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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Litebulb Grp | LSE:LBB | London | Ordinary Share | GB00BXVMLV36 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMLBB
RNS Number : 4033N
Litebulb Group Limited
18 May 2015
LiteBulb Group Limited
("LiteBulb" or the "Company" or the "Group")
Final Results for the year ended 31 December 2014
2015 trading ahead of budget
LiteBulb (AIM: LBB), the branded product developer, announces audited results for the year ended 31 December 2014, a year of transformational growth and investment to establish a solid platform for future growth and profitability. In addition, trading in the first four months of 2015 is ahead of budget with revenue for the four months to 30 April 2015 up 152% to GBP5.0m (from GBP2.0m in 2014).
The financial results shown in the highlights below are compared to the 12 months ended 31 December 2013.
Financial highlights
-- In line with the trading statement of 27 January 2015, revenue increased 170% to GBP21.9m (2013: GBP8.1m) - and H2 delivered a positive EBITDA of over GBP2m.
-- Gross profit of GBP7.9m (2013: GBP3.3m) -- EBITDA loss (before exceptional items) reduced to GBP0.4m (2013: GBP0.6m) -- Significant investment in Group wide CRM/ERP system to manage future growth -- Cash at bank as at 31 December 2014 of GBP4.2m (2013: GBP1.8m)
Operational highlights
-- Acquisition of Go Entertainment (April 2014) and Concept Merchandise (December 2014) -- Strong organic revenue growth across existing divisions:
-- Litebulb Studios (formerly Rizon Studios) up 67% to GBP1.0m (2013: GBP0.6m)
-- Bluw up 34% to GBP5.5m (2013: GBP4.1m)
-- Meld up 10% to GBP7.8m (2013: GBP7.1m)
-- Successful launch of Mary Berry range of cooking products into Sainsburys -- Successful launch of Disney 'Frozen' products into Tesco -- Winner of Innovation Award at the UK Licensing Awards 2014 for Star Wars homeware range
Current Trading - ahead of budget
-- Revenue for four months ended April 2015 up 152% to GBP5.0m (2014: GBP2.0m) -- Strong response from retailers to new 2015 product ranges
Simon McGivern, Chief Executive of LiteBulb, commented: "This has been a year of strong growth and we have now established a solid platform for future profitability. Revenues for the first four months of the year are up circa 150% on the same period last year and this bodes extremely well for 2015 after a strong profitable performance from the Group in the second half of 2014.
The future of the business is looking very good with further organic growth to come. Litebulb will continue its acquisition strategy when the right opportunities arise and we look forward with optimism to reporting next year's numbers when we will see the full 12 month contributions of our 2014 acquisitions."
The Group's Report and Accounts for the year ended 31 December 2014 is available on the Group's website www.litebulbgroup.com. The Group's AGM will be held at 10am on 4 June 2015 at the offices of Fladgate LLP, 16 Great Queen Street, London WC2B 5DG.
Hot Features
Premium
LiteBulb Group Limited www.litebulbgroup.com
Simon McGivern, Chief Executive Tel: 020 3384 7131
Guy Pettigrew, Group Finance Director
finnCap (NOMAD & Broker) Tel: 020 7220 0500
Stuart Andrews / Scott Mathieson
(Corporate Finance)
Joanna Weaving (Corporate Broking)
Walbrook PR Limited Tel: 020 7933 8780 or litebulb@walbrookpr.com
Paul McManus / Sam Allen Mob: 07980 541 893 / Mob: 07884
664 686
About LiteBulb Group
LiteBulb Group designs, manufactures and distributes innovative brands and products to the global retail market.
LiteBulb Products - our wide range of products are sold in over 30 countries through blue chip retailers including: ASDA, BHS, Tesco, Sainsbury's, WH Smith, Halfords, Marks & Spencer, Morrisons, QVC, Next, Fenwicks and Toys R Us.
LiteBulb Studios is a creative agency with global reach, delivering compelling and agile brand extension programmes to the entertainment industry. LiteBulb Studios has designed products and campaigns for clients around the world, including Disney, Mattel and Miramax.
CHAIRMAN'S STATEMENT
Introduction
2014 has been another transformational year for LiteBulb and we are delighted with the integration and performance of our acquisitions, the organic growth delivered within the Group and the subsequent revenue growth that we have delivered.
As well as increasing our scale we have invested sensibly to create a solid platform for further growth and profitability. During the year we implemented new integrated Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems to ensure we maximise cross-selling opportunities throughout the Company and to enable live financial reporting. The sales and logistics teams have both been strengthened and we believe we have a platform in place to deliver growth both organically and by additional acquisitions.
We are already seeing the benefits of our actions with revenues for the first four months of the year up circa 150% on the same period last year. This bodes extremely well for 2015 after a strong profitable performance from the Group in the second half of 2014.
Whilst the statutory results for the 18 months ended 31 December 2013 are provided later in this statement, we believe that a comparison with the 12 month period to 31 December 2013 is more helpful for investors and this is used as the comparable financial period throughout my Chairman's statement.
Financial Results
The Company generated revenue from continuing operations for the year to 31 December 2014 of GBP21.9m, an increase of 170% compared to the previous 12 month period (2013: GBP8.1m). This produced a gross profit of GBP7.9m (2013: GBP3.3m) reflecting gross margins of 36%.
The second half of the year produced a positive EBITDA of over GBP2m, as indicated in our trading update in January. As a result the Company recorded an EBITDA loss before exceptional administrative expenses for the year of GBP0.4m (2013: GBP0.6m), although this reflects the additional investment made during the year to ensure we have the systems and people in place to deliver further growth.
Cash at bank at 31 December 2014 increased to GBP4.2m from GBP1.8m at 31 December 2013.
Operational Review
Over the last 12 months, we have seen strong financial growth supported by a strengthening of the business, as set out below.
Relationships with retailers have grown as the Group increases in size. At the end of 2014, Litebulb employed around 150 staff, attracting some of the best talent in the industry, from product designers to quality assurance specialists, logistics teams, sales professionals and industry executives. Between the board and the five Managing Directors across the business, it is estimated that there now exists within the Group over 100 years of combined industry experience.
Although the number of customers/retailers has grown significantly from 2013 to 2014, more importantly the quality of our customers has increased, our relationships with them have become deeper and are beginning to yield more favourable opportunities. The Company is not reliant on any one retailer, but sells to a wide and varied range.
Partnerships with major brands have developed alongside the Company's growth, ranging from iconic worldwide brands such as Disney's Frozen and Star Wars, to trending celebrities such as Mary Berry and David Attenborough.
Litebulb has expanded into a number of new product categories, providing many different areas for growth with their partners. From a product range of two items upon flotation in 2010, Litebulb now offers over 1,500 products to its customers, some of the world's major retailers. These products are both our own brand and some of the world's most well-known labels. Litebulb's products are increasingly being recognised as market leading in their design with our Star Wars homeware range winning the Innovation Award at the UK Licencing Awards 2014. The Company is also not reliant on any one product range or brand, given that no range accounts for more than 5% of overall sales.
While around 80% of sales are in the UK, there is huge opportunity to sell the Group's products into foreign markets; this will be a further area for growth in 2015. As we announced earlier in the year, we received a significant order for our Star Wars homeware range from a US partner and given the continued rise in US sales we have opened our first group sales office in the US.
Considerable investment was made into operational systems during 2014 which will benefit the Group over the coming years and help manage future growth. New CRM and ERP systems have been introduced across the Group. Live sales figures can be viewed from a cloud-based system, as well as margin information, stock levels and other key management information. Sales contacts are now centralised across the different Group companies allowing for cross-selling opportunities and improved customer service.
Acquisitions
Two acquisitions were made in 2014, Go Entertainment in April 2014, and Concept Merchandise in December 2014. Both acquisitions (outlined below) bring new categories to the Company, increasing the offering to our brand partners and retailers. Both acquisitions contributed to the 2014 financial results in terms of revenues and profitability and 2015 will benefit from a full year contribution from both.
In respect of the previous acquisitions, the Group benefits began to bear fruit in 2014 and are reflected by improved performance across the board. Bluw returned organic sales growth of 34% to GBP5.5m in 2014; Meld grew by 10% to GBP7.8m and Litebulb Studios returned 67% growth to GBP1.0m. Further progress is forecast across all these divisions in 2015.
Go Entertainment
Go Entertain is a brand extension specialist working with a number of key content owners, including Discovery, History Channel, David Attenborough and ESPN. Go designs, develops and manufactures consumer products focusing in the entertainment space, including books, magazines, DVD's and other gift products. Go has successfully launched in the US and is growing its footprint internationally. The company has been operating in the consumer products market for over five years and brings a track record of strong financial performance, having been profitable for the last four years. Go was acquired on 23 April 2014 and contributed revenues of GBP6.6m and profit after taxation of GBP0.8m to the Group results for the year ending 31 December 2014.
Concept Merchandise
Concept designs, develops and manufactures stationery and party products for the retail market and has been creating bespoke consumer products for some of the largest retailers in the UK for more than 24 years. Based in West Yorkshire, with a staff of 17, its customer base is tightly focused and almost solely UK based. It adds another product category to LiteBulb's offering and further extends the ability of the group to cross-sell throughout its extensive retail network, both at home and abroad. In addition, Concept has focused on designing its own ranges which are proving highly successful; these ranges can benefit further from the Group's brand relationships. Concept was acquired on 10 December 2014 and contributed revenues of GBP1.1m and profit after taxation of GBP48,000 to the Group results for the year ending 31 December 2014.
Fundraisings
In April 2014, we completed a GBP2.0m fundraising to provide expansion capital and followed this in December 2014 with a further GBP3.5m fundraising to provide funding for the acquisition of Concept Merchandise. Both rounds of fundraising were structured as secured Convertible Loan Notes and attracted well respected institutional investors, demonstrating confidence in our strategic plans and growth ambitions.
Outlook
2014 was a transformational year for the Group. We have grown our teams, product ranges, relationships with retailers and brands and we are now in a strong position to continue our fast but controlled growth into 2015, through continued organic growth, the first full contributions from our most recent acquisitions, as well as any future potential acquisitions.
Organic growth from our existing divisions was very strong with revenues, excluding the contributions from acquisitions up 21% year on year. New ranges for iconic brands such as Star Wars and Disney are expected to drive further organic growth, as well as the Group's partnership with Tesco launching product merchandise alongside films such as Frozen. We expect to extend our relationships with these brands and will update shareholders on these deals in due course. In addition we are driving cross-selling opportunities through our new 2,000 sqft sales room in the Battersea office which ensures that each of the group companies is able to showcase a much wider range of products to their varied customers.
Concept was acquired too late in the year to have any material effect on 2014, but alongside a full year's contribution from Go Entertainment it is expected to add strong cash flow and further strategic opportunities for the Group in 2015. We continue to explore further acquisition opportunities and a number of accretive acquisitions have been identified and are being considered.
As mentioned above, our second half last year saw a strong positive EBITDA contribution. With continued growth expected in 2015, we will see the considerable benefits of the operational gearing inherent in the business.
Already the new financial year has started well with the Group trading ahead of budget in the first four months of the year with sales up 152% to GBP5.0m, compared to GBP2.0m in the same period in 2014. We believe that this is a strong indicator of performance for the year as a whole and bodes well for 2015. We remain confident that LiteBulb will continue to grow organically during 2015 and that we have established a platform of critical mass that will deliver growing profits and cash generation.
Michael Hough
Chairman
15 May 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 months 18 months
to 31 December to 31 December
Notes 2014 2013
GBP GBP
Revenue 1 21,868,906 8,698,510
Cost of sales (13,958,516) (5,061,409)
Gross profit 7,910,390 3,637,101
Administrative expenses (8,789,001) (4,765,415)
Exceptional administrative expense 2 (627,604) (243,508)
Operating loss 3 (1,506,215) (1,371,822)
Finance costs 5 (445,650) (254,236)
Loss before tax (1,951,865) (1,626,058)
Taxation 6 (25,128) (141,982)
Loss for the period from continuing
operations (1,976,993) (1,768,040)
Discontinued operations
Loss for the period from discontinued
operations - (814,356)
Loss for the period (1,976,993) (2,582,396)
---------------- ----------------
Other comprehensive income:
Exchange differences on translation
of foreign operations 8,526 56,427
Total comprehensive income (1,968,467) (2,525,969)
================ ================
Loss per share
Basic and diluted loss per ordinary
share 8 (0.0008) (0.0020)
The accompanying accounting policies and notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
Notes 2014 2013
Assets GBP GBP
Non-current assets
Intangible assets 9 10,827,209 4,881,181
Property, plant and equipment 10 731,478 257,064
Deferred tax assets 11 183,769 163,617
Current assets
Inventories 13 3,836,295 1,625,430
Trade and other receivables 14 11,418,736 4,477,256
Cash and cash equivalents 15 4,155,038 1,812,244
19,260,069 7,914,930
------------- -------------
Total assets 31,002,525 13,216,792
============= =============
Equity and liabilities
Capital and reserves attributable
to equity shareholders
Issued share capital 16 31,506,219 26,135,051
Share based payment reserve 102,148 102,148
Reverse acquisition reserve (13,221,177) (13,221,177)
Equity reserve 1,001,948 111,861
Retained earnings (8,007,534) (6,039,067)
Total equity 11,381,604 7,088,816
------------- -------------
Non-current liabilities
Trade and other payables 19 4,324 -
Interest bearing borrowings 18 5,298,052 888,139
------------- -------------
Total non-current liabilities 5,302,376 888,139
------------- -------------
Current liabilities
Trade and other payables 19 14,011,777 4,441,912
Interest bearing borrowings 18 306,768 797,925
Total current liabilities 14,318,545 5,239,837
------------- -------------
Total equity and liabilities 31,002,525 13,216,792
============= =============
Approved by the Board on 15 May 2015 and signed on its behalf by:
Simon McGivern
Director
Company registration number: 91984
Registered in Jersey, Channel Islands
COMPANY STATEMENT OF FINANCIAL POSITION
31 December 31 December
Notes 2014 2013
GBP GBP
Assets
Non-current assets
Investments in subsidiaries 12 27,760,610 17,587,755
Current assets
Trade and other receivables 47,950 -
Cash and cash equivalents 15 (101) (101)
------------- -------------
Total assets 27,808,459 17,587,654
============= =============
Share capital 15 31,663,502 26,292,334
Share based payment 102,148 102,148
Redemption reserve 5,714,487 5,714,487
Retained earnings (16,271,678) (16,268,279)
------------- -------------
Total equity 21,208,459 15,840,690
------------- -------------
Non-current liabilities
Interest bearing borrowings 6,300,000 1,000,000
Current liabilities
Interest bearing borrowings 300,000 746,964
------------- -------------
Total liabilities 6,600,000 1,746,964
------------- -------------
Total equity and liabilities 27,808,459 17,587,654
============= =============
Approved by the Board on 15 May 2015 and signed on its behalf by:
Simon McGivern
Director
Company registration number: 91984
Registered in Jersey, Channel Islands
CONSOLIDATED STATEMENT OF CASH FLOWS
18 months
12 months to
to 31 December 31 December
2014 2013
GBP GBP
Cash flows from operating activities
Loss after tax (1,968,467) (2,525,969)
Non-cash adjustments
Amortisation 236,744 53,014
Depreciation 192,254 59,139
Share payments 112,640 51,532
Changes in working capital
Increase in inventories 502,106 1,194,767
Increase in trade and other receivables (1,008,475) (948,368)
Increase in trade and other payables 4,092,762 250,869
---------------- ---------------
Net cash flows from operating activities 2,159,564 (1,865,016)
---------------- ---------------
Cash flows from investing activities
Purchase of fixed assets (473,083) (124,836)
Product development costs (547,021) (135,949)
Purchase of subsidiaries (net of
cash and cash equivalents) (6,082,893) (1,706,087)
---------------- ---------------
Net cash flows from investing activities (7,102,997) (1,966,872)
---------------- ---------------
Cash flows from financing activities
Repayment of loans (341,157) (258,361)
New loans 5,500,000 2,196,964
Conversion of loan notes (350,000) (450,000)
Shares issued 2,477,384 4,039,187
---------------- ---------------
Net cash flows from financing activities 7,286,227 5,527,790
---------------- ---------------
Net increase in cash and cash equivalents 2,342,794 1,695,902
Opening cash and cash equivalents 1,812,244 116,342
---------------- ---------------
Closing cash and cash equivalents 4,155,038 1,812,244
================ ===============
RECONCILIATION OF CASHFLOW TO NET
DEBT
At 1 January At 31 December
2014 Cashflow Other Changes 2014
GBP GBP GBP GBP
Cash 1,812,244 2,342,794 - 4,155,038
Debt due within
1 year (797,925) 341,157 150,000 (306,768)
Debt due after
1 year (888,139) (5,504,324) 1,090,087 (5,298,052)
126,180 (2,816,049) 1,240,087 (1,449,782)
================== ============ ================ ===============
COMPANY STATEMENT OF CASH FLOWS
18 months
12 months to
to 31 December 31 December
2014 2013
GBP GBP
Cash flows from operating activities
Net loss for the year (3,399) -
Amortisation 3,399 -
Increase in trade and other receivables (47,950) -
---------------- -------------
Net cash flows from operating activities (47,950) -
---------------- -------------
Cash flows from investing activities
Acquisition of subsidiary (7,116,568) (2,059,534)
Shares issued 2,118,038 3,640,721
Loans received 5,500,000 2,196,964
Loans to subsidiary undertakings (2,250,000) (3,778,152)
Loans from subsidiary undertakings 1,796,480 -
Net cash inflow from financing
activities 47,950 -
---------------- -------------
Net increase in cash and cash equivalents - -
Opening cash and cash equivalents (101) (101)
---------------- -------------
Closing cash and cash equivalents (101) (101)
================ =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reverse Share based
acquisition payment Equity Retained
Share capital reserve reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP
Group
At 30 June 2012 17,520,689 (13,221,177) 102,148 - (3,513,098) 888,562
Equity element
of convertible
loan notes - - - 111,861 - 111,861
Shares issued
in period:
Cash 3,589,187 - - - - 3,589,187
Settlement of
creditors 51,532 - - - - 51,532
Acquisitions 4,523,643 - - - - 4,523,643
Conversion of
loan notes 450,000 - - - - 450,000
Comprehensive
income:
Loss for the
period - - - - (2,525,969) (2,525,969)
-------------- ------------- ------------ ---------- ------------ -------------
At 31 December
2013 26,135,051 (13,221,177) 102,148 111,861 (6,039,067) 7,088,816
Equity element
of convertible
loan notes - - - 890,087 - 890,087
Shares issued
in year:
Cash 57,297 - - - - 57,297
Settlement of
creditors 112,640 - - - - 112,640
Acquisitions 2,070,088 - - - - 2,070,088
Conversion of
loan notes 350,000 - - - - 350,000
Shares to be
issued:
Acquisitions 2,781,143 - - - - 2,781,143
Comprehensive
income:
Loss for the
year - - - - (1,968,467) (1,968,467)
At 31 December
2014 31,506,219 (13,221,177) 102,148 1,001,948 (8,007,534) 11,381,604
============== ============= ============ ========== ============ =============
COMPANY STATEMENT OF CHANGES IN EQUITY
Share based
Redemption payment Retained
Share capital reserve reserve earnings Total equity
GBP GBP GBP GBP GBP
At 30 June 2012 17,677,970 5,714,487 102,148 (16,268,279) 7,226,326
Shares issued
in period:
Cash 3,589,187 - - - 3,589,187
Settlement of
creditors 51,534 - - - 51,534
Acquisitions 4,523,643 - - - 4,523,643
Conversion of
loan note 450,000 - - - 450,000
Comprehensive
income:
Loss for the
period - - - - -
-------------- ----------- ------------ ------------- -------------
At 31 December
2013 26,292,334 5,714,487 102,148 (16,268,279) 15,840,690
Shares issued
in year:
Cash 57,297 - - - 57,297
Settlement of
creditors 112,640 - - - 112,640
Acquisitions 2,070,088 - - - 2,070,088
Conversion of
loan note 350,000 - - - 350,000
Shares to be
issued:
Acquisitions 2,781,143 - - - 2,781,143
Comprehensive
income:
Loss for the
year - - - (3,399) (3,399)
At 31 December
2014 31,663,502 5,714,487 102,148 (16,271,678) 21,208,459
============== =========== ============ ============= =============
PRINCIPAL ACCOUNTING POLICIES
Basis of preparation and general information
The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies (Jersey) Law 1991.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all of its subsidiaries as at 31 December 2014.
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
Going concern
The Company's activities are funded by a combination of long term equity capital and term loans. The day to day operations are funded by cash generated from trading.
The Board has reviewed the Company's profit and cash flow projections and are of the opinion that the Company will meet its obligations as they fall due with the use of existing facilities.
The financial statements do not reflect the adjustments that would be necessary were the trading performance of the Company to deteriorate significantly.
Foreign currencies
The functional currency of the Company and the Group is Sterling. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transaction.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
On consolidation, the assets and liabilities of the Group's overseas operations are translated at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Revenue recognition
Revenue is measured at the fair value of consideration received or receivable.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. All such revenue is reported net of discounts and value added and other sales taxes.
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably.
Interest expense recognition
Interest is charged to the income statement on an accruals basis using the effective interest method and is added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Effective interest method
The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability to that asset's or liability's net carrying amount.
Exceptional items
The Group presents as exceptional items on the face of the income statement those significant items of income and expense which, because of their size, nature and infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the period, so as to facilitate comparison with prior periods to assess trends in financial performance more readily.
Investments
Investments in subsidiaries are held at cost less any impairment.
Intangible assets
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be reliably measured. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.
Goodwill representing the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is capitalised, is deemed to have an indefinite useful economic life and is reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses.
Other intangible assets are deemed to have a useful economic life of three years and amortisation on these assets is calculated using the straight line method.
Impairment testing of goodwill and other intangible assets
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at the cash-generating unit level. Goodwill is allocated to those cash-generating units that have arisen from business combinations and represent the lowest level within the Group at which management monitors the related cash flows.
Goodwill with an indefinite life is tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are included within administrative expenses in the statement of comprehensive income and are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.
Tangible assets
Property, plant and equipment is stated at historic cost less subsequent depreciation and impairment.
Historic cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation on assets is calculated using the straight line method to allocate their cost less their residual values over their estimated useful lives, as follows:
Leasehold improvements: 3 years
Office equipment: 3 years
Plant and equipment: 3 years
Motor vehicles: 3 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Subsequent costs are included in an asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Litebulb Group and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial year in which they are incurred.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the statement of comprehensive income.
Income tax
Income tax expense represents the sum of the tax currently payable and deferred income tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is provided in full, using the Balance Sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and the carrying amounts in the financial statements.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than as a business combination) or other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is determined using the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, provided they are enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxed levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Capital management
Capital is made up of stated capital, retained earnings and non-current borrowings. The objective of the Company's capital management is to ensure that it maintains strong credit ratings and capital ratios. This will ensure that the business is correctly supported and shareholder value is maximised.
The Company manages its capital structure through adjustments that are dependent on economic conditions. In order to maintain or adjust the capital structure, the Company may choose to change or amend dividend payments to shareholders or issue new share capital to shareholders. There were no changes to the objectives, policies or processes during the year ended 31 December 2014.
Inventories
Inventories are valued at the standard cost basis and are included at the lower of cost and net realisable value less any provisions for impairment.
When goods are sold, costs previously included in the measurement of that inventory are recognised as an expense through cost of sales.
Trade and other receivables
Trade and other receivables are recognised by the Company and carried at original invoice amount less an allowance for any uncollectible or impaired amounts. Trade and other receivables are classified as loans and receivables.
Provision against trade receivables is made where there is objective evidence that the Company will not be able to collect all amounts due. Bad debts are written off when they are identified as being irrecoverable.
Other receivables are recognised at fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term deposits. Short term deposits are defined as deposits with an initial maturity of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purposes of the Cash flow statement.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Critical accounting judgements
The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Recognition of deferred tax asset
The Company's management bases its assessment of the profitability of future taxable income on the Company's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is recognised in full.
Employee benefits - Share based payments
The Group operates an equity-settled, share-based payment compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee service received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.
Where options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to stated capital when the options are exercised.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
Adoption of new revised International Financial Reporting Standards (IFRS)
The IASB and IFRIC issued a number of Standards and Interpretations with an effective date before the date of these financial statements. The new Standards and Interpretations issued include the following:
IAS 27 (revised 2011) Separate Financial Statements
IAS 28 (revised 2011) Associates and Joint Ventures
IAS 32 Offsetting Financial Assets and Financial Liabilities (amendment)
IAS 36 (amendment) Recoverable Amount Disclosures for Non-Financial Assets
IAS 39 (amendment) Novation of Derivatives and Continuation of Hedge Accounting
IFRS 10 Consolidated Financial Statements
IFRS 10, IFRS 12 & IAS 27 Investments Entities (amendments)
IFRS 11 Joint Arrangements
IFRS 12 Disclosures of Interests in Other Entities
IFRIC 21 Levies
Adoption of these Standards and Interpretations did not have any material impact on the Group's financial statements, or result in changes in accounting policy or additional disclosure.
The IASB and IFRIC have issued a number of Standards and Interpretations with an effective date after the date of these financial statements. The new Standards and Interpretations issued, with their effective from dates, include:
IAS 16 & IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation - 1 January 2016
IAS 16 & IAS 41 Agriculture: Bearer Plants - 1 January 2016
IAS 19 Defined Benefit Plans - Employee contributions - 1 July 2014
IFRS 7 Disclosures (amendment) - Mandatory effective Date and Transition Disclosures - 1 January 2015
IFRS 9 Financial Instruments - Classification and Measurement - 1 January 2018
IFRS 11 Joint Arrangements - Accounting for Interests in Joint Operations - 1 January 2016
IFRS 14 Regulatory Deferral Accounts - 1 July 2014
IFRS 15 Revenue from Contracts with Customers - 1 January 2017
Annual Improvements to IFRS (2010-12) - 1 July 2014
Annual Improvements to IFRS (2011-13) - 1 July 2014
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. SEGMENT ANALYSIS
The Group operates in one business segment, being the design, production and sale of innovative products in the UK and overseas. For management purposes, the Board of Directors of the Company considers the business to operate from one geographical location, being the UK.
The segmental results by geographical destination are shown below:
Year ended Period ended Year ended Period ended
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Sales Sales Gross Profit Gross Profit
GBP GBP GBP GBP
UK 17,792,482 6,768,931 6,248,550 2,658,034
EU 1,061,796 696,141 335,266 291,108
Rest of the World 3,014,628 1,664,583 1,326,574 698,321
------------- ------------- ------------- -------------
21,868,906 9,129,655 7,910,390 3,647,464
------------- ------------- ------------- -------------
Less discontinued
operations - (431,145) - (10,363)
------------- ------------- ------------- -------------
21,868,906 8,698,510 7,910,390 3,637,101
============= ============= ============= =============
2. EXCEPTIONAL ADMINISTRATIVE EXPENSES
The exceptional costs relate to costs comprised of fees and services rendered in relation to following items:
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Bluw acquisition 86,223 140,634
Meld acquisition 17,500 102,874
Go acquisition 161,921 -
Concept acquisition 361,960 -
627,604 243,508
============= =============
3. OPERATING LOSS
The loss before taxation is stated after charging the following:
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Auditor's remuneration:
Parent company 10,000 12,000
Subsidiaries 46,250 22,000
Tax 5,000 9,070
Operating lease costs 207,872 183,794
Amortisation of intangible assets 192,254 53,014
Depreciation 236,744 59,139
Loss on exchange differences 57,489 48,889
4. EMPLOYEE EXPENSES
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Wages and salaries 4,416,474 2,286,687
Social security costs 468,700 243,941
Pension costs 51,056 -
Compensation for loss of office 78,677 -
5,014,907 2,530,628
============= =============
The following are included in the above in relation to the executive Directors:
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Wages and salaries 450,000 614,750
Benefits 9,192 14,750
Social security costs 60,996 82,862
520,188 712,362
============= =============
No Directors are receiving post-employment benefits. Details of Directors' emoluments, including share option awards, are given in the Directors' Report.
The average monthly number of staff (including executive Directors) employed by the Group during the year was:
Year ended Period ended
31 December 31 December
2014 2013
Number Number
Sales and Marketing 28 11
Management, Finance and Administration 108 26
------------- -------------
136 37
============= =============
5. FINANCE INCOME AND COSTS
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Loan interest payable 309,712 149,255
Other bank interest payable and charges 135,938 104,981
445,650 254,236
============= =============
6. INCOME TAX
Components of income tax expense
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Current income tax expense
Current income tax charge 25,128 141,982
25,128 141,982
============= =============
Major components of tax expense:
Loss on ordinary activities
before taxation (1,951,895) (1,626,058)
------------- -------------
Loss on ordinary activities
multiplied by UK standard rate
of 21% (2013: 23%) (409,892) (373,993)
Tax effect of expenses not
deductible for tax purposes 102,489 239,987
Capital allowances - (28,584)
Utilised losses - (39,984)
Unrelieved losses 326,614 378,567
Prior year adjustment 5,917 -
------------- -------------
Current income tax charge 25,128 141,982
============= =============
7. LOSS ATTRIBUTABLE TO THE PARENT COMPANY
The loss attributable to the parent company, Litebulb Group Limited, was GBP3,399 (2013: GBPnil). As permitted by Companies (Jersey) Law 1991, no separate income statement is presented in respect of the parent company.
8. LOSS PER SHARE
The calculation of basic loss per share is based on the loss attributable to ordinary shareholders and the weighted average number of ordinary shares in issue during the year.
The calculation of diluted loss per share is based on loss per share attributable to ordinary shareholders and the weighted average number of ordinary shares that would be in issue, assuming conversion of all dilutive potential ordinary shares into ordinary shares.
Reconciliations of the loss and weighted average number of shares used in the calculations are set out below:
Year ended Period ended
31 December 31 December
2014 2013
GBP GBP
Basic loss per share
Reported loss (1,968,467) (2,525,969)
Reported loss per share (pence) (0.08) (0.20)
Number of Number of
Shares Shares
Weighted average number of ordinary shares:
As at 31 December 2013 2,237,696,654 1,270,070,834
Shares issued on:
23 January 2014 5,132,188
11 February 2014 18,729,835
20 March 2014 14,878,559
7 April 2014 34,535,477
23 April 2014 126,006,065
30 April 2014 4,711,538
27 June 2014 2,134,704
8 October 2014 1,022,129
10 December 2014 1,489,988
Weighted average number of ordinary shares 2,446,337,137
-------------- --------------
Due to the Group's loss for the year, the diluted loss per share is the same as the basic loss per share.
9. INTANGIBLE ASSETS
Group
Goodwill Product development Total
GBP GBP GBP
Cost
At 1 January 2014 4,806,458 165,027 4,971,485
Foreign exchange differences - 2,353 2,353
Additions 5,591,258 545,060 6,136,318
Disposals - (91,558) (91,558)
At 31 December 2014 10,397,716 620,882 11,018,598
----------- -------------------- -----------
Amortisation and Impairment
At 1 January 2014 - 90,304 90,304
Foreign exchange differences - 389 389
Amortisation during the year - 133,209 133,209
Impairment 59,045 - 59,045
Disposals - (91,558) (91,558)
At 31 December 2014 59,045 132,344 191,389
----------- -------------------- -----------
Net book value at 31 December
2014 10,338,671 488,538 10,827,209
=========== ==================== ===========
Net book value at 31 December
2013 4,806,458 74,723 4,881,181
=========== ==================== ===========
The recoverable amount for the cash generating units was derived from value-in-use calculations, covering a detailed two year forecast followed by the extrapolation of expected cash flows at growth rates of between 3% and 30% for the following three years. The growth rate reflects the estimated long term average growth rates for the product lines of the cash generating units. A discount rate of 10% has been applied to these calculations, estimated by management using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the Group.
10. PROPERTY PLANT AND EQUIPMENT
Group
Leasehold Plant and
improvements Office equipment equipment Motor vehicles Total
GBP GBP GBP GBP GBP
Cost
At 1 January
2014 224,268 284,065 428,029 16,472 952,834
Foreign exchange
differences (347) (752) (7,888) - (8,987)
Acquired
with subsidiaries 4,261 61,341 44,938 120,477 231,017
Additions 9,556 145,915 308,942 17,466 481,879
Disposals - (5,890) - - (5,890)
At 31 December
2014 237,738 484,679 774,021 154,415 1,650,853
-------------- ----------------- ----------- --------------- ----------
Depreciation
At 1 January
2014 152,688 202,708 340,012 362 695,770
Foreign exchange
differences (347) (738) (6,164) - (7,249)
Charge for
the year 29,393 80,884 112,308 14,159 236,744
Disposals - (5,890) - - (5,890)
At 31 December
2014 181,734 276,964 446,156 14,521 919,375
-------------- ----------------- ----------- --------------- ----------
Net book
value at
31 December
2014 56,004 207,715 327,865 139,894 731,478
============== ================= =========== =============== ==========
Net book
value at
31 December
2013 71,580 81,357 88,017 16,110 257,064
============== ================= =========== =============== ==========
11. DEFERRED TAX
31 December 31 December
2014 2013
GBP GBP
Deferred tax assets arising
from tax losses 183,769 163,617
============ ============
All deferred tax assets (including tax losses and other tax credits) have been recognised in the balance sheet.
12. INVESTMENTS
Company
GBP GBP GBP
Shares Loans Total
At 1 January 2014 10,024,556 7,563,199 17,587,755
Additions 10,034,263 138,592 10,172,855
----------- ---------- -----------
At 31 December 2014 20,058,819 7,701,791 27,760,610
=========== ========== ===========
Details of the acquisitions made during the year can be found in note 22.
Interests in group undertakings
Details of the Company's principal subsidiary undertakings (which have been consolidated in the group financial statements) are as follows:
Proportion
Country of voting
Name of undertaking of incorporation rights held Nature of business
Bluwstuff Ltd England 100% Design and sale of
innovative
products
Bluw Ltd England 100% (indirectly) Design and sale of
innovative
products
Bluw Inc USA 100% (indirectly) Design and sale of
innovative
products
Bluw HK Ltd Hong Kong 100% (indirectly) Design and sale of
innovative
products
Meld Group Ltd England 100% Design and sale of
books,
gifts, puzzles and
homeware
products
Ginger Fox Limited England 100% (indirectly) Design and sale of
books,
gifts, puzzles and
homeware
products
Meld Marketing England 100% (indirectly) Design and sale of
Strategies books,
Ltd gifts, puzzles and
homeware
products
Go Entertainment England 100% Design and sale of
Group Ltd home entertainment
products
Go International England 100% Design and sale of
Ltd home entertainment
products
Canny Media Ltd England 100% Design and sale of
home entertainment
products
Concept Merchandise England 100% Design and sale of
Ltd gift wrap,
bags and accessories
Litebulb Studios England 100% Creative services and
Ltd (formerly Rizon design
Studios Ltd)
Scarlett Willow Ltd England 100% Sale of homeware
products
Litebulb Corporate England 100% Provision of corporate
Ltd (formerly Ila services
Security Ltd)
13. INVENTORIES
Group
31 December 31 December
2014 2013
GBP GBP
Finished goods for resale 3,686,295 1,625,430
============ ============
14. TRADE AND OTHER RECEIVABLES
Group
31 December 31 December
2014 2013
GBP GBP
Receivable from trade customers 10,059,759 3,707,931
Other debtors 1,358,977 769,325
------------ ------------
11,418,736 4,477,256
============ ============
Amounts receivable from trade customers are non-interest bearing and are generally on 30 - 90 day terms.
All amounts are due within one year. The carrying value of trade receivables is considered a reasonable approximation of fair value.
15. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and short-term deposits held by Group companies. The carrying amount of these assets approximates their fair value.
16. STATED CAPITAL
Allotted and called up:
Group Company
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Number Number GBP GBP
Allotted and called
up:
Authorised
Founder shares of no
par value 10 10
Ordinary shares of
no par value Unlimited Unlimited
============== ============== ============ ============
Issued and fully paid
Founder shares of no
par value 2 2 - -
Ordinary shares of
no par value 2,553,528,714 2,237,696,654 28,882,358 26,292,334
-------------- -------------- ------------ ------------
2,553,528,716 2,237,696,656 28,882,358 26,292,334
-------------- -------------- ------------ ------------
To be issued:
Ordinary shares of
no par value 347,642,857 - 2,781,143 -
-------------- -------------- ------------ ------------
2,901,171,573 2,237,696,656 31,663,501 26,292,334
============== ============== ============ ============
During the year, 315,832,060 ordinary shares of no par value were issued as follows:
On 23 January 2014, 5,462,329 shares in respect of interest;
On 11 February 2014, 21,107,306 shares in respect of the conversion of a loan note and interest;
On 20 March 2014, 18,936,328 shares in respect of the conversion of a loan note, interest, exercise of options and settlement of a creditor;
On 7 April 2014, 46,906,394 shares in respect of the conversion of a loan note and interest;
On 23 April 2014, 182,008,761 shares in respect of the acquisition of Go Entertainment Group Ltd;
On 30 April 2014, 7,000,000 in respect of the exercise of options;
On 27 June 2014, 4,155,252 in respect of interest;
On 8 October 2014, 4,429,224 in respect of interest; and
On 10 December 2014, 25,826,466 in respect of the acquisition of Concept Merchandise Ltd.
The 347,642,857 ordinary shares of no par value to be issued are in respect of the earn-out arrangements of Meld Group Ltd for the year ending 31 December 2014.
17. SHARE BASED PAYMENTS
The total charge for the year relating to share based payment plans was GBPnil (2013: GBPnil).
The Company operates several share option schemes. At 31 December 2014, options under these schemes, including those held by Directors, were outstanding over:
2014 2013
Weighted Weighted
average exercise average
Number price Number exercise price
Outstanding at start
of year 168,540,289 0.34p 38,648,677 0.12p
Granted 216,788,686 0.82p 129,437,067 0.41p
Exercised (15,496,443) 0.37p - -
Lapsed (6,336,897) 0.71p - -
------------- ------------------ ------------ ----------------
Exercisable at end
of year 363,495,635 0.62p 168,540,289 0.34p
============= ================== ============ ================
18. FINANCIAL LIABILITIES
Group
31 December 31 December
2014 2013
GBP GBP
The debt is repayable as follows:
Within one year 306,768 797,926
Between one and two years 718,771 -
Between two and five years 4,579,281 888,139
------------ ------------
5,604,820 1,686,064
============ ============
The loans are secured by fixed charges over all assets held within the Group both present and future. The interest rates of the loans varies from 5% to 10%.
Included within the balance is an amount of GBP5,298,052 (2013: GBP988,139) in respect of a convertible instrument. Other loans are repayable by instalments.
Convertible loan notes
The principal amount of the convertible loan notes is GBP6,300,000, which had been drawn down in full at 31 December 2014. Interest accrues at 10% per annum on the amount drawn down and is paid quarterly, either in cash or in ordinary shares on the basis of a pre agreed formula.
The repayment dates are February 2016, April 2017 and December 2017. The noteholders may, by written notice to the Company, convert all or part of the outstanding notes into ordinary shares on the basis of a pre agreed formula.
19. TRADE AND OTHER PAYABLES
Group
31 December 31 December
2014 2013
GBP GBP
Payable to trade suppliers 6,485,926 2,710,987
Accrued liabilities 1,941,143 400,907
Other creditors 4,249,119 398,058
Tax payable 1,335,589 931,960
------------ ------------
14,011,777 4,441,912
============ ============
All amounts are payable within one year. The fair values of trade and other payables are not materially different from those disclosed above.
Included within Other creditors is an amount of GBP3,924,034 (2013: GBP398,058) which is secured against the trade receivable balances under invoice finance arrangements.
The balance due in more than one year of GBP4,324 (2013: GBPnil) relates to Other Creditors.
20. OPERATING LEASE COMMITMENTS
At 31 December 2014 the Group had outstanding annual commitments for future minimum lease payments under non-cancellable leases, which fell due as follows:
31 December 31 December
2014 2013
GBP GBP
Within one year 20,701 85,302
Within 2 to 5 years 597,288 98,500
617,989 183,802
============ ============
21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and Company's financial instruments comprise cash balances and receivables and payables that arise directly from its operations, for example, accrued income with respect to deposit bank interest and purchases awaiting settlement.
The main risks the Group and Company faces from its financial instruments are (i) credit risk, (ii) liquidity risk, (iii) interest rate risk and (iii) foreign currency risk.
The Board regularly reviews and agrees policies for managing each of these risks. The Company's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors as their carrying amount is considered to be a reasonable approximation of their fair value.
Credit risk
The Group is exposed to counterparty default or non-performance risk on its holdings of cash and cash equivalents, deposits with banks and trade receivables. Exposure to credit risk is limited to the carrying amounts of those class of financial assets recognised at the balance sheet date.
The Group trades only with recognised, credit worthy customers. All customers who wish to trade on credit are subject to credit verification checks. Customer balances are checked regularly to ensure that the risk of exposure to doubtful debts is minimised.
Liquidity risk
The liquidity risk of the Company is the risk that the Group could be unable to meet its financial obligations as they fall due. The Group has given responsibility of liquidity risk management to the Board who have formulated liquidity management tools to service this requirement.
Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows.
Interest rate risk
The Group has seasonal cash flow and uses short term borrowings, namely bank overdrafts, bank loans, finance advances and import loans to finance working capital requirements.
The interest rates of the long term borrowings are on fixed.
The Group believes that an interest rate sensitivity analysis is not representative of the underlying risks due to the seasonality of cash flows and the short term nature of borrowings and deposits.
Interest rate sensitivities have not been presented here as the amounts would not be material to the consolidated financial statements.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar and the Euro.
The sensitivity analysis below is based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur and changes in some of the assumptions may be correlated, for example a change in interest rate and a change in foreign currency exchange rates.
The following table details how the Group's foreign currency financial assets at the balance sheet date would (decrease)/increase, given a 10% revaluation in the respective currencies against Sterling and in accordance with IFRS 7 all other variables remaining constant.
The 10% change represents a reasonably possible change in the specified foreign exchange rates in relation to the Group's functional currencies.
Sterling Sterling
strengthening weakening
GBP GBP
US dollars (778) 778
Euros 34,418 (34,418)
--------------- -----------
33,641 (33,641)
=============== ===========
22. ACQUISITIONS
In order to broaden the Group's product offering and customer reach, the following acquisitions were made during the year.
On 23 April 2014 the Company acquired the entire share capital of Go Entertainment Group Ltd. The book value, which is the equivalent to fair value, of the liabilities at acquisition were as follows:
GBP
Fixed assets 40,588
Inventories 977,492
Trade and other receivables 2,669,278
Cash and cash equivalents (210,549)
Trade and other payables (2,805,860)
Net assets 670,949
Goodwill arising on acquisition 1,410,619
------------
Total consideration 2,081,568
============
Satisfied by:
182,008,761 ordinary shares of no par value 1,820,088
Cash 261,480
------------
2,081,568
============
Revenue of GBP6,584,658 and profit after taxation of GBP812,057 have been included in the Consolidated Statement of Comprehensive Income for the year ending 31 December 2014.
On 10 December 2014 the Company acquired the entire share capital of Concept Merchandise Limited. The book value, which is the equivalent to fair value, of the liabilities at acquisition were as follows:
GBP
Fixed assets 190,546
Inventories 1,585,479
Trade and other receivables 3,284,355
Cash and cash equivalents 1,244,223
Trade and other payables (2,529,100)
Net assets 3,775,503
Goodwill arising on acquisition 1,259,497
------------
Total consideration 5,035,000
============
Satisfied by:
25,826,486 ordinary shares of no par value 250,000
Cash 4,785,000
------------
5,035,000
============
Revenue of GBP1,079,285 and profit after taxation of GBP48,004 have been included in the Consolidated Statement of Comprehensive Income for the year ending 31 December 2014.
If both acquisitions had been included throughout the whole reporting period, the Group's Revenue and loss after taxation for the year ending 31 December 2014 would have been GBP29.9m and GBP1.4m respectively.
23. RELATED PARTY TRANSACTIONS
Entities with joint control or significant influence over the entity
During the year the Group acquired goods totalling GBPnil (2013: GBP411,112) for resale from Locca Tech Limited, a company of which Simon McGivern and James Phillips are directors. At the year end, GBP40,561 (2013: GBP74,296) was due by the Group and is included within trade and other payables.
During the year Bluebell PR Limited, a company of which the wife of Simon McGivern is a director, provided PR services to the Group to the value of GBPnil (2013: GBP65,900). At the year end, GBP9,600 (2013: GBP9,600) was due by the Group and is included within trade and other payables.
During the year the Company purchased services from Zag Limited, a shareholder, in the sum of GBP32,583 (2013: GBP21,417). At the year end, GBP21,600 (2012: GBP25,701) of this amount was included in trade and other payables.
During the year the Group sold goods to Handpicked Companies Limited totalling GBP47,463 (2013: GBP188,703), a company of which Simon McGivern was a director for part of the year. At the year end, a balance of GBPnil (2013: GBP103,871) was outstanding. During the year the Group also hired space to Handpicked Companies Limited totalling GBP25,950 (2013: GBP38,000). At the year end, a balance of GBPnil (2013: GBP45,600) was outstanding.
All transactions have been undertaken on an arm's length basis, are unsecured and are on normal commercial terms.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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