TIDMCLTV
RNS Number : 8818Y
Cellcast plc
14 May 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014
14 May 2019
Cellcast plc
("Cellcast", the "group" or the "Company")
Final Results
Key points
-- Group operating revenues of GBP11.3 million (2017: GBP12.0 million), comprising:
o core interactive broadcast revenue of GBP10.9 million (2017:
GBP11.3 million); and
o technical services and consulting to overseas gaming and
lottery operators of GBP395,000 (2017: GBP660,000)
-- Cost of sales were GBP11.0 million (2017: GBP11.2 million)
-- Gross profit of GBP0.3 million (2017: GBP0.8 million)
-- Loss for the year was GBP250,000 (2017: loss of GBP645,000
which included, inter alia, the Lexinta impairment)
-- Net cash balance at 31 December 2018 of GBP0.7 million (31 December 2017: GBP1.1 million)
-- Loss per share of 0.3p (2017: loss per share of 0.8p)
-- Board is undertaking a review as to the prospects for the group going forward
Mike Neville, Chairman of Cellcast, commented:
"We continued to see the gradual decline in the core interactive
broadcast business that we have witnessed for the past few years.
This has continued in 2019 year to date. In addition, due to the
adverse effect of a new taxation rate for the group's clients in
Kenya, we also saw reduced fees for our technical and consultancy
services to overseas gaming and lottery operators."
"There has therefore been increased focus by the Directors on
the long-term viability of the economic model that the group
utilises which has prompted the Directors to undertake a review as
to the prospects for the group going forward. The Board is
currently exploring all options available to the group."
For further information:
Cellcast plc
Craig Gardiner, CEO Tel: +44 (0) 203 376
9420
craig@cellcast.tv www.cellcast.tv
Allenby Capital Limited (Nominated
Adviser)
Nick Naylor/James Reeve Tel: +44 (0) 20 3328
5656
Chairman's statement
Cellcast plc (the "group") continued to experience difficult
trading conditions in 2018. This is a pattern that has existed over
the last several years, with revenues in the core interactive
broadcast business continuing to decline and margins being eroded,
resulting in continuing losses to the bottom line and a decline in
the Company's cash position.
The sectors for the group's core services are being gradually
discontinued and, despite a clear focus by the Board on cost
savings and related diversification, these are yet to have a
material impact on the group. The Board has looked for suitable
partners in order to expand and diversify, however, despite
numerous attempts, these have not been forthcoming.
As reported in our trading update in November 2018, the latter
half of 2018 was particularly difficult, and this has continued
into 2019. There has therefore been increased focus by the
Directors on the long term viability of the economic model that the
group utilises which has prompted the Directors to undertake a
review as to the prospects for the group going forward. The Board
is currently exploring all options available to the group.
As part of this review, the carrying value of the company's
investment in its 100% owned subsidiary undertaking; Cellcast UK
Limited, through which the trade of the group is carried out, was
undertaken in the year. As a result, an impairment loss of
GBP461,000 (2017: GBPnil) was recognised in the company to reduce
the carrying value of the investment to its expected recoverable
amount of GBP750,000 and an impairment loss of GBP2,949,000 was
recognised against amounts due from Cellcast UK Limited- refer to
notes 13 and 16 for further detail. The recoverable amounts were
assessed based on the market capitalisation of the group at 31
December 2018.
Mike Neville
Non-Executive Chairman
Chief Executive's statement
The second half of 2018 has proven more challenging than the
second half of 2017 for both the core UK business and the East
African consultancy service and this has continued into the first
quarter of 2019. The consultancy services continue to be impacted
by increased taxation and increased regulation of the gaming sector
in East Africa.
The group has undertaken a full review of the UK business and
the resources allocated to international businesses to see where
savings can be made. In the UK, the first of these initiatives has
been to make savings in operation and production costs.
2018 Results
Cellcast plc's (the "group's") total operating revenues amounted
to GBP11.3 million in 2018, compared to GBP12.0 million in 2017, a
decrease of 6%.
The group's interactive broadcasting activities in the UK
generated GBP10.9 million of revenue (2017: GBP11.3 million), which
represents a decrease of 4%.
The group's income from the provision of management services and
consultancy to overseas gaming and lottery operators generated
GBP395,000 of revenue (2017: GBP660,000), a decrease of 40%. This
reduction is due to the adverse effect of a new taxation rate on
the business of the group's clients in Kenya. This resulted in the
bonus payments due to the group for 2018 of GBP265,000, forming
part of the service remuneration, not being realised. The group is
working to collect monies due to it from its clients in Kenya and
expects to receive most of these monies in 2019, although the
directors estimate that GBP293,000 will be recovered more than a
year after 31 December 2018.
Cost of sales were down 2% on the previous year. In 2018, they
amounted to GBP11.0 million, compared to GBP11.2 million in 2017.
The group's gross profit amounted to GBP0.3 million in 2018
compared to GBP0.8 million in 2017. This decrease is mainly due to
the loss of the bonus forming part of the overseas consultancy
services.
General and administrative costs decreased by 13%, from
GBP565,000 in 2017 to GBP489,000 in 2018. These costs exclude the
foreign exchange loss of GBP26,000 in 2018 (2017: loss of
GBP30,000). Approximately 53% of these costs were personnel costs
(2017: 58%). Amortisation and depreciation expenses for 2018 were
GBP80,000, a GBP13,000 decrease on those of 2017 (GBP93,000).
After taking into account the net interest and tax the total
loss for 2018 was GBP250,000 (2017: loss of GBP647,000). 2018
earnings per share was negative 0.3p (2017: negative earnings per
share of 0.8p). The Strategic report, set out on pages 4 and 5 of
this Annual Report and Accounts, gives a more extensive description
of the group's operations during the year and technological
developments.
The group's total assets have reduced from GBP3,317,000 at 31
December 2017 to GBP2,517,000 at 31 December 2018.
The company only result for the year is affected by an
impairment loss of GBP461,000 (2017: GBPnil) recognised against the
carrying value of the company's investment in its 100% subsidiary
undertaking; Cellcast UK Limited - refer to note 13 for further
detail. A further impairment loss of GBP2,949,000 has been
recognised against amounts due from Cellcast UK Limited - refer to
note 16 for further detail. These impairment losses have led to a
reduction in the total assets of the company from GBP4,160,000 at
31 December 2017 to GBP750,000 at 31 December 2018.
Funding
At 31 December 2018, the group had a net cash balance of GBP0.7
million (2017: GBP1.1 million). The decrease was mainly due to the
losses incurred during the year. The total assets at 31 December
2018 amounted to GBP2.5 million, a decrease of GBP0.8m on the
previous year.
Outlook
Unfortunately trading in the first quarter of 2019 has continued
the pattern of the second half of 2018 and the group hasn't yet
seen an upturn since the trading update announced on 27 November
2018.
With respect to the East African consultancy services, the group
is looking to diversify away from gaming activities to support
other transactional applications that are not subject to the tax
and other regulatory restrictions that have damaged the sector over
the last 18 months.
In the core UK business the group has undertaken a further
review of the staffing costs and made some adjustments in light of
the reduced trading. The decline in revenue is driven by the
decline in mobile traffic generated by the core TV business which
is impacted by global changes in viewing habits. However, the
decline in TV driven revenues has been partially offset by
continued growth in our online business. Online revenues grew by
15% in 2018 to GBP4.5m from GBP3.9m in 2017. The group is in the
process of further optimising its online properties to improve its
performance further. This potential is impacted by uncertainty
regarding the implementation of the Government's online content
verification programmes.
As noted in greater detail in the Chairman's statement on page
1, in light of the decline in the business and its prospects for
the future, the Board is currently exploring all options available
to the Company and its subsidiary, Cellcast UK Ltd.
Craig Gardiner
Chief Executive Officer
Strategic report
Review of business
The group's main core activity from which it derives the
majority of its revenue continues in the production and
distribution of participatory television formats across multiple
digital platforms in the United Kingdom. However, revenues from
online and mobile interaction have increased and now provide a
significant income stream. These income streams combined are
referred to as 'interactive broadcasting'. Additionally, the group
has used its expertise in developing mobile applications and
services to provide consultancy services specifically in relation
to the use of mobile money. This consultancy income is mainly
derived from East Africa which leads the world in the penetration
of mobile money.
Further details on the financial performance of the company and
group during the year, and of the financial position of the company
and group at the reporting date, is given in the Chairman's
statement on page 1 and the Chief Executive's statement on pages 2
and 3.
Update on technology
2018 saw an increase in Web revenues as the trend of customers
moving away from TV and onto Online platforms continued. The
Technology Division focused on improving Web related revenues by
developing a number of new products to complement and expand upon
the Broadcast offerings. The team continued to develop and utilise
our Business Intelligence (BI) and Reporting systems to analyse
costs, revenue and profit on all products and make improvements
across the board. The Technology Division also continued to build
the Technical Services platforms and focused on some key areas:
Direct Mobile Operator Integrations, Mobile Payment Solutions
across multiple markets and App Development. The team now have a
strong platform to allow the group, and partners, to launch
products and services in multiple markets quickly and cost
efficiently which the group hopes to utilise beyond its existing
business partnerships going into 2019 and beyond.
Key Performance Indicators
The directors continue to monitor the performance of the
business through various key performance indicators ("KPIs"), of
which the principal ones are broadcast revenue, consultancy
services revenue, and overall group profitability. These KPIs
continue to be monitored along with the compliance record with
broadcasting regulations, where there have been no material
breaches in the year.
H1 2018 H2 2018 2018 2017
Full year Full year
GBP GBP GBP GBP
----------------- -------------------- ------------------
Broadcast revenue 5,442,995 5,432,082 10,875,077 11,309,626
--------- ----------------- -------------------- ------------------
Consultancy
services 330,000 65,000 395,000 660,000
--------- ----------------- -------------------- ------------------
Operating result 7,813 (308,662) (300,849) 130,557
--------- ----------------- -------------------- ------------------
The KPIs show a 4% decline in broadcast revenue and a 40%
decrease in revenues generated by its consultancy services, both of
which are consistent with previous comments relating to the
difficulties experienced by the group in the course of the
year.
This decline in revenues has had a direct impact at the
operating level, incurring losses of GBP301,000 in 2018 compared to
a profit of GBP131,000 in 2017.
The group has been working on reducing its costs to compensate
for the decline in revenue.
Consolidated statement of comprehensive income
For the year ended 31 December 2018
Note 2018 2017
GBP GBP
Revenue:
Interactive broadcasting 10,875,077 11,309,626
Management and consultancy services 395,000 660,000
------------- ---------------
Total revenue 1 11,270,077 11,969,626
------------- ---------------
Cost of sales (10,976,656) (11,151,615)
------------- ---------------
Gross profit 293,421 818,011
------------- ---------------
Operating costs and expenses:
General and administrative (514,649) (594,636)
Amortisation and depreciation (79,621) (92,818)
Total operating costs and expenses (594,270) (687,454)
------------- ---------------
Operating (loss)/profit (300,849) 130,557
Fair value gains and losses 5 1,787 12,719
Foreign exchange loss on current asset
investments - (45,315)
Impairment losses 6 - (754,358)
Finance costs 7 (2,460) (7,953)
Share of results in associate 14 - 11,913
Loss before tax 4 (301,522) (652,437)
Taxation 8 51,117 5,794
------------- ---------------
Loss for the year and total comprehensive
income attributable to owners of the
parent (250,405) (646,643)
============= ===============
Earnings per share attributable to owners
of the parent
Basic & diluted (pence) 9 (0.3p) (0.8p)
============= ===============
Consolidated statement of financial position
As at 31 December 2018
Note 2018 2017
Assets GBP GBP
Non-current assets:
Intangible assets 10 78,768 94,149
Property, plant and equipment 11 146,971 122,741
Investments 12 62,421 88,813
Trade and other receivables 16 293,228 -
581,388 305,703
----------- -----------
Current assets:
Trade and other receivables 16 1,237,915 1,954,053
Cash and cash equivalents 698,179 1,057,301
----------- -----------
1,936,094 3,011,354
----------- -----------
Total assets 2,517,482 3,317,057
=========== ===========
Capital and reserves
Called up share capital 20 2,285,398 2,285,398
Share premium account 20 5,533,626 5,533,626
Merger reserve 20 1,300,395 1,300,395
Warrant reserve 20 13,702 13,702
Retained earnings 20 (7,702,078) (7,423,494)
----------- -----------
Equity attributable to owners
of the parent 1,431,043 1,709,627
----------- -----------
Liabilities
Non-current liabilities 17 - 37,113
Current liabilities:
Trade and other payables 18 1,086,439 1,570,317
Total liabilities 1,086,439 1,607,430
----------- -----------
Total equity and liabilities 2,517,482 3,317,057
=========== ===========
Company statement of financial position
As at 31 December 2018
2018 2017
Note GBP GBP
Non-current assets
Investments in subsidiary 13 750,000 1,211,281
Trade and other receivables 16 - 2,949,078
Total assets 750,000 4,160,359
============ ============
Capital and reserves
Called up share capital 20 2,285,398 2,285,398
Share premium account 20 5,533,626 5,533,626
Warrant reserve 20 13,702 13,702
Retained earnings 20 (7,082,726) (3,672,367)
------------ ------------
Equity attributable to the owners 750,000 4,160,359
============ ============
The company's loss and total comprehensive income for the year
was GBP3,410,359 (2017: GBPnil).
Consolidated statement of changes in equity
For the year ended 31 December 2018
Attributable to owners of the parent
Share Share Merger Warrant Retained Total
Note Capital Premium Reserve Reserve Earnings
GBP GBP GBP GBP GBP GBP
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Balance at 1 January
2017 20 2,285,398 5,533,626 1,300,395 13,702 (6,776,851) 2,356,270
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Loss and total
comprehensive
income for the
year - - - - (646,643) (646,643)
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Balance at 31
December 2017 20 2,285,398 5,533,626 1,300,395 13,702 (7,423,494) 1,709,627
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Aggregate adjustments
on adoption of
IFRS 9 12 - - - - (28,179) (28,179)
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Balance as 1 January
2018 as restated 2,285,398 5,533,626 1,300,395 13,702 (7,451,673) 1,681,448
----------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Loss and total
comprehensive
income for the
year - - - - (250,405) (250,405)
Balance at 31
December 2018 20 2,285,398 5,533,626 1,300,395 13,702 (7,702,078) 1,431,043
======================= ======= ========== ========== ========== ========== ============ ==========
Company statement of changes in equity
For the year ended 31 December 2018
Share Share Warrant Retained Total
Note Capital Premium Reserve Earnings
GBP GBP GBP GBP GBP
-------------------------------- ------- ---------- ---------- ---------- ------------ ------------
Balance at 1 January
2017 20 2,285,398 5,533,626 13,702 (3,672,367) 4,160,359
-------------------------------- ------- ---------- ---------- ---------- ------------ ------------
Profit and total comprehensive - - - - -
income for the year
Balance at 31 December
2017 20 2,285,398 5,533,626 13,702 (3,672,367) 4,160,359
-------------------------------- ------- ---------- ---------- ---------- ------------ ------------
Loss and total comprehensive
income for the year 13,16 - - - (3,410,359) (3,410,359)
Balance at 31
December 2018 20 2,285,398 5,533,626 13,702 (7,082,726) 750,000
================================ ======= ========== ========== ========== ============ ============
Cellcast plc has not presented its own income statement as
permitted by Section 408 of the Companies Act 2006
Consolidated statement of cash flows
For the year ended 31 December 2018
2018 2017
GBP GBP
Net cash outflow from operations 23a (268,192) (154,448)
Net cash (outflow)/inflow from investing
activities 23b (88,470) 118,467
Net cash used in financing activities 23c (2,460) (7,953)
Net decrease in cash and cash equivalents (359,122) (43,934)
---------- ----------
Cash and cash equivalents at beginning of
year 1,057,301 1,101,235
Cash and cash equivalents at end of year 23d 698,179 1,057,301
========== ==========
No separate company statement of cash flows is presented as the
company holds no cash at 31 December 2018 (2017: GBPnil).
Notes to the consolidated financial statements
The figures for the years ended 31 December 2018 and 2017 do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The figures for the year ended 31 December
2018 have been extracted from the statutory accounts for that year,
on which the auditor has issued an unqualified audit report, which
have yet to be delivered to the Registrar of Companies. The figures
for the year ended 31 December 2017 have been extracted from the
statutory accounts for that year which have been delivered to the
Registrar of Companies and on which the auditor has issued an
unqualified audit report. No reference was made to any matter to
which the auditor drew attention by way of emphasis and no
statement has been made by the auditor under Section 498(2) or (3)
of the Companies Act 2006 in respect of either of these sets of
accounts. This announcement was approved by the board of directors
and authorised for issue on 14 May 2019.
The consolidated and company financial statements for the years
ended 31 December 2018 and 2017 have been prepared in accordance
with International Financial Reporting Standards adopted by the
International Accounting Standards Board ('IASB') and
interpretations issued by the International Financial Reporting
Interpretations Committee of the IASB (together 'IFRS') as endorsed
by the European Union. The information in this preliminary
statement has been extracted from the audited financial statements
for the year ended 31 December 2018 and as such, does not contain
all the information required to be disclosed in the financial
statements prepared in accordance with the International Financial
Reporting Standards ('IFRS').
Accounting policies
The consolidated and company financial statements have been
prepared under the historical cost convention, modified to include
certain financial instruments at fair value, and in accordance with
EU adopted IFRS.
Monetary amounts in these financial statements are rounded to
the nearest whole GBP1, except where otherwise indicated.
Adoption of new and revised standards and interpretations
For the preparation of these financial statements, the following
new or amended standards are mandatory for the first time for the
financial year beginning 1 January 2018.
-- IFRS 9 Financial instruments (effective 1 January 2018)
-- IFRS 15 Revenue from contracts with customers (effective 1 January 2018)
-- Amendments to IFRS 2 Classification and Measurement of
Share-based Payment Transactions (effective 1 January 2018)
-- IFRIC 22 Foreign currency transactions and advance
consideration (effective 1 January 2018)
IFRS 9
IFRS 9 'Financial instruments' replaces IAS 39 'Financial
Instruments: Recognition and measurement', the adoption of IFRS 9
changes the group's accounting policy for un-quoted equity
investments. The group's un-quoted equity investment was previously
accounted for at cost less impairment, rather than fair value,
using a specific exemption available under IAS 39. Under IFRS 9
there is no such exemption and the investment is required to be
measured at fair value. In accordance with IFRS 9, the difference
between the IAS 39 carrying value of this investment at the date of
initial application of IFRS 9 (1 January 2018) and its fair value
under IFRS 9 at that date has been recognised in opening retained
earnings in the current year. The group's financial assets
(previously classified as loans and receivables) and financial
liabilities arising from normal operations, such as trade
receivables, amounts owed by group undertakings, trade payables and
accruals, continue to be recognised under the amortised cost model
and there was no adjustment to amounts previously recognised, on
transition to IFRS 9.
IFRS 15
IFRS 15 'Revenue from contracts with customers' replaces IAS 18
'Revenue'. The directors have considered the impact of implementing
IFRS 15 and considered the performance obligations in the group's
contracts with customers and the basis on which the revenue from
those performance obligations should be recognised ('at a point in
time' or 'over time'). The resulting accounting policy under IFRS
15 (refer to 'Revenue recognition' accounting policy) does not lead
to any adjustment to amounts previously recognised for revenue
under IAS 18.
Amendments to IFRS 2 and IFRIC 22
The implementation of the amendments to IFRS 2 and IFRIC 22
above did not result in any adjustments to amounts previously
recognised.
Standards issued but not yet effective
The following standards, amendments and interpretations to
existing standards have been published but are not effective and
have not been early adopted by the group or the company.
-- IFRIC 23 Uncertainty over income tax treatments (effective 1 January 2019)
-- Annual improvements 2015-2017 cycle
-- Amendments to IFRS 9: Prepayment features with Negative Compensation
It is not anticipated that the adoption of the above standards,
amendments and interpretations of existing standards will have a
material impact on the group or company financial statements in the
period of initial application. IFRS 16- 'Leases' is also effective
for periods commencing 1 January 2019 and will result in almost all
leases being recognised on the statement of financial position by
lessees, as the distinction between operating and finance leases is
removed. Under the new standard, an asset (the right to use the
leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-value
leases. This is not expected to have any impact because the group
doesn't currently hold any leases.
Going concern
During the year ended 31 December 2018, the group recorded a
loss of GBP250,405. The group had net cash of GBP698,179 as at 31
December 2018 and it had net current assets of GBP849,655.
The directors have carefully considered whether or not it is
appropriate to adopt the going concern basis in preparing the 2018
financial statements. The directors have reviewed the group's
detailed cash forecast to ensure that the group's current working
capital and credit facilities in place are sufficient for the
foreseeable future. This assessment is based upon forecasts
following the reduction in the revenue of the UK television
business together with the continued reduction in operational costs
implemented over the year; it also assumes the maintenance of
existing relationships with key suppliers. During the prior year,
the group made a 100% provision for the funds invested in Lexinta.
The failure to recover these has no impact on the day to day
business of the group and company, which has sufficient funds for
its normal operations.
After making enquiries, the directors have concluded that the
group and company have adequate resources to continue trading for
the foreseeable future. For these reasons, they continue to adopt
the going concern basis of accounting in preparing the group and
company financial statements.
Revenue recognition
Revenue is recognised at an amount that reflects the
consideration to which the group is expected to be entitled in
exchange for transferring goods or services to a customer. For each
contract with a customer, the group: identifies the contract with a
customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates
the transaction price to the separate performance obligations on
the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner
that depicts the transfer to the customer of the goods or services
promised.
The group generates revenue in relation to broadcast related
income and the provision of management and consultancy services
which is measured at the fair value of the consideration received
or receivable net of discounts, VAT and other sales related
taxes.
Revenue from broadcast related revenue arises from customers
interacting with the group's television shows, the revenue is
recognised immediately as the service is provided at the time of
the call or SMS/ online interaction.
Revenue generated from the provision of management and
consultancy services is recognised on a straight-line basis over
the period during which the services are provided.
Accounting judgements and key sources of estimation
uncertainty
The directors consider the critical accounting judgements and
key sources of estimation uncertainty used in the financial
statements and concluded that the main areas are:
-- Classification of investments. Management have considered
whether the group has significant influence or control in
classifying its investments. Details of these judgements are
provided in notes 12 and 14.
-- The group's equity investment in 2Giraffes LLP (see note 12)
is measured at fair value, management have applied judgement in
determining that the most appropriate basis for measuring fair
value is by using the group's percentage share of net asset value
of the investee. Net asset value is considered the most appropriate
basis due to the investee's underlying trading performance and
perceived value held within the website domain owned by the
investee. This fair value basis represents a level 3 valuation
methodology in the IFRS 13 hierarchy whereby inputs other than
quoted prices that are observable for the asset and observable
inputs for the asset have been used.
-- Certain of the group's trade receivables due from its Kenyan
management and consultancy services' clients are expected to be
recovered in more than one year from the reporting date. Management
have exercised judgement in estimating this amount at GBP293,228
based on the current expected payment profile of amounts due.
Management have also exercised judgement in determining the full
receivable due from these services of GBP493,228 to be fully
recoverable and thus have not recognised any provision for
impairment against this receivable. This judgement is based on the
on-going relationship with the customer and payment plan in
place.
-- Management have exercised judgement in determining the
recoverable amount of the company's interests in its 100% owned
subsidiary undertaking; Cellcast UK Limited. The company's total
interests comprising of a fixed asset investment and a group
receivable has been calculated using the market capitalisation of
the company based on its share price at the reporting date.
Management believe this is appropriate because the entire trade of
the group is carried out through Cellcast UK Limited. The expected
recoverable amount is GBP750,000 and the company has applied the
impairment first to the group receivable (see note 16) with the
excess recognised against its investment (see note 13).
These judgements are based on historical experience and various
other assumptions that management and the board of directors
believe are reasonable under the circumstances and are discussed in
more detail in the relevant notes. The group also makes estimates
and judgements concerning the future and the resulting estimate
may, by definition, vary from the related actual results.
1. Segmental reporting
The group's interactive broadcasting revenues are almost
entirely from broadcasting related activities on Sky, Freeview and
Freesat channels as well as on webcams and mobile.
The financial information is presented to the executive
management team who are responsible for making financial decisions,
as one operating unit which operates in one geographical unit. The
executive management team make their decisions based upon this
information. The executive management team comprises the chief
executive officer and the chief financial officer. All non-current
assets are in the UK.
The group has three significant telecom aggregators, generating
67% of the group's broadcasting related revenue. The three telecom
aggregators contribute GBP3,449,806, GBP2,002,032 and GBP1,829,474
of the group's total revenue (2017: 66% representing GBP4,239,574,
GBP1,655,082, and GBP1,577,385).
Revenue is further split below between revenue generated by:
2018 2017
GBP GBP
Interactive broadcasting 10,875,077 11,309,626
Management and consultancy services 395,000 660,000
11,270,077 11,969,626
=============== ===========
An analysis of the geographical location of the group's revenue
is as follows:
2018 2017
GBP GBP
UK 10,875,077 11,309,626
Rest of the world 395,000 660,000
11,270,077 11,969,626
=============== ===========
Revenue relates to broadcast related income and the provision of
management and consultancy services (refer to revenue recognition
accounting policy). The broadcast related income arises from
customers interacting with the group's television shows, the cash
is received at, or shortly after, the point when the service is
provided at the time of the call or SMS/ online interaction. Fees
for the provision of management and consultancy services are billed
monthly on a straight-line basis over the period during which the
services are provided. The timing of the satisfaction of the
groups' performance obligations is therefore in line with the
typical timing of invoicing and payment from customers. As a
result, the only balances recognised in respect of the application
of IFRS 15 to the group's contracts with customers, as at 31
December 2017 and as at 31 December 2018 were trade receivables and
accrued income. There were no impairment provisions or impairment
losses recognised on these debtor balances in the current or prior
year. As there are no differences in how the nature, amount, timing
and uncertainty of revenue and cash flows are affected by economic
factors within each of the above revenue streams, no further
disaggregation applies.
2. Staff costs
2018 2017
GBP GBP
Wages and salaries (including directors) 817,567 868,757
Social security costs 163,942 164,411
Other pension costs 70,240 74,620
1,051,749 1,107,788
========== ==========
Staff costs of GBP283,291 (2017: GBP328,996) are included in
general and administrative expenses and GBP768,458 (2017:
GBP778,792) are included in cost of sales. The parent company staff
costs were GBPnil (2017: GBPnil).
Average monthly number of employees by activity (including
directors):
2018 2017
Production 10 10
Technical 7 8
Management 3 4
Administration 2 2
22 24
===== =====
All employees are employed by the subsidiary.
2. Staff costs (continued)
2018 2017
Key management compensation: GBP GBP
Salaries, other short-term employee benefits
and employer's NI costs 356,330 393,336
Post-employment benefits 69,250 93,630
425,580 486,966
============================================= ========
Key management personnel comprise the statutory directors.
3. Directors' emoluments
Salary & Fees Pension Contribution Sub total
2018 GBP GBP GBP
----------------------- ------------- -------------------- ----------
Craig Gardiner 91,150 36,000 127,150
Emmanuelle Guicharnaud 88,700 33,250 121,950
Bertrand Folliet 51,000 - 51,000
Michael Neville 42,721 - 42,721
Samuel Malin 24,000 - 24,000
----------------------- ------------- -------------------- ----------
Total 297,571 69,250 366,821
======================= ============= ==================== ==========
In addition to the amounts above, GBP11,500 was paid to Andrew
Wilson during the year in respect of his termination package.
Salary & Fees Pension Contribution Sub total
2017 GBP GBP GBP
--------------------------- ------------- -------------------- ---------
Andrew Wilson - resigned
4 July 2017 70,000 30,000 100,000
Craig Gardiner - appointed
4 July 2017 72,000 38,630 110,630
Emmanuelle Guicharnaud 90,000 25,000 115,000
Bertrand Folliet 60,000 - 60,000
Michael Neville 42,000 - 42,000
Samuel Malin - appointed
1 August 2017 10,000 - 10,000
--------------------------- ------------- -------------------- ---------
Total 344,000 93,630 437,630
=========================== ============= ==================== =========
See Note 21 for details of share options granted to the
directors.
4. Loss before tax
Loss before tax is stated after charging/(crediting): 2018 2017
GBP GBP
Depreciation - owned assets 64,240 67,746
Amortisation of intangible assets 15,381 25,072
Auditor's remuneration - statutory audit
of parent and consolidated accounts 30,000 33,000
Auditor's remuneration- accounting services-
statutory accounts 10,000 7,000
Auditor's remuneration- accounting services-
interim accounts 7,000 7,300
Foreign exchange (gains)/losses (32,207) 29,672
5. Fair value gains and losses
2018 2017
GBP GBP
Fair value gains on financial assets 1,787 12,719
====== =======
6. Impairment losses - Group
The impairment loss shown separately on the face of the
statement of comprehensive arose in the prior year from a 100%
provision against the following assets:
2018 2017
GBP GBP
Other receivables - being cash due from
redemption of Lexinta fund investment
(see note 15 and below) - 309,973
Amounts due from associate - other receivables
(Global Gaming) - 369,427
Interest in associate (Global Gaming
- see note 14) - 74,958
------- ----------
- 754,358
------- ----------
In its prior year interim results to 30 June 2017, announced on
25 September 2017, the group stated it had elected to redeem its
investments in the Lexinta Fund. This followed the decision of the
fund manager of the Lexinta Fund to liquidate the fund's entire
portfolio.
After these interim results were published, the group had not
received the balances due at the reporting date and, in light of
the ongoing investigation by the Swiss authorities into Lexinta AG
(the manager of the Lexinta fund) and Mr Bismark Badilla (the
individual fund manager), the Board of Cellcast concluded that it
was appropriate to make a provision for 100% of the company's
interest in the Lexinta fund in the prior year.
These investments comprised a current asset investment held
directly and the group's interest in Global Gaming Limited, a
company whose sole activity was to invest in the Lexinta fund.
Therefore, in the prior year, an impairment charge of GBP309,973
was recognised in respect of Other Receivables, being the cash due
from the redemption of the investment held directly, GBP369,427 in
respect of amounts due from Global Gaming Limited and GBP74,958 in
respect of the carrying value of the group's investment interest in
Global Gaming Limited.
These investments and receivables continue to be provided for in
full at 31 December 2018.
7. Finance costs
2018 2017
GBP GBP
Interest expense on financial liabilities
measured at amortised cost 2,460 7,953
====== ======
8. Taxation
2018 2017
GBP GBP
Current tax
In respect of the current year (51,117) (5,794)
(51,117) (5,794)
=========== ====================
Factors affecting the tax credit
for the year
2018 2017
GBP GBP
Loss before taxation (301,522) (652,437)
----------- --------------------
Group loss on ordinary activities
before taxation multiplied by
the effective standard rate of
UK corporation tax of 19% (2017:
19.25%) (57,289) (125,594)
Effects of:
Non-deductible expenses (11,272) 118,098
Tax credit - (5,794)
Research and development tax (51,117) -
credit
Unutilised tax losses carried
forward 68,561 7,496
=========== ====================
(51,117) (5,794)
=========== ====================
At the reporting date, the group had estimated tax trading
losses of GBP1.9 million (2017: GBP1.5 million) which subject to
the agreement of the HM Revenue & Customs and overseas tax
authorities, are available to carry forward against future profits
of the same trade. No deferred tax asset has been recognised on
these losses as timings of future profits are uncertain.
A reduction in the UK corporation tax rate from 20% to 19% and
subsequently to 17% was substantively enacted in September 2016 and
will take effect from 1 April 2017 and 1 April 2020
respectively.
9. Earnings per share
The calculations of basic and diluted earnings per ordinary
share are based on the following results:
2018 2017
GBP GBP
Loss for the financial year (250,405) (646,643)
Weighted average number of ordinary
shares 77,513,224 77,513,224
Basic and diluted earnings per share
(pence) (0.3p) (0.8p)
=========== ===========
There was no dilutive effect from the issued share options
because the exercise prices are above market price. The number of
share options outstanding at the year-end was 1,050,000 (2017:
2,650,000).
10. Intangible assets Development
Licences costs Total
GBP GBP GBP
Cost
At 1 January 2017 781,761 2,692,716 3,474,477
At 31 December 2017 781,761 2,692,716 3,474,477
At 31 December 2018 781,761 2,692,716 3,474,477
========= ============ ==========
Amortisation
At 1 January 2017 675,460 2,679,796 3,355,256
Charge for the year 13,767 11,305 25,072
--------- ------------ ----------
At 31 December 2017 689,227 2,691,101 3,380,328
Charge for the year 13,766 1,615 15,381
At 31 December 2018 702,993 2,692,716 3,395,709
========= ============ ==========
Net book value at 31 December
2018 78,768 - 78,768
========= ============ ==========
Net book value at 31 December
2017 92,534 1,615 94,149
========= ============ ==========
Net book value at 1 January
2017 106,301 12,920 119,221
========= ============ ==========
Included within Licences is an individual channel licence with a
carrying value of GBP78,000 (2017: GBP91,000). The asset will be
fully amortised in 6 years (2017: 7 years).
11. Property, plant and equipment
Broadcasting
equipment
GBP
Cost
At 1 January 2017 2,014,557
Additions 49,884
-------------
At 31 December 2017 2,064,441
Additions 88,470
At 31 December 2018 2,152,911
=============
Depreciation
At 1 January 2017 1,873,954
Charge for the year 67,746
-------------
At 31 December 2017 1,941,700
Charge for the year 64,240
-------------
At 31 December 2018 2,005,940
=============
Net book value at 31 December
2018 146,971
=============
Net book value at 31 December
2017 122,741
=============
Net book value at 1 January
2017 140,603
=============
12. Non-current investments - Group
At 31 December 2018, the group had a 35% holding in 2Giraffes
LLP. 2Giraffes LLP is a global provider of mobile internet content.
This holding is treated as an investment as the group does not have
any significant influence on the operations of 2Giraffes LLP.
The un-quoted equity investment held in 2Giraffes LLP is
measured at fair value. Fair value has been calculated based on the
group's percentage share of the net asset value of the investee.
This represents a level 3 valuation in the IFRS 13 hierarchy
whereby inputs other than quoted prices that are observable for the
asset and observable inputs for the asset have been used.
The directors do not consider that 'significant influence' is
exercised by the company over the LLP and therefore, despite the
holding of 35%, the investment is not accounted for as an associate
undertaking. This is on the basis that a sole member has the
remaining 65% holding and the company does not have voting
rights.
2018 2017
GBP GBP
Fair value
At 1 January 88,813 88,813
Aggregate adjustment on adoption of IFRS 9 (28,179) -
Net gain from fair value adjustment 1,787 -
-------- ----------------
At 31 December 62,421 88,813
======== ================
This investment was previously recognised at cost in accordance
with IAS 39 and GBP88,813 was the IAS 39 carrying value, rather
than fair value, as at 31 December 2017. In accordance with the
transitional provisions in IFRS 9, the difference between this
carrying value and the fair value of GBP60,634 under IFRS 9 at the
date of initial application (1 January 2018) has been recognised in
opening retained earnings in the current year. This opening
adjustment is shown above as 'aggregate adjustment on adoption of
IFRS 9' in the table above.
13. Non-current investments - Company
Subsidiary
undertakings
Cost GBP
At 1 January 2017, 31 December 2017 and 31
December 2018 1,211,281
==============
Allowances for impairment
Impairment charge 461,281
--------------
At 31 December 2018 461,281
==============
Net book value at 31 December 2018 750,000
==============
Net book value at 1 January 2017 and 31 December
2017 1,211,281
==============
At 31 December 2018 Cellcast plc directly owned 100% of the
issued ordinary share capital in Cellcast UK Limited, a company
incorporated in the UK whose principal business was television and
broadcasting. The registered office of Cellcast UK Limited is 184
The Terrace, The Dell, Southampton, England, SO15 2BU and the
principal place of business is Unit 22, Cochran Close, Crownhill
Industrial Estate, Milton Keynes, MK8 0AJ.
During the year, an impairment loss of GBP461,281 (2017: GBPnil)
was recognised in the company in respect of the shares held in
Cellcast UK Limited to reduce the carrying value of the investment
to its expected recoverable amount of GBP750,000.
The impairment review was triggered following a particularly
difficult trading period as reported in the group's half yearly
November 2018 trading update which has continued in the latter half
of 2018 and in to 2019. The accounting judgements and key sources
of estimation uncertainty note in accounting policies explains the
basis on which the recoverable amount was calculated. This
represents a level 1 valuation in the IFRS 13 hierarchy whereby
quoted prices that are observable for the asset have been used.
14. Associate
On 26 November 2015 the group acquired 49% of the issued share
capital of Global Gaming Limited for a total cost of GBP4. The
directors have assessed that the group has significant influence,
but not control over Global Gaming Limited and have accounted for
the investment as an associate. Details of the associate
undertaking and the movements in the investment in the year are as
follows:
Company Country of Class Shares and voting Type of holding Principal business
incorporation rights held %
Global Gaming China Ordinary 49 Associate Investment
Limited management
The registered office of Global Gaming Limited is 13/F, Times Tower, 391-407 Jaffe Road, Wanchai,
Hong Kong.
2018 2017
GBP GBP
At 1 January - 63,045
Share of associate result - 11,913
Impairment - (74,958)
---------------- -----------------
At 31 December - -
================ =================
In the prior year, at the reporting date the directors
considered the group's interest in the associate to be
irrecoverable. Therefore, an impairment was recognised in the prior
year (see note 6). At the reporting date, the directors continue to
consider the group's interest in the associate to be
irrecoverable.
At the reporting date, the carrying value of the amount due from
the associate stood at GBPnil (2017: GBPnil).
15. Current asset investments
In May 2015, the group invested US$ 260,000 (GBP165,000) in a
treasury product managed by the Lexinta Fund. This investment was
classified in current assets as the capital and interest generated
could only be withdrawn on a yearly basis at the anniversary date
of the investment. In the prior year, the group redeemed the
investment and re-classified the disposal proceeds due from the
Lexinta fund to other receivables, subsequent to this the amount
due was provided for in full (refer to note 6 for further
details).
In September 2016, the group invested US$ 250,000 (GBP168,350)
in the 'Ventury Fund Inc'. This investment was classified in
current assets as the capital and interest generated could only be
withdrawn on a yearly basis at the anniversary date of the
investment. In the prior year, the group redeemed the investment
for GBP197,103.
2018 2017
GBP GBP
At 1 January - 510,920
Fair value gain - 12,719
Foreign exchange loss - (45,315)
Redemption - (168,351)
Reclassified to other receivables on redemption - (309,973)
At 31 December - -
====== ==========
16. Trade and other receivables
Group 2018 2017
GBP GBP
Non-current assets
Trade receivables 293,228 -
--------- ---------
Current assets
Trade receivables 691,109 1,349,103
Other receivables 127,675 150,639
Prepayments and accrued income 419,131 454,311
--------- ---------
1,237,915 1,954,053
--------- ---------
Total trade and other receivables 1,531,143 1,954,053
========= =========
Company 2018 2017
GBP GBP
Amounts owed by group undertaking (loans and
receivables) - 2,949,078
========= =========
Following a review of the amounts due by the group undertaking,
the directors have considered the projected performance of Cellcast
UK Limited and concluded that the full amount was irrecoverable. As
a result, an impairment loss of GBP2,949,078 (2017: GBPnil) was
recognised in the Company only profit or loss account. In the prior
year, the directors deemed that it was appropriate to classify the
amounts due after more than one year as this reflected the
timescale on which recovery was expected to occur. No interest was
charged on this balance in the current or prior year.
In calculating the impairment, the company assessed that the
group receivable was 'underperforming' and as such the risk of
default occurring, and the subsequent impairment calculated, took
into consideration all possible default events over the expected
life of the receivable ('the lifetime expected credit losses').
17. Non-current liabilities
2018 2017
GBP GBP
Trade payables - 37,113
- 37,113
==== ======
18. Trade and other payables
2018 2017
GBP GBP
Trade payables 311,509 498,425
Other taxes & social security 170,899 170,260
Other payables 75,107 361,911
Accruals 528,924 539,721
------------- ---------
1,086,439 1,570,317
============= =========
Credit payment profile in days 35 days 49 days
============= =========
The credit payment profile in days calculation excluded the
long-term trade payable in the prior year, which was contractually
due in over one year from the reporting date, as including this
long term element would have skewed the trade payable days.
19. Financial instruments and financial risk management
The group's financial instruments as at 31 December 2018 and
2017 mainly comprise cash and various items arising directly from
its operations, such as trade and other receivables and trade and
other payables. The main purpose of these financial instruments is
to provide working capital for the group. The group's policy is to
obtain the highest rate of return on its cash balances and current
asset investments, subject to having sufficient resources to manage
the business on a day to day basis and not exposing the group to
unnecessary risk of default.
(a) Risk management policies
The group's finance function is responsible for procuring the
group's capital resources and maintaining an efficient capital
structure, together with managing the group's market, liquidity,
foreign exchange, interest and credit risk exposures.
All treasury operations are conducted within strict policies and
guidelines that have been approved by the directors.
(b) Financial assets and liabilities
The totals for each category of financial instrument, measured
in accordance with IFRS 9 as detailed in the accounting policies,
are as follows:
As at 31 December 2018 Currency Financial Financial Total
assets at liabilities carrying
amortised at amortised value
cost cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade receivables and
accrued income Sterling 1,265 - 1,265
Other receivables Sterling 128 - 128
Cash and cash equivalents Sterling 698 - 698
Financial liabilities
Trade payables Sterling - (312) (312)
Other payables Sterling - (75) (75)
Accruals Sterling - (529) (529)
2,091 (916) 1,175
=========== ============== ==========
As at 31 December 2017 Currency Financial Financial Total
assets liabilities carrying
at amortised at amortised value
cost cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade receivables and
accrued income Sterling 1,653 - 1,653
Other receivables Sterling 151 - 151
Cash and cash equivalents
Financial liabilities Sterling 1,057 - 1,057
Trade payables Sterling - (498) (498)
Other payables Sterling - (362) (362)
Accruals Sterling - (540) (540)
Trade payables > 1 year Sterling - (37) (37)
2,861 (1,437) 1,424
============== ============== ==========
In addition to the above, the group also held an un-quoted
equity investment which is recognised at fair value under IFRS 9,
the fair value at the reporting date was GBP62k. The carrying value
of this investment at 31 December 2017 was GBP89k measured at cost
in accordance with IAS 39 - refer to note 12 for further
details.
The carrying value of all financial instruments is not
materially different from their fair value. It is, and has been
throughout the year, the group's policy that no trading in
financial instruments shall be undertaken. Cash and cash
equivalents attract floating interest rates. Accordingly, their
carrying amounts are considered to approximate to fair value.
(c) Credit risk
Credit risk is the risk that the counterparty will default on
its contractual obligations resulting in financial loss to the
group. Maximum credit risk at 31 December was as follows:
2018 2017
GBP'000 GBP'000
Trade receivables and accrued income 1,265 1,653
Other receivables 128 151
Non-current investments 62 89
Cash and cash equivalents 698 1,057
2,153 2,950
======= =======
Before accepting a new customer, the group assesses both the
potential customer's credit quality and risk. Customer contracts
are drafted to reduce any potential credit risk to the group. Where
appropriate the customer's recent financial statements are
reviewed. The average credit period given on trade receivables was
45 days (2017: 54 days).
Trade receivables are regularly reviewed for impairment loss.
The group did not write off any trade receivables or accrued income
during the current or prior year. There were no impairment
provisions or impairment losses recognised on trade receivables or
accrued income in the current or prior year.
In the prior year, an impairment of GBP309,973 was recognised in
respect of other receivables and an impairment of GBP369,427 was
recognised in respect of amounts due from associates. For more
details see note 6.
Ageing of the trade receivables and accrued income is as
follows:
2018 2017
GBP'000 GBP'000
Current 749 954
Up to 3 months 228 571
Over 3 months 288 128
1,265 1,653
======= ==========
The total of the trade receivables which were past due at the
reporting date but not impaired was GBPnil (2017: GBPnil). Of the
total trade receivables and accrued income balance amounting to
GBP1,265,000, GBP835,000 was collected by 2 May 2019. The directors
are confident as to the recoverability of the remaining balance and
thus no impairment of the amount has been recognised in the
financial statements at 31 December 2018.
All cash balances are held in established UK financial
institutions.
The Group does not hold any collateral as security or any other
credit enhancements, nor does it hold any derivatives which
mitigate credit risk.
Receivables are considered to be in default when the principal
is more than 90 days past due, based on an assessment of past
payment practices and the likelihood of such overdue amounts being
recovered. Receivables are written off by the Group when there is
no reasonable expectation of recovery, such as when the
counterparty is known to be going bankrupt, or into liquidation or
administration.
The Group calculates lifetime expected credit losses for trade
receivables using a portfolio approach. Receivables are grouped
based on the credit terms offered and the type of product sold. The
probability of default is determined at the year-end based on the
aging of the receivables and historical data about default rates on
the same basis. That data is adjusted if the Group determines that
historical data is not reflective of expected future conditions due
to changes in the nature of its customers and how they are affected
by external factors such as economic and market conditions.
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with financial
liabilities. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
Contractual cash flows relating to the group's financial
liabilities are as follows:
2018 2017
GBP'000 GBP'000
Trade payables (<6months) (312) (498)
Other payables (<6months) (75) (362)
Accruals (<6months) (529) (540)
Greater than 12 months - (37)
-------- --------
Cash flows on financial liabilities (916) (1,437)
======== ========
The average credit period received on trade payables was 34 days
(2017: 49 days).
(e) Interest rate risk
Interest rate risk is the risk that the future cash flows
associated with a financial instrument will fluctuate because of
changes in market interest rates. The interest rates on cash and
cash equivalents are low, such that interest rate risk is
minimal.
The only interest-bearing loan was fully repaid in the year. At
the reporting date, GBPnil (2017: GBP300,000) was included within
other payables. The interest rate on this loan was 2% per annum.
The impact of a 1% interest rate increase would represent an annual
sum of GBPnil (2017: GBP3,000).
(f) Currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. Currency risk arises on financial assets
and liabilities and investments in associates that are denominated
in a currency other than the functional currency of the entity by
which they are held.
In the current and prior year, the risk relates to cash balances
held of US$165,000 (2017: US$476,000).
2018 2017
GBP'000 GBP'000
Impact of 10% increase US$ foreign
exchange rate against pound
sterling 13 32
Impact of 10% decrease US$ foreign
exchange rate against pound
sterling (13) (32)
========= =========
At the reporting date the group has no financial assets or
liabilities (except bank balances) denominated in a currency other
than the functional currency.
(g) Capital management
The group's main objective when managing capital is to protect
returns to shareholders by ensuring the group will continue to
trade for the foreseeable future.
The group considers its capital to include cash, share capital,
share premium, retained earnings, and other equity reserves.
2018 2017
GBP'000 GBP'000
Net cash 698 1,057
Total equity 1,431 1,710
-------------- --------- ---------
The group has an undrawn overdraft facility with Barclays of up
to GBP150,000 (2017: GBP150,000).
20. Share capital and reserves
Group and Company
2018 2017
Authorised GBP No of shares GBP No of shares
Ordinary shares of 1p
each 1,489,736 148,973,552 1,489,736 148,973,552
Deferred shares of 2p
each 1,510,264 75,513,224 1,510,264 75,513,224
3,000,000 224,486,776 3,000,000 224,486,776
========== ============= ========== =============
Issued
Ordinary shares of 1p
each 775,134 77,513,224 775,134 77,513,224
Deferred shares of 2p
each 1,510,264 75,513,224 1,510,264 75,513,224
2,285,398 153,026,448 2,285,398 153,026,448
========== ============= ========== =============
Ordinary shares, which carry no right to fixed income, each
carry the right to one vote at general meetings of the company.
The deferred shares of 2p have no voting rights, no rights to
dividends and negligible rights on return of capital. They are not
listed on any stock exchange.
The share options granted over the shares of the company are set
out in note 21.
The nature and the purpose of each reserve in equity is
described as follows:
Retained earnings
Cumulative profit and loss net of distribution to owners.
Share premium account
The share premium account represents the premium paid on issue
of ordinary shares in excess of their nominal value.
Merger reserve
The merger reserve arises as a result of a group reorganisation
where the company acquired Cellcast UK Limited which was accounted
for in accordance with merger accounting principles.
Warrant reserve
Warrants represent subscription rights for ordinary shares in
Cellcast plc and the warrant reserve represents the fair value of
the warrants at the date of issue. All warrants are expired.
21. Share options
The group operates two different share option schemes, an
Enterprise Management Incentive (EMI) share option plan and a
General share option plan. Options are available to be granted to
directors, staff, consultants and independent contractors as part
of their remuneration package and they act as an incentive to
assist with the future performance of the group.
During the year ended 31 December 2018 the company had
share-based payment arrangements, all of which have vested, and
expire 10 years after grant as follows:
EMI share option plan
Date of grant 25/07/08 27/10/10
Number granted 1,200,000 450,000
Exercise price GBP0.03 GBP0.04
General share option plan
Date of grant 25/07/08 27/10/10
Number granted 400,000 600,000
Exercise price GBP0.03 GBP0.04
Options are forfeited if the employee leaves the group before
the options are exercised
Further details of share options in issue during the year are as
follows:
Share options 2018 2017
Number Weighted Number Weighted
of options average of options average
exercise exercise
price (GBP) price (GBP)
--------------------------- --------------- ------------ ---------------- ------------
Outstanding at 1 January 2,650,000 0.03 3,684,510 0.04
Expired during the
year (1,600,000) (0.03) (584,510) (0.05)
Forfeited during the
year - - (450,000) (0.04)
Outstanding at 31 December 1,050,000 0.04 2,650,000 0.03
=========================== =============== ============ ================ ============
All of the above share options outstanding at the end of the
year are exercisable and have an exercise price of GBP0.04, with a
weighted average remaining contractual life of 1.83 years (2017:
1.40 years).
The following EMI options, save those granted to Mike Neville
and Bertrand Folliet which are Unapproved Options, over the
ordinary shares of 1 pence each have been granted to the directors
and were in place at the reporting date:
2018:
Option price Number granted Date of grant
GBP
------------------------ -------------------- ------------------------ ------------------------------
Bertrand Folliet 0.04 450,000 27/10/10
Emmanuelle Guicharnaud 0.04 50,000 27/10/10
Mike Neville 0.04 50,000 27/10/10
------------------------ -------------------- ------------------------ ------------------------------
2017:
Option price Number granted Date of grant
GBP
------------------------ ------------- ----------------- --------------
Craig Gardiner 0.03 400,000 25/07/08
Bertrand Folliet 0.04 450,000 27/10/10
Emmanuelle Guicharnaud 0.03 400,000 25/07/08
0.04 50,000 27/10/10
Mike Neville 0.03 400,000 25/07/08
0.04 50,000 27/10/10
------------------------ ------------- ----------------- --------------
22. Related party transactions
Group
SMS Media Limited
SMS Media Limited has a common director and beneficial
shareholder in Bertrand Folliet. In 2018 management charges
totalled GBPnil (2017: GBP114,000). The management charges levied
by SMS Media in 2017 related to the running cost of the company's
office in Hong Kong. It was made up of rent and the employment of
local staff. Its purpose was undertaking business development in
the Greater China, South East Asia and African regions. This
resource had constituted a part of the company since November
2001.
Global Gaming Limited
In 2017 an impairment charge of GBP369,427 was recognised in
respect of amounts owed by Global Gaming Limited, an associate of
the company. After provision for impairment no amounts were due
from Global Gaming Limited at the reporting date in the current or
prior year.
Company
Cellcast UK Limited
At the reporting date GBPnil (2017: GBP2,949,078) was due from
Cellcast UK Limited, a subsidiary of the company, this amount is
net of accumulated impairment charges of GBP6,749,079 (2017:
GBP3,800,001). During the current year an impairment charge of
GBP2,949,078 (2017: nil) was recognised on amounts due from
Cellcast UK Limited- refer to note 16.
23. Cash flows
Note 2018 2017
GBP GBP
a Reconciliation of loss after tax to net
cash outflow from operating activities
Loss for the year (250,405) (646,643)
Income tax recognised in profit or loss (51,117) (5,794)
Fair value gains (1,787) (12,719)
Finance costs 2,460 7,953
Amortisation and depreciation 79,621 92,818
Impairment losses - 754,358
Share of results in associate - (11,913)
Foreign currency loss on current asset
investment 15 - 45,315
Decrease in trade and other receivables 474,027 20,497
Decrease in trade and other payables (520,991) (398,338)
Income taxes received - 18
---------- ---------
Net cash outflow from operating activities (268,192) (154,448)
Cash flow (used in) / from investing
b activities
2018 2017
GBP GBP
Purchase of property, plant and equipment (88,470) (49,884)
Proceeds received from current investment - 168,351
Net cash (outflow) / inflow from investing
activities (88,470) 118,467
========== =========
c Cash flow from financing activities
2018 2017
GBP GBP
Interest paid (2,460) (7,953)
Net cash used in financing activities (2,460) (7,953)
---------- ---------
d Cash and cash equivalents
2018 2017
GBP GBP
Cash at bank 698,179 1,057,301
Cash and cash equivalents at end of year 698,179 1,057,301
========== =========
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END
FR QXLFFKEFXBBF
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