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Spinnaker Opports - Half Yearly Report (Unaudited)

RNS Number : 5283U
Spinnaker Opportunities PLC
30 July 2020
 

30 July 2020

Spinnaker Opportunities plc

Half Yearly Report (Unaudited)

For the Period Ended 30 June 2020

Spinnaker Opportunities plc ("Spinnaker" or the "Company") announces today its preliminary financial results for the period ended 30 June 2020.

Period Highlights

·    During the period Spinnaker has been awaiting confirmation of the overall listing requirements for cannabis-related companies by the appropriate UK regulatory bodies so the Company can complete its proposed acquisition of the entire issued share capital of Kanabo Research Ltd ("Kanabo")

·    Advanced a further sum of £200,000 to Kanabo under the terms of the existing Loan Facility Agreement to enable Kanabo to grow sales and invest in future development

·     Raised £165,000 through the issue of convertible loan notes

·      ash of approximately £510,000 on 30 June 2020

Post-Period Highlights

·     Acquisition and admission of enlarged group remains on course

·    Indications received in July 2020 that UK review of regulatory requirements for cannabis-related companies is nearly complete which could then allow the transaction to proceed

For further information, please visit http://www.spinnakeropportunities.uk/ or contact the following:

Peterhouse Capital (Financial adviser and joint broker)

Tel: +44 (0)20 7469 0930

Guy Miller/ Lucy Williams/ Eran Zucker

 

 

SI Capital (Joint broker)

Tel: +44 (0)1483 413 500 / +44 (0) 203 871 4038

Nick Emerson / Greg Mahoney

 

 

 

 

Blytheweigh (Financial PR)

Tel: +44 (0) 207 138 3553

Tim Blythe/ Camilla Horsfall/ Madeleine Gordon-Foxwell

 

Chairman's Statement

I am pleased to present the interim financial statements to shareholders for the six months ending 30 June 2020.

 

The Company remains focused on the delivery of the acquisition of Kanabo and along with its management team, we very much look forward to bringing the business to the London market to enable Kanabo to achieve its growth potential. The transaction has taken longer than expected and is still not completed, but the Company remains positioned to be one of the first cannabis-related businesses to list on the London Stock Exchange.

 

Whilst the terms of the acquisition have been agreed, completion remains subject to the satisfaction of certain conditions, including inter alia:

 

·   The transaction will constitute a reverse takeover under the Listing Rules and will be subject to approval by shareholders of the Company at a general meeting

·     The Company having obtained a waiver from the Takeover Panel under Rule 9 of the Takeover Code

·     The successful completion of fundraising activities to be undertaken by way of a placing and direct subscriptions by new and existing investors

·     Re-listing of the enlarged group on the London Stock Exchange

 

Accordingly, there can be no absolute certainty that the transaction will proceed.

 

The period under review was spent waiting for confirmation of the overall listing requirements for cannabis-related companies by the appropriate UK regulatory bodies. A Share Purchase Agreement for the transaction was executed on 2 December 2019 and the Company has been ready to proceed since then. In the second half of July 2020, the Company received indications that a resolution is at last being actively sought. The Boards of both Spinnaker and Kanabo remain optimistic and both companies continue to press for a satisfactory conclusion to the current regulatory processes.

 

A prospectus setting out final details of the acquisition and re-admission transaction is expected to be published shortly, together with a notice of meeting convening and setting out the resolutions required to be endorsed by members at a general meeting in order to complete the transaction.

 

In order to facilitate the execution of Kanabo's business plan while waiting for completion of the acquisition and re-admission to trading, the Company supplied two further tranches each of £100,000 to Kanabo during the period, under its Loan Facility Agreement, secured against the intellectual property of the business. Financing for the additional loan tranches came from internal funds together with £165,000 raised through convertible loan notes issued to new and existing subscribers to the Company.

 

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.

 

We continue to believe that helping to open the new and exciting medicinal cannabis sector to investors in London will be worthwhile. The consumer demand for alternative healthcare has never been higher, and the sector, therefore, offers a valuable growth platform as the UK and the world overcome the COVID-19 crisis.

 

I would like to take this opportunity to thank my board colleagues, retained advisers and the transaction advisory team for their dedication and hard work which has brought the Company within sight of a ground-breaking transaction. We look forward to updating shareholders through to completion and beyond.

Results for the 2020 interim financial period

A summary of the key financial results is set out in the table below:

 

Unaudited

Unaudited

Audited

 

30.6.2020

30.6.2019

31.12.2019

 

£'000

£'000

£'000

Revenue

-

-

-

Operating expenses

(111)

(157)

(365)

Operating loss

(111)

(157)

(365)

Finance income

10

1

2

Loss before tax

(101)

(156)

(363)

Taxation

-

-

-

 

 

 

 

Loss for the period

(101)

(156)

(363)

 

 

 

 

 

Interest

The net interest cost for the company for the period was £nil. 

Loss before tax

Loss before tax for the period was £101,000.

Taxation

Taxation charge was £nil for the period. 

Earnings per share

Basic and diluted earnings per share for the period was 0.35p loss.

 

 

 

Financial position

The Company's unaudited balance sheet as at 30 June 2020 can be summarised as set out in the table below:

 

Assets

£'m

Liabilities

£'m

Net assets

£'m

 

£'000

£'000

£'000

Non-current assets and liabilities

-

-

-

Current assets and liabilities

834

(231)

603

Total as at 30 June 2020

834

(231)

603

 

 

Cash flow

Net cash outflow for 2020 was £81,000.

 

Interim Condensed Income Statement

Six month period ended 30 June 2020

 

 

Unaudited 6 months ended

Unaudited 6 months ended

Audited Year   ended

 

 

30.06.20

30.06.19

31.12.19

 

Note

£'000

£'000

£'000

Revenue

 

-

-

-

Cost of sales

 

-

-

-

Gross profit

 

-

-

-

Operating expenses

 

(111)

(157)

(365)

Operating loss

 

(111)

(157)

(365)

Net finance income

 

10

1

2

Loss before tax

 

(101)

(156)

(363)

Taxation

 

-

-

-

Loss for the period

 

(101)

(156)

(363)

Loss attributable to the Company

 

(101)

(156)

(363)

 

 

 

 

 

 

 

 

 

 

 

 

 

5

(0.35)

(0.5)

(1.2)

 

 

 

 

 

 

The Company has no items of other comprehensive income.

 

 

Interim Condensed Balance Sheet

As of 30 June 2020

 

 

Unaudited

 30 June

2020

Unaudited

30 June 2019

Audited

31 December 2019

 

Note

£'000

£'000

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Other receivables

 

-

-

100

Total non-current assets

 

-

-

100

Current assets

 

 

 

 

Receivables and prepayments

 

318

10

13

Cash

 

516

883

597

Total current assets

 

834

893

610

Total assets

 

834

893

710

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

                     66

                   12

                    36

Convertible loan

 

165

-

-

Total current liabilities

 

231

12

36

Net current assets

 

603

881

574

Net Assets

 

603

881

674

 

 

 

 

 

Share capital

3

735

735

735

Share premium

3

589

592

592

Share based payments reserve

4

92

59

59

Retained earnings

 

(813)

(505)

(712)

Total equity attributable to equity holders of the company

 

603

881

674

Interim Condensed Statement of Changes in Equity

Six months ended 30 June 2020

 

Share capital

Share premium

Share based payments reserve

Retained

earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Balance at 1 January 2019

735

592

59

(349)

1,037

Loss for the period

-

-

-

(363)

(363)

Total comprehensive loss

-

-

-

(363)

(363)

 

 

 

 

 

 

Balance at 31 December 2019

735

592

59

(712)

674

 

 

 

 

 

 

Loss for the period

-

-

-

(101)

(101)

Total comprehensive loss

-

-

-

(101)

(101)

Commission on fund raise

-

(3)

-

-

(3)

Grant of share options

-

-

33

-

33

Balance at 30 June 2020

735

589

92

(813)

603

 

 

 

Interim Condensed Cash Flow Statement

Six months ended 30 June 2020

 

 

Unaudited

 30 June

2020

Unaudited

30 June

2019

          Audited

31 December 2019

 

£'000

£'000

£'000

Loss for the period

(101)

(156)

(363)

Adjustment for:

 

 

 

Share based payment charge

33

-

-

(Increase)/decrease in receivables

(205)

3

-

Increase/(decrease) in payables

30

(5)

19

 

 

 

 

Net cash used in operating activities

(243)

(158)

(344)

 

 

 

 

Cash flows from investing activities

 

 

 

Loan advanced

-

-

(100)

Net cash from/(used in) investing activities

-

-

(100)

 

 

 

 

Cash flows from financing activities

 

 

 

Convertible loan notes (net of costs)

162

-

-

Net cash from/(used in) financing activities

162

-

-

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

(81)

(158)

(444)

Cash and cash equivalents brought forward

597

1,041

1,041

 

Cash and cash equivalents carried forward

516

883

597

 

 

 

 

Notes to the interim condensed financial statements

For the six month period ended 30 June 2020

1.         General information

Spinnaker Opportunities plc (the Company) is a company incorporated and domiciled in England and Wales. It is a cash shell company listed on the standard list of the London Stock Exchange.

 

2.         Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these financial results are set out below. These policies have been consistently applied to all financial periods presented, unless otherwise stated.

Basis of preparation and going concern basis

The interim condensed financial statements for the 6 months ended 30 June 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim financial information set out above does not constitute statutory accounts within the meaning of Companies Act 2006.  It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union (adopted IFRS).

The financial statements have been prepared under the historic cost convention.

The company was incorporated on 17 November 2016 and in 2017 was admitted to Standard List of London Stock Exchange, the period under review represents the third interim set of accounts.  The interim financial information for the 6 months ended 30 June 2020 has not been reviewed or audited.  The interim financial report was approved by the Board on 29 July 2020.

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in this review. The financial position of the Company, its cash flows and liquidity position are described in this business review. In addition, the below notes to the financial results include the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to credit risk and liquidity risk.  As highlighted below, the Company meets its day to day working capital requirements through its on-going cash flows. 

Segment reporting

The Company is currently a cash shell and the directors believe that there is no benefit to show any segmental reporting until a new strategy is undertaken.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Taxation

Income tax payable is provided on taxable profits using tax rates enacted or substantively enacted at the balance sheet date.

Deferred taxation is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial results. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related balance sheet tax asset is realised or the deferred liability is settled. Deferred income tax assets are recognised to the extent that it is possible that future taxable profit will be available against which temporary differences can be utilised.  Income tax is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Critical accounting estimates and judgements

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 Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

Going concern basis of preparation

The Company has approximately £510,000 cash at the period end. The Directors have prepared the accounts on a going concern basis as they consider that the company has adequate funding.

 

3.         Share capital and share premium

Ordinary shares of 2.5p

Number of

shares

Share capital

£'000

Share premium

£'000

Shares issued brought forward

29,400,120

735

592

 

At 30 June 2020

29,400,120

735

589

 

 

 

 

4.         Share based payments

Share based payments reserve

Movements in the share based payments reserve in the period relate to:

 

 

£'000

At the beginning of the period

 

59

Share options issued

 

33

At 30 June 2020

 

92

 

Warrants

 

 

Number of awards

Weighted average exercise price

At the beginning of the period

 

26,590,500

£0.074

Lapsed

 

(26,590,500)

 

Exercisable at 30 June 2020

 

-

-

 

All warrants lapsed in the period to 30 June 2020.

 

Share options

 

 

Number of awards

Weighted average exercise price

At the beginning of the period

 

2,440,000

£0.05

Granted

 

1,960,000

£0.05

Lapsed

 

(2,440,000)

-

Exercisable at 30 June 2019

 

1,960,000

£0.05

 

The options outstanding at 30 June 2020 have a weighted average remaining contractual life of 2.9 years.

At 30 June 2020, the following options were issued to directors and advisers of the Company under the share option incentive scheme:

Date of grant

 

15-Jun-20

Number granted

 

1,960,000

Contractual life

 

3 years

Exercise price

 

£0.05

The estimated fair value

 

£0.017

 

All options vested at the date of the agreement.

The fair value of the options issued during the period determined using the Black-Scholes valuation model and a share based payment charge of £33,025 (year ended 31 December 2019: £nil) has been recognised in the income statement.

Other significant inputs into the model are:

Issue date share price

5p

Risk free rate

0.2%

Expected volatility

50%

The average volatility has been calculated by using the average volatility for the Company and other similar companies.

 

5.         Earnings per share

Basic and diluted

The basic earnings per share is calculated by dividing the (loss)/profit attributable to the ordinary shareholders of the Company by the weighted average number of Ordinary shares in issue during the period, excluding Ordinary shares purchased by the Company and held as treasury shares.

 

Half year ended

Half year ended

Year    ended

 

30.06.20

30.06.19

31.12.19

(Loss)/profit attributable to equity holders of the Company (£'000)

(101)

(157)

(363)

Weighted average number of shares in issue

29,400,120

29,400,120

29,381,490

 

 

 

 

(Loss)/earnings per share (pence)

(0.3)

(0.5)

(1.2)

 

Due to the loss incurred in the period under review, the dilutive securities have no effect as at 30 June 2020.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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Quick facts: Spinnaker Opportunities Plc

Price: 4.65

Market: LSE
Market Cap: -
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