Registered number:
08071406
OZO INNOVATIONS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2021
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COMPANY INFORMATION
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T Hopen
(appointed
3 September 2021
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Dr M Poole
(appointed
10 January 2022
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Chancerygate Business Centre
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Chartered Accountants
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Statutory Auditor
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CONTENTS
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Statement of financial position
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Notes to the financial statements
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OZO INNOVATIONS LIMITED
REGISTERED NUMBER:
08071406
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STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2021
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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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Net current assets/(liabilities)
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Total assets less current liabilities
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OZO INNOVATIONS LIMITED
REGISTERED NUMBER:
08071406
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STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2021
The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 3 to 16 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Ozo Innovations Limited is a private company limited by shares incorporated in England and Wales, United Kingdom.
The address of the registered office is; Unit 29, Chancerygate Business Centre, Langford Lane, Kidlington, Oxford, OX5 1FQ.
The principal activity of the company is to develop, manufacture and sell a range of highly innovative products offering improved cleaning and antimicrobial performance to the food production, processing and preparation sectors.
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 Section 1A of
Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
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The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
These financial statements have been prepared on a going concern basis, which assumes the Company will have sufficient funds available to enable it to continue to trade for the foreseeable future.
The Company is non-revenue generating and management has prepared financial forecasts which estimate the likely cash requirements of the company over the next 12 months from the authorisation of the financial statements. Currently the business is still within the development phase and therefore is primarily dependent on funds received from external investors. The current business plan and cash flow forecasts show that the Company will need to raise further capital investment in early 2023 to enable it to deliver on its business plan and continue as a going concern.
If the Company cannot raise funds on acceptable terms when needed, this could have a material adverse effect on the Company’s business, results of operations and financial position. Accordingly, these circumstances indicate that a material uncertainty exists that may cast significant doubt on the ability of the Company to continue as a going concern and, therefore, its ability to realise its assets and discharge its liabilities in the ordinary course of business.
The directors have prepared the accounts on the going concern basis considering a number of indicators of the company’s ability to raise the required capital in the future including:
i) the support and commitment of existing investors to the future commercial success of the business;
ii) the experience of the Board in raising significant investment capital;
iii) the progress being made with several major global food producers with an expectation of revenue generation in late 2022/early 2023; and
iv) the engagement with the venture arms of two major global food producers in support of the Ozo technology.
These financial statements do not include any adjustments that would be necessary if the company was unable to continue as a going concern.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
The company acts on its own account when contracting with its customers for the supply of goods and services. The selling processes are agreed directly with customers. The company has the ability to set their own margins and prices on the sale of products, services and solutions.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired on business combinations are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Intangible assets are amortised on a straight line basis over their useful lives. The useful lives of intangible assets are as follows:
Development expenditure - 3 year straight line
Computer software - 4 year straight line
Patents - 3 year straight line
Provision is made for any impairment.
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.
Depreciation is provided on the following basis:
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2 year straight line basis
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4 year straight line basis
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4 year straight line basis
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4 years straight line basis
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5 - 10 years straight line basis
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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 Company shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in profit or loss for the period.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, 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.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
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Financial instruments (continued)
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is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Grant income is recognised in the profit and loss account in the same period as the expenditure, to which the grant relates.
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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.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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Operating leases: the Company 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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company 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 Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the reporting date.
Interest income is recognised in profit or loss using the effective interest method.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the directors have made the following judgements:
- Determine whether leases entered into by the company either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
- Determine whether there are indicators of impairment of the company’s tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Other key sources of estimation uncertainty
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Intangible fixed assets
Intangible assets are amortised over the useful lives, based on the estimated period that the assets will have a value in use or generate revenues. The estimates are reviewed annually. Changes to the estimates could result in significant variations in the carrying value and amounts charged to the profit and loss. The carrying value of intangibles by class is included in note 9 and useful lives are included within the accounting policy.
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The average monthly number of employees, including directors, during the year was
24
(2020 -
37
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Current tax on losses for the year
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Current tax on losses for previous periods
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Taxation on loss on ordinary activities
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Factors affecting tax charge for the year
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The tax assessed for the year is the same as
(2020 - the same as)
the standard rate of corporation tax in the UK of
19
%
(2020 -
19
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as set out below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of prior periods
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Adjustments to closing deferred tax to average rate of 19%
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Deferred tax not recognised
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Total tax charge for the year
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Factors that may affect future tax charges
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The March 2021 Budget announced an increase to the main rate of corporation tax to 25% from 1 April 2023. This rate has not been substantively enacted at the balance sheet date.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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Ozone Purification Limited
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Unit 29 Chancerygate Business centre, Langford Lane, Kidlington, Oxford, OX5 1FG
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Ozo Innovations EBT Trustee Limited
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Prepayments and accrued income
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Convertible loan note - short term
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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During the year convertible loan notes of £5,346,560 (including interest) were converted into shares. Refer note 15 for further details
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Financial assets measured at fair value through profit or loss
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Financial assets measured at fair value through profit or loss comprise cash at bank.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Called up share capital
Called up share capital represents the nominal value of the shares issued.
Share premium account
The share premium account includes the premium on issue of equity shares, net of any issue costs.
Other reserves
The other reserve relates to the equity portion of the convertible loan note.
Profit and loss account
The profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
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During the year, a share based payment arrangement existed whereby share options have been granted to option holders in order to acquire shares in the company.
The nominal value and the exercise price payable per share is between 1p and 1500p. If the option holder is not in employment by the company on the date of the exit event or does not validly execute the agreement as a deed and return it to the company within 30 days after the date of the grant, the option shall lapse automatically at the end of the 30 day period.
The number and exercise prices of the share options are as follows:
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Weighted average exercise price (pence)
2021
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Weighted average exercise price
(pence)
2020
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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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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £48,132 (2020 - £62,223). Contributions totalling £5,075 (2020: £11,950) were payable to the fund at the reporting date and are included within creditors.
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Related party transactions
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During the year, Ozo Innovations Limited paid Grosvenor Food and AgTech (previously known as Wheatsheaf Group Limited) £Nil (2020 - £18,396) in respect of director consultancy fees, director expenses and professional fees.
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The auditors' report on the financial statements for the year ended 31 December 2021 was unqualified.
We draw attention to note 2.2 in the financial statements which indicates that the Company’s business plan and cash flow forecasts show that the Company will need to raise additional capital investments in early 2023 to enable it to deliver on its business plan and continue as a going concern. As stated in note 2.2, these events or conditions, along with other matters as set out in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The audit report was signed on
16 June 2022
by
Yasin Khandwalla FCCA
(Senior statutory auditor) on behalf of
Xeinadin Audit Limited
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