Company registration number: 11625145
HEALTH HOUSE HOLDINGS LIMITED
Annual report and financial statements
For the year ended 30 June 2020
HEALTH HOUSE HOLDINGS LIMITED
CONTENTS
Officers and professional advisers
Directors’ report
Statement of directors’ responsibilities
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the financial statements
3
4
6
7
9
10
11
12
13
14
15
16
HEALTH HOUSE HOLDINGS LIMITED
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
Robert Hyman Beenstock
Michael David Rann
David Colin Wheeler
Paul Mavor (resigned on 4th September 2019)
Antony Michael Samios (appointed on 4th September 2019, resigned on 24th March 2020)
Jason William Gould Peterson (appointed on 16th January 2020)
Baroness Simone Jari Finn (appointed on 17th April 2020)
Rakesh Uppal (appointed on 17th April 2020)
COMPANY NUMBER
11625145
REGISTERED OFFICE Memery Crystal LLP
165 Fleet Street
London
EC4A 2DY
AUDITOR
PKF Littlejohn LLP
15 Westferry Circus, Canary Wharf
London, United Kingdom
E14 4HD
3
HEALTH HOUSE HOLDINGS LIMITED
DIRECTORS’ REPORT
General information
The Directors present their Annual Report and the audited consolidated financial statements for the Group and Company
for the year ended 30 June 2020.
The Company is registered in England where its head office is located. The Company’s operations are based in the United
Kingdom and Australia, where the trading subsidiaries Health House Pharma Limited and CliniCann Ltd are respectively
located. CliniCann Ltd owns 100% of an Australian subsidiary called Health House Holdings Limited, which in turn owns
100% of Health House International Pty Ltd. The Company was dormant in the period to 30 June 2019 and, in addition to
its trading subsidiaries, owns 100% of a UK subsidiary, Health House Development UK Limited, which remains dormant.
Principal activities
Health House Holdings Limited is a holding company of operations in the pharmaceutical wholesale and distribution
sectors. It has two operating subsidiaries:
• Health House Pharma Limited, an international pharmaceutical distribution business in the UK; and
• Health House International Pty Limited, a medicinal cannabis distribution business in Australia.
Results and dividends
The loss for the year, after taxation, amounted to £1,339,924 (2019: £Nil).
The Directors do not propose a dividend in respect of the year ended 30 June 2020.
Directors
The Board is responsible for the Group’s objectives and business strategy and its overall supervision. Acquisition,
divestment and other strategic decisions will all be considered and determined by the Board including, when
circumstances permit, whether the payment of dividends, issue or buy back of shares is appropriate.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Robert Hyman Beenstock
Michael David Rann
David Colin Wheeler
Paul Mavor (resigned on 4th September 2019)
Antony Michael Samios (appointed on 4th September 2019, resigned on 24th March 2020)
Jason William Gould Peterson (appointed on 16th January 2020)
Rakesh Uppal (appointed on 17th April 2020)
Baroness Simone Jari Finn (appointed on 17th April 2020)
Disclosure of information to auditors
Each of the persons who are Directors at the time when this Directors’ Report is approved has confirmed that:
• So far as that Director is aware, there is no relevant audit information of which the Group and Company’s
•
auditors are unaware, and
That Director has taken all the steps that ought to have been taken as a Director in order to be aware of any
relevant audit information and to establish that the Group and Company’s auditors are aware of that information.
4
HEALTH HOUSE HOLDINGS LIMITED
DIRECTORS’ REPORT
Post balance sheet events
On 1 September 2020, the Company, via its subsidiary, Health House Pharma Limited, purchased the trade and assets of
Gees Pharmacy, a web-based pharmacy business in the UK, for £325,001. See note 32 for further details.
On 7 October, the Company completed a fundraising whereby the Company raised a gross amount of £536,500 from new
and existing investors.
COVID-19 Assessment
The impact of the Covid-19 virus has clearly, and is continuing to, put businesses across the world under severe pressure
both operationally and financially. Early on in the pandemic, the Board recognised the need to proactively manage the
potential impact by continually monitoring risks to the business and ensuring that cost control measures were identified
and enacted.
As such, whilst there is no certainty as to the length of time that the pandemic will be ongoing, the Board are of the view
that by acting swiftly, the business is in a strong position to maintain its current trading and continue to grow whilst at the
same time continuing to monitor and adapt as required during the ongoing global situation.
Auditors
The auditors, PKF Littlejohn LLP, have indicated their willingness to continue in office and will be proposed for
reappointment in accordance with section 485 of the Companies Act 2006.
Status of this Directors report
In preparing this report, the Directors have taken advantage of the small companies exemptions provided by section 415A
of the Companies Act 2006.
This report was approved by the board on 14 October 2020 and signed on its behalf.
…………………………………………………………….
David Wheeler
Chief Executive Officer
5
HEALTH HOUSE HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and 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 elected to prepare 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 period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:
•
•
•
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the entity's financial
position and financial performance; and
• make an assessment of the Company's ability to continue as a going concern.
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 to
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
6
HEALTH HOUSE HOLDINGS LIMITED
INDEPENDENT AUDITOR’S REPORT
Opinion
We have audited the financial statements of Health House Holdings Limited (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 30 June 2020 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of
Changes in Equity, the Consolidated and Parent Company Statements 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
and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as
at 30 June 2020 and of the group’s and parent company’ loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by
the EU and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, 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 going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are authorised for
issue.
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 group and parent
company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
7
HEALTH HOUSE HOLDINGS LIMITED
INDEPENDENT AUDITOR’S REPORT
•
•
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
group and parent company financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
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.
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.
Mark Ling (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
14 October 2020
15 Westferry Circus
Canary Wharf
London E14 4HD
8
HEALTH HOUSE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2020
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating loss
Finance income
Finance costs
Loss before taxation
Taxation
Loss after taxation
Other comprehensive income
Total comprehensive income for the period
Note
4
6
5
6
Year ended 30
June 2020
Period ended
30 June 2019
£
£
3,181,030
-
(2,466,971)
-
714,059
-
(2,057,113)
-
31,717
-
(1,311,337)
-
337
-
(28,924)
-
(1,339,924)
-
11
-
-
(1,339,924)
-
8,170
-
(1,331,754)
-
All results in the current financial year derive from continuing operations.
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
9
HEALTH HOUSE HOLDINGS LIMITED
Company registration number: 11625145
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
As at 30 June
2020
As at 30 June
2019
Note
£
£
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventory
Trade and other receivables
Financial assets at amortised cost
Cash and cash equivalents
Liabilities
Non-current liabilities
Lease liabilities
Borrowings
Trade and other payables
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Net assets
Equity
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
Total shareholder equity
13
16
17
18
19
20
22
24
21
21
22
24
26
27
28
28
28
1,008,570
61,208
1,069,778
358,466
602,457
136,452
272,733
1,370,108
17,388
6,878
50,000
74,266
1,091,543
16,176
251,753
1,359,472
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,006,148
-
1,016,983
3,879,210
(2,558,291)
8,170
(1,339,924)
1,006,148
-
-
-
-
-
-
-
The Group financial statements were approved by the board of directors and authorised for issue on 14 October 2020 and
are signed on its behalf by:
…………………………………
David Wheeler
Chief Executive Officer
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
10
HEALTH HOUSE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Share
capital
£
Share
premium
Other
reserves
Translation
reserve
£
£
£
Retained
earnings
£
Total
£
Incorporated on 16 October 2018
-
Comprehensive income:
Loss for the year
Other comprehensive income for the
year
-
-
Total comprehensive income for the year
-
Issue of share capital
Balance at 30 June 2019
Balance at 30 June 2019
Comprehensive income:
Loss for the year
Other comprehensive income for the
year
Total comprehensive income for the year
Issue of share capital
Consolidation adjustment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,170
8,170
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,339,924)
(1,339,924)
-
8,170
(1,339,924)
(1,331,754)
-
-
4,896,193
(2,558,291)
1,016,983
3,879,210
-
-
(2,558,291)
Balance at 30 June 2020
1,016,983
3,879,210
(2,558,291)
8,170
(1,339,924)
1,006,148
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
11
HEALTH HOUSE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Cash flows from operating activities
Cash used in operations
Note
29
Year ended 30
June 2020
£
Period ended 30
June 2019
£
(1,031,218)
-
Net cash outflow from operating activities
(1,031,218)
-
Cash flows from investing activities
Purchase of bonds
Cash balance of subsidiary acquired
Purchase of tangible assets
Purchase of intangible assets
Purchase of P&D trade and assets
(136,115)
312,611
(2,200)
(40,869)
(370,000)
-
-
-
-
-
Net cash used in investing activities
(236,573)
-
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from loans
Payments under finance lease
1,342,941
224,588
(35,175)
-
-
-
1,532,354
-
Net increase in cash and cash equivalents
264,563
-
Cash and cash equivalents at the beginning of
the financial year
-
-
Exchange differences
8,170
Cash and cash equivalents at end of year
20
272,733
-
Material non-cash transactions during the year ended 30 June 2020 was the acquisition of subsidiary via share for share
exchange. Refer to note 1 for further detail.
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
12
HEALTH HOUSE HOLDINGS LIMITED
Company registration number: 11625145
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Assets
Non-current assets
Investments in subsidiaries
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
Liabilities
Non-current liabilities
Borrowings
Current liabilities
Trade and other payables
Borrowings
Net assets
Equity
Share capital
Share premium
Retained earnings
As at 30 June
2020
£
As at 30 June
2019
£
Note
12
13
18
20
24
3,553,252
38,767
3,592,019
692,189
30,687
722,876
1
-
1
-
-
-
6,878
6,878
-
-
21
24
196,183
12,507
208,690
1
-
1
4,099,327
-
26
27
28
1,016,983
3,879,210
(796,866)
-
-
-
Total shareholder equity
4,099,327
-
As permitted by s408 Companies Act 2006, the Company has not presented its own total comprehensive income and
related notes. The Company’s total comprehensive loss for the year was £796,866 (2019: £Nil).
The Company financial statements were approved by the board of directors and authorised for issue on 14 October 2020
and are signed on its behalf by:
……………………………………..
David Wheeler
Chief Executive Officer
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
13
HEALTH HOUSE HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Note
Share
capital
£
Share
premium
£
Retained
earnings
£
Total
£
Incorporated on 16 October 2018
Comprehensive income:
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of share capital
Balance at 30 June 2019
Comprehensive income:
-
-
-
-
-
-
Loss for the year
Other comprehensive (loss) for the year
Total comprehensive (loss) for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(796,866)
-
(796,866)
(796,866)
-
(796,866)
Issue of ordinary shares as consideration
for a business combination
26,27
1,106,983
3,879,210
-
4,896,193
Balance at 30 June 2020
1,016,983
3,879,210
(796,866)
4,099,327
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
14
HEALTH HOUSE HOLDINGS LIMITED
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Cash flows from operating activities
Cash used in operations
Interest received
Interest paid
Note
29
Year ended 30
June 2020
£
Period ended
30 June 2019
£
(1,269,834)
16
(1,564)
1
-
-
Net cash outflow from operating activities
(1,271,382)
1
Cash flows from investing activities
Purchase of intangible assets
Payment for acquisition of subsidiary
Cash flows from financing activities
Proceeds from issues of shares
(40,872)
-
(40,872)
-
(1)
(1)
1,342,941
-
1,342,941
-
Net increase in cash and cash equivalents
30,687
-
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at end of year
-
-
30,687
-
Material non-cash transactions during the year ended 30 June 2020 was the acquisition of subsidiary via share for share
exchange. Refer to note 1 for further detail.
The accounting policies and notes on pages 16 to 39 form part of the financial statements.
15
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
1. General information
Health House Holdings Limited (“the Company”) is a company incorporated in the United Kingdom under the Companies
Act 2016. The Company is a private company limited by shares and is registered in England and Wales. The address of
the Group and Company’s registered office is shown on page 3.
During the year ended 30 June 2020, the Company acquired 100% of CliniCann Ltd by way of a share for share
exchange. This was completed through a two-step transaction, which took place on the 4th November and 20th November
2019. 87,438,509 of Company’s shares were exchanged for the entire share capital of CliniCann Ltd, at an average value
of A$0.076 per share.
During the year ended 30 June 2020, on 5 September 2019, Health House Pharma acquired the trade and assets of P&D
Pharmaceuticals Limited.
The principal activities of Health House Holdings Limited and its Subsidiaries (together, “the Group”) and the nature of the
Group’s operations are set out in the Directors’ Report on pages 4 to 5.
2. New and amended IFRS standards
These are the first financial statements of the Group and Company prepared in accordance with International Financial
Reporting Standards. The Group and Company has therefore adopted all recognition, measurement and disclosure
requirements of IFRS, in effect for annual periods commencing on or after 1 July 2019.
Standards which are in issue but not yet effective
The following relevant new standards and amendments to standards and interpretations have been issued, but are not
effective for the financial year beginning on 1 July 2019, as adopted by the European Union, and have not been early
adopted:
Standard
Key requirements
Definition of Material
– Amendments to IAS
1 and IAS 8
The IASB has made amendments to IAS 1 Presentation of Financial
Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors which use a consistent definition of materiality
throughout International Financial Reporting Standards and the
Conceptual Framework
for Financial Reporting, clarify when
information is material and incorporate some of the guidance in IAS 1
about immaterial information.
Effective date as
adopted by the EU
1 January 2020
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial
statements of the Group or the Company in future periods, except with regards to disclosure purposes.
3. Significant accounting policies
Basis of preparation
The financial statements have been prepared on a going concern basis, under the historic cost convention and in accordance
with International Financial Reporting Standards, (IFRS’s) and IFRS Interpretation Committee interpretation (IFRS IC) as
adopted by the European Union and with the Companies Act 2006 applicable to companies reporting under IFRS. The
comparative information shows information for a shortened period of 8 months from 18 October 2018 to 30 June 2019.
Going concern
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and settlement of liabilities in the normal course of business.
16
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Going concern (continued)
Notwithstanding the fact that the Group incurred an operating loss of £1,339,924 for the year ended 30 June 2020 and a
net cash outflow from operating activities amounting to £1,031,218, the financial statements have been prepared on a
going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.
In making their assessment as to the going concern assumption, the Directors have taken into consideration its available
cash reserve and the Group’s commitments for the foreseeable future. The Directors have also considered the effect of
the ongoing worldwide pandemic of Covid19 on the Group and Company’s financial position and believe that it has
implemented sufficient risk mitigation strategies to limit the effect of Covid19 on the Group and Company’s operations.
The Directors have reviewed projections for a period of at least 12 months from the date of approval of the Financial
Statements. The Group is currently loss making, but significant cash resources were raised during the period to finance its
activities and acquisitions.
After considering the uncertainties described above, the Directors have a reasonable expectation that the Group will have
adequate resources to continue in operational existence over the twelve months from the date of approval of these
financial statements. For these reasons they continue to adopt the going concern basis of accounting in preparing the
financialstatements.
The Directors, therefore, consider it appropriate to continue to prepare the financial statements on a going concern basis.
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidated of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the
Group gains control until the date the Group ceases to control the subsidiary.
The group consists of Health House Holdings Limited and its wholly owned subsidiaries Health House Pharma Limited,
Health House Development UK Limited, a dormant company, and CliniCann Ltd. CliniCann owns 100% of the share
capital of Health House Holding Ltd, which in turn holds 100% share capital of Health House International Pty Ltd.
In the parent company financial statements, investments in subsidiaries are accounted for at cost less impairment.
In the consolidated financial statements, subsidiaries acquired during the year are consolidated using the purchase
method. Their results are incorporated from the date that control passes. Accordingly, the consolidated statement of
comprehensive income and statement of cashflows include the results and cash flows of CliniCann Ltd for the period from
its acquisition on 4th November.
All intra-group transactions, balances and unrealised gains or transactions between group companies are eliminated on
consolidation.
Revenue recognition
The Group enters into contracts for the sale and distribution of medicinal cannabis products and other medical supplies.
Revenue is recognised when the price is determinable, the product has been delivered in accordance with the terms of the
contract, the significant risks and rewards or ownership have been transferred to the customer and collection of the sales
price is reasonably assured. The performance obligation is identified to be the delivery of supplies to the customer, and
the transaction price is allocated to the number of units delivered. These criteria for performance obligation are assessed
to have occurred once the product has been delivered to the customer.
17
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Government grants
Government grants are recognised as income when there is reasonable assurance that the Company has complied with
the conditions attached to them and the grant income is receivable.
The grant income is treated as other operating income in the Statement of Comprehensive Income.
Foreign currency
The individual financial statements of each Group company are prepared in the currency of the primary economic
environment in which it operates. For the purpose of the consolidated financial statements, the results and financial
position of the Group is presented in Pound Sterling.
The functional currencies of some of the Company’s subsidiaries differ from the consolidated Group Pound Sterling
presentation currency. As a result, the assets and liabilities of these subsidiaries are translated on consolidation at the
rates of exchange prevailing at the balance sheet date. Revenue and expenses are translated at the average rate of
exchange for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income
and accumulated in equity.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred
tax is charged or credited in the income statement, except when it relates to items charged or credited in other
comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting
for a business combination, the tax effect is included in the accounting for the business combination.
18
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the
straight-line method, on the following bases:
Plant and machinery
Computer equipment
Office equipment
Right of use asset
5 years
5 years
3 years
Length of lease
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with
the effect of any changes in estimate being accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. The gain or loss arising on the disposal or scrappage of an asset is determined
as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Intangible fixed assets
Amortisation methods and useful lives
The Group amortises intangible assets with a limited useful life, using the straight-line method over the following periods:
Website costs 10 years
Customer contracts
2-3 years
Customer contracts
Customer contracts were acquired as part of a business combination (see note 14 for details). They are recognised at their
fair value at the date of acquisition and are subsequently amortised on a straight-line based on the timing of projected cash
flows of the contracts over their estimated useful lives.
Impairment of assets
An impairment test is performed at each balance sheet or whenever events and circumstances, arising during its use,
indicate that the carrying value of the asset may exceed its recoverable amount.
The carrying value is compared against the expected recoverable amount of the asset, generally to the present value of the
right to use the building over its remaining lease life. Any impairment identified is charged to the income statement.
Inventory
Inventory is stated at the lower of cost and net realisable value on a first-in, first-out basis. Cost comprises of direct materials
and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead
expenditure based on normal operating capacity. Costs of purchased inventory are determined after deducting rebates and
discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
19
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised on the statement of financial position when the Group or Company
has become a party to the contractual priorities of the instrument. Financial instruments are classified into specified
categories dependent upon the nature and purpose of the instruments and are determined at the time of initial recognition.
All financial assets are recognised as loans, receivables and cash and all financial liabilities are recognised as other financial
liabilities.
IFRS 9 requires the classification of financial assets to be determined by a contractual cash flows test referred to as “Solely
payment of principal and interest” (SPPI) and a business model test. Financial assets that fail the SPPI test will be measured
at Fair value through the income statement. For assets passing the SPPI test, a business model test assesses the objective
of holding the asset. The business model test for financial assets can be summarised as follows:
•
•
•
Financial assets will be measured at amortised cost if they are held within a business model where the objective
is to hold financial assets in order to collect contractual cash flows (“Hold to collect” business model).
Financial assets will be measured at fair value through other comprehensive income if they are held within a
business model where the objective is achieved by both collecting contractual cash flows and selling financial
assets (“Hold to collect and sell” business model).
Financial assets will be measured at fair value through the income statement if they do not meet the business
model criteria of either “Hold to collect” or “Hold to collect and sell”.
Entities also have the option to designate a financial asset as measured at fair value through the income statement if doing
so eliminates or significantly reduces a measurement or recognition inconsistency (accounting mismatch).
Financial assets and financial liabilities are recognised on the statement of financial position when the Company has
become a party to the contractual priorities of the instrument.
Impairment
IFRS 9 introduces a new impairment model that requires the recognition of expected credit losses on all financial assets at
amortised cost or at fair value through other comprehensive income (other than equity instruments), lease receivables and
certain loan commitments and financial guarantee contracts. The expected credit loss must also consider forward looking
information to recognise impairment allowances earlier in the lifecycle of a product. IFRS 9 consequently is likely to increase
the volatility of impairment allowances as the economic outlook changes, although cash flows and cash losses are expected
to remain unchanged.
IFRS 9 introduces a three-stage approach to impairment as follows:
Stage 1 - Performing loans - the recognition of 12 month expected credit losses (ECL), that is the portion of lifetime expected
credit losses from default events that are expected within 12 months of the reporting date, if credit risk has not increased
significantly since initial recognition;
Stage 2 - Underperforming loans - lifetime expected credit losses for financial instruments for which credit risk has increased
significantly since initial recognition; and
Stage 3 - Non-performing loans - lifetime expected credit losses for financial instruments which are credit impaired.
The impairment requirements are applied by reference to the credit quality at initial recognition. Where actual information
on credit quality at initial recognition is not available without undue cost or effort, an approximation may be applied using
internal or external information, information about similar assets, or peer group experience. Otherwise, where information
on initial credit quality is not available lifetime expected credit losses must be recognised until the financial assets have
been derecognised.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Interest income is recognised by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be immaterial. Appropriate allowances for estimated
irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.
20
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances in current accounts.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. Trade and
other payables are recognised initially at fair value and subsequently measured at their amortised cost using the effective
interest rate method.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a residual interest in the assets of the Group or Company after
deducting all of its liabilities. Equity instruments issued by the Group or Company are recorded at the proceeds received,
net of direct issue costs.
Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at the inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except
for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as
tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the
lease payments as an administrative expense on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its
incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
•
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
•
•
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the
lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
•
•
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating
interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the modification.
21
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
3. Significant accounting policies (continued)
Leases (continued)
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement date of the lease.
The right-of-use assets are presented within ‘Property, Plant and Equipment’ in the consolidated statement of financial
position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment
loss as described in the ‘Property, Plant and Equipment’ policy.
Critical accounting judgements and key sources of estimation uncertainty
Judgement: Identifying the acquirer
Judgement is required in identifying the acquirer in a business combination, being the entity that obtains control of the
acquiree. This depends on a number of factors, including:
The original intention of the shareholders;
The existence of a large minority voting interest in the combined entity;
The composition of the governing body of the combined entity;
The composition of the senior management of the combined entity; and
The terms of the exchange of equity interests.
•
•
•
•
•
Health House Holdings Limited was deemed to be the acquirer under IFRS 3 ‘Business Combinations’ in the share for
share exchange with CliniCann Ltd that took place on 4 November 2019. Whilst the former shareholders of CliniCann own
the majority of the shares in the combined Group, the Directors of Health House Holdings Limited have the ability to
govern the entire Group, it was the intention of the shareholders for Health House Holdings Limited to be the acquirer and
the share for share exchange valued CliniCann at a premium.
Estimate: Consideration of shares acquired
The valuation of CliniCann shares acquired in the year was carried out by an independent valuation team. Assumptions,
based on the current economic environment have been made, which management believe are a reasonable basis on
which to estimate the value of CliniCann.
Estimate: Recoverable value of intangible fixed assets other than goodwill
Business contracts have been recognised at their fair value at the date of acquisition, and are subsequently amortised on a
straight-line based on the timing of projected cash flows of the contracts over their estimated useful lives. An estimation of
the projected cashflows has been made based on the contract terms, however the amount of units that will be fulfilled cannot
be known with certainty until the end of the contract.
Estimate: Recoverable value of goodwill
The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2020 reporting period, the
recoverable amount of the cash-generating units (CGUs) was determined based on value-in-use calculations which
require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by
management covering a 2-year period, and key inputs include an estimate of ongoing market share and an estimate of
future patient numbers based on historic growth rates.
Estimate: Inventory provisioning
It is necessary to consider the recoverability of the cost of inventory and the associated provisioning required. When
calculating the inventory provision, management considers the nature and condition of the stock, as well as applying
assumptions around anticipated saleability of inventory.
22
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Critical accounting judgements and key sources of estimation uncertainty (continued)
Estimate: Expected credit loss
When measuring ECL the Group uses reasonable and supportable forward looking information, which is based on
assumptions for the future movement of different economic drivers and how these drivers will affect each other. LGD is an
estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that
the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. PD
constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time
horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
4. Revenue
Revenue arising from the Group's activities during the period were as follows:
Sale of goods
The geographical split of revenue is shown below:
United Kingdom
Australia
Europe
5. Other income
Sponsorship income
Government grants
6. Expenses by nature
Cost of sales
Direct costs
Registrations
Commissions payable
30-Jun-20
£
3,181,030
3,181,030
30-Jun-20
£
498,353
961,913
1,720,764
3,181,030
30-Jun-19
£
-
-
30-Jun-19
£
-
-
-
-
30-Jun-20
£
30-Jun-19
£
5,103
26,614
31,717
30-Jun-20
£
2,433,375
26,408
7,188
2,466,971
-
-
-
30-Jun-19
£
-
-
-
-
23
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
6. Expenses by nature (continued)
Administration expenses
Salaries and other employee costs
Audit and accountancy fees
Licences and fees
Depreciation and amortisation
Short term leases
Legal and professional fees
Foreign exchange losses
Bad debts
Consulting fees
Advertising fees
Travel and subsistence
Other administration expenses
7. Auditor’s remuneration
Fees payable to the Group’s auditor and associates
Audit of the financial statements of the Group
Other non-audit services
30-Jun-20
30-Jun-19
£
£
794,745
112,593
9,527
216,580
22,361
132,684
37,881
1,327
483,604
11,460
47,709
186,641
2,057,113
-
-
-
-
-
-
-
-
-
-
-
-
-
30-Jun-20
£
30-Jun-19
£
35,000
21,400
56,400
-
-
-
8. Employees
The average monthly number of persons (including directors) employed by the Group during the period was 22 (2019: Nil).
9. Staff costs
Staff costs, including executive directors:
Salaries
Social security costs
Pension costs
10. Directors’ and key management remuneration
30-Jun-20
£
30-Jun-19
£
721,406
41,430
23,884
786,720
-
-
-
-
30-Jun-20
£
30-Jun-19
£
Director's remuneration for qualifying services
401,873
-
The amounts above are remunerated through both salaries (of which, some are included in Note 9) and through service
companies (as disclosed in Note 30).
24
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
11. Income tax
Current tax
UK corporation tax
Foreign income tax
Total current tax expense
Deferred income tax
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Total deferred tax expense/(benefit)
30-Jun-20
£
30-Jun-19
£
-
-
-
-
-
-
-
-
Income tax expense
-
-
Factors affecting tax charge for the year:
(Loss) before taxation
(Loss) before taxation multiplied by the weighted average of the corporation
tax rates of the jurisdictions in which the group operates at 23.25% (2018:
19%)
30-Jun-20
£
30-Jun-19
£
(1,339,924)
-
(311,532)
-
Explained by:
Expenses not deductible for tax purposes
Income disallowed for tax
Unutilised tax losses carried forward
Effects of different tax rates of subsidiaries operating in other jurisdictions
(518,053)
39
239,623
(33,141)
-
-
-
-
Tax charge for the period
-
-
The Group has tax losses available to be carried forward and used against trading profits arising in future periods of
£1,261,173. A deferred tax asset of £293,223 has not been recognised in respect of the tax losses carried forward on the
basis that there is insufficient certainty over the level of future profits to utilise against this amount.
25
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
12. Investments in subsidiaries
Company
At cost
At the beginning of the year
Additions during the year
At the end of the year
30-Jun-20
£
30-Jun-19
£
1
3,553,251
3,553,252
-
1
1
The Company has investments in the following subsidiary undertakings:
Subsidiary undertakings
Principle activity
Country of
incorporation
Holdings
%
Health House Pharma
Limited
Health House Distribution
UK Limited
CliniCan Ltd
Wholesale of
pharmaceutical
goods
UK
1 ordinary share
100%
Dormant
UK
1 ordinary share
100%
Wholesale of
pharmaceutical
goods
Australia
87,438,509 ordinary
shares
100%
The registered office of both Health House Pharma Limited and Health House Distribution UK Limited is Memery Crystal
LLP, 165 Fleet Street, London, United Kingdom, EC4A 2DY.
Health House Distribution UK Limited was dormant during the period ended 30 June 2020.
During the year ended 30 June 2020, the Company acquired 100% of CliniCann Ltd by way of a share for share exchange.
This was completed through a two step transaction, which took place on the 4th November and 20th November. 87,438,509
shares were exchanged, at an average value of A$0.076 per share. CliniCann owns 100% of the share capital of Health
House Holdings Ltd, which in turn holds 100% share capital of Health House International Pty Ltd. The registered office of
CliniCan Ltd and its fellow subsidiaries is Level 26, 140 St Georges Terrace, Perth, WA 6000. All companies were
incorporated in Australia.
13. Intangible assets
Group
Website costs
Customer
contracts
Goodwill
Total
Cost
At 1 July 2019
Additions
Acquisition of subsidiary
Acquisition of business contracts
At 30 June 2020
Amortisation
At 1 July 2019
Charge for the year
At 30 June 2020
£
-
40,872
-
-
40,872
-
2,105
2,105
£
-
-
-
400,000
400,000
-
180,967
180,967
£
£
-
-
750,770
-
750,770
-
40,872
750,770
400,000
1,191,642
-
-
-
-
183,072
183,072
Net book value as at 30 June 2020
38,767
219,033
750,770
1,008,570
Net book value as at 30 June 2019
-
-
-
26
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
13. Intangible assets (continued)
Customer contracts of £400,000 have been capitalised as part of the acquisition of trade and assets from P&D
Pharmaceuticals Limited on 05 September 2019 (see note 14 for details). The customer contracts have been recognised at
their fair value at the date of acquisition and are subsequently amortised on a straight-line based on the timing of projected
cash flows of the contracts over their estimated useful lives.
Goodwill also arose upon the acquisition of CliniCann Ltd on 4th November 2019. See note 15 for a reconciliation of
goodwill and further detail.
Company
Cost
At 1 July 2019
Additions
At 30 June 2020
Accumulated amortisation
At 1 July 2019
Charge for the period
At 30 June 2020
Net book value
At 30 June 2020
At 30 June 2019
14. Acquisition of P&D
Website costs
£
-
40,872
40,872
-
2,105
2,105
38,767
-
On 5 September 2019, Health House Pharma Limited acquired the trade and assets of P&D Pharmaceuticals Limited. P&D
Pharmaceuticals Limited is a distribution business offering a suite of third-party medicinal cannabis products via pharmacy
channels with Europe, and qualifies as a business as defined in IFRS 3. P&D Pharmaceuticals Limited was acquired in
order to open up further opportunities for the Group in Europe, and was transferred to the Group with strong business
contracts already in place.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table
below.
Plant and Equipment
Customer contracts
Total identifiable assets acquired and liabilities assumed
Goodwill
Total consideration
Satisfied by:
Cash
Cash retention (note 21)
Total consideration transferred
£
20,000
400,000
420,000
-
420,000
370,000
50,000
420,000
Acquisition-related costs (included in administrative expenses) amount to £32,538.
The acquisition of the assets and trade from P&D Pharmaceuticals Limited contributed £2,221,558 revenue and £283,131
to the Group’s loss for the period between the date of acquisition and the reporting date.
27
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
15. Acquisition of CliniCann Ltd
During the year ended 30 June 2020, the Group acquired 100% of CliniCann Ltd by way of a share for share exchange.
This was completed through a two step transaction, which took place on the 4th November and 20th November.
87,438,509 of Company’s shares were exchanged for the entire issued share capital of CliniCann Ltd at an average value
of A$0.02 (£0.01) per share. CliniCann owns 100% of the share capital of Health House Holding Ltd, which in turn holds
100% share capital of Health House International Pty Ltd.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Ordinary shares issued
£
994,960
The fair value of the 87,438,509 shares issued as the consideration paid for CliniCann Ltd was based on an independently
valued share price of A$0.02 (£0.01).
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Fixed assets
Trade receivables
Other debtors
Inventory
Trade payables
Lease liabilities
Other creditors
Net identifiable assets acquired
Goodwill
Net assets acquired
Fair value
£
312,611
58,542
93,960
22,736
31,716
(196,088)
(59,012)
(20,275)
244,190
750,770
994,960
The goodwill is attributable to the expected profitability of the acquired business. It will not be deductible for tax purposes.
CliniCann Ltd made a loss of £555,340 during the year ended 30 June 2020, of which £259,927 has been included in the
Group results, relating to the period 4 November 2019, the date of acquisition, to 30 June 2020.
28
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
16. Property, plant and equipment
Cost
Balance as at 1 July 2019
Additions
Computer
Equipment
Office
equipment
Plant &
Machinery
Right Of
Use Asset
£
£
£
£
-
11,594
-
2,200
-
20,000
-
62,263
Total
£
-
96,057
Balance as at 30 June 2020
11,594
2,200
20,000
62,263
96,057
Accumulated depreciation
Balance as at 1 July 2019
Charge for the year
Balance as at 30 June 2020
-
966
966
-
658
658
-
3,278
-
29,947
-
34,849
3,278
29,947
34,849
Net book value as at 30 June 2020
10,628
1,542
16,722
32,316
61,208
Net book value as at 30 June 2019
-
-
-
-
-
The Group leases buildings, the average lease term of which is 2.5 years. None of the leases held by the Group expired in
the current financial year.
Plant & Machinery of £20,000 acquired during the year ended 30 June 2020 relates solely to the assets acquired from P&D
Pharmaceuticals Limited.
17. Inventory
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Finished goods
358,466
-
-
-
Inventories recognised as an expense during the year ended 30 June 2020 amounted to £1,730,550. These were included
in cost of sales.
18. Trade and other receivables
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Trade receivables
Prepayments
Other receivables
VAT receivable
Amounts from group companies
417,623
60,147
23,674
100,013
1,000
602,457
-
-
-
-
-
-
-
26,070
21,950
2,799
641,370
692,189
-
-
-
-
-
-
29
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
18. Trade and other receivables (continued)
Group
Other receivables are non-trade receivables, and are non-interest bearing. The above amounts do not bear interest and the
Directors consider that the carrying amount is equivalent to their fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped
based on similar credit risk and ageing. The Group’s primary customer base is of a similar bracket and share the same
characteristics, as such these have been treated as one population. There is no history of default, and therefore no expected
losses against them. The other customer base relates to State customers, with no history of default, therefore, the lifetime
expected losses are considered to be £nil.
Company
All amounts due from subsidiary undertakings are repayable on demand, and are non-interest bearing. No allowances for
ECL's have been made during the year ended 30 June 2020 (2019: £Nil).
19. Other assets held at amortised cost
Financial assets at amortised cost include the following bonds held:
Current
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Bonds
136,452
-
-
-
On 2 June 2020, the Group entered into a loan agreement with the Ministry for Health Central Procurement and Supplies
Unit of Malta. The bond is unsecured and bears no interest and is held in Euros. The bond is renewable on an annual basis.
20. Cash and cash equivalents
Cash at the end of the financial period as shown in the statement of cash flows is reconciled to items in the statement of
financial position as follows:
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Cash and cash equivalents
272,733
-
30,687
-
30
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
21. Trade and other payables
Amounts due within one year:
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Trade payables
Amounts payable to Parent Entity
Other Creditors
Accruals
Social security and other taxes
640,518
-
251,771
168,568
30,686
1,091,543
-
-
-
-
-
-
108,369
2,049
14,646
53,375
17,744
196,183
-
-
1
-
-
1
Amounts due after one year:
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Deferred consideration
50,000
50,000
-
-
-
-
-
-
Trade and other payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs
and are non-interest bearing. For most suppliers no interest is charged on the trade payables for the first 30 days from the
date of the invoice. Thereafter, interest is chargeable on the outstanding balances at various interest rates. The Group has
financial risk management policies in place to ensure that payables are paid within the credit timeframe. Due to the short-
term nature of the trade payables the carrying amount approximates fair value.
Other payables are non-trade receivables, and are non-interest bearing. The above amounts do not bear interest and the
Directors consider that the carrying amount is equivalent to their fair value.
Company
All amounts due to subsidiary undertakings are repayable on demand, and are non-interest bearing.
31
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
22. Lease liabilities
Amounts recognised on the balance sheet
The balance sheet shows the following amounts relating to leases:
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Right-of-use assets (included within property,
plant and equipment)
Property leases
32,316
-
-
-
Lease liabilities
Property leases
33,564
-
-
-
Maturity analysis - contractual cash flows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
17,909
18,106
-
36,015
-
-
-
-
-
-
-
-
-
-
-
-
Less: future finance charges
Present value of lease liabilities
(2,451)
33,564
-
-
-
-
-
-
Disclosed as:
Current lease liabilities
Non-current lease liabilities
Amounts recognised in the statement of profit or
loss:
16,176
17,388
33,564
-
-
-
-
-
-
-
-
-
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Depreciation on property leases
Interest expense on lease liabilities
29,947
6,475
-
-
-
-
-
-
The total cash outflow for leases during the period was £35,175 (2019: £Nil).
32
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
23. Commitments under operating leases
At 30 June 2020 the Group and Company had future minimum lease payments under non-cancellable operating leases as
follows:
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Not later than 1 year
Later than 1 year and not later than 5 years
28,500
16,625
45,125
-
-
-
28,500
16,625
45,125
-
-
-
24. Borrowings
Current
Secured
Loans
Unsecured
Loans
Total
Non-current
Secured
Loans
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
4,809
-
4,809
-
246,944
-
7,698
-
251,753
-
12,507
-
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
6,878
-
6,878
-
The unsecured loans primarily relate to the following:
On 2nd June 2020, the Group entered into a loan agreement with Gees Pharma Limited. This loan agreement is unsecured,
and bears interest at a rate of 5% per annum, which is repayable at the end of the loan term. The loan is expected to be
repaid by 31 March 2021, and as at 30 June 2020, the outstanding amount is £136,771.
On 11 March 2020, the Group entered into a loan agreement with Oakways Healthcare. This loan agreement is unsecured,
and bears interest at a rate of 5% per annum, which is repayable at the end of the loan term. The loan is expected to be
repaid by 31 March 2021, and as at 30 June 2020, the outstanding amount is £74,556.
33
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
25. Financial instruments
The Group and Company are exposed to the risks that arise from its use of financial instruments. This note describes the
objectives, policies and processes of the Group and Company for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is presented throughout these financial statements.
Capital risk management
The Group and Company manages its capital to ensure that it will be able to continue as a going concern whilst maximising
the return to stakeholders. The Group and Company is funded by both of its shareholders through equity financing.
The capital structure of the Group and Company consists of cash and cash equivalents and equity, comprising issued capital
and retained profits. Cash is held with banks rated A+.
The Group and Company has no externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in the accounting policies section of these financial statements.
Principal financial instruments
The principal financial instruments used by the Group and Company, from which financial instrument risk arises, are as
follows:
· Trade and other receivables;
· Trade and other payables;
· Cash and cash equivalents;
· Financial assets at amortised cost; and
· Borrowings
Categories of financial instruments
At 30 June 2020, the Group and Company held the following financial assets:
Financial assets
Trade and other receivables
Financial assets at amortised cost
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Group
Amortised
cost
30-Jun-20
£
Amortised
cost
30-Jun-19
£
433,666
136,452
272,733
842,851
-
-
-
-
Group
Amortised
cost
30-Jun-20
£
Amortised
cost
30-Jun-19
£
962,131
258,631
1,220,762
1
-
1
34
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
25. Financial instruments (continued)
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Company
Amortised cost
30-Jun-20
£
Amortised
cost
30-Jun-19
£
654,770
30,687
685,457
-
-
-
Company
Amortised
cost
30-Jun-20
£
Amortised
cost
30-Jun-19
£
142,808
19,385
1
-
162,193
1
Fair value measurements
The information set out below provides information about how the Group and Company determines fair values of various
financial assets and financial liabilities.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair
value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
•
•
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
All financial instruments are defined as any contract that gives rise to both the recognition of a financial asset in one entity
and a financial liability or equity instrument in another entity. The estimated fair value of a financial instrument is the amount
at which the instrument could be exchanged in the market. For the purpose of estimating the fair value of financial assets
maturing in less than one year, the Group uses the market value. For other investments, the Group uses quoted prices in
the market. In relation to financial liabilities, since most loans are taken at variable rates or fixed rates that approximate to
market rates, the fair value of loans approximates their carrying value.
Financial risk management objectives
The Group’s finance function provides services to the business, co-ordinates access to domestic and international financial
markets, monitors and manages the financial risks relating to the operations of the Group through internal risk assessments.
These risks include credit risk, currency risk and capital risk.
35
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
25. Financial instruments (continued)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. Credit risk arises principally from the Group’s trade receivables, other financial assets and its cash balances. The
Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. The
Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped
based on similar credit risk and ageing. The Group’s primary customer base is of a similar bracket and share the same
characteristics, as such these have been treated as one population. The other customer base relates to State customers,
with no history of default, therefore, the lifetime expected losses are considered to be £nil.
The concentration of the Group's credit risk is considered by counterparty, geography and currency. The Group holds the
majority of its cash with one bank in each country of operation.
There are no other significant concentrations of credit risk at the Statement of Financial Position date.
At 30 June 2020, the Group held no collateral as security against any financial asset. The carrying amount of financial assets
recorded in the financial statements, net of any allowances for losses, represents the Group's maximum exposure to credit
risk without taking account of the value of any collateral obtained. At 30 June 2020, there were no financial assets, other
than trade receivables, that are not were past their due date. As a result, there has been no impairment of other financial
assets during the year.
The Group maintains good relationships with its bank, which has a high credit rating and its cash requirements are
anticipated via both the annual budgetary process and the ongoing authorisation for expenditure process. At 30 June 2020,
the Group had £272,733 (2019: £Nil) of cash reserves.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. There have been no changes to the Group’s exposure to market risks or the manner in which these risks
arise.
The carrying amounts of the foreign currency denominated monetary assets and monetary liabilities at the reporting date
are as follows:
Group
30-Jun-20
AUD
£
EUR
£
USD
£
Trade and other receivables
320,678
79,346
-
Financial assets at amortised
cost
Cash and cash equivalents
136,452
-
-
2,257
137,985
4,017
Trade and other payables
(2,876)
(442,683)
Borrowings
(136,772)
(27,917)
-
-
319,739
(253,269)
4,017
Group
30-Jun-19
EUR
AUD
USD
£
-
-
-
-
-
-
£
-
-
-
-
-
-
£
-
-
-
-
-
-
36
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
25. Financial instruments (continued)
Trade and other receivables
Financial assets at amortised cost
Cash and cash equivalents
Trade and other payables
Borrowings
Company
30-Jun-20
Company
30-Jun-19
EUR
£
AUD
£
EUR
£
AUD
£
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Capital risk
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the equity balance. The capital structure of the Group
consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital,
reserves and retained earnings (see note 1 for going concern statement).
26. Share capital
Issued and fully paid:
101,698,310 - Ordinary shares at £0.01 each
Reconciliation of movements during the year:
30-Jun-20
£
30-Jun-19
£
1,016,983
-
1 Ordinary Share of £0.01 issued at £1 on incorporation
13,959,800 Ordinary Shares issued at £0.1 each on 02 September 2019 for cash
87,438,509 Ordinary Shares issued in exchange for 87,438,509 Ordinary Shares in CliniCann Ltd at a
value of A$0.076 each on 4th November and 20th November
300,000 Ordinary Shares issued at £0.1 each on 08 April 2020
30-Jun-20
Number
Ordinary
Shares of
£0.01 each
0.01
139,598
874,385
3,000
1,016,983.01
37
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
27. Share premium
Balance at 1 July 2019
Issue of new shares
Less share issue costs
Balance at 30 June 2020
28. Reserves
30-Jun-20
£
-
3,962,249
(83,039)
3,879,210
Group
Company
30-Jun-20
£
30-Jun-19
£
30-Jun-20
£
30-Jun-19
£
Other reserves
Translation reserve
Retained earnings
(2,558,291)
8,170
(1,339,924)
-
-
-
-
-
(796,866)
-
-
-
Nature and purpose of reserves
Other reserves
The other reserve was created as a result of the acquisition by the Company of the entire issued share capital of
CliniCann Ltd. This acquisition was affected by a share-for-share exchange. In preparing consolidated financial
statements, the amount by which the fair value of the shares issued exceeded their nominal value was recorded in an
'other' reserve on consolidation. This reserve is not considered to be distributable.
Translation reserve
The translation reserve is due to accumulated foreign exchange translation differences arising on translation of the
Group's operations into a GBP presentational currency. This reserve is not considered to be distributable.
Retained earnings
This is the Group's accumulated profit/loss and is distributable.
29. Cash used in operations
Group
30 June
2020
£
30 June
2019
£
Company
30 June
2020
£
30 June
2019
£
(Loss) before income tax
Adjustments for:
Depreciation
Amortisation
Finance costs
Interest income
Change in operating assets and liabilities
(Increase) in receivables
(Increase) in inventory
Increase in payables
Cash used in operations
(1,339,924)
34,849
183,072
28,453
(337)
(485,762)
(326,751)
875,180
(1,031,218)
(796,866)
-
-
-
-
-
-
-
-
-
2,105
1,566
(17)
-
-
-
-
-
-
-
-
(692,190)
-
215,568
(1,269,834)
-
-
-
38
HEALTH HOUSE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
30. Related party transactions
CPS
On 2 September 2019, £90,454 commission was paid to CPS Capital Group Pty Ltd for brokerage services. CPS Capital
Group Pty Ltd is a company owned by Jason Peterson, who is a Director of Health House Holdings Limited. All amounts
were fully paid as at 30 June 2020.
CliniCann acquisitions
During the year ended 30 June 2020, the Company acquired 100% of CliniCann Ltd by way of a share for share exchange.
At the date of acquisition, David Wheeler, who is a Director of Health House Holdings Limited, held an interest in CliniCann
Ltd.
Key management compensation
Key management includes Directors (executive and non-executive) and senior management. The compensation paid to
related parties in respect of key management for employee services during the period consisted of: £13,972 paid to CPS
Capital Group Pty Ltd in respect of the fees of Jason Peterson (£Nil outstanding as at 30 June 2020); £59,882 paid to
Pathways Corporate Ptd Ltd in respect of the fees of David Wheeler (£3,992 outstanding as at 30 June 2020). Other key
management received £322,031.
31. Controlling party
There is no controlling party of the Group.
32. First time adoption of IFRS
The policies applied under the Group's previous accounting framework are not materially different to IFRS and have not
impacted on equity or comprehensive income. The date of adoption of IFRS is the start of the comparative period, being 18
October 2018.
33. Post balance sheet events
On 1 September 2020, the Company, via its subsidiary, Health House Pharma Limited, purchased the trade and assets of
Gees Pharmacy, a web-based pharmacy business in the UK, for £325,001. The provisional fair value of identifiable assets
acquired and liabilities assumed are set out as follows:
Plant and Equipment
Stock
Customer contracts
Total identifiable assets acquired and liabilities assumed
Goodwill
Total consideration transferred
£
30,000
70,000
225,001
325,001
-
325,001
On 7 October, the Company completed a fundraising whereby the Company raised a gross amount of £536,500 from new
and existing investors.
39