Registered number: 07471527
THE COCONUT COLLABORATIVE LTD
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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THE COCONUT COLLABORATIVE LTD
COMPANY INFORMATION
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THE COCONUT COLLABORATIVE LTD
CONTENTS
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Independent Auditors' Report
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Consolidated Statement of Comprehensive Income
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Consolidated Balance Sheet
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Notes to the Financial Statements
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THE COCONUT COLLABORATIVE LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
Directors' responsibilities statement
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The directors are responsible for preparing the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The business has continued to grow with turnover 1% ahead of last year with increasing sales volume through the Group’s main market, the UK. There was a decline in sales volume in other markets, predominantly the US who stopped selling yogurts during 2022. The US subsidiary ceased trading during the year ending 31 December 2023 which has significantly reduced the Group’s cash outflow. Due to this sales mix, and the decrease in freight prices on raw materials during the year, the gross profit margin improved to 38.2% (2021: 34.8%). The directors are satisfied with the progress made by the Group during the year and with the post year-end completed Series B funding believe the business is well positioned for the future.
The directors who served during the year were:
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M Capiod (resigned 28 June 2022)
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THE COCONUT COLLABORATIVE LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Principal risks and uncertainties
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Raw materials for the Group’s products are sourced from overseas and therefore the business is subject to risks of exchange rate fluctuation and changes in commodity prices. The business manages short term exchange risk by purchasing currency under forward contracts. It manages commodity prices by fixing the price of its annual volume requirement for the year ahead.
The volatile nature of the UK’s cost of living, influenced by factors such as changing market conditions, fluctuating consumer demands and global economic trends remains a pivotal concern. The current economic climate presents uncertainty wherein inflationary pressures pose a tangible risk to managing the Group’s expenditure. The potential impact of inflationary pressures on operating costs, pricing strategies and overall financial performance is continually assessed to navigate these uncertainties effectively.
Key Performance Indicators
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2022 2021
£ £
Turnover 17,042,951 16,882,464
Cost of Sales (10,527,172) (11,011,229)
Gross Profit 6,515,779 5,871,235
GP % 38.2% 34.8%
2022 2021
No. Branded Products Sold 104 108
No. UK Customers 49 34
No. European Customers 28 27
No. US Customers 6 14
Tonnes of product sold worldwide 3,387 3,573
Tonnes of product sold UK 2,799 2,622
Tonnes of product sold Europe 489 567
Tonnes of product sold USA 99 384
3,387 3,573
No. Branded Products Sold UK 44 43
No. Branded Products Sold Europe 52 45
No. Branded Products Sold USA 8 20
104 108
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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THE COCONUT COLLABORATIVE LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
This report was approved by the board on 5 January 2024 and signed on its behalf.
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THE COCONUT COLLABORATIVE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COCONUT COLLABORATIVE LTD
We have audited the financial statements of The Coconut Collaborative Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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THE COCONUT COLLABORATIVE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COCONUT COLLABORATIVE LTD (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' Report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 1, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
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THE COCONUT COLLABORATIVE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COCONUT COLLABORATIVE LTD (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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 Group 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:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements for the Group and trade regulations. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax, payroll tax and sales tax.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
- Inspecting correspondence with regulators and tax authorities;
- Discussions with management including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
- Evaluating management's controls designed to prevent and detect irregularities;
- Identifying and testing accounting journal entries, in particular those journal entries which exhibited characteristics we had identified as possible indicators of irregularities; and
- Challenging assumptions and judgements made by management in their critical accounting estimates
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness
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THE COCONUT COLLABORATIVE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE COCONUT COLLABORATIVE LTD (CONTINUED)
of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 Auditors' 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.
Ian Cliffe (Senior Statutory Auditor)
for and on behalf of
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
5 January 2024
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THE COCONUT COLLABORATIVE LTD
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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Interest payable and similar expenses
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Loss for the financial year
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There were no recognised gains and losses for 2022 or 2021 other than those included in the consolidated statement of comprehensive income.
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The notes on pages 14 to 32 form part of these financial statements.
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THE COCONUT COLLABORATIVE LTD
REGISTERED NUMBER: 07471527
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 5 January 2024.
The notes on pages 14 to 32 form part of these financial statements.
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THE COCONUT COLLABORATIVE LTD
REGISTERED NUMBER: 07471527
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Profit and loss account brought forward
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Other changes in the profit and loss account
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 5 January 2024.
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THE COCONUT COLLABORATIVE LTD
REGISTERED NUMBER: 07471527
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The notes on pages 14 to 32 form part of these financial statements.
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THE COCONUT COLLABORATIVE LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Reversal of share option charge
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Employee share option charge
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Comprehensive income for the year
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Reversal of share option charge
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Employee share option charge
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The notes on pages 14 to 32 form part of these financial statements.
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THE COCONUT COLLABORATIVE LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Reversal of share option charge
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Employee share option charge
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Comprehensive income for the year
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Reversal of share option charge
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Employee share option charge
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The notes on pages 14 to 32 form part of these financial statements.
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Coconut Collaborative Ltd is a private company limited by shares incorporated in England and Wales. The registered office address is 10 Queen Street Place, London, EC4R 1AG and company registration number is 07471527.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
Figures within the accounts have been rounded to the nearest £.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
As of 31 December 2022, the Group had a net liabilities position of £5,330,624 (2021: net liabilities position of £1,813,781), operating losses for the period of £2,947,700 (2021: £4,160,137) and cash and cash equivalents of £186,929 (2021: £204,539).
The successful completion of the Group’s recent Series B funding, supported by existing shareholders, demonstrates the continued confidence and support in the Group’s long-term strategic direction. The Directors expect that net cash inflows from future operating activities in conjunction with the cash generated from the share issues to be sufficient to cover the Group’s working capital requirements through to a breakeven position. The Group has improved their overall cash flow by increased orders from major customers and ceased it’s trading operations in the US.
As a result of the above matters, the Directors are of the view that the Group will continue as a going concern and, therefore, will realise its assets and liabilities and commitments in the normal course of business and as the amounts stated in the financial statements. The Directors remain confident about the successful achievement of projected targets and therefore no adjustments have been made to these financial statements relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Balance Sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to Consolidated Statement of Comprehensive Income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the Consolidated Statement of Comprehensive Income is charged with fair value of goods and services received.
The share option charge was calculated using the Black Scholes Option pricing model which requires the use of various estimates and assumptions.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Page 17
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less cost to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
At each reporting date, stocks are assessed for impairment. If stocks are imparied, the carrying amount is reduced to its selling price less cost to complete and sell. The impairment loss is recognised immediatley in the profit or loss.
Short term debtors are measured at transaction price, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price.
Page 18
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are
Page 19
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Financial instruments (continued)
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settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Page 20
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Judgments in applying accounting policies and key sources of estimation uncertainty
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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. Although these estimates are based on management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates. The directors consider the following items to be areas subject to estimation and judgement.
Depreciation
The estimated useful economic lives of tangible fixed assets are based on management's judgement and experience. When management identifies that actual useful economic lives differ materially from the estimates used to calculate depreciation, that charge is adjusted prospectively. Historically no changes have been required. The directors are required to evaluate the carrying values of tangible fixed assets for impairment whenever the circumstances indicate that the carrying value of such assets may not be recoverable.
Amortisation
The trademark is being amortised over 5 years. The estimated useful economic life of trademark is based on management's judgement and experience. When management identifies that actual useful economic lives differ materially from the estimates used to calculate amortisation, that charge is adjusted prospectively.
Debtors
Short term debtors are measured at transaction price, less impairment. When management identifies that debts may not be recoverable, a provision is made against the specific debt.
Stock
At each reporting date, the directors evaluate the value of stock held and record a provision where the recoverable value is deemed to be less than the carrying value. The provision is based on, amongst other things, a consideration of future product sales. The actual recoverable value may differ from the estimated value, which could impact operating results positively or negatively.
Share option charge
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. The Company uses the Black-Scholes pricing model to estimate fair value at each exercise and period end date, and to calculate the share option charge recognised in the year. The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the options. The impact of changes in key assumptions is described in note 16.
Convertible loan notes
Convertible loan notes issued in the year have been recognised at amortised cost with interest being accrued in line with the agreement in place. The loan notes have been paid or converted as a result of the completion of the series B funding.
Page 21
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Analysis of turnover by country of destination:
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The operating loss is stated after charging/crediting:
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Research & development charged as an expense
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Other operating lease rentals
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During the year, the Group obtained the following services from the Company's auditors:
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Fees payable to the Company's auditors for the audit of the consolidated and parent Company's financial statements
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Staff costs were as follows:
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The average monthly number of employees, including the directors, during the year was as follows:
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Page 22
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Interest payable and similar expenses
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Other loan interest payable
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Page 23
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 24
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Tangible fixed assets (continued)
Page 25
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company. Bon Devil Holdings Limited was incorporated on 10 February 2022 and remained dormant for the financial year-ended 31 December 2022:
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The Coconut Collaborative Inc
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1240, Rosecrans Avenue, Suite 120, Manhattan Beach, CA, 90266
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The Coconut Collaborative BV
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Kingsfordweg 151, Amsterdam, 1043GR
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Bon Devil Holdings Limited
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10 Queen Street Place, London, United Kingdom, EC4R
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The aggregate of the share capital and reserves as at 31 December 2022 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
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Aggregate of share capital and reserves
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The Coconut Collaborative Inc
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The Coconut Collaborative BV
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Bon Devil Holdings Limited
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Page 26
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Raw materials and consumables
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Finished goods and goods for resale
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
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Page 27
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts due to factoring companies
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Other taxation and social security
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Accruals and deferred income
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RBS Invoice Finance Limited holds a fixed charge over the assets of the Company. At the year end the amounts owed to RBS Invoice Finance Limited totalled £1,125,083 (2021: £1,066,777).
During the year, convertible loan notes were issued up to $2,900,000 which have been included within other loans above. It is the expectation that the notes convert on the next fundraise. The loans are due for repayment on 31 December 2022 with a redemption date of 30 April 2023. The loans are to convert in the event of a fundraise. Interest is charged at 12.59% p.a. for month 1 of the loan and then 24% p.a. thereafter. The loans are measured at amortised cost.
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Page 28
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due after more than one year
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Allotted, called up and fully paid
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336,167 (2021 - 331,975) Ordinary shares shares of £0.01 each
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55,960 (2019 - nil 55,960) Preference A Shares shares of £0.01 each
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Share premium account
Amount subscribed for share capital in excess of nominal value is recognised within the share premium account.
Profit and loss account
Includes cumulative profit and loss and all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Share option reserve
Includes cumulative charges in respect of employee share options.
Page 29
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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The company operates an Enterprise Management Incentive Scheme for the purpose of incentivising key members of staff. All share options issued by the Company are valued at fair value at the date of grant. As at the date of grant, management have adjusted the number of equity instruments expected to vest.
The options have no service requirement attached but can only be exercised at the earliest of the folllowing event:.
- A sale of the Company;
- A listing of the Company's shares;
- The Company selling its buinsess in such a way that the "trading activities requirement" is no longer met; or
- If the above has not occurred before the ninth anniversary of the date of grant, the option may be exercised in respect of vested shares.
Therefore, as the options can, in theory, be exercised anytime in the next 9 years, the full charge has been recognised in the year.
During the period a net share based payment charge has been recognised of £96,827 (2021: £850,017) in respect of options granted and options lapsed.
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Weighted average exercise price (pence)
2022
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Weighted average exercise price
(pence)
2021
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Outstanding at the beginning of the year
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Forfeited during the year
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Outstanding at the end of the year
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Option pricing model used
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Weighted average share price (pence)
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Page 30
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The company operates a defined contribution pension scheme. During the period the company made contributions totalling £104,102 (2021: £73,866). At the year-end, pensions payable totalled £11,500 (2021: £7,903).
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Commitments under operating leases
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The Group and the Company had no commitments under non-cancellable operating leases at the balance sheet date.
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Related party transactions
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Consultancy fees totalling £50,000 (2021: £50,000) were paid to Grovemoor Estates Limited, a company connected to M Wosner who is an indirect shareholder in the Group. At year end, £5,000 of this balance was included within trade creditors (2021: £5,000).
During the year, expenditure of £3,387 (2021: £12,429) was recognised for the business travel and related expenses of J Averdieck, which was within accruals and trade creditors at year end. Included within other creditors and accruals at year end is a loan balance owed to J Averdieck of £441,492 (2021: £218,282).
Included within other creditors and accruals at year end is a loan balance owed to WF Estates, a company connected to M Wosner who is an indirect shareholder in the Group, of £1,858,412 (2021: £892,194).
Included within other creditors and accruals at year end is a loan balance owed to Powerplant Ventures, a company connected to M Rampola who is a director in the Group, of £1,453,113 (2021: £nil).
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Post balance sheet events
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Following the year-end date, a bridging loan has been received by the Group from two shareholders totalling $800,000. The Group is able to draw these funds on short notice, as required, prior to any further future fundraising events.
A Series B fundraise of £6,500,000 has completed prior to the signing of the financial statements. This funding is from existing shareholders demonstrating their ongoing commitment and support to the business. The Series B has resulted in the $2,900,000 convertible loan notes issued in the year and the $800,000 bridging loans received post year-end, plus interest, converting or being repaid.
RBS invoice discount facility has been replaced by Investec invoice discount facility, and Investec now also provide a revolving cash facility of £350k, increasing to £600k on completion of Series B.
The Group also ceased trading in The Coconut Collaborative Inc in February 2023. This Group set up a wholly-owned subsidiary in February 2022 named Bon Devil Holdings Limited. As of January 2023, this entity has a 49% stake in Bon Devil North America Inc which is a joint venture with Runaton Group for the US operations. The US operations and cashflows as a result have been separated from the Group. The Coconut Collaborative Inc revenue in 2022 represented £943,219 of the Group total. The losses incurred in this entity including foreign exchange variances which impact the Group were £3,233,838 with net assets of £64,327.
Page 31
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THE COCONUT COLLABORATIVE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors do not consider there to be an ultimate controlling party.
Page 32
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