TIDMCLTV
RNS Number : 7277M
Cellcast plc
01 May 2018
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.
1 May 2018
Cellcast Plc
("Cellcast", the "group" or the "Company")
Audited results for the year ended 31 December 2017
The Board of Cellcast Plc (AIM: CLTV) announces the Company's
audited results for the year ended 31 December 2017.
Highlights
-- Group operating revenues of GBP12.0 million (2016: GBP12.1 million), comprising:
o core interactive broadcast revenue of GBP11.3 million (2016:
GBP11.5 million); and
o technical services and consulting to overseas gaming and
lottery operators of GBP660,000 (2006: GBP620,000)
-- Cost of sales were GBP11.2 million (2016: GBP11.0 million)
-- Gross profit of GBP0.8 million (2016: GBP1.1 million)
-- Board decision to fully provide against all amounts held in
relation to the Lexinta Fund, totalling GBP754,000
-- Loss for the year after accounting for, inter alia, the
Lexinta impairment, was GBP647,000 (2016: profit of GBP645,000)
-- Net cash balance at 31 December 2017 of GBP1.1 million (31 December 2016: GBP1.1 million)
-- Loss per share of 0.8p (2016: earnings per share of 0.8p)
-- Renegotiation of supplier bandwidth agreements in July 2017
resulted in an improved performance in H2 2017.
Craig Gardiner, Chief Executive of Cellcast, commented:
"Whilst we continued to see a gradual decline in the core
interactive broadcast business throughout 2017, the reduction in
revenue from the production and distribution of participatory
television formats has been partially offset by an increase in
revenues from online and mobile interaction. In addition, revenue
contribution from the group's overseas consultancy operations also
improved.
"The core focus of the Board in 2017 has been to control the
cost base in all areas of the business. The renegotiation of our
supplier bandwidth agreements in July 2017 has led to the Company
trading profitably at the operating profit level in the second half
of the financial year.
"Whilst the Board has taken the prudent approach of making a
100% provision for the funds held by the group in relation to the
Lexinta Fund, this has not had an impact on the day to day running
of the business, which continues to have sufficient funds for its
normal operations."
For further information:
Cellcast Plc 020 3376 9420
Mike Neville - Non-Executive
Chairman
Craig Gardiner - Chief Executive
Officer
Emmanuelle Guicharnaud - Finance
Director
Allenby Capital Limited (Nominated
Adviser and Broker) 0203 328 5656
Nick Naylor / James Reeve
Chief Executive's statement
I am pleased to present my first review as the Chief
Executive.
The UK market has continued, as we forecast, to experience
difficult economic conditions in our core markets. This has meant
we have had to be extremely focused in our strategy, adaptable in
our thinking, and cautious in how we invest in new areas.
2017 Results
Cellcast's total operating revenues amounted to GBP12.0 million
in 2017, compared to GBP12.1 million in 2016, a decrease of
0.8%.
The group's interactive broadcasting activities in the UK
generated GBP11.3 million of revenue (2016: GBP11.5 million) which
reflects a decrease of 1.7%.
The group's income from the provision of management services and
consultancy to overseas gaming and lottery operators, which
launched during the prior year, generated GBP660,000 of revenue
(2016: GBP620,000), an increase of 6.5%.
Cost of sales amounted to GBP11.2 million, compared to GBP11.0
million in 2016. This increase of 1.8% primarily comes from the
growth in online revenues that carry more direct costs.
The group's gross profit amounted to GBP0.8 million in 2017
compared to GBP1.1 million in 2016. As was the case in 2016, the
group benefitted from the additional revenue from its overseas
consultancy activities, which compensated for the profit reduction
in its core UK broadcast services.
Following the introduction of the new bandwidth supplier
agreement during 2017 the group has been trading profitably at the
operating profit level.
General and administrative costs decreased by 5%, from
GBP593,000 in 2016 to GBP565,000 in 2017. These costs exclude the
foreign exchange loss of GBP30,000 in 2017 (2016: gain of
GBP61,000). Approximately 58% of these costs were personnel costs
(2016: 61%).
Amortisation and depreciation expenses for 2017 were GBP93,000,
a GBP30,000 decrease on those of 2016 (GBP123,000).
On 5 January 2018 the group announced its decision that the
Board considered it was appropriate to make a provision for 100% of
its interest in the Lexinta fund in its full year accounts for the
year ended 31 December 2017. The total amount recognised and the
circumstances surrounding the provision are detailed in note 6 to
the consolidated financial statements.
The group's trade receivables were significantly higher at the
reporting date due to early raising of invoices in 2017 as compared
to 2016. This has also resulted in a fall in accrued income. In
addition, as at the reporting date a significant amount of trade
receivables was due from a few large customers. This was a one-off
event and all amounts have been received since the reporting date.
The fall in other receivables is due to the provision made in
respect of amounts due from Global Gaming (as disclosed in note
6).
After taking into account the net interest, share of associate
results, impairment losses and the taxation impact and fair value
movements, the total loss for 2017 was GBP647,000 (2016: profit of
GBP645,000). 2017 earnings per share was negative 0.8p (2016:
positive earnings per share of 0.8p).
The Strategic report gives a more extensive description of the
group's operations during the year and technological
developments.
Funding
At 31 December 2017, the group had a net cash balance of GBP1.1
million (2016: GBP1.1 million).
The total assets at 31 December 2017 amounted to GBP3.3 million,
a decrease of GBP1.1m on the previous year. The decrease was mainly
due to the 100% provision on the Lexinta investment (inclusive of
gains on the investment generated in the previous two years).
Outlook
As previously announced, following the renegotiation of our
supplier bandwidth agreements in August, the second half of 2017
performed better than the first half. However, the first few months
of 2018 have proved challenging following a similar seasonal
pattern as the previous year. In addition, the group's core
revenues have been negatively impacted by the increasing
penetration of next generation satellite boxes that make it harder
for viewers to access the group's content. This has resulted in
declining revenues from the Sky platform which we are addressing
through the reorganisation of our bandwidth requirements.
As announced on 5 January 2018, the Company has made a 100%
provision for the funds invested in Lexinta. The company continues
to work with its Lawyers and other parties affected by the same
problems, but the failure to recover these monies has had no impact
on the day to day business of the group which has sufficient funds
for its normal and continuing operations.
During 2017 the group began to see the impact of the
diversification of its revenues and realise meaningful contribution
from its consultancy activity. The technical consultancy business
in East Africa has been performing well and newly developed
services are increasing its scope.
Within interactive broadcasting the continuing decline in
revenue in participatory television formats was significantly
offset by the increase in web derived income over the course of
2017. The first quarter of this year has seen continued focus on
developing and marketing our portfolio of online services to
maintain growth levels through 2018.
Craig Gardiner
Chief Executive Officer
1 May 2018
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 continued to derive significant income from its overseas
consultancy services.
Further details on the financial performance of the group during
the year is given in the Chief Executive's statement.
Update on technology
The Technology Division focused on three key areas in 2017,
Business intelligence, Capacity and bandwidth efficiency and
Technical services provision. On Business intelligence (BI), the
group has worked with partners to deploy a Broadcast BI system
based on Microsoft Azure Cloud with a front end based built
internally. These systems provide the group with fine grained
analysis of user behaviour leading to an increase in average
revenue per user ("ARPU") across the business units. Utilizing the
BI systems, the group has been able to do capacity and bandwidth
analysis across all channels in the business. By reviewing the
performance of each hour of capacity, it targeted the hours of
broadcast that were non- performing which led to a review with
suppliers to reduce the overall hours of capacity required. This
led to a reduction in Freeview capacity in 2017 and a further
reduction in Satellite bandwidth in 2018. The group has also
continued to build the Technical services department, it is now
able to provide the services developed by the Technology team to
third parties. The goal of 2018 is to grow out the Services team
and include the other development such as the BI as part of the
product offering.
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, broadcast gross
profit margins, 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 2017 H2 2017 2017 2016
Full year Full year
--------- ------------------ ------------------ ------------------
Broadcast revenue 5,469,311 5,840,315 11,309,626 11,452,101
--------------------------- --------- ------------------ ------------------ ------------------
Consultancy services 300,000 360,000 660,000 620,000
--------------------------- --------- ------------------ ------------------ ------------------
Operating (loss) / profit* (252,622) 383,179 130,557 467,247
--------------------------- --------- ------------------ ------------------ ------------------
* Excludes Lexinta provision (see note 6 of the consolidated
financial statements)
The KPIs show a 1.2% decline in broadcast revenue and a 68% drop
in operating profit, both of which are consistent with previous
comments relating to the difficulties experienced within this
sector. The shift in the broadcasting revenue to products
generating less profit margin also explains the drop in the group
profitability.
The comparative between the first half of 2017 and the second
shows the recovery experienced by the group following the
renegotiation of its supplier agreement.
Consolidated statement of comprehensive income
For the year ended 31 December 2017
As restated
Note 2017 2016
GBP GBP
Revenue:
Interactive broadcasting 11,309,626 11,452,101
Management and consultancy
services 660,000 620,000
------------- ---------------
Total revenue 1 11,969,626 12,072,101
------------- ---------------
Cost of sales (11,151,615) (10,949,499)
------------- ---------------
Gross profit 818,011 1,122,602
------------- ---------------
Operating costs and expenses:
General and administrative (594,636) (531,885)
Amortisation and depreciation (92,818) (123,470)
Total operating costs and expenses (687,454) (655,355)
------------- ---------------
Operating profit 130,557 467,247
Fair value gains and losses 5 12,719 58,196
Foreign exchange (loss)/gain
on current asset investments 4 (45,315) 79,038
Impairment losses 6 (754,358) -
Finance costs 7 (7,953) (8,388)
Share of results in associate 14 11,913 55,906
(Loss)/profit before tax 4 (652,437) 651,999
Taxation 8 5,794 (7,195)
------------- ---------------
(Loss)/profit for the year
and total comprehensive income
attributable to owners of the
parent from continuing operations (646,643) 644,804
============= ===============
Earnings per share attributable
to owners of the parent from
continuing operations
Basic & diluted (pence) 9 (0.8p) 0.8p
============= ===============
Consolidated statement of financial position
As at 31 December 2017
Note 2017 2016
Assets GBP GBP
Non-current assets
Intangible assets 10 94,149 119,221
Property, plant and equipment 11 122,741 140,603
Investments 12 88,813 88,813
Interest in associate 14 - 63,045
305,703 411,682
----------- -----------
Current assets
Investments- financial
assets 15 - 510,920
Trade and other receivables 16 1,954,053 2,343,977
Cash and cash equivalents 1,057,301 1,101,235
----------- -----------
3,011,354 3,956,132
----------- -----------
Total assets 3,317,057 4,367,814
=========== ===========
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 (7,423,494) (6,776,851)
----------- -----------
Equity attributable to
owners of the parent 1,709,627 2,356,270
----------- -----------
Liabilities
Non-current liabilities 17 37,113 385,000
Current liabilities
Trade and other payables 18 1,570,317 1,626,544
Total liabilities 1,607,430 2,011,544
----------- -----------
Total equity and liabilities 3,317,057 4,367,814
=========== ===========
Company statement of financial position
As at 31 December 2017
2017 2016
Note GBP GBP
Non-current assets
Investments in subsidiary 13 1,211,281 1,211,281
Trade and other receivables 16 2,949,078 2,949,078
Total assets 4,160,359 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 (3,672,367) (3,672,367)
------------ ------------
Equity attributable to the
owners 4,160,359 4,160,359
============ ============
The company's profit and total comprehensive income for the year
was GBPNil (2016: GBPNil).
Consolidated statement of changes in equity
For the year ended 31 December 2017
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 2016 20 2,285,398 5,533,626 1,300,395 13,702 (7,421,655) 1,711,466
---------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Profit and
total comprehensive
income for
the year - - - - 644,804 644,804
---------------------- ------- ---------- ---------- ---------- ---------- ------------ ----------
Balance at
31
December 2016 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
====================== ======= ========== ========== ========== ========== ============ ==========
Company statement of changes in equity
For the year ended 31 December 2017
Share Share Warrant Retained Total
Note Capital Premium Reserve Earnings
GBP GBP GBP GBP GBP
------------------------ ------- ---------- ---------- ---------- ------------ ----------
Balance at 1 January
2016 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
2016 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
======================== ======= ========== ========== ========== ============ ==========
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 2017
2017 2016
GBP GBP
Net cash (outflow) / inflow from
operations 23a (154,448) 457,707
Net cash inflow / (outflow) from
investing activities 23b 118,467 (187,360)
Net cash used in financing activities 23c (7,953) (8,388)
Net (decrease) / increase in cash
and cash equivalents (43,934) 261,959
---------- ----------
Cash and cash equivalents at beginning
of year 1,101,235 839,276
Cash and cash equivalents at end
of year 23d 1,057,301 1,101,235
========== ==========
No separate company statement of cash flows is presented as the
company holds no cash at 31 December 2017 (2016: GBPNil).
Notes to the consolidated financial statements
The figures for the years ended 31 December 2017 and 2016 do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The figures for the year ended 31 December
2017 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 2016 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 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 on 1 May 2018 and authorised for issue on 1
May 2018.
The consolidated and company financial statements for the years
ended 31 December 2017 and 2016 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 2017 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').
Going concern
During the year ended 31 December 2017, the group recorded a
loss of GBP646,643. The group had net cash of GBP1,057,301 as at 31
December 2017 and it had net current assets of GBP1,441,037.
The directors have carefully considered whether or not it is
appropriate to adopt the going concern basis in preparing the 2017
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 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 has 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 represents the amounts receivable in relation to
broadcast related income and the provision of management and
consultancy services.
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes.
Revenue from customers interacting with the group's television
shows is recognised immediately as the service is rendered at the
time of the call or SMS/ online interaction.
Revenue generated from the provision of management and
consultancy services is recognised in line with the provision of
such services. Revenue from performance incentives is recognised
when the performance criterion has been met.
Accounting judgements
The directors consider the critical accounting judgments used in
the financial statements and concluded that the main areas of
judgments are:
-- Realisable amounts of investments. Management have considered
the recoverable amount of all investments based on expected future
cash flows and consider the assets to be held at realisable amounts
(refer to note 6 for further detail).
-- 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.
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 judgments 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.
The group has three significant telecom aggregators, generating
66% of the group's broadcasting related revenue. The three telecom
aggregators contribute GBP4,239,574, GBP1,655,082, and GBP1,577,385
of the group's total revenue (2016: 67% representing GBP5,404,286,
GBP1,331,522, and GBP979,335).
Revenue is further split below between revenue generated by:
2017 2016
GBP GBP
Interactive broadcasting 11,309,626 11,452,101
Management and consultancy
services 660,000 620,000
11,969,626 12,072,101
=============== ===========
An analysis of the geographical location of the group's revenue
is as follows:
2017 2016
GBP GBP
UK 11,309,626 11,452,101
Rest of the world 660,000 620,000
11,969,626 12,072,101
=============== ===========
2. Staff costs
2017 2016
GBP GBP
Wages and salaries (including
directors) 868,757 964,504
Social security costs 164,411 192,455
Other pension costs 74,620 85,990
1,107,788 1,242,949
========== ==========
Staff costs of GBP328,996 (2016: GBP360,007) are included in
general and administrative expenses and GBP778,792 (2016:
GBP882,942) are included in cost of sales. The parent company staff
costs were nil (2016: Nil).
Average monthly number of employees by activity (including
directors):
2017 2016
Production 10 12
Technical 8 8
Management 4 4
Administration 2 2
24 26
===== =====
All employees are employed by the subsidiary.
2017 2016
Key management compensation: GBP GBP
Salaries, other short-term employee
benefits and employer's NI costs 393,336 328,848
Post-employment benefits 93,630 85,000
486,966 413,848
======== ========
Key management personnel comprise the statutory directors.
3. Directors' emoluments
Salary & Pension
Fees Contribution Sub total
2017 GBP GBP GBP
----------------------- -------- ------------- ---------
Andrew Wilson 70,000 30,000 100,000
Craig Gardiner 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 10,000 - 10,000
----------------------- -------- ------------- ---------
Total 344,000 93,630 437,630
======================= ======== ============= =========
Salary & Pension
Fees Contribution Sub total
2016 GBP GBP GBP
----------------------- -------- ------------- ---------
Andrew Wilson 92,000 60,000 152,000
Emmanuelle Guicharnaud 90,000 25,000 115,000
Bertrand Folliet 60,000 - 60,000
Michael Neville 36,000 - 36,000
----------------------- -------- ------------- ---------
Total 278,000 85,000 363,000
======================= ======== ============= =========
See Note 21 for details of share options granted to the
directors.
4. (Loss)/profit before tax
(Loss)/profit before tax is stated 2017 2016
after charging/(crediting):
GBP GBP
Depreciation - owned assets 67,746 87,779
Amortisation of intangible assets 25,072 35,961
Auditor's remuneration - statutory
audit of parent and consolidated
accounts 33,000 30,000
Auditor's remuneration- accounting
services- statutory accounts 7,000 10,000
Auditor's remuneration- accounting
services- interim accounts 7,300 -
Foreign exchange losses/(gains)
on current asset investments 45,315 (79,038)
Other foreign exchange losses/(gains) 29,672 (61,005)
======== ==========
In the comparative year foreign exchange gains and losses on
current asset investments were included within administrative
expenses. The directors have concluded that it is more appropriate
to include such amounts below operating profit because they relate
to the group's investment activities. The comparative figures have
been restated to re-classify the equivalent amount. The effect of
this reclassification in the prior year is to increase general and
administrative expenses by GBP79,038 and to show a foreign currency
gain of the same amount below operating profit. The reported
Statement of Financial Position in the prior year is not
affected.
5. Fair value gains and losses
2017 2016
GBP GBP
Fair value gains on financial
assets net of fees and expenses 12,719 58,196
======= =======
6. Impairment losses
The impairment loss shown separately on the face of the
statement of comprehensive arises from a 100% provision against the
following assets:
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 interim results, 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.
Since the interim results have been published the group has not
received the balances due 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 has now concluded that it is
appropriate to make a provision for 100% of the Company's interest
in the Lexinta fund in these accounts.
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, an impairment charge has been recognised of GBP309,973
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.
7. Finance costs
2017 2016
GBP GBP
Bank charges and interest
paid 7,953 8,388
====== ======
8. Taxation
2017 2016
GBP GBP
Current tax charge/(credit)
In respect of the current (5,794) -
year
In respect of prior years - 7,195
---------- ----------
(5,794) 7,195
========== ==========
Factors affecting the
tax (credit)/charge for
the year
2017 2016
GBP GBP
(Loss)/profit before taxation (652,437) 651,999
---------- ----------
Group (loss)/profit on
ordinary activities before
taxation multiplied by
the effective standard
rate of UK corporation
tax of 19.25% (2016: 20%) (125,594) 130,400
Effects of:
Non-deductible expenses 118,098 30,052
Brought forward losses
utilised - (148,813)
Tax charge in respect
of prior years - 7,195
Capital losses/(gains)
not taxable - (11,639)
Tax credit (5,794) -
Current year unutilised 7,496 -
tax losses
========== ==========
(5,794) 7,195
========== ==========
8. Taxation (continued)
At 31 December 2017, the group had estimated tax trading losses
of GBP1.6 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.
9. Earnings per share
The calculations of basic and diluted earnings per ordinary
share are based on the following results:
2017 2016
GBP GBP
(Loss)/profit for the financial
year (646,643) 644,804
Weighted average number of
ordinary shares 77,513,224 77,513,224
Basic and diluted earnings
per share (pence) (0.8p) 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 2,650,000 (2016:
3,684,510).
10. Intangible assets Development
Licences costs Total
GBP GBP GBP
Cost
At 1 January 2016 781,761 2,692,716 3,474,477
At 31 December 2016 781,761 2,692,716 3,474,477
At 31 December 2017 781,761 2,692,716 3,474,477
========= ============ ==========
Amortisation
At 1 January 2016 655,088 2,664,477 3,319,565
Charge for the year 20,372 15,319 35,691
--------- ------------ ----------
At 31 December 2016 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
========= ============ ==========
Net book value at 31
December 2017 92,534 1,615 94,149
========= ============ ==========
Net book value at 31
December 2016 106,301 12,920 119,221
========= ============ ==========
Net book value at 1
January 2016 126,673 28,239 154,912
========= ============ ==========
Included within Licences is an individual channel licence with a
carrying value of GBP91,000 (2016: GBP104,000). The asset will be
fully amortised in 7 years (2016: 8 years).
11. Property, plant and equipment
Broadcasting
equipment
GBP
Cost
At 1 January 2016 1,995,547
Additions 19,010
-------------
At 31 December 2016 2,014,557
Additions 49,884
At 31 December 2017 2,064,441
=============
Depreciation
At 1 January 2016 1,786,174
Charge for the year 87,779
-------------
At 31 December 2016 1,873,954
Charge for the year 67,746
-------------
At 31 December 2017 1,941,700
=============
Net book value at
31 December 2017 122,741
=============
Net book value at
31 December 2016 140,603
=============
Net book value at
1 January 2016 209,373
=============
12. Non-current investments - Group
At 31 December 2017, 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 market value of this investment is not readily available
because the investment is not in publicly traded equities with a
quoted market price and the directors do not consider that a
reliable estimate of fair value can be made using the level 2 or 3
hierarchy within IFRS 13. Therefore, the investment is accounted
for at cost less impairment.
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 shareholder has the
remaining 65% holding and the company does not have voting
rights.
2017 2016
GBP GBP
Cost
---------- ----------
At 1 January 2016, 31 December 2016
and 31 December 2017 177,627 177,627
========== ==========
Impairment
---------- ----------
At 1 January 2016, 31 December 2016
and 31 December 2017 88,814 88,814
========== ==========
Carrying amount at 1 January 2016,
31 December 2016 and 31 December
2017 88,813 88,813
========== ==========
13. Non-current investments - Company
Subsidiary
undertakings
Cost GBP
At 1 January and 31 December 2017 1,211,281
==============
At 31 December 2017 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.
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.
2017 2016
GBP GBP
At 1 January 63,045 7,139
Share of associate result 11,913 55,906
Impairment (74,958) -
---------------- -----------------
At 31 December - 63,045
================ =================
At the reporting date the directors considered the group's
interest in the associate to be irrecoverable. Therefore, an
impairment of GBP74,958 was recognised (see note 6).
As at 31 December 2017, the amount due from the associate stood
at GBPnil (2016: GBP549,428), this is shown in note 16.
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
can only be withdrawn on a yearly basis at the anniversary date of
the investment. The group redeemed the investment in the year and
re-classified the disposal proceeds due from the Lexinta fund to
other receivables, subsequent to this the amount due has been
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 can only be
withdrawn on a yearly basis at the anniversary date of the
investment. The group redeemed the investment in the year for
GBP197,103.
2017 2016
GBP GBP
At 1 January 510,920 205,335
Investment in fund - 168,350
Fees and costs - (5,559)
Fair value gain 12,719 63,756
Foreign exchange (loss)/gain (45,315) 79,038
Redemption (168,351) -
Reclassified to other receivables
on redemption (309,973) -
At 31 December - 510,920
========= ==========
16. Trade and other receivables
Group 2017 2016
GBP GBP
Trade receivables 1,349,103 376,919
Other receivables 150,639 438,884
Prepayments and accrued income 454,311 978,746
Amount due from associate - 549,428
1,954,053 2,343,977
========= =========
Company 2017 2016
GBP GBP
Amounts owed by group undertaking
(loans and receivables) 2,949,078 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 are confident that the amounts will be recovered.
The directors deemed that it is appropriate to classify the amounts
due after more than one year as this reflects the timescale on
which recovery is expected to occur. No interest is charged on this
balance.
17. Non-current liabilities
2017 2016
GBP GBP
Trade payables 37,113 385,000
37,113 385,000
====== =======
18. Trade and other payables
2017 2016
GBP GBP
Trade payables 498,425 308,008
Other taxes & social security 170,260 237,491
Corporation tax - 5,776
Other payables 361,911 418,444
Accruals 539,721 656,825
--------- ---------
1,570,317 1,626,544
========= =========
Credit payment profile in days 49 days 51 days
========= =========
The credit payment profile in days calculation excludes the
long-term trade payables days which is contractually due over one
year as including this long term element would skew the trade
payable days.
19. Financial risk management
The group's financial instruments as at 31 December 2017 and
2016 mainly comprise cash and various items arising directly from
its operations, such as trade and other receivables, trade and
other payables and as at 31 December 2016 also included current
asset investments and amounts due from associate. 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.
19. Financial risk management (continued)
(b) Financial assets and liabilities
Financial assets and liabilities analysed by the categories were
as follows:
As at 31 December Currency Loans Other Total
2017 and financial carrying
receivables instruments value
at amortised
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 Sterling 1,057 - 1,057
Non-current investments
held at cost Sterling - 89 89
Financial liabilities
Trade payables Sterling - (498) (498)
Other payables Sterling - (362) (362)
Accruals Sterling - (540) (540)
Trade payables
> 1 year Sterling - (37) (37)
2,861 (1,348) 1,513
============= ============== ==========
As at 31 December Currency Loans Financial Other Total
2016 and assets financial carrying
receivables at fair instruments value
value at amortised
through cost
profit
and loss
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade receivables
and accrued income Sterling 1,179 - - 1,179
Other receivables Sterling 439 - - 439
Amounts due from
associate Sterling 549 - - 549
Cash and cash equivalents Sterling 1,101 - - 1,101
Current asset investments
at fair value through
profit and loss
Non-current investments
held at cost US Dollars - 511 - 511
Sterling - - 89 89
Financial liabilities
Trade payables Sterling - - (308) (308)
Other payables Sterling - - (418) (418)
Accruals Sterling - - (657) (657)
Other payables
> 1 year Sterling - - (385) (385)
3,268 511 (1,679) 2,100
============= ========== ============== ==========
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.
19. Financial risk management (continued)
(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:
2017 2016
GBP'000 GBP'000
Trade receivables and accrued income 1,653 1,179
Other receivables 151 439
Amounts due
from associate - 549
Current asset
investments - 511
Non-current
investments 89 89
Cash and cash
equivalents 1,057 1,101
2,950 3,868
======== ========
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.
Trade receivables are regularly reviewed for impairment loss.
The group did not write off any accrued income during 2017 (2016:
GBP37,000 written off). There are no provisions for trade
receivables at 31 December 2017 or 2016.
During the 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 associate. For more
details see note 6.
Ageing of the trade receivables and accrued income is as
follows:
2017 2016
GBP'000 GBP'000
Current 954 1,047
Up to 3 months 571 132
Up to 6 months 128 -
1,653 1,179
======= =======
The total of the trade receivables which were past due at 31
December 2017 but not impaired was GBPnil (2016: GBPnil). The total
trade receivables and accrued income balance of GBP1,541,000 was
collected by 11 April 2018. 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 2017.
All cash balances are held in established UK financial
institutions.
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with financial
liabilities.
Contractual cash flows relating to the group's financial
liabilities are as follows:
2017 2016
GBP'000 GBP'000
Trade payables (<6months) (498) (308)
Other payables (<6months) (362) (418)
Accruals (<6months) (540) (657)
Greater than 12 months (37) (385)
-------- --------
Cash flows on financial liabilities (1,437) (1,768)
======== ========
(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.
19. Financial risk management (continued)
The only interest-bearing loan is in other payables and amounts
to GBP300,000 (2016: GBP300,000). The interest rate is 2% per
annum. The impact of a 1% interest rate increase would represent an
annual sum of GBP3,000 (2016: 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 2016, the currency risk of the group
related to the cash balances it held in USD in the Lexinta treasury
and Ventury funds. The table below illustrates the impact of a
change in exchange rates on results and reserves:
In 2017 the risk relates to amounts held as cash balances in
USD.
31 December 31 December
2017 2016
GBP'000 GBP'000
10% increase USD foreign
exchange rate against
pound sterling 32 35
10% decrease USD foreign
exchange rate against
pound sterling (32) (35)
============ ============
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.
31 December 31 December
2017 2016
GBP'000 GBP'000
Net cash 1,057 1,101
Total equity 1,710 2,356
-------------- ------------ ------------
The group has an undrawn overdraft facility with Barclays of up
to GBP150,000 (2016: GBP150,000).
20. Share capital and reserves
Group and Company
2017 2016
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.
20. Share capital and reserves (continued)
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 2017 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 08/11/07 25/07/08 27/10/10
Number granted 584,510 1,200,000 900,000
General share option plan
Date of grant 25/07/08 27/10/10
Number granted 400,000 600,000
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 2017 2016
Number Weighted Number Weighted
of options average of options average
exercise exercise
price (GBP) price (GBP)
----------------- ----------- ------------ ----------- ------------
Outstanding
at 1 January 3,684,510 0.04 4,099,510 0.05
Expired during
the year (584,510) (0.05) (415,000) 0.14
Forfeited during
the year (450,000) (0.04) - -
Outstanding
at 31 December 2,650,000 0.03 3,684,510 0.04
================= =========== ============ =========== ============
The share options outstanding at the end of the year have an
exercise price of between GBP0.03 and GBP0.04, with a weighted
average remaining contractual life of 1.40 years (2016: 2.25
years).
21. Share options (continued)
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:
Option price Number granted Date of
GBP grant
------------------ ------------- ----------------- ---------
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
In 2017 management charges totalled GBP114,000 (2016:
GBP168,000). At the year-end GBPnil (2016: GBP14,000) was owed to
SMS Media Limited, which has common directors and beneficial
shareholders in Bertrand Folliet and Andrew Wilson. The management
charges levied by SMS Media relate to the running cost of the
company's office in Hong Kong. It is made up of rent and the
employment of local staff. Its purpose is undertaking business
development in the Greater China, South East Asia and African
regions. This resource has constituted a part of the company since
November 2001.
Global Gaming Limited
During 2017 the company advanced GBPnil (2016: GBPnil) to Global
Gaming Limited, an associate of the company. At 31 December 2017
GBPnil (2016: GBP549,428) remained outstanding. During the year the
company recognised an impairment on this amount of GBP369,427 (see
note 6).
Company
Cellcast UK Limited
At the reporting date GBP2,949,078 (2016: GBP2,949,078) was due
from Cellcast UK Limited, a subsidiary of the company, this amount
is net of accumulated impairment charges recognised prior to 31
December 2015 of GBP3,800,001.
23. Cash flows
Note 2017 2016
GBP GBP
a Reconciliation of (loss)/profit
after tax to net cash (outflow)/inflow
from operating activities
(Loss)/profit for the year (646,643) 644,804
Income tax recognised in profit
or loss (5,794) 7,195
Fair value gains (12,719) (58,196)
Finance costs 7,953 8,388
Amortisation and depreciation 92,818 123,470
Impairment losses (See note
6) 754,358 -
Share of results in associate (11,913) (55,906)
Foreign currency loss/(gain)
on current asset investment 15 45,315 (79,038)
Decrease/(increase) in trade
and other receivables 20,497 (126,959)
Decrease in trade and other
payables (398,338) (83,017)
Income taxes received 18 76,966
---------- ---------
Net cash (outflow) / inflow
from operating activities (154,448) 457,707
b Cash flow from investing activities
2017 2016
GBP GBP
Purchase of property, plant
and equipment (49,884) (19,010)
Investment in treasury fund - (168,350)
Proceeds received from current
investment 168,351 -
Net cash inflow / (outflow)
from investing activities 118,467 (187,360)
========== =========
c Cash flow from financing activities
2017 2016
GBP GBP
Interest paid (7,953) (8,388)
Net cash used in financing
activities (7,953) (8,388)
---------- ---------
d Cash and cash equivalents 2017 2016
GBP GBP
Cash at bank 1,057,301 1,101,235
Cash and cash equivalents at
end of year 1,057,301 1,101,235
========== =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KFLBBVEFFBBF
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May 01, 2018 05:15 ET (09:15 GMT)
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