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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Photonstar Led | LSE:PSL | London | Ordinary Share | GB00B1TK2453 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.045 | 0.044 | 0.046 | 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
TIDMPSL
RNS Number : 1262T
Photonstar LED Group PLC
29 June 2018
29(th) June 2018
PhotonStar LED Group Plc
Full year results, Posting of Annual Report and Notice of AGM
PhotonStar LED Group Plc (AIM: PSL, "PhotonStar", the "Company" or "the Group"), the British designer and manufacturer of smart LED lighting solutions, announces its audited results for the year ended 31 December 2017.
In addition, the Group's Annual Report and Accounts for the year ended 31 December 2017 (the "Annual Report") will be posted to shareholders today.
A Notice of the Group's Annual General Meeting ("AGM") has also been posted to shareholders with the Annual Report, and both are available to download on PhotonStar's website via http://www.photonstarled.com/investorrelations/regulatory_announcements/.
The AGM will be held at Unit 8 Westlink, Belbins Business Park, Cupernham Lane, Romsey, Hants, SO51 7JF on Tuesday 31 July 2018 at 11am.
Financial overview
-- Revenues for full year 2017 down 15% to GBP4.5m (2016: GBP5.3m) -- Gross profit fell 17.7% to GBP1.45m (2016: GBP1.76m) -- Administrative expenses (excluding exceptional item) down 15% to GBP2.77m (2016: GBP3.26m) -- Adjusted EBITDA loss for 2017 down to GBP0.48m (2016: loss GBP0.7m) -- Operating loss for the period (before exceptional item) of GBP1.19m (2016: loss GBP1.38m) -- Loss per share of 0.9p (2016: loss per share 0.6p) -- At 31 December 2017, net debt of GBP0.8m (2016: net debt GBP0.61m)
Post year end
-- Announced sale of Camtronics Vales Ltd for a total cash consideration of GBP150,000, representing a further step along the path of the Group's transformation into a software and services business.
-- Raised gross proceeds of GBP0.88m from two placings via the issue of new shares, primarily to fund the development of the Group's next generation v2 halcyon cloudBMS(TM) software and to provide the Group with additional working capital.
-- Announced the release of the Group's next generation v2 halcyon cloudBMS(TM) software which is characterised by a low cost, retrofit-able wireless monitoring and control platform, halcyonPRO2(TM).
James McKenzie, CEO of PhotonStar, said:
"I believe that 2017 was a crucial year for the Group's future as a software and services business. At the beginning of 2018 we announced the sale of our Camtronics Vale Ltd group company to certain members of the Camtronics management team. This represented a further step along the path of the Group's transformation into a software and services business. We then released the v2 halcyon cloudBMS software in May 2018, which we believe will allow the Group to progress beyond the various single site trials that we currently have in place and roll-out halcyon across multiple sites, as a solution to customers' operational and cost problems. The cloud-based compliance reporting, IoT data analytics and fault notifications will mean that, once the system is installed, site visits should be reduced to essential maintenance work. This should offer compelling cost savings for building owners, primarily by reducing the number of site visits by up to 90% in commercial buildings. This software release was a major milestone for the Group and I would like to thank our customers and shareholders for their patience and continued support over the last year.
The success of both the trials for v2 halcyon cloudBMS and the control platform, halcyonPRO2(TM) represent significant developments for PhotonStar and highlight the Group's future growth prospects. The v2 cloudBMS software has been well received and the Group is currently making good commercial progress. I look forward to providing shareholders with further updates in due course."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information:
PhotonStar LED Group Plc (www.photonstarled.com) James McKenzie - Group Chief Executive +44 (0)2381 230381 Northland Capital Partners Limited David Hignell/Tom Price/Jamie Spotswood (Corporate Finance) John Howes/Rob Rees (Corporate Broking) +44 (0)20 3861 6625 Peterhouse Capital Limited Duncan Vasey/ Fungai Ndoro +44 (0)20 7469 0930
About PhotonStar LED Group Plc
PhotonStar LED Group Plc is a leading British designer and manufacturer of intelligent lighting & building control solutions. The Group's proprietary technology Halcyon(TM) is a scalable, secure wireless IoT platform for retrofit into commercial buildings, for energy reduction, asset monitoring & control, and real time environmental, behavioural and energy insights.
PhotonStar is based in Romsey, Hampshire.
Chief Executive Officer's Statement
Overview
The Group's full year revenue for 2017 was GBP4.55m (2016: GBP5.32m) and the adjusted EBITDA loss (as defined in Note 5) was GBP0.48m (2016: GBP0.70m). There is an exceptional impairment charge during the year of GBP0.84m (2016: GBPnil) relating to the write-down of halcyon(TM) platform development costs (GBP0.75m) and write-down of Camtronics goodwill (GBP0.09m). The impairment of halcyon(TM) platform development costs is due to a change in the assumptions used in calculating the future cash flows of business units. Previously 10 year future cash flows with terminal value were used in this calculation and this has now changed to 5 years with terminal value. The loss after tax for the year was GBP1.91m (2016: GBP1.17m). During the course of the year to 31 December 2017 approximately GBP0.41m of additional investment was made into the Group's halcyon(TM) platform. The EBITDA loss after exceptional item was GBP1.32m (2016: Loss GBP0.70m).
Throughout 2017 the Group's key strategic focus was the further development of its halcyon(TM) product platform (halyconPRO2(TM) server and halcyon cloudBMS(TM) building management as a service cloud service) and the further development of its offering to address the improvements and modifications that were identified during the paid for client trials. There has been very limited investment in other areas of the Group's business in line with the Group's strategy, which has been outlined to shareholders previously.
The Group continues to see a good level of interest in its halcyon(TM) platform and services and management remains confident about the market potential for halcyonPRO2(TM) and its halcyon cloudBMS(TM) service. v1 halcyon cloudBMS(TM) was launched in March 2017. Management had expected that the various client trials of these systems would result in a progression to full roll-out with those clients during the course of the second half of 2017. However, the modifications to the systems that were installed during 2017 have taken longer to put in place than management initially expected and consequently full roll-out of the halcyon(TM) platform was delayed. In May 2018 the v2 halcyon cloudBMS(TM) software was released and it is anticipated that this will allow the Group to progress past the trial stage with customers. PhotonStar continues to work in a highly collaborative manner with a number of clients who anticipate that roll-outs of the system will begin shortly but the Group and its clients want to ensure that the modifications are successfully completed and tested before deployments begin.
In the traditional areas of the lighting business (specification and wholesale LED lighting) PhotonStar continued to experience challenging trading conditions resulting in the Group generating lower revenues during the second half of 2017 than in the previous period.
Management has identified the colour-tuneable and circadian LED lighting sector as a sub sector that it believes can be successfully pursued by the Group. This sub-sector of the LED lighting market is estimated to be worth up to EUR2.3bn per year by 2020 (Source: Lighting Europe 2013, 'Human Centric Lighting') and the technical know-how that is required for the development of both colour-tuneable and circadian lighting is something that the Group has in place as a consequence of previous development work. The Company introduced additional products and control solutions to address this opportunity during 2017. The circadian lighting solution based off traditional wired lighting control protocol DMX and the Group's proprietary ChromaWhite 2.0 biologically optimized LED light source technology attracted strong interest, particularly in the health care sector, during 2017. Management anticipates that this will become an important development during the course of 2018 and beyond.
Business review
PhotonStar Technology Ltd - Halcyon IoT and LED light engines
In 2017 the Company focused on the development and installation of halcyon(TM) into a number of customer sites and invested significantly in product development of the control software for the system and the cloud platform, cloudBMS(TM) . Overall sales decreased to GBP293,000 (2016: GBP585,000) as technical issues arising in the software took time to correct and the Company invested GBP412,000 (2016: GBP580,000) in research and development to improve the system.
IBM Interconnect and cloudBMS(TM) launch
At IBM Interconnect 2017 in April, PhotonStar(TM) delivered a presentation, outlining the key features of cloudBMS(TM) , a new cloud based solution that delivers an Internet of Things 'building management system as a service' launched at the event. The new solution is built on the second generation of its low cost retrofit-able wireless monitoring and control platform, halcyonPRO2(TM). The new halcyonPRO2 software adds regulation of heating and cooling, shading and power management to the existing lighting control and environmental sensor network in the first halcyonPRO(TM) product. The cloudBMS(TM) v1 software (a cloud based sensor monitoring platform for the halcyonPRO2(TM) server ) delivers an extremely capable, scalable and secure Building Management System as a service solution at a price point and low entry cost that enables owners of small to medium-sized businesses to reduce energy and operating costs and realise new insights into their operations.
Halcyon roll out letter of intent
On 27 April 2017 the Company announced a letter of intent (LoI) regarding the proposed roll out of the halcyonPRO2(TM) and its halcyon cloudBMS(TM) service. This was received from a leading manager and developer of student accommodation in the UK following a 9 month trial period that commenced in July 2017. During the trial period the Company's halcyon IoT platform was installed to evaluate the use of halcyon(TM) in reducing the operating costs of the accommodation buildings for the customer. The initial trial incorporated 139 flats on one site and demonstrated significant maintenance savings to the customer. Pursuant to the LoI, it was proposed that approximately 50,000 of the Company's halcyon(TM) devices would be installed however, and as notified in the Group's Trading Update on 30 January 2018, this work is currently on hold until management and the customer are satisfied that the issues identified during the trial have been fully and successfully addressed.
Placing to support proposed roll out and additional working capital
On 3 May 2017 the Company's parent company, PhotonStar LED Group plc, announced a fundraising round of GBP465,000 (before expenses) via a placing of new shares. The net proceeds of the placing were used to further progress halcyonPRO2(TM) and halcyon cloudBMS(TM) software as well as to provide the group with additional working capital.
The first version of the halcyon cloudBMS(TM) (v1 halcyon cloudBMS(TM) ) software was launched by the Group in March 2017 and has been evaluated by customers during 2017 and into 2018 via a number of paid-for trials with customers operating in a variety of industry sectors. These trials have been valuable in identifying improvements and adding additional features that various industry sectors identified as being essential.
PhotonStar LED Ltd - LED lighting fixtures business
LED lighting focused on the new build market
The Company's LED fixtures business, selling predominantly fixed white light LED luminaires, saw increasing competition and price pressures contributing to decreased revenue of GBP2.58m (2016: GBP3.08m).
In the traditional areas of the lighting business (specification and wholesale LED lighting) PhotonStar continued to experience challenging trading conditions resulting in the Group generating lower revenues during the second half of 2017 than in the previous period. The export business revenues reduced to less than GBP0.13m. On a more positive note house-builder sales were up by 47% to GBP0.77m (2016: GBP0.52m). The Group benefits from an exclusive contract with a leading UK house-builder, initially announced in September 2012. The Group subsequently announced in June 2016 that this major house-builder contract had been extended for another year and we are pleased to report that this contract continues to operate on a rolling basis for the foreseeable future.
A revised range of more efficient and competitive products were introduced in Q2 2017 with the best-selling EcoStar600 increasing in efficiency to over 100 lm/W.
The lighting market continues to transition towards LED lighting, with colour-tuneable and circadian LED lighting predicted to become a significant subsector. The Company introduced additional products and control solutions to address this opportunity during 2017. The circadian lighting solution based on traditional lighting control protocol DMX and the groups proprietary ChromaWhite 2.0 biologically optimised LED light source technology has attracted strong interest in the health care sector during 2017. This product is being trialed by 3 care home groups at present with over 40 care homes in aggregate. Initial results from the trials look promising and the benefits are proving to be significant in terms of resident and staff well-being and sentiment.
Camtronics Vale Ltd ("Camtronics Vale") - Contract Manufacturing
Contract electronics manufacturing business
As reported in last year's annual accounts Camtronics Vale experienced a material fall in revenue during the final quarter of 2015 and the first quarter of 2016. The fall in revenue was due to a number of factors including a key customer deciding to source its product from overseas and a new customer placing a very large assembly order but then entering receivership. During H1 2016 the Group sought to reduce the cost base of Camtronics Vale whilst focusing on increasing sales. In 2017 we saw the benefits of this strategy and as a result the business returned to a pretax profit, before exceptional item, during 2017. The Board concluded that with a return to profitability (on a standalone basis) it was a good opportunity to sell the business in order that the management team could focus on halcyon(TM) . As announced on 30 January 2018 the sale of Camtronics Vale was completed just after the end of the financial year under review.
For the year ended 31 December 2017, Camtronics generated revenue of GBP1.68m (2016: GBP1.66m), an increase of 1%.
Financial overview
The Group is making progress in transitioning from its traditional LED product markets into becoming a retrofit connected lighting and building management business. Meanwhile, focus continues on maximising its traditional revenues and maintaining its margins, and investing in the enhancement of its halcyon(TM) platform and its building management services.
The Group's 2017 revenues decreased to GBP4.55m (2016: GBP5.32m) with a gross profit margin of 32% (2016: 33%).
Administrative expenses in 2017, before exceptional items, decreased by a further GBP0.49m to GBP2.77m (2016: GBP3.26m), due to downsizing and continuing tight control on costs (whilst maintaining the required investment in R&D and software product development). Adjusted EBITDA (adjusted for share based payments) loss was GBP0.48m (2016: loss GBP0.70m).
There is an exceptional impairment charge during the year of GBP0.84m (2016: GBPnil) relating to the write-down of halcyon(TM) development costs (GBP0.75m) and write-down of Camtronics goodwill (GBP0.09m). The impairment of halcyon(TM) development costs is due to a change in the assumptions used in calculating the future cash flows of business units. Previously 10year future cash flows and terminal value were used in this calculation and this has now changed to 5 years and terminal value. The Group reported a pre-tax loss of GBP2.08m (2016: GBP1.43m) and loss per share for the year was 0.9p (2016: loss per share 0.6p). At 31 December 2017, the Group's unused aggregate tax losses are approximately GBP10m.
At 31 December 2017 the Group held cash balances of GBP0.04m (2016: GBP0.23m) and had borrowings of GBP0.8m (2016: GBP0.83m). Included within borrowings the Group had drawn down GBP0.73m (2016: GBP0.69m) of invoice financing debt out of its total maximum facility of GBP1.5m.
Group net borrowings debt (cash balances less current borrowings) at 31st December 2017 was GBP0.79m (2016: GBP0.61m). Group capital expenditure was GBP0.47m (2016: GBP0.91m), relating to the continuing investment in product development and the patent portfolio, in particular the development of the halcyon(TM) system.
The Group has successfully raised gross proceeds of GBP0.88m via the issue of new equity in February and May 2018, details of which are summarised below.
Intellectual Property
PhotonStar continues to develop its Intellectual Property (IP) portfolio for halcyon(TM) and halcyon cloudBMS(TM) and in rationalizing its portfolio of IP in other areas. Patent applications for halcyon(TM) and halcyon cloudBMS(TM) were filed prior to the launch of halcyon(TM) with the result that the Group's IP portfolio covering advanced LED chip design, optimal low cost packaging, advanced colour mixing and secure commissioning of IoT devices including lighting products. During H1 2017 the company disposed of its LED chip design patents for GBP50k to a large LED manufacturer.
Post Year End
Disposal of Camtronics Vale
On 30 January 2018, it was announced that the Group had agreed to sell Camtronics Vale, which specialises in the manufacture of electronic components, to Camtronics Vale Holdings Limited ("CVH"), a private company controlled by certain members of the Camtronics management team, for a total cash consideration of GBP150,000 with GBP40,000 being paid at completion, a further GBP10,000 payable by 31 March 2018 and GBP100,000 to be received in subsequent monthly instalments. This resulted in a GBP0.46m reduction in the Group debt, which represented approximately 55% of the Group's debt prior to the transaction.
At the year-end negotiations were continuing with a number of parties and it was not probable that the sale would have occurred in the foreseeable future. The directors were also considering not proceeding with sale activities due to the amount of time that negotiations were taking. Accordingly the Camtronics business was not considered to be a 'discontinued operation' at the year-end.
Disposal of Camtronics Vale (continued)
PhotonStar will used the proceeds from the transaction to fund the continued development of the halcyon cloudBMS(TM) platform. The monthly instalments are also providing PhotonStar with additional working capital as the Group continues its transformation programme during 2018. The impact on PhotonStar's balance sheet is expected to be minor and will be reported as part of the Group's interim results for the period ending 30 June 2018.
Placing, subdivision of shares and general meeting results
Since the year end, on 27 February 2018 the Group conditionally raised gross proceeds of GBP430,000 via the placing of 286,666,667 new ordinary shares with new and existing investors and Directors of the Company at a price of 0.15 pence per placing share. The placing price was less than the 1 pence nominal value of the existing ordinary shares. The UK Companies Act 2006 (as amended) prohibits the Company from issuing ordinary shares at a price below the nominal value and so it was necessary for the Company to carry out a subdivision of the existing ordinary shares whereby each existing ordinary share was subdivided into one new ordinary share of 0.01 pence and one deferred share of 0.99 pence to enable the placing to complete. The new ordinary shares continue to carry the same rights as attached to the existing ordinary shares, save for the reduction in nominal value. The placing was confirmed at a General Meeting of shareholders on 16 March 2018. The net proceeds of the placing were used to complete the development of the Company's halcyon Internet of Things solution for buildings, cloudBMS v2, ahead of its proposed deployment and have also provided the Group with additional working capital.
Issue of equity
On 16 April 2018 the Group announced the issue of a total of 71,729,580 new ordinary shares of 0.01p each in the Company to professional advisers in lieu of fees, two directors of the Company in lieu of salaries and to certain subscribers for cash at a price of 0.15p, as summarised below.
v2 CloudBMS, accelerated book build and subsequent placing
On 2 May 2018 the Group announced the successful release of its next generation v2 halcyon cloudBMS(TM) ("Halcyon V2") software together with a placing of GBP450,000 (before expenses) via the issue of 150,000,000 new ordinary shares at a placing price of 0.3 pence per share. This placing was executed via an accelerated bookbuild.
The next generation v2 halcyon cloudBMS(TM) platform is characterised by its low cost, retrofit-able wireless monitoring and control platform, halcyonPRO2(TM). The Group also released a new halcyonPRO2 server software version v925, which includes monitoring of emergency lighting systems, energy clamps, leak detectors, water monitors and critical asset -monitoring devices, augmenting the regulation of heating and cooling, shading and lighting control of previous versions of the server software.
The Group believes that the v2 halcyon cloudBMS(TM) service and the latest software release for halcyonPRO2(TM) will combine to deliver a highly effective, scalable and secure Building Management System as a service, via a low cost monthly subscription model that enables building estate owners and managers to reduce energy and operating costs and experience greater transparency across their operations via data.
One of the key features of v2 halcyon cloudBMS(TM) is its powerful data analytics rules engine that allows notifications of asset performance changes or faults to be shared with customers via email and SMS. The v2 halcyon cloudBMS(TM) software provides solutions for remote compliance reporting (e.g. emergency lighting testing and legionella risk reduction via temperature monitoring). Energy monitoring and reporting is also a key feature of the software.
In addition, v2 halcyon cloudBMS(TM) aims to prevent loss of trade in the restaurant and hospitality industry by monitoring critical assets such as walk-in freezers, air extraction systems, cooling and hot water systems to allow predictive maintenance, thus reducing loss of trade situations that arise from the sudden failure of these systems. The v2 halcyon cloudBMS(TM) software also provides a full cloud based environment for the monitoring of buildings including leaks, room occupancy, temperature, CO2, humidity and noise. Finally, v2 halcyon cloudBMS(TM) software allows advanced rules and notifications of potential problems via email and SMS.
Current Trading and Outlook
In terms of financial results, the revenues generated by the Group in 2017 were disappointing. However management believes that the Group entered 2018 as a much leaner business, with a significantly reduced cost base. Since the year end, v2 halcyon cloudBMS(TM) software has been launched which we believe will enable us to transition from trials to full scale deployments.
Trading continues to be difficult in the traditional LED business with competitive price pressure showing no sign of abating. As a result of increased demand for our circadian lighting products in the health care sector, the revenues for 2018 are expected to grow for this product line. This product is currently being trialed by three care home groups with over 40 care homes in their estates. Initial results from the trials look promising and the benefits are proving to be significant in terms of resident and staff well-being and sentiment.
The disposal of Camtronics Vale and the completion of v2 halcyon cloudBMS(TM) software represent important steps along the path of the Group's transformation into a software and services business with halcyon at the core of the Group's strategy.
James McKenzie
Chief Executive Officer
29 June 2018
Strategic Report
The directors present their strategic report for the year ended 31 December 2017.
Business review
The review of all businesses is detailed on pages 2 to 7 of the Chief Executive Officer's Statement.
Principal risks and uncertainties
There are a number of potential risks and uncertainties that could impact on the Group's performance. Principally these risks and uncertainties relate to:
-- Going Concern - the Group has historically been loss making and similarly made a loss after tax of GBP1.91m in 2017. Whilst the Board believes the Group has sufficient resources available to continue operating for at least the next 12 months, this is predicated on the Group achieving an anticipated growth in the levels of sales and gross margin, which are themselves subject to operational and market uncertainty. This is further explained in Note 2.2:
-- Research & Development and Product Development activities - whilst we are confident that the Group has the right people with the right skills and drive in order to execute its R&D and Product Development plan, there is no guarantee that these efforts will be successful, or that any such development work will be successfully translated into a commercial product or sales for the Group;
-- Market conditions and competition - the Group operates in markets where there are many competing products and competing companies, many of whom have significantly greater resources than the Group. Whilst we endeavour to differentiate our products from our competitors on the basis of quality, performance and reliability, we may find that our customers prefer to sacrifice such attributes in return for a lower price; and
-- Other financial risks as highlighted in Note 3 to the financial statements, including credit risk, interest rate cash flow risk, foreign exchange risk and going concern risk (see Note 2.2).
Key performance indicators (KPIs)
The Group's directors use various key performance indicators to help understand the development, performance and position of the business. Ordinarily this is presented in the form of monthly management accounts and other management information (although other information is presented on an ad hoc basis as and when requested), and includes, amongst others, the following indicators which the directors consider key:
Hot Features
Premium
In GBP'000 12 months 6 months 6 months 12 months 6 months 6 months
to 31 December to 31 December to 30 to 31 December to 31 December to 30
2017 2017 June 2017 2016 2016 June 2016
-------------------- ---------------- ---------------- ----------- ---------------- ---------------- -----------
Sales:
LED light
fixtures 2,575 1,214 1,361 3,075 1,483 1,592
Halcyon &
light engines 293
184 109 585 322 263
Contract
Manufacturing 1,679 890 789 1,659 982 677
Gross profit
% 31.9% 31.4% 32.4% 33.2% 34.4% 33.1%
Net operating
expenses excluding
exceptional
costs 2,642 1,333 1,309 3,144 1,420 1,727
Adjusted EBITDA
loss (see
Note 5) (483) (87) (396) (701) (155) (546)
In GBP'000 As at As at As at As at
31 December 30 June 31 December 30 June
2017 2017 2016 2016
-------------------- ---------------- ---------------- ----------- ---------------- ---------------- -----------
Net cash/(debt) (789) (810) (606) (683)
-------------------- ---------------- ---------------- ----------- ---------------- ---------------- -----------
All of the actual performances of the above KPI's are compared monthly to those formulated in the Group's budget or latest forecast.
The net operating expenses in 2017 were significantly lower than 2016, particularly in the second half of the year.
The major ongoing programme of investment in research and development continues to impact the net cash resources of the Group.
The main non-financial KPI is monitoring the progress of halcyon cloudBMS(TM) trials - see Chief Executive Officers comments about the importance of these.
Financial review
Group sales decreased by GBP0.77m to GBP4.55m (2016: GBP5.32m), reflecting a decrease in the halcyon and light engines business sales to GBP0.29m (2016: GBP0.59m) along with a decline in LED lighting fixtures sales to GBP2.58m (2016: GBP3.08m).
Gross margin overall reduced to 31.9% (2016: 33.2%). The larger LED fixtures division saw lower margins of 32.0% (2016: 37.3%) due to pricing pressures and the other two divisions saw increased margins - halcyon(TM) & Light Engines margins was 27.6% (2016: 12.2%) and Contract Manufacturing was 30.4% (2016: 27.7%).
The significant reduction in administrative expenses in 2017 to GBP2.78m (2016: GBP3.26m) reflects the major cost-reduction focus in the second half of 2017.
Non-cash costs (depreciation, amortisation and share based charges), included in net operating expenses, increased from GBP0.68m in 2016 to GBP0.70m in 2017,
The Board's annual review of tangible and intangible assets has resulted in an impairment charge in 2017 of GBP0.84m (2016: nil).
The Group's pre-tax loss before exceptional items for the year was GBP1.24m (2016: GBP1.38m). The Group's pre-tax loss after exceptional item (see Note 32) was GBP2.10m (2016: GBP1.38m). Basic and the diluted loss per share were 0.9p (2016: 0.6p). The Group has tax losses of approximately GBP10.4m (2016: GBP9.9m) available to set against future taxable trading profits.
During 2017, the Group made capital expenditure of GBP0.51m (2016: GBP0.91m), of which GBP0.48m (2016: GBP0.63m) was spent on research, development and patents for its LED lighting fixtures and light engines, and GBP0.02m (2016: GBP0.27m) on plant and equipment.
In 2015 the Group started drawing on a grant from Innovate UK (the new name for the government's Technology Strategy Board), worth a total of GBP0.12m over 2015, 2016 and 2017, and made available to support the Group's development of a project entitles 'Smart In-building Micro-Grid for Energy Management'. This grant was completed during 2017.
The Group's year-end net borrowings were GBP0.79m (2016: GBP0.61m) with further available borrowing facilities of up to GBP0.77m (2016: GBP0.82m). During 2017, the Group released GBP0.11m (2016: GBP0.82m) from inventories and trade and other receivables, before impairment provisions.
On 3 May 2017 the Group announced a fundraising round of GBP465,000 (before expenses) via the placing of 37,200,000 new ordinary shares with existing investors and Directors of the Company at a price of 1.25p per share. The net proceeds of the Placing were used to fund the proposed roll out of the halcyonPRO2(TM) and its halcyon(TM) cloudBMS(TM) service and also provided the Group with additional working capital.
The Group raised additional funds after the year end as explained in Note 31 on subsequent events.
This report was approved by the board on 29 June 2018 and was signed on its behalf by
James McKenzie
Chief Executive Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
------------------------------------- ------ -------------------------- ---------
Revenue 5 4,547 5,319
Cost of sales (3,095) (3,555)
------------------------------------- ------ -------------------------- ---------
Gross profit 1,452 1,764
Administrative expenses (excluding
exceptional item) (2,767) (3,263)
Exceptional item (administrative
expenses) 6b (836) -
------------------------------------- ------ -------------------------- ---------
Total administrative expenses (3,603) (3,263)
Other income 6c 125 116
------------------------------------- ------ -------------------------- ---------
Operating loss before exceptional
item 6a (1,190) (1,383)
------------------------------------- ------ -------------------------- ---------
Operating loss after exceptional
item (2,026) (1,383)
Financial expense 20 (53) (50)
Loss before income tax (2,079) (1,433)
Income tax credit 22 169 266
------------------------------------- ------ -------------------------- ---------
Loss and total comprehensive income
for the year attributable to the
equity shareholders of the parent (1,910) (1,167)
------------------------------------- ------ -------------------------- ---------
Loss per ordinary share (pence)
attributable to the
equity shareholders of the parent
Basic and diluted 24 (0.9p) (0.6p)
------------------------------------- ------ -------------------------- ---------
The results relate to continuing operations.
The notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position
As at 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
-------------------------------------- ----- -------- --------
Non-current assets
Property, plant and equipment 8 335 394
Intangible assets 9 917 1,898
-------------------------------------- ----- -------- --------
1,252 2,292
Current assets
Inventories 10 761 774
Trade and other receivables 11 948 1,039
Current tax assets 80 160
Cash and cash equivalents 12 44 225
-------------------------------------- ----- -------- --------
1,833 2,198
-------------------------------------- ----- -------- --------
Total assets 3,085 4,490
-------------------------------------- ----- -------- --------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 13 2,252 1,879
Share premium 13 7,828 7,776
Share capital reduction reserve 13 10,081 10,081
Share option reserve 680 641
Reverse acquisition reserve 30 (8,843) (8,843)
Accumulated losses (11,257) (9,347)
-------------------------------------- ----- -------- --------
Total equity 741 2,187
-------------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables and deferred
income 15 1,486 1,413
Borrowings 15 833 831
Provisions 17 10 44
2,329 2,288
-------------------------------------- ----- -------- --------
Non-current liabilities
Deferred tax liabilities 16 15 15
Total liabilities 2,344 2,303
-------------------------------------- ----- -------- --------
Total equity and liabilities 3,085 4,490
-------------------------------------- ----- -------- --------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved and authorised for issue by the board on 29 June 2018 and were signed on its behalf by:
James McKenzie
Director
Company Statement of Financial Position
As at 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
---------------------------------- ----- -------- --------
Non-current assets
Investments 7 - 3,795
- 3,795
Current assets
Trade and other receivables 11 1,425 1,869
Cash and cash equivalents 12 3 4
---------------------------------- ----- -------- --------
1,428 1,873
---------------------------------- ----- -------- --------
Total assets 1,428 5,668
---------------------------------- ----- -------- --------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 13 2,252 1,879
Share premium 7,828 7,776
Share capital reduction reserve 30 10,081 10,081 Share option reserve 634 618 Accumulated losses (20,210) (15,623) ---------------------------------- ----- -------- -------- Total equity 585 4,731 ---------------------------------- ----- -------- -------- Liabilities Current liabilities Trade and other payables 15 843 937 Total liabilities 843 937 ---------------------------------- ----- -------- -------- Total equity and liabilities 1,428 5,668 ---------------------------------- ----- -------- --------
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company's statement of comprehensive income.
The loss for the Parent Company for the year was GBP4,587,000 (2016 loss: GBP2,592,000).
The notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board on 29 June 2018 and were signed on its behalf by:
James McKenzie
Director
Consolidated Statement of Cash Flows for the year ended 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
------------------------------------------- -------- -------- --------
Cash flows from operating activities
Loss before tax (2,079) (1,433)
Exceptional item - impairment 6b,32 836 -
Depreciation 8 86 94
Amortisation 9 582 546
Share option charge 39 42
Movement in provisions 17 (34) 8
Grant income 6 (60) (62)
Receipt of grants - 24
Profit on Sale of Plant, Property
& Equipment (49) (53)
Change in inventories 10 13 100
Change in trade & other receivables 11 91 598
Change in trade & other payables 15 137 (144)
------------------------------------------- -------- -------- --------
Cash used in operations (438) (280)
Tax received 248 466
------------------------------------------- -------- -------- --------
Net cash used in operating activities (190) 186
------------------------------------------- -------- -------- --------
Cash flows from investing activities
Proceed on disposal of Plant, Property
& Equipment 49 53
Purchase of property, plant and equipment 8 (27) (274)
Purchase of intangible assets 9 (440) (633)
------------------------------------------- -------- -------- --------
Net cash used in investing activities (418) (854)
------------------------------------------- -------- -------- --------
Cash flows from financing activities
Proceeds from the issue of ordinary
shares (net of issue costs) 13 425 907
New bank facilities - -
Repayment of previous bank facilities - -
Change in borrowings 15 2 (211)
------------------------------------------- -------- -------- --------
Net cash generated from financing
activities 427 696
------------------------------------------- -------- -------- --------
Net (decrease)/increase in cash and
cash equivalents (181) 28
Cash and cash equivalents at the start
of the year 12 225 197
------------------------------------------- -------- -------- --------
Cash and cash equivalents at the end
of the year 12 44 225
------------------------------------------- -------- -------- --------
The notes are an integral part of these financial statements.
Company Statement of Cash Flows for the year ended 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
--------------------------------------------- -------- -------- --------
Cash flows from operating activities
Loss before tax (4,587) (2,592)
Provision for Impairment to investment
in subsidiary companies and intercompany
balances 7,11 4,505 2,340
Share option charge 16 42
Change in trade and other receivables 11 2 24
Change in trade and other payables 15 27 (43)
--------------------------------------------- -------- -------- --------
Net cash used in operating activities (37) (229)
--------------------------------------------- -------- -------- --------
Cash flows from investing activities
Change in intra group funding 7,11,15 (389) (683)
--------------------------------------------- -------- -------- --------
Net cash used in investing activities (389) (683)
--------------------------------------------- -------- -------- --------
Cash flows from financing activities
Proceeds from the issue of ordinary
shares (net of issue costs) 13 425 907
Net cash generated from financing
activities 425 907
--------------------------------------------- -------- -------- --------
Net (decrease) in cash and cash equivalents (1) (5)
Cash and cash equivalents at the start
of the year 12 4 9
--------------------------------------------- -------- -------- --------
Cash and cash equivalents at the end
of the year 12 3 4
--------------------------------------------- -------- -------- --------
The notes are an integral part of these financial statements.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
Share
capital Share Reverse
Ordinary share Share reduction option acquisition Retained
capital premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Balance at 1 January
2016 1,477 7,271 10,081 599 (8,843) (8,180) 2,405
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Contributions
by and distributions
to owners
Issue of new shares
(net of issue
costs) 402 505 - - - - 907
Share option charge - - - 42 - - 42
---------------------- --------- ----------- --------- ------------- --------- --------
402 505 - 42 - - 949
---------------------- --------- ----------- --------- ------------- --------- --------
Loss and total
comprehensive
income for the
year - - - - - (1,167) (1,167)
Balance at 31
December 2016 1,879 7,776 10,081 641 (8,843) (9,347) 2,187
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
Contributions
by and distributions
to owners
Issue of new shares
(net of issue
costs) 373 52 - - - - 425
Share option charge - - - 39 - - 39
---------------------- --------- ----------- --------- ------------- --------- --------
373 52 - 39 - - 464
---------------------- --------- ----------- --------- ------------- --------- --------
Loss and total
comprehensive
income for the
year - - - - - (1,910) (1,910)
Balance at 31
December 2017 2,252 7,828 10,081 680 (8,843) (11,257) 741
----------------------- ---------------------- --------- ----------- --------- ------------- --------- --------
The notes are an integral part of these financial statements.
Company Statement of Changes in Equity
for the year ended 31 December 2017
Share
Ordinary capital Share
share Share reduction option Retained
capital premium reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- ----------- --------- --------- --------
Balance at 1 January
2016 1,477 7,271 10,081 576 (13,031) 6,374
------------------------------ --------- --------- ----------- --------- --------- --------
Contributions by and
distributions to owners
Issue of new shares
(net of issue costs) 402 505 - - - 907
Share option charge - - - 42 - 42
--------- --------- ----------- --------- --------- --------
402 505 - 42 - 949
--------- --------- ----------- --------- --------- --------
Loss and total comprehensive
income for the year - - - - (2,592) (2,592)
Balance at 31 December
2016 1,879 7,776 10,081 618 (15,623) 4,731
------------------------------ --------- --------- ----------- --------- --------- --------
Contributions by and
distributions to owners
Issue of new shares
(net of issue costs) 373 52 - - - 425
Share option charge - - - 16 - 16
--------- --------- ----------- --------- --------- --------
373 52 - 16 - 441
--------- --------- ----------- --------- --------- --------
Loss and total comprehensive
income for the year - - - - (4,587) (4,587)
------------------------------ --------- --------- ----------- --------- --------- --------
Balance at 31 December
2017 2,252 7,828 10,081 634 (20,210) 585
------------------------------ --------- --------- ----------- --------- --------- --------
The notes are an integral part of these financial statements.
Notes to the financial statements for the year ended 31 December 2017
1 General information
The principal activity of the Group is the design, development, manufacture and sale of LED light fixtures and light engines.
The Company is a public limited liability company incorporated and domiciled in England and Wales and listed on the Alternative Investment Market ('AIM').
The directors consider there to be no ultimate controlling shareholder of the Company.
The address of the registered office is Unit 8 Westlink, Belbins Business Park, Cupernham Lane, Romsey SO51 7JF and the registered number of the Company is 06133765.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements of PhotonStar LED Group PLC have been prepared in accordance with the requirements of the AIM rules and in accordance with International Financial Reporting Standards as adopted by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and on a historical cost basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
(a) New and amended standards adopted by the Group
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2017 that had a significant effect on the Group's financial statements, although an amendment to IAS 7, Statement of Cash Flows, has resulted in a reconciliation of liabilities disclosed for the first time in Note 33.
(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group
The Group and Company has not adopted any standards or interpretations in advance of the required implementation dates and believes that its effect will not be material to the Group. It is not expected that the adoption of any other standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the 2018 financial statements.
The Group has considered the impact of new standards taking effect on or after 1 January 2018 including the impact of IFRS 9 Financial Instruments, IFRS15 Revenue from Contracts with Customers, and IFRS 16 Leases. IFRS 16 is effective from 1 January 2019 and eliminates the classification of leases as either operating leases or finance leases as is currently required by IAS 17. Instead, a single lessee accounting model will be introduced which will require a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Depreciation of the leased assets will be recognised separately.
IFRS15, Revenue from Contracts is likely to have the largest impact on the Group and its accounting for HalcyonV2 revenues when these commence, but will not impact revenues during the year ended 31 December 2017. IFRS 9, Financial Instruments, will bring in new guidance in the assessment of impairment of financial instruments. This will affect the way in which the Group will consider the calculation of credit risk impairment. The Group's interim accounts for the 6 months ended 30 June 2018 will be prepared in accordance with IFRS 9 and IFRS 15.
2.2 Going concern
The directors have adopted the going concern basis in preparing the financial statements for the year to 31 December 2017. In reaching this conclusion, the directors have considered for both the Company and the Group, current trading and the current and projected funding position for the period of just over 12 months from the
date of approval of the financial statements through to 30 Jun 2018.
Current funding
The Group's cash balance as at 31 December 2017 was GBP44,000 and the drawdown of borrowing was GBP732,000 against bank facilities at that date of GBP1,500,000. Since then the Group has continued to execute its business plan by:
o investing in the continuing growth of its Lighting fixtures business and the development of new product ranges;
o continued further investment in expanding its halcyon range; and
o continued transformation of the Group into a retrofit connected lighting and building management business through its halcyon and cloudBMS platforms.
In order to progress these plans after the year end, in Feb 2018 new shares were issued in the Company for a consideration of GBP430,000.
Projected funding
Subject to the continued growth in halcyon(TM) sales, the cash flow projections show that the Group can continue to operate for a period of 12 months from the date the financial statements were signed.
The achievement of these projections is subject to uncertainties described below.
The projections include assumptions on the amount and timing of revenue and gross margin that the Group expects to achieve during the period of the projections. These assumptions are subject to both market and other uncertainties, as discussed in the Chief Executive Officer's Statement and the Strategic Report. In particular, the forecasts include assumptions about the sales of the Group's halcyon product range. This is a relatively new product range and therefore there is more uncertainty inherent in forecasting the timing and quantum of sales since there is not yet a mature market for this product range.
The Group has incurred a net loss of GBP1.910m in the year (2016: GBP1.167m) and has been loss making since incorporation. The projections reflect the directors' expectation that the Group will be monthly adjusted EBITDA (as calculated in Note 5) positive in early 2019. To the extent there is a shortfall in revenue and/or gross margin, it is likely to be at least partially offset by a reduction in working capital requirements. However, additional funding may be required and this is not yet in place. Nevertheless, the ability of the Company and the Group to continue as going concerns is dependent on the ability of the Group to achieve the growth in sales of its products projected by the directors in their current forecasts which in turn depends on the Group being able to exploit the market for the new product range. Growth needs to be sufficient for the Company and the Group to be able to operate within their cash resource and borrowing facilities.
Conclusion
It is acknowledged that the achievement of these projections is subject to market and other uncertainties as outlined above including the Group's ability to obtain additional funding if required and consequently there is a material uncertainty which may cast significant doubt about the Group's and Company's ability to continue as going concerns. Nevertheless, after taking account of the Group's current funding position, its cash flow projections and the risks and uncertainties associated with these, the directors have a reasonable expectation that the Group and Company have access to adequate resources to continue in operational existence for the foreseeable future. For these reasons they continue to prepare the financial statements on a going concern basis. These financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.
2.3 Consolidation
These financial statements are the consolidated financial statements of PhotonStar LED Group PLC and all of its subsidiaries ("the Group").
Business combinations
Business combinations are accounted for using the acquisition method. The consideration for acquisition is measured at the fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Company in order to obtain control of the acquiree (at the date of exchange). Costs such as professional fees incurred in connection with the acquisition are recognised in the statement of comprehensive income as incurred.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which it occurred, provisional amounts are reported for the items for which the accounting is incomplete. During the measurement period, the provisional amounts recognised at the acquisition date are adjusted retrospectively to reflect new information obtained about the facts and circumstances that existed at the acquisition date and which, if known, would have affected the measurement of the amounts recognised at that date. The measurement period is the period from the acquisition date to the date by which complete information has been received about the facts and circumstances at the acquisition date, subject to a maximum of one year.
Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever the facts and circumstances indicate that there may be a change in any of these elements of control. Defacto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.
2.4 Segmental reporting
IFRS 8 requires that segmental information be disclosed on the basis of information reported to the chief operating decision maker. The Group considers that the role of chief operating decision maker is performed by the Group's Board of Directors.
Although the Group has different entities in the United Kingdom operating as wholly-owned subsidiaries, their primary activities focus on the supply of LED lighting fixtures. The Group operates in three reporting segments, LED Lighting Fixtures, halcyon(TM) and LED Light Engines, and Contract Manufacturing. Segmental information consistent with the Group's internal reporting is provided in Note 5.
2.5 Foreign currency translation
The functional currency of the Company and each of its subsidiary companies is Sterling. Foreign currency assets and liabilities are converted into Sterling at the rates of exchange ruling at the end of the financial year. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
2.6 Investments in subsidiaries
Investments in subsidiaries are stated at cost less accumulated impairment.
2.7 Intangible fixed assets - patents, development costs, customer lists and goodwill
Patents and development costs
Acquired patents associated with internally developed intellectual property are recognised initially at cost. Patents have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives (5 years).
The costs associated with acquiring patents relating to technology which are no longer integral to the product range planned for market are expensed to the statement of comprehensive income.
Development costs capitalised under IAS38 are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives (5 years). Amortisation only commences when the asset is available for use.
Intangible amortisation is recognised within administrative expenses in the statement of comprehensive income.
Customer lists
Customer lists are stated at fair value on acquisition less amortisation recognised since acquisition.
Amortisation of customer lists is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Architectural Lighting & Controls customer list - 6 years.
Goodwill
Goodwill arising on acquisition is the residual cost of the acquisition after allocation of the consideration paid to the fair value of the net tangible and other intangible assets acquired. Goodwill valuation is subject to annual review for impairment and any write-down resulting from impairment is charged to the statement of comprehensive income.
2.8 Property, plant and equipment
All plant and equipment is stated at cost less accumulated depreciation. The cost of plant and equipment includes expenditure that is directly attributable to the acquisition of the assets.
Depreciation on all plant and equipment is calculated using the straight-line method to allocate cost less residual value over estimated useful life, as follows:
Plant and equipment 3 - 5 years
Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate. 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. Repairs and maintenance expenditure is written off to the statement of comprehensive income as incurred.
2.9 Research and development
Expenditure on research is charged to the statement of comprehensive income as incurred. Expenditure on product development is capitalised as an intangible asset in the statement of financial position from the date that the expenditure incurred on the development meets all the capitalisation criteria detailed below:
-- Technical feasibility of completing the asset so that it will be available for use or sale can be demonstrated;
-- The intention to complete the asset and use or sell it can be demonstrated; -- The ability to use or sell the asset can be demonstrated; -- The ability to demonstrate how the asset will generate probable future economic benefits;
-- The ability to demonstrate the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and
-- The ability to measure reliably the expenditure attributable to the asset during its development.
Expenditure on product development is expensed to the statement of comprehensive income as incurred where the capitalisation criteria are not met. Development costs recognised as an expense are not recognised as an asset in a subsequent period.
2.10 Impairment of non-financial assets
The Group assesses annually whether there is any indication that any of its assets have been impaired. If such indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where it is impossible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the smallest cash-generating unit to which the asset is allocated.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount an impairment loss is recognised immediately in the statement of comprehensive income, unless the asset is carried at a revalued amount, in which case the impairment loss is recognised as a decrease in the revaluation reserve to the extent of any previous surplus with any further loss being recognised in the statement of comprehensive income.
For goodwill, intangible assets that have an indefinite life and intangible assets not yet available for use, the recoverable amount is estimated annually or whenever there is an indication of impairment.
2.11 Trade receivables
Trade receivables are stated at the original invoice amount less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payment are considered indicators that the trade receivable is impaired. The carrying amount of the asset is reduced through the use of a provision account and the amount of the loss is recognised within administrative expenses in the statement of comprehensive income. Trade receivables are not discounted as the effect would be immaterial.
2.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first in, first out method. The cost of finished goods and work in progress comprises the purchase price including transport and handling costs and attributable manufacturing overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.13 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments, with original maturities of three months or less.
2.14 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.15 Trade payables
Trade payables are non-derivative financial liabilities with fixed or determinable payments. Trade payables are included in current liabilities, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current liabilities. Trade payables are recognised at cost. They are not discounted as the effect would be immaterial.
2.16 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the statement of comprehensive income over the period of the borrowings using the effective interest rate method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
2.17 Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
2.18 Revenue
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services. Revenue is shown net of value added taxes, returns and rebates.
Revenue is recognised when the amount can be reliably measured and it is probable that future economic benefit will flow to the Group under the terms of any sale agreements. This normally corresponds to the date that goods are either despatched to customers, or in the case of ex-works customers the goods are available for collection. Revenue is not considered to be reliably measurable until all contingent clauses in sale agreements are met.
Details of the accounting policy for warranty and stock return provisions are in Note 2.22.
2.19 Government grants
Grants from the Government are recognised at their fair value where there is reasonable assurance that the grant will be received and that the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in other income in the statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate.
Capital grants that relate to specific capital expenditure are included in current and non-current liabilities as deferred income which is credited to the statement of comprehensive income over the related asset's useful life.
2.20 Operating leases
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Contingent rentals arising under operating leases are recognised in the period in which they are incurred.
2.21 Share based payments
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense and credited to the share option reserve within equity. 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).Options that lapse before vesting are credited back to income.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and, if applicable, share premium when the options are exercised.
Share based payments are facilitated by an Employee Benefit Trust which is consolidated in the Group financial statements.
2.22 Provisions
The Group's principal provisions relate to product warranties and stock returns from distributors.
Provisions are recognised when the Group has a present obligation as a result of an event that occurred in the past and the settlement of that obligation will result in an outflow of resources, but the timing of or amount that will be required to settle is uncertain. The amount recognised as a provision is the best estimate of the consideration which will be required to settle the obligation.
2.23 Financial instruments
i) Financial assets
Basic financial assets, including trade and other debtors and cash and bank balances, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in the consolidated income statement.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in the consolidated income statement.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions
ii) Financial liabilities
Basic financial liabilities, including trade and other creditors, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
The group does not hold or issue derivative financial instruments.
iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle to liability simultaneously.
2.24 Pensions
For defined contribution schemes the amount charged to the statement of comprehensive income is the contribution payable in the year. Differences between the contributions payable in the year and contributions actually paid are shown either as accruals or prepayments.
3 Financial risk 3.1 Capital risk management
The Group monitors capital which comprises all components of equity (i.e. share capital, share premium, capital reduction reserve, share option reserve, and retained earnings/losses). Note 29 describes how capital is managed in respect of the debt to equity ratio.
3.2 Financial risk factors
The Group and Company's operations expose it to a variety of financial risks that include the effects of credit risk, liquidity risk and interest rate risk. The Group and Company have in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Group and Company by monitoring levels of debt finance and the related finance costs. The Group and Company do not use derivative financial instruments to manage interest rate costs and as such, no hedge accounting is applied.
Given the size of the Group and Company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the Group and Company's finance department.
(a) Market risk (i) Foreign exchange risk
The Group distributes and sells internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and Sterling. Foreign exchange risk arises from future commercial transactions and translation of foreign currency denominated monetary assets and liabilities. Foreign currency risk is managed via the purchase of raw materials and the sale of products in equivalent currencies. A sensitivity analysis has not been performed because the Group's exposure to foreign exchange risk is not significant.
(ii) Price risk
The Group has periodic price reviews within distributor sales contracts that enable it to reassess and adjust for price risk as part of contractual negotiations. Commodity price risk is assessed as medium as a result of the various supply alternatives available for key components. Any increase or decrease in commodity prices has a direct impact on EBITDA until sales prices can be renegotiated.
(b) Credit risk
The Group has implemented policies that require appropriate credit checks on potential customers before sales are made. The Group's credit risk is primarily attributable to its trade receivables balance. The amounts presented in the statement of financial position are net of allowances for impairment.
(c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group's financial liabilities include its borrowings and trade and other payables shown in Note 15. Responsibility for monitoring liquidity risk and for ensuring that Group members are adequately funded lies with the board of the Parent Company, PhotonStar LED Group PLC. Contractual maturity analysis for financial liabilities is also shown in Note 15.
(d) Interest rate cash flow risk
The Group has both interest bearing assets and interest bearing liabilities. Interest bearing assets comprise only cash balances, which earn interest at floating rates. Interest bearing liabilities comprise debt at fixed and floating rates.
4 Critical accounting estimates and judgements
In the preparation of the financial statements the directors must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the financial statements. These estimates are based on historical experience and various other assumptions that the Board believes are reasonable under the circumstances. The results of this form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.
a) Accounting judgement
There were no judgments made.
b) Accounting estimate
The principal area where estimates have been made in the financial statements is in respect of intangible assets and the level of impairment required which is dependent on future revenue growth and margins (see note 32, Impairment Review).
Impairment of non-current assets
Determining whether intangible assets or plant and equipment are impaired requires an estimation of the value in use of those assets. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the business or asset and to apply a suitable discount rate in order to calculate present value. Estimates of business segments' future performance are based on past performance and then update for the Board's assessment of current opportunities and the related growth prospects. The status of the Group's development projects is also taken into account. A Group impairment loss is required at 31 December 2017 of GBP836,000 (2016: nil). Further details regarding the impairment review and the underlying assumptions and sensitivities are given in Note 32.
Stock provisions
The directors review at each reporting date the net realisable value of all stock. Where the cost of stock is believed to exceed its net realisable value, stock provisions are made to reduce cost to net realisable value, taking into account the costs of disposal. The stock provision (including impairment) at 31 December 2017 was GBP172,000 (2016: GBP338,000). The directors assess stocks on a line by line basis and make assumptions regarding the future use of each line based the age of the item, the historical usage of the stock line, and the budgeted sales for the related products. The estimation uncertainty arises as it is not certain whether future sales of all lines of stock will arise in accordance with these assumptions.
Deferred tax
The Group has tax losses of GBP10.39m (2016: GBP9.94m) available for off-set against future taxable profits. In determining the value of the deferred tax asset that can be attributed to these losses, the directors have to estimate future taxable profits and the period over which the asset may be recovered. The directors consider the most up-to-date forecasts for the business and assess the risks inherent in achieving those forecasts. At the statement of financial position date, no deferred tax asset has been recorded. The deferred tax asset may be recognised in the future if there is an improvement in the forecast taxable profits.
Share based payments
See Note 13 which explains the methods used to estimate the fair value of share options granted.
5 Segmental information
The directors consider that for the year ended 31 December 2017 the Group has operated in three business segments, LED Lighting Fixtures, Halcyon and Light Engines and Contract Manufacturing. The main factor used in determining the reportable segments are dependent on the nature of the business segment's activities. Similar business activities are undertaken in separate subsidiary undertakings so as to facilitate their segregation and management. This simplifies accounting for business segments as invoices do not need to be split between business segments. Accordingly any accounting between business segments is minimal. Assets are also recorded in each company so there is no need to allocate depreciation charges across business segments as depreciation charges are already recorded in each company (business segment).
The Group Board reviews the Group's internal reporting in order to monitor and assess the performance of each business segment for the purposes of making decisions about the resources to be allocated. Performance is evaluated based on a combination of revenue, gross margins and EBITDA. The Group's principal activities consisted of the design, development, manufacture and sale of LED Lighting Fixtures and of Halcyon and Light Engines and Contract Manufacturing, as follows:
Halcyon
Year ended 31 December 2017 LED Lighting & Light Contract Total
Fixtures Engines Manufacturing
GBP'000 GBP'000 GBP'000 GBP'000
Revenue;
UK 2,450 293 1,679 4,422
Rest of World 125 - - 125
--------------------------------- ------------- ----------- -------------- ----------
Total Revenue 2,575 293 1,679 4,547
--------------------------------- ------------- ----------- -------------- ----------
Adjusted EBITDA for reportable
segments (191) (327) 70 (448)
Depreciation and Amortisation (131) (495) (42) (668)
Impairment - (748) (88) (836)
Interest expense (27) - (26) (53)
Taxation Credit 65 104 - 169
Total Assets 1,138 888 897 2,923
Total Liabilities 840 206 450 1,496
Additions to Non-current assets
in the year 87 380 - 467
Note that these revenues relate to the supply of goods.
Halcyon
Year ended 31 December 2016 LED Lighting & Light Contract Total
Fixtures Engines Manufacturing
GBP'000 GBP'000 GBP'000 GBP'000
Revenue;
UK 2,819 585 1,659 5,063
Rest of World 256 - - 256
--------------------------------- ------------- ----------- -------------- ----------
Total Revenue 3,075 585 1,659 5,319
--------------------------------- ------------- ----------- -------------- ----------
Adjusted EBITDA for reportable
segments (111) (353) (27) (491)
Depreciation and Amortisation (214) (377) (49) (640)
Interest Expense (20) (1) (29) (50)
Taxation Credit 70 196 - 266
Total Assets 1,243 1,916 895 4,054
Total Liabilities 616 364 396 1,376
Additions to Non-current assets
in the year 62 587 258 907
'Adjusted EBITDA for reportable segments' above is defined as EBITDA before share option charge and corporate expenses, and 'Adjusted EBITDA' below is defined as EBITDA before share option charge and exceptional item. The relevant amounts are disclosed below. Corporate expenses consist mainly of certain expenses of the parent undertaking such as legal, professional and consultancy costs related to the Group's listing on AIM and other central costs not allocated to business segments. Adjusted EBITDA, rather than the traditional EBITDA measure, is used as an alternative performance measure because it is a fairer approximation of operating cash flows.
Note that the Adjusted EBITDA reported in these financial statements is not considered to be a substitute for those figures reported under IFRS.
A reconciliation of the adjusted EBITDA to the loss before tax is as follows:
Total Total
2017 2016
GBP'000 GBP'000
----------------------------------------- ----------- ---------
Adjusted EBITDA for reportable segments (448) (491)
Corporate expense (35) (210)
----------------------------------------- ----------- ---------
Adjusted EBITDA (483) (701)
Depreciation and amortisation (668) (640)
Impairment (836) -
Share option charge (39) (42)
Interest expense (53) (50)
Loss before tax (2,079) (1,433)
----------------------------------------- ----------- ---------
A reconciliation of the reportable segments' assets to the Group's total assets is as follows:
Total Total
2017 2016
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Segment assets for reportable segments 2,923 4,054
Unallocated
Cash at bank 44 225
Other 118 211
Total assets per the statement of financial
position 3,085 4,490
--------------------------------------------- --------- ---------
A reconciliation of the reportable segments' liabilities to the Group's total liabilities is as follows:
Total Total
2017 2016
GBP'000 GBP'000
------------------------------------- ----------- ---------
Segment liabilities for reportable
segments 1,496 1,376
Unallocated:
Borrowings 833 831
Other 15 96
------------------------------------- ----------- ---------
Total liabilities per the statement
of financial position 2,344 2,303
------------------------------------- ----------- ---------
The sum of the reportable segments' additions to Non-current assets is equal to the totals reported in Notes 8 and 9 for both 2017 and 2016.
Single external customers amounting to more than 10 per cent of segment revenue - in 2017 for Lighting fixtures GBP589,008 (2016: one customer with revenues of GBP1,317,085), Halcyon(TM) & Light Engines three customers with revenues of GBP71,852, GBP41,635 and GBP30,170 (2016: two customers with revenues of GBP172,393 and GBP83,819) and Contract Manufacturing two customers with revenues of GBP502,211 and GBP249,048 (2016: two customers with revenues of GBP614,109 and GBP267,620.)
6a Operating loss
Operating loss is stated after 2017 2016
charging/(crediting): GBP'000 GBP'000
-------------------------------- --------- ---------
Cost of inventory recognised
as expense 3,095 3,555
Staff costs 1,738 2,448
Pension contributions 10 13
Depreciation 86 94
Amortisation of intangible
assets 582 546
Operating lease expense 141 179
Government grant income (60) (62)
-------------------------------- --------- ---------
6b Exceptional item
2017 2016
GBP'000 GBP'000
---------------------------- ---------------------------- ---------
Impairment losses (see Note 836 -
33)
---------------------------- ---------------------------- ---------
Total exceptional item 836 -
---------------------------- ---------------------------- ---------
Exceptional items are shown in the Statement of Comprehensive Income as an administrative expense.
6c Other Income
2017 2016
GBP'000 GBP'000
------------------------- --------------------------- ---------
Government Grant Income 60 62
Other sundry income 65 54
------------------------- --------------------------- ---------
Total other income 125 116
------------------------- --------------------------- ---------
7 Investments in subsidiary undertakings
Company 2017 2016
GBP'000 GBP'000
-------------------------- --------- ---------
Opening balance 3,795 6,135
Provision for impairment (3,795) (2,340)
-------------------------- --------- ---------
Closing balance - 3,795
-------------------------- --------- ---------
Note 32 sets out the group-level impairment review and concludes there should be an impairment charge to the consolidated balance sheet of GBP836,000 (2016: GBPNil). In the Company's own financial statements, a provision for impairment has been recorded in order to adjust the book value of the parent company's investments to the value in use of the subsidiaries that is estimated in the Group's impairment review. This provision for impairment has no impact on the consolidated financial statements.
Name Country of incorporation Proportion of ownership Principal activities
interest
PhotonStar LED England and Wales 100% interest in ordinary Design and development of LED
Limited share capital lighting fixtures.
PhotonStar Technology England and Wales 100% interest in ordinary Design and development of
Limited share capital halcyon(TM) and LED light
engines
----------------------------- ------------------------ ------------------------------ -----------------------------
Camtronics Vale Limited England and Wales 100% interest in ordinary Specialist electronics
share capital manufacture
----------------------------- ------------------------ ------------------------------ -----------------------------
Enfis Limited England and Wales 100% interest in ordinary Dormant
share capital
----------------------------- ------------------------ ------------------------------ -----------------------------
Architectural Lighting & England and Wales 100% interest in ordinary Dormant
Controls Limited share capital* ----------------------------- ------------------------ ------------------------------ -----------------------------
.
*Shares held by subsidiary Company.
The registered address for all subsidiaries is Unit 8 Westlinks, Belbins Business Park, Cupernham Lane, Romsey, Hampshire, SO51 7JF.
8 Property, plant and equipment
Property,
Group plant and
equipment
GBP'000
------------------------------ -----------
Cost
At 1 January 2016 1,182
Additions 274
Disposals (111)
At 31 December 2016 1,345
Additions 27
Disposals (12)
At 31 December 2017 1,360
------------------------------ -----------
Accumulated depreciation and
impairment
At 1 January 2016 968
Charge for the year 94
Disposal (111)
At 31 December 2016 951
Charge for the year 86
Disposal (12)
At 31 December 2017 1,025
------------------------------ -----------
Net book value
At 31 December 2017 335
------------------------------ -----------
At 31 December 2016 394
------------------------------ -----------
At 31 December 2015 214
------------------------------ -----------
At 31 December 2017 property, plant and equipment with a net book value of GBP335,000 (2016: GBP394,000) were pledged as security for the bank facilities (see Note 15 Trade and other payables).
The Company has no property, plant and equipment.
9 Intangible fixed assets
Group
Patents and licences Customer Goodwill Development costs Total
GBP'000 list GBP'000
GBP'000 GBP'000 GBP'000
---------------------------- ---------------------- --------- --------- -------------------- ---------
Cost
At 1 January 2016 550 243 1,833 2,870 5,496
Additions 53 - - 580 633
At 31 December 2016 603 243 1,833 3,450 6,129
Additions 28 - - 412 440
Disposals (88) - - - (88)
At 31 December 2017 543 243 1,833 3,862 6,481
---------------------------- ---------------------- --------- --------- ------------------ -----------
Amortisation and impairment
At 1 January 2016 417 240 1,626 1,402 3,685
9
Charge for the year 65 - - 481 546
At 31 December 2016 482 240 1,626 1,883 4,231
Charge for year 57 3 - 522 582
Disposals (85) - - - (85)
Impairment (see Note 33) - - 88 748 836
At 31 December 2017 454 243 1,714 3,153 5,564
---------------------------- ---------------------- --------- --------- ------------------ -----------
Net book value
At 31 December 2017 89 - 119 709 917
---------------------------- ---------------------- --------- --------- ------------------ -----------
At 31 December 2016 121 3 207 1,567 1,898
---------------------------- ---------------------- --------- --------- ------------------ -----------
At 31 December 2015 133 3 207 1,468 1,811
---------------------------- ---------------------- --------- --------- ------------------ -----------
Included within additions to development costs are costs of GBP258,643 (2016: GBP448,000) which are staff and other internal costs capitalised in the year.
Patents include the external third party cost associated with the acquisition of patents for internally developed intellectual property and technical expertise. Intangible amortisation is recognised within administrative expenses in the statement of comprehensive income. The costs associated with acquiring patents relating to technology which are not integral to the product range planned for market have been expensed to the statement of comprehensive income during the period.
At 31 December 2017 intangible fixed assets with a net book value of GBP1,775,000 (2016: GBP1,898,000) were pledged as security for the bank facilities (see Note 15 Trade and other payables).
The remaining goodwill of GBP119,000 consists of GBP106,000 to the acquisition of Architectural Lighting and Controls Limited and GBP13,000 to the acquisition of Camtronics Vale Limited.
10 Inventories
Group 2017 2016
GBP'000 GBP'000
Raw materials 923 905
Work in progress 85 72
Finished goods 63 134
Provision for obsolete and slow moving stock (310) (337)
---------------------------------------------- --------- ---------
Total 761 774
---------------------------------------------- --------- ---------
The inventories shown above are pledged
as security for the invoice finance borrowings
disclosed in Note 15. The Company has no
inventories.
11 Trade and other receivables
Group Company Group Company
2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- --------- ---------
Trade receivables 865 - 1,032 -
Less: provision for impairment (28) - (69) -
----------------------------------- --------- --------- --------- ---------
Trade receivables (net) 837 - 963 -
Amounts due from subsidiaries - 2,130 - 1,862
Less: provision for impairment - (710) - -
Prepayments and other receivables 111 5 76 7
948 1,425 1,039 1,869
----------------------------------- --------- --------- --------- ---------
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are classified as 'trade and other receivables' in the statement of financial position and are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets. The value of trade receivables shown above, in addition to the value of cash balances on deposit with counterparties (see Note 12), represents the Group's maximum exposure to credit risk. No collateral is held as security.
Amounts due from subsidiary undertakings represent net amounts provided to the Company's wholly owned subsidiaries, PhotonStar Technology Limited, PhotonStar LED Limited and Camtronics Vale Limited. Receivables due from subsidiaries are unsecured and repayable on demand.
The fair value of trade and other receivables approximate to the net book values stated above.
As of 31 December 2017, trade receivables of GBP99,000 (2016: GBP191,000) were past their due date of receipt but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:-
2017 2016
GBP'000 GBP'000
--------------------------- --------- ---------
Up to two months past due 59 160
Over two months past due 21 31
Total 90 191
--------------------------- --------- ---------
As of 31 December 2017 trade receivables of GBP28,000 (2016: GBP69,000) were impaired. The individually impaired receivables relate to balances where it has been assessed that the receivable is not expected to be recovered. The ageing of these receivables is as follows:
2017 2016
GBP'000 GBP'000
--------------------------- --------- ---------
Current - -
Up to two months past due - -
Over two months past due 28 69
--------------------------- --------- ---------
The Group's trade and other receivables above are denominated in Sterling, and are pledged as security for the invoice finance borrowings disclosed in Note 15.
Movements on the provision for impairment of trade receivables are as follows:
2016 2016
GBP'000 GBP'000
----------------------------------------------- --------- ---------
At 1 January 69 87
Utilised (69) (87)
Provision for impairment of trade receivables 28 69
At 31 December 28 69
----------------------------------------------- --------- ---------
12 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances with banks and investments in readily accessible money market instruments. Cash and cash equivalents included in the consolidated and Company statement of cash flows comprise the following statement of financial position amounts.
Group Company Group Company
2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- --------- ---------
Cash on hand & balances
with banks 44 3 225 4
------------------------- --------- --------- --------- ---------
An analysis of cash balances is provided in Note 34.
13 Share capital
The authorised and issued share capital comprises ordinary shares of 1p nominal value (2016: 1p) and is summarised below:
Allotted, called
up and fully
paid
No.
--------------------- -----------------
At 31 December 2015 147,727,363
Issued 40,230,857
---------------------- -----------------
At 31 December 2016 187,958,220
Issued 37,200,000
---------------------- -----------------
At 31 December 2017 225,158,220
---------------------- -----------------
The table below reconciles movements in issued share capital during the year.
Number Ordinary Share Share capital reduction reserve GBP'000
of shares share capital premium Total
GBP'000
GBP'000 GBP'000
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
At 31 December 2015 147,727,363 1,477 7,271 10,081 18,829
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
Shares issued 40,230,857 402 505 - 907
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
At 31 December 2016 187,958,220 1,879 7,776 10,081 19,736
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
Shares issued 37,200,000 373 52 - 425
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
At 31 December 2017 225,158,220 2,252 7,828 10,081 20,161
--------------------- ------------ --------------- --------- ---------------------------------------- ----------
In May 2017, 37,200,000 ordinary 1p shares were issued for cash at 1.25p each per share.
Employee share schemes
(i) Deferred payment share purchase plan
The Group has a deferred payment share purchase plan which enables the funding of share purchases in the Group by executive directors and other employees. There are no current applications to purchase shares through this plan (2016: Nil applications).
(ii) Share options
The Group has an Enterprise Management Incentive Share Option Scheme (EMI Scheme) and an Executive Share Option Scheme.
During the year options over 4,350,000 (2016: 2,750,000) ordinary shares have been granted to directors of the Company. These were granted as incentives to retain staff and not granted in lieu of payment.
The exercise terms of granted options as at 31 December 2017 are summarised below:
Date of grant Number of Exercise
options price (pence
per share) Exercise
dates from
--------------- ----------- -------------- -------------
2010 5,776,215 2.8 2011
2012 234,000 10 2015
2012 1,716,225 13.5 2015
2013 3,101,000 10 2015
2014 1,732,000 7 2017
2015 2,170,000 5 2017
2016 6,505,000 1.85 2017
2017 4,350,000 0.85 2018
--------------- ----------- -------------- -------------
The number and weighted average exercise price of the options that were exercisable at 31 December 2017 were 21,234,440 and 5.9p respectively (2016: 11,050,995 and 7.1p).
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
Average
exercise price Options
(pence per number
share)
--------------------- --------------- ------------
At 31 December 2015 6 17,442,390
Granted 1.85 7,850,000
Lapsed 7 (1,744,395)
--------------------- --------------- ------------
At 31 December 2016 5 23,547,995
Granted 0.85 4,350,000
Lapsed 0.05 (2,313,555)
--------------------- --------------- ------------
At 31 December 2017 0.04 25,584,440
--------------------- --------------- ------------
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Exercise price Options Options
Expiry date (pence per 2017 2016
share)
--------------- --------------- ----------- -----------
2017 72 - 54,000
2018-2019 2.8 5,776,215 5,776,215
2022 10 234,000 258,000
2022 13.5 1,716,225 1,841,780
2023 10 3,101,000 3,121,000
2024 7 1,732,000 1,832,000
2024 3 - 560,000
2025 5 2,170,000 2,520,000
2026 1.85 6,505,000 7,585,000
2027 0.85 4,350,000 -
--------------- --------------- ----------- -----------
25,584,440 23,547,995
--------------- --------------- ----------- -----------
The Company determines the fair value of its share option contracts on the grant date, adjusts this to reflect its expectation of the options that will ultimately vest, and then expenses the calculated balance on a straight line basis through its statement of comprehensive income over the expected vesting period with a corresponding credit to its share option reserve. Subsequent changes to the expectation of number of options that will ultimately vest are dealt with prospectively such that the cumulative amount charged to the statement of comprehensive income is consistent with latest expectations. Subsequent changes in market conditions do not impact the amount charged to the statement of comprehensive income.
The Company determines the fair value of its share option contracts using a model based on the Black-Scholes-Merton methodology. In determining the fair value of its share option contracts, the Company made the following assumptions (ranges are provided where values differ across tranches). Expected volatility was determined by reference to historical experience.
Fair
Expected Expected Risk free value
Share Exercise option Expected dividend interest at grant
Grant price price life volatility yield rate date
date pence pence years % % % pence
------ --------- --------- ----------- --------- ---------- ---------
2016 1.85 1.85 10 34 0 1.08 0.80
2017 0.85 0.85 10 34 0 1.30 0.08
------ --------- --------- ----------- --------- ---------- ---------
14 Financial assets and liabilities
The tables below analyse the carrying value of financial assets and financial liabilities in the Group and
Company's statements of financial position. Further information on the classes that make up each category is provided in the notes indicated. The carrying value of each category is considered a reasonable approximation of its fair value. All amounts are due within one year.
Group Notes 2017 2016
GBP'000 GBP'000
----------------------------------- ----- -------- --------
Trade receivables 11 865 963
Cash and cash equivalents 12 44 225
----------------------------------- ----- -------- --------
Financial assets 909 1,188
----------------------------------- ----- -------- --------
Trade payables 15 939 658
Accruals 15 283 289
Borrowings 15 833 831
Financial liabilities at amortised
cost 2,055 1,778
----------------------------------- ----- -------- --------
Financial liabilities 2,055 1,778
----------------------------------- ----- -------- --------
Company Notes 2017 2016
GBP'000 GBP'000
----------------------------------- ----- -------- --------
Amounts due from subsidiaries 11 1,420 1,862
Cash and cash equivalents 12 3 4
----------------------------------- ----- -------- --------
Financial assets 1,423 1,866
----------------------------------- ----- -------- --------
Trade payables 15 58 35
Amounts due to subsidiaries 15 739 865
Accruals 15 46 37
----------------------------------- ----- -------- --------
Financial liabilities at amortised
cost 843 937
----------------------------------- ----- -------- --------
Financial liabilities 843 937
----------------------------------- ----- -------- --------
15 Trade and other payables
2017 2016
Group GBP'000 GBP'000
------------------------------------- --------- ---------
Trade payables 939 658
Other creditors 11 38
Social security and other taxes 264 259
Accruals 255 289
Deferred income - government grants 17 169
------------------------------------- --------- ---------
Total 1,486 1,413
------------------------------------- --------- ---------
Company
------------------------------------- --------- ---------
Trade payables 58 35
Accruals 46 37
Amounts due to subsidiaries 739 865
Total 843 937
------------------------------------- --------- ---------
Group Due Due between one and three months
or GBP'000
due in less than one month GBP'000
Trade payables Total
GBP'000
------------------ ---------- ------------------------------------ ---------------------------------
31 December 2017 939 540 399
------------------ ---------- ------------------------------------ ---------------------------------
31 December 2016 658 477 181
------------------ ---------- ------------------------------------ ---------------------------------
Group 2017 2016
Borrowings GBP'000 GBP'000
-------------------------- --------- ---------
Current borrowings
Hire purchase agreements 98 140
Bank credit cards 3 2
Invoice finance 732 689
-------------------------- --------- ---------
Total 833 831
-------------------------- --------- ---------
16 Deferred income tax
There is an un-provided deferred tax asset arising on taxable losses of GBP10.39m (2016: GBP9.94m). In accordance with accounting standards, the deferred tax asset has not been recognised in the financial statements as there will not be sufficient future profits against which it could be recovered. This view will be reconsidered once the Group demonstrates consistent profitability.
The deferred tax liability of GBP15,000 (2016: GBP15,000) relates to accelerated temporary differences on plant and equipment.
17 Provisions
Group Warranty
provision
GBP'000
----------------------------- -----------
At 1 January 2016 36
Charged to income statement 42
Utilised (34)
----------------------------- -----------
At 31 December 2016 44
Charged to income statement 44
Utilised (34)
----------------------------- -----------
At 31 December 2017 10
----------------------------- -----------
The Group has provided product warranties to certain customers. Provision has been made for the expected cost of meeting claims in respect of these arrangements. The balance as at 31 December 2017 is expected to be utilised over an appropriate period of time, having taken account of the Group's rigorous quality assurance procedures prior to despatch, and the low level of warranty claims experienced relating to the new product lines.
18 Auditor's remuneration
During the year the Group obtained the following services from the Company's auditor as detailed below:
2017 2016
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Fees payable to Company's auditor for the audit
of Parent Company's and consolidated financial
statements 15 14
Fees payable to the Company's auditor and its
associates for other services:
- The audit of the Company's subsidiaries
pursuant to legislation 36 20
- Tax services
- Compliance 9 9
Total 60 43
------------------------------------------------- --------- ---------
19 Employee benefit expense
Group 2017 2016
GBP'000 GBP'000
----------------------- --------- ---------
Wages and salaries 1,601 2,198
Social security costs 144 208
Share based payments 39 42
----------------------- --------- ---------
1,784 2,448
----------------------- --------- ---------
The average number of persons (including executive directors) employed by the Group during the year was:
By activity 2017 2016
Number Number
---------------------------- ------- -------
Research and development 5 7
Sales 12 15
Administration and finance 6 6
Production 45 58
---------------------------- ------- -------
68 86
---------------------------- ------- -------
During the year, the Company had 2 employees (2016: 2), including the directors.
20 Financial expense
Group 2017 2016
GBP'000 GBP'000
Bank loans, overdrafts and invoice finance 38 36
Hire purchase and other interest 15 14
-------------------------------------------- -------- --------
53 50
-------------------------------------------- -------- --------
21 Directors' emoluments
Group 2017 2016
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Dr J S McKenzie 115 130
Dr M E Zoorob 83 90
J Freeman 18 20
P Marshall - 9
--------------------------------------------- --------- ---------
Salary and Fees 216 249
Social security costs - employer's national
insurance 26 30
Share based charges 12 21
Pensions costs 1 1
--------------------------------------------- --------- ---------
Total 255 301
--------------------------------------------- --------- ---------
Key management personnel are defined as Directors. Key management compensation comprises salaries and fees set out above and share options set out later in this note.
The emoluments of the highest paid Director were as follows:
Group 2017 2016
GBP'000 GBP'000
---------------------- --------- ---------
Aggregate emoluments 115 130
---------------------- --------- ---------
No share options were exercised by the highest paid Director in the year (2016: Nil). The highest paid Director received no share options during the year (2016: 1,500,000).
Share options granted to the Directors under the Company's share option schemes are shown below:
31 December 31 December
2016 Issued Lapsed 2017
number number number Number
----------------- ------------ --------- --------- ------------
Dr J S McKenzie 6,359,710 - - 6,359,710
Dr M Zoorob 5,435,456 - - 5,435,456
11,795,166 - - 11,795,166
----------------- ------------ --------- --------- ------------
The period over which the options held by the Directors are exercisable is summarised below:
Year of grant Number of options Exercise Period of
issued price exercise
(pence)
--------------- ------------------ --------- -----------------
2010 4,245,166 2.8 2009 - 2019
2012 1,000,000 13.5 2015 - 2023
2013 2,000,000 10 2015 - 2023
2014 900,000 7 2015 - 2024
2015 900,000 5.025 2016 - 2025
2016 2,750,000 1.85 2017 - 2026
22 Income tax credit
Group 2017 2016
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Current taxation; research and development tax
credits
UK corporation tax on loss for the year (137) (161)
Adjustment in respect of prior periods (32) (105)
------------------------------------------------ --------- ---------
(169) (266)
Deferred tax - -
------------------------------------------------ --------- ---------
Income tax credit (169) (266)
------------------------------------------------ --------- ---------
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the tax rate applicable to the losses of the Group as follows:
Group 2017 2016
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Loss before tax (2,079) (1,433)
------------------------------------------------ --------- ---------
Tax calculated at the domestic rate applicable
of 19.25% (2016:20%) (400) (287)
Expenses not deductible for tax purposes 173 43
R&D tax credit (135) (161)
Tax losses for which no deferred income tax
asset was recognised 225 244
Adjustments in respect of prior periods (32) (105)
------------------------------------------------ --------- ---------
Total tax credit (169) (266)
------------------------------------------------ --------- ---------
23 Net foreign exchange (gains)/loss
The exchange differences charged to the consolidated statement of comprehensive income are as follows:
Group 2017 2016
GBP'000 GBP'000
------------ --------- ---------
Loss - net 2 1
------------ --------- ---------
24 Earnings per share
2017 2016
Basic loss per share
-------------------------------------------- --------------- ---------------
Loss attributable to ordinary shareholders GBP(1,910,000) GBP(1,167,000)
Weighted average number of ordinary shares 212,622,330 187,958,220
Basic loss per share (0.9p) (0.6p)
-------------------------------------------- --------------- ---------------
Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding after adjusting these amounts for the effects of dilutive potential ordinary shares.
As the results for the years ended 31 December 2017 and 31 December 2016 are a loss, any exercise of share options would have an anti-dilutive effect on earnings per share. Consequently earnings per share and diluted earnings per share are the same and the calculation has not been included.
As at 31 December 2017, there were share options outstanding over 25,584,440 shares (2016: 23,547,995 shares), which could potentially have a dilutive impact in the future.
25 Commitments (a) Capital commitments
Capital commitments at 31 December 2017 GBPNil (31 December 2016: GBPNil)
(b) Operating lease commitments
The Group leases buildings under non-cancellable leases from various landlords.
The future aggregate minimum lease payments under these non-cancellable operating leases are as follows:
2017 2016
GBP'000 GBP'000
---------------------------------- --------- ---------
Payable within one year 165 123
Payable within two to five years 239 303
Payable over five years 95 -
---------------------------------- --------- ---------
499 426
---------------------------------- --------- ---------
26 Related party transactions
Transactions with and between subsidiaries
As at 31 December 2017 the Company had advanced GBP674,000 to PhotonStar LED Limited (2016: GBP434,000) and GBP1,456,000 to PhotonStar Technology Limited (2016: GBP1,427,000), GBP610,000 was due to Camtronics Vale Limited (2016: GBP731,000), and GBP134,000 was due to Architectural & Lighting Controls Limited (2016: GBP134,000). Further details of these advances are given in Note 11, Trade and other receivables, and in Note 15, Trade and other payables.
Transactions with directors
Emoluments of P Marshall totalling GBPNil (2016: GBP9,000) were invoiced to the Company by Marshall Consulting KFT, as included in Note 21. GBPNil was outstanding at the year-end (2016: GBPNil).
During the year an amount of GBP81,000 (2016: GBP94,000) was paid to related parties of the director in respect of services provided to the company.
27 Controlling party
The directors consider there to be no ultimate controlling party.
28 Government grants
Government grants credited to income are as follows:
Group 2017 2016
GBP'000 GBP'000
------------------- --------- ---------
Government grants 60 64
------------------- --------- ---------
The government grants relate to research that was funded by the DECC Entrepreneurs Fund and by Innovate UK.
29 Capital management
In managing its capital structure the Group's objective is to safeguard the Group's ability to continue as a going concern, managing cash flows so that it can continue to provide returns for shareholders.
The Group makes adjustments to its capital structure in the light of changes in economic conditions and the requirements of the Group's businesses. The Board has sought to maintain low levels of borrowing to reflect the development stage of the Group's businesses.
Over time as the Group's businesses mature and become profitable the Board is likely to make increased use of borrowing facilities to fund working capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or seek additional borrowing facilities. The Group monitors capital on several bases including the debt to equity ratio. This ratio is calculated as debt ÷ equity. Debt is calculated as total borrowings as shown in the consolidated statement of financial position.
Equity comprises all components of equity as shown in the consolidated statement of financial position. The debt-to-equity ratio at 31 December 2017 and 31 December 2016 was as follows:
Group 2017 2016
GBP'000 GBP'000
---------------------- --------- ---------
Total debt 732 831
Total equity 741 2,187
Debt-to-equity ratio 98.8% 38.0%
---------------------- --------- ---------
30 Reserves
The following reserves describe the nature and purpose of each reserve within equity:
a. Capital reduction reserve and Reverse acquisition reserve
The capital reduction reserve set out in the Consolidated Statement of Changes in Equity arose in 2014 when the nominal value of each share was reduced from 10p to 1p. The reverse acquisition reserve arose on the acquisition by PhotonStar LED Group PLC of the entire issued share capital of PhotonStar LED Limited on 23 December 2010. Although the legal acquirer in this transaction was PhotonStar LED Group PLC (formerly Enfis Group PLC), IFRS 3 requires that PhotonStar LED Limited be treated as the acquiring and continuing business. Consequently the previously recognised book values and assets and liabilities of PhotonStar LED Limited have been retained and the consolidated financial information has been presented as if PhotonStar LED Limited had always been the Parent Company of the Group.
b. Share premium
The amount subscribed for each share in excess of nominal value.
30. Reserves c. Share option
The accumulated expense arising during their vesting period of share options granted to directors and employees.
d. Accumulated losses
All other net losses and gains not recognised elsewhere.
31 Subsequent events a) Fundraising and product release
On 27 February 2018 the Group announced that it had conditionally raised gross proceeds of GBP430,000 via the placing of 286,666,667 new ordinary shares with new and existing investors and Directors of the Company at a price of 0.15 pence per Placing Share (the "Placing Price"). The net proceeds of the Placing will be used to complete the development of the Company's halcyon Internet of Things solution for buildings, cloudBMS v2, ahead of its proposed roll out and will also provide PhotonStar with additional working capital. The placing was confirmed at the general meeting on the 16(th) March 2018.
On 16 April 2018 the group issued a total of 71,729,580 new ordinary shares of 0.01p each in the Company to professional advisers in lieu of fees, two directors of the Company in lieu of salaries and to certain subscribers for cash at a price of 0.15p. Firstly, a total of 51,350,000 New Ordinary Shares will be issued to certain of the Company's professional advisers and consultants in lieu of advisory and consultancy work undertaken recently. In addition, a total of 16,346,246 New Ordinary Shares will be issued to James McKenzie, the Company's CEO and Jonathan Freeman, the Company's Chairman in lieu of unpaid salaries over the course of the past 12 months.
On 2 May 2018 the Group announced completion of v2 of its cloudBMS product and raised a total of GBP450,000 (before expenses) by way of an issue of 150,000,000 new ordinary shares at a placing price of 0.3p to new and existing investors. This fundraise was executed via an accelerated bookbuild. PhotonStar has raised these additional funds to further strengthen the Company's balance sheet and support the Group as it continues the market development of halcyon(TM) .
b) Disposal of Camtronics Vale Limited
On the 30 January 2018, it was announced that the Group had agreed to sell its' wholly owned subsidiary Camtronics Vale Limited ("Camtronics Vale"), that specialises in the manufacture of electronic components, to Camtronics Vale Holdings Limited ("CVH"), a private company controlled by certain members of the Camtronics management team, for a total cash consideration of GBP150,000 with GBP40,000 being paid at completion, a further GBP10,000 payable by 31 March 2018 and GBP100,000 to be received in monthly instalments. This resulted in a GBP0.46m reduction in the Group debt, which represented approximately 55% of the Group's debt prior to the Transaction.
At the year-end negotiations were continuing with a number of parties and it was not probable that the sale would have occurred in the foreseeable future. The directors were also considering not proceeding with sale activities due to the amount of time that negotiations were taking. Accordingly the Camtronics business was not considered to be a 'discontinued operation' at the year-end.
PhotonStar will used the proceeds from the transaction to fund the continued development of the halcyon(TM) platform. The monthly instalments are also providing PhotonStar with additional working capital as the Group continues its transformation programme during 2018. The impact on PhotonStar's balance sheet is expected to be minor and will be reported as part of the Group's interim results for the period ending 30 June 2018.
32 Impairment review
As a result of the change in strategic direction by the Company towards transitioning into a Group that increasingly focuses on being a retrofit connected lighting and building management business, the Board reviewed, in conjunction with the annual review of goodwill, the value of certain historic assets on the balance sheet but which are related to non-strategic areas of the Group. The result of this review is that we have concluded that there should be an impairment charge to the balance sheet of GBP836,000 (2016: GBPNil). This relates to the impairment of goodwill (GBP88,000) arising on the acquisition of Camtronics Vale Limited and taking into account the consideration receivable arising on the sale of this business on 30 January 2018 and the impairment of GBP748,000 of development costs within the halcyon and light engine business segment. The impairment of halcyon(TM) development costs is due to a change in the assumptions used in calculating the future cash flows of business units. Previously 10 year future cash flows with terminal value were used in this calculation and this has now changed to 5 years with terminal value.
The recoverable amount of the Group businesses is GBP719,000 which results in an impairment loss in 2017 as follows:
Group 2017 2016
GBP'000 GBP'000
---------------------------- -------- --------
Goodwill 88
Development costs (note 9) 748 -
---------------------------- -------- --------
Total impairment loss 836 -
---------------------------- -------- --------
Cash generating units
The Group comprises of four Cash Generating Units (CGU), PhotonStar LED Limited, PhotonStar Technology Limited, Camtronics Vale Limited and a Group CGU.
In accordance with the Group's accounting policy, the carrying value of the cash generating unit operating assets including the carrying value of goodwill has been tested for impairment. This was done by calculating its value in use using certain key assumptions. The key assumptions applied were as follows:
-- Future time period - 5 years plus terminal value
-- A positive growth rate for PhotonStar LED Ltd and its lighting products as and the following turnover for halcyon(TM) :
Turnover / % Growth PhotonStar LED Ltd PhotonStar Technology
and its lighting business Limited and its halcyon(TM)
and LED light engines
business
2018 GBP2.5m GBP0.3m
--------------------------- -----------------------------
2019 GBP3.3m GBP2.0m
--------------------------- -----------------------------
2020 3% growth GBP3.0m
--------------------------- -----------------------------
2021 3% growth GBP3.0m
--------------------------- -----------------------------
2022 3% growth GBP3.5m
--------------------------- -----------------------------
-- A discount factor of 12% (2016: 13%)
-- Use of an EBITDA forecast, adjusted for forecast movements in working capital and capital expenditure, as a reasonable estimate for future cash flow
Projected EBITDA is calculated based on a detailed forecast for one year, and growth assumptions based on expected overall sector growth for up to 5 years plus terminal value (2016: 10 years plus terminal value). Expected future cash flows were based on the CGU's detailed budget cash flows for the financial year ending 31 December 2018 and the assumption that revenues will grow using the assumptions noted above. The directors are content that this growth is achievable because of the view taken by the directors of the Group's current position within the LED lighting market and the opportunities for the halcyon(TM) retrofit lighting product. The Group cash generating unit value in use was calculated using average discounted cash flows reflective of its cash generation throughout each future financial year and using a pre-tax discount factor of 12% (2016: 13.0%).
Different assumptions could have resulted in the following 2017 recoverable amounts:
Recoverable amount/(Impairment)
GBP'000
Determined recoverable amount 719
Different Growth factors
2% growth for all business and Halcyon sales
of GBP1.5m in 2019 (1,082)
6% growth for all business and Halcyon sales
of GBP1.5m in 2019 (833)
Using different discount factors
10% 935
15% 438
Using different EBITDA forecast
+10% 1,305
-10% 139
-25% (735)
-50% (2,192)
The carrying value of goodwill is dependent on the ability of the group to achieve cash flows set out in its planned forecasts and the uncertainties that exist in this respect. The Company has no intangible fixed assets.
33 Notes supporting statement of cash flows
Group Current
Borrowings
(Note 15)
GBP'000
--------------------------- ------------
At 1 January 2016 1,042
Cash flows (226)
Interest accruing in year 15
--------------------------- ------------
At 31 December 2016 831
Cash flows (23)
Interest accruing in year 25
--------------------------- ------------
At 31 December 2017 833
--------------------------- ------------
Cash and cash equivalents for purposes of the statement of cash flows comprises:
Group Company Group Company
2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- --------- ---------
Cash at bank available
on demand 44 3 224 4
------------------------ --------- --------- --------- ---------
Cash in hand - - 1 -
------------------------ --------- --------- --------- ---------
44 3 225 4
------------------------ --------- --------- --------- ---------
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END
FR SESFLUFASEEM
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June 29, 2018 10:40 ET (14:40 GMT)
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