TIDMCHAL
RNS Number : 9976R
Challenger Acquisitions Limited
27 September 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA
OR JAPAN.
For Immediate Release
27 September 2017
Challenger Acquisitions Limited
("Challenger" or the "Company")
Interim Results
Challenger Acquisitions Limited (LSE: CHAL), a leader in the
Giant Observation Wheel industry, is pleased to announce its
interim results for the period ended 30 June 2017.
Interim Management Report
As stated in our final results, 2016 was a difficult year due to
the inability of Starneth, our previously held wholly owned
subsidiary, to close any Giant Observation Wheel projects.
Consequently, the requirement to restructure Challenger was one of
the primary objectives in 2017. The following is a list of
significant changes for the first six months of this year and to
the date of this report:
Disposition of Starneth:
The sale of Starneth, announced on 30 January 2017, provided for
three key elements: contingent consideration for Challenger, an
on-going cooperation agreement, and the extinguishment of all cash
obligations owing by Challenger related to Starneth.
The Starneth sale agreement stipulated that Challenger would
receive certain payments upon the closing of at least two major
development projects by Starneth prior to January 2019, including
the Giant Observation Wheel project in Jakarta. Challenger could
receive up to US$6 million in fees less a payment of EUR1.25
million related to the cash payment that Challenger was due to pay
to the former Starneth vendors from the original acquisition. One
common equity unit of New York Wheel LLC will continue to be
pledged to the former Starneth vendors until this payment of
EUR1.25 million has been completed. Following the sale of Starneth,
Challenger will retain its equity stake in the New York Wheel LLC,
with a minimum of two equity units and up to three equity units
depending on the closure of at least one project by Starneth prior
to January 2019.
The cash fees of up to US$6 million that Challenger could
receive are based on two fee agreements signed with the new owners
of Starneth and are calculated based on the incoming cash receipts
from the developers for these projects. The cash payment of EUR1.25
million from Challenger is completely contingent on these projects
commencing and paid only once Challenger starts receiving these
cash fees.
Challenger and the new Starneth owners have signed a five-year
cooperation agreement whereby Starneth can provide the design and
engineering for select Giant Observation Wheel projects and
Challenger can provide potential funding options for the developers
of these select projects.
To date no projects have closed and no fees have been
generated.
Board changes:
Primarily due to the lack of progress with Giant Observation
Wheel contracts, three directors retired from the board and one new
director was added. John Le Poidevin retired in January, Markus
Kameisis retired in February (he remains as the Chief Financial
Officer and Secretary), and Gert Rieder retired in March. Gene
Stice was appointed as a non-executive director in March.
Convertible note changes:
After extensive discussions and negotiations, all of the
convertible notes that were scheduled to mature in 2017 were
restructured on three major points. The maturity date was extended
for another 12 months into 2018, interest that was paid in the past
at each quarter end is now paid at the time of the actual
conversion of the note into ordinary shares, and the fixed
conversion price on the note that is scheduled to mature on 2 March
2018 was reduced to 12p. All other terms for the convertible notes
were left substantially unchanged. No additional fees were paid for
this restructuring process.
During the six month reporting period and post period end, a
significant number of shares were issued as a result of conversions
of these convertible notes into ordinary shares and related
accumulated interest on these notes; January - 980,657 shares,
February - 8,339,012 shares, March - 8,697,927 shares, May -
2,054,683 and 16,457,816 shares, July - 7,257,395 shares, August -
16,556,310, 44,306,596 and 37,671,142 shares.
New funding facilities:
On 13 June 2017, a new GBP1 million unsecured convertible note
facility due 8 June 2019 was announced. This facility will be used
for general working capital purposes and to potentially support an
acquisition or development of a project. To date GBP350,000 has
been received from this facility: GBP100,000 in June and GBP250,000
in August.
On 18 May 2017 GBP30,000 was also received from the CEO of
Challenger for an unsecured convertible note. This note was fully
converted at 3p in July.
New York Wheel Project:
Due to a contractual dispute with the wheel erectors, led by the
Dutch company Mammoet, New York Wheel has terminated their contract
and is in advanced negotiations with American Bridge Company, a
very experienced engineering and construction firm that completed
the Giant Observation Wheel in Las Vegas in 2014 (see
www.americanbridge.net). This has caused a pause in those specific
activities as the companies transition. Work continues on the main
terminal building and the major components such as the rim, cables,
spindle, drive towers, capsules and control cabinets. For more
information see www.newyorkwheel.com, which includes a live webcam
of the construction site.
Financial and Corporate Overview
During the six month period we raised GBP130,000 of funding
through the issuance of new unsecured convertible notes and
GBP250,000 of new unsecured convertible notes was received post
period end. This has enabled the Company to continue operating this
year. Cost control measures have been implemented throughout the
Company, including a reduction of the CEO's compensation to
GBP1,000 per month effective 1 February 2017.
The half year results report a loss of GBP560k, comprised of
personnel costs of GBP53k, administrative expenses of GBP175k and
non-cash finance costs of GBP332k. This result is driven by costs
for the ongoing management of Challenger, for the sourcing of
funding of Challenger, restructuring of the convertible notes, the
corresponding interest on these convertible notes and the public
company costs in dealing with its shareholders and other
stakeholders.
The corporate activities to date include the Starneth
disposition, restructuring of the convertible notes, implementation
of cost reduction measures, board changes, securing new funding and
actively communicating with creditors, noteholders and
shareholders.
Outlook
Looking forward we expect to see continued progress on the New
York Wheel Project for the balance of this year and into 2018.
Alongside this, we are continuing to seek out, evaluate and review
a number of potential projects and developments, which we believe
may offer strategic growth opportunities for our Company. This is
an ongoing and time consuming process however we are committed to
finding a prospective development opportunity for our
shareholders.
I would like to take this opportunity to thank our loyal
stakeholders and the Board for their continued support.
We look forward to providing further updates in due course.
Mark Gustafson
Chief Executive Officer
27 September 2017
Condensed Consolidated Statement of Comprehensive Income
The condensed consolidated statement of comprehensive income of
the Group for the six month period from 1 January 2017 to 30 June
2017 is set out below.
Period ended Period ended
30 June 30 June
2017 2016
(unaudited)* (unaudited)
Note GBP'000 GBP'000
Revenue 4 - 2,029
Cost of sales - (1,553)
--------------- --------------
Gross profit - 476
Personnel
expenses (53) (498)
Administrative
expenses (175) (966)
--------------- --------------
Operating
loss on ordinary
activities
before taxation (228) (988)
Finance costs (332) (521)
--------------- --------------
Loss before
income taxes (560) (1,509)
Income tax - -
expense
--------------- --------------
Loss after
taxation (560) (1,509)
Loss for the
period (560) (1,509)
Fair value
movement on
available
for sale financial
asset (172) (20)
--------------- --------------
Total comprehensive
loss attributable
to owners
of the parent (732) (1,529)
--------------- --------------
Loss per share:
Basic & diluted 8 (0.01) (0.11)
*After the disposal of the Starneth group of entities
Condensed Consolidated Statement of Financial Position
The condensed consolidated statement of financial position as at
30 June 2017 is set out below:
As at 30 As at 31
June December
2017 2016
unaudited audited
Note GBP'000 GBP'000
Assets
Current assets
Cash and cash equivalents 36 71
Trade and other receivables 5 17
----------- ----------
Total current assets 41 88
-----------
Assets of disposal group
classified as held for sale 13 - 2,271
Non-current assets
Property, plant and equipment - -
Intangible assets - -
Available-for-sale financial
assets 6 2,311 2,438
----------- ----------
Total non-current assets 2,311 2,438
Total assets 2,352 4,797
=========== ==========
Equity and liabilities
Capital and reserves
Share capital 5 584 219
Share premium 5,597 4,364
Shares to be issued - 775
Translation reserve - (146)
Equity component of convertible
instruments 1,064 1,064
Available for Sale reserve 290 462
Accumulated deficit (9,419) (9,488)
Total equity attributable
to equity holders (1,884) (2,750)
Current liabilities
Borrowings 7 2,566 3,615
Trade and other payables 652 533
----------- ----------
Total current liabilities 3,218 4,148
Liabilities of disposal
group classified as held
for sale 13 - 1,228
Non-current liabilities
Borrowings 7 1,018 2,171
----------- ----------
Total non-current liabilities 1,018 2,171
=========== ==========
Total equity and liabilities 2,352 4,797
Condensed Consolidated Statement of Changes in Equity
The unaudited condensed consolidated statement of changes in
equity of the Group for the period from 1 January 2016 to 30 June
2016 is set out below:
Equity component Available
Share Share Shares to Trans-lation of convertible for sale Retained
capital Premium be issued reserve instruments reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On 1 January
2016 133 2,080 1,650 (3) - - (2,592) (1,268)
Loss for
the period - - - - - - (1,509) (1,509)
Other comprehensive
loss - - - (20) - - - (20)
-------- -------- ---------- ------------ ---------------- --------- --------- -------
Total comprehensive
loss for
the period - - - (20) - - (1,509) (1,529)
-------- -------- ---------- ------------ ---------------- --------- --------- -------
Transaction
with owners
Issue of
shares 16 428 - - - - - 444
Issue of
options - - - - - - 5 5
Equity component
convertible
notes - - - - 569 - - 570
-------- -------- ---------- ------------ ---------------- --------- --------- -------
Total 16 428 - - 569 - 5 1,018
As at 30
June 2016 149 2,508 1,650 (23) 569 - (4,096) 756
-------- -------- ---------- ------------ ---------------- --------- --------- -------
The unaudited condensed consolidated statement of changes in
equity of the Group from 1 January 2017 to 30 June 2017 is set out
below:
Equity
component Available
Share Share Shares Translation of convertible for sale Retained
capital Premium to be issued reserve instruments reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On 1 January
2017 219 4,364 775 (146) 1,064 462 (9,488) (2,750)
Loss for
the period - - (560) (560)
Other comprehensive
loss - - (172) (172)
-------- -------- ------------- ----------- --------------- --------- --------- -------
Total comprehensive
loss for
the period - - (172) (560) (732)
-------- -------- ------------- ----------- --------------- --------- --------- -------
Transaction
with owners
Issue of
shares 365 1,233 - - - - - 1,598
Cancellation
of unissued
shares - - (775) - - - 775 -
Disposal
of disposal
unit - - - 146 - - (146) -
Equity
component
convertible
notes - - - - - - - -
-------- -------- ------------- ----------- --------------- --------- --------- -------
Total 365 1,233 (775) 146 - - 629 1,598
As at 30
June 2017* 584 5,597 - - 1,064 290 (9,419) (1,884)
-------- -------- ------------- ----------- --------------- --------- --------- -------
*After the disposal of the Starneth group of entities
Share capital comprises the Common Shares issued by the
Company.
Accumulated deficit represents the aggregate retained losses of
the Company since incorporation.
Other reserves represent the shares to be issued, the share
options reserve as well as gains and losses on translation of
foreign subsidiaries.
Condensed Consolidated Statement of Cash Flows
The condensed consolidated cash flow statement of the Group from
1 January 2016 to 30 June 2017 is set out below:
Period ended Period ended
30 June 30 June
2017 2016
Unaudited* Unaudited
GBP'000 GBP'000
Net cash used in operating activities
Loss for the period before taxation (560) (1,509)
Depreciation and amortisation - 39
Share option charge - 5
Finance Cost 379 521
Operating cash flows before movements
in working capital (181) (944)
Increase in receivables 12 (508)
Increase in accounts payable
and accrued liabilities 119 88
------------- -------------
Net cash used in operating activities (50) (1,364)
Investment in property, plant
and equipment - (16)
Investment in available for sale
financial asset - (805)
Net cash outflow from investing
activities - (821)
Issue of ordinary shares net - -
of issue costs
Issue of convertible instruments 125 2,402
Finance Expenses (110) (108)
Net cash inflow from financing
activities 15 2,294
Net (decrease)/increase in cash
and cash equivalents (35) 109
============= =============
Cash and cash equivalent at beginning
of period 71 325
Cash and cash equivalent at end
of period 36 434
============= =============
Notes to the Condensed Consolidated Interim Report
1. General information
The Company was incorporated under section II of the Companies
(Guernsey) Law 2008 on 24 November 2014, it is limited by shares
and has registration number 59383.
The Company has an investment of US$3m in New York Wheel
Investor LLC, a company that was set up to fund the equity
component for the project to build a New York Wheel which includes
an approximate 630 foot high observation wheel with 36 capsules, a
68,000 square foot terminal and retail building, and a 950 space
parking garage.
The comparatives given relate to period ended 30 June 2016 for
all Profit and Loss related items and to the annual report for the
period ended 31 December 2016 for all Balance Sheet related items.
The comparatives relating to the period ended 30 June 2016 are
before the disposal of the Starneth group of entities.
The Company's registered office is located at 1 Le Marchant
Street, St. Peter Port, Guernsey GY1 4HP, Channel Islands.
The company has not prepared individual financial statements in
accordance with section 244 of the Companies (Guernsey) Law
2008.
2. BASIS OF PREPARATION
The interim condensed unaudited financial statements for the
period ended 30 June 2017 have been prepared in accordance with IAS
34 Interim Financial Reporting. They do not include all the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the group's financial position and
performance since the last annual consolidated financial statements
as at the year ended 31 December 2016. The results for the period
ended 30 June 2017 are unaudited.
The condensed unaudited consolidated financial statements for
the period ended 30 June 2016 have adopted accounting policies
consistent with those followed in the preparation of the Group's
annual consolidated financial statements for the year ended 31
December 2016.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the group's accounting policies.
This note provides an overview of the areas that involved a
higher degree of judgement or complexity, and of items which are
more likely to be materially adjusted due to estimates and
assumptions turning out to be wrong. Detailed information about
each of these estimates and judgements is included together with
information about the basis of calculation for each affected line
item in the financial statements.
Significant estimates and judgements
The areas involving significant estimates or judgements are:
-- Going concern
At 30 June 2017 the group had net current liabilities of
GBP3,177k. The Interim Report has been prepared on the basis that
the Group will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. The assessment has
been made based on the Group's economic prospects which have been
included in the financial budget for the forthcoming twelve months
and for managing their working capital requirements. In assessing
whether the going concern assumption is appropriate, management
takes into account all available information for the foreseeable
future, in particular for the twelve months from the date of
approval of the financial statements. Should the company be unable
to continue trading, adjustments would have to be made to reduce
the value of the assets to their reasonable amounts, to provide for
further liabilities which might arise, and to classify fixed assets
as current.
The Group finances its current working capital through the issue
of convertible loan notes. The directors are confident that they
will be able to raise the required funds and/or manage the level of
expenditure for the foreseeable future.
Based on the above, the directors have formed a judgement that
the going concern basis should be adopted in preparing the
financial statements.
Estimates and judgements are continually evaluated. They are
based on historical experience and other factors, including
expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances.
4. BUSINESS SEGMENTS
For the purpose of IFRS8, the Chief Operating Decision Maker
"CODM" takes the form of the board of directors. The Directors are
of the opinion that after the sale of the Starneth entities the
business of the Company comprised a single activity, being the
identification and acquisition of target companies or businesses in
the entertainment sector.
5. SHARE CAPITAL
Issued and fully Number Share Share Total
paid of shares capital premium
GBP'000 GBP'000 GBP'000
Issued on incorporation 1 - - -
Issue of shares 9,365,581 133 2,080 2,213
Sub division of 3,960,099 - - -
shares
At 31 December
2015 13,325,681 133 2,080 2,213
----------- --------- --------- --------
Issue of shares 1,552,087 16 428 444
----------- --------- --------- --------
At 30 June 2016 14,877,768 149 2,508 2,657
----------- --------- --------- --------
Issue of shares 7,021,308 70 1,856 1,926
----------- --------- --------- --------
At 31 December
2016 21,899,076 219 4,364 4,583
----------- --------- --------- --------
Issue of shares 36,530,095 365 1,233 1,598
----------- --------- --------- --------
At 30 June 2017 58,429,171 584 5,597 6,181
----------- --------- --------- --------
On 24 November 2014, the Company was incorporated and had an
issued share capital of one Ordinary Share of GBP1.00.
On 5 December 2014, a further 40,000 Ordinary Shares of GBP1
each were issued to the Founder for a consideration of
GBP320,000.
On 10 December 2014, the existing 40,001 Founder Shares were
sub-divided into 4,000,100 Ordinary Shares of GBP0.01 each.
On 19 February 2015, on Admission to the Main Market of the
London Stock Exchange, a further 7,000,000 Ordinary Shares were
issued for a consideration of GBP700,000.
On 3 July 2015, 109,789 shares were issued at GBP 0.37 as
consideration for interests from the Convertible Note 2016 and
240,000 shares at GBP 0.40 were issued to the introducer of the New
York Wheel investment.
On 15 July 2015, as part of the consideration paid for acquiring
the Starneth business 1,100,000 shares were issued at a price of
GBP 0.75/each.
On 28 July 2015, 630,000 shares were issued at GBP 0.40 to the
introducer of the Starneth acquisition.
On 6 October 2015, 235,792 shares were issued as consideration
for interests from the Convertible Note 2016.
On 16 October 2015, 10,000 shares were issued upon the exercise
of employee options at GBP 0.40 per share.
On 7 January 2016, 230,034 shares were issued as consideration
for interests on the Convertible Notes outstanding.
On 21 March 2016, 711,646 shares have been issued for the
conversion of convertible notes into shares. 694,610 shares have
been for the conversion of GBP 172,200 and 17,036 shares have been
for the accrued interest until the conversion date.
On 13 April 2016, 277,061 shares were issued as consideration
for interests on the Convertible Notes outstanding. On the same day
332,792 shares were issued for the conversion of GBP 83,198 loan
notes into shares. For the accrued interest of GBP 138.08 on the
conversion amount 554 shares were issued.
On 18 July 2016, 2,024,421 shares were issued. Of these, 463,597
shares were issued in relation to interest on Convertible Notes up
to 30 June 2016, 460,824 shares were issued in respect of the
conversion of GBP 81,243 of the 12% Convertible Notes due 2017 and
1,100,000 shares were issued in relation to the second tranche of
Consideration shares.
On 15 September 2016, 4,276,262 shares were issued as conversion
of GBP 750,128 of the 12% Convertible Notes due 2017 and GBP
11,046.52 to settle the interest accrued interest up until the date
of conversion.
On 17 October 2016, 529,952 shares were issued as consideration
for interests on the Convertible Notes outstanding up to 30
September 2016.
On 22 December 2016, 190,673 shares were issued. Of these
124,673 shares were issued in relation to a conversion of GBP
15,918 of the 0% Convertible Notes due April 2018, 66,000 shares
were issued in relation to the third tranche of Consideration
Shares. It was anticipated that the sale of Starneth was to be
completed prior to 31 December 2016 and the 66,000 shares were
issued in full and final settlement of the third tranche of share
consideration payable to one of the vendors. The remaining balance
was forgiven as part of the sale of Starneth after the year
end.
On 6 January 2017, 188,501 new ordinary have been issued on the
conversion of GBP20,000 of the unsecured convertible note due 13
April 2018. A further 792,156 new ordinary shares have been issued
to the holders of convertible notes a payment of interest due for
the quarter ended 31 December 2016.
On 6 February 2017, 8,323,476 new ordinary shares were issued.
Of these 7,688,185 shares were issued for the conversion of
GBP630,431 of the 12% unsecured convertible notes due 6 May 2017
and 635,291 shares were issued for the conversion of GBP50,000 of
the unsecured convertible notes due 13 April 2018. Additionally
15,536 new ordinary shares were issued to settle interest of
GBP1,274 due up until the date of conversion.
On 30 March 2017, 6,622,963 new ordinary shares have been issued
upon conversion of GBP213,400 of the unsecured convertible notes
due 6 May 2017. Further 1,206,329 new ordinary shares have been
issued upon conversion of GBP40,453 of the unsecured convertible
notes due 13 April 2018. In addition 868,635 new ordinary shares
have been issued to settle interest due up until the date of
conversion of GBP27,818.
On 4 May 2017, 1,991,839 new ordinary shares were issued upon
the conversion of GBP72,487 of the unsecured convertible note due
13 April 2018. Further 62,844 new ordinary shares have been
allotted to the holder of the convertible note 2019 in payment of
interest due for the quarter ended 31 March 2017.
On 25 May 2017, 2,089,995 new ordinary shares have been allotted
on the conversion of GBP60,242 of the unsecured convertible note
due 13 April 2018. Further 10,429,629 new ordinary shares have been
allotted to the holders of the unsecured convertible note due 6 May
2018 on the conversion of GBP281,600. Additionally 255,608 new
ordinary shares were allotted as interest on this note upon until
the date of conversion. Further 3,571,429 new ordinary shares were
issued upon the conversion of GBP100,000 of the unsecured
convertible note due 22 April 2018. Additional 111,155 have been
issued as interest on this note up until the date of
conversion.
On 30 June 2017, the number of Ordinary Shares authorised for
issue was unlimited. All Ordinary Shares have equal voting rights
and rank equally on a winding up.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available
for sale
financial
asset
GBP'000
Cost
At 31 December 2015 1,976
------------
Additions 805
At 30 June 2016 2,781
------------
Disposal (805)
Foreign exchange difference 462
------------
At 31 December 2016 2,438
------------
Additions -
Foreign exchange difference (127)
At 30 June 2017 2,311
On 20 May 2015, the Company invested a total of GBP1,976,400
(US$3,000,000) in New York Wheel Investor LLC. This company was
setup to fund the equity component for the New York Wheel project,
which includes an approximate 630 foot high observation wheel with
36 capsules, a 68,000 square foot terminal and retail building and
a 950 space parking garage. In order to acquire its interest, the
Company became a party to the Amended and Restated Operating
Agreement of New York Wheel Investor LLC, dated May 20, 2015. Under
that agreement, the Company can be called upon to make further
capital contributions to the project should there be a cash
shortfall, or face potential dilution of its interest should it
choose not to invest further cash sums.
7. BORROWINGS
30 June 30 June
2017 2016
Current GBP'000 GBP'000
----------------------------- -------- --------
Convertible notes 1,414 2,832
Deferred cash consideration 1,152 1,029
Borrowings - 382
2,566 4,243
Non-current
----------------------------- -------- --------
Convertible notes 1,018 1,817
Deferred cash consideration - 919
----------------------------- -------- --------
1,018 2,736
Between 6 May 2015 and 30 July 2015, the Company issued
GBP3,067,200 of convertible notes. The notes are unlisted,
unsecured, transferable and convertible with a twelve month
maturity date. Interest is accrued at 12% per annum and payable
quarterly, or upon conversion, in cash or in Ordinary Shares at the
Company's discretion. The notes can be converted into Ordinary
Shares at a price per Ordinary Share equal to the lower of GBP0.50
and 7.5% discount to the prevailing market price, defined as the
average of the lowest three volume weighted average prices as
quoted by Bloomberg for the period of 10 trading days prior to the
conversion date. Provided that if the volume weighted average price
is at any time less than GBP0.25 for three consecutive trading
days, then the noteholder is unable to convert for a period of 30
calendar days, without the consent of the Company. The requirement
of consent applies only on the first such occasion. The maximum
amount of notes that may be converted in any 30-day period by a
noteholder is 10% of the total amount of any notes subscribed by
that noteholder. The Company can redeem the notes at a 10% premium
anytime the market price is lower than GBP0.50. On 26 April 2016
the Noteholders agreed to an extension of the Convertible Note for
12 month. On 10 May 2017 the Company announced that the three
remaining holders of the note have agreed to extent the date of
maturity to 6 May 2018 and to receive interest upon conversion of
the note or on the maturity date.
On 15 July 2015 the company acquired the Starneth Group. Part of
the purchase price was two deferred cash payments. The payments are
in equal amounts of EUR 1,250,000 and payable at the first and
second anniversary of the transaction. Accordingly these were
recorded under current and non-current liabilities respectively.
Based on the convertible notes issued in 2015, an interest rate of
12% was used to discount the tranches for the initial recognition.
The carrying value of the amounts at 31 December 2016 in the
transaction were GBP1,064k for the first tranche and GBP1,043k for
the second tranche. Interest expenses recorded on both tranches in
2016 was GBP163k (2015:GBP 86k). As part of the disposal of the
Starneth participation as announced on 30 January 2017, the terms
of these payments were changed as follows: the second tranche was
waived as part of the sale agreement and the first tranche is only
payable on the payment of success fees by Starneth to Challenger,
if success fees become payable then the first tranche of fees will
be deducted from success fees due. The company has not recognised
an asset in this regard due to the uncertainty over whether the
success fees will become due. The current amount of the liability
amounts to GBP 1,152k. One common unit in New York Wheel Investor
LLC has been pledged as part of the disposition agreement.
On 29 January 2016, the Company issued a further GBP1 million of
secured convertible notes. The notes are unlisted, secured,
transferable and convertible. Maturity date is 30 June 2019. The
Secured Convertible Notes are secured by one common unit of New
York Wheel Investor LLC, representing a total value US$1 million.
Interest is accrued at 8% per annum and payable quarterly. One
eighth of the interest can be settled in cash or shares at the
Company's discretion. Seven eighths of the interest is settled in
new convertible notes with the same terms. The notes can be
converted into Ordinary Shares at a fixed conversion price of
GBP0.80 per Ordinary Share. The Company can redeem the notes at a
10% premium anytime. As per the nature of this convertible
instrument, GBP106k has been recognised as an equity component in
the reserves, using a discount rate of 12%.
On 2 March 2016 the Company issued another convertible note for
GBP0.5 million. The notes are unlisted, secured, transferable and
convertible. Maturity date is 2 March 2017. The Company can redeem
the notes in cash or shares at 25p at Maturity at the Company's
discretion. The Secured Convertible Notes are secured by one common
unit of New York Wheel Investor LLC, representing a total value
US$1 million. Interest is accrued at 5% per annum and payable
quarterly or at Maturity at the Company's discretion. The interest
can be paid in cash or shares, at the average of the 10 day closing
price prior to the end of each calendar quarter, at the Company's
discretion. The Company can redeem the notes at a 25% premium
anytime. On 28 March 2017 the Company announced that the
convertible note was amended and restated. The maturity date is now
on 2 March 2018, the fixed conversion price is now 12p, any accrued
interest will be paid upon conversion and the Company can at any
time redeem in cash all or any part of the outstanding note at 30%
premium to the principal amount.
On 24 April 2016 the Company issued another convertible note for
GBP0.5 million. The notes are unlisted, unsecured, transferable and
convertible. Maturity date is 22 April 2018. Interest is accrued at
8% per annum and payable quarterly. The interest can be paid in
cash or shares, at the average of the 10 day closing price prior to
the end of each calendar quarter, at the Company's discretion. The
notes can be converted into Ordinary Shares at the lower of GBP0.25
or the lowest volume weighted average price over the 10 days prior
to the conversion. The Company can redeem the notes at a 25%
premium anytime. As per the nature of this convertible instrument,
GBP463k has been recognised as an equity component in the reserves,
using a discount rate of 12%. On 8 May 2017 the Company announced
that interest on this convertible note is received by the investor
on conversion or on the maturity date.
On 10 June 2016 the Company issued another convertible note with
for GBP0.5 million. The notes are unlisted, unsecured, transferable
and convertible. Maturity date is 10 June 2018. Interest is accrued
at 8% per annum and payable quarterly. The interest can be paid in
cash or shares, at the average of the 10 day closing price prior to
the end of each calendar quarter, at the Company's discretion. The
notes can be converted into Ordinary Shares at the lower of GBP0.25
or the lowest volume weighted average price over the 10 days prior
to the conversion. The Company can redeem the notes at a 25%
premium anytime. On 8 May 2017 the Company announced that interest
on this convertible note is received by the investor on conversion
or on the maturity date.
On 18 October 2016 the Company issued another convertible note
for GBP0.35 million. The notes are unlisted, unsecured,
transferable and convertible. Maturity date is 13 April 2018.
Interest is built into the face value of the note at GBP1.15 per
GBP 1 of note. The notes can be converted into ordinary shares of
the Company for the lower of GBP 0.25 or the lowest weighted
average price over the 5 days prior to the conversion. For the
first 6 months, the Company can redeem in cash all or any part of
the outstanding convertible note at face value, thereafter with a
15% premium to face value. The convertible note must be redeemed by
the Company on 13 April 2018 in cash, unless it has been fully
converted by then into ordinary shares.
On 18 May 2017 the Company issued another convertible note for
GBP30,000. The notes are unlisted, unsecured, transferable and
convertible. Maturity date is 17 May 2018. Interest is 5% per annum
after an initial 90 day grace period, interest is payable upon
conversion or on maturity in cash or in Ordinary Shares at the
Company's discretion. The notes can be converted into ordinary
shares of the Company at the fix conversion prices of GBP0.03 per
ordinary share. The Company can redeem in cash all or any part of
the outstanding convertible note with a 20% premium to face value.
The convertible note must be redeemed by the Company on 17 May 2018
in cash or in ordinary shares at GBP0.03 per ordinary share, at the
Company's discretion.
As part of a new GBP1 million funding facility, on 13 June 2017
the company issued another convertible note for GBP100,000. The
notes are unlisted, unsecured, transferable and convertible.
Maturity date is 8 June 2019. No conversions can happen in the
first 120 days. The maximum amount that can be converted in any 30
day period is 20% of the principle amount. The conversion price is
the lowest volume weighted average price over 10 days prior to the
conversion. Interest rate is 8% per annum and payable upon
conversion at the Company's option in cash or ordinary shares at
the conversion price. The Company can redeem in cash all or any
part of the outstanding convertible note with a 25% premium to the
principal amount.
The convertible notes, where no equity component has been
described above, have been recognised as a liability in accordance
with IAS 32 - Financial Instruments as the instrument provides an
obligation to the company to either settle the liability via a cash
payment or via the issue of a variable number of shares. The
conversion feature represents an embedded derivative, however this
has not been separately recognised as the conversion feature is
considered to be closely related to the host contract.
8. LOSS PER SHARE
The calculation for loss per share (basic and diluted) for the
relevant period is based on the loss after income tax attributable
to equity holder for the period from 31 December 2016 to 30 June
2017 and is as follows:
Loss attributable to equity holders
(GBP) (560,000)
-----------
Weighted average number of shares 37,823,056
-----------
Loss per share basic (GBP) (0.01)
-----------
Basic loss per share is calculated by dividing the loss after
tax attributable to the equity holders of the group by the weighted
average number of shares in issue during the year.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all potential dilutive ordinary shares namely the conversion of
the convertible loan note in issue. The effect of these potential
dilutive shares would be anti-dilutive and therefore are not
included in the above calculation of diluted earnings per
share.
9. RELATED PARTY TRANSACTIONS
The unsecured convertible note due 17 May 2018 for GBP30,000 was
issued to the Chief Executive Officer of the Company. This note was
convertible at 3p and carried a 5% interest rate after a 90 day
grace period.
10. SUBSEQUENT EVENTS
On 7 July 2017 the Company issued 1,000,000 new ordinary shares
to Mark Gustafson upon conversion of the convertible note due 17
May 2018. Further 6,115,713 new ordinary shares have been allotted
to the holders of the unsecured convertible note due 22 April 2018,
compromising 5,882,353 shares for the conversion of GBP100,000 of
notes and 233,360 for accumulated interest. In addition 141,682 new
ordinary shares and 18,493 new convertible notes have been allotted
in the relation to the unsecured convertible note due 30 June 2019,
for interest for the quarter ended 30 June 2017.
On 2 August 2017 the Company announced that it has allotted
5,510,282 new ordinary shares on the conversion of GBP53,802.39 of
the unsecured convertible note due 13 April 2018. In addition the
Company allotted 10,555,556 shares on the conversion of GBP95,000
of the unsecured convertible note due 22 April 2018 and 490,472
shares for accumulated interest.
On 15 August 2017 the Company announced that is has allotted
5,952,166 new ordinary shares for the conversion of the remaining
GBP73,408.06 of the unsecured convertible note due 13 April 2018.
Further the Company has allotted 22,777,778 new ordinary shares on
the conversion of the last GBP205,000 of the unsecured convertible
note due 22 April 2018 and 1,113,304 shares for accumulated
interest. Further 13,463,027 new ordinary shares were issued for
the conversion of GBP170,000 of the unsecured convertible note due
6 May 2018 and 1,000,322 shares have been issued for accumulated
interest.
On 24 August 2017 the Company announced that is has allotted
35,833,334 new ordinary shares in relation to the conversion of
GBP430,000 unsecured convertible notes due 10 June 2018 and a
further 1,837,808 shares for accumulated interest.
On 25 August 2017 the Company announced that it has received
GBP250,000 of funding through the GBP1 million unsecured
convertible note facility due 8 June 2019. The notes are unlisted,
unsecured, transferable and convertible. Maturity date is 8 June
2019. No conversions can happen in the first 120 days. The maximum
amount that can be converted in any 30 day period is 20% of the
principle amount. The conversion price is the lowest volume
weighted average price over 10 days prior to the conversion.
Interest rate is 8% per annum and payable upon conversion at the
Company's option in cash or ordinary shares at the conversion
price. The Company can redeem in cash all or any part of the
outstanding convertible note with a 25% premium to the principal
amount.
11. GROUP STRUCTURE
The group had the following dormant subsidiaries as of 30 June
2017:
Proportion Portion
of ordinary of ordinary
shares shares
Country held held
of incorporation directly by the
and place Nature by parent group
Name of business of business (%) (%)
------------ ------------------- -------------- ------------- -------------
Global Eye
Holdings
Limited Guernsey Dormant 100 100
------------ ------------------- -------------- ------------- -------------
12. ULTIMATE CONTROLLING PARTY
As at 30 June 2017, no one entity owns greater than 50% of the
issued share capital. Therefore the Company does not have an
ultimate controlling party.
13. DECONSOLIDATION OF DISPOSAL GROUP
The pre-tax loss recognised on the re-measurement of the
disposal group to fair value less costs to sell was GBP3,128k as
per 31 December 2016. The fair value less costs to sell reflect the
expected proceeds on disposal, which have been determined by the
directors to be the waiving of an existing liability to the
purchaser for deferred cash consideration for GBP1,043k. Therefore
the carrying value of the disposal group equals the expected
proceeds at 31 December 2016. Immediately subsequent to the year
end the Company lost control of the disposal group after agreement
was reached with the purchasers. The date of signing the sale and
purchase agreement was 30 January 2017, and the date of the loss of
control was 6 January 2017. As the loss of control happened
immediately subsequent to the year end, the figures as at year end
have been used for the deconsolidation.
This announcement contains inside information.
**ENDS**
For more information visit www.challengeracquisitions.com or
enquire to:
Challenger Acquisitions Limited
Mark Gustafson +1 604 454 8677
St Brides Partners Ltd (PR)
Lottie Brocklehurst, Charlotte +44 (0) 20 7236
Page 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SELFDWFWSEEU
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September 27, 2017 09:30 ET (13:30 GMT)
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