Registration number:
Honest Brew Ltd
for the Year Ended 31 December 2020
Honest Brew Ltd
Contents
Company Information |
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Balance Sheet |
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Notes to the Financial Statements |
Honest Brew Ltd
Company Information
Directors |
Mr Keith Nicholas Foreman Mr David Michael Brock Mr Michael Alcock |
Registered office |
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Accountants |
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Auditors |
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Honest Brew Ltd
(Registration number: 08276744)
Balance Sheet as at 31 December 2020
Note |
2020 |
(As restated) |
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Fixed assets |
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Intangible assets |
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Tangible assets |
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Current assets |
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Stocks |
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Debtors |
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Cash at bank and in hand |
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Creditors: Amounts falling due within one year |
( |
( |
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Net current liabilities |
( |
( |
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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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Net (liabilities)/assets |
( |
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Capital and reserves |
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Called up share capital |
1,163,994 |
759,380 |
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Share premium reserve |
3,603,697 |
3,497,241 |
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Profit and loss account |
(5,209,482) |
(4,256,266) |
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Shareholders' (deficit)/funds |
(441,791) |
355 |
These financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.
These financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime and the option not to file the Profit and Loss Account has been taken.
Approved and authorised by the
.........................................
Director
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
These financial statements were authorised for issue by the
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements have been prepared in accordance with FRS 102 "The Financial Reporting Standards applicable in the UK and Republic of Ireland" ("FRS 102") and the requirements of the Companies Act 2006 as applicable to the companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
Basis of preparation
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £. The financial statements have been prepared under the historical cost convention.
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Going concern
The financial statements have been prepared under the going concern basis. The company incurred trading losses of £953,215 for the year ended 31 December 2020 (2019: £1,013,965) and had net liabilities or £441,791 (2019: £355 Net assets) as at that date.
In December 2021 the company secured further funding in the form of convertible loan notes from existing shareholders with a minimum commitment of £250,000.
The 2021 financial year has been an opportunity for the business to address many of the operational and technical challenges that were faced in 2020. The company has invested significantly in data capacity in order to better understand the current customer behaviour and trends. As a result the company will begin the 2022 financial year more robust and correctly structured to drive growth and the company is planning on increasing the marketing investment by 50% in the next 12 months.
The company sees 2022 as a year of opportunity with a number of events occurring that could lead to further improvements:
• Potential for further COVID restrictions on the hospitality section in Q1 of 2022
• Football World Cup in November 2022
• Craft beer continuing to be the fastest growth segment of a £7bn market
The directors are optimistic that the business will continue to grow.
After careful consideration of forecast cash flows and the expected trading performance (both of which incorporate a revenue growth modelled at the lower end of the potential growth scenarios) in addition to the post balance sheet cash injection noted above, the directors believe that the company will be able to meet its liabilities as they fall due, for a period of at least 12 months from the date of approval of these financial statements using existing working capital and, if required, procuring additional funding. The directors have therefore concluded that it is appropriate to adopt the going concern basis for the preparation of these financial statements.
Reclassification of comparative amounts
Following a detailed review of the opening balances, it was noted that share capital with a nominal value of £759,380 was classified as share premium in the year ended 31 December 2019. This has been restated to share capital to reflect the correct position.
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.
The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Tax
The tax expense for the period comprises current tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
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 taxable income.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Brewing Equipment |
Straight Line Method 33.3% |
Office and Computer Equipment |
Straight Line Method 33.3% |
Leasehold Improvements |
Straight Line Method 33.3% |
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Internally generated software development costs |
Straight Line Method 50% |
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.
The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are 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.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on the amounts recognised in the financial statements.
Stock valuation and obsolescence
Stocks are valued at the lower of cost and net realisable value. Cost is based on the purchase cost. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include the forecasted customer demand, competitive and economic environment as well as the ageing of stock. These variables are monitored by the directors and a provision is in place to mitigate the relevant risk.
Useful economic lives of non-current assets
The useful economic lives of non-current assets have been derived from the judgement of the directors, using their best estimate of the write-down period.
Staff numbers |
The average number of persons employed by the company (including directors) during the year, was
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Intangible assets |
Internally generated software development costs |
Total |
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Cost or valuation |
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At 1 January 2020 |
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At 31 December 2020 |
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Amortisation |
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At 1 January 2020 |
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Amortisation charge |
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At 31 December 2020 |
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Carrying amount |
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At 31 December 2020 |
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At 31 December 2019 |
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The aggregate amount of research and development expenditure recognised as an expense during the period is £
Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Tangible assets |
Leasehold improvements |
Furniture, fittings and equipment |
Total |
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Cost or valuation |
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At 1 January 2020 |
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Additions |
- |
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At 31 December 2020 |
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Depreciation |
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At 1 January 2020 |
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Charge for the year |
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At 31 December 2020 |
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Carrying amount |
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At 31 December 2020 |
- |
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At 31 December 2019 |
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Included within the net book value of land and buildings above is £Nil (2019 - £6,968) in respect of long leasehold land and buildings.
Operating lease commitments |
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows
Note |
2020 |
2019 |
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Total amount payable |
18,970 |
23,531 |
Debtors |
2020 |
2019 |
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Trade debtors |
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Prepayments |
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Other debtors |
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Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Creditors |
Creditors: amounts falling due within one year
2020 |
2019 |
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Due within one year |
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Trade creditors |
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Taxation and social security |
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Accruals |
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Other creditors |
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Creditors: amounts falling due after more than one year
Note |
2020 |
2019 |
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Due after one year |
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Loans and borrowings |
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Called up share capital |
Ordinary share capital issued and fully paid
2020 |
2019 |
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No. |
£ |
No. |
£ |
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Ordinary of £0.010 each |
18,797,236 |
187,972.360 |
17,727,023 |
177,270.230 |
B Ordinary of £0.010 each |
5,298,689 |
52,986.890 |
5,298,689 |
52,986.890 |
C Investment of £0.010 each |
1,430,491 |
14,304.910 |
1,430,491 |
14,304.910 |
D Ordinary of £0.010 each |
12,225,359 |
122,253.590 |
12,225,359 |
122,253.590 |
E Ordinary of £0.010 each |
11,695,250 |
116,952.500 |
11,695,250 |
116,952.500 |
F Ordinary of £0.010 each |
16,652,176 |
166,521.760 |
16,652,176 |
166,521.760 |
G Ordinary of £0.010 each |
10,676,680 |
106,766.800 |
10,676,680 |
106,766.800 |
I Ordinary of £0.001 each |
23,235,595 |
23,235.595 |
23,235,595 |
23,235.595 |
J Ordinary of £0.010 each |
11,971,838 |
119,718.380 |
- |
- |
K Ordinary of £0.010 each |
27,419,372 |
274,193.720 |
- |
- |
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Honest Brew Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
During the year the company issued 1,070,213 ordinary shares of £0.01.
During the year the company issued 11,971,838 Ordinary J shares of £0.01.
During the year the company issued 27,419,372 Ordinary K shares of £0.01.
Related party transactions |
During the year the company paid consultancy services to a director totalling £40,000 (2019: 23,333). Included in trade creditors at the year end is an amount of £28,000 (2019: £28,000) which the company owed to the director.
As at the year end the company owed a director, who resigned during the year, £15,281 (2019: £15,281). This balance is shown within loans due in more than one year.
Post balance sheet events |
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The auditor's report |
The auditor's report was unqualified.
The senior statutory auditor who signed the audit report on
The auditor was
We draw attention to the fact that the company has recorded a loss for the year ended 31 December 2020 of £953,215 (2019: £1,013,965) and, as at that date, the company had net liabilities of £441,791 (2019: £355 net assets). As stated on page 4 these events or conditions 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.