Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
COMPANY INFORMATION
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SUNBIRD BUSINESS SERVICES LIMITED
CONTENTS
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SUNBIRD BUSINESS SERVICES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Sunbird Business Services Limited (the "Company"), including its subsidiary companies (the “Group”), is a provider of flexible offices and operations in multiple African locations, including Kenya, Tanzania, Nigeria and South Africa. These services are provided via Service Centers that offer clients a choice of flexible private offices, desks or meeting rooms. The Group operates under the trading name of Kofisi in Kenya and Nigeria.
Scheme of Arrangement On 12 October 2020, the Company applied to the High Court of England and Wales (the “Court”) seeking approval to restructure the Company’s balance sheet by way of a scheme of arrangement under part 26 of the UK Companies Act 2006 (“Scheme”), converting all of the Company’s financial debt, amounting to circa $15,912,387 plus accrued interest outstanding into new A1 Ordinary Shares in the Company (“Debt-for-equity Conversion”). For further details of the Debt-for-equity Conversion, please refer to note 17 of the financial statements. The Court Sanctioned the Scheme on 15th December 2020 and it became effective on 16th December 2020. In accordance with the Scheme - 62,257,364 new A1 Ordinary Shares in the Company were issued to Creditors. The purpose of the Scheme as set out in the Scheme Circular was to ensure that the Company’s financial debt was discharged and to raise US$3,150,000 of funds, via an equity rights issue, in order to provide sufficient working capital for the Company’s immediate cashflow requirements. Strategy We define our strategic objectives as: • Create, operate and maintain sophisticated workspace environments for enterprise (businesses) in Africa • Use technology to enhance space and power services for our clients • Focusing on the private sector enterprise, including SMEs and multinationals • Become the flexible office provider of choice across Africa Market Indicators for our Services Workspace environments are evolving globally to meet the demands of a changing workforce due to technology and change in habits. From individuals to multinationals there is a growing trend to outsource workspace to experts so that businesses can focus on core activities as well as enjoying enhanced benefits from the variety of designed spaces which are available in a flexible workspace. This “space as a service” mode is particularly valuable in developing markets where there is a greater degree of uncertainty and replicating modern work environments is more difficult. Performance (for the year ended 31 Dec 2020) The Group continues to be loss making, with losses attributable to the owners of the Company of $7.45m (2019: $14.6m), however it has been impacted by several “one-off” costs relating to its restructuring and Scheme of Arrangement. As at the date of this report, all Centres except for Tanzania, are profitable. Revenues for 2020 were not yet at a level capable of supporting the central overhead base, however a path to profitability is now clear for 2021. The Group is benefiting from a restructured central team, stronger senior management, a reduced overhead base and new deals/centres announced post balance sheet.
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SUNBIRD BUSINESS SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
During the year the Group continued to rationalise and concentrate on its core service line, being Serviced Offices. Unfortunately, due to Covid, revenues were impacted by a lower take-up of offices space and accelerated attrition of some clients, including the loss of a major contract in Tanzania. This led to a decrease in revenues from continued operations from $8.2m (for the 17-month period) in 2019 to $4.7m (for the 12-month period) in 2020. Whilst Covid disrupted the business environment, we adapted quickly, with our Covid protocols being developed and deployed efficiently across all our centres. We are also confident the impact Covid has had on the workplace environment and the habits of professionals who occupy our Centres, will have a positive impact on our business going forward.
Summary of activities During the year the Group opened its new site in Lagos, Nigeria and continued to pursue several opportunities to open new Centres in Nairobi. Each opportunity is being approached cautiously and with a robust risk management process, as any new centre will require additional financing in order to meet the capital expenditure requirements. During the year, the group closed down one of its centres in Nairobi (Wilson Business Park). Wilson Business Park, had, as its main clientele customers from the aviation industry given the location next to the previously busy Wilson Airport. With Covid, several of these clients scaled down considerably while others closed shop completely which severely impacted the operations and the business of the centre. The Group, having now fully deployed its Kofisi Brand in Kenya and Nigeria, continues to align its designs with the global benchmark for flexible workspace but combined this with a strong focus on local design, procuring over 50% of furniture from local manufacturers. The Group’s continued understanding of supply chains, the specific needs of the African Client, and an ability to hire and train local staff gives it a strong platform to grow. Principal Risks Our principal risks can be seen in broad terms to encompass Currency, Political, Commercial, Credit, Ability to Raise Finance, Health and Safety, Control Environment and Compliance Obligations. Risk committee commitment Our Risk Committee is constituted by the full Board and provides scope for which risks are quantified and fully analysed. The Risk Committee proposes robust mitigation strategies in respect of such identified risks. Currency The Group expects to operate and conduct its services in jurisdictions which could generate revenue, expenses and liabilities in currencies other than our functional currency which is the US Dollar. As a result, we will be subject to the foreign currency risks. Where appropriate the Group will consider entering into forward contracts to limit the exposure. Political The Group is continuously monitoring the political environment in Africa. Although the Group does no work directly for the public sector, the sector agnostic requirement for workspace infers that this risk of political impact is materially mitigated. In regards other political risk such as terrorism and war, the Group ensures such political risks are covered within the insurance policy cover. Commercial The Group commercial risks include, but are not limited to, customer and supplier due diligence, resource forecasting, and governance and control policies. The Group carries out checks on material customers and suppliers. Credit The Group on the whole, will be exposed to the credit risk of clients related to the non-payment for services or non-reimbursement of costs incurred. The Group may also be subject to strict performance metrics that could
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SUNBIRD BUSINESS SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
increase its credit risk, requiring effort by management to retrieve payment for services. Failure by any clients to pay for services or reimburse costs may adversely increase the Group’s credit risk that could have an impact on its profitability.
Ability to raise finance
The Group has successfully raised finance through various forms including debt, equity and listed bonds since its formation. The working capital assumptions for the next twelve months assume this will continue as additional funding through debt and equity is required to support the business. The inability to raise further finance to provide development capital to existing service lines and their capital expenditure pipeline will have a significant detrimental effect on the Group’s ability to achieve its commercial and strategic goals. As at the date of signing these financial statements the Group has successfully completed a rights issue and converted its long-term debt to equity. Management are confident that this will allow the Group to continue its strategy. See going concern note for further detail. Compliance obligations Owing to the breadth of countries in which the Group operates, working to compliance obligations is integral to our business. We continually work to ensure that we obtain and continue to comply with all necessary approvals, licenses or permits. Health and Safety The Group puts health and safety firmly at the top of the list for every single project it undertakes from construction services to running serviced commercial offices. Occupational Health and Safety directives are constantly assessed through robust management systems - at a local and a global level. The Group ensures all sub-contractors adhere to equally high standards. Control Environment The Group operates subsidiaries in West, East and South Africa where the control environment expectations are different to those in the United Kingdom. This increases the risk of a weaker control environment in our operating subsidiaries. Management work to the principal that the control environment will be maintained across the Group to the highest standard. Environmental Our business activity has an impact on business ecosystem in the region and the communities surrounding areas where we operate. We are committed to working on sustainability policies, and environmental solutions, to assist our clients as they enter and expand into the market. Corporate Social Responsibility commitment Our workspace solutions enable local and international businesses to establish themselves and grow, impacting communities in the countries in which we operate. By enabling businesses we provide a platform for job creation as well as catering for the emerging entrepreneurial class of Africa.
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SUNBIRD BUSINESS SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The year ahead
2021 has shown steady progress following the completion of a $3.15m rights issue in February 2021, approaching overall profitability, the addition of two new prominent centres, refinancing of a debt facility and strengthening the management team. Covid has continued to impact business across African cities but despite the general economic impact, flexible working and notably the Kofisi product and brand have displayed increased strength in 2021. The Group has engaged with even more enterprise clients, increased awareness of our offering (social media stats up 41% in 2021) and delivered a net increase in memberships by over 50 year to date. The focus has been to increase the portfolio of space to increase the probability of breakeven, as the Group aims to achieve profitability on lower occupancies. The reduction in losses shows good progress which has principally been achieved through a reduction of overheads and cost of sales. As sales growth increases, this can lead straight to bottom line profitability. The Company is proud and delighted to announce the addition of two new centres in 2021, which have been achieved through the proven ability and track record of the team, with the most sophisticated product in the market. The first of these is the Group’s largest deal yet, with the signing of a 5-year anchor licensee agreement for a new 45,000 sq ft centre in Nairobi (‘NBO5’). This is a landmark deal, which we believe to be one of the largest deals in Sub-Saharan Africa and supports the growing trend for flexible workspace. The Group has also signed its first management contract for another new “media focused” centre in Nairobi (‘NBO6’). This is a 25,000 sq ft space in the heart of the business hub and is further evidence of our growing brand and capability. As a result of the above key wins, it has a significant impact on key metrics for the Group. Namely, it increases the impact of contribution to the bottom line, improves valuation metrics in revenue and desk numbers, and emphasises our difference from the competition. The Group has also refinanced the last of its external debt (being a finance lease) with a shareholder of the Company, as well as consolidating other payables into an instrument with a 12-month payment holiday. The refinancing provides a much-needed cash relief and significantly reduces short-term cash requirements. These new deals will assist the Company in attracting institutional support for the business and hence the company has engaged external corporate finance to embark on a capital raising programme to commence in 2021. Following the advice from our fund-raising partners, the Company’s articles are being updated to simplify the structure and allow for share-based remuneration for new and existing staff that are essential to the delivery of shareholder returns. The Group has also substantially bolstered the management team with the hiring of a new Group Managing Director who comes with significant Real Estate and financing experience.
This report was approved by the board on 30 September 2021
and signed on its behalf.
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SUNBIRD BUSINESS SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
The directors are responsible for preparing the Group strategic report, 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 loss for the year, after taxation, amounted to $
7,452,051
(2019 -
loss
$
14,573,152
)
.
The directors who served during the year were:
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SUNBIRD BUSINESS SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Following the court sanctioned Scheme of Arrangement in December 2020, the Group successfully completed a $3.15m rights issue in February 2021. Funds have been utilised to support the Group’s working capital requirements and to reduce its net liabilities.
In August 2021, the Group announced the completion of its largest centre to date, with the signing of a 5-year anchor licensee agreement for a new 45,000 sq ft centre in Nairobi, Kenya. The Group also signed its first management contract for another new “media focused” centre in Nairobi. This is a 25,000 sq ft space in the heart of the business hub and is further evidence of the Group’s growing brand and capability. In August 2021, the Group also refinanced the last of its external debt facilities with a shareholder of the Company. The refinancing provides a 12-month payment holiday and significantly reduces short-term cash requirements. On 17 September 2021 an Employment Tribunal (London, UK) hearing was held regarding a claim from an ex-employee of the Company for arrears in employment dues. On 20 September 2021, the Judgement was received and the Company has been ordered to pay an amount of GBP 140,128 within 14 days from the award date. There is also a substantial civil claim (in the UK) that the Company is pursuing against that same ex-employee.
The auditors, Barnes Roffe LLP, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board on
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SUNBIRD BUSINESS SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNBIRD BUSINESS SERVICES LIMITED
We have audited the financial statements of Sunbird Business Services Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2020, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and 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).
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.
We draw attention to note 2.3 in the financial statements, which indicates that the Group incurred a net loss of $7.45m during the period ended 31 December 2020 and, as of that date, the group’s total liabilities exceeded its total assets by $5.13m. As stated in note 2.3, these events or conditions, along with other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
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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SUNBIRD BUSINESS SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNBIRD BUSINESS SERVICES LIMITED (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.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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 Group strategic report or the Directors' report.
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SUNBIRD BUSINESS SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNBIRD BUSINESS SERVICES LIMITED (CONTINUED)
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SUNBIRD BUSINESS SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNBIRD BUSINESS SERVICES LIMITED (CONTINUED)
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:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: - The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; - We identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the relevant sector; - We focused on specific laws and regulations, which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and ISO standards; - We assessed the extent of compliance with laws and regulations identified above through making enquires of management and inspecting legal correspondence and identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: - Making enquires of management as to where they considered there was susceptibility to fraud, their knowledge of actual suspected and alleged fraud; and - Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: - Performed analytical procedures to identify and unusual or unexpected relationships; - Tested journal entries to identify unusual transactions; - Assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and - Investigated the rationale behind significant or unusual transactions. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial statements, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
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SUNBIRD BUSINESS SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNBIRD BUSINESS SERVICES LIMITED (CONTINUED)
Material misstatements that arise due to fraud can be harder to detect that those that arise from errors as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' report.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an 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.
for and on behalf of
Chartered Accountants
Leytonstone House
3 Hanbury Drive
London
E11 1GA
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SUNBIRD BUSINESS SERVICES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
REGISTERED NUMBER:
09107183
CONSOLIDATED BALANCE SHEET
AS AT
31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 21 to 51 form part of these financial statements.
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SUNBIRD BUSINESS SERVICES LIMITED
REGISTERED NUMBER:
09107183
COMPANY BALANCE SHEET
AS AT
31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
REGISTERED NUMBER:
09107183
COMPANY BALANCE SHEET
(CONTINUED)
AS AT
31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 21 to 51 form part of these financial statements.
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SUNBIRD BUSINESS SERVICES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2020
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Sunbird Business Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is 5th Floor, 8 City Road, London, England, EC1Y 2AA.
The principal activity of the company continued to be the provision of integrated services to its subsidiaries to act as a holding company. Integrated services includes the provision of risk management and financial direction, commercial management and support services including market elevation, marketing and branding assistance, sales and pipeline management, and assistance with material customer sales. The principal activity of the group is the provision of serviced offices and facilities management in the East, West and South African region. During the year ended 31 December 2020 the group also provided construction services and development consulting services.
2.
Accounting policies
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.
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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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
The group has incurred a loss for the period of $7.45m and has net liabilities of $5.13m as at 31 December 2020. The group has successfully completed a rights issue and converted its long term debt to equity. Management are confident that this will allow the Group to continue its strategy.
The above rights issue and conversion of long term debt into equity provides a significant improvement to the group's immediate solvency position. However, the group continues to make financial losses post year end and therefore there remains a material uncertainty that the group will have the ability to continue as a going concern. Despite this uncertainty, the directors have a reasonable expectation that the group will be able to meet its liabilities as they fall due and therefore can continue as a going concern for at least 12 months from the date of signing the accounts. The financial statements have been prepared on that basis and do not include adjustments that would result if the group was unable to continue as a going concern.
Revenue comprises the fair value of the consideration received and receivable by the group from the provision of its services. Those services include facilities management, construction services and the provision of serviced office workspaces.
Revenue is shown net of sales and value added taxes, returns, rebates and discounts. The group 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 activities.
Page 22
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Goodwill
Other intangible assets
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.
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
At the balance sheet date goodwill and other intangible fixed assets have been fully impaired.
Page 23
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
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.
Page 24
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Page 25
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
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.
Page 26
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the costs of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received. Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. Retirement benefits Payments to defined contribution retirement benefit schemes are charges as an expense as they fall due.
Page 27
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Compound instruments
The component parts of compound instruments issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issues, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised costs basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently remeasured. Equity instruments 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. Incremental costs of directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Page 28
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than the financial instrument's legal form.
Financial liabilities within the scope of IAS 39 are initially classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. Subsequently, the measurement of financial liabilities depends on their classification as follows: After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance revenue and finance cost. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such as an exchange or modification, this is treated as a derecognition of the original liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.
Page 29
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying value of assets and liabilities are outlined below. Critical Judgements Leases The group has entered into a facility for financing of fixtures, fittings and equipment installed and used in its centres. Management considers that the terms of the facility are such that the group receives substantially all of the risk and rewards incidental to ownership of the assets and have therefore classified the facility as a finance lease. As a substantial portion of the assets leased under this arrangement are fixtures and fittings which are integral to the building, the nature of the assets would make it difficult for them to returned to the lessor at the end of the lease term, therefore management considered there to be no residual economic value. Critical accounting estimates Impairment of debtors The group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. Dilapidation provision The Group makes an estimate in respect of its obligation to repair and reinstate the leased premises at the end of the lease period. The provision reflects management's best estimate of the expected costs that may be incurred at the time of termination of any of its leases. The estimates have been assessed by reference to market conditions and prices existing at the reporting date and is determined by the Group, based on comparable transactions identified by the Group for leases in the same geographical market serving the same segment. Carrying value of goodwill In assessing impairment, management estimates the recoverable amount of each cash-generating unit based on discounted expected future cash flows, Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate. Full details are provided in Note 2.5.
Page 30
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 31
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 32
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 33
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 34
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
10.
Taxation (continued)
The group has significant tax losses carried forward which may be offsetable against future profits.
Page 35
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 36
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 37
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 38
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
13.
Tangible fixed assets (continued)
Page 39
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Company - The company impaired its investment in Sunbird Business Services Africa Ltd of $100 by $100 in the previous period.
Fixed asset investments are the subject of a prior year adjustment – see note 24 below. The following were subsidiary undertakings of the company: Company Country Holding Nature Sunbird Business Services Africa Ltd* United Kingdom 100% Holding Company Sunbird Business Services Botswana Ltd Botswana 100% Dormant Sunbird Business Services Uganda Ltd** Uganda 100% Property services Sunbird Business Services Tanzania Ltd Tanzania 100% Property services Sunbird Business Services Kenya Ltd Kenya 100% Property services Big Bird Holding Tanzania Ltd Tanzania 100% Dormant Sunbird Support Services Kenya Ltd Kenya 100% Dormant Sunbird Support Service (Pty) Ltd South Africa 100% Facilities management Sunbird Business Services Zambia Ltd Zambia 100% Property Services Sunbird Business Services Namibia Ltd Namibia 100% Dormant Sunbird Business Services South Africa (Pty) Ltd South Africa 100% Property Services Sunbird Business Services Nigeria Ltd Nigeria 100% Property Services *Sunbird Business Services Africa Ltd is a direct subsidiary undertaking. All other subsidiaries are held by Sunbird Business Services Africa Limited. **Sunbird Business Services Uganda Ltd is currently under dissolution. Below are the registered offices in each country: United Kingdom - 8 City Road, London, EC1Y 2AA. Uganda - 5 Floor Rwenzori Tower, Kampala, Uganda. Tanzania - Kilwa House, Oysterbay, Dar Es Salaam, Tanzania. Kenya - 4th floor, Eden Square Complex, Westlands Nairobi, Kenya. South Africa - Westwood Building, 57 6th Rd Hyde Park, Johannesburg, South Africa. Zambia - 3rd floor Mpile office park, 74 Independence Avenue, Lusaka, Zambia. Botswana - Acumen Park, Plot 50370, Fairground, Gaborone. Namibia - Unit 5 Ground Floor, Ausspann Plaza, Dr. Agostinho Neto Road, Windhoek, Namibia. Nigeria - 9th Floor, St Nicholas House, Catholic Mission Street, Lagos, Lagos State
Page 40
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 41
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 42
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 43
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 44
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
20.
Financial instruments (continued)
Page 45
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 46
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
21.
Provisions (continued)
Page 47
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
22.
Share capital (continued)
During the period, 63,462,552 Ordinary shares
(2019 – 1,486,731 A1 Ordinary shares)
having an aggregate nominal value of $634,626 (
2019 - $14,867)
were allotted for consideration of $22,004,167
(2019 - $3,308,466)
.
During the period, Nil A2 Ordinary shares (2019 – 9,703 A2 Ordinary shares) having an aggregate nominal value of $Nil (2019 - $97) were allotted at their par value. During the year, 196,234 A3 Ordinary shares (2019 – Nil) , having an aggregate nominal value of $1,962 were allotted for nil consideration. A1 and A2 Ordinary shares have voting rights but the voting rights to appoint directors do not attach to the shares. For A1 Ordinary shares only certain investors have the right to appoint directors subject to their share holdings. For A1 Ordinary shares, only 2 shareholders (Mr M Aldridge and Mr W Sykes) who are also directors have rights to appoint directors. The holders of A3 Ordinary Shares have no entitlement to vote and do not have any right to receive notice of or speak at any general meetings of the Company. All classes have equal rights to dividends and rank pari passu in that regard. A1 and A2 Ordinary shares have pre-emption rights priority whereas A3 Ordinary shares have no pre-emption rights. A1 Ordinary shares rank ahead of A2 and A3 Ordinary shares upon a liquidation or winding up.
Share premium account
Profit and loss account
The Group owns a number of subsidiary companies in Africa which carry on the trade of the Group. These companies have historically been accounted for as if directly owned by Sunbird Business Services Ltd. The investments are directly owned by Sunbird Business Services Africa Ltd and a prior year adjustment has been made to account for the investments as being directly owned by that Company.
The investment in subsidiary undertakings was fully impaired in the previous year and therefore the prior year adjustment has not had an impact on the previous financial years profit and loss account or net liabilities. The prior year adjustment created an intercompany debtor due from Sunbird Business Services Africa Ltd which is fully provided against. Also during the year management became aware of a material overstatement of the Group’s provision for dilapidations expense as shown in note 21. This resulted in a reduction in the Group’s provision brought forward as at 31 July 2018 of $1,307,858 (and therefore a reduction in the Group’s net liabilities as at that date) and a reduction in the prior period dilapidations expense of $1,683,632. The cumulative effect on the net liabilities as at 31 December 2019 was therefore a reduction of $2,991,490.
Page 48
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The Group operates a defined contributions pension scheme. The pension cost charge represents contributions payable by the Group to the fund and amounted to $14,908
(2019 - $21,363)
.
Page 49
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 50
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SUNBIRD BUSINESS SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
In August 2021, the Group announced the completion of its largest centre to date, with the signing of a 5-year anchor licensee agreement for a new 45,000 sq ft centre in Nairobi, Kenya. The Group also signed its first management contract for another new “media focused” centre in Nairobi. This is a 25,000 sq ft space in the heart of the business hub and is further evidence of the Group’s growing brand and capability. In August 2021, the Group also refinanced the last of its external debt facilities with a shareholder of the Company. The refinancing provides a 12-month payment holiday and significantly reduces short-term cash requirements. On 17 September 2021 an Employment Tribunal (London, UK) hearing was held regarding a claim from an ex-employee of the Company for arrears in employment dues. On 20 September 2021, the Judgement was received and the Company has been ordered to pay an amount of GBP 140,128 within 14 days from the award date. There is also a substantial civil claim (in the UK) that the Company is pursuing against that same ex-employee.
The company has no controlling party.
Page 51
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