Kanabo Group Plc
(formerly : Spinnaker Opportunities Plc)
Annual Report & Financial Statements
for the year ended 31 December 2020
Company Registration No. 10485105 (England and Wales)
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Contents
Company Information
Chairman’s Statement
Board of Directors and Senior Management
Directors’ Report
Strategic Report
Governance Report
Remuneration Committee Report
Audit Committee Report
Nomination Committee Report
Independent Auditors’ Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Page
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31
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42
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Company information
Directors
Andrew Morrison
Anthony Harpur (resigned on 16 February 2021)
Alan Hume (resigned on 16 February 2021)
Uziel Danino (appointed on 16 February 2021)
David Tsur (appointed on 16 February 2021)
Avihu Tamir (appointed on 16 February 2021)
Company Secretary
Howard Rubenstein
Registered Office
Churchill House
137-139 Brent Street
London
NW4 4DJ
Registered Number
10485105
Brokers
Peterhouse Capital Limited
3rd Floor
80 Cheapside
London
EC2V 6EE
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Solicitors
Asserson
Churchill House
137-139 Brent Street
London
NW4 4DJ
1
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Company information (continued)
Principal Bankers
Metro Bank
One Southampton Row
London
WC1 5HA
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
2
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Chairman’s Statement
I am pleased to present the audited financial statements to shareholders for the year ended 31
December 2020.
Since the year-end, the Company published a prospectus setting out the final details of the
acquisition of Kanabo Research Ltd (“Kanabo”) and the re-admission of the enlarged Company
to trading on the Standard List segment of London Stock Exchange. The general meeting that
took place on 15 February 2021 approved the transaction. I am proud to be a part of this historical
moment and share the achievement of being one of the first medical cannabis admissions to
London Stock Exchange.
The Company’s shares were suspended from trading for the entire financial year ended 31
December 2020 pending completion of the proposed transaction.
During the COVID-19 pandemic, Kanabo has implemented appropriate policies to protect the
health of its staff and to manage costs. In the meantime, business development activities directed
towards expanding the list of qualified suppliers of raw materials and sales through its distributor
network in the target markets have continued in line with Kanabo's business plan.
The key transaction milestones passed during the year were:
• To facilitate the execution of Kanabo's business plan while waiting for completion of the
acquisition and re-admission to trading, the Company supplied three further tranches
each of £100,000 to Kanabo during the period, under its Loan Facility Agreement,
secured against the intellectual property of the business. This brought the total loan
financing advanced to £400,000.
• The total loan financing came from internal funds together with £165,000 raised through
convertible loan notes issued in March and April 2020 to new and existing subscribers to
the Company.
• Following an announcement made on 18 September 2020 by the Financial Conduct
Authority covering the eligibility of certain categories of cannabis-related businesses for
admission to the Official List, the Company confirmed on 21 September 2020 that it had
re-started all project work-streams with the objective of completing its proposed
acquisition as quickly as possible.
• On 18 December 2020, the Company confirmed that it had conditionally agreed to acquire
the entire issued share capital of Kanabo. The executed Share Purchase Agreement
("SPA") was a restatement of the agreement that was originally signed on 2 December
2019, updated for the passage of time.
Following the year end, the Company confirmed that a marketing exercise was under way and
the results of this, including the significant over-subscription were announced to the market with
the prospectus on 29 January 2021. Admission to trading to London Stock Exchange took effect
from 16 February 2021.
3
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Chairman’s Statement (continued)
Founded on the successful fund-raise and over-subscription, the Company has additional funds
to deploy, over and above the minimum that it set at the beginning of the exercise. The Company
is therefore able to accelerate the roll-out of its business plan and take advantage of new growth
opportunities as they arise.
Clearly the transaction with Kanabo took much longer to complete than we initially expected. As
a cash shell, with the objective of making a single acquisition, the Company was well positioned
to adopt a patient approach in order to help pioneer a dynamic new sector. We were admirably
supported in this approach by our legal advisers Hill Dickinson, our auditors PKF Littlejohn, our
financial advisers Peterhouse Capital, SI Capital and the whole transaction team. Their efforts
and stamina were much appreciated.
The business development activities during the year were undertaken by the Company by a team
comprising the Directors and retained advisers. Retained advisers provided 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. In common with the Directors, retained advisers did not receive any fees
for their ordinary duties prior to completion of the acquisition of Kanabo. We take this opportunity
to thank each of them for their dedication and hard work.
None of the above would have been possible, of course, without the trust and patience of
shareholders and the hard work of Andy Morrison, the former chairman of the Company, and the
directors. It has been a monumental effort from everyone. Following completion of the acquisition
on 16 February 2021, Andy continues as a non-executive director of the Company.
On behalf of the Board, I thank you for your support of our company and we look forward to the
exciting opportunities in front of us.
…………………………..
David Tsur
Chairman
01 June 2021
4
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Board of Directors and Senior Management
Andrew Morrison – Non-Executive Director
Formerly Chairman of Spinnaker Opportunities, Mr Morrison has focused on managing and
developing junior public companies, largely in the energy sector including Xtract Energy Plc,
Silvermere Energy Plc and Zeta Petroleum Plc, an ASX quoted firm with operations in
Romania.
He began his career at Shell in oil products and in 1999, joined BG Group Plc as a New
Ventures Director. Subsequently he held senior New Business Development roles for the
industrial gases group BOC Group Plc until its acquisition in 2007. Mr Morrison has a BSc in
Chemical Engineering and Fuel Technology from the University of Sheffield and a Diploma in
Company Direction from the Institute of Directors.
Uziel Danino, Non-Executive Director (appointed on 16 of February 2021).
Mr. Danino has over 35 years of experience in the financial sector, including capital markets.
Mr. Danino began his career at Bank Mizrahi in 1981 and worked in all of the bank’s business
units filling a variety of managerial positions. In his last position with the bank, Mr. Danino
served as the manager of the customer asset division, which includes the bank’s investment
management company.
In 2012, Mr. Danino was appointed to head the Excellence Investment House that had NIS80
billion (approximately GBP 17 billion) in customer assets under management at the time. In the
framework of his position, he also serves as a chairperson of provident funds, trust funds, a
Stock Exchange Member Brokerage, and serves as a member of the Israeli Federation of
Investment Houses.
Mr. Danino is currently a member and director of Rosario Capital, an underwriting company. In
addition, Mr. Danino is a director in two public companies, UMI and Spacecom, and serves a
member of theUniversity of Ariel Finance Committee.
Avihu Tamir, Chief Executive Officer (appointed on 16 February 2021)
Mr. Tamir is a cannabis entrepreneur with over five years of hands-on experience in multiple
cannabis ventures and vast experience in consulting for international cannabis projects. Mr.
Tamir began his career and built his reputation as a senior strategy consultant at Accenture. He
is also the founder of Teva Nature, the leading vaporiser company in Israel.
Mr. Tamir founded Kanabo Research in 2017 and since then has served as CEO of the
company. His expertise includes biotechnology, new agriculture and agro-tech, and other
breakthrough technologiesin the dynamic field of medical cannabis.
Mr. Tamir holds a B.A. in Finance and Risk Management (Magna Cum Laude), and a M.A. in
Political Science (Magna Cum Laude) from the IDC Herzliya.
5
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Board of Directors and Senior Management (continued)
David Tsur, Non-Executive Chairman (appointed on 16 February 2021)
Mr. Tsur is the co-founder of Kamada Ltd, a public company listed on both the NASDAQ and
Tel-Aviv Stock Exchange. He served as its Chief Executive Officer and on its board of directors
from the company’s inception in 1990 until July 2015.
Mr. Tsur served as a Board member and Chairman of Collplant listed on the NASDAQ.
Prior to co-founding Kamada, Mr. Tsur was the Chief Executive Officer of Arad Systems and
RAD Chemicals Inc. He has also held various positions in the Israeli Ministry of Economy
(formerly named the Ministry of Industry and Trade), including Chief Economist and
Commercial Attaché in Argentina and Iran.
Mr. Tsur holds a BA degree in Economics and International Relations and an MBA in Business
Management from the Hebrew University of Jerusalem.
6
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Directors’ Report
The Directors present their report with the audited financial statements of the Company for the
year ended 31 December 2020. 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 12 to 16.
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 2020 were as follows:
Director
Position
Appointed
Resigned Ordinary
shares
Options Warrants
Andrew
Morrison*
Anthony
Harpur
Non-
Executive
Chairman
Non-
Executive
Director
17/11/2016
- 4,600,080 1,250,000
-
21/02/2017
16/02/2021 1,400,000
350,000
500,000
Alan Hume Non-
17/09/2018
16/02/2021
400,000
270,000
-
Executive
Director
* 2,600,080 Ordinary Shares held by Andrew Morrison were held by Platform Securities
Nominees Ltd on behalf of his Self-Invested Personal Pension (SIPP).
On February 16, 2021 Uziel Danino, David Tsur and Avihu Tamir were appointed to serve as
Directors in the Company with David Tsur replacing Andrew Morrison as Chairman.
Director
Position
Appointed
Resigned Ordinary
shares
Options Warrants
David Tsur Non-
16/2/2021
-
9,061,102 2,700,000
Uziel
Danino
Avihu
Tamir
Executive
Chairman
Non-
Executive
Director
Non-
Executive
Director
16/2/2021
-
3,683,382 1,800,000
16/2/2021
- 97,263,870
-
-
-
-
As a part of the Kanabo transaction the company granted Andrew Morrison 900,000 options for
future services as Non-Executive Director.
7
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Directors’ Report (continued)
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party indemnity policy in place for all four
Directors.
Substantial shareholders
As at 31 December 2020, 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.
Party Name
Number of Ordinary
Shares
% of
Share Capital
DARTINGTON PORTFOLIO NOMINEES LIMITED
Des:DPN
218,250,753
62.09%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED Des:HLNOM
15,115,945
4.30%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED Des:15942
16,764,734
4.77%
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 15 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 2020 (2019:
nil).
8
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Directors’ Report (continued)
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 12 to 16.
Corporate Governance
The Governance report forms part of the Director’s Report and is disclosed on pages 17 to 24.
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 15 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 and
the newly formed group have as a result of the successful RTO and significant funds raised,
adequate working capital to execute its operations over the next 12 months. 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 in the reporting period was 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.
9
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Directors’ Report (continued)
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
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 5 and 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.
10
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Directors’ Report (continued)
This directors’ report was approved by the Board of Directors on 01 June 2021 and is signed on
its behalf by:
……………………………
David Tsur
Chairman
11
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Strategic Report
The Directors present the Strategic Report of the Company for the year ended 31 December
2020.
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 operated as a cash shell, which was successful in sourcing a business to
acquire and was in the process of applying to the FCA to re-admit to the LSE main market. The
pre-revenue nature of the business prior to the acquisition of Kanabo is important to the
understanding of the Company by its members and suppliers, and the Directors were 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 2020:
• Any contracts for services provided have been undertaken with a clear cap on financial
exposure;
• Maintaining a policy of no remuneration for the Directors prior to admission;
•
In January 2020 the FCA announced that it was conducting a review of undisclosed
issues relating to the prospective listing on the London Stock Exchange of cannabis-
related companies. Despite not receiving a clear timeline from the FCA on how long this
review would take, the Directors resolved to continue to work with Kanabo since
discussions with the FCA were already well-advanced and the Directors and their
advisers were confident that the FCA would, in due course, agree that the listing should
be allowed to proceed.
In order to lend support to Kanabo during this further delay the Directors arranged for
loans to be made to Kanabo both from its own cash reserves and also by raising an
additional £165,000 by way of collaterised loan notes.
In September 2020 the FCA finally issued guidelines on the listings of cannabis related
companies and the Directors decided to proceed ‘full speed ahead’ to secure approval
of the prospectus with the FCA.
•
•
12
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Strategic Report (continued)
• As a result of these efforts the Company succeeded in executing an updated Share
Purchase Agreement with Kanabo on December 17 2020 and this was announced to
the market on the following day.
As a 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. Following the announcement from the FCA on 18 September 2020, the Company re-
started all project work streams with the intention of completing its proposed acquisition of
Kanabo. On 18 December 2020 the Company confirmed that it had conditionally agreed to
acquire the entire issued share capital of Kanabo.
Business Strategy
The Company has been 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.
The completion of the Kanabo transaction took place on 15 February 2021 with admission to
trading on London Stock Exchange the following day.
COVID-19
The impact of the Covid-19 pandemic had little effect on the business of the Company during
2020 as the Company was suspended from trading during the entire year. Work continued using
phone communications and video conference facilities to minimize risk to participants. The
Directors believe that the global vaccination programmes taking place and the widespread
existence of on-line purchasing will not hinder the business of the enlarged organization.
Event since the year end
On 29 January 2021 the Company published the prospectus in relation to the acquisition of
Kanabo and called for a General Meeting of shareholders on the 15 February 2021. The
completion of the Kanabo transaction took place on 15 February 2021 with admission to trading
on London Stock Exchange the following day.
Financial review
Results for the 2020 period
The Company incurred a loss for the year to 31 December 2020 of £131,000 (2019 – loss of
£363,000).
13
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Strategic Report (continued)
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 2020 was £238,000 (2019 - £444,000 outflow).
Closing cash
As at 31 December 2020, the Company held £359,000 of cash (31 December 2019 - £597,000).
Key Performance Indicators
The sole KPI for the Company has been to source a suitable acquisition target. This KPI was
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
£738,000 (31 December 2019 – £674,000). 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.
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.
14
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Strategic Report (continued)
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
The Company may face
significant competition
in its chosen industry
Risk/Uncertainty
There may be significant competition faced
by the Company. The Company is currently
the cannabis processing
focussed on
industry which
received considerable
publicity in recent years. There is a risk that
by the time the product is brought to market,
there will be a large number of competitors.
A number of
these competitors may
possess greater technical, financial and
other resources than the Company.
The
and
successful management
operations of the Company are reliant upon
the contributions of directors and advisors.
In addition, the Company’s future success
depends in part on its ability to continue to
recruit, motivate
highly
experienced and qualified directors and
consultants.
retain
and
The Company relies on
and
experience
the
its
talent
management
and
advisors
of
The Company may be
subject to changes in
regulation affecting its
target industry
The cannabis processing industry in which
the Company is focussed on is controversial
and is highly regulated. Against a backdrop
of overall liberalisation, the industry will
likely continue to be the subject of regulatory
oversight. Compliance with various laws
and regulations may impose compliance
costs and restrictions on the Company, with
fines and/or sanctions for non-compliance.
The Covid-19 pandemic The uncertainty and any future restrictions
resulting from the Covid-19 pandemic may
disrupt the Company’s operations.
Brexit
The uncertainty arising from Brexit may
impose new costs and requirements on the
Company
15
Mitigation
The growth prospects in the cannabis
industry are widely regarded as very
strong, which may help to reduce the
effect of competition. By consulting with
knowledgeable experts in the industry,
carrying out thorough due diligence on
potential targets and extensive market
research, the Company may reduce
this risk.
The Company offers
to
Directors through participation in share
offerings, which makes them linked to
the long-term success of the business.
incentives
the event
The Company monitors legislative and
regulatory changes and alters
its
business practices where appropriate.
In
the Company
that
becomes subject to specific regulation
regarding its activities the Company will
put in place such procedures as are
necessary to ensure it complies with
such regulation.
With the core of the Company’s
operations based in Europe and Israel,
the Company is vigilantly monitoring
the situation and the health of our
staff. The company have implemented
appropriate policies to protect and best
manage the health of our staff. The
Company has experienced minor
disruptions to parts of its raw materials
supply chain, which is being managed
on a daily basis to mitigate any
disruption to manufacturing
operations.
The Company monitors legislative and
regulatory changes relating
the
Brexit and alters its business practices
where appropriate.
to
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Strategic Report (continued)
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 01 June 2021
……………………………
David Tsur
Chairman
16
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 July 2018 (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. After the Kanabo transaction took place in February 2021, two
non-executive directors were appointed, however, as they hold shares in the company
they cannot at present be deemed as fully independent under the code.
• 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. After the Kanabo transaction
took place in February 2021, this provision was also met. Mr. Uziel Danino was appointed
to lead the Audit committe
• 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. After the Kanabo transaction took place
on 16 February 2021, two non-executive directors were appointed, however, as they hold
shares in the company they cannot be deemed as fully independent under the code.
• 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.The Non-Executive Directors in
place at the year end held ordinary shares in the company and cannot therefore be
considered fully independent under the code. The non-executive directors appointed on
16 February 2021 also hold shares in the company and therefore cannot at present be
considered fully independent under the code.
17
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Governance Report (continued)
Compliance with the UK Code of Corporate Governance (continued)
• 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.
• The roles of Chairman and Chief Executive were 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 considered the structure and arrangements to be
adequate given the size and stage of development of the Company during the period
under review. Following completion of the acquisition of Kanabo, the roles were
separated and the Company now complies with this provision.
• 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 21, 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 the Company’s corporate governance practices for the year ended 31
December 2020. Following completion of an acquisition, these corporate governance practices
are being 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.
Governance Report (continued)
18
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 12 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.
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
Andrew Morrison
Anthony Harpur
Alan Hume
Position
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Meetings
attended
12 of 12
12 of 12
12 of 12
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, proposed and sought agreement to the Board Agenda and
ensured adequate time for discussion.
Governance Report (continued)
19
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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.
Remuneration Committee
The Company has established a Remuneration Committee, 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.
As of the 16 February 2021, Andrew Morrison and Uziel Danino, as independent Non-Executive
Directors, replaced Anthony Harpur
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 during the period, there was 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 with the auditors 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 29-30.
As of the 16 February 2021, Andrew Morrison and Uziel Danino, as independent Non-Executive
Directors, replaced Anthony Harpur
Nominations Committee
The Company has established a Nominations Committee, the members of which are Andrew
Morrison, David Tsur and Avihu Tamir. The committee meets as required to fulfil its duties of
Governance Report (continued)
20
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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.
The Nominations Committee report is included on page 31.
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 Howard Rubenstein 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 5 and 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 pages 17-18.
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)
21
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 2020:
Directors
Male
3
Female
-
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 29-30.
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 for the newly
formed group, for a period of at least 12 months from the date of approval of these financial
statements. The Directors recognise the modest committed cost base of the newly formed group
relative to its current working capital. As a result the Directors consider that the Company and
the newly formed group 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.
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 29-30.
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 for the newly
formed group, for a period of at least 12 months from the date of approval of these financial
statements. The Directors recognise the modest committed cost base of the newly formed group
relative to its current working capital. As a result the Directors consider that the Company and
Governance Report (continued)
22
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
the newly formed group 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.In
making their assessment of going concern, the Directors have reviewed forecasts for the newly
formed group, for a period of at least 12 months from the date of approval of these financial
statements. The Directors recognise the modest committed cost base of the newly formed group
relative to its current working capital. As a result the Directors consider that the Company and
the newly formed group 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.
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:
23
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
……………………..…
David Tsur
Non-Executive Chairman
01 June 2021
24
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Remuneration Committee Report
The Remuneration Committee presents its report for the year ended 31 December 2020.
Membership of the Remuneration Committee
During the year ended 31 December 2020 and until 16 February 2021, the Remuneration
Committee was comprised of one Non- Executive Director, Anthony Harpur. The Remuneration
Committee is currently comprised of Non-Executive Directors Andrew Morrison (Chair) and Uziel
Danino.
During the year ended 31 December 2020, no 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 in 2017, the
Company did not remunerate any of its Directors or Retained Advisers for their ordinary duties
during the year ended 31 December 2020 and had no employees. At that stage of the Company’s
growth there was therefore no remuneration policy in place. Following the acquisition of Kanabo
on 16 February 2021 the Remuneration Committee has been working on a remuneration policy
to apply to Directors and employees.
On 16 February 2021, the Company entered into a service contract with its Chief Executive,
Avihu Tamir on terms as set out in the prospectus published on 29 January 2021.
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 suspended
pending direction from the FCA on its proposed acquisition.
25
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Remuneration Committee Report (continued)
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 issued fresh letters of
appointment to its Non-Executive Directors, effective 16 February 2021 on terms as set out in
the prospectus published on 29 January 2021.
Other Employees
During the year ended 31 December 2020, there were no employees in the Company other than
the Directors, so this policy only applies to the Board.
Terms of appointment
The services of the Directors during the year ended 31 December 2020 were provided in
accordance with their appointment letters. Directors were expected to devote such time as was
necessary for the proper performance of their duties, but as a minimum they were expected to
commit at least one day per month, which should include attendance at all meetings of the Board
and any sub-committees of the Board.
Director
Andrew Morrison
Anthony Harpur
Alan Hume
Year of
appointment
2016
2017
2018
Number of years
completed
5
4
2
Directors’ emoluments and compensation (audited)
Set out below are the emoluments of the Directors for the year ended 31 December 2020 (GBP):
Annual
bonus and
long term
benefits
Pension
related
benefits
£
-
-
-
£
-
-
-
Other
Total
£
-
-
-
£
-
-
-
Name of Director
Salary and
fees
Taxable
benefits
Andrew Morrison
Anthony Harpur
Alan Hume
£
-
-
-
£
-
-
-
26
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Remuneration Committee Report (continued)
Set out below are the emoluments of the Directors for the year ended 31 December 2019 (GBP):
Name of Director
Salary and
fees
Taxable
benefits
Annual
bonus and
long term
benefits
Andrew Morrison
Anthony Harpur
Alan Hume
£
-
-
-
£
-
-
-
£
-
-
-
Pension
related
benefits Other
Total
£
-
-
-
£
-
-
-
£
-
-
-
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 during the year ended 31 December 2020 was to seek an acquisition. In addition and
as mentioned above, the remuneration of Directors was not 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.
27
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 Directors
were not 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 2020 and at the date of this report has been set out in the Directors’ Report on
pages 7-11.
Other matters
In accordance with the Company’s 2017 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. To be clear, Retained Advisors do not include any
professional legal or audit service providers. 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 would be capped at an aggregate amount of £200,000 and would
be settled in the form of shares rather than in cash.
A success bonus of £200,000 was approved and settled by the issue of shares on 16 February
2021 as set out in the prospectus published on 29 January 2021.
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:
……………………..…
Andrew Morrison
Non-Executive Director
01 June 2021
28
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Audit Committee Report
During 2020, The Audit Committee comprised only one Non-Executive Director, Anthony Harpur.
It oversaw the Company’s financial reporting and internal controls and provided 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.
After the completion of the Kanabo transaction the company appointed Uziel Danino (Chair) and
Andrew Morrison as members of the Audit Committee to replace Anthony Harpur.
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.
29
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Audit Committee Report (continued)
Meetings
In the year to 31 December 2020 the Audit Committee has met with the auditors 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.
…………………........
Uziel Danino
Chairman of the Audit Committee
01 June 2021
30
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Nomination Committee Report
The Nomination committee is comprised of Andrew Morrison (Chair), David Tsur and Avihu
Tamir.
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
01 June 2021
31
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Independent Auditors’ Report to the Members of Kanabo Group Plc
Opinion
We have audited the financial statements of Kanabo Group Plc (the ‘company’) for the year
ended 31 December 2020 which comprise Statement of Comprehensive Income, the Statement
of Financial Positions, the Statement of Cashflows, the Statement of Changes in Equity 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 2020
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 going concern
In auditing the financial statement, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation
of the directors’ assessment of the company’s ability to continue to adopt the going concern basis
of accounting included reviewing the forecasts covering the going concern period, ascertaining
the latest cash position and discussing with directors the progress of the proposed reverse
takeover of Kanabo and the associated placing.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the
company’s ability to continue as a going concern for a period of at least twelve months form when
the financial statements are authorised for issue.
In relation to the company’s reporting on how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the director’s statement
in the financial statements about whether the directors’ considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
32
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 for the financial statements was set as £28,000
(2019: £33,000) based upon 5% of net assets (2019: 5% of net assets). Materiality was based
on net assets due to the company’s lack of trading in the year rendering the balances in the
Statement of Financial Position being of greater importance than expenses or the loss for the
year. Performance materiality and the triviality threshold for the financial statements was set at
£19,600 (2019: £23,100) and £1,400 (2019: £1,650) respectively.
We have agreed with the directors that we would report to the committee individual audit
differences in excess of £1,400 as well as differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
An overview of the scope of our audit
In 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 judgements by the directors and considered future events that are
inherently uncertain. These areas include the recoverable value of loan receivables and
judgements made in assessing the company’s going concern status. 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.
The company’s key accounting function is based in the United Kingdom and our audit was
performed from our office with regular contract with the company throughout.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we identified, including
those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to
the key audit matter
Recoverability and treatment of Kanabo
Loan
As at 31 December 2020 amounts
receivable from acquisition target Kanabo
Research Limited
funds
advanced in 2020 and 2019 and relating
accrued interest totalled £424,000 – see
note 8.
in respect of
We enquired with management to ascertain
their justification for no IFRS 9 expect credit
loss model charge being recognised in the
year and challenged management's key
assumptions made in their assessment of
the recoverable value of the loan.
Due to Kanabo’s stage of development and
the fact that no repayments had been made
We recalculated the interest income that
was required to be recognised in the year
33
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
up to 31 December 2020, there is a risk that
that
fully
loan receivable may not be
recoverable and that an IFRS 9 expect credit
loss model impairment charge is required to
be recognised.
There is also a risk that the amounts
advanced in 2020 have not been accounted
in
for on
accordance with IFRS 9.
issue and during
the year
the amortised cost method and
using
compared this to the interest recognised.
We ensured that the loan was correctly
classified and disclosed in the financial
statements in accordance with IFRS 9 and
was correctly split between current and non-
current based on the expected repayment
date.
We vouched the advance of funds to
Kanabo to bank statements.
See note 2e for the Directors’ commentary
on the judgments made in assessing the
recoverability of the loan. The determining
factor in the directors’ assessment of the
loan being
fully recoverable, and our
agreement with this assessment, is that the
successful completion of
the proposed
transaction and the significant funds raised
upon completion of the transaction will highly
likely provide Kanabo with sufficient working
capital to make full repayment of the balance
due.
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration committee 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
34
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Opinions on other matters prescribed by the Companies Act 2006 (continued)
•
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 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.
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the
company’s compliance with the provision of the UK Corporate Governance Statement specific
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainty identified (page 22);
• Directors’ explanation as to its assessment of the company’s prospects, the period this
assessment covers and why the period is appropriate (page 22);
• Directors’ statement on fair, balance and understandable (page 10);
• Board’s confirmation that is has carried out robust assessment of the emerging and
principal risks (page 15)
• The section of the annual report that describes the review of effectiveness of risk
management and internal controls system (page 21); and
• The section describing the work of the audit committee (page 29)
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, 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
35
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Responsibilities of directors (continued)
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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud, is detailed below:
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 event of compliance with those laws and regulations as part of our
procedures on the related financial statement 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, misrepresentation, or the override of internal
controls.
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 3
years, covering the periods ending 31 December 2018 to 31 December 2020.
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.
Our audit opinion is consistent with the additional report to the audit committee.
36
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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
01 June 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
37
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Statement of Comprehensive Income
Continuing operations
Operating expenses
Operating loss
Interest income
Note
3
Loss before taxation
Taxation
5
Loss for the year
Other comprehensive income for the
year
Total comprehensive income for
the year attributable to the equity
owners
Earnings per share from continuing
operations attributable to the
equity owners
Year ended
31 December 2020
£’000
Year ended
31 December 2019
£’000
(156)
(156)
25
(131)
-
(131)
-
(131)
(365)
(365)
2
(363)
-
(363)
-
(363)
Basic and diluted earnings per share
(pence per share)
6
(0.44)
(1.2)
The notes to the financial statements form an integral part of these financial statements.
38
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Statement of Financial Position
As at
31 December 2020
£’000
As at
31 December 2019
£’000
Note
Assets
Non-current assets
Other receivables
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity attributable to shareholders
Share capital
Share premium
Share based payments reserve
Convertible loan notes
Retained deficit
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
7
8
9
10
10
12
13
11
-
-
433
359
792
792
735
592
33
162
(784)
738
54
54
792
100
100
13
597
610
710
735
592
59
-
(712)
674
36
36
710
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 01 June 2021 and signed
on its behalf by:
………………………
Andrew Morrison
Director
Company Registration Number: 10485105
39
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Statement of Changes in Equity
Share
capital
£’000
Share
premium
£’000
Share
based
payments
reserve
£’000
Convertible
loan notes
reserve
£’000
Retained
deficit
£’000
Total
equity
£’000
On 1 January 2019
735
592
59
Total comprehensive loss
for the period
Balance as at 31
December 2019
Total comprehensive loss
for the year
Shares options issued
Lapsed share options
Loan notes issued
Loan note issue costs
Total transactions with
owners, recognised
directly in equity
Balance as at 31
December 2020
-
59
-
33
(59)
-
-
-
-
735
592
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(349)
1,037
(363)
(363)
-
(712)
674
-
-
165
(3)
(131)
(131)
-
59
-
-
33
-
165
(3)
(26)
162
59
195
735
592
33
162
(784)
738
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 convertible loan note reserve consists of the fair value of convertible loan notes issued and
outstanding which meet the definition of equity as per IAS 32.
The notes to the financial statements form an integral part of these financial statements.
40
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
Statement of Cash Flows
Cash flow from operating activities
Loss before taxation
Adjustments for:
Share-based payment
Net cash used in operating activities
Changes in working capital
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash (used) in/generated from operating
activities
Cash flows from investing activities
Year ended
31
December
2020
£’000
Year ended
31
December
2019
£’000
(131)
(363)
Note
33
(98)
(20)
18
(100)
(300)
(300)
162
162
-
(363)
-
19
19
(100)
(100)
-
-
Loan advanced
7/8
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of convertible loan notes
Net cash generated from financing activities
Decrease in cash and cash equivalents
(238)
(444)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
9
597
359
1,041
597
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.
41
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
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 27th 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 Kanabo Group Plc 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
Standard
Impact on initial application
IFRS 3
(amendments)
IFRS standards
(amendments)
IAS 1
(amendments)
IAS 8
(amendments)
IFRS 9, IAS 39 and
IFRS 7
(amendments)
IFRS 3
(amendments)
IFRS standards
(amendments)
Definition of a Business
References to the Conceptual Framework
Definition of Material
Definition of Material
Interest Rate Benchmark Reform
Definition of a Business
References to the Conceptual Framework
42
Effective
date
1 January
2020
1 January
2020
1 January
2020
1 January
2020
1 January
2020
1 January
2020
1 January
2020
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2.
Summary of Significant Accounting Policies (continued)
b) New Standards and Interpretations (continued)
No new standards, amendments or interpretations, effective for the first time for the
financial year beginning on or after 1 January 2020 have had a material impact on the
Company.
ii) New standards, amendments and Interpretations in issue but not yet effective or not
yet endorsed and not early adopted
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.
Standard
IFRS standards
(amendments)
IFRS 3
(amendments)
IAS 37
(amendments)
IFRS standards
(amendments)
IAS 16
(amendments)
IFRS 17
IFRS 17
(amendments)
IAS 1
(amendments)
Impact on initial application
Interest rate benchmark reform
Effective date
1 January 2021
Business combinations
1 January 2022
Onerous contracts
1 January 2022
2018-2020 annual improvement cycle
1 January 2022
Proceeds before intended use
1 January 2022
Insurance Contracts
Insurance contracts
Reclassification of liabilities as current or
non-current
1 January 2023
1 January 2023
1 January 2023
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, having made due and careful enquiry, are of the opinion that the
Company and the newly formed Group have, as a result of the successful RTO and
significant funds raised, adequate working capital to execute its operations over the next
12 months. As a result, the Directors have adopted the going concern basis of
accounting in the preparation of the annual financial statements.
43
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2.
Summary of Significant Accounting Policies (continued)
c) Going Concern (continued)
Furthermore, the Directors acknowledge that COVID-19 has had, and will continue to
have, a significant adverse impact on the global economy. The Directors do not believe
that COVID-19’s impact on the global economy gives rise to a material uncertainty in
respect of the Company’s going concern status due to the Company not being
dependent on future financing being obtained in the going concern period.
d) Foreign Currency Translation
i) Functional and Presentation Currency
The financial statements are presented in Pounds Sterling (£000), 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
By 31 December 2020 the Company had advanced £400,000 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 a judgement 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 was based on the likelihood of the proposed reverse
takeover taking place in 2021, the anticipated funds that would be raised subsequent to
this transaction and the forecasted subsequent cashflows of the newly formed group.
The proposed reverse takeover successfully completed in February 2021 with
significant funds being raised subsequent to this transaction.
44
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2.
Summary of Significant Accounting Policies (continued)
e) Significant accounting judgements, estimates and assumptions (continued)
See note 8 for further commentary.
Share Based Payments
In the year-end 31 December 2020 1,960,000 share options were granted. When
accounting for the share based payment expense in respect of those share options
granted, Management must calculate the fair value of the share options issued.
Management have done so using the black scholes model, however, a number of the
inputs in this model are subjective and thus management must make estimates.
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. This is a result of the
Directors’ strong belief that the RTO will be successful and sufficient funds will be
raised in the process thus enabling Kanabo to repay the loans in full and by the scheduled
repayment date should the RTO be successful. The Directors deem it not to be practical to
incorporate future macroeconomic factors into the expected credit loss model calculation
without incurring undue cost.
45
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2. Summary of Significant Accounting Policies (continued)
(ii) Impairment and risk exposure (continued)
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.
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) Convertible loan notes
Convertible loan notes are classified as either equity, financial liabilities or a mixture of both
in accordance with the contractual agreement.
Where a convertible loan note is deemed to meet the definition of equity as per IAS 32, the
proceeds receive less any associated issue costs are recognised directly within equity and
is not subsequently remeasured.
i) 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
46
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2. Summary of Significant Accounting Policies (continued)
i) Taxation (continued)
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.
k) 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.
l) 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
47
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
2. Summary of Significant Accounting Policies (continued)
l) Share-based payments (continued)
inherently subjective and uncertain due to the assumptions made and the limitation of
the calculation used.
m) 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 15.
n) Equity
Equity instruments issued by the Company are recorded at the value of net proceeds
after direct issue costs.
Please see page 40 for a definition of each equity reserve.
o) 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.
48
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
3.
Expenses by Nature
S Directors’ share-based payment
A Audit fees
Professional and consultancy fees
Other expenses
Operating expenses
4. Auditors’ remuneration
Year ended
31 December
2020
£’000
Year ended
31 December
2019
£’000
33
15
105
3
156
-
15
345
5
365
Year ended
31
December
2020
£’000
Year ended
31
December
2019
£’000
Fees payable to the Company’s current auditor for the
audit of the Company’s financial statements
Fees payable to the Company’s current auditor in
respect of the provision of services in connection to the
proposed transaction
15 15
-
38
49
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
5.
Income tax
Analysis of charge in the year
Current tax
Deferred tax
Total tax
Year ended
31 December
2020
£’000
Year ended
31 December
2019
£’000
-
-
-
-
-
-
Loss on ordinary activities before tax
(131)
(363)
Analysis of charge in the year/period
Loss on ordinary activities multiplied by rate of
corporation tax in the UK of 19% (2019: 19%)
Non-deductible expenses
Tax losses carried forward
Total tax
(25)
(69)
-
25
-
-
69
-
The company has accumulated tax losses of approximately £764,000 (2019: £633,000) 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
£145,000 (2019: £120,000).
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 £131,000 (2019: £363,000) for the
Company by the weighted average number of ordinary shares in issue during the year of
29,400,120 (2019: 29,400,120):
Loss for the year from continuing operations
2020
£
(131,000)
2019
£
(363,000)
Weighted average number of shares in issue
29,400,120
29,400,120
Basic and diluted earnings per share
(0.44p)
(1.2p)
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 1,960,000 share options in issue, which
could potentially have an anti-dilutive impact depending on the results of the Company.
50
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
7. Other receivables – non-current
Other loans
As at
31 December
2020
£’000
As at
31 December
2019
£’000
-
-
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.
8. Trade and other receivables - current
Other loans
Other taxes
Prepayments
As at
31 December
2020
£’000
As at
31 December
2019
£’000
424
5
4
433
-
-
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
Cash at bank
As at
31 December
2020
£’000
As at
31 December
2019
£’000
359
359
597
597
The Directors consider the carrying amount of cash and cash equivalents approximates to
their fair value.
51
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
10. Called up share capital
As at 31 December 2020 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.
As at 31 December 2019
As at 31 December 2020
11. Trade and other payables
Trade payables
Accruals
12. Share based payments
Warrants
At 31 December 2019
Lapsed
At 31 December 2020
Number of
Ordinary
Shares of
£0.025 each
29,400,120
29,400,120
Share
Capital
£000
Share
Premium
£000
735
735
592
592
As at
31
December
2020
£’000
As at
31
December
2019
£’000
15
39
54
13
23
36
Weighted
average exercise
price
£0.074
Number of awards
26,590,500
(26,590,500)
-
Exercisable at 31 December 2020
-
-
Share options
At 31 December 2019
Lapsed
Granted
At 31 December 2020
Number
2,440,000
(2,440,000)
1,960,000
1,960,000
Exercisable at 31 December 2020
1,960,000
52
Weighted average
exercise price
£0.05
£0.05
£0.05
£0.05
£0.05
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
12. Share based payments (continued)
The options outstanding at 31 December 2020 have a weighted average remaining
contractual life of 2.4 years, a share price of 5p, a volatility of 50%, an initial life of options
of 3 years and a risk free interest rate of 0.2%.
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 £33,000 (2019: £Nil) has
been recognised in the income statement.
13. Convertible loan notes
During the year ended 31 December 2020, the Company issued convertible loan notes in
the amount of £165,000. In the event of the proposed transaction completing or the
company re-admitting onto the London Stock Exchange on or before 31 March 2021, the
convertible loan notes issued are automatically converted into ordinary share capital at a
fixed price. Should neither event take place then the convertible loan notes must be settled
in cash.
The convertible loan notes have therefore been classified as equity and held at fair value.
14. Directors’ emoluments
No salaries or fees were paid to the directorsin either period.
The Directors are considered to be the key management personnel.
15. Financial instruments
The following table sets out the categories of financial instruments held by the Company as
at 31 December 2020 and 31 December 2019:
Financial Assets held at amortised cost
Other loans
Cash and cash equivalents
Financial liabilities held at amortised cost
2020
£’000
2019
£’000
424
359
100
597
Trade and other payables
15
13
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
53
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
control market risk exposures within acceptable parameters, while optimising the return
on risk.
15. 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.
16. Average number of people employed
Average number of people employed, including Directors:
Office and management
2020
Number
3
2019
Number
3
54
Kanabo Group Plc
(formerly: Spinnaker Opportunities Plc)
Annual Report & Financial statements
For the Year Ended 31 December 2020
17. 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 £200,000.
18. Ultimate Controlling Party
The Directors have determined that there is no controlling party as no individual shareholder
holds a controlling interest in the Company.
19. Related Party Transactions
Of the 165 Convertible Loan Notes issued during the year, Mr Anthony Harpur, a director
of the Company contributed 50 Loan Notes for consideration totaling £50,000. For the
details of the Directors’ remuneration in 2020 and 2019, please see note 14.
20. Post balance sheet events
On 29 January 2021 the Company published the prospectus in relation to the purchase of
all the issued equity in Kanabo Research Ltd and issued the Notice of General Meeting in
relation to the transaction to be held on 15 February 2021.
On 16 February 2021, the proposed reverse takeover of Kanabo Research Ltd completed.
This acquisition falls outside the scope of IFRS 3 and therefore the net asets and liabilities
arising from the acquisition have not been disclosed.
21. Copies of the Annual Report
the annual
Copies of
the Company’s website at
http://www.kanabogroup.com and from the Company’s registered office Churchill House,
137-139 Brent Street , London , NW4 4DJ
report are available on
55