carbon footprint.
In the future, the Company will only measure the impact of its
direct activities, as the full impact of the entire supply chain of
its suppliers cannot be measured practically.
Dividends
The Directors do not propose a dividend in respect of the year
ended 31 December 2019 (31 December 2018: nil).
Future developments and events subsequent to the year end
Further details of the Company's future developments and events
subsequent to the year-end are set out in the Strategic Report on
pages 11 to 15.
Corporate Governance
The Governance report forms part of the Director's Report and is
disclosed on pages 16 to 22.
Directors' Report (continued)
Going Concern
The Company's business activities, together with facts likely to
affect its future operations and financial and liquidity positions
are set out in the Chairman's Statement and also note 2 of the
financial statements. In addition, note 14 to the financial
statements disclose the Company's financial risk management
policy.
The Directors, having made due and careful enquiry, are of the
opinion that the Company has adequate working capital to execute
its operations over the next 12 months. In the scenario of a
successful RTO, sufficient funds will be raised to undertake the
identified future plan for the enlarged Company. If the RTO does
not complete, the Directors have satisfied themselves that the
Company has adequate existing cash resources to continue operating
over the following 12 months. The Directors therefore have made an
informed judgement, at the time of approving the financial
statements, that there is reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. As a result, the Directors have adopted the
going concern basis of accounting in the preparation of the annual
financial statements.
Principal Activities
The Company's principal activity is to seek an acquisition in
the energy and industrial sectors, with focus since September 2018
on the cannabis processing industry.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the
Company on 12 December 2018. They have expressed their willingness
to continue in office and a resolution to reappoint them will be
proposed at the Annual General Meeting.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
alongside the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that year. The Directors are also required
to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies with a Standard Listing.
In preparing these financial statements, the Directors are
required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgments and accounting estimates that are reasonable and prudent;
-- State whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
Directors' Report (continued)
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Remuneration Committee Report
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. They are also responsible to make a statement
that they consider that the annual report and accounts, taken as a
whole, is fair, balanced, and understandable and provides the
information necessary for the shareholders to assess the Company's
position and performance, business model and strategy.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may
differ from legislation in other jurisdictions.
Statement of Directors' responsibilities pursuant to Disclosure
and Transparency Rule
Each of the Directors, whose names and functions are listed on
page 6 confirm that, to the best of their knowledge and belief:
-- the financial statements prepared in accordance with IFRS as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and loss of the Company;
and
-- the Annual Report and financial statements, including the
Strategic Report, includes a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that they face.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware, and each
Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
This directors' report was approved by the Board of Directors on
10 March 2020 and is signed on its behalf by:
.................................
Andrew Morrison
Chairman
Strategic Report
The Directors present the Strategic Report of Spinnaker
Opportunities Plc for the year ended 31 December 2019.
Section 172(1) Statement - Promotion of the Company for the
benefit of the members as a whole
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long term;
-- Act fairly between the members of the Company;
-- Maintain a reputation for high standards of business conduct;
-- Consider the interests of the Company's employees;
-- Foster the Company's relationships with suppliers, customers and others; and
-- Consider the impact of the Company's operations on the community and the environment.
The Company operates as a cash shell, which has been successful
in sourcing a business to acquire and is in the process of applying
to the FCA to re-admit to the LSE main market. The pre-revenue
nature of the business is important to the understanding of the
Company by its members and suppliers, and the Directors are as
transparent about the cash position and funding requirements as is
allowed under LSE regulations.
The application of the s172 requirements can be demonstrated in
relation to some of the key decisions made during 2019:
-- Any contracts for services provided have been undertaken with
a clear cap on financial exposure.
-- Maintain a policy of no remuneration for the Directors.
As a cash shell Company, the Board seriously considers its
ethical responsibilities to the communities and environment
Review of Business in the Period
Operational Review
The Company's principal activity is set out in the Directors'
Report on page 9.
On 27 February 2019, the Company requested suspension of its
listing following the signing of a non-binding Heads of Terms to
acquire the entire issued share capital of Kanabo Research
Limited.
Business Strategy
The Company is focused on delivering a material acquisition in
the cannabis processing industry and a number of opportunities had
been evaluated before the decision to proceed with the Kanabo
transaction was taken.
Strategic Report (continued)
Event since the year end
A further GBP100,000 loan has been extended to Kanabo since
31(st) December 2019. This was anticipated in the Facility
Agreement.
Financial review
Results for the 2019 period
The Company incurred a loss for the year to 31 December 2019 of
GBP363,000 (31 December 2018 - loss of GBP159,000).
The loss for the year occurred as a result of on-going
administrative expenses required to operate the Company and costs
in relation to pursuing the completion of the identified
acquisition transaction.
Cash flow
Net cash outflow for 2019 was GBP444,000 (31 December 2018 -
GBP41,000 outflow).
Closing cash
As at 31 December 2019, the Company held GBP597,000 of cash (31
December 2018 - GBP1,041,000).
Key Performance Indicators
The sole KPI for the Company has been to source a suitable
acquisition target. This KPI has been met with the identification
of Kanabo as the RTO target.
Position of Company's Business
At the year end
At the year end the Company's Statement of Financial Position
shows net assets totaling GBP674,000 (31 December 2018 -
GBP1,037,000). The Company has few liabilities and is considered to
have a strong cash position at the reporting date.
Environmental matters
The Board contains personnel with a good history of running
businesses that have been compliant with all relevant laws and
regulations and there have been no instances of non-compliance in
respect of environmental matters.
Employee information
At present, there are no female Directors in the Company. The
Company has a Chairman and two Non-Executive Directors. There are
also two Board advisers. The Company is committed to gender
equality and, if future roles are identified, a wide-ranging search
would be completed with the most appropriate individual being
appointed irrespective of gender.
Strategic Report (continued)
Social/Community/Human rights matters
The Company ensures that employment practices take into account
the necessary diversity requirements and compliance with all
employment laws. The Board has experience in dealing with such
issues and sufficient training and qualifications to ensure they
meet all requirements.
Anti-corruption and anti-bribery policy
The government of the United Kingdom has issued guidelines
setting out appropriate procedures for companies to follow to
ensure that they are compliant with the UK Bribery Act 2010. The
Company has conducted a review into its operational procedures to
consider the impact of the Bribery Act 2010 and the Board has
adopted an anti-corruption and anti-bribery policy.
Principal Risks and Uncertainties
The Company operates in an uncertain environment and is subject
to a number of risk factors. The Directors consider the following
risk factors are of particular relevance to the Company's
activities although it should be noted that this list is not
exhaustive and that other risk factors not presently known or
currently deemed immaterial may apply.
Risks/Uncertainties to the Company
Issue Risk/Uncertainty Mitigation
------------------------------- -----------------------------
Unproven business model The Company has not The management team
yet commenced trading has experience in advising,
and must complete an investing in and/or
acquisition in a timely managing a number of
manner. The Company companies across a
is currently in the variety of sectors.
process of applying External advisers with
for re-admission to specific related knowledge
the LSE market post and experience have
an acquisition in the been brought in following
cannabis processing the Company's decision
industry. to focus on the cannabis
processing industry.
------------------------------- -----------------------------
The Company may face There may be significant The growth prospects
significant competition competition faced by in the cannabis industry
in its chosen industry the Company. The Company are widely regarded
is currently focussed as very strong, which
on the cannabis processing may help to reduce
industry which received the effect of competition.
considerable publicity By consulting with
in recent years. Such knowledgeable experts
competition may come in the industry, carrying
from fellow investors out thorough due diligence
looking to buy into on potential targets
similar targets or, and extensive market
following an acquisition, research, the Company
an excess in suppliers may reduce this risk.
when the time comes
to market the product.
A number of these competitors
may possess greater
technical, financial
and other resources
than the Company.
------------------------------- -----------------------------
The Company relies The successful management The Company offers
on the experience and and operations of the incentives to Directors
talent of its management Company are reliant through participation
and advisors upon the contributions in share offerings,
of directors and advisors. which makes them linked
In addition, the Company's to the long term success
future success depends of the business.
in part on its ability
to continue to recruit,
motivate and retain
highly experienced
and qualified directors
and consultants.
------------------------------- -----------------------------
Strategic Report (continued)
Principal Risks and Uncertainties (continued)
Risks/Uncertainties to the Company
Issue Risk/Uncertainty Mitigation
------------------------------ --------------------------------
The Company may be The cannabis processing The Company monitors
subject to changes industry in which the legislative and regulatory
in regulation affecting Company is focussed changes and alters
its target industry on is controversial its business practices
and is highly regulated. where appropriate.
Against a backdrop In the event that the
of overall liberalisation, Company becomes subject
the industry will likely to specific regulation
continue to be the regarding its activities
subject of regulatory either before or after
oversight. Compliance an acquisition, the
with various laws and Company will put in
regulations may impose place such procedures
compliance costs and as are necessary to
restrictions on the ensure it complies
Company, with fines with such regulation.
and/or sanctions for
non-compliance.
------------------------------ --------------------------------
Raising funding Following completion It is anticipated that
of an acquisition, a reverse acquisition
the Company must have will take place and
sufficient cash to that funds will be
fund the operations raised for the enlarged
of the enlarged business business in conjunction
which may be significant with this. The Company
given that it must monitors its cash requirements
carry out ongoing research carefully and the net
and is in the drug proceeds from the share
sector. It may not issues in prior periods
be easy to obtain additional have been conserved
funds in an industry as much as possible
that could be viewed pending completion
as high risk. of an acquisition.
Whilst the cannabis
processing industry
could be considered
risky, the returns
are considered attractive.
------------------------------ --------------------------------
Composition of the Board
A full analysis of the Board, its function, composition and
policies, is included in the Governance Report.
Capital structure
The Company's capital consists of ordinary shares which rank
pari passu in all respects which are traded on the Standard segment
of the Main Market of the London Stock Exchange. There are no
restrictions on the transfer of securities in the Company or
restrictions on voting rights and none of the Company's shares are
owned or controlled by employee share schemes. There are no
arrangements in place between shareholders that are known to the
Company that may restrict voting rights, restrict the transfer of
securities, result in the appointment or replacement of Directors,
amend the Company's Articles of Association or restrict the powers
of the Company's Directors, including in relation to the issuing or
buying back by the Company of its shares or any significant
agreements to which the Company is a party that take effect after
or terminate upon, a change of control of the Company following a
takeover bid or arrangements between the Company and its Directors
or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or
otherwise) that may occur because of a takeover bid.
Approved by the Board on 10 March 2020
.................................
Andrew Morrison
Chairman
Governance Report
Introduction
The Company recognises the importance of, and is committed to,
high standards of Corporate Governance. Whilst the Company is not
formally required to comply with the UK Corporate Governance Code,
the Company has voluntarily applied the requirements of the UK Code
of Corporate Governance published in April 2016 (the Code). The
following sections explain how the Company has applied the
Code:
Compliance with the UK Code of Corporate Governance
The UK Corporate Governance Code, as published by the Financial
Reporting Council, is the corporate governance regime for England
and Wales. The Company has stated that, to the extent practicable
for a company of its size and nature, it follows the UK Corporate
Governance Code. The Directors are aware that there are currently
certain provisions of the UK Corporate Governance Code that the
Company is not in compliance with, given the size and early stage
nature of the Company. These include:
-- Provision 24 of the Code requires that the board should
establish an Audit Committee with at least two independent
non-executive directors. The Audit Committee comprises of one
non-executive director who cannot be assessed as independent. The
Directors consider the present composition to be adequate given the
size of the Company and volume of transactions.
-- Provision 24 of the Code requires that at least one member of
the Audit Committee must have the relevant financial experience.
The Committee consisted of one Non-Executive Director at the
year-end, who does not directly have experience in accounting or
auditing. However, his experience of finance gained in the industry
is considered sufficient given the present size and stage of
development of the Company. See also page 18.
-- Provision 32 of the Code requires that the board should
establish a Remuneration Committee with at least two independent
non-executive directors. The Remuneration Committee comprises of
one non-executive director who cannot be assessed as independent .
The Directors consider the present composition to be adequate given
the size of the Company and volume of transactions
-- Provision 11 of the Code requires that at least half of the
board should be non-executive directors whom the board considers to
be independent. Non-Executive Directors are interested in ordinary
shares in the Company and cannot therefore be considered fully
independent under the Code. However, the Non-Executive Directors
are considered to be independent in character and judgement.
-- As a consequence of the above, where provisions of the Code
require the appointment of independent directors, for example as
chairman or as senior independent director, the Company is not in
full compliance with the Code - this applies in relation to various
provisions of the Code including 9 and 12. However, the Directors
consider the present structure and arrangements to be adequate
given the size and stage of development of the Company.
Governance Report (continued)
Compliance with the UK Code of Corporate Governance
(continued)
-- The roles of Chairman and Chief Executive are undertaken by
the same individual. This is outside of provision 9 of the
Corporate Governance Code applicable to smaller companies, which
requires that these roles should not be exercised by the same
individual. However, the Directors consider the present structure
and arrangements to be adequate given the size and stage of
development of the Company.
-- Provision 17 states that the board should establish a
Nomination Committee of which the majority of members of the
committee should be independent non-executive directors. The
Nomination Committee comprises of one non-executive director who
cannot be assessed as independent. As set out in page 20, an
informal induction is considered sufficient given the size and
limited complexity of the Company. See point on independence
above.
The UK Corporate Governance Code can be found at
www.frc.org.uk.
Set out below are Spinnaker Opportunities' corporate governance
practices for the year ended 31 December 2019. After the Company
has completed an acquisition, these corporate governance practices
will be considered and reviewed to ensure they remain
appropriate.
Leadership
The Company is headed by an effective Board which is
collectively responsible for the long-term success of the
Company.
The role of the Board - The Board sets the Company's strategy,
ensuring that the necessary resources are in place to achieve the
agreed strategic priorities, and reviews management and financial
performance. It is accountable to shareholders for the creation and
delivery of strong, sustainable financial performance and long-term
shareholder value. To achieve this, the Board directs and monitors
the Company's affairs within a framework of controls which enable
risk to be assessed and managed effectively. The Board also has
responsibility for setting the Company's core values and standards
of business conduct and for ensuring that these, together with the
Company's obligations to its stakeholders, are widely understood
throughout the Company. The Board has a formal schedule of matters
reserved which is provided later in this report.
Board Meetings - The core activities of the Board are carried
out in scheduled meetings of the Board. These meetings are timed to
link to key events in the Company's corporate calendar and regular
reviews of the business are conducted. Additional meetings and
conference calls are arranged to consider matters which require
decisions outside the scheduled meetings. During the year, the
Board met on 13 occasions. Outside the scheduled meetings of the
Board, the Directors maintain frequent contact with each other to
discuss any issues of concern they may have relating to the Company
or their areas of responsibility, and to keep them fully briefed on
the Company's operations. Where Directors have concerns which
cannot be resolved about the running of the company, or a proposed
action, they will ensure that their concerns are recorded in the
Board minutes.
Governance Report (continued)
Matters reserved specifically for Board - The Board has a formal
schedule of matters reserved that can only be decided by the Board.
The key matters reserved are the consideration and approval of:
-- The Company's overall strategy;
-- Financial statements and dividend policy;
-- Management structure including succession planning,
appointments and remuneration; material acquisitions and disposals,
material contracts, major capital expenditure projects and
budgets;
-- Capital structure, debt and equity financing and other matters;
-- Risk management and internal controls;
-- The Company's corporate governance and compliance arrangements; and
-- Corporate policies.
Certain other matters are delegated to the Board Committees,
namely the Audit, Nomination and Remuneration Committees.
Summary of the Board's work in the year - During the year, the
Board considered all relevant matters within its remit, but focused
in particular on the establishment of the Company and the
identification of suitable investment opportunities for the Company
to pursue, the associated due diligence work as required and the
decisions thereon.
Attendance at meetings:
Member Position Meetings attended
---------------- ----------------------- ------------------
Andrew Morrison Non-Executive Chairman 13 of 13
Anthony Harpur Non-Executive Director 13 of 13
Alan Hume Non-Executive Director 13 of 13
---------------- ----------------------- ------------------
The Board is pleased with the high level of attendance and
participation of Directors at Board and committee meetings.
Attendance at Committee meetings is detailed in the respective
Committee reports.
The Chairman, Andrew Morrison, proposes and seeks agreement to
the Board Agenda and ensures adequate time for discussion.
Directors appointed by the Board are subject to election by
shareholders at the Annual General Meeting of the Company following
their appointment and thereafter are subject to re-election in
accordance with the Company's articles of association.
The terms and conditions of appointment of Non-Executive
Directors will be made available upon written request.
Governance Report (continued)
Remuneration Committee
The Company has established a Remuneration Committee, the sole
member being Anthony Harpur, a Non-Executive Director, to assist
the Board in determining its responsibilities in relation to
remuneration, including making recommendations to the Board on the
policy on remuneration.
The report of the Remuneration Committee is included in this
Annual Report. Formal terms of reference for the Remuneration
Committee have been documented and are made available for review at
the AGM.
Audit Committee
The Company has established an Audit Committee with delegated
duties and responsibilities. Due to the size and nature of the
Company and Board there is currently only one member of the Audit
Committee being Anthony Harpur, a non-Executive Director. Anthony
is an experienced senior business leader who has officiated on many
committees during his business life. He has held budget and P&L
responsibilities and fully understands the requirements of
independent audit. The Audit Committee is responsible, amongst
other things, for making recommendations to the Board on the
appointment of auditors and the audit fee, monitoring and reviewing
the integrity of the Company's financial statements and any formal
announcements on the Company's financial performance as well as
reports from the Company's auditor on those financial statements.
In addition, the Audit Committee will review the Company's internal
financial control and risk management systems to assist the Board
in fulfilling its responsibilities relating to the effectiveness of
those systems, including an evaluation of the capabilities of such
systems in light of the expected requirements for any specific
acquisition target.
The Audit Committee meets at least twice a year and more
frequently if required.
Terms of reference of the Audit Committee will be made available
upon written request.
The Audit Committee report is included on pages 27-28.
Nominations Committee
The Company has established a Nominations Committee, the members
of which are Andrew Morrison and Anthony Harpur. The committee
meets as required to fulfil its duties of reviewing the Board
structure and composition and identifying and nominating candidates
to fill Board vacancies as they arise.
Terms of reference of the Nominations Committee will be made
available upon written request.
Governance Report (continued)
The Nominations Committee report is included on page 29.
Other governance matters - All of the Directors are aware that
independent professional advice is available to each Director in
order to properly discharge their duties as a Director. In
addition, each Director and Board committee has access to the
advice of the Company Secretary.
The Company Secretary - The Company Secretary is David Little
who is responsible for the Board complying with UK procedures.
Effectiveness
For the period under review the Board comprised of a Chairman
and 2 Non-Executive Directors. Biographical details of the Board
members are set out on page 6 of this report.
The Directors are of the view that the Board and its committees
consist of Directors with an appropriate balance of skills,
experience, independence and diverse backgrounds to enable them to
discharge their duties and responsibilities effectively.
Independence - The non-executive Directors bring a broad range
of business and commercial experience to the Company. The Board
considers all the non-executive Directors to be independent in
character and judgement; this has been explored in more detail on
page 16.
Appointments - the Board is responsible for reviewing the
structure, size and composition of the Board and making
recommendations to the Board with regards to any required
changes.
Commitments - All Directors have disclosed any significant
commitments to the Board and confirmed that they have sufficient
time to discharge their duties.
Induction - All new Directors received an informal induction as
soon as practical on joining the Board. No formal induction process
exists for new Directors, given the size of the Company, but the
Chairman ensures that each individual is given a tailored
introduction to the Company and fully understands the requirements
of the role.
Conflict of interest - A Director has a duty to avoid a
situation in which he or she has, or can have, a direct or indirect
interest that conflicts, or possibly may conflict with the
interests of the Company. The Board had satisfied itself that there
is no compromise to the independence of those Directors who have
appointments on the Boards of, or relationships with, companies
outside the Company. The Board requires Directors to declare all
appointments and other situations which could result in a possible
conflict of interest.
Board performance and evaluation - The Chairman normally carries
out an annual formal appraisal of the performance of the other
Directors which takes into account the objectives set in the
previous year and the individual's performance in the fulfilment of
these objectives.
Governance Report (continued)
Although the Board consisted of three male Directors, the Board
supports diversity in the Boardroom and the Financial Reporting
Council's aims to encourage such diversity. Aside from the
Directors, there are no employees in the Company. The following
table sets out a breakdown by gender at 31 December 2019:
Male Female
---------- ----- -------
Directors 3 -
---------- ----- -------
The Board will pursue an equal opportunity policy and seek to
employ those persons most suitable to delivering value for the
Company.
Accountability-
The Board is committed to providing shareholders with a clear
assessment of the Company's position and prospects. This is
achieved through this report and as required other periodic
financial and trading statements. The Board has made appropriate
arrangements for the application of risk management and internal
control principles. The Board has delegated to the Audit Committee
oversight of the relationship with the Company's auditors as
outlined in the Audit Committee report on pages 27-28.
Going concern - The preparation of the financial statements
requires an assessment on the validity of the going concern
assumption.
In making their assessment of going concern, the Directors have
reviewed forecasts, under both a successful RTO process and one
which entails finding another target company, for a period of at
least 12 months from the date of approval of these financial
statements. The Directors recognise the small cost base of the
Company and their ability to conserve cash. As a result the
Directors consider that the Company has sufficient funds for the
required timeframe and as such they consider it appropriate to
adopt the going concern basis in the preparation of the financial
statements.
Internal controls - The Board of Directors reviews the
effectiveness of the Company's system of internal controls in line
with the requirement of the Code. The internal control system is
designed to manage the risk of failure to achieve its business
objectives. This covers internal financial and operational
controls, compliance and risk management. The Company had necessary
procedures in place for the year under review and up to the date of
approval of the Annual Report and financial statements. The
Directors acknowledge their responsibility for the Company's system
of internal controls and for reviewing its effectiveness. The Board
confirms the need for an ongoing process for identification,
evaluation and management of significant risks faced by the
Company. The Directors carry out a risk assessment before signing
up to any commitments.
The Directors are responsible for taking such steps as are
reasonably available to them to safeguard the assets of the Company
and to prevent and detect fraud and other irregularities.
At the present, due to the size of the Company, there is no
internal audit function. The requirement for internal audit will be
considered following the completion of a transaction.
Governance Report (continued)
Shareholder relations
Communication and dialogue - Open and transparent communication
with shareholders is given high priority and there is regular
dialogue with institutional investors, as well as general
presentations made at the time of the release of the annual and
interim results. All Directors are kept aware of changes in major
shareholders in the Company and are available to meet with
shareholders who have specific interests or concerns. The Company
issues its results promptly to individual shareholders and also
publishes them on the Company's website. Regular updates to record
news in relation to the Company and the status of its exploration
and development programmes are included on the Company's website.
Shareholders and other interested parties can subscribe to receive
these news updates by email by registering online on the website
free of charge.
The Directors are available to meet with institutional
shareholders to discuss any issues and gain an understanding of the
Company's business, its strategies and governance. Meetings are
also held with the corporate governance representatives of
institutional investors when requested.
Annual General Meeting - At every AGM individual shareholders
are given the opportunity to put questions to the Chairman and to
other members of the Board that may be present. Notice of the AGM
is sent to shareholders at least 21 working days before the
meeting. Details of proxy votes for and against each resolution,
together with the votes withheld are announced to the London Stock
Exchange and are published on the Company's website as soon as
practical after the meeting.
This Governance Report was approved by the Board and signed on
its behalf by:
.............................
Andrew Morrison
Non-Executive Chairman
10 March 2020
Remuneration Committee Report
The Remuneration Committee presents its report for the year
ended 31 December 2019.
Membership of the Remuneration Committee
The Remuneration Committee is currently comprised of one Non-
Executive Director, Anthony Harpur.
During the year ended 31 December 2019, one formal meeting of
the Remuneration Committee was held.
Subject to what appears below, no other third parties have
provided advice that materially assisted the Remuneration Committee
during the year.
The items included in this report are unaudited unless otherwise
stated.
Remuneration Committee's main responsibilities
-- The Remuneration Committee considers the remuneration policy,
employment terms and remuneration of the Board and advisors;
-- The Remuneration Committee's role is advisory in nature and
it makes recommendations to the Board on the overall remuneration
packages;
-- The Remuneration Committee, when considering the remuneration
packages of the Company's Board, will review the policies of
comparable companies in the industry.
Report Approval
A resolution to approve this report will be proposed at the AGM
of the Company. The vote will have advisory status, will be in
respect of the remuneration policy and overall remuneration
packages and will not be specific to individual levels of
remuneration.
Remuneration policy
In accordance with the commitments made in the Company's IPO
prospectus, the Company does not remunerate any of its Directors or
Retained Advisers for their ordinary duties prior to an acquisition
and currently has no employees. At this stage of the Company's
growth there is therefore no remuneration policy in place. If the
Company decides to remunerate the Directors or hires any employees
then a policy will be put in place.
There was no vote taken during the last general meeting with
regard to the Directors' remuneration policy. This is considered
reasonable given that the Company was not listed in the preceding
financial year and there was therefore no requirement for such a
remuneration policy.
Non-executive Directors
The Company policy is that the Non-Executive Directors are
expected to attend scheduled board meetings and attend committee
meetings as required. The Company does not have service contracts
with any of the directors.
Remuneration Committee Report (continued)
Other Employees
At present there are no other employees in the Company other
than the Directors, so this policy only applies to the Board.
Terms of appointment
The services of the Directors are provided in accordance with
their appointment letter. Directors are expected to devote such
time as is necessary for the proper performance of their duties,
but as a minimum they are expected to commit at least one day per
month, which shall include attendance at all meetings of the Board
and any sub-committees of the Board.
Director Year of appointment Number of years
completed
Andrew Morrison 2016 4
Anthony Harpur 2017 3
Alan Hume 2018 1
Directors' emoluments and compensation (audited)
Set out below are the emoluments of the Directors for the year
ended 31 December 2019 (GBP):
Annual bonus Pension
Salary and Taxable and long related
Name of Director fees benefits term benefits benefits Other Total
GBP GBP GBP GBP GBP GBP
Andrew Morrison - - - - - -
Anthony Harpur - - - - - -
Alan Hume - - - - - -
Remuneration Committee Report (continued)
Set out below are the emoluments of the Directors for the year
ended 31 December 2018 (GBP):
Annual bonus Pension
Salary Taxable and long related
Name of Director and fees benefits term benefits benefits Other Total
GBP GBP GBP GBP GBP GBP
Andrew Morrison - - - - - -
Anthony Harpur - - - - - -
Alan Hume - - - - - -
Pension contributions (audited)
The Company does not currently have any pension plans for any of
the Directors and does not pay pension amounts in relation to their
remuneration.
The Company has not paid out any excess retirement benefits to
any Directors or past Directors.
Payments to past directors (audited)
The Company has not paid any compensation to past Directors.
Payments for loss of office (audited)
No payments were made for loss of office during the year.
UK Remuneration percentage changes
As the remuneration for the preceding financial year is nil for
all Directors, no percentage changes for remuneration have been set
out in this report.
UK 10-year performance graph
The Directors have considered the requirement for a UK 10-year
performance graph comparing the Company's Total Shareholder Return
with that of a comparable indicator. The Directors do not currently
consider that including the graph will be meaningful because the
Company has only been listed since 2017, is not paying dividends,
is currently incurring losses as it gains scale and its focus is to
seek an acquisition. In addition and as mentioned above, the
remuneration of Directors is not currently linked to performance
and we therefore do not consider the inclusion of this graph to be
useful to shareholders at the current time. The Directors will
review the inclusion of this table for future reports.
Remuneration Committee Report (continued)
UK 10-year CEO table and UK percentage change table
The Directors have considered the requirement for a UK 10-year
CEO table. The Directors do not currently consider that including
these tables would be meaningful given that the Company is not yet
trading and the Directors are not yet remunerated for their
services. The Directors will review the inclusion of this table for
future reports.
Relative importance of spend on pay
The Directors have considered the requirement to present
information on the relative importance of spend on pay compared to
shareholder dividends paid. Given that the Company does not
currently pay dividends we have not considered it necessary to
include such information.
UK Directors' shares (audited)
The interests of the Directors who served during the year in the
share capital of the Company at 31 December 2019 and at the date of
this report has been set out in the Directors' Report on pages
7-10.
Other matters
In accordance with the Company's IPO Prospectus, subject to
completion of an acquisition the Board may award a bonus to one or
more Directors and/or Retained Advisers in recognition of their
contribution(s) to such acquisition. Any such bonus will be
contingent on completion of the acquisition, will be disclosed to
the vendors of the acquired business and will also appear in the
prospectus associated with re-admission of the enlarged business to
trading. Any sums paid as a bonus will not be material in the
context of an acquisition and will not in any event exceed 2% of
the aggregate of the total consideration paid in connection with
acquisition and the gross proceeds of any fundraising associated
with the acquisition.
The Remuneration Committee proposed, and it was resolved by the
Directors during the period that the success bonus above will be
capped at an aggregate amount of GBP200,000 and will normally be
settled in the form of shares rather than in cash.
The Company does not currently have any other annual or
long-term incentive schemes in place for any of the Directors and
as such there are no disclosures in this respect.
Approved on behalf of the Board of Directors by:
.............................
Anthony Harpur
Non-Executive Director
10 March 2020
Audit Committee Report
The Audit Committee comprises one Non-Executive Director,
Anthony Harpur. It oversees the Company's financial reporting and
internal controls and provides a formal reporting link with the
external auditors. The ultimate responsibility for reviewing and
approving the annual report and financial statements and the
half-yearly report remains with the Board.
Main Responsibilities
The Audit Committee acts as a preparatory body for discharging
the Board's responsibilities in a wide range of financial matters
by:
-- monitoring the integrity of the financial statements and
formal announcements relating to the Company's financial
performance;
-- reviewing significant financial reporting issues, accounting
policies and disclosures in financial reports, which are considered
to be in accordance with the key audit matters identified by the
external auditors;
-- overseeing that an effective system of internal control and
risk management systems are maintained;
-- ensuring that an effective whistle-blowing, anti-fraud and
bribery procedures are in place;
-- overseeing the Board's relationship with the external auditor
and, where appropriate, the selection of new external auditors;
-- monitoring the statutory audit of the annual financial
statements, in particular, its performance, taking into account any
findings and conclusions by the competent authority;
-- approving non-audit services provided by the external
auditor, or any other accounting firm, ensuring the independence
and objectivity of the external auditors is safeguarded when
appointing them to conduct non-audit services; and
-- ensuring compliance with legal requirements, accounting
standards and the Listing Rules and the Disclosure and Transparency
Rules.
Governance
The Code requires that at least one member of the Audit
Committee has recent and relevant financial experience. Anthony
Harpur has over 40 years of experience working with a wide variety
of companies. As a result the Board is satisfied that the Audit
Committee has recent and relevant financial experience.
Members of the Audit Committee are appointed by the Board and
whilst shareholders, the Company believes they are considered to be
independent in both character and judgement.
The Company's external auditor is PKF Littlejohn LLP and the
Audit Committee will closely monitor the level of audit and
non-audit services they provide to the Company.
Audit Committee Report (continued)
Meetings
In the year to 31 December 2019 the Audit Committee has met on 2
occasions.
The key work undertaken by the Audit Committee is as
follows:
-- interview of external auditors and recommendation to the Board
-- review of audit planning and update on relevant accounting developments;
-- consideration and approval of the risk management framework,
appropriateness of key performance indicators;
-- consideration and review of full-year results;
-- review of the effectiveness of the Audit Committee;
-- review of internal controls; and
-- consider whether an internal audit function is required and
confirmed not considered necessary given the present size of the
Company
The Code states that the Audit Committee should have primary
responsibility for making a recommendation on the appointment,
reappointment or removal of the external auditor.
External auditor
The Company's external auditor is PKF Littlejohn LLP. The
external auditor has unrestricted access to the Audit Committee
Chairman. The Committee is satisfied that PKF Littlejohn LLP has
adequate policies and safeguards in place to ensure that auditor
objectivity and independence are maintained. The external auditors
report to the Audit Committee annually on their independence from
the Company. In accordance with professional standards, the partner
responsible for the audit is changed every five years. The current
auditor, PKF Littlejohn LLP was first appointed by the Company in
2018 following a tender process, and therefore the current partner
is due to rotate off the engagement after completing the audit for
the year ended 31 December 2022. Having assessed the performance
objectivity and independence of the auditors, the Committee will be
recommending the reappointment of PKF Littlejohn LLP as auditors to
the Company at the 2020 Annual General Meeting
.............................
Anthony Harpur
Chairman of the Audit Committee
10 March 2020
Nomination Committee Report
The Nomination committee is comprised of the Chairman Andrew
Morrison and Non-Executive Director Anthony Harpur.
The committee considers potential candidates for appointment to
the Company's Board who maintain the highest standards of corporate
governance and have sufficient time to commit to the role.
Nomination committee evaluation
The nomination committee evaluates the composition, skills, and
diversity of the Board and its committees and identifies a
requirement for a Board appointment.
Identify suitable candidates
The nomination committee undertakes a review of each candidate
and their experience in accordance with the Company's 'director's
profile' and suitable candidates are identified.
For the appointment of a Chairman, the Nomination Committee will
prepare a job specification, including an assessment of the time
commitment expected, recognising the need for availability in the
event of crises.
Nomination committee recommendation
Following interviews with a candidate conducted by the Chairman,
and other members of the Board, the nomination committee makes a
recommendation on a preferred candidate to the Board.
Due diligence
After a candidate has been recommended to the Board by the
nomination committee, the company secretary undertakes appropriate
background checks on a candidate. The Board of directors meets any
candidate recommended by the nomination committee and the candidate
is given an opportunity to make a presentation to the Board prior
to deciding on their appointment.
Board appointment
The Board formally approves a candidate's appointment to the
Board.
Approach to Diversity
The nomination committee believes in the benefits of diversity,
including the need for diversity in order to effectively represent
shareholders' interests. This diversity is not restricted to gender
but also includes geographic location, nationality, skills, age,
educational and professional background. The Board's policy remains
that selection should be based on the best person for the role.
On behalf of the nomination committee
................................
Andrew Morrison
Chairman
10 March 2020
Independent Auditors' Report to the Members of Spinnaker
Opportunities Plc
Opinion
We have audited the financial statements of Spinnaker
Opportunities plc (the 'Company') for the year ended 31 December
2019 which comprise the Statement of Comprehensive Income, the
Statement of Financial Position, the Statement of Changes in
Equity, the Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2019 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to principal risks, going concern and
viability statements
We have nothing to report in respect of the following
information in the annual report, in relation to which the ISAs
(UK) require us to report to you whether we have anything material
to add or draw attention to:
-- the disclosures in the annual report [set out on pages 13-14]
that describe the principal risks and explain how they are being
managed or mitigated;
-- the directors' confirmation [set out on page 13-14] in the
annual report that they have carried out a robust assessment of the
principal risks facing the group, including those that would
threaten its business model, future performance, solvency or
liquidity;
-- whether the directors' statements relating to going concern
and their assessment of the prospects of the group required under
the Listing Rules in accordance with Listing Rule 9.8.6R(3) are
materially inconsistent with our knowledge obtained in the audit;
or
-- the directors explanation [set out on page 9] in the annual
report as to how they have assessed the prospects of the Company,
over what period they have done so and why they consider that
period to be appropriate, and their statement as to whether they
have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or
assumptions.
Independent Auditors' Report for the Members of Spinnaker
Opportunities Plc (continued)
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. Materiality was set at
GBP33,000 based on 5% of net assets, given that the Company are not
yet revenue generating and have limited trading activity. Unlike in
the previous year, a two separate materialities for the Statement
of Financial Position and
the Income Statement were not set due to the Company's assets as
at 31 December 2019 not being significantly higher than the total
expenses in 2019, as was the case in 2018. In the previous year,
materiality for the Statement of Financial Position was set at
GBP50,000 based on 5% of net assets. Materiality for the Income
Statement was set at GBP15,000 based on 10% of loss before tax.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the Directors and considered
future events that are inherently uncertain, such as the key audit
matter noted below. As in all of our audits, we also addressed the
risk of management override of internal controls, including among
other matters consideration of whether there was evidence of bias
that represented a risk of material misstatement due to fraud.
Key audit matters
We have determined that there are no key audit matters to
communicate in our report.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. In connection with our audit of the
financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that those
items meet the following conditions:
Independent Auditors' Report for the Members of Spinnaker
Opportunities Plc (continued)
-- Fair, balanced and understandable [set out on pages 11 to 12]
- the statement given by the directors that they consider the
annual report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the group's performance, business model
and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
-- Audit committee reporting [set out on pages 27 to 28] - the
section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit
committee; or
-- Directors' statement of compliance with the UK Corporate
Governance Code [set out on pages 16 to 17] the parts of the
directors' statement required under the Listing Rules relating to
the company's compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor in
accordance with Listing Rule 9.8.10R(2) do not properly disclose a
departure from a relevant provision of the UK Corporate Governance
Code
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
-- the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act
2006.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Independent Auditors' Report for the Members of Spinnaker
Opportunities Plc (continued)
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Audit Committee on 26 June 2019 to
audit the financial statements for the period ending 31 December
2019. Our total uninterrupted period of engagement is two years,
covering the periods ending 31 December 2018 to 31 December
2019.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the company and we remain independent of the
company in conducting our audit.
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with
the Directors. We considered the extent of compliance with those
laws and regulations as part of our procedures on the related
financial statements items.
We communicated laws and regulations throughout our audit team
and remained alert to any indications of non-compliance throughout
the audit.
As with any audit, there remained a higher risk of non-detection
of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
10 March 2020
Statement of Comprehensive Income
Year ended Year ended
31 December 2019 31 December
2018
Note GBP'000 GBP'000
Continuing operations
Operating expenses 3 (365) (161)
Operating loss (365) (161)
Interest income 2 2
Loss before taxation (363) (159)
Taxation 5 - -
Loss for the year (363) (159)
Other comprehensive income - -
for the year
Total comprehensive income
for the year attributable
to the equity owners (363) (159)
================== =============
Earnings per share from
continuing operations attributable
to the equity owners
Basic and diluted earnings
per share (pence per share) 6 (1.2p) (0.5p)
================== =============
The notes to the financial statements form an integral part of
these financial statements.
Statement of Financial Position
As at As at
31 December 2019 31 December 2018
Note GBP'000 GBP'000
Assets
Non-current assets
Other receivables 7 100 -
Total non-current assets 100 -
------------------ ------------------
Current assets
Trade and other receivables 8 13 13
Cash and cash equivalents 9 597 1,041
Total current assets 610 1,054
------------------ ------------------
Total assets 710 1,054
------------------ ------------------
Equity and liabilities
Equity attributable to shareholders
Share capital 10 735 735
Share premium 10 592 592
Share based payments reserve 59 59
Retained deficit (712) (349)
Total equity 674 1,037
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 11 36 17
Total liabilities 36 17
------------------ ------------------
Total equity and liabilities 710 1,054
------------------ ------------------
The notes to the financial statements form an integral part of
these financial statements .
This report was approved by the board and authorised for issue
on 10 March 2020 and signed on its behalf by:
...........................
Andrew Morrison
Director
Company Registration Number: 10485105
Statement of Changes in Equity
Share based
payments Retained
Share capital Share premium reserve deficit Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On 1 January 2018 650 510 58 (190) 1,028
Total comprehensive
loss for the period - - - (159) (159)
------------------------- ------------- ------------- ----------- -------- ------------
Shares issued 85 85 - - 170
Share issue costs - (3) 1 - (2)
Total transactions
with owners, recognised
directly in equity 85 82 1 - 168
Balance as at 31
December 2018 735 592 59 (349) 1,037
------------------------- ------------- ------------- ----------- -------- ------------
Total comprehensive
loss for the year - - - (363) (363)
------------------------- ------------- ------------- ----------- -------- ------------
Balance as at 31
December 2019 735 592 59 (712) 674
------------------------- ------------- ------------- ----------- -------- ------------
Share capital comprises the ordinary issued share capital of the
Company.
Share premium represents consideration less nominal value of
issued shares and costs directly attributable to the issue of new
shares.
Share based payments represents the value of equity settled
share-based payments provided to employees, including key
management personnel, and third parties for services provided.
Retained deficit represents the cumulative retained losses of
the Company at the reporting date.
The notes to the financial statements form an integral part of
these financial statements.
Statement of Cash Flows
Year ended Year ended
31 December 31 December
2019 2018
Note GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (363) (159)
Adjustments for:
Interest received (2) (2)
Net cash used in operating activities (365) (161)
------------- -------------
Changes in working capital
(Increase) in trade and other receivables - (9)
Increase/(decrease) in trade and other
payables 19 (41)
Net cash (used) in/generated from operating
activities 19 (50)
------------- -------------
Cash flows from investing activities
Loan advanced 7 (100) -
Net cash used in financing activities (100) -
------------- -------------
Cash flows from financing activities
Issue of shares - 170
Share issue costs - (2)
Net cash generated from financing activities - 168
------------- -------------
Cash flows from investing activities
Interest received 2 2
Net cash generated from investing activities 2 2
------------- -------------
Decrease in cash and cash equivalents (444) (41)
Cash and cash equivalents at beginning
of period 1,041 1,082
Cash and cash equivalents at end of
period 9 597 1,041
------------- -------------
A net debt reconciliation has not been included as the Company
had no debt during the year.
The notes to the financial statements form an integral part of
these financial statements .
Notes to the Financial Statements
1. General Information
The Company's principal activity is to seek an acquisition in
the energy and industrial sectors, with a focus since September
2018 on the cannabis processing industry. A suitable acquisition
target was identified and on 27(th) February 2019 the Company was
suspended from trading pending completion of the acquisition.
The Company is incorporated and domiciled in England and Wales
as a public limited company and operates from its registered office
at 59-60 Russell Square, London WC1B 4HP, and is listed on the
London Stock Exchange on the standard segment.
2. Summary of Significant Accounting Policies
The principle accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
a) Basis of Preparation
The financial statements of Spinnaker Opportunities have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") and IFRS Interpretations Committee (IFRS IC)
interpretations as adopted for use by the European Union, and the
Companies Act 2006.
The financial statements have been prepared under the historical
cost convention.
b) New Standards and Interpretations
i) New and amended standards adopted by the Company
Effective
Standard Impact on initial application date
IFRS 16 Leases 1 January
2019
IFRIC Interpretation Uncertainty over Income Tax Treatments 1 January
23 2019
IFRS 9 (Amendments) Prepayment Features with Negative 1 January
Compensation 2019
IAS 28 (Amendments) Long-term Interests in Associates 1 January
and Joint Ventures 2019
Annual improvements 2015-2017 Cycle 1 January
2019
IAS 19 (Amendments) Plan Amendment, Curtailment or 1 January
Settlement. 2019
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1
January 2019 have had a material impact on the Company.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
b) New Standards and Interpretations (continued)
ii) New standards, amendments and Interpretations in issue but
not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are issued, but not yet
effective and (in some cases) have not yet been endorsed by the EU,
up to the date of issuance of the financial statements are listed
below. The Company intends to adopt these standards, if applicable,
when they become effective.
Effective
Standard Impact on initial application date
IFRS 3 (amendments) Definition of a Business 1 January
2020
IFRS standards References to the Conceptual Framework 1 January
(amendments) 2020
IAS 1 (amendments) Definition of Material 1 January
2020
IAS 8 (amendments) Definition of Material 1 January
2020
IFRS 9, IAS Interest Rate Benchmark Reform 1 January
39 and IFRS 2020
7 (amendments)
IFRS 17 Insurance Contracts 1 January
2021
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.
c) Going Concern
The preparation of the financial statements requires an
assessment on the validity of the going concern assumption.
The Directors have reviewed projections for a period of at least
12 months from the date of approval of the financial
statements.
In making their assessment of going concern, the Directors
acknowledge that the Company has a very small cost base and can
therefore confirm that they consider sufficient funds will be
available to ensure the Company continues to meet its obligations
they fall due for a period of at least one year from the date of
approval of these financial statements. Accordingly, the Board
believes it is appropriate to adopt the going concern basis in the
preparation of the financial statements.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
d) Foreign Currency Translation
i) Functional and Presentation Currency
The financial statements are presented in Pounds Sterling (GBP),
which is the Company's functional and presentation currency.
ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement.
e) Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with
International Financial Reporting Standards requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
accounting policies.
Estimates and judgements are continually evaluated, and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Directors consider the significant
accounting judgements, estimates and assumptions used within the
financial statements to be:
Recoverability of loan
During the year ended 31 December 2019 the Company advanced
GBP100,000 to Kanabo Research Limited in accordance with the signed
loan agreement with the borrower. The amount expected to be
recovered in respect of this loan is an accounting estimate that
the Directors have made based on the forecasts, other financial
information available and developments since the year-end.
The Directors have estimated that the full loan balance
repayable will be recovered within the repayment period. This
assessment was based on the assessed strong likelihood of the
proposed reverse takeover taking place in 2020, the anticipated
funds that would be raised subsequent to this transaction and the
forecasted subsequent cashflows of the newly formed group.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
f) Financial Assets
(a) Classification
The Company classifies its financial assets in the following
categories: at amortised cost (including trade receivables and
other financial assets at amortised cost) fair value through other
comprehensive income or fair value through profit or loss. The
classification depends on the financial asset's contractual cash
flow characteristics and the business model for managing them.
Management determines the classification of its financial assets at
initial recognition.
Financial assets at amortised cost
(i) Classification of financial assets at amortised cost
The Company classifies its 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 the contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payments of principal and interest
Financial assets at amortised cost are initially measured at
fair value and subsequently measured using the effective interest
rate method less impairment.
(ii) Impairment and risk exposure
All of the financial assets at amortised cost are denominated in
Pounds Sterling. As a result, there is no exposure to foreign
currency risk. There is also no exposure to price risk.
It is the Directors' opinion that any calculation of an expected
credit loss charge in respect of financial assets at amortised cost
would be immaterial at present and that there are no historical
performance indicators to review. The Directors deem it not to be
practical to incorporate future macroeconomic factors into the
expected credit loss model calculation without incurring undue
cost.
There is no definition of default at present. This will be
reassessed as and when repayments are due in respect of financial
assets at amortised cost held. The loan receivable held as at the
year-end has a repayment term of two years and as such there will
be no possibility of default until November 2021.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
g) Financial Liabilities
Trade and other Payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer. If not, they are
presented as non-current liabilities.
Trade and other payables are recognised initially at fair value,
and subsequently measured at amortised cost using the effective
interest method.
h) Taxation
Current Tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and the tax laws used to
compute the amount are those that are enacted or substantively
enacted by the statement of financial position date.
Deferred Tax
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of
the transaction, affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investment in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the statement of
financial position date.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity. Otherwise
income tax is recognised in the statement of comprehensive
income.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
i) Segmental Reporting
At this point, identifying and assessing investment projects is
the only activity the Company is involved in and is therefore
considered as the only operating/reportable segment.
Therefore the financial information of the single segment and is
the same as that set out in the statement of comprehensive income,
statement of financial position.
j) Share-based payments
The Company has applied the requirements of IFRS 2 Share-based
payments.
The Company issues equity settled share based payments to the
directors and to third parties for the provision of services
provided for assistance in raising private equity. Equity settled
share based payments are measured at fair value at the date of
grant, or the date of the service provided. The fair value
determined at the grant date or service date of the equity settled
share based payment is recognised as an expense, or recognised
against share premium where the service received relates assistance
in raising equity, with a corresponding credit to the share base
payment reserve. The fair value determined at the grant date of
equity settled share based payment is expensed on a straight line
basis over the life of the vesting period, based on the company's
estimate of shares that will eventually vest. Once an option vests,
no further adjustment is made to the aggregate expensed.
The fair value is measured by use of the Black Scholes model as
the Directors view this as providing the most reliable measure of
valuation. The expected life used in the model has been adjusted,
based on management's best estimates, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The market price used in the model of issue price
of Company shares at the last placement of shares immediately
preceding the calculation date. The fair value calculated is
inherently subjective and uncertain due to the assumptions made and
the limitation of the calculation used.
k) Financial Risk Management Objectives and Policies
The Company does not enter into any forward exchange rate
contracts.
The main financial risks arising from the Company's activities
are market risk, interest rate risk, foreign exchange risk, credit
risk, liquidity risk and capital risk management. Further details
on the risk disclosures can be found in Note 14.
l) Equity
Equity instruments issued by the Company are recorded at the
value of net proceeds after direct issue costs.
Notes to the Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
m) Cash and Cash Equivalents
Cash and cash equivalents comprise cash held in bank. This
definition is also used for the Statement of Cash Flows.
The Company considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk. The Company
only keeps its holdings of cash and cash equivalents with
institutions which have a minimum credit rating of 'A-'.
The Company considers that it is not exposed to major
concentrations of credit risk.
3. Expenses by Nature
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Directors' share-based payment - -
Audit fees 15 14
Professional and consultancy fees 345 142
Other expenses 5 5
Operating expenses 365 161
------------- ------------------------
4. Auditors' remuneration
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Fees payable to the Company's current
auditor for the audit of the Company's
financial statements 15 14
------------- ------------------------
Notes to the Financial Statements (continued)
5. Income tax
Analysis of charge in the year
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Current tax - -
Deferred tax - -
Total tax - -
------------ ------------
Loss on ordinary activities before
tax (363) (159)
Analysis of charge in the year/period
Loss on ordinary activities multiplied
by rate of corporation tax in
the UK of 19% (2018: 19%) (69) (30)
Non-deductible expenses - -
Tax losses carried forward 69 30
Total tax - -
------------ --------------
The company has accumulated tax losses of approximately
GBP633,000 (2018: GBP270,000) that are available, under current
legislation, to be carried forward indefinitely against future
profits.
A deferred tax asset has not been recognised in respect of these
losses due to the uncertainty of future profits. The amount of the
deferred tax asset not recognised is approximately GBP120,000
(2018: GBP46,000).
Notes to the Financial Statements (continued)
6. Earnings per share
The calculation of the basic and diluted earnings per share is
calculated by dividing the loss for the year/period from continuing
operations of GBP363,000 (2018: GBP159,000) for the Company by the
weighted average number of ordinary shares in issue during the year
of 29,400,120 (2018: 29,381,490):
2019 2018
GBP GBP
------------------------------------------ ----------- -----------
Loss for the year/period from continuing
operations (363,000) (159,000)
Weighted average number of shares in
issue 29,400,120 29,381,490
Basic and diluted earnings per share (1.2p) (0.5p)
------------------------------------------ ----------- -----------
There is no difference between the basic and diluted earnings
per share as the effect would be to decrease earnings per
share.
As at the end of the financial period there were 29,030,500
share warrants and options in issue, which had an anti-dilutive
effect on the weighted average number of shares.
7. Other receivables
As at As at 31 December
31 December 2018
2019
GBP'000 GBP'000
Other loans 100 -
100 -
------------- ------------------
There are no material differences between the fair value of
other loans and their carrying value at the year end.
No receivables were past due or impaired at the year end.
Notes to the Financial Statements (continued)
8. Trade and other receivables
As at As at
31 December 31 December
2019 2018
GBP'000 GBP'000
Prepayments 13 13
13 13
------------- -------------
There are no material differences between the fair value of
trade and other receivables and their carrying value at the year
end.
No receivables were past due or impaired at the year end.
9. Cash and cash equivalents
As at As at
31 December 31 December
2019 2018
GBP'000 GBP'000
Cash at bank 597 1,041
------------- -------------
597 1,041
------------- -------------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
10. Called up share capital
As at 31 December 2019 the Company had 29,400,120 allotted and
fully paid ordinary shares.
The ordinary shares have attached to them full voting, dividend
and capital distribution rights (including on a winding up). The
ordinary shares do not confer any rights of redemption.
Number of Share Capital Share Premium
Ordinary GBP GBP
Shares of
GBP0.025
each
As at 31 December 2018
& 31 December 2019 29,400,120 735,003 591,852
----------- -------------- --------------
Notes to the Financial Statements (continued)
11. Trade and other payables
As at As at
31 December 31 December
2019 2018
GBP'000 GBP'000
Trade payables 13 2
Accruals 23 15
36 17
------------- -------------
12. Share based payments
Warrants Weighted average
Number of awards exercise price
As at 31 December 2018
& 31 December 2019 26,590,500 GBP0.074
--------------------------------------- -------------------------- ----------------------------
Exercisable at 31 December
2019 26,590,500 GBP0.074
The warrants outstanding at 31 December 2019 have a weighted
average remaining contractual life of 0.3 years.
At 31 December 2019, the Company had the following warrants in
issue:
Broker Broker
Warrants Warrants Warrants Warrants
------------------------ ---------------------- --------------------- --------------------- ----------------------
Date of
grant 17-May-17 17-May-17 3-Jan-18 3-Jan-18
Number
granted 24,000,000 790,500 1,700,000 100,000
Contractual
life 3 years 3 years 2.5 years 2.5 years
Exercise
price GBP0.075 GBP0.05 GBP0.075 GBP0.05
Estimated
fair
value Nil GBP0.017 Nil GBP0.017
The Warrants were granted to the subscribers and placees as part
of the share subscription and placing. These warrants fall outside
the scope of IFRS 2 .
Notes to the Financial Statements (continued)
12. Share based payments (continued)
Share options Weighted average
Number exercise price
Exercisable at 31 December
2018
& 31 December 2019 2,440,000 GBP0.05
-------------------------------------- --------------------- --------------------------
The options outstanding at 31 December 2019 have a weighted
average remaining contractual life of 0.3 years.
The fair value of the options issued during the period was
determined using the Black-Scholes valuation model and a share
based payment charge of GBPNil (2018: GBPNil) has been recognised
in the income statement.
13. Directors' emoluments
No salaries or fees were paid to the directors, In either
period.
The Directors are considered to be the key management
personnel.
14. Financial instruments
The following table sets out the categories of financial
instruments held by the Company as at 31 December 2019 and 31
December 2018:
2019 2018
GBP'000 GBP'000
--------------------------------------------- -------- --------
Financial Assets held at amortised cost
Other loans 100 -
Cash and cash equivalents 597 1,041
Financial liabilities held at amortised
cost
Financial liabilities measured at amortised
cost - Trade and other payables 13 2
--------------------------------------------- -------- --------
a) Market risk
The Company is not materially exposed to market risk as it has
yet to commence trading. Market risk is the risk that changes in
market prices, such as foreign exchange rates and interest rates
will affect the Company's income or value of its holdings of
financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
Notes to the Financial Statements (continued)
14. Financial instruments (continued)
b) Interest rate risk
The Company is not materially exposed to interest rate risk
because it does not have any funds at either fixed or floating
interest rates.
c) Foreign currency risk
The Company is not currently materially exposed to foreign
currency risk.
d) Credit risk
The Company's maximum exposure to credit risk in relation to
each class of recognised asset is the carrying amount of those
assets as indicated in the balance sheet. At the reporting date,
there was no significant concentration of credit risk. Receivables
at the year-end were not past due, and the Directors consider there
to be no significant credit risk arising from these
receivables.
e) Liquidity risk
Cash flow working capital forecasting is performed for regular
reporting to the directors. The directors monitor these reports and
forecasts to ensure the Company has sufficient cash to meet its
operational needs.
f) Capital risk management
The Company defines capital based on the total equity of the
Company. The Company manages its capital to ensure that the Company
will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and
equity balance.
In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to
reduce debt, in the future.
15. Average number of people employed
Average number of people employed, including Directors:
2019 2018
Number Number
Office and management 3 4
Notes to the Financial Statements (continued)
16. Contingent liability
Post year end, the Company entered into a Heads of Terms
agreement for the acquisition of Kanabo Research Limited. Upon
successful completion of this transaction, there will be a bonus
payable to the current Directors, which has been capped at
GBP200,000.
17. Ultimate Controlling Party
The Directors have determined that there is no controlling party
as no individual shareholder holds a controlling interest in the
Company.
18. Post balance sheet events
A further GBP100,000 loan has been extended to Kanabo since
31(st) December 2019. This was anticipated in the Facility
Agreement.
19. Copies of the Annual Report
Copies of the annual report are available on the Company's
website at http://www.spinnakeropportunities.uk/ and from the
Company's registered office, 59-60 Russell Square, London WC1B
4HP.
This information is provided by RNS, the news service of the
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END
FR URRRRRNUOAUR
(END) Dow Jones Newswires
March 11, 2020 03:00 ET (07:00 GMT)
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