The directors present the strategic report for the period ended 31 December 2023.
On 8 December 2023, the entire share capital of the ultimate parent company, H2O Innovation Inc, was acquired by Ember SPV I Purchaser Inc. The acquisition led to an alignment of the group’s accounting period to 31 December. The change in accounting period resulted in a short period of six months to 31 December 2023, causing apparent fluctuations in the results.
Throughout this six-month period, we have continued to see strong levels of sales, which has been achieved by expanding our efforts through various distributors outside of the UK.
The cost of raw materials saw an average price decrease, returning back to levels before the COVID-19 pandemic. Freight costs also reduced globally. As a result, the total cost of sales decreased by 21% (when extrapolated across a twelve-month period). We do not expect to have any further significant decrease.
Administrative expenses increased by 12% (once extrapolated across a twelve-month period). These costs increased as a result of general rises in costs in most administrative areas of the business.
The only major changes to the group balance sheet relate to creditors falling due within one year and creditors falling due after one year. Amounts falling due under one year have reduced by CAD 7.3m to CAD 3.2m and amounts falling due after one year have increased by CAD 4.3m to CAD 28.6m. The main reason for these changes relate to deferred consideration due from the group being paid by the parent company, thus creating an intercompany loan with the parent company that is due in over one year.
Cash balances have also reduced in the group from CAD 4.8m to CAD 3.1m. The main reasons for this relate to the payment of dividends and group interest charges in the period.
The group’s strategy includes identifying and mitigating potential threats to the financial health of the business. These are regularly assessed, with the following being considered the principal risks that are faced by the group:
Foreign currency risk
The group’s presentational currency is in CAD$, however it regularly trades within the UK in GBP£ and outside the UK in CAD$, USD$, CLP$ and EUR€. The group does not hedge transactions, however mitigates any risks posed by purchasing in the same currency it sells. This group is also part of the wider H2O group, that carries a global presence and so is able to take advantage of this where possible.
Market competition
We consider market competition a risk for the group, however the group holds the intellectual property behind specific products and also aims to build strong customer relationships, mitigating this threat.
The directors assess the financial performance of the group by reviewing key financial benchmarks.
Operating profit is the chosen benchmark which in the directors’ opinions, best reflects the performance of the business during the period. Operating profit for the current period to December 2023 is CAD 3.52m (when extrapolated over a twelve-month period) and is an increase on the previous period of CAD 928k.
Gross profit margin is another benchmark, and has grown by 10%, from June 2023 at 48% to December 2023 at 58%. The reasons for this growth can be attributed to the decrease in cost of sales as discussed above.
Future developments
The group continues to focus on the growth of the overseas customer base. The group hope to achieve this by continuing to invest in its employees, with both recruitment and retention.
There has also been an issue of equity shares in a subsidiary, H2O Innovation Europe, S.L., since the year-end which created a non-controlling interest within the H2O Innovation UK Holding Limited group from 1st January 2024. Further information in relation to this can be found in Note 24 to the Financial Statements.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2023.
The results for the period are set out on page 9.
Ordinary dividends were paid amounting to CAD 1,458,649. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Since the balance sheet date. but before the approval of the financial statements, there has been an issue of equity shares by a subsidiary, H2O Innovation Europe, S.L., which created a non-controlling interest within the H2O Innovation UK Holding Limited group from 1st January 2024. Further information in relation to this can be found in Note 24 to the Financial Statements.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of H2O Innovation UK Holding Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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).
Basis for opinion
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the 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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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 auditor's 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 financial statements.
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 and group through discussions with directors and other management, and from our commercial knowledge and experience of the company and group;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries 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 financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries 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 any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation; and
reviewing correspondence with HMRC and the company and group’s legal advisors; and
performing a review of legal and professional fees.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required 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.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
This is the first financial period that the company has prepared consolidated financial statements, therefore the consolidated figures presented for the prior period have not been audited previously.
The parent company's individual company financial statements were audited in the prior period.
As a result of the above, the comparative financial statements, except for the company balance sheet and the company statement of changes in equity, are unaudited.
Use of our 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 auditor's 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's profit for the period was CAD 2,764,327 (2023 - CAD 2,347,420 loss).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
H2O Innovation UK Holding Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is C/O McCarthy Tetrault, 1 Angel Court, 18th Floor, London, EC2R 7HJ.
The group consists of H2O Innovation UK Holding Limited and all of its subsidiaries.
The group has sites in the United Kingdom, Spain and Chile and so its principal places of business are:
- 3a Aston Way, Middlewich, Cheshire, United Kingdom, CW10 0HS
- Calle Londres, 38, Las Rozas (Madrid), Spain
- Av, Nueva Providencia 1363 Of, 1304 Providencia, Santiago de Chile, Chile
The financial statements are presented for the shorter 6 month period ended 31 December 2023 due to the acquisition of the group during the period. The financial year end has therefore been changed to align with the new ultimate parent company. The comparative information is for the year ended 30 June 2023 and is therefore not entirely comparable.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in Canadian Dollars ("CAD"), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest CAD.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
The consolidated group financial statements consist of the financial statements of the parent company H2O Innovation UK Holding Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally 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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than Canadian Dollars are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
The financial statements of subsidiaries with a functional currency other than the presentation currency, Canadian Dollars, were translated to Canadian Dollars using the following methods:
- The assets and liabilities of subsidiaries at the balance sheet date were translated at the exchange rate at the period end date;
- The income and expenditure of the subsidiaries were translated using the average exchange rates for the period;
- Any remaining exchange rate variances are recognised separately within Other Comprehensive Income.
Share based payment transactions
The parent company of H2O Innovation UK Holding Limited operates a share based compensation plan. The fair value of employee services received in exchange for the grant of options is recognised as an expense in the financial statements of H2O Innovation UK Holding Limited for staff employed within the H2O Innovation UK Holding Limited group, due to these staff members being employees of H20 Innovation UK Holdings Limited group companies and not the parent company.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest.
The expense in relation to options over the parent company’s shares granted to employees of this group are recognised by the group as a capital contribution.
In the application of the group’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 in applying the Group's accounting policies
In the director's opinion there are no critical judgements, apart from those involving estimations (dealt with separately below), that they have made in applying group's accounting policies and that have had a significant effect on the amounts recognised in the financial statements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Goodwill has been recognised on acquisitions made in prior periods. Management have estimated the useful economic life of goodwill based on the time period over which ongoing benefits and cash flows are anticipated from the acquired customer relationships, trademarks and non-compete arrangements of the businesses acquired. Uncertainties in these estimates relate to the actual economic useful life of the goodwill.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
Further information on tax charges
The total amount of UK corporation tax charges in the period amounted to CAD 509,042 (30 June 2023 - CAD 166,968).
The total overseas tax charges in the period amounted to CAD 110,034 (30 June 2023 - CAD 470,438).
Details of the company's subsidiaries at 31 December 2023 are as follows:
Amounts owed to group undertakings consist of intra-group loans, these are secured via a debenture registered with National Bank of Canada, these loans carry an interest rate of 5.24% per annum and are due to mature between 2027 and 2030.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. Amounts owing at the period end totalled CAD 2,535 (30 June 2023 - CAD nil).
Ordinary shares carry full voting, dividend and capital distribution rights.
Share premium is made up of receipts in excess of the par value of new share capital issued. This is a non-distributable reserve.
Profit and loss reserves represents the accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.
At the balance sheet date the group acted as a guarantor for its parent company, H2O Innovation Inc, in respect of group loan arrangements which amounted to CAD 58,183,810 at 31 December 2023 (30 June 2023 - CAD 51,274,093). The directors do not feel that there is a likelihood that the guarantee will be called upon.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Since the balance sheet date, but before the approval of the financial statements, there has been an issue of equity shares by a subsidiary, H2O Innovation Europe, S.L., which created a non-controlling interest within the H2O Innovation UK Holding Limited group from 1st January 2024.
A permanent establishment located in Bilbao, Spain and owned by H2O Innovation Inc. the ultimate parent company, was transferred to H2O Innovation Europe, S.L. in exchange for an issue of shares with nominal value of CAD 3,936 and a share premium of CAD 612,690.
As a result of this transaction, from 1 January 2024, H2O Innovation Europe, S.L. is now directly owned by H2O Innovation UK Holding Limited (85.04%) and indirectly owned by H2O Innovation Inc. (14.96%).
At the balance sheet date the company was a wholly owned subsidiary of H2O Innovation Inc. The companies that are part of the H2O Innovation Inc. group were all wholly owned at the year-end and as a result the company has taken advantage of the exemption conferred by FRS102 not to disclose transactions with H2O Innovation Inc. or any other wholly owned group companies within this group.
Other non-cash changes relate to a new intercompany loan received of CAD 5,525,000 in exchange for the payment of deferred consideration by the ultimate parent company on behalf of the group, along with accrued interest charges on the group loan balances totalling CAD 709,374.