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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Cellcast Plc | LSE:CLTV | London | Ordinary Share | GB00B0GWFM68 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.25 | 1.00 | 1.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCLTV
RNS Number : 7277M
Cellcast plc
01 May 2018
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
1 May 2018
Cellcast Plc
("Cellcast", the "group" or the "Company")
Audited results for the year ended 31 December 2017
The Board of Cellcast Plc (AIM: CLTV) announces the Company's audited results for the year ended 31 December 2017.
Highlights
-- Group operating revenues of GBP12.0 million (2016: GBP12.1 million), comprising:
o core interactive broadcast revenue of GBP11.3 million (2016: GBP11.5 million); and
o technical services and consulting to overseas gaming and lottery operators of GBP660,000 (2006: GBP620,000)
-- Cost of sales were GBP11.2 million (2016: GBP11.0 million) -- Gross profit of GBP0.8 million (2016: GBP1.1 million)
-- Board decision to fully provide against all amounts held in relation to the Lexinta Fund, totalling GBP754,000
-- Loss for the year after accounting for, inter alia, the Lexinta impairment, was GBP647,000 (2016: profit of GBP645,000)
-- Net cash balance at 31 December 2017 of GBP1.1 million (31 December 2016: GBP1.1 million) -- Loss per share of 0.8p (2016: earnings per share of 0.8p)
-- Renegotiation of supplier bandwidth agreements in July 2017 resulted in an improved performance in H2 2017.
Craig Gardiner, Chief Executive of Cellcast, commented:
"Whilst we continued to see a gradual decline in the core interactive broadcast business throughout 2017, the reduction in revenue from the production and distribution of participatory television formats has been partially offset by an increase in revenues from online and mobile interaction. In addition, revenue contribution from the group's overseas consultancy operations also improved.
"The core focus of the Board in 2017 has been to control the cost base in all areas of the business. The renegotiation of our supplier bandwidth agreements in July 2017 has led to the Company trading profitably at the operating profit level in the second half of the financial year.
"Whilst the Board has taken the prudent approach of making a 100% provision for the funds held by the group in relation to the Lexinta Fund, this has not had an impact on the day to day running of the business, which continues to have sufficient funds for its normal operations."
For further information:
Cellcast Plc 020 3376 9420 Mike Neville - Non-Executive Chairman Craig Gardiner - Chief Executive Officer Emmanuelle Guicharnaud - Finance Director Allenby Capital Limited (Nominated Adviser and Broker) 0203 328 5656 Nick Naylor / James Reeve
Chief Executive's statement
I am pleased to present my first review as the Chief Executive.
The UK market has continued, as we forecast, to experience difficult economic conditions in our core markets. This has meant we have had to be extremely focused in our strategy, adaptable in our thinking, and cautious in how we invest in new areas.
2017 Results
Cellcast's total operating revenues amounted to GBP12.0 million in 2017, compared to GBP12.1 million in 2016, a decrease of 0.8%.
The group's interactive broadcasting activities in the UK generated GBP11.3 million of revenue (2016: GBP11.5 million) which reflects a decrease of 1.7%.
The group's income from the provision of management services and consultancy to overseas gaming and lottery operators, which launched during the prior year, generated GBP660,000 of revenue (2016: GBP620,000), an increase of 6.5%.
Cost of sales amounted to GBP11.2 million, compared to GBP11.0 million in 2016. This increase of 1.8% primarily comes from the growth in online revenues that carry more direct costs.
The group's gross profit amounted to GBP0.8 million in 2017 compared to GBP1.1 million in 2016. As was the case in 2016, the group benefitted from the additional revenue from its overseas consultancy activities, which compensated for the profit reduction in its core UK broadcast services.
Following the introduction of the new bandwidth supplier agreement during 2017 the group has been trading profitably at the operating profit level.
General and administrative costs decreased by 5%, from GBP593,000 in 2016 to GBP565,000 in 2017. These costs exclude the foreign exchange loss of GBP30,000 in 2017 (2016: gain of GBP61,000). Approximately 58% of these costs were personnel costs (2016: 61%).
Amortisation and depreciation expenses for 2017 were GBP93,000, a GBP30,000 decrease on those of 2016 (GBP123,000).
On 5 January 2018 the group announced its decision that the Board considered it was appropriate to make a provision for 100% of its interest in the Lexinta fund in its full year accounts for the year ended 31 December 2017. The total amount recognised and the circumstances surrounding the provision are detailed in note 6 to the consolidated financial statements.
The group's trade receivables were significantly higher at the reporting date due to early raising of invoices in 2017 as compared to 2016. This has also resulted in a fall in accrued income. In addition, as at the reporting date a significant amount of trade receivables was due from a few large customers. This was a one-off event and all amounts have been received since the reporting date. The fall in other receivables is due to the provision made in respect of amounts due from Global Gaming (as disclosed in note 6).
After taking into account the net interest, share of associate results, impairment losses and the taxation impact and fair value movements, the total loss for 2017 was GBP647,000 (2016: profit of GBP645,000). 2017 earnings per share was negative 0.8p (2016: positive earnings per share of 0.8p).
The Strategic report gives a more extensive description of the group's operations during the year and technological developments.
Funding
At 31 December 2017, the group had a net cash balance of GBP1.1 million (2016: GBP1.1 million).
The total assets at 31 December 2017 amounted to GBP3.3 million, a decrease of GBP1.1m on the previous year. The decrease was mainly due to the 100% provision on the Lexinta investment (inclusive of gains on the investment generated in the previous two years).
Outlook
As previously announced, following the renegotiation of our supplier bandwidth agreements in August, the second half of 2017 performed better than the first half. However, the first few months of 2018 have proved challenging following a similar seasonal pattern as the previous year. In addition, the group's core revenues have been negatively impacted by the increasing penetration of next generation satellite boxes that make it harder for viewers to access the group's content. This has resulted in declining revenues from the Sky platform which we are addressing through the reorganisation of our bandwidth requirements.
As announced on 5 January 2018, the Company has made a 100% provision for the funds invested in Lexinta. The company continues to work with its Lawyers and other parties affected by the same problems, but the failure to recover these monies has had no impact on the day to day business of the group which has sufficient funds for its normal and continuing operations.
During 2017 the group began to see the impact of the diversification of its revenues and realise meaningful contribution from its consultancy activity. The technical consultancy business in East Africa has been performing well and newly developed services are increasing its scope.
Within interactive broadcasting the continuing decline in revenue in participatory television formats was significantly offset by the increase in web derived income over the course of 2017. The first quarter of this year has seen continued focus on developing and marketing our portfolio of online services to maintain growth levels through 2018.
Craig Gardiner
Chief Executive Officer
1 May 2018
Strategic report
Review of business
The group's main core activity from which it derives the majority of its revenue continues in the production and distribution of participatory television formats across multiple digital platforms in the United Kingdom. However, revenues from online and mobile interaction have increased and now provide a significant income stream. These income streams combined are referred to as 'interactive broadcasting'. Additionally, the group has continued to derive significant income from its overseas consultancy services.
Further details on the financial performance of the group during the year is given in the Chief Executive's statement.
Update on technology
The Technology Division focused on three key areas in 2017, Business intelligence, Capacity and bandwidth efficiency and Technical services provision. On Business intelligence (BI), the group has worked with partners to deploy a Broadcast BI system based on Microsoft Azure Cloud with a front end based built internally. These systems provide the group with fine grained analysis of user behaviour leading to an increase in average revenue per user ("ARPU") across the business units. Utilizing the BI systems, the group has been able to do capacity and bandwidth analysis across all channels in the business. By reviewing the performance of each hour of capacity, it targeted the hours of broadcast that were non- performing which led to a review with suppliers to reduce the overall hours of capacity required. This led to a reduction in Freeview capacity in 2017 and a further reduction in Satellite bandwidth in 2018. The group has also continued to build the Technical services department, it is now able to provide the services developed by the Technology team to third parties. The goal of 2018 is to grow out the Services team and include the other development such as the BI as part of the product offering.
Key performance indicators
The directors continue to monitor the performance of the business through various key performance indicators ("KPIs"), of which the principal ones are broadcast revenue, broadcast gross profit margins, and overall group profitability. These KPIs continue to be monitored along with the compliance record with broadcasting regulations, where there have been no material breaches in the year.
H1 2017 H2 2017 2017 2016 Full year Full year --------- ------------------ ------------------ ------------------ Broadcast revenue 5,469,311 5,840,315 11,309,626 11,452,101 --------------------------- --------- ------------------ ------------------ ------------------ Consultancy services 300,000 360,000 660,000 620,000 --------------------------- --------- ------------------ ------------------ ------------------ Operating (loss) / profit* (252,622) 383,179 130,557 467,247 --------------------------- --------- ------------------ ------------------ ------------------
* Excludes Lexinta provision (see note 6 of the consolidated financial statements)
The KPIs show a 1.2% decline in broadcast revenue and a 68% drop in operating profit, both of which are consistent with previous comments relating to the difficulties experienced within this sector. The shift in the broadcasting revenue to products generating less profit margin also explains the drop in the group profitability.
The comparative between the first half of 2017 and the second shows the recovery experienced by the group following the renegotiation of its supplier agreement.
Consolidated statement of comprehensive income
For the year ended 31 December 2017
As restated Note 2017 2016 GBP GBP Revenue: Interactive broadcasting 11,309,626 11,452,101 Management and consultancy services 660,000 620,000 ------------- --------------- Total revenue 1 11,969,626 12,072,101 ------------- --------------- Cost of sales (11,151,615) (10,949,499) ------------- --------------- Gross profit 818,011 1,122,602 ------------- --------------- Operating costs and expenses: General and administrative (594,636) (531,885) Amortisation and depreciation (92,818) (123,470) Total operating costs and expenses (687,454) (655,355) ------------- --------------- Operating profit 130,557 467,247 Fair value gains and losses 5 12,719 58,196 Foreign exchange (loss)/gain on current asset investments 4 (45,315) 79,038 Impairment losses 6 (754,358) - Finance costs 7 (7,953) (8,388) Share of results in associate 14 11,913 55,906 (Loss)/profit before tax 4 (652,437) 651,999 Taxation 8 5,794 (7,195) ------------- --------------- (Loss)/profit for the year and total comprehensive income attributable to owners of the parent from continuing operations (646,643) 644,804 ============= =============== Earnings per share attributable to owners of the parent from continuing operations Basic & diluted (pence) 9 (0.8p) 0.8p ============= ===============
Consolidated statement of financial position
As at 31 December 2017
Note 2017 2016 Assets GBP GBP Non-current assets Intangible assets 10 94,149 119,221 Property, plant and equipment 11 122,741 140,603 Investments 12 88,813 88,813 Interest in associate 14 - 63,045 305,703 411,682 ----------- ----------- Current assets Investments- financial assets 15 - 510,920 Trade and other receivables 16 1,954,053 2,343,977 Cash and cash equivalents 1,057,301 1,101,235 ----------- ----------- 3,011,354 3,956,132 ----------- ----------- Total assets 3,317,057 4,367,814 =========== =========== Capital and reserves Called up share capital 20 2,285,398 2,285,398 Share premium account 20 5,533,626 5,533,626 Merger reserve 20 1,300,395 1,300,395 Warrant reserve 20 13,702 13,702 Retained earnings 20 (7,423,494) (6,776,851) ----------- ----------- Equity attributable to owners of the parent 1,709,627 2,356,270 ----------- ----------- Liabilities Non-current liabilities 17 37,113 385,000 Current liabilities Trade and other payables 18 1,570,317 1,626,544 Total liabilities 1,607,430 2,011,544 ----------- ----------- Total equity and liabilities 3,317,057 4,367,814 =========== ===========
Company statement of financial position
As at 31 December 2017
2017 2016 Note GBP GBP Non-current assets Investments in subsidiary 13 1,211,281 1,211,281 Trade and other receivables 16 2,949,078 2,949,078 Total assets 4,160,359 4,160,359 ============ ============ Capital and reserves Called up share capital 20 2,285,398 2,285,398 Share premium account 20 5,533,626 5,533,626 Warrant reserve 20 13,702 13,702 Retained earnings 20 (3,672,367) (3,672,367) ------------ ------------ Equity attributable to the owners 4,160,359 4,160,359 ============ ============
The company's profit and total comprehensive income for the year was GBPNil (2016: GBPNil).
Consolidated statement of changes in equity
For the year ended 31 December 2017
Attributable to owners of the parent Share Share Merger Warrant Retained Total Note Capital Premium Reserve Reserve Earnings GBP GBP GBP GBP GBP GBP ---------------------- ------- ---------- ---------- ---------- ---------- ------------ ---------- Balance at 1 January 2016 20 2,285,398 5,533,626 1,300,395 13,702 (7,421,655) 1,711,466 ---------------------- ------- ---------- ---------- ---------- ---------- ------------ ---------- Profit and total comprehensive income for the year - - - - 644,804 644,804 ---------------------- ------- ---------- ---------- ---------- ---------- ------------ ---------- Balance at 31 December 2016 20 2,285,398 5,533,626 1,300,395 13,702 (6,776,851) 2,356,270 ---------------------- ------- ---------- ---------- ---------- ---------- ------------ ---------- Loss and total comprehensive income for the year - - - - (646,643) (646,643) Balance at 31 December 2017 20 2,285,398 5,533,626 1,300,395 13,702 (7,423,494) 1,709,627 ====================== ======= ========== ========== ========== ========== ============ ==========
Company statement of changes in equity
For the year ended 31 December 2017
Share Share Warrant Retained Total Note Capital Premium Reserve Earnings GBP GBP GBP GBP GBP ------------------------ ------- ---------- ---------- ---------- ------------ ---------- Balance at 1 January 2016 20 2,285,398 5,533,626 13,702 (3,672,367) 4,160,359 ------------------------ ------- ---------- ---------- ---------- ------------ ---------- Profit and total - - - - - comprehensive income for the year Balance at 31 December 2016 20 2,285,398 5,533,626 13,702 (3,672,367) 4,160,359 ------------------------ ------- ---------- ---------- ---------- ------------ ---------- Profit and total - - - - - comprehensive income for the year Balance at 31 December 2017 20 2,285,398 5,533,626 13,702 (3,672,367) 4,160,359 ======================== ======= ========== ========== ========== ============ ==========
Cellcast plc has not presented its own income statement as permitted by Section 408 of the Companies Act 2006.
Consolidated statement of cash flows
For the year ended 31 December 2017
2017 2016 GBP GBP Net cash (outflow) / inflow from operations 23a (154,448) 457,707 Net cash inflow / (outflow) from investing activities 23b 118,467 (187,360) Net cash used in financing activities 23c (7,953) (8,388) Net (decrease) / increase in cash and cash equivalents (43,934) 261,959 ---------- ---------- Cash and cash equivalents at beginning of year 1,101,235 839,276 Cash and cash equivalents at end of year 23d 1,057,301 1,101,235 ========== ==========
No separate company statement of cash flows is presented as the company holds no cash at 31 December 2017 (2016: GBPNil).
Notes to the consolidated financial statements
The figures for the years ended 31 December 2017 and 2016 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 December 2017 have been extracted from the statutory accounts for that year, on which the auditor has issued an unqualified audit report, which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 December 2016 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts. This announcement was approved by the board of directors on 1 May 2018 and authorised for issue on 1 May 2018.
The consolidated and company financial statements for the years ended 31 December 2017 and 2016 have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2017 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').
Going concern
During the year ended 31 December 2017, the group recorded a loss of GBP646,643. The group had net cash of GBP1,057,301 as at 31 December 2017 and it had net current assets of GBP1,441,037.
The directors have carefully considered whether or not it is appropriate to adopt the going concern basis in preparing the 2017 financial statements. The directors have reviewed the group's detailed cash forecast to ensure that the group's current working capital and credit facilities in place are sufficient for the foreseeable future. This assessment is based upon forecasts following the reduction in the revenue of the UK television business together with the continued reduction in operational costs implemented over the year; it also assumes the maintenance of existing relationships with key suppliers. During the year the group made a 100% provision for the funds invested in Lexinta. The failure to recover these has no impact on the day to day business of the group and company which has sufficient funds for its normal operations.
After making enquiries, the directors have concluded that the group and company has adequate resources to continue trading for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the group and company financial statements.
Revenue recognition
Revenue represents the amounts receivable in relation to broadcast related income and the provision of management and consultancy services.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Revenue from customers interacting with the group's television shows is recognised immediately as the service is rendered at the time of the call or SMS/ online interaction.
Revenue generated from the provision of management and consultancy services is recognised in line with the provision of such services. Revenue from performance incentives is recognised when the performance criterion has been met.
Accounting judgements
The directors consider the critical accounting judgments used in the financial statements and concluded that the main areas of judgments are:
-- Realisable amounts of investments. Management have considered the recoverable amount of all investments based on expected future cash flows and consider the assets to be held at realisable amounts (refer to note 6 for further detail).
-- Classification of investments. Management have considered whether the group has significant influence or control in classifying its investments. Details of these judgements are provided in notes 12 and 14.
These judgements are based on historical experience and various other assumptions that management and the board of directors believe are reasonable under the circumstances and are discussed in more detail in the relevant notes. The group also makes estimates and judgments concerning the future and the resulting estimate may, by definition, vary from the related actual results.
1. Segmental reporting
The group's interactive broadcasting revenues are almost entirely from broadcasting related activities on Sky, Freeview and Freesat channels as well as on webcams and mobile.
The financial information is presented to the executive management team who are responsible for making financial decisions, as one operating unit which operates in one geographical unit. The executive management team make their decisions based upon this information. The executive management team comprises the chief executive officer and the chief financial officer.
The group has three significant telecom aggregators, generating 66% of the group's broadcasting related revenue. The three telecom aggregators contribute GBP4,239,574, GBP1,655,082, and GBP1,577,385 of the group's total revenue (2016: 67% representing GBP5,404,286, GBP1,331,522, and GBP979,335).
Revenue is further split below between revenue generated by:
2017 2016 GBP GBP Interactive broadcasting 11,309,626 11,452,101 Management and consultancy services 660,000 620,000 11,969,626 12,072,101 =============== ===========
An analysis of the geographical location of the group's revenue is as follows:
2017 2016 GBP GBP UK 11,309,626 11,452,101 Rest of the world 660,000 620,000 11,969,626 12,072,101 =============== =========== 2. Staff costs 2017 2016 GBP GBP Wages and salaries (including directors) 868,757 964,504 Social security costs 164,411 192,455 Other pension costs 74,620 85,990 1,107,788 1,242,949 ========== ==========
Staff costs of GBP328,996 (2016: GBP360,007) are included in general and administrative expenses and GBP778,792 (2016: GBP882,942) are included in cost of sales. The parent company staff costs were nil (2016: Nil).
Average monthly number of employees by activity (including directors):
2017 2016 Production 10 12 Technical 8 8 Management 4 4 Administration 2 2 24 26 ===== =====
All employees are employed by the subsidiary.
2017 2016 Key management compensation: GBP GBP Salaries, other short-term employee benefits and employer's NI costs 393,336 328,848 Post-employment benefits 93,630 85,000 486,966 413,848 ======== ========
Key management personnel comprise the statutory directors.
3. Directors' emoluments Salary & Pension Fees Contribution Sub total 2017 GBP GBP GBP ----------------------- -------- ------------- --------- Andrew Wilson 70,000 30,000 100,000 Craig Gardiner 72,000 38,630 110,630 Emmanuelle Guicharnaud 90,000 25,000 115,000 Bertrand Folliet 60,000 - 60,000 Michael Neville 42,000 - 42,000 Samuel Malin 10,000 - 10,000 ----------------------- -------- ------------- --------- Total 344,000 93,630 437,630 ======================= ======== ============= ========= Salary & Pension Fees Contribution Sub total 2016 GBP GBP GBP ----------------------- -------- ------------- --------- Andrew Wilson 92,000 60,000 152,000 Emmanuelle Guicharnaud 90,000 25,000 115,000 Bertrand Folliet 60,000 - 60,000 Michael Neville 36,000 - 36,000 ----------------------- -------- ------------- --------- Total 278,000 85,000 363,000 ======================= ======== ============= =========
See Note 21 for details of share options granted to the directors.
4. (Loss)/profit before tax (Loss)/profit before tax is stated 2017 2016 after charging/(crediting): GBP GBP Depreciation - owned assets 67,746 87,779 Amortisation of intangible assets 25,072 35,961 Auditor's remuneration - statutory audit of parent and consolidated accounts 33,000 30,000 Auditor's remuneration- accounting services- statutory accounts 7,000 10,000 Auditor's remuneration- accounting services- interim accounts 7,300 - Foreign exchange losses/(gains) on current asset investments 45,315 (79,038) Other foreign exchange losses/(gains) 29,672 (61,005) ======== ==========
In the comparative year foreign exchange gains and losses on current asset investments were included within administrative expenses. The directors have concluded that it is more appropriate to include such amounts below operating profit because they relate to the group's investment activities. The comparative figures have been restated to re-classify the equivalent amount. The effect of this reclassification in the prior year is to increase general and administrative expenses by GBP79,038 and to show a foreign currency gain of the same amount below operating profit. The reported Statement of Financial Position in the prior year is not affected.
5. Fair value gains and losses 2017 2016 GBP GBP Fair value gains on financial assets net of fees and expenses 12,719 58,196 ======= ======= 6. Impairment losses
The impairment loss shown separately on the face of the statement of comprehensive arises from a 100% provision against the following assets:
GBP Other receivables - being cash due from redemption of Lexinta fund investment (see note 15 and below) 309,973 Amounts due from associate - other receivables (Global Gaming) 369,427 Interest in associate (Global Gaming- see note 14) 74,958 754,358 ========
In its interim results, announced on 25 September 2017, the group stated it had elected to redeem its investments in the Lexinta Fund. This followed the decision of the fund manager of the Lexinta Fund to liquidate the fund's entire portfolio.
Since the interim results have been published the group has not received the balances due and, in light of the ongoing investigation by the Swiss authorities into Lexinta AG (the manager of the Lexinta fund) and Mr Bismark Badilla (the individual fund manager), the Board of Cellcast has now concluded that it is appropriate to make a provision for 100% of the Company's interest in the Lexinta fund in these accounts.
These investments comprised a current asset investment held directly and the group's interest in Global Gaming Limited, a company whose sole activity was to invest in the Lexinta fund. Therefore, an impairment charge has been recognised of GBP309,973 in respect of Other Receivables, being the cash due from the redemption of the investment held directly, GBP369,427 in respect of amounts due from Global Gaming Limited and GBP74,958 in respect of the carrying value of the group's investment interest in Global Gaming Limited.
7. Finance costs 2017 2016 GBP GBP Bank charges and interest paid 7,953 8,388 ====== ====== 8. Taxation 2017 2016 GBP GBP Current tax charge/(credit) In respect of the current (5,794) - year In respect of prior years - 7,195 ---------- ---------- (5,794) 7,195 ========== ========== Factors affecting the tax (credit)/charge for the year 2017 2016 GBP GBP (Loss)/profit before taxation (652,437) 651,999 ---------- ---------- Group (loss)/profit on ordinary activities before taxation multiplied by the effective standard rate of UK corporation tax of 19.25% (2016: 20%) (125,594) 130,400 Effects of: Non-deductible expenses 118,098 30,052 Brought forward losses utilised - (148,813) Tax charge in respect of prior years - 7,195 Capital losses/(gains) not taxable - (11,639) Tax credit (5,794) - Current year unutilised 7,496 - tax losses ========== ========== (5,794) 7,195 ========== ========== 8. Taxation (continued)
At 31 December 2017, the group had estimated tax trading losses of GBP1.6 million which subject to the agreement of the HM Revenue & Customs and overseas tax authorities, are available to carry forward against future profits of the same trade. No deferred tax asset has been recognised on these losses as timings of future profits are uncertain.
9. Earnings per share
The calculations of basic and diluted earnings per ordinary share are based on the following results:
2017 2016 GBP GBP (Loss)/profit for the financial year (646,643) 644,804 Weighted average number of ordinary shares 77,513,224 77,513,224 Basic and diluted earnings per share (pence) (0.8p) 0.8p =========== ===========
There was no dilutive effect from the issued share options because the exercise prices are above market price. The number of share options outstanding at the year-end was 2,650,000 (2016: 3,684,510).
10. Intangible assets Development Licences costs Total GBP GBP GBP Cost At 1 January 2016 781,761 2,692,716 3,474,477 At 31 December 2016 781,761 2,692,716 3,474,477 At 31 December 2017 781,761 2,692,716 3,474,477 ========= ============ ========== Amortisation At 1 January 2016 655,088 2,664,477 3,319,565 Charge for the year 20,372 15,319 35,691 --------- ------------ ---------- At 31 December 2016 675,460 2,679,796 3,355,256 Charge for the year 13,767 11,305 25,072 At 31 December 2017 689,227 2,691,101 3,380,328 ========= ============ ========== Net book value at 31 December 2017 92,534 1,615 94,149 ========= ============ ========== Net book value at 31 December 2016 106,301 12,920 119,221 ========= ============ ========== Net book value at 1 January 2016 126,673 28,239 154,912 ========= ============ ==========
Included within Licences is an individual channel licence with a carrying value of GBP91,000 (2016: GBP104,000). The asset will be fully amortised in 7 years (2016: 8 years).
11. Property, plant and equipment Broadcasting equipment GBP Cost At 1 January 2016 1,995,547 Additions 19,010 ------------- At 31 December 2016 2,014,557 Additions 49,884 At 31 December 2017 2,064,441 ============= Depreciation At 1 January 2016 1,786,174 Charge for the year 87,779 ------------- At 31 December 2016 1,873,954 Charge for the year 67,746 ------------- At 31 December 2017 1,941,700 ============= Net book value at 31 December 2017 122,741 ============= Net book value at 31 December 2016 140,603 ============= Net book value at 1 January 2016 209,373 ============= 12. Non-current investments - Group
At 31 December 2017, the group had a 35% holding in 2Giraffes LLP. 2Giraffes LLP is a global provider of mobile internet content. This holding is treated as an investment as the group does not have any significant influence on the operations of 2Giraffes LLP.
The market value of this investment is not readily available because the investment is not in publicly traded equities with a quoted market price and the directors do not consider that a reliable estimate of fair value can be made using the level 2 or 3 hierarchy within IFRS 13. Therefore, the investment is accounted for at cost less impairment.
The directors do not consider that 'significant influence' is exercised by the company over the LLP and therefore, despite the holding of 35%, the investment is not accounted for as an associate undertaking. This is on the basis that a sole shareholder has the remaining 65% holding and the company does not have voting rights.
2017 2016 GBP GBP Cost ---------- ---------- At 1 January 2016, 31 December 2016 and 31 December 2017 177,627 177,627 ========== ========== Impairment ---------- ---------- At 1 January 2016, 31 December 2016 and 31 December 2017 88,814 88,814 ========== ========== Carrying amount at 1 January 2016, 31 December 2016 and 31 December 2017 88,813 88,813 ========== ========== 13. Non-current investments - Company Subsidiary undertakings Cost GBP At 1 January and 31 December 2017 1,211,281 ==============
At 31 December 2017 Cellcast plc directly owned 100% of the issued ordinary share capital in Cellcast UK Limited, a company incorporated in the UK whose principal business was television and broadcasting. The registered office of Cellcast UK Limited is 184 The Terrace, The Dell, Southampton, England, SO15 2BU and the principal place of business is Unit 22, Cochran Close, Crownhill Industrial Estate, Milton Keynes, MK8 0AJ.
14. Associate
On 26 November 2015 the group acquired 49% of the issued share capital of Global Gaming Limited for a total cost of GBP4. The directors have assessed that the group has significant influence, but not control over Global Gaming Limited and have accounted for the investment as an associate. Details of the associate undertaking and the movements in the investment in the year are as follows:
Company Country of Class Shares and voting Type of holding Principal business incorporation rights held % Global Gaming China Ordinary 49% Associate Investment Limited management The registered office of Global Gaming Limited is 13/F, Times Tower, 391-407 Jaffe Road, Wanchai, Hong Kong. 2017 2016 GBP GBP At 1 January 63,045 7,139 Share of associate result 11,913 55,906 Impairment (74,958) - ---------------- ----------------- At 31 December - 63,045 ================ =================
At the reporting date the directors considered the group's interest in the associate to be irrecoverable. Therefore, an impairment of GBP74,958 was recognised (see note 6).
As at 31 December 2017, the amount due from the associate stood at GBPnil (2016: GBP549,428), this is shown in note 16.
15. Current asset investments
In May 2015, the group invested US$ 260,000 (GBP165,000) in a treasury product managed by the Lexinta Fund. This investment was classified in current assets as the capital and interest generated can only be withdrawn on a yearly basis at the anniversary date of the investment. The group redeemed the investment in the year and re-classified the disposal proceeds due from the Lexinta fund to other receivables, subsequent to this the amount due has been provided for in full (refer to note 6 for further details).
In September 2016, the group invested US$ 250,000 (GBP168,350) in the 'Ventury Fund Inc'. This investment was classified in current assets as the capital and interest generated can only be withdrawn on a yearly basis at the anniversary date of the investment. The group redeemed the investment in the year for GBP197,103.
2017 2016 GBP GBP At 1 January 510,920 205,335 Investment in fund - 168,350 Fees and costs - (5,559) Fair value gain 12,719 63,756 Foreign exchange (loss)/gain (45,315) 79,038 Redemption (168,351) - Reclassified to other receivables on redemption (309,973) - At 31 December - 510,920 ========= ========== 16. Trade and other receivables Group 2017 2016 GBP GBP Trade receivables 1,349,103 376,919 Other receivables 150,639 438,884 Prepayments and accrued income 454,311 978,746 Amount due from associate - 549,428 1,954,053 2,343,977 ========= ========= Company 2017 2016 GBP GBP Amounts owed by group undertaking (loans and receivables) 2,949,078 2,949,078 ================ =================
Following a review of the amounts due by the group undertaking, the directors have considered the projected performance of Cellcast UK Limited and are confident that the amounts will be recovered. The directors deemed that it is appropriate to classify the amounts due after more than one year as this reflects the timescale on which recovery is expected to occur. No interest is charged on this balance.
17. Non-current liabilities 2017 2016 GBP GBP Trade payables 37,113 385,000 37,113 385,000 ====== ======= 18. Trade and other payables 2017 2016 GBP GBP Trade payables 498,425 308,008 Other taxes & social security 170,260 237,491 Corporation tax - 5,776 Other payables 361,911 418,444 Accruals 539,721 656,825 --------- --------- 1,570,317 1,626,544 ========= ========= Credit payment profile in days 49 days 51 days ========= =========
The credit payment profile in days calculation excludes the long-term trade payables days which is contractually due over one year as including this long term element would skew the trade payable days.
19. Financial risk management
The group's financial instruments as at 31 December 2017 and 2016 mainly comprise cash and various items arising directly from its operations, such as trade and other receivables, trade and other payables and as at 31 December 2016 also included current asset investments and amounts due from associate. The main purpose of these financial instruments is to provide working capital for the group. The group's policy is to obtain the highest rate of return on its cash balances and current asset investments, subject to having sufficient resources to manage the business on a day to day basis and not exposing the group to unnecessary risk of default.
(a) Risk management policies
The group's finance function is responsible for procuring the group's capital resources and maintaining an efficient capital structure, together with managing the group's market, liquidity, foreign exchange, interest and credit risk exposures.
All treasury operations are conducted within strict policies and guidelines that have been approved by the directors.
19. Financial risk management (continued)
(b) Financial assets and liabilities
Financial assets and liabilities analysed by the categories were as follows:
As at 31 December Currency Loans Other Total 2017 and financial carrying receivables instruments value at amortised cost GBP'000 GBP'000 GBP'000 Financial assets Trade receivables and accrued income Sterling 1,653 - 1,653 Other receivables Sterling 151 - 151 Cash and cash equivalents Sterling 1,057 - 1,057 Non-current investments held at cost Sterling - 89 89 Financial liabilities Trade payables Sterling - (498) (498) Other payables Sterling - (362) (362) Accruals Sterling - (540) (540) Trade payables > 1 year Sterling - (37) (37) 2,861 (1,348) 1,513 ============= ============== ========== As at 31 December Currency Loans Financial Other Total 2016 and assets financial carrying receivables at fair instruments value value at amortised through cost profit and loss GBP'000 GBP'000 GBP'000 GBP'000 Financial assets Trade receivables and accrued income Sterling 1,179 - - 1,179 Other receivables Sterling 439 - - 439 Amounts due from associate Sterling 549 - - 549 Cash and cash equivalents Sterling 1,101 - - 1,101 Current asset investments at fair value through profit and loss Non-current investments held at cost US Dollars - 511 - 511 Sterling - - 89 89 Financial liabilities Trade payables Sterling - - (308) (308) Other payables Sterling - - (418) (418) Accruals Sterling - - (657) (657) Other payables > 1 year Sterling - - (385) (385) 3,268 511 (1,679) 2,100 ============= ========== ============== ==========
The carrying value of all financial instruments is not materially different from their fair value. It is, and has been throughout the year, the group's policy that no trading in financial instruments shall be undertaken. Cash and cash equivalents attract floating interest rates. Accordingly, their carrying amounts are considered to approximate to fair value.
19. Financial risk management (continued)
(c) Credit risk
Credit risk is the risk that the counterparty will default on its contractual obligations resulting in financial loss to the group. Maximum credit risk at 31 December was as follows:
2017 2016 GBP'000 GBP'000 Trade receivables and accrued income 1,653 1,179 Other receivables 151 439 Amounts due from associate - 549 Current asset investments - 511 Non-current investments 89 89 Cash and cash equivalents 1,057 1,101 2,950 3,868 ======== ========
Before accepting a new customer, the group assesses both the potential customer's credit quality and risk. Customer contracts are drafted to reduce any potential credit risk to the group. Where appropriate the customer's recent financial statements are reviewed.
Trade receivables are regularly reviewed for impairment loss. The group did not write off any accrued income during 2017 (2016: GBP37,000 written off). There are no provisions for trade receivables at 31 December 2017 or 2016.
During the year an impairment of GBP309,973 was recognised in respect of other receivables and an impairment of GBP369,427 was recognised in respect of amounts due from associate. For more details see note 6.
Ageing of the trade receivables and accrued income is as follows:
2017 2016 GBP'000 GBP'000 Current 954 1,047 Up to 3 months 571 132 Up to 6 months 128 - 1,653 1,179 ======= =======
The total of the trade receivables which were past due at 31 December 2017 but not impaired was GBPnil (2016: GBPnil). The total trade receivables and accrued income balance of GBP1,541,000 was collected by 11 April 2018. The directors are confident as to the recoverability of the remaining balance and thus no impairment of the amount has been recognised in the financial statements at 31 December 2017.
All cash balances are held in established UK financial institutions.
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
Contractual cash flows relating to the group's financial liabilities are as follows:
2017 2016 GBP'000 GBP'000 Trade payables (<6months) (498) (308) Other payables (<6months) (362) (418) Accruals (<6months) (540) (657) Greater than 12 months (37) (385) -------- -------- Cash flows on financial liabilities (1,437) (1,768) ======== ========
(e) Interest rate risk
Interest rate risk is the risk that the future cash flows associated with a financial instrument will fluctuate because of changes in market interest rates. The interest rates on cash and cash equivalents are low, such that interest rate risk is minimal.
19. Financial risk management (continued)
The only interest-bearing loan is in other payables and amounts to GBP300,000 (2016: GBP300,000). The interest rate is 2% per annum. The impact of a 1% interest rate increase would represent an annual sum of GBP3,000 (2016: GBP3,000).
(f) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises on financial assets and liabilities and investments in associates that are denominated in a currency other than the functional currency of the entity by which they are held. In 2016, the currency risk of the group related to the cash balances it held in USD in the Lexinta treasury and Ventury funds. The table below illustrates the impact of a change in exchange rates on results and reserves:
In 2017 the risk relates to amounts held as cash balances in USD.
31 December 31 December 2017 2016 GBP'000 GBP'000 10% increase USD foreign exchange rate against pound sterling 32 35 10% decrease USD foreign exchange rate against pound sterling (32) (35) ============ ============
At the reporting date the group has no financial assets or liabilities (except bank balances) denominated in a currency other than the functional currency.
(g) Capital management
The group's main objective when managing capital is to protect returns to shareholders by ensuring the group will continue to trade for the foreseeable future.
The group considers its capital to include cash, share capital, share premium, retained earnings, and other equity reserves.
31 December 31 December 2017 2016 GBP'000 GBP'000 Net cash 1,057 1,101 Total equity 1,710 2,356 -------------- ------------ ------------
The group has an undrawn overdraft facility with Barclays of up to GBP150,000 (2016: GBP150,000).
20. Share capital and reserves Group and Company 2017 2016 Authorised GBP No of shares GBP No of shares Ordinary shares of 1p each 1,489,736 148,973,552 1,489,736 148,973,552 Deferred shares of 2p each 1,510,264 75,513,224 1,510,264 75,513,224 3,000,000 224,486,776 3,000,000 224,486,776 ========== ============= ========== ============ Issued Ordinary shares of 1p each 775,134 77,513,224 775,134 77,513,224 Deferred shares of 2p each 1,510,264 75,513,224 1,510,264 75,513,224 2,285,398 153,026,448 2,285,398 153,026,448 ========== ============= ========== ============
Ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company.
The deferred shares of 2p have no voting rights, no rights to dividends and negligible rights on return of capital. They are not listed on any stock exchange.
The share options granted over the shares of the company are set out in note 21.
20. Share capital and reserves (continued)
The nature and the purpose of each reserve in equity is described as follows:
Retained earnings
Cumulative profit and loss net of distribution to owners.
Share premium account
The share premium account represents the premium paid on issue of ordinary shares in excess of their nominal value.
Merger reserve
The merger reserve arises as a result of a group reorganisation where the company acquired Cellcast UK Limited which was accounted for in accordance with merger accounting principles.
Warrant reserve
Warrants represent subscription rights for ordinary shares in Cellcast plc and the warrant reserve represents the fair value of the warrants at the date of issue. All warrants are expired.
21. Share options
The group operates two different share option schemes, an Enterprise Management Incentive (EMI) share option plan and a General share option plan. Options are available to be granted to directors, staff, consultants and independent contractors as part of their remuneration package and they act as an incentive to assist with the future performance of the group.
During the year ended 31 December 2017 the company had share-based payment arrangements, all of which have vested, and expire 10 years after grant as follows:
EMI share option plan
Date of grant 08/11/07 25/07/08 27/10/10 Number granted 584,510 1,200,000 900,000
General share option plan
Date of grant 25/07/08 27/10/10 Number granted 400,000 600,000
Options are forfeited if the employee leaves the group before the options are exercised.
Further details of share options in issue during the year are as follows:
Share options 2017 2016 Number Weighted Number Weighted of options average of options average exercise exercise price (GBP) price (GBP) ----------------- ----------- ------------ ----------- ------------ Outstanding at 1 January 3,684,510 0.04 4,099,510 0.05 Expired during the year (584,510) (0.05) (415,000) 0.14 Forfeited during the year (450,000) (0.04) - - Outstanding at 31 December 2,650,000 0.03 3,684,510 0.04 ================= =========== ============ =========== ============
The share options outstanding at the end of the year have an exercise price of between GBP0.03 and GBP0.04, with a weighted average remaining contractual life of 1.40 years (2016: 2.25 years).
21. Share options (continued)
The following EMI options, save those granted to Mike Neville and Bertrand Folliet which are Unapproved Options, over the ordinary shares of 1 pence each have been granted to the directors and were in place at the reporting date:
Option price Number granted Date of GBP grant ------------------ ------------- ----------------- --------- Craig Gardiner 0.03 400,000 25/07/08 Bertrand Folliet 0.04 450,000 27/10/10 Emmanuelle Guicharnaud 0.03 400,000 25/07/08 0.04 50,000 27/10/10 Mike Neville 0.03 400,000 25/07/08 0.04 50,000 27/10/10 ------------------ ------------- ----------------- --------- 22. Related party transactions
Group
SMS Media Limited
In 2017 management charges totalled GBP114,000 (2016: GBP168,000). At the year-end GBPnil (2016: GBP14,000) was owed to SMS Media Limited, which has common directors and beneficial shareholders in Bertrand Folliet and Andrew Wilson. The management charges levied by SMS Media relate to the running cost of the company's office in Hong Kong. It is made up of rent and the employment of local staff. Its purpose is undertaking business development in the Greater China, South East Asia and African regions. This resource has constituted a part of the company since November 2001.
Global Gaming Limited
During 2017 the company advanced GBPnil (2016: GBPnil) to Global Gaming Limited, an associate of the company. At 31 December 2017 GBPnil (2016: GBP549,428) remained outstanding. During the year the company recognised an impairment on this amount of GBP369,427 (see note 6).
Company
Cellcast UK Limited
At the reporting date GBP2,949,078 (2016: GBP2,949,078) was due from Cellcast UK Limited, a subsidiary of the company, this amount is net of accumulated impairment charges recognised prior to 31 December 2015 of GBP3,800,001.
23. Cash flows Note 2017 2016 GBP GBP a Reconciliation of (loss)/profit after tax to net cash (outflow)/inflow from operating activities (Loss)/profit for the year (646,643) 644,804 Income tax recognised in profit or loss (5,794) 7,195 Fair value gains (12,719) (58,196) Finance costs 7,953 8,388 Amortisation and depreciation 92,818 123,470 Impairment losses (See note 6) 754,358 - Share of results in associate (11,913) (55,906) Foreign currency loss/(gain) on current asset investment 15 45,315 (79,038) Decrease/(increase) in trade and other receivables 20,497 (126,959) Decrease in trade and other payables (398,338) (83,017) Income taxes received 18 76,966 ---------- --------- Net cash (outflow) / inflow from operating activities (154,448) 457,707 b Cash flow from investing activities 2017 2016 GBP GBP Purchase of property, plant and equipment (49,884) (19,010) Investment in treasury fund - (168,350) Proceeds received from current investment 168,351 - Net cash inflow / (outflow) from investing activities 118,467 (187,360) ========== ========= c Cash flow from financing activities 2017 2016 GBP GBP Interest paid (7,953) (8,388) Net cash used in financing activities (7,953) (8,388) ---------- --------- d Cash and cash equivalents 2017 2016 GBP GBP
Cash at bank 1,057,301 1,101,235 Cash and cash equivalents at end of year 1,057,301 1,101,235 ========== =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 01, 2018 05:15 ET (09:15 GMT)
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