Annual Results for the Year Ended 31 August 2023
22/12/2023 07:00
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RNS Number : 6977X Cellular Goods PLC 22 December 2023
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014, as retained as part of the law of England and Wales. Upon
the publication of this announcement via the Regulatory Information Service,
this inside information is now considered to be in the public domain.
22 December 2023
Cellular Goods PLC
("Cellular Goods" or "The Company")
Annual results
Cellular Goods (LSE: CBX), a UK based company pioneering the use of lab-based
and biosynthetic production methods for wellness and sustainability solutions,
announces its audited results for the year ended 31 August 2023.
Summary:
· Increased sales growth of over 132% YoY driven by the Company's
refocused marketing strategy, to progress near-term sales with lower
acquisition costs, and expansion of its 'Look Better' Rejuvenating skincare
range.
· Prevailing headwinds faced by businesses in the premium goods sector
led the Company to undergo further measures to reduce its cash burn and
improve performance in its wellness division including a 50% reduction in the
overall cost base.
· In September 2022 the Company expanded its Look Better range with
three new Rejuvenating products, comprising the Rejuvenating Night Cream, the
SPF 25 Rejuvenating Day Cream and the Rejuvenating Day Mousse, complementing
the Company's Rejuvenating Cannabinoid Serum, the first and only product in
the UK to use novel cannabigerol ("CBG") to provide age-preventative
benefits.
· Simultaneously to expanding the Look Better rage, the Company signed
an agreement with the international supermodel Helena Christensen to be the
face of the Company's 'Rejuvenating Skincare Range', contributing to an
increase in US sales which account for 22% of the Company's total sales for
the fiscal year ended August 2023.
· Expanded distribution with the launch of product shipping to the USA
in September 2022 and to France and Germany in August 2023.
· New partnership distribution channels for the Look Better
Rejuvenating skincare range were unlocked through the e-commerce websites for
high-street beauty and cosmetic retailers Sephora UK and Debenhams, with
Cellular Goods becoming the first cannabigerol (CBG)-based skincare brand to
offer its products on these e-commerce websites.
· In June 2023 the Company signed an agreement with Klarna Bank AB to
offer flexible purchase options, supporting increased sales and broadening its
customer base further.
· In May 2023 the Company acquired King Tide Carbon, a
Singapore-incorporated biosynthetic algae and seaweed carbon
sequestration-as-a-service company pioneering in the carbon markets and
particularly in the realm of carbon removal, deepening its sustainability
vision while offering an opportunity to generate long-term growth.
· Reported loss of £3,309,721 (2022: loss of £5,989,957) for the year
ended 31 August 2023 was primarily a consequence of one-time restructuring
costs and M&A expenses. However, the market value of the shares issued for
the King Tide Carbon acquisition was £569,940 which is accounted for as a
loss for the financial year 2022-2023. The actual operating loss without this
adjustment was £2,739,781.
· Net cash amounted to £1,772,892 on 31 August 2023 (2022:
£4,376,134).
Post-period highlights:
· Expanded ecommerce distribution with a further retail partnership
with Chill Brands Group PLC, the online shop for wellness and relaxation
products, was announced in November 2023, to help improve UK and US market
awareness and distribution of the Company's skincare range.
· The Company continues to activate and leverage its existing sales
channels by participating in their seasonal promotional campaigns and events,
such as Sephora UK's beauty box and subscription platforms over the Autumn
2023 season.
· EU Geographic expansion of the Company's distribution channels for
its 'Look Better' skincare range into new markets continued with the launch of
product shipping to Austria, Italy, Portugal, Spain, Denmark, Belgium and the
Netherlands in November 2023.
· King Tide Carbon achieved a significant milestone in the production
of kelp-derived biochar with 28% carbon content, in November 2023, supporting
the foundational science for the company's commitment to sustainable carbon
removal.
Current trading and outlook
· Despite the identified industry headwinds, the Company has benefitted
from successful cost cutting and revenue growth achieved notwithstanding
challenging economic and industry conditions, in a highly fragmented market
where expected consolidation has not occurred.
· Growth momentum in sales for the wellness division in 2H of the
financial year stabilised, though current trading remains encouraging from new
ecommerce partner activation and distribution, geographic expansion and
additional cost cutting measures that provides the Company an increased
runway, allowing time for new initiatives and King Tide Carbon revenue to
develop.
· As direct marketing Return on Investment (ROI) to prospective
customers in the retail industry continues to be challenged, with a lack of
clarity on marketing regulations and the continued impact of Apple's privacy
changes, we remain cautiously optimistic on our trading outlook.
Darcy Taylor, Interim CEO at Cellular Goods, commented: "Despite the continued
challenging market conditions and industry headwinds, we saw positive business
growth over the financial year, driven by our refocused marketing strategy and
geographic and product line expansion of the 'Look Better' skincare range. The
wider economic and sector challenges led us to significantly reduce our
marketing spend and focus on further optimising our high-quality brand
partnerships to translate into revenues and product sales within the premium
beauty segment.
"In the face of these industry headwinds, a strategic review was conducted to
identify where there was more scope for development in the business, defining
a path to drive the Company forward. As we looked to widen our lens and
explore other areas, biosynthetics for carbon capture was identified as a
sector with a large market opportunity, offering potential for high and
sustainable long-term growth as well as being complementary to our current
activities. The acquisition of King Tide Carbon and move into the carbon
removal industry was complementary to our strategic direction, deepening our
sustainability vision and philosophy.
"We remain committed to developing next-generation skincare and wellness
products that help people look, feel and function better as we continue to
investigate future product lines and verticals. Just as we believe in
harnessing the untapped potential of CBD and CBG, we also believe in
harnessing oceanic kelp's high value ingredients and carbon removal properties
as we continue developing science-backed, efficacy-led formulations for
skincare and wellness products that align with our wellness vision: wellness
for self and wellness for the environment.
"I would like to thank our loyal shareholders for their support and patience
while we navigate the challenging macro environment and current industry
challenges and look to an improvement in growth and performance in the year
ahead."
The Company's annual report and accounts will be uploaded to its website
www.cellular-goods.com later today.
For further information please contact:
Cellular Goods
Darcy Taylor via FSCF +44 7572 873 300
Chairman and Interim CEO
First Sentinel Corporate Finance (FSCF)
Investor Relations
Rebecca Noonan +44 7572 873 300
IR@cellular-goods.com (mailto:IR@cellular-goods.com)
Media Relations
Rebecca Noonan +44 7572 873 300
Media@cellular-goods.com (mailto:Media@cellular-goods.com)
Corporate Broker & Advisor
Brian Stockbridge +44 7858 888 007
Novum Securities
Corporate Broker
Colin Rowbury
Jon Belliss +44 207 399 9427
About Cellular Goods PLC:
Cellular Goods is pioneering the use of lab-based and biosynthetic production
methods for wellness and sustainability solutions. The Company launched with a
focus on efficacy led and science-backed products utilising biosynthetics, and
now employs its expertise across two verticals: premium next-generation
cannabinoid skincare products, and carbon sequestration-as-a-service through
its wholly owned business division, King Tide Carbon, which utilises
biosynthetic algae and seaweed to provide scalable carbon removal. The Company
is incorporated in the UK and listed on the Main Market of the London Stock
Exchange. For more information, visit www.cellular-goods.com
(http://www.cellular-goods.com) .
CELLULAR GOODS PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 AUGUST 2023
Introduction
Despite the continued challenging market conditions and industry headwinds, we
saw positive business growth for the financial year ended 31 August 2023.
Driven by our refocused marketing strategy, to progress near-term sales with
lower acquisition costs, and expansion of our 'Look Better' Rejuvenating
skincare range, we saw increased sales growth of over 132% YoY. However, the
momentum seen in the first half of the financial year did not continue at the
rate envisaged by the Company into the second half of the financial year, as
direct marketing to prospective customers in the retail industry continues to
be challenged with a lack of clarity on marketing regulations and the
continued impact of Apple's privacy changes.
The expanded marketing and influencer outreach strategy, including campaigns
with premium online lifestyle magazines, and the resulting increase in cost to
acquire customers eroded returns on our online advertising spend. Coupled with
the sector wide challenge of limited opportunities to market CBD and CBG-based
products in alternative channels, we took the decision to significantly reduce
our YoY and 2H fiscal year marketing spend and focus on further optimising our
social media and database marketing.
In September 2022 the Company expanded its skincare product range with the
introduction of three new rejuvenating skincare products and signed an
agreement with the international supermodel Helena Christensen to be the face
of the Company's 'Rejuvenating Skincare Range', to support brand awareness and
sales in the UK and US markets as well as delivering strong media coverage.
The strategic partnership with our brand ambassador supported our strategy to
continue the expansion of our 'Look Better' skincare range into new markets
and increase global access to our products. Also in September 2022, we
launched product shipping to the USA and in August 2023 we announced product
shipping to France and Germany, followed by Austria, Italy, Portugal, Spain,
Denmark, Belgium and the Netherlands in November 2023.
Our renewed focus on improving shorter term sales and bringing new customers
in to purchase was further driven by the unlocking of new partnership
distribution channels for the Rejuvenating skincare range through the
e-commerce websites for high-street beauty and cosmetic retailers Debenhams
and Sephora UK. Debenhams is a household name and Sephora UK is a
multinational luxury goods group. Cellular Goods became the first cannabigerol
(CBG)-based skincare brand to offer its products on these e-commerce websites,
with the Company's association to Helena Christensen appealing to their new
and existing customers looking to try next-generation skincare formulations.
To broaden our customer base further, the Company signed an agreement with
Klarna Bank AB in June 2023 to offer flexible purchase options, supporting
increased sales and opening the Company's products up to a wider audience.
Demand for buy now, pay later payment services has surged among all age groups
in the UK and is popular with customers across the Company's target
demographics, making it an important improvement to our ecommerce offering.
While high quality brand ambassador partnerships and investment in innovative
purchase options aid in fostering brand awareness and loyalty for long-term
growth, it takes time for these types of marketing activities to translate
into significant revenues and product sales within the premium beauty segment
due to entrenched consumer habits and industry headwinds.
As revenue at the financial year-end 2023 more than doubled to £67,236 from
£28,904 at year-end 2022, the Company continues to enhance its retail
strategy and drive growth by expanding its sales channels and increasing its
collaboration with established online and high street outlets.
In light of the prevailing headwinds faced by businesses in the premium goods
sector, the wider economic conditions disproportionately affecting start-ups,
and Apple's privacy changes negatively impacting customer acquisition in the
traditionally high return-on-investment direct-to-consumer channel, the
Company underwent further measures to reduce its cash burn and improve
performance in our wellness division. These actions include a 50% reduction in
the overall cost base, achieved through lower management and staff costs,
consultancy fees and administrative expenses, allowing the Company to
streamline its media spend levels to address Return On Investment ("ROI")
challenges.
For the current scale of operations, we believe the Company has the right size
of management team and full commitment of all its members to drive growth. To
build on the leadership team at this time would unnecessarily increase
recurring expenditure. However, in the longer term and as the business
develops, the Board intends to bring in a permanent CEO. Although there is no
definitive deadline on how long this interim period will be, we continue to
keep a close eye on the market for potential candidates to take over the
permanent position of CEO. At the moment, our main priority and focus is on
the growth and development of Cellular Goods.
We announced at our half-year results, in May 2023, that we were interested in
widening our lens of opportunity across biosynthetic production fields to
generate value for our shareholders, following which we acquired King Tide
Carbon. King Tide Carbon is a Singapore-incorporated biosynthetic algae and
seaweed carbon sequestration-as-a-service company pioneering in the carbon
markets and particularly in the realm of carbon removal. The King Tide Carbon
acquisition allows us to deepen our sustainability vision while offering an
opportunity to generate long-term growth. The strategy behind the acquisition
had deep underpinnings in our Company's wellness vision, wellness for self and
wellness for the environment.
Only two months after completion of the acquisition, the Company was pleased
to announce King Tide Carbon had entered a non-binding memorandum of
understanding with Springtide Seaweed for the purposes of developing carbon
sequestration and removal services through sustainable kelp farming.
Springtide Seaweed is in the business of growing, cultivating and harvesting
kelp in the State of Maine, cultivating multiple species over 55 acres on deep
water sites in Frenchman Bay. Springtide Seaweed also provides nursery and
farm technology services to other kelp farms globally. The focus of the
collaboration between King Tide Carbon and Springtide Seaweed is to utilise
their combined efforts and expertise to identify, analyse and select kelp
species to maximise carbon sequestration and removal.
The Company remains committed to developing next-generation skincare and
wellness products that help people look, feel and function better. As we
believe in harnessing the untapped potential of CBD and CBG, we also believe
in harnessing oceanic kelp's carbon removal properties as well as the high
value ingredients that can be extracted from kelp. Despite the identified
industry headwinds, we have benefitted from positive business momentum. In
combination with a significant rationalisation of our cost base and cash burn,
we have defined a path to drive the Company forward as we investigate future
product lines and verticals that remain aligned with our Company's wellness
vision: wellness for self and wellness for the environment.
Strategy and Operational Review
King Tide Carbon acquisition and rationale of the deal
The acquisition of King Tide Carbon Pte.Ltd ("KTC") and move into the carbon
removal ("CDR") industry widens our lens of opportunity whilst remaining
aligned with the Company's strategic direction, deepening our sustainability
vision and philosophy. The strategy behind the acquisition of King Tide Carbon
was the result of a strategic review that was conducted to identify where
there was more scope for value delivery to accelerate the development of the
business.
King Tide Carbon was an early-stage carbon removal company building on an
experienced team that has decades of experience working with biologically
enabled carbon sequestration and the sourcing of CDR contract opportunities in
the growing carbon markets. A clear opportunity was identified for the Company
to bring its experience in biosynthetics to enhance sustainability practices
to King Tide Carbon and deploy biosynthetic technology R&D to supply
partners to increase yield, hardiness, and Co2 capture properties of kelp and
algae to optimise the generation of reliable, scalable, and sustainable
high-quality oceanic carbon removal credits ("CDRs") as a service. By 2050 the
global CDR market is forecasted to increase by 300 times and the value of the
carbon offset market could top $500Bn in 2050 (source:Bloomberg NEF).
Biosynthetics for carbon capture properties in kelp and algae is still at an
early stage but has shown potential as a viable commercial-scale technology
and is a sector with a large market opportunity, offering potential for high
and sustainable long-term growth as well as being complementary to our current
activities.
The Company's innovation continues to be centred around harnessing
biosynthetic technologies in the development of next-generation biosynthetic
products that improve people's lives and combat climate change. We are
committed to our mission to develop a responsible approach to ingredient
sourcing using sustainable production methods to create science-backed,
efficacy-led formulations that never compromise on quality, safety or efficacy
and really make a difference.
The market value of the shares issued for the KTC acquisition was £569,940
which is accounted for as a loss for the financial year 2022-2023. Reported
losses at the financial year end 2023 are £3,309,721; however, the actual
operating loss without this adjustment was £2,739,781, a reduction of 54%
from the previous year.
Cannabinoid market opportunity
The global cannabidiol ("CBD") and CBG (cannabigerol) market size was valued
at USD 6.4 billion in 2022 and is expected to grow at a compound annual growth
rate ("CAGR") of 16.2% from 2023 to 2030. The growing interest in the
potential health benefits of cannabidiol has led to increased investment in
research and development to understand its effects better and develop new
products. The demand for CBD/CBG for health and wellness is the primary factor
driving the market growth. Furthermore,
CBD/CBG is growing in popularity as an ingredient in skincare products for
treating acne and wrinkles. (Source: Grand View Research)
The CBD/CBG market is a large and growing industry, but despite the demand it
also faces several difficult challenges and significant headwinds, with heavy
regulation being the main one. The establishment of a clear and detailed
regulatory framework for the CBD/CBG industry to operate within is an ongoing
process. In the absence of comprehensive regulation, the industry continues to
grow and develop, but further regulatory changes are required to unlock its
full potential.
We believe that the operating environment for CBD and CBG-infused skin care
products in the UK and USA remains impacted by a glut of niche brands and
products. This has prompted fierce competition for both online and offline
retail space where expected consolidation has not yet occurred, and we are
witnessing attrition in both suppliers and consumer facing brands in the
space.
Voluntary carbon dioxide removal ("CDR") market opportunity
The International Panel on Climate Change ("IPCC") has made the requirement
for emissions reductions and carbon dioxide removal extremely clear. Limiting
global warming to 1.5 degrees C above pre-industrial levels requires
significant carbon reductions and 6 to 10 billion tonnes of carbon dioxide
removal per year by 2050. The voluntary carbon market ("VCM") is a key
mechanism to scale those solutions. The VCM allows for the transaction of
carbon credits between carbon project developers and buyers with each carbon
credit representing an equivalent tonne of CO2 reduced, avoided, or removed.
The demand for high-quality, durable carbon removal credits has increased
alongside global climate commitments. The majority of these credits are still
in development and are limited in number as per BCG 2022 insights and trends
report on voluntary carbon markets. Due to this limited supply, organisations
that are working to reach net zero by 2030 or 2050 increasingly recognise that
they need to secure the necessary volumes of carbon dioxide removal in
advance, alongside large-scale emissions reductions.
In 2021, the global voluntary carbon market grew at a record pace, reaching $2
billion-four times its value in 2020-and the pace of purchases is still
accelerating in 2022. By 2030, the market is expected to scale to close to $40
billion. (Source: BCG 2022 insights and trends report on voluntary carbon
markets)
However, achieving the goals outlined by the Paris Agreement requires the
rapid scaling of high-quality removals across nature-based, hybrid, and
engineered solutions.
We are on the verge of a once in a generation growth cycle, and King Tide
Carbon will aim to be a leader in delivering carbon removal as a service.
Operational review
The Company expanded its 'Look Better' skincare range with the launch of three
new products in the Rejuvenating Range of skincare products, containing the
Company's proprietary blend of cannabigerol ("CBG") and cannabidiol ("CBD"),
using a campaign fronted by international supermodel Helena Christensen in
September 2022. With a substantial and dedicated following in the United
States, she played a pivotal role in driving the Company's growth,
contributing to a considerable increase in US sales, accounting for 22 % of
the Company's total sales for the fiscal year ended August 2023.
Our retail strategy received another boost in May 2023 with the launch of the
Company's 'Look Better' skincare range and selected products from its 'Gift
Better' line on Sephora.co.uk. A total of ten products are available with the
UK high street retailer in the Company's third major retail distribution deal
after Amazon and Debenhams, providing further validation of our premium
product strategy. We are working closely with Sephora.co.uk to participate in
selective marketing activities to drive sales and continue assessing the
potential to open other retail opportunities in additional Sephora
geographies.
The Company has taken a two-pronged approach to its marketing strategy this
year to drive trial of its core products and expand its sales channels, and
encourage conversion of the consumer recognition of our brand into an initial
purchase. Having significantly raised awareness in 2022, our refocused
marketing strategy this year was centred on driving near-term sales with lower
acquisition costs.
Function Better movement range
As noted in our half-year results, the Company postponed the launch of the
'Function Better' movement range to focus its resources on strengthening the
market presence behind its existing 'Look Better' and 'Gift Better' ranges
before further expansion. The prohibiting of advertising cannabinoid infused
products on leading online platforms and the imposition of new rules governing
the sale of novel foods led the Company to perform a review of the portfolio
and narrow its scope to exploring alternative opportunities for ingredient
sourcing whilst strengthening the existing ranges. The Company remains in
communication with potential distribution partners for the launch of the
'Function Better' range and will provide an update in the event an agreement
is reached.
Cannaray Brands acquisition
On 26 September 2022 the Company announced its intention to acquire Cannaray
Brands Ltd. and Love CBD Health Ltd. from Cannaray Ltd. ("Cannaray"). Cellular
Goods' Board of Directors entered into negotiations with the intention of
generating value for our shareholders by creating an enlarged business with
significant growth opportunities and an enhanced market presence. As
negotiations progressed and changes to the deal were made, it became clear to
Cellular Goods' Board and senior leadership team that the updated transaction
terms were not in the best interests of the Company's shareholders. The
negotiations were not able to reach a deal structure and terms that worked for
both parties, and as such we terminated the discussions as announced on 8
February 2023.
UK patent application Status
On 28 April 2022, the Company disclosed its initiation of a UK priority patent
application centred on the utilisation of CBG for skin brightening. Subsequent
to a thorough internal examination, the application has not been pursued
further. The decision to not proceed was based on the realisation that the
formulations encompassed by the priority patent did not align with the
Company's current product offerings and were constrained in their
applicability to the future product pipeline. Consequently, it was determined
that the return on investment and cost benefits did not meet the established
standards of the Company.
Marketing focus
The Company started the financial year with a focus on building a clear brand
plan and ensuring investment was only made once the strategy was defined and
could be executed. The investment that was made focused on shorter sales
driving activities and leveraging of the partnership with Helena Christensen
across the UK and USA.
Apple's privacy changes, particularly the introduction of App Tracking
Transparency ("ATT") and Mail Privacy Protection ("MPP"), have had a
significant negative impact on direct marketing return on investment. The
industry is therefore in a state of ongoing adaptation and innovation as
marketers strive to maintain effective campaigns in the face of evolving
privacy regulations and consumer preferences.
In light of these changes, the Company has refocused its marketing strategy to
be more cost efficient and effective in adapting to these challenges. These
include focusing on first-party data collection and building stronger
relationships with our audience, as well as exploring partnerships with online
marketplaces and influencers that are privacy-compliant.
The Company continues to focus its marketing efforts on delivering short term
sales activity by utilising owned channels and earned channels through product
gifting and e-commerce initiatives.
Post-balance sheet milestones
Since the year end, the Company has continued to enhance its retail strategy
and drive growth by expanding its sales channels and increasing its
collaboration with established online and high street outlets. In the first
quarter of the 2023-2024 financial year, we announced a further retail
partnership with Chill Brands Group PLC, the online shop for wellness and
relaxation products. The Company's partnerships with e-commerce websites help
to improve market awareness and distribution of our skincare range whilst
building on our brand profile and broadening our accessibility to customers.
As well as establishing new partnerships with high street outlets, we continue
to grow our existing sales channels by participating in their seasonal
promotional campaigns and events. As the first CBG-based skincare brand to be
offered as part of Sephora UK's beauty box and subscription platforms over the
Autumn 2023 season, we continue increasing our brand awareness and our
products gain more visibility and traction with new and existing customers.
In addition to growing our existing sales channels, we have continued our
commitment to expanding distribution of our 'Look Better' skincare range into
new markets. Following the opening of Cellular Goods' e-commerce site to our
French and German customers in November 2023, we also launched shipping of our
products to Austria, Italy, Portugal, Spain, Denmark, Belgium and the
Netherlands in November 2023.
The Company will continue to assess online traffic and new market sales to
identify potential market demand for growth into additional territories as it
remains focused on driving distribution of our breakthrough anti-inflammatory
CBD/CBG powered products to CBD/CBG friendly markets to deliver incremental
revenue growth.
Through the Company's wholly owned subsidiary King Tide Carbon, we aim to
deliver cost-competitive carbon removal credits ("CDR") through the
integration of multiple synergistic elements within the 2023-2024 financial
year. Our approach involves extracting valuable compounds prior to submerging
biomass, enhancing ocean alkalinity to leverage existing infrastructure, and
exploring alternative pathways like biochar and biosynthetic algal growth.
This multifaceted strategy empowers us to optimise carbon sequestration and
therefore optimise the price of carbon sequestration.
As we position ourselves at the forefront of carbon removal solutions, we are
focused on scaling-up the Company's joint venture agreements with diverse
carbon capture projects over the next twelve months. The first of which are
with Springtide Seaweed, as announced in the first quarter of the 2023/24
financial year. As part of the joint venture agreements, the partnering
companies will use their combined efforts to identify, analyse and select kelp
species, cultivation techniques and harvesting techniques to maximise carbon
sequestration and removal services through sustainable kelp farming. By
growing partnerships with suppliers across multiple geographies, we can access
different strains of product, increased amounts of data and more proof of
concept allowing the Company to effectively develop and broaden its range of
products and services, complementing our current activities and helping to
tackle climate change.
Additionally in November, King Tide has achieved a milestone in the production
of kelp-derived biochar with 28% carbon content, propelling the company
forward in its commitment to sustainable carbon removal. This innovation
utilizes the carbon-rich properties of kelp, a rapidly renewable marine
resource, for biochar production, recognised for its potential in soil
improvement, carbon sequestration, and enhanced agricultural productivity. As
global scientific consensus grows on biochar's viability for permanent carbon
sequestration, King Tide aims to scale up its carbon removal efforts and
generate high-quality Carbon Dioxide Removal ("CDR") credits. The kelp-derived
biochar not only contributes to long-term carbon storage but also promotes
environmental stewardship through circular economy principles, reducing waste
and maximizing resource utilization. With a notable 28% carbon content, the
biochar demonstrates efficacy in carbon sequestration, soil fertility
enhancement, and potential industrial applications. This achievement aligns
with King Tide's dedication to a sustainable future and collaborative
interdisciplinary efforts with experts in marine biology, environmental
science, and agriculture. The success holds promise for advancing agricultural
practices, promoting scientific collaboration, and ushering in a new era of
oceanic carbon sequestration innovation.
Outlook
We are continuing to assess strategic opportunities to deliver long-term
shareholder value and will assess each opportunity on its individual merits.
In the meantime, our focus will continue to be to execute the Company's
existing business model and position it for long-term growth.
The growth of the Company's wellness for good product pipeline and wellness
for the environment sustainability strategy are the core areas of development.
We plan to continue expanding distribution of our 'Look Better' skincare range
into new markets to deliver revenue growth.
The Company continues its focus on bringing deep expertise in biosynthetics to
the kelp industry through King Tide Carbon and its joint venture partners,
assisting in early-stage investigations on the extraction of high value
ingredients from algae and seaweed for use in the biosynthetic product
industry. As we continue harnessing the potential of CBD/CBG, we are also
investigating the ability to harness the high value ingredients that can be
extracted from kelp and analysing their use in future product lines.
The Company's move into the carbon removal industry is a continued focus for
our strategic direction as biosynthetics for carbon capture remains a sector
with a large market opportunity and offers potential for high and sustainable
long-term growth as well as being complementary to our current activities.
I would like to thank our loyal shareholders for their support and patience
while we navigate the challenging macro environment and current industry
challenges and look to an improvement in growth and performance in the year
ahead.
Darcy Taylor
Chairman
21 December 2023
STRATEGIC REPORT FOR THE YEAR ENDED 31 AUGUST 2023
The directors present their strategic report for the year ended 31 August
2023.
Principal activity
The Company's principal activity is a premium high-quality, independently
tested and compliant consumer cannabinoid business targeting the expanding but
fragmented CBD sector.
Review of the business and future developments
Cellular Goods PLC is a UK-based wellness company providing premium consumer
products formulated with lab produced cannabinoids consumer products. Cellular
Goods was incorporated to establish premium high-quality, efficacy-led and
research backed cannabinoid-powered wellness products targeting the expanding
but fragmented CBD sector.
The Company launched with a focus on efficacy led and science-backed products
utilising biosynthetic, and now employs its knowledge across two verticals:
premium next-generation cannabinoid skincare products, and carbon
sequestration-as-a-service through its acquisition of wholly owned business
division, King Tide Carbon, which utilises biosynthetic algae and seaweed to
provide scalable carbon removal.
The Company has communicated a strategy to participate in three product
verticals within its wellness division: Function Better, Feel Better and Look
Better. These three verticals encompass Cellular Goods' premium CBG skincare
and CBD ingestible and topical athletic recovery products. The Company's focus
to date has been on Look Better skincare offering that builds on existing
consumer behaviours, is premium focused, simple to understand and available
primarily through direct-to-consumer channels and selected retail outlets. The
Company's products are available direct to the consumer through the Company's
website, e-commerce sites, such as Sephora Marketplace, Chill.com, Debenhams
and Amazon and through physical retail partnerships.
As the Company continues to harness the untapped potential of biosynthetics
and sustainable production methods, it has widened its scope with the 9 May
2023 acquisition of King Tide Carbon Pte.Ltd ("KTC") a biosynthetic algae and
seaweed carbon sequestration-as-a-service division with a clear mission to
deliver sustainable, scalable, and high-quality carbon removal credits
("CDRs") that ensure a reliable supply to support global and national
commitments to achieving net-zero carbon emissions by 2050.
The Company's medium to long-term intention was to expand its wellness
division product range and establish a deeper sustainability offering via
scalable, and high-quality carbon removal credits while still realising latent
growth in the cannabinoid sector.
Performance of the business during the year and at the end of the year
The Company reported a loss of £3,309,721 for the year ended 31 August 2023
(2022: loss of £5,989,957). The loss was primarily a consequence of one-time
restructuring costs and M&A expenses.
Net assets of the Company at the year-end were £2,262,808 (2022: net assets
£4,852,232).
Key Performance Indicators ("KPIs")
The Board aims to monitor the activities and performance of the Company
regularly. The Company only commenced sales midway throughout the previous
year and the Directors regularly review sales, stock levels, new product
development, and cash reserves.
For now, the Directors consider that a KPI applicable to the Company is
maintaining cash reserves held in cash and short-term investments.
2023 2022
Cash at bank £1,772,892 £4,376,134
Principal risks and uncertainties
The Company operates in an uncertain environment and is subject to a number of
risk factors. The Directors consider the risk factors in this report will be
relevant to the Company's activities. It should be noted that the list is not
exhaustive and other risk factors not presently known or currently deemed
immaterial may apply.
Early stage of operations and cash levels
The Company's operations are at an early stage in nascent industries, with
nine products launched year to date in its wellness division, and recent entry
into the biosynthetic algae and seaweed carbon sequestration-as-a-service
carbon removal space. The business is reliant on a small number of principal
suppliers.
The Directors consider the principal risks for the Company to be the
maintenance of cash while it focuses on developing cannabinoid skincare
products, and carbon sequestration-as-a-service divisions, and the level of
sales being generated.
Supply arrangements
CBD and CBG - As the Company expands its product range and enters new
geographical markets, we will consider its reliance on individual third
parties, and will seek to take measures to minimise supplier risk and the
resulting potential disruption to its business as appropriate to the
business's stage of operations and development.
The Company has partnered with a leading bio-synthetic CBG (cannabigerol)
producer and chemically-synthetic CBD (cannabidiol) producer, both with
experience and expertise in the synthesis of cannabinoid compounds. There are
several business risks related to the procurement of synthetic cannabinoids,
which form the basis of the Company's products.
First, the Company's principal sources of synthetic CBG and CBD are imported,
and therefore subject to import and export risk, which may be exacerbated by
the consignment being a cannabinoid.
Secondly, the synthesis of these compounds at commercial volumes remains
relatively novel, and so may be subject to unexpected issues, delays or
quality control problems, which may adversely affect the Company's supply of
high-quality synthetic cannabinoids. Such disruption could have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects.
Lastly, there are a limited number of suppliers engaged in the commercial
production of synthetic cannabinoids, thereby limiting the Company's ability
to build contingency into their supply chain.
Oceanic biomass - As the Company scales it commercial operations to deliver
high-quality carbon removal credits ("CDRs"), we will consider its reliance on
individual third parties, and will seek to take measures to minimise supplier
risk and the resulting potential disruption to its business as appropriate to
the business's stage of operations and development.
The Company has partnered with a leading kelp biomass supplier, with
experience and expertise in the cultivation of ocean-based kelp biomass. There
are several business risks related to the procurement of kelp, which form the
basis of the Company's CDRs services.
First, the Company's principal sources of Kelp biomass are imported, and
therefore subject to import and export risk.
Secondly, these biomass compounds at commercial volumes remains relatively
novel, and so may be subject to unexpected issues, delays or quality control
problems, which may adversely affect the Company's supply of high-quality
biomass. Such disruption could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
Lastly, there are a limited number of suppliers engaged in the commercial
growing of Kelp biomass, thereby limiting the Company's ability to build
contingency into their supply chain.
Market demand
Acceptance and/or widespread use of CBD or CBG products containing these
cannabinoids is uncertain. This is further aggravated by the inability to
promote and advertise products on social media due to marketing restrictions
on products containing CBD, which presents a hindrance to growth plans.
Corporate spending on carbon credits (CDRs) are viewed discretionary and can
be impacted by greater economic challenges. This is further challenged by lack
of standardization, integrity and transparency for carbon credits, it can be
difficult for companies to validate their emissions reduction programs
hindering demand and impacting our growth.
Reliance on key personnel
The Company's business is dependent on the services of a small management team
and the loss of a key individual could have an adverse effect on the future of
the Company's business. The Company's future success will also depend in part
on its ability to attract and retain highly skilled personnel. This risk is
managed by offering salaries that are competitive in the current market.
Regulatory risk
A breach with any environmental or regulatory requirements, including data
protection and privacy breaches, may give rise to reputational, financial, or
other sanctions against the Company, and therefore the Board considers these
risks seriously and designs, maintains and reviews the policies and processes
to mitigate or avoid these risks. The Board has a good record of compliance,
but there is no assurance that the Company's activities will always be
compliant.
There is risk for finished products which may not be sold before their
respective expiry dates, and a risk of stock of packaging remaining unused.
Promotion of the Company for the benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as
required by s172(1) of the Companies Act 2006.
The requirements of s172(1) are for the Directors to:
· Consider the likely consequences of any decision in the long term
· Act fairly between the members of the Company
· Maintain a reputation for high standards of business conduct
· Consider the interests of the Company's employees
· Foster the Company's relationships with suppliers, customers and
others, and
· Consider the impact of the Company's operations on the community
and the environment.
The Company has created and is expanding a new range of products for sale in
what we believe is a fast-growing but developing environment, and is
dependent on the support of consumers for its future success. The start- up
nature of the business is understood by the Company's directors, employees and
suppliers.
During the year, eight individuals served as directors of the company, of whom
five were male and three were female. At today's date, below board and C-suite
level, all full-time staff are female.
The application of the s172 requirements can be demonstrated in relation to
some of the key decisions made during the year, including the appointment of
new directors, hiring key executives for the supply chain and marketing,
various promotional activities, and opening new sales channels.
As a company with a growing social following and the imminent launch of a
range of cannabinoid products, the Board takes seriously its ethical
responsibilities to the communities and the environment in which it works.
This strategic report was approved by the Board on 21 December 2023 and signed
on its behalf by:
Darcy Taylor
Chairman and Interim Chief Executive Officer
DIRECTORS' REPORT FOR THE YEAR ENDED 31 AUGUST 2023
The Directors present the Annual Report and the audited financial statements
for the year ended 31 August 2023.
Principal activities
The Company established a biosynthetic CBD and CBG retail business and was
admitted to the Official List (by way of a Standard Listing under Chapter 14
of the Listing Rules) and trading on the London Stock Exchange on 26 February
2021. The Company was incorporated in England and Wales. It has two
subsidiaries, CBX Cellular Goods Canada Limited incorporated in Canada and
King Tide Carbon Pte.Ltd incorporated in Singapore as part of the Company's
May 9th, 2023, acquisition.
Directors
The Directors of the Company during the year ended 31 August 2023 and to the
date of this report were:
Darcy Taylor
Bruna Nikolla
Anna Chokina (resigned 26 September 2022)
Peter Wall (resigned 21 December 2022)
Simon Walters (resigned 21 December 2022)
Gill Whitty Collins
Misha Sher
Matthew Lodge (appointed 5 May 2023)
Events after the reporting date
Our Rejuvenating Face Serum has been nominated as a finalist in this year's
Get The Gloss Awards within the category 'Best Product For Ageing Well' as
well as a finalist in the 'Best New Serum' category for its Rejuvenating Face
Serum, at the 2023 Pure Beauty Awards.
The nomination of the Rejuvenating Face Serum has generated a positive
response in the UK as well as the US where our Rejuvenating Face Serum was
included as part of Jamie Greenberg's 'Swag Bag' event in November 2023,
resulting in a notable uptick in sales orders. Jamie Greenberg is
well-respected US makeup artist, with celebrity clients such as Margot Robbie,
Taylor Swift, and Kaley Cuoco.
The Company continued to monitor online traffic and sales to assess potential
market demand for selected territories' entry to expand its addressable market
and revenue base if confident of generating a fast return on its capital and
launched it's 'Look Better' skincare range at the beginning of November in
France and Germany, followed by Austria, Italy, Portugal and Spain at the end
of November 2023. Cellular Goods skincare products are now available on its
ecommerce website for shipping in 8 countries (UK, USA, France, Germany,
Austria, Italy, Portugal and Spain).
Our retail strategy added another partner on 15 November 2023 with the launch
of its 'Look Better' skincare range on the online platform, Chill.com, to
expand UK and US awareness and distribution of its nine premium skincare
products. Chill Brands Group PLC's online platform, Chill.com, is an online
shop for wellness and relaxation products and expands our route to market in
the UK and US markets.
The Company marked its first opportunity to leverage Cellular Goods' retail
strategy with Sephora UK, via its online platform Sephora.co.uk, to drive
customer growth by expanding its sales channels and increasing its
collaboration with established online and high street outlets. The Company was
the first CBG-based skincare brand to be offered as part of Sephora's 'Pick
and Mix' and 'Check Out' complimentary beauty programs as well as the Sephora
Beauty Box subscription service from 6 November 2023.
As the Company continues to harness the untapped potential of biosynthetics
and sustainable production methods, it widened its scope on 5 May 2023 with
the acquisition of King Tide Carbon Pte.Ltd ("KTC"), a biosynthetic algae and
seaweed carbon sequestration-as-a-service division. This new division has
achieved some key milestones with King Tide Carbon formalising an agreement
with Springtide Seaweed to form Kelp Farming Carbon Removal Joint Venture.
Springtide Seaweed and King Tide will use their combined efforts to identify,
analyse and select kelp species, cultivation techniques and harvesting
techniques to maximise carbon sequestration and removal. The term of the Joint
Venture will be for two years, with option to extend. As part of the Joint
Venture, King Tide shall provide investigatory, analytical and advisory
services with respect to determining carbon sequestration levels, techniques
and confirmation.
King Tide Carbon achieved our second major milestone on 13 November 2023 with
the successful creation of kelp-derived biochar. This was a significant
milestone with the production of kelp-derived biochar to pave the way for
carbon dioxide removal ("CDR") credit production and a range of applications
in agriculture, environmental restoration and industry.
This development follows increasing global scientific consensus that biochar
is a viable, and permanent form of carbon sequestration, paving the way for
King Tide to scale up its carbon removal efforts and generate high quality CDR
credits. King Tide will continue to refine and scale its innovative process
with the goal of making kelp-derived biochar accessible on a larger scale,
maintaining its commitment to a sustainable future and innovative solutions
for climate change.
Future developments
See the Strategic Report for anticipated future developments of the Company.
Dividends
The Directors do not propose a dividend in respect of the year ended 31 August
2023 (2022: nil).
Corporate governance
As a company listed on the standard segment of the Official UK Listing
Authority, the Company was not required to comply with the provisions of the
UK Corporate Governance Code.
The Company does not choose to voluntarily comply with the UK Corporate
Governance Code. The Directors are responsible for internal control in the
Company and for reviewing effectiveness. Due to the size of the Company, all
key decisions are made by the Board. The Directors have reviewed the
effectiveness of the Company's systems during the year under review and
consider that there have been no material losses, contingencies or
uncertainties due to weaknesses in the controls. The Company will comply with
the Quoted Company Alliance Code insofar as is appropriate having regard to
the size and nature of the Company and the size and composition of the Board.
Diversity
As the Company is at a very early stage, it is focused on appointing Board
members with the best expertise to achieve its short-term objectives being
strategic acquisitions. Once this has been achieved, the Board will implement
a strategy to achieve the required targets on gender and ethnicity. During the
year, eight individuals served as directors of the Company, of whom five were
male and three were female. At today's date, the Board consists of three males
and two females.
Table for reporting the gender identity or sex
Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, and Chairman) Number in executive management Percentage of executive management
Men 3 60% 1 - -
Woman 2 40% 1 1 100%
Table for reporting on ethnic background
Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, and Chairman) Number in executive management Percentage of executive management
White British or other White (including minority-white groups) 4 80% 2 1 100%
Mixed/Multiple Ethnic Groups 1 20% - - -
Carbon and greenhouse gas emissions
The Company currently has minimal sales revenue, relatively few employees
(other than the Directors) and uses rented offices. Therefore, the Company has
minimal carbon emissions and it is not practical to obtain emissions data at
this stage. The Company consumed less than 40,000 KWh of energy in the United
Kingdom and is currently exempt from the requirement to disclose its
greenhouse gas and other emission producing sources under the Companies Act
2006 (Strategic Report and Directors Report) Regulations 2014.
Going concern
The Directors, having made due and careful enquiry, are of the opinion that
the Company has adequate working capital to meet its obligations over the next
12 months. The Directors therefore have made an informed judgement, at the
time of approving the financial statements, that there is a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. As a result, the Directors have
adopted the going concern basis of accounting in the preparation of the annual
financial statements.
The Board presents a balanced and understandable assessment of the Company's
position and prospects in all interim and price sensitive reports to
regulators as well as in the information required to be presented by statutory
requirements.
Employees
The Company is in early stages of development. As at 31 August 2023, the
Company utilised the expertise of the Directors, consultants/contractors and
two employees in Canada, and one employee in the UK.
Climate - Related Financial Disclosure
As a pioneering force in the skincare industry, Cellular Goods PLC is not only
dedicated to pushing the boundaries of innovation but also to addressing the
critical challenges posed by climate change, recognising the need for a
comprehensive and transparent approach.
Cellular Goods PLC acknowledges the detrimental consequences of climate change
and remains steadfast in our commitment to evaluating and addressing both the
influence of climate change on our operations and our broader impact on the
environment. We recognise the growing interest and concerns of investors,
employees, regulators, the local community, and other stakeholders regarding
our approach to climate change planning and adaptation.
Cellular Goods PLC aligns its climate-related financial disclosures with
global best practices, prominently guided by the four core elements outlined
by the Task Force on Climate-related Financial Disclosures (TCFD).
Core Elements Description
Governance Structures and processes in place to oversee climate-related issues, including
the role of the board, management, and relevant committees.
Strategy Insights into the company's actual and potential impacts of climate-related
risks and opportunities on its business, strategy, and financial planning
Risk Management Processes used to identify, assess, and manage climate-related risks
integrated into overall risk management. Adaptations to strategies in response
to climate considerations.
Metrics and Targets Disclosure of metrics and targets used to assess and manage relevant
climate-related risks and opportunities, providing quantitative information on
performance and progress.
At the heart of Cellular Goods PLC's commitment to environmental stewardship
is a strategic investment in the carbon capture industry. Understanding the
imperative of mitigating greenhouse gas emissions, the Company actively
supports initiatives that contribute to a more sustainable future. This
strategic choice is a testament to our dedication to not only minimize our
carbon footprint but actively engage in solutions that combat climate change
on a broader scale.
In tandem with our investments in carbon capture, Cellular Goods PLC places
sustainability at the core of our skincare innovation. We believe that
skincare should not only enhance beauty but also contribute to the well-being
of our planet. Collaborating closely with our Research and Development team,
we explore and implement sustainable alternatives for skincare formulations
and packaging. This commitment is not just a strategy; it's an ethos that
informs our decision-making, from product development to market positioning.
Given the small size of our business, establishing a dedicated team within the
Financial Stability Task Force has not been operationally feasible. However,
we recognise the critical importance of oversight in managing climate-related
risks. In lieu of a dedicated team, responsibilities for climate-related
oversight are distributed among existing personnel with relevant expertise.
This approach allows us to maintain a nimble and adaptive governance
structure, ensuring that climate-related considerations are integrated into
various aspects of our decision-making processes.
In our inaugural TCFD-aligned report, we acknowledge the existing gaps in
achieving full compliance with the TCFD's Recommendations and Recommended
Disclosures. As we embark on this journey, we commit to evaluating and
enhancing our reporting practices continually. Looking ahead, we plan to
develop a comprehensive roadmap towards full compliance over the next year.
Recognising that improvement extends beyond reporting, we aim to bolster the
Company's strategies, structures, resources, and tools to effectively manage
climate-related risks and opportunities.
The table below shows our current progress against TCFD Recommendations
TCFD pillar Recommended Disclosure Cellular Goods Summary
Governance • Board's oversight of climate-related risks and opportunities. The Board of Directors oversees climate-related matters, integrating them into
the overall governance structure.
• Management's role in assessing and managing climate-related risks and
opportunities.
Governance responsibilities for climate-related issues are distributed among
existing personnel due to the size of the business.
Strategy • Climate-related risks and opportunities the organization has identified Business strategy aligns with sustainability, fostering innovation in
over the short, medium, and long term. sustainable skincare practices. Our lab made products, collaborative efforts
with the Research and Development team, focus on exploring eco-friendly
• Impact of climate-related risks and opportunities on the business, alternatives for formulations and packaging.
strategy, and financial planning.
The process of crafting lab-made products allows us to carefully control and
optimize each element of our formulations. This precision not only ensures the
• Resilience of the organisation's strategy, taking into consideration highest quality but also minimizes resource consumption and waste throughout
different climate-related scenarios, including a 2°C or lower scenario. the production cycle. From reducing reliance on traditional raw materials to
eliminating unnecessary by-products, our lab-made approach exemplifies our
dedication to sustainable practices.
The acquisition of carbon capture technologies aligns seamlessly with our
broader sustainability strategy. We recognise that carbon capture plays a
crucial role in mitigating greenhouse gas emissions, and our investment
underscores our dedication to minimizing our carbon footprint across the
entire value chain. This strategic move is not just a business decision; it is
a manifestation of our ethos to be at the forefront of responsible business
practices.
Risk Management • Organization's processes for identifying and assessing climate related At Cellular Goods PLC, climate-related risk identification is seamlessly
risk. integrated into our routine operations. While we may not have a dedicated task
force, each team member is responsible for considering climate-related risks
• Organization's processes for managing climate-related risks. within their respective domains.
This distributed approach ensures that climate considerations are part of
• Processes for identifying, assessing, and managing climate related risks day-to-day decision-making processes.
are integrated into the organization's overall risk management.
With a small team, collaboration is key. We regularly convene cross-functional
discussions to collectively assess climate-related risks. By leveraging the
expertise of each team member, we ensure a comprehensive understanding of
potential impacts on our supply chain, production, and market dynamics. This
collaborative effort fosters a collective awareness of climate-related
challenges.
Metrics and targets • Metrics used by the organization to assess climate-related risks and Cellular Goods PLC sets ambitious metrics and targets encompassing its
opportunities in line with its strategy and risk management process. skincare and carbon capture businesses. Key metrics include reducing
unnecessary business travel, reducing waste generation as the whole team works
• Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) from home, and increasing the percentage of sustainably sourced ingredients
emissions and the related risks. and recyclable packaging materials.
• Targets used by the organization to manage climate-related risks and
The Company aims to innovate with a specific target for introducing a number
opportunities and performance against targets. of sustainable skincare products. In parallel, the carbon capture venture
involves goals for mitigating emissions and contributing to broader climate
initiatives. These metrics underline Cellular Goods' PLC commitment to
comprehensive sustainability practices across its diverse business portfolio.
Financial risk management
The Company has a simple capital structure and its principal financial asset
is cash. The Company's market risk is limited to price risk, primarily for the
costs of operating a retail biosynthetic CBD/CBG business carbon
sequestration-as-a-service. The Directors manage the Company's exposure to
liquidity risk by maintaining adequate cash reserves and ensuring any debt
financing is at a competitive interest rate which can be maintained within the
Company's cash resources going forward.
Further details regarding risks are detailed in the notes to the financial
statements.
Provision of information to auditors
So far as each of the Directors is aware at the time this report is approved:
· there is no relevant audit information of which the Company's
auditors are unaware; and
· the Directors have taken all steps that they ought to have taken
to make themselves aware of any relevant audit information and to establish
that the Company's auditors are aware of that information.
Auditors
PKF Littlejohn LLP will be proposed for reappointment in accordance with
Section 485 of the Companies Act 2006. PKF Littlejohn LLP, the auditors, have
indicated their willingness to continue in office as auditors.
Approved by the Board on 21 December 2023, and signed on its behalf by:
Bruna Nikolla
Director and Company Secretary
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE YEAR ENDED 31 AUGUST 2023
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial period. Under that law the directors have prepared the Group and
Company financial statements in accordance with UK-adopted international
accounting standards and as regards the Company financial statements, as
applied in accordance with the provisions of the Companies Act 2006. Under
company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and the Company and of the profit or loss of the Group and
Company for that year.
In preparing these financial statements, the directors are required to:
· Select suitable accounting policies and then apply them
consistently;
· Make judgements and accounting estimates that are reasonable and
prudent;
· State whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements and
the Directors' Remuneration Report comply with the requirements of the
Companies Act 2006 and, as regards the Group financial statements, in
accordance with UK-adopted international accounting standards. They are also
responsible for safeguarding the assets of the Group and Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are
published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Directors' responsibilities pursuant to DTR4 (Disclosure and Transparency
Rules)
The directors confirm to the best of their knowledge and belief:
· The Group and Company financial statements have been prepared in
accordance with UK-adopted international accounting standards, and give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Group and Company; and
· The annual report includes a fair review of the development and
performance of the business and financial position of the Group and Company,
together with a description of the principal risks and uncertainties.
On behalf of the board.
Darcy Taylor
Chairman
21 December 2023
DIRECTORS' REMUNERATION REPORT FOR THE YEAR ENDED 31 AUGUST 2023
This remuneration report sets out the Company's policy on the remuneration of
executive and non-executive Directors together with details of Directors'
remuneration packages and service contracts for the year ended 31 August 2023.
Due to the size of the Board and the early stage of the Company's listing, an
independent remuneration committee is not considered appropriate. The Company
did not appoint any third-party advisers in relation to directors'
remuneration.
The items included in this report are unaudited unless otherwise stated.
Remuneration policy
In setting the policy, the Board has taken the following into account:
· The need to attract, retain and motivate individuals of a calibre
who will ensure successful leadership and management of the Company;
· The Company's general aim of seeking to reward all employees
fairly according to the nature of their respective roles and performance;
· Remuneration packages offered by similar companies within similar
sectors;
· The need to align the interests of shareholders as a whole with
the long-term growth of the Company; and
· The need to be flexible and adjust with operational changes
throughout the term of this policy.
Current and future policy
Executive directors are paid monthly, and their compensation package includes
a combination of fixed salaries, pensions, and any other performance-related
bonuses. Any increase will be properly documented highlighting the reasons and
mainly be based on comparisons with other companies of a similar size and
sector.
UK-based executive directors are entitled to participate in the Company's
auto-enrolment pension scheme if they wish. No directors receive any benefits
for life insurance, accidental death or critical illness cover, hospital
fees, dental care or similar. No director has any entitlement to a company
car, fuel allowance, or equivalent benefits.
The Directors are reimbursed by the Company for any travel, hotel or other
expenses that occur in connection with the discharge of their duties.
Non-executive directors may be entitled to remuneration based on
recommendations of the Chairman and comparisons with other companies of a
similar size in a similar sector.
No directors have received bonuses, and any eventual bonuses will be decided
upon by the full board with each director recusing himself or herself from
discussions about his or her bonus.
The Company does not have a remuneration committee. During the year, key
decisions made by the full board in respect of remuneration were remuneration
packages for Darcy Taylor. Anna Chokina, executive director who left the board
during the year, received the payments due under her service contract.
During 2023, the Company conducted a comprehensive annual salary review of the
executive director's compensation, along with a broader review of the entire
personnel compensation structure. This review was prompted by the need to
address the challenging circumstances created by the organizational
restructuring and redundancies undertaken during the year.
As a result of this thorough review, it was determined that an adjustment to
the compensation package of Bruna Nikolla was warranted. This adjustment aims
to fairly compensate Bruna for the additional board level responsibilities
that she has shouldered in navigating the organization through these
significant changes while also ensuring our executive team remains competitive
and motivated. Effective 1 February 2023, Bruna Nikolla's compensation package
was increased to £150,000. This adjustment addressed increased scope of work
and aligned her with current market rate compensation.
The Directors have considered the requirement to present information on the
relative performance of spend on pay compared to shareholder dividends. As the
Company does not currently pay dividends, we have not considered it necessary
to include such information.
Directors' remuneration (audited)
Details of the directors' remuneration during the year ended 31 August 2023
are as follows:
Director Salary Benefits- Pension 2023 2022
and fees in-kind contributions Total Total
£ £ £ £ £
Executive directors
Darcy Taylor 220,000 - - 220,000 -
Bruna Nikolla 137,500 - 552 138,052 3,692
Anna Chokina (resigned 320,769 - 110 320,879 223,627
26 September 2022)
Simon Walters (resigned 10,000 - 237 10,237 121,320
21 December 2022)
Alexis Abraham (resigned - - - - 174,100
28 February 2022)
Eric Chang - - - - 156,562
(resigned 15 April 2022)
Non-executive directors
Darcy Taylor 4,000 4,000 36,000
Gill Whitty Collins 30,000 - - 30,000 9,144
Matthew Lodge 10,000 - - 10,000 -
Misha Sher - - - - 9,144
Peter Wall (resigned 17,500 - - 17,500 42,000
21 December 2022)
Total 749,769 - 899 750,668 775,589
Service agreements and Letters of Appointment
Under a letter of appointment with Darcy Taylor dated 18 February 2020,
conditional upon Admission, he was appointed as a non-executive director of
the Company for an annual fee of £30,000, payable monthly in arrears. From 10
May 2022, Mr. Taylor's role changed to non-executive chairman, under a new
two-year agreement at £48,000 per annum, payable monthly in arrears. On the 1
October 2022, he was appointed as an interim CEO, in addition to the chairman
role, with a fee of £192,000 per annum.
The appointment as chairman is for an initial term of 24 months and is
terminable on three months' notice by either party. No compensation is payable
for loss of office and the appointment may be terminated immediately if, among
other things, Mr Taylor is in material breach of the terms of the appointment.
He was appointed to oversee the transition of the Company into new markets,
with his role intended to last until a permanent CEO is established and to
explore potential merger and acquisitions avenues.
Bruna Nikolla was appointed as a director on 22 August 2022 and is the
Company's Chief Financial Officer and Company Secretary. She receives a salary
of £150,000 per annum, payable monthly in arrears.
Gill Whitty Collins was appointed as a non-executive director of the Company
on 12 May 2022 and is entitled to fees of £30,000 per year under a contract
for services for an initial two-year period which can be terminated by either
party giving three months' notice. Ms. Whitty Collins is expected to devote at
least six days a year to perform duties for the Company. The appointment may
be terminated immediately if, among other things, she is in material breach of
the terms of the appointment.
Misha Sher was appointed as a non-executive director of the Company on 12 May
2022 and is entitled to fees of £30,000 per year under a contract for
services for an initial two-year period which can be terminated by either
party giving three months' notice. Mr. Sher is expected to devote at least six
days a year to perform duties for the Company. The appointment may be
terminated immediately if, among other things, he is in material breach of the
terms of the appointment.
Matthew Lodge was appointed as a non-executive director of the Company on 5
May 2023 and is entitled to fees of £30,000 per year under a contract for
services for an initial two-year period which can be terminated by either
party giving three months' notice. Mr. Lodge is expected to devote at least
six days a year to perform duties for the Company. The appointment may be
terminated immediately if, among other things, he is in material breach of the
terms of the appointment.
Anna Chokina was appointed as CEO under a service agreement dated 6 December
2021, for an annual salary of £300,000 payable monthly in arrears. Mrs.
Chokina resigned on 26 September 2022.
Under a letter of appointment dated 1 February 2021, Peter Wall was appointed
as non-executive chairman of the Company and received an annual fee of
£48,000, payable monthly in arrears. Under the terms of a subsequent
agreement dated 10 May 2022, Mr. Wall's role changed to non-executive
director, for a further two years, for an annual fee of £30,000 payable
monthly in arrears. Mr. Wall resigned on 21 December 2022.
Simon Walters was appointed as finance director under a service agreement
dated 10 February 2021, for an annual salary of £120,000 payable monthly in
arrears. On 1 September 2022, the role held by Mr. Walters changed to
non-executive director, for an initial period of four months with a monthly
fee of £2,500. Mr. Walters resigned on 21 December 2022.
Share warrants
Directors hold warrants to subscribe for Ordinary shares in the company in the
future, as shown in the table below.
At 0.97p each At 1p each At 2.9p each At 5p each
Misha Sher 2,000,000 - - -
Matthew Lodge 5,000,000 - - -
Gill Whitty Collins - - 2,000,000 -
Darcy Taylor - 1,500,000 - 1,000,000
Peter Wall - 2,500,000 - 2,000,000
Simon Walters - 1,500,000 - 1,000,000
The warrants at 0.97p per share, issued on 5 May 2023 and 10 May 2023, one
third will vest on 5 May 2024 and 10 May 2024 with the remaining two thirds
vesting in twenty-four equal monthly instalments thereafter.
The warrants at 1p per share vested on Admission to Listing on 26 February
2021, had an exercise period of two years from that date, and any shares
arising before 26 February 2022 were subject to a lock-in to that date, being
12 months from admission. These warrants have now all expired as of 26
February 2023.
The warrants at 2.9p per share, issued on 3 April 2023, one third vested on 1
May 2023 with the remaining two thirds vesting in twenty-four equal monthly
instalment thereafter.
The warrants at 5p per share, being the placing price in Admission, vested 25%
on Admission and thereafter in 25% tranches every six months. They have an
exercise period to 26 February 2024, being three years from Admission, and any
Ordinary shares which arose from exercise prior to 26 February 2022 were
subject to a lock-in to that date.
Share options
Director Bruna Nikolla held options to subscribe for 7,000,000 Ordinary shares
in the Company at 31 August 2023. Director Anna Chokina (who resigned on 26
September 2023) held options to subscribe for 16,781,594 Ordinary shares in
the Company at 31 August 2023.
Statement of directors' shareholdings
The Directors who held office at 31 August 2023 and their respective
beneficial interests in the Ordinary shares of the Company at the
year-end were:
Ordinary shares Share options
Matthew Lodge 95,000,000 -
Bruna Nikolla - 7,000,000
Corporate Governance Statement
The Company intends to comply with the provisions of the Corporate Governance
Code published by the Quoted Companies Alliance (QCA Corporate Governance
Code) insofar as is appropriate having regard to the size and nature of the
Company and the size and composition of the Board.
The Company's Standard Listing means that it is also not required to comply
with those provisions of the Listing Rules which only apply to companies on
the Premium List. The FCA will not have the authority to (and will not)
monitor the Company's compliance with any of the Listing Rules which the
Company has indicated that it intends to comply with on a voluntary basis, nor
to impose sanctions in respect of any failure by the Company so to comply.
Other matters
The Company does not have an annual or long-term incentive scheme in place for
any of the Directors and as such there are no disclosures in this respect.
This report was approved by the board on 21 December 2023 and signed on its
behalf by:
Darcy Taylor
Chairman and Interim Chief Executive Officer
INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31 AUGUST 2023
Opinion
We have audited the financial statements of Cellular Goods Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31
August 2023 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Changes in Equity, the Consolidated and
Company Statements of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK-adopted
international accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
· the financial statements give a true and fair view of the state
of the group's and of the parent company's affairs as at 31 August 2023 and of
the group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included:
· an assessment of management's assumptions in modelling future
financial performance and cash flow requirements, including consideration of
future plans, the ability to raise additional funds if required and ensuring
all commitments are reflected therein;
· checking the mathematical accuracy of the spreadsheet used to
model future financial performance and cash flow requirements; and
· assessing whether management has adequately disclosed any
conditions which may cast significant doubt on the ability of the group and
company to continue as a going concern in the financial statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's or parent company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements on our audit and on the
financial statements. For the purposes of determining whether the financial
statements are free from material misstatement, we define materiality as the
magnitude of misstatement that makes it probable that the economic decisions
of a reasonably knowledgeable person, relying on the financial statements,
would be changed or influenced.
We also determine a level of performance materiality which we use to assess
the extent of testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole. In determining
our overall audit strategy, we assessed the level of uncorrected misstatements
that would be material for the financial statements as a whole.
We determined the group and parent company materiality for the financial
statements as a whole to be £99,100 and £97,600 (2022: £87,700 and
£78,900) respectively, calculated at 3% of the loss before tax (2022: 1.5% of
total expenses). We considered loss before tax to be an appropriate benchmark
as the group increased commercial operations in the year, generating more
revenue, but also introduced cost control measures. In 2022 we considered
total expenses to be the appropriate benchmark for a start-up group.
Performance materiality was set at 60% (2022: 70%) of overall materiality for
the group and parent company at £59,400 and £58,560 (2022: £61,300 and
£55,200) respectively, whilst the threshold for reporting unadjusted
differences to those charged with governance was set at £4,955 for the group
and £4,880 for the parent company (2022: £4,300 and £3,900). We also agreed
to report differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
The component materiality was set at group performance materiality.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of
material misstatement in the financial statements. In particular, we looked at
areas involving significant accounting estimates and judgement by the
directors and considered future events that are inherently uncertain such as
the valuation of share based payments and stock provisions. We also addressed
the risk of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a
risk of material misstatement due to fraud. The component was audited by the
group audit team for consolidation purposes.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Asset acquisition (refer to notes 5 and 13) Our audit work in this area included:
During the year, the company acquired King Tide Carbon Pte Ltd Singapore · Reviewing the contractual terms of the sale and purchase
together with a carbon removal services business to be operated by that entity agreement.
by issuing 95,000,000 ordinary shares.
· Checking good title over the subsidiary company.
There is a risk that the acquisition has not been accounted for correctly as
either an asset acquisition or a business combination, including where · Testing the valuation of the share consideration.
applicable the fair value of assets and liabilities acquired, the recognition
of goodwill and other separately identifiable intangible assets. · Evaluating management's accounting treatment of the
transactions as an asset acquisition versus a business combination within the
scope of IFRS 3.
· Evaluating the presentation and disclosures in the financial
statements.
The directors' treatment of the acquisitions was concluded as reasonable. The
acquisition of the subsidiary undertaking did not constitute a business
combination in accordance with IFRS 3.
Valuation of inventory (refer to note 14) Our audit work in this area included:
There is a risk that inventory is not valued at the lower of cost and net · Vouched the cost of inventory back to supporting documentation
realisable value. including, where applicable, packaging, storage and overhead costs.
Inventory is subject to impairment, given the expiry date of certain · Verified the ageing of inventory at year-end, together with the
ingredients and finished goods, and based upon the quantity of inventory held product expiry dates.
compared to actual and forecast sales volumes.
· For post year-end sales, tested that the sales price realised
exceeded the carrying value of inventory.
· Reviewed the sales forecasts volumes, and the expected time to
realise those sales, with reference to the volume and expiry dates of
inventory.
· Obtained confirmations of inventory quantities from material
third party inventory holders and reconciled to the group's year-end inventory
listings.
The directors' judgements and assumptions applied in the calculation of the
year-end inventory provision were concluded as reasonable.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group and parent company financial
statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches not
visited by us; or
· the parent company financial statements and the part of the
directors' remuneration report to be audited are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group's and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent company and the
sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management,
industry research and experience of the sector.
· We determined the principal laws and regulations currently relevant
to the group and parent company in this regard to be those arising from FCA
Rules, the Food Standards Agency, London Stock Exchange Rules, Disclosure and
Transparency Rules and international accounting standards.
· We designed our audit procedures to ensure the audit team considered
whether there were any indications of non-compliance by the group and parent
company with those laws and regulations. These procedures included, but were
not limited to, enquiries of management and review of minutes, review of
Regulatory News Service (RNS) announcements, and review of legal and
regulatory correspondence.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the estimates, judgements and assumptions applied by
management in their valuation of share-based payments and inventory
represented the highest risk of material misstatement and we addressed this by
challenging the assumptions and judgements made by management in those areas.
· We addressed the risk of fraud arising from management override of
controls by performing audit procedures which included, but were not limited
to: the testing of journals; reviewing accounting estimates for evidence of
bias; and evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
(http://www.frc.org.uk/auditorsresponsibilities.) This description forms part
of our auditor's report.
Other matters which we are required to address
We were appointed by Board of Directors on 24 August 2021 to audit the
financial statements for the year ended 31 August 2020 and subsequent
financial periods. Our total uninterrupted period of engagement is four years,
covering the years ended 31 August 2020 to 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
21 December 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 AUGUST 2023
2023 2022
Note £ £
Revenue 3 67,236 28,904
Cost of sales (25,796) (10,787)
Gross profit 41,440 18,117
Administrative expenses 5 (3,375,179) (6,009,375)
Operating loss (3,333,739) (5,991,258)
Finance income 24,113 1,301
Loss before taxation (3,309,626) (5,989,957)
Corporation tax 9 (95) -
Loss for the year (3,309,721) (5,989,957)
Other comprehensive loss/(gain)
(24) 1,284
Total comprehensive loss for the year (3,309,745) (5,988,673)
Earnings per share
Basic earnings per share - continuing and total 10 (0.615p) (1.183p)
operations
The consolidated statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
The Accounting Policies and notes on pages 33-44 form part of these
consolidated financial statements.
The Company has elected to take exemption under section 408 of the Companies
Act 2006 not to present the parent company Statement of Comprehensive
Income.
The loss of the parent company for the year was £3,259,358 (2022: loss of
£5,991,009).
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2023
Consolidated Consolidated Company Company
2023 2022 2023 2022
Note £ £ £ £
ASSETS
Non-current assets
Investment in subsidiary 13 - - 61 1
Current assets
Cash and cash equivalents 1,772,892 4,376,134 1,711,893 4,376,134
Inventory 14 582,883 504,127 582,883 504,127
Trade and other receivables 12 92,835 251,104 198,107 250,830
Total Assets 2,448,610 5,131,365 2,492,944 5,131,092
EQUITY AND LIABILITIES
Equity attributable to owners
Share capital
15 602,250 507,250 602,250 507,250
Share premium 15 12,988,101 12,513,101 12,988,101 12,513,101
Accumulated losses (13,040,611) (9,730,889) (12,991,820) (9,732,462)
Share-based payment reserve 17 1,714,392 1,564,070 1,714,392 1,564,070
Foreign translation reserve (1,324) (1,300) - -
Total Equity and Reserves 2,262,808 4,852,232 2,312,923 4,851,959
LIABILITIES
Current Liabilities
Trade and other payables
16 185,802 279,133 180,021 279,133
185,802 279,133 180,021 279,133
Total Equity and Liabilities 2,448,610 5,131,365 2,492,944 5,131,092
The Accounting Policies and Notes on pages 33-44 form part of the financial
statements
The consolidated and company financial statements were approved and authorised
for issue by the Board of Directors. Signed on behalf of the Board of
Directors by:
Bruna Nikolla
Director
21 December 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 AUGUST 2023
Share capital Share premium Foreign currency translation Share-based payment reserve Retained earnings Total equity
£ £ £ £ £ £
As at 1 September 2022 507,250 12,513,101 (1,300) 1,564,070 (9,730,889) 4,852,232
Loss for the year - - - - (3,309,721) (3,309,721)
Exchange difference on translation - - (24) - - (24)
Total comprehensive loss for the year - - (24) - (3,309,721) (3,309,745)
Issue of ordinary shares (05/05/2023) 95,000 475,000 - - - 570,000
Share-based payments - - - 150,322 - 150,322
Total transactions with owners recognised in equity 95,000 475,000 - 150,322 - 720,322
As at 31 August 2023 602,250 12,988,101 (1,324) 1,714,392 (13,040,611) 2,262,808
Share capital Share premium Foreign currency translation Share-based payment reserve Retained earnings Total equity
£ £ £ £ £ £
As at 1 September 2021 504,750 12,490,601 (2,584) 1,295,918 (3,740,931) 10,547,754
Loss for the year - - - - (5,989,957) (5,989,957)
Exchange difference on translation - - 1,284 - - 1,284
Total comprehensive loss for the year - - 1,284 - (5,989,957) (5,988,673)
Issue of ordinary shares (04/03/2022) 2,500 22,500 - - - 25,000
Share-based payments - - - 268,152 - 268,152
Total transactions with owners recognised in equity 2,500 22,500 - 268,152 - 293,152
As at 31 August 2022 507,250 12,513,101 (1,300) 1,564,070 (9,730,889) 4,852,232
The Accounting Policies and Notes on pages 33-44 form part of the financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY AS AT 31 AUGUST 2023
Share capital Share Premium Share-based payment reserve Retained earnings Total equity
£ £ £ £ £
As at 1 September 2022 507,250 12,513,101 1,564,070 (9,732,462) 4,851,959
Loss for the year - - - (3,259,358) (3,259,358)
Total comprehensive loss - - - (3,259,358)
for the year
(3,259,358)
Issue of ordinary shares (05/05/2023) 95,000 475,000 - - 570,000
Share-based payments - - 150,322 - 150,322
Total transactions with owners recognised in equity 95,000 475,000 150,322 - 720,322
As at 31 August 2023 602,250 12,988,101 1,714,392 (12,991,820) 2,312,923
Share capital Share Premium Share-based payment reserve Retained earnings Total equity
£ £ £ £ £
As at 1 September 2021 504,750 12,490,601 1,295,918 (3,741,453) 10,549,816
Loss for the year - - - (5,991,009) (5,991,009)
Total comprehensive loss - - - (5,991,009) (5,991,009)
for the year
Issue of ordinary shares (04/03/2022) 2,500 22,500 - - 25,000
Share-based payments - - 268,152 - 268,152
Total transactions with owners recognised in equity 2,500 22,500 268,152 - 293,152
As at 31 August 2022 507,250 12,513,101 1,564,070 (9,732,462) 4,851,959
The Accounting Policies and Notes on pages 33-44 form part of the financial
statements.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2023
Consolidated 2023 Consolidated 2022 Company Company
£ £ 2023 2022
£ £
Cash flows from operating activities
Loss for the year (3,309,721) (5,989,957) (3,259,358) (5,991,009)
Share-based payment charge 150,322 268,152 150,322 268,152
Increase in inventory (78,757) (446,950) (78,757) (446,950)
Decrease in debtors 158,269 117,243 52,723 116,612
(Decrease)/Increase in creditors (93,331) 78,886 (99,111) 81,853
Research and development non-cash 570,000 - 570,000 -
Foreign exchange differences (24) 1,264 - -
Finance income (22,812) (1,301) (22,812) (1,301)
Net cash flow used in operating activities (2,626,054) (5,972,643) (2,686,993) (5,972,643)
Cash flows from investing activity
Increase in investment - - (60) -
Finance income 22,812 1,300 22,812 1,301
Net cash flow generated from investing activity 22,812 1,300 22,754 1,301
Cash flows from financing activity
Issue of ordinary shares, net of issue costs - 25,000 - 25,000
Net cash generated from financing activity - 25,000 - 25,000
Net increase in cash and cash equivalents (2,603,242) (5,946,342) (2,664,241) (5,946,342)
Cash and cash equivalents at beginning of year 4,376,134 10,322,476 4,376,134 10,332,476
Cash and cash equivalents at end of year 1,772,892 4,376,134 1,711,893 4,376,134
Significant non-cash transactions
On 5 May 2023 the Company issued 95,000,000 ordinary shares at £0.006 per
share, amounting to £570,000, as consideration for the acquisition of the
biosynthetic algae and seaweed carbon sequestration 'as a service' business
held by King Tide Carbon Pte. Ltd Singapore (see note 13).
The Accounting Policies and Notes on pages 33-44 form part of the financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2023
1. General Information
The Company was incorporated in England and Wales on 25 August 2018 as Leaf
Studios Limited, but subsequently re-registered as a public limited company
and renamed as Leaf Studios PLC. On 29 September 2020, the Company's name was
changed to Cellular Goods PLC.
The registered office is 9th Floor, 16 Great Queen Street, London, WC2B 5DG.
The principal activity of the Company is establishing a biosynthetic CBD/CBG
retail business as well as delivering carbon removal as a service.
The Company gained admission to the Official List (by way of a Standard
Listing under Chapter 14 of the Listings Rules) and trading on the London
Stock Exchange on 26 February 2021.
The Company has two subsidiaries, CBX Cellular Goods Canada Limited
incorporated in Canada, and King Tide Carbon Pte.Ltd which was incorporated in
Singapore.
2. Accounting Policies
The Directors consider that in the proper preparation of the financial
statements there were no critical or significant areas which required the
use of accounting estimates and exercise of judgement by management while
applying the Company's accounting policies, with the exception of share-based
payment calculations and inventory valuations.
There is no material difference between the fair value of financial assets and
liabilities and their carrying amount.
The functional and presentational currency is Pounds Sterling ("GBP").
2.1. Basis of preparation
These financial statements have been prepared in accordance with UK-adopted
international accounting standards in accordance with the requirements of the
Companies Act 2006. The financial statements have been prepared under the
historical cost convention. There is no material difference between the fair
value of financial assets and liabilities and their carrying amount.
Amounts in the financial statements have been rounded to the nearest pound.
2.2. Revenue recognition
Revenue from the sale of goods is recognised when a group entity sells a
product to a customer. Sales are mostly made via online portals, paid by
credit card, at which point revenue is recognised. For sales made in
traditional retail shops, revenue is recognised when consumers buy each
product (goods held by retail outlets are not treated as sales by Cellular
Goods).
2.3. Inventory
Inventory is valued at lower of cost and net realisable value. Cost is based
on the purchase price of the manufactured products, materials and transport
costs. Net realisable value is based on the estimated selling price less
estimated selling costs. Stock considered to have no value has been written
down to nil.
2.4. Basis of consolidation
The Group financial statements consolidate those of the Company and its two
subsidiaries as of 31 August 2023. The subsidiaries have a reporting date of
31 August and are entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the subsidiary and has the ability to affect
those returns through its power over the entity. The subsidiaries have been
fully consolidated from the date on which control was transferred to the
Group.
Inter-company transactions, unrealised gains and losses on intra-group
transactions and balances between Group companies are eliminated on
consolidation.
New and Revised Standards
There were no new and amended standards adopted for the first time which had a
material impact on the Group or Company.
IFRS in issue but not applied in the current financial statements
The following IFRS and IFRIC Interpretations have been issued but have not
been applied by the Group or Company in preparing these financial statements,
as they are not yet effective. The Group or Company intends to adopt these
standards and interpretations when they become effective, rather than adopt
them early.
· Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current (Amendments to IAS 1) effective 1
January 2024
· Presentation of Financial Statements and IFRS Practice Statement
2: Disclosure of Accounting Policies (Amendments to IAS 1) effective 1 January
2023
· Accounting Policies, Changes in Accounting Estimates and Errors -
Definition of Accounting Estimates (Amendments to IAS 8) effective 1 January
2023
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
effective 1 January 2024
· International Tax Reform: Pillar Two Model Rules (Amendments to
IAS 12) effective 1 January 2023
The above standards are not expected to have a material impact on the Group or
Company in future reporting periods and on foreseeable future transactions.
2.5. Going concern
The Directors have assessed the current financial position of the Group, along
with future cash flow requirements, to determine whether the Group has the
financial resources to continue as a going concern for the foreseeable future.
As part of their assessment, the Directors have also taken into account the
ability to raise additional funding whilst maintaining sufficient cash
resources to meet all commitments.
The Directors have prepared detailed cash flow forecasts with strong cost
control measures in place to enable the Group to grow according to its plans.
Given the current economic uncertainties, the Group has controls in place to
monitor spend and ensure that it can continue to operate for the foreseeable
future. Additional cost control measures are available, if required. The
conclusion of this assessment is that it is appropriate that the Group be
considered a going concern. For this reason, the Directors continue to adopt
the going concern basis in preparing the financial statements.
2.6. Capital risk management
The Company's objectives when managing capital is to safeguard the Company's
ability to continue as a going concern, in order to provide returns for
shareholders and benefits for other stakeholders, and to maintain an
optimal capital structure. The Company has no borrowings. In order to maintain
or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, return capital to shareholders or issue new
shares. The Company monitors capital on the basis of the total equity held by
the Company.
2.7. Financial Instruments
Initial recognition
A financial asset or financial liability is recognised in the Statement of
Financial Position of the Group when it arises or when the Group becomes
part of the contractual terms of the financial instrument.
Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following
conditions are met:
1. The asset is held within a business model whose objective is to
collect contractual cash flows; and
2. The contractual terms of the financial asset generating cash
flows at specified dates only pertain to capital and interest payments on
the balance of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate method ("EIR") and are subject to impairment. Gains
and losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the EIR method include
trade and other payables that are short term in nature.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in profit or loss.
Derecognition
Financial liabilities are derecognised if the company's obligations specified
in the contract expire or are discharged or cancelled.
A financial asset is derecognised when:
1. The rights to receive cash flows from the asset have expired,
or
2. The company has transferred its rights to receive cash flows
from the asset or has undertaken the commitment to fully pay the cash flows
received without significant delay to a third party under an arrangement and
has either (a) transferred substantially all the risks and the assets of the
asset or (b) has neither transferred nor held substantially all the risks and
estimates of the asset but has transferred the control of the asset.
2.8. Impairment
The Group recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Company expects to receive. Regarding trade receivables, the
Company applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses, trade receivables and contract assets have been
grouped based on shared risk characteristics.
At each balance sheet date, the Directors review the carrying amounts of the
Company's investments, to determine whether there are any indications that
those investments have suffered an impairment loss.
2.9. Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements are measured using the currency of
the primary economic environment in which entities operate ('the functional
currency'). The financial statements are presented in Pounds Sterling, which
is the parent company's functional and presentation currency. There has been
no change in the functional currency during the current or preceding period.
(ii) Transactions and balances
Transactions in foreign currencies are translated into Pounds Sterling using
monthly average exchange rates. This is permissible in this case as there are
no significant fluctuations between the currencies with which the entity
operates. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the exchange rates ruling at the Statement of Financial
Position date and any exchange differences arising are taken to profit
or loss.
(iii) Foreign operations
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than GBP are
translated into GBP upon consolidation. The functional currency of the
entities in the Group has remained unchanged during the reporting period. On
consolidation, assets and liabilities have been translated into GBP at the
closing rate at the reporting date. Income and expenses have been translated
into GBP at the average rate over the reporting period. Exchange differences
arising from significant foreign subsidiaries are charged or credited to other
comprehensive income and recognised in the currency translation reserve in
equity. On disposal of a foreign operation, the related cumulative translation
differences recognised in equity are reclassified to profit or loss and are
recognised as part of the gain or loss on disposal.
2.10. Share-based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to profit or loss over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based
on the number of options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative expense is
not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions.
These are either factors beyond the control of either party (such as a target
based on an index) or factors which are within the control of one or other
of the parties (such as the Company keeping the scheme open or the employee
maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to profit or loss over the remaining
vesting period.
Where equity instruments are granted to persons other than employees, profit
or loss is charged with fair value of goods and services received.
2.11. Taxation and deferred taxation
The income tax expense or income for the year is the tax payable on the
current period's taxable income. This is based on the national income tax rate
enacted or substantively enacted for each jurisdiction with any adjustment
relating to tax payable in previous years and changes in deferred tax assets
and liabilities attributable to temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the financial
statements.
Current tax credits arise from the UK legislation regarding the treatment of
certain qualifying research and development costs, allowing for the
surrender of tax losses attributable to such costs in return for a tax rebate.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to be applicable when the asset or liability
crystallises based on current tax rates and laws that have been enacted
or substantively enacted by the reporting date. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore recognised only
when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits against which to
recover carried forward tax losses and from which the future reversal of
temporary differences can be deducted. The carrying amount of deferred tax
assets are reviewed at each reporting date.
2.12. Trade and other payables
Short-term creditors are measured at the transaction price. Other financial
liabilities are measured initially at fair value, net of transaction costs,
and are measured subsequently at amortised cost using the effective interest
rate method.
2.13. Trade and other receivables
Trade and other receivables are short-term financial assets due to the
Company. Other receivables are recognised at the transaction's price when it
is probable that economic benefit will flow to the Company.
2.14. Equity
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 from the proceeds.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
2.15. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and demand deposits with banks
and other financial institutions, that are readily convertible into known
amounts of cash, and which are subject to an insignificant risk of changes in
value.
3. Segment information
In the year to 31 August 2023, revenue was derived wholly from the sale of
cannabinoid products. This has been consistent with the prior year's revenue,
derived wholly from the sale of cannabinoid products.
Under IFRS 8 there is a requirement to show the profit or loss for each
reportable segment and the total assets and total liabilities for each
reportable segment if such amounts are regularly provided to the chief
operating decision-maker.
The Group has one operating segment, being the establishment and operation of
a biosynthetic retail services business, therefore all IFRS 8 disclosures are
incorporated within other notes to the financial statements. Except as
disclosed in note 5, the carbon renewal business had no material transactions,
assets or liabilities during the period and at year-end.
4. Critical accounting estimates and judgement
In the application of the Group's and Company's accounting policies, the
directors are required to make judgements, estimates and assumptions about the
carrying amount of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current
and future periods.
The directors have applied their knowledge and experience of the industry in
determining the level of provisions required in calculating inventory values.
Specific estimates and judgements are required on the ageing of inventory,
expiry dates, local economic conditions, increased costs and lower margins,
overstocking and more. Provision estimates are forward looking and are formed
using a combination of factors including management's knowledge of the
industry and the overall assessment made by management of the risks in
relation to inventory.
Estimating the fair value of share-based payment transactions requires
determination of the most appropriate valuation model, which is dependent on
the terms and conditions of the grant of share options and warrants. This
estimate also requires determination of the most appropriate inputs into the
valuation model including volatility and dividend yield and making assumptions
about them. The assumptions used for estimating the fair value of share-based
payment transactions are disclosed in note 17.
5. Expenses by nature
2023 2022
£ £
Legal and professional 318,234 374,498
Auditor's remuneration 34,000 26,500
Directors' remuneration 740,741 775,589
Share-based payment charge 150,322 268,152
Consultancy 57,513 903,426
Advertising and promotion 607,504 1,927,813
Product research and development 586,576 356,524
Other expenses 880,289 1,376,883
3,375,179 6,009,375
On 5 May 2023 the Company issued 95,000,000 ordinary shares at £0.006 per
share, amounting to £570,000, as consideration for the acquisition of the
developing biosynthetic algae and seaweed carbon sequestration 'as a service'
business held going forward by King Tide Carbon Pte. Ltd Singapore. At the
date of acquisition, the business comprised of the intellectual property
rights developed to date and still under development, including information on
potential customers and suppliers, technical information related to algae
production and carbon sequestration and removal services, and the industry
expertise and future services of former owner Matthew Lodge. The consideration
paid of £570,000 has been fully expensed and is included above within
'Product research and development'.
6. Auditor's remuneration
2023 2022
£ £
Fees payable to the Company's auditor for the audit of the Group's and 34,000 26,500
Company's annual financial statements
34,000 26,500
7. Directors' remuneration
Directors' remuneration amounted to £750,668 during the year (2022:
£775,589), of which £nil (2022: £nil) remained outstanding at the year end.
Detailed disclosure of Directors' remuneration is disclosed in the
Directors' Remuneration Report.
8. Employees
The average number of employees for the Group during the year was 5 (2022: 5),
apart from the Directors.
2023 2022
£ £
Directors' remuneration 740,741 775,589
Wages and salaries 499,293 654,096
Social security costs 87,620 105,700
Pension 8,318 10,925
Share-based payments 150,322 268,152
1,486,294 1,814,462
9. Taxation
The tax charge for the year was £95 (2022 - £nil). The Company had tax
losses at the year-end of £11,371,187 (2022: £8,848,182), on which no
deferred tax asset has been recognised.
Factors affecting the tax charge
The tax assessed for the year is higher (2022: higher) than the standard rate
of corporation tax in the UK. The difference is explained below:
2023 2022
£ £
Loss on ordinary activities before tax (3,309,626) (5,991,009)
Loss for year multiplied by standard rate of corporation tax in the UK of 19% (628,829) (1,138,292)
(2022: 19%)
Effects of:
Disallowable expenditure 137,795 53,813
Unutilised losses on which no deferred tax losses is required 491,034 1,084,479
Tax charge for the year - -
On 3 March 2021, the UK government announced that it intended to increase the
main rate of corporation tax to 25% for the financial years beginning 1 April
2023. This new rate was substantively enacted by Finance Act 2021 on 10 June
2021.
10. Earnings per share
2023 2022
Loss attributable to equity holders of the Company £3,309,721 £5,989,957
Weighted average number of Ordinary Shares in issue (number) 537,962,329 505,989,726
Basic earnings per share (pence per share) (0.615p) (1.183p)
11. Financial Instruments
2023 2022 2023 2022
£ £ £ £
Group Group Company Company
Carrying amount of financial assets
Financial assets measured at amortised cost
Cash and cash equivalents 1,772,892 4,376,134 1,711,893 4,376,134
1,772,892 4,376,134 1,711,893 4,376,134
Carrying amount of financial liabilities
Financial liabilities measured at amortised cost
Trade and other payables 185,802 279,133 180,021 279,133
12. Trade and other receivables
2023 2022 2023 2022
£ £ £ £
Group Group Company Company
VAT debtor 31,491 94,556 31,491 94,556
Prepayments 59,100 153,697 58,114 153,697
Amounts due by subsidiary undertaking - - 107,712 2,577
Other debtors 2,244 2,852 790 -
92,835 251,105 198,107 250,830
13. Investment in subsidiaries
Cellular Goods PLC, as a multinational corporation, holds complete ownership
of two subsidiary companies, CBX Cellular Goods Canada Ltd, and King Tide
Carbon Pte. Ltd Singapore, each with distinct focuses and contributions to the
parent company's operations. CBX Cellular Goods Canada is incorporated in
Canada and has its registered office at 700-401 West Georgia Street,
Vancouver, British Columbia V6B 5A1, Canada. It specializes in the research,
development, and production of innovative consumer skincare and wellness
products in the biosynthetic CBD and CBG space. King Tide Carbon Pte. Ltd
Singapore is a wholly owned subsidiary dedicated to oceanic biosynthetic
carbon removal industry. Incorporated and registered in Singapore with its
registered office at 101 Telok Ayer Street, #03-02, Singapore 068574.
Furthermore, King Tide Pte. Ltd Singapore also has its wholly owned
subsidiary, King Tide Carbon Canada Ltd, dedicated to the carbon removal
industry and registered office at 700-401 West Georgia Street, Vancouver,
British Columbia V6B 5A1, Canada.
The carbon removal services business was acquired separately by the parent
company from the newly incorporated subsidiary undertaking King Tide Carbon
Pte. Ltd Singapore but will be operated going forward by that entity (see note
5). The acquisition of King Tide Carbon Pte. Ltd Singapore therefore did not
constitute a business combination in accordance with IFRS 3.
The subsidiary undertakings are set out below.
Name Principal activity Holding
CBX Cellular Goods Canada Ltd Cannabinoid wellness products 100%
King Tide Carbon Pte. Ltd Singapore Carbon removal services 100%
Investments
in subsidiary
Cost and net book value £
As at 1 September 2022 1
Additions 60
As at 31 August 2023 61
14. Inventory
2023 2022 2023 2022
£ £ £ £
Group Group Company Company
Raw materials and packaging 456,297 363,410 582,883 363,410
Finished goods 179,983 335,150 179,983 335,150
Provision for obsolescence (53,397) (194,433) (53,397) (194,433)
582,883 504,127 582,883 504,127
The cost of inventory recognised within cost of sales amounted to £25,796
(2022: £10,787). Write-downs of inventory to net realisable value amounting
to £53,397 (2022: £194,433) was recognised in administrative expenses in the
statement of profit or loss.
15. Share capital and share premium
Number of Share Share Total
shares capital premium
No. £ £ £
At 1 September 2022 507,250,000 507,250 12,513,101 13,020,351
Issue of ordinary shares (05/05/2023) 95,000,000 95,000 475,000 570,000
At 31 August 2023 602,250,000 602,250 12,988,101 13,590,351
16. Trade and other payables
2023 2022 2023 2022
£ £ £ £
Group Group Company Company
Trade creditors 104,892 125,374 100,381 125,374
Accruals 56,926 84,222 55,728 84,222
Other creditors 23,984 69,537 23,911 69,537
185,802 279,133 180,021 279,133
17. Share-based payments
The Company has issued a total of 64,960,000 warrants to subscribe for
additional share capital of the company, of which, 2,500,000 have been
exercised and 21,000,000 have lapsed, leaving 41,460,000 in issue. Each
warrant entitles the holder to subscribe for one ordinary equity share in the
Company. The right to convert each warrant is unconditional.
In the year to 31 August 2023, the Company issued 26,831,594 share options to
subscribe for additional share capital of the Company to its employees, of
which 2,500,000 have lapsed, leaving 24,331,594 in issue. Each option entitles
the holder to subscribe for one ordinary equity share in the Company. The
right to convert each option is subject to the terms of each respective share
option agreement.
Weighted average exercise price 31-Aug-23 31-Aug-22
Warrants Number Number
At the beginning of the year 3.05p 50,460,000 52,960,000
Issued on 3 April 2023 2.90p 2,000,000 -
Issued on 9 May 2023 0.97p 5,000,000 -
Issued on 10 May 2023 0.97p 2,000,000 -
Issued on 8 June 2023 1.50p 3,000,000 -
Lapsed in the year 1.00p (21,000,000) -
Exercised in the year 1.00p - (2,500,000)
At the end of the year 3.62p 41,460,000 50,460,000
Equity-settled share-based payments are measured at fair-value (excluding the
effect of non-market- based vesting conditions) as determined through use of
the Black-Scholes technique at the date of issue.
Weighted average exercise price 31-Aug-23 31-Aug-22
Share options Number Number
At the beginning of the year 7.47p 22,550,000 -
Issued in the year 1.20p 7,000,000 23,050,000
Lapsed in the year 7.15p (5,218,406) (500,000)
Exercised in the year - - -
At the end of the year 5.74p 24,331,594 22,550,000
The total share-based payment charge for year was £150,322 (2022: £268,153).
An amount of £150,322 (2022: £268,153) has been charged to administrative
expenses and £nil (2022: £nil) to share premium.
The share-based payment charge was calculated using the Black-Scholes model.
All warrants have a vesting period between one and three years from the date
of issue and are subject to their respective lock-in conditions if exercised.
All share options have an exercise period of between three and ten years.
Volatility for the calculation of the share-based payment charge in respect of
the warrants issued was determined by reference to movements in share price of
the Company for the period after the date of admission and by reference to the
relative share prices of a selected peer group of companies listed on the
London Stock Exchange up to the date of admission.
The inputs into the Black-Scholes model for the share options issued in the
year are as follows:
31-Aug 31-Aug
2023 2022
Share options Share options
issued issued
Weighted average share price at grant date - pence 0.398 6.79
Weighted average exercise price - pence 3.615 7.47
Weighted average volatility 126.33% 70.80%
Weighted average expected life in years 3 1.8
Weighted average contractual life in years 10 10
Risk-free interest rate 2.5 to 3.5% 1.5 to 2.5%
Expected dividend yield 0% 0%
Weighted average fair-value of warrants granted (pence) 0.49 2.07
The total number of warrants held by directors at 31 August 2023 was
10,000,000 (2022: 9,500,000). The total number of share options issued to
directors at 31 August 2023 was 7,000,000 (2022: 20,000,000).
18. Contingent liabilities
There were no contingent liabilities at 31 August 2023 or 31 August 2022.
19. Capital commitments
There were no capital commitments at 31 August 2023 or 31 August 2022.
20. Controlling party
There was no ultimate controlling party as at the year-end.
21. Related party transactions
During the year, the Company incurred fees of £11,125 (2022: £28,812) for
consulting services from Headline FD Limited, a company majority-owned by
Simon Walters. No other related party transaction occurred during this
financial year.
22. Subsequent events
Subsequent to the year end, the Company has continued to enhance its retail
strategy as it announced in the first quarter of the 2023-2024 financial year,
a further retail partnership with Chill Brands Group PLC, the online shop for
wellness and relaxation products.
As well as establishing new partnerships with high street outlets, we continue
to grow our existing sales channels by participating in their seasonal
promotional campaigns and events. Over the Autumn 2023 season Cellular Goods'
products were offered as the first CBG-based skincare brand to be part of
Sephora UK's beauty box and subscription platforms.
In November 2023 Cellular Goods' e-commerce site was opened to our French and
German customers and later in the same month we also launched shipping of our
products to Austria, Italy, Portugal, Spain, Denmark, Belgium and the
Netherlands.
As we position ourselves at the forefront of carbon removal solutions, King
Tide in mid-November has achieved a milestone in the production of
kelp-derived biochar with 28% carbon content, propelling the company forward
in its commitment to sustainable carbon removal. This innovation utilizes the
carbon-rich properties of kelp, a rapidly renewable marine resource, for
biochar production, recognised for its potential in soil improvement, carbon
sequestration, and enhanced agricultural productivity. As global scientific
consensus grows on biochar's viability for permanent carbon sequestration,
King Tide aims to scale up its carbon removal efforts and generate
high-quality Carbon Dioxide Removal ("CDR") credits. The kelp-derived biochar
not only contributes to long-term carbon storage but also promotes
environmental stewardship through circular economy principles, reducing waste
and maximizing resource utilization. With a notable 28% carbon content, the
biochar demonstrates efficacy in carbon sequestration, soil fertility
enhancement, and potential industrial applications. This achievement aligns
with King Tide's dedication to a sustainable future and collaborative
interdisciplinary efforts with experts in marine biology, environmental
science, and agriculture. The success holds promise for advancing agricultural
practices, promoting scientific collaboration, and ushering in a new era of
oceanic carbon sequestration innovation.
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