REG - Iconic Labs PLC - Full Year Results for the year ended 30 June 2020
10/12/2020 07:00
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RNS Number : 1413I Iconic Labs PLC 10 December 2020
Iconic Labs Plc ("Iconic Labs" or the "Company")
Full Year Results 2020
Iconic Labs Plc (LSE:ICON), a multi-divisional new media and technology
business, today announces its audited financial results for the year ended 30
June 2020.
Copies of the Report and Accounts for the year ended 30 June 2020 are
available to view on the Company's website www.iconiclabs.co.uk.
Chief Executive and Interim Chairman's Report
I am pleased to introduce the audited accounts for the twelve months to 30
June 2020. This is the final set of accounts which covers both the shutting
down of the old Widecells business as well as setting the operational platform
from which we have built the Iconic Labs business. During this period, the
core building blocks of the Company's new media and technology business were
put in place, albeit it is only in the period since the balance sheet date
that the commercial results have begun to accelerate. More specifically, the
Company was able to build upon the acquisition of GSN with a contract to
manage TheLondonEconomic, which is a successful digital newspaper with a very
high reach into a key young, affluent, urban demographic.
However, the most significant event occurred after the balance sheet date with
the contract to manage the JOE and Her Media businesses, under a contract now
worth a minimum of £125,000 per month plus a 25% share of profits after
certain revenue and profitability targets are met. With the more recent
management contract for Lovin Media, not only is the Company is close to being
profitable on an operational basis but the sheer scale and reach of JOE and
Her makes it the perfect foundation stone upon which to grow.The owned and
operated properties of GSN, TLE and, JOE and Her are all examples of the
company's strategy of identifying websites and digital brands that have a
valuable audience and brand but have yet to fully monetise that potential.
Since taking over the management of JOE the Company has not only secured
several major sponsorship contracts but has increased programmatic advertising
revenue by 300%. The company has also significantly increased revenues at TLE,
with programmatic advertising revenue more than doubling in recent months. The
company believes that this model is scalable and believes there are
considerable further digital media brands that fit the profile of strong
brands that would benefit from the increased revenues that Iconic Labs can
facilitate.
Finally, importantly, the Company was fully aware of members views of the
convertible facility with European High Growth Opportunities Securitization
Fund (EHGOSF) that we had in place as at the balance sheet date. The company
had previously had a facility with EHGOSF prior to the current board's
involvement and it had been a long term strategy and ambition to replace it
when the Company was able to do so. That facility has been terminated post
year-end and the Company is now funded by the conventional routes of equity,
debt and revenues. It is also unfortunate but important that we continue to
recognise and take account of the current Coronavirus Covid-19 pandemic. It
has had an effect on some branded contract delays and cancellations in Q2
2020, particularly amongst live events and travel clients, but more broadly
the plans we have had for each managed or owned company have been at least in
line with expectations. More generally, however, as more people spend time at
home the Group remains confident that it will see a long term increase in
demand for its online publishing content. The Group believes that many content
and technological trends may accelerate as a result, and the Group aims to be
best positioned to benefit from the long term. Finally, we hope that all of
you and your families continue to stay safe during this period and our
thoughts go out to all of those who are suffering hardship or have lost family
members and loved ones.
Strategic Report
INTRODUCTION
This is the fourth set of financial statements prepared by the Group. The
Strategic Report should also be read in conjunction with the Chief Executive
and Interim Chairman's statement which is included within the Annual Report.
During the previous year the Group evolved from a stem cell and prospective
insurance intermediary called Widecells Group PLC into a media and technology
Group, and was renamed Iconic Labs PLC.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
Iconic Labs is a media and technology business focused on providing online
marketing, content and technology driven products. The Company's principal
activity within this sector is in digital and social media publishing. The
Company owns certain publishers, such as GSN, and manages other publishers,
such as TheLondonEconomic, JOE and Her and Lovin' Media, through management
services contracts ("MSCs"). These MSCs provide for the payment of a fixed
monthly management fee together with a percentage of the profits. For example,
the MSC in respect of JOE and Her provides for a £125,000 monthly management
fee plus external costs together with a 25% share of the profits after certain
revenue and profitability targets are met. There are advantages to both owned
and managed assets. With owned assets the Company seeks to build asset value
as well as income, whereas with managed assets the Company does not have an
up-front capital cost and can also access assets whose open market price
exceeds the amount that the Company can afford. With respect to both owned and
managed assets, the Company seeks to use the skills and experience of the
management team to increase revenues and profits by increasing both
programmatic advertising revenues and sponsorship or branded content revenues.
In conjunction with increasing revenues, by centralising core functions and
then applying them across all of the assets, costs can be set against larger
revenues thereby increasing profits.
PRINCIPAL RISKS AND UNCERTAINTIES
The following risks are considered by the Board to be the most significant
risks to the business:
The Group cannot be certain that it will achieve and sustain revenues and
profitability
The Company is still at an early stage of development. Since the balance sheet
date, there has been a significant increase in revenues. However, were
revenues to decline then it would have an immediate adverse effect on the
Company's business, operating results and financial condition. The business
has a flexible cost base and will be able to introduce identified cost savings
to mitigate this but it remains an inherent risk of a business at this stage
of development.
Dependence on a key contract
At this stage, the revenues from the JOE and Her MSC comprise a significant
majority of the Company's revenues and the loss of this contract would
materially adversely affect the business. However, the MSC entered into with
Greencastle has an initial term of one year which rolls over automatically
unless both parties agree to terminate. The effect of this is that the consent
of the Company is required to terminate the agreement, thereby significantly
mitigating this risk. There are only limited other grounds for termination,
such as Greencastle's sole right to be able to terminate the MSC on one weeks'
notice in the event that: (i) two or more of Liam Harrington, John Quinlan
and/or Sam Asante cease to be directors of the Company; or (ii) more than
three other directors are appointed; or (iii) the existing executive directors
cease to exercise day to day management of the Company. As at the date of
these accounts, no such events have occurred and the MSCs remain in place and
are continued to be carried out in accordance with their terms in the ordinary
course of business. However, should any such events transpire in the future
then it is possible that Greencastle may exercise its right to terminate the
MSCs by serving such notice.
Employee Risk
Failure to retain key executives could adversely affect the Group's operating
and financial performance. Retaining and motivating key executives is a
critical
component of the future success of the business. The company has a total of
seven employees and the departure of any of the company's very small number of
executive officers or other key employees could have a significant negative
impact on its operations. The ex-UNILAD team are one of biggest strengths of
the
business and the performance of the company depends, to a significant extent,
upon their abilities and continued efforts as its senior management. The loss
of the services of any of the key management personnel will adversely affect
the Group's ability to maintain or improve its operating and financial
performance.
Funding Risk
The company is at an early stage of development and is not currently
profitable. Despite strong confidence in its business plan and forecasts, the
Directors recognise there is a risk that it may require more funding but not
be able to find agreement with a funding partner. The Directors have sought to
mitigate this risk by identifying a number of options for funding, including
both equity and debt.
Market risk
The digital media and advertising industry is continually changing and has a
significant amount of competition. The company believes that it has a strong
and competitive business strategy but the operational and financial results of
the company could be materially affected by the actions of competitors,
partners and suppliers. The company competes with a large number of people as
the business spans several sectors, notably digital publishing and
advertising. As a company at an early stage of development the company's
competitors could offer superior scale and put pressure on prices which could
affect the Company's revenues and profit margins.
Global Economic Risk
The advertising industry is susceptible to adverse developments in the global
economy and particularly the UK economy where the company operates. The
continual uncertainty over Brexit, for example, may continue to delay
advertising spending by potential clients which may have a negative effect on
the demand for services or the delay of campaigns which could affect the
revenues of the company.
Potential unrecorded legacy liabilities
There were significant legacy issues, some of which were not known to the new
management upon taking control of the business. A review of the true creditor
position of the company was taken along with an assessment made of how to
restructure the company's debts and its subsidiaries. There were and are a
number of subsidiaries that had incurred significant debts under the old
business. The management negotiated with creditors to substantially reduce the
debt position of PLC. The directors believe it is highly unlikely that there
are any material unknown liabilities of Iconic Labs Plc. In making this
statement, the directors have placed particular reliance on the public
announcement prior to the commencement of the Iconic Labs business that the
company had been recapitalised. This prompted a considerable number of
creditors to come forward and the directors consider it unlikely that any
material creditor would not have sought repayment at that stage. In addition,
the directors worked with the former Widecells Finance Controller to conduct a
forensic exercise to assess and list all potential liabilities arising from
the former business activity. This process was carried out was extremely
thorough, took place over several months and involved the senior management
team. The Group has received legal and professional advice at every stage and,
whilst there is a risk of unrecorded liabilities, the Board is fully confident
that it is in control of the liabilities and any processes required to manage
them.
The current status of the old Widecells subsidiaries is as
follows:
• Widecells Limited - Has entered liquidation process; Antony Batty and Co
appointed liquidator
• WideAcademy - Dormant
• Widecells Espana - Has entered liquidation process. DIRECTORSHIP CIBELES,
SL, a subsidiary of Gestiona-t, appointed liquidator.
• Widecells Portugal - Following the decision to cease operations and in the
absence of local directors the UK Board have been taking legal advice and are
in the process of instructing a local liquidator to formalise the cessation of
this company and discharge any identified obligations.
• Cellplan Limited - Shareholder of Cellplan International LDA. Dormant
• Widecells International Limited - Holding Company
Financial Risk Management
The Board monitors the internal risk management function across the Group and
advises on all relevant risk issues. There is regular communication with
internal departments, external advisors and regulators. The Group's policies
on financial instruments and the risks pertaining to those instruments are set
out in the accounting policies in note 1.
FINANCIAL REVIEW - LEGACY STEM CELL AND PROSPECTIVE INSURANCE BUSINESS
During the period, the stem cell and insurance business earned income of £nil
(2019 - £21,081). However a number of potential liabilities included in the
2019 financial period have been realised, leading to a write back of
administrative expenses totalling £450,062 in the 2020 financial year (2019 -
£3,472,771 administrative expense were incurred) and impairment of
non-current assets of £nil (2019 - £629,616). The overall impact of the
legacy business on the Group's results for the year is a profit on
discontinued activities of £450,062 (2019 - £4,113,879) and an increased
finance cost relating to conversion penalties and make whole settlements of
£349,380 (2019 - £1,814,563).
FINANCIAL REVIEW - MEDIA AND TECHNOLOGY BUSINESS
In March 2019, the media and technology business was launched. As the launch
took place only a few months prior to the end of the prior financial period,
no revenues arose relating to this business prior to 30 June 2019. Revenues
and other operating income generated in the current financial year totalled
£132,303. Since the balance sheet date, the Company has entered into several
further management service contracts, most notably in respect of JOE and Her
Media. These have now increased base monthly recurring revenues to £125,000.
The administration expenses relating to the media and technology business
totalled £2,357,366 (2019 - £327,902) in the year. However, within those
administration expenses there are approximately £1,000,000 of expenses
relating to the financing arrangements for the Company and legal and
professional fees. Actual operating expenses were therefore approximately
£1,600,000. Further the largest element of that sum was salaries, and the
number includes more than £200,000 of salaries, fees and expenses due to
senior employees and directors that have been accrued but are unpaid. The
directors and senior employees have since the balance sheet date continued to
defer part of their salaries, fees and expenses. The Company hopes that with
increased revenues and the recent refinancing of the Company that it may be
able to resume full salary payments early in 2021. The overall loss
attributable to the new business for the period totalled £2,840,183 (2019 -
£2,146,515). The loss includes a redemption penalty of £349,380 (2019 -
£1,814,563) on convertible loan notes and make whole settlements. At the
balance sheet date, the Group had assets totalling £360,722 (2019 - £38,612)
and liabilities totalling £3,473,388 (2019 - £1,855,725).
Key Performance Indicators:
The business is focused on the areas of cash management and operating results.
The Company has identified the following key performance indicators which the
directors will use to measure success against the business plan:
• Gross revenue growth
• EBITDA growth
• GP%
• % Client retention
• Publisher network (% audience size growth)
• Publisher page views (% growth)
FUTURE DEVELOPMENT AND STRATEGY
Market Trends
The directors believe that years of sustained technological innovation across
the globe has fundamentally changed consumer buying habits; the way they
interact with each other; and the way they consume content. This sets the
scene for a fundamentally changed market; not only for content producers and
publishers; commerce and advertisers; but for all. This change has been driven
by, and capitalised upon, by key technological companies, primarily focused on
online advertising and other internet related services, software and hardware
but have a much wider reaching impact on our everyday lives. Google, Facebook,
Amazon, Apple, Microsoft, Samsung, Snapchat, Netflix & Tencent are the
notable companies in the space, at present, with entire business ecosystems
reliant on their services and key influence and impact in policy and
regulation at the highest level.
Digital Publishing
The demand for online content and entertainment services is increasing with
people spending more time online and consuming more content than ever before.
Social media usage across the UK continues to increase, alongside overall
internet use which has doubled in the last 10 years from 12 hours a week in
2007 to 24 hours a week in 2017. Despite sizeable and staunch audiences it is
clear traditional content creators have failed to adapt to the technological
changes and effectively monetise on digital distribution channels and
platforms. Social Media platforms such as Facebook and Twitter have
transformed the way content in particular news is discovered, disseminated,
and digested. In this new era a key component in building an engaged audience
and effectively monetising it, is understanding and navigating the
ever-changing social media landscape.
Advertising
As audiences continue to shift online, so too does advertising revenue, as the
WARC Expenditure report states, "at £13.4 billion in 2018, it now accounts
for 57% of the UK's total advertising expenditure of £23.6 billion." Behind
search, the largest slice of online advertising is display advertising, and an
increasing amount is spent on social media, with spend on social platforms
increasing more than three-fold from £861m in 2015 to £3 billion in 2018.
Company Strategy
The directors believe that there is a huge opportunity in the publishing and
advertising market because of technological and structural changes. The
directors consider a staged roll-out of complementary divisions that work
together and as standalone propositions will allow the Company to take
advantage of a number of industry trends with the scale to service the biggest
clients but also the flexibility to work with a variety of partners in the
industry. The directors believe the planned structure of Iconic labs is an
example of a new operating model of that will be highly desirable to partners
and clients, and critical to establishing a successful modern media company.
Online Media Brands and Complimentary Agency and Consultancy Services
The first phase of the company's strategy has been launching the agency and
consultancy offering. This was formally launched in the early 2020 and has
achieved a very promising reception. This is a product that involves a
consulting approach to advise clients on their businesses but also with the
agency capabilities to actually deliver campaigns and creative services in
line with a client's needs. The directors believe that the Company's
consultancy offering brings a unique benefit to clients due to the company's
access to the data, audience and the content capabilities of the Groups'
online media brands.
Additional Business Divisions:
The directors will look to add in additional business divisions and revenue
streams over time:
• E commerce - Work in collaboration with online media brands division and
utilise the feedback loops to inform production and sale of consumer products
• Content Studio - Create original video formats that are piloted on social
media and further developed for viewing on TV and platforms such as Netflix
• Content Licensing - License User Generated Content ('UGC') created by
users who have posted it to social media and resell brands, & production
houses internationally
• Tech Product Development - Use insights gained from owned and operated
media audiences to drive development of innovative & forward-thinking
products
GOING CONCERN
The board's assessment of going concern and the key considerations thereto are
set out in the Corporate Governance Report in the Accounts.
CAPITAL STRUCTURE
Details of the ordinary shares of the Company are shown in note 14. The
Company has a class of ordinary shares of £0.00001 per share and a class of
deferred shares of £0.00249 per share, both of which carry no fixed income.
Each holder of ordinary shares is entitled to receive the Group's Annual
Report and audited financial statements, to attend and speak or appoint
proxies and to exercise voting rights at the general meetings of the Company.
The Company's Articles of Association (the 'Articles') do not have any
specific restrictions on the transfer of shares, restrictions on voting rights
nor are there limitations on the holding of such shares. The Board are not
aware of any agreement between holders of the Company's shares that may result
in restrictions on the transfer of securities or on voting rights. No person
has any special rights of control over the Company's share capital and all
issued shares are fully paid. The appointment and replacement of directors and
the powers of the directors are governed by the Articles, the UK Corporate
Governance Code, the Companies Act 2006 and related legislation. The powers of
the directors are described in the Corporate Governance Report on pages 10 to
16 of the Accounts.
ENVIRONMENTAL ISSUES
As far as the directors are aware the Company's business activates not cause a
direct and disproportionate adverse effect on the environment.
EMPLOYEE MATTERS
The current business is model is dependent on the current employees skills and
although the directors believe this will decrease over time the Company uses
all reasonable endeavours to keep the employees safe, incentivised and
motivated. As of 30 June 2020 the Company had 6 FTE's of whom 5 were male and
1 female. There were 3 male and 1 female senior members of the Board.
Social, community and human rights issues
The Group seeks to achieve the highest ethical standards and behaviours in
conducting its business, with integrity, openness, diversity and inclusiveness
being high priority from the Board to senior management and throughout the
workforce. We have adopted a formal equal opportunities policy which is
contained in our employee handbook. The aim of the policy is to ensure no job
applicant, employee or worker is discriminated against either directly or
indirectly on the grounds of race, sex, disability, sexual orientation, gender
reassignment; marriage or civil partnership; pregnancy or maternity; religion
or belief or age.
SECTION 172 STATEMENT
Section 172 of the Companies Act 2006 requires Directors to take into
consideration the interests of stakeholders and other matters in their
decision making. The Directors continue to have regard to the interests of the
Company's employees and other stakeholders, the impact of its activities on
the community, the environment and the Company's reputation for good business
conduct, when making decisions. In this context, acting in good faith and
fairly, the Directors consider what is most likely to promote the success of
the Company for its members in the long term. We explain in this annual
report, and below, how the Board engages with stakeholders. Relations with key
stakeholders such as employees, shareholders and suppliers are considered in
more detail on page 9. The Directors are fully aware of their responsibilities
to promote the success of the Company in accordance with section 172 of the
Companies Act 2006. To ensure the Company was operating in line with good
corporate practice, all Directors received refresher training on the scope and
application of section 172 in writing. This encouraged the Board to reflect on
how the Company engages with its stakeholders and opportunities for
enhancement in the future and was considered at the Company's summer board
meeting in June. A section 172 notice has been included with the board papers
since this date. As required, the Senior Legal Counsel and Company Secretary
will provide support to the Board to help ensure that sufficient consideration
is given to issues relating to the matters set out in s172(1)(a)-(f). The
Board regularly reviews the Company's principal stakeholders and how it
engages with them. This is achieved through information provided by management
and also by direct engagement with stakeholders themselves. We aim to work
responsibly with our stakeholders, including suppliers. The Board has recently
reviewed its anti-corruption and anti-bribery, equal opportunities and
whistleblowing policies.
The key Board decisions made in the year are set out below:
Significant events/decisions Key s172 matter(s) affected Actions and impact
Acquisition of GayStarNews Shareholders, employees • Decisions were made by the executive team in
consultation with the Board.
• The Company's product offering has been
diversified to generate more revenue from
programmatic revenue and branded content
deals.
Issuance of Prospectus and Shareholders, employees • Decisions were made by the executive team in
Financing Agreement consultation with the Board after carefully
considering the Group wide impact.
• The Company secured funding for working
capital and also formed part of the Company
ambition to work towards a clean balance sheet.
Management Services Agreement Shareholders, employees • Decisions were made by the executive team in
regarding consultation with the Board.
TheLondonEconomicNewspaper • The new contract provided the Company with a
new revenue source but one which relies on the
skills and existing experience of the Company in
running digital publishers.
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2020
18 Month period ended
Year ended
30 June 30 June
2020 2019
Notes £ £
Continuing operations
Revenue 107,303 -
Gross profit 107,303 -
Administrative expenses 3 (2,357,366) (327,902)
Direct costs incurred in connection with EHGOF financing facility
3 (262,000)
Other operating income 25,000
Operating loss (2,487,063) (327,902)
Finance costs 6 (353,120) (1,818,613)
Loss before taxation (2,840,183) (2,146,515)
Taxation 7 - -
Loss for the period from continuing operations (2,840,183) (2,146,515)
Profit/(loss) for the period from discontinued operations 5 450,062 (4,113,879)
Loss for the period (2,390,121) (6,260,394)
Total comprehensive loss for the period (2,390,121) (6,260,394)
Loss per ordinary share 8
Basic and diluted (pence)
- from continuing operations (0.11) (0.75)
- from discontinued operations 0.00 (0.01)
The loss for the year and total comprehensive loss for the year are wholly
attributable to the equity holders of the parent.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2020
30 June 30 June
2020 2019
Notes £ £
Assets
Non-current assets
Property, plant and equipment 9 22,590 7,093
Intangible assets 10 21,600 -
Total non-current assets 44,190 7,093
Current assets
Trade and other receivables 12 136,135 -
VAT recoverable 12 - 15,922
Cash and cash equivalents 13 180,397 15,597
316,532 31,519
Total assets 360,722 38,612
Equity
Share capital 14 4,138,936 3,498,257
Share premium 15 5,578,789 5,124,900
Retained deficit 15 (12,830,391) (10,440,270)
(3,112,666) (1,817,113)
Liabilities
Non-current liabilities
Loans and borrowings 17 - 11,141
- 11,141
Current liabilities
Trade and other payables 16 1,699,794 1,736,306
Loans and borrowings 17 1,739,594 68,278
Provisions 18 34,000 40,000
3,473,388 1,844,584
Total liabilities 3,473,388 1,855,725
Total equity and liabilities 360,722 38,612
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
Share-based payments reserve
Share capital Share premium Merger reserve Translation Retained deficit Total equity
reserve
£ £ £ £ £ £ £
Balance at 31 December 2017 162,053 3,460,854 (185,728) (32,798) 331,975 (4,305,132) (568,776)
Loss for the period - - (6,260,394) (6,260,394)
- - -
Total comprehensive loss for the period
- - (6,260,394) (6,260,394)
- - -
Transactions with owners:
Share-based payment charges - - - - 11,807 - 11,807
Issue of shares 3,336,204 1,894,621 - - - - 5,230,825
Costs of (230,575) - - - - (230,575)
placings
-
Total contribution by and
distribution to owners 3,336,204 1,664,046 - - 11,807 - 5,012,057
Transfer between reserves - - 185,728 32,978 (343,782) 125,256 -
Balance at 30 June 2019 3,498,257
5,124,900
- - -
(10,440,270) (1,817,113)
Loss for the - - - - (2,390,121)
year (2,390,121)
-
Foreign exchange translation - - - - -
- -
Total comprehensive loss
for the - - - - (2,390,121)
year (2,390,121)
-
Transactions with owners:
Share-based payment charges - - - - -
- -
Issue of shares 453,889 - - 1,094,568
640,679 - -
Total contribution by and
distribution to owners 640,679 453,889 - - 1,094,568
- -
Balance at 30 June 2020 4,138,936
5,578,789
- - -
(12,830,391) (3,112,666)
The currency translation reserve comprised all foreign currency adjustments
arising from the translation of the
financial statements of the foreign operation. During the period to 30 June 2019, the Board decided that a number
of the reserves related to historic balances are no longer relevant given the
changes in the group during the period. The merger reserve, translation
reserve and share-based payment reserve were transferred to retained
deficit in the period ended 30 June 2019.
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2020
Year ended Period ended
30 June 30 June
2020 2019
Notes £ £
Cash flows from operating activities
Total comprehensive loss for the period (2,390,121) (6,260,394)
(Profit)/Loss from discontinued operations 5 (450,062) 4,137,879
Depreciation 3 2,503 417
Finance costs 6 353,120 1,818,613
(2,484,560) (303,485)
Increase in trade and other receivables (120,213) -
(Decrease)/increase in trade and other payables 1,212,679 66,000
(Decrease) in provisions (6,000) -
Operating cash flows used by continuing activities (1,398,094) (237,485)
Operating cash flows generated from/(used by) discontinued operations
(204,561) (3,241,618)
Net cash used in operating activities (1,602,655) (3,479,103)
Cash flows from investing activities
Purchase of property, plant and equipment 9 (18,000) (7,510)
Purchase of intangible assets 10 (21,600) -
Investing cash flows used by continuing activities (39,600) (7,510)
Investing cash flows used by discontinued operations - (23,919)
Net cash used in investing activities (39,600) (31,429)
Cash flows from financing activities
Interest paid 6 (353,120) (604,050)
Repayment of leases (47,438) (88,747)
Loan from director 16,613 -
Repayment of loan from director (4,340) -
Issue of share capital - 2,060,950
Costs of issuing shares - (230,575)
Issue of convertible loan notes 2,195,000 2,700,000
Financing cash flows from continuing activities 1,807,055 3,837,578
Financing cash flows used by discontinued operations - (429,490)
Net cash flows from financing activities 1,807,055 3,408,088
Net increase/(decrease) in cash and cash equivalents 164,800 (102,444)
Cash and cash equivalents at beginning of period 15,597 118,041
Effect of foreign exchange rate changes - -
Cash and cash equivalents at period end 13 180,397 15,597
Company Statement of Financial Position
AS AT 30 JUNE 2020
30 June 31 December
2020 2019
Notes £ £
Non-current assets
Property, plant and equipment 9 4,590 7,093
Investments 11 2 -
Non-current assets 4,592 7,093
Current assets
Trade and other receivables 12 9,116 -
Cash and cash equivalents 13 144,138 4,339
153,254 4,339
Total assets 157,846 11,432
Equity
Share capital 14 4,138,936 3,498,257
Share premium 15 5,578,789 5,124,900
Share-based payment reserve - -
Retained deficit 15 (12,524,595) (10,186,141)
(2,806,870) (1,562,984)
Non-current liabilities
Loans and borrowings 17 - 11,141
- 11,141
Current liabilities
Trade and other payables 16 1,225,122 1,494,997
Loans and borrowings 17 1,739,594 68,278
2,964,716 1,563,275
Total liabilities 2,964,716 1,574,416
Total equity and liabilities 157,846 11,432
The Company's loss and total comprehensive loss for the year ended 30 June 2020 was £2,338,454 (Period to 30 June
2019: £7,177,280).
Company Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
Share-based payments reserve
Share capital Share premium Retained deficit Total equity
£ £ £ £ £`
Balance at 31 December 2017 162,053 3,460,854 331,975 (3,352,643) 602,239
Loss for the period - - - (7,177,280) (7,177,280)
Total comprehensive loss for period - - - (7,177,280) (7,177,280)
Transactions with owners
Share-based payment charge - - 11,807 - 11,807
Issue of shares 3,336,204 1,894,621 - - 5,230,825
Cost of placings - (230,575) - - (230,575)
Total contributions by and distributions to owners 3,336,204 1,664,046 11,807 - 5,012,057
Balance at 30 June 2019 3,498,257 5,124,900 - (10,186,141) (1,562,984)
Loss for the year - - - (2,338,454) (2,338,454)
Total comprehensive loss for year - - - (2,338,454) (2,338,454)
Transactions with owners
Share-based payment charge - - - - -
Issue of shares 640,679 453,889 - - 1,094,568
Cost of placings - - - - -
Total contributions by and distributions to owners 640,679 453,889 - - 1,094,568
Balance at 30 June 2020 4,138,936 5,578,789 - (12,524,595) (2,806,870)
FOR THE YEAR ENDED 30 JUNE 2020
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union ("adopted IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing
their accounts under adopted IFRS.
On 18 March 2019, a new Board was appointed to lead the Group in a new
direction. In order to give the new Board the necessary time to prepare the
financial statements and resolve legacy issues that they inherited from their
predecessors, the decision was made to extend the prior accounting period of
the Group by 6 months from 31 December to 30 June. The comparative financial
statements cover the 18 month period from 1 January 2018 to 30 June 2019. As
these financial statements cover a 12 month period, they are not entirely
comparable to the previous period.
These consolidated financial statements are presented in Pounds Sterling ('GBP'), which is considered by the directors to be
the functional and presentation currency.
The Company's individual statement of comprehensive income has been omitted
from the Group's annual financial
statements having taken advantage of the exemption not to disclose under Section 408(3) of the Companies Act 2006.
Going concern
The Directors consider it is appropriate to prepare the Group and Parent
Company's financial statements on the basis that
they are able to continue to operate for a period of at least 12 months from the date of approving these financial statements.
As noted in the Strategic Report on page 7 when making this assessment the directors have prepared forecasts which
consider the expected level of expenditure over the course of the review period together with the anticipated revenues
arising from the new business and acquisitions completed shortly after the
period end. Key to the compilation of the
forecasts central to the Directors' assessment of going concern are the following factors:
• The company is at an early stage of development and is not
currently profitable. Despite strong confidence in its
business plan and forecasts, the Directors recognise there is a risk that it may require more funding but not be able to
find agreement with a funding partner. The Company completed a placing in
November 2020 which provided new funds via equity and debt to secure the
medium-to-long term future of the business. As well as the existing
management services agreements, the Company also signed a significant contract with Greencastle MM LLP, a digital
media business, the proceeds of which allow the Company to continue to operate as a going concern.
• The Company has, like most, been affected by the COVID-19
pandemic and has lost some revenue as discussed above however the Company is
confident that its risk to the pandemic has been mitigated. The Company has
completed fundraising which will reduce the reliance of the Company on
revenue. More importantly, the overriding business model is to procure or
manage digital publishers and the Company has not seen, nor does it foresee, a
decrease in online audiences or a behavioural change as a result of the
pandemic. The Company therefore has
confidence in its ability to continue to recognise revenue. It is important to note that advertising as an industry will be
affected and there has been a decrease in certain media budgets although
through its management services
agreements, the Company has still been able to secure sizeable contracts despite this.
While the Directors remain satisfied that the assumptions they have used in the forecasts to assess that the Group and Parent
Company are a going concern, there does remain a fundamental uncertainty
around the future funding, should it be required.
Notes to the Consolidated Financial Statements
Basis of consolidation
The Group financial statements consolidate those of the parent company and all of its subsidiaries. Subsidiaries are entities
controlled by the Group. The parent company controls a subsidiary if it has power over the investee to significantly direct
the activities, exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power
over the investee to affect the amount of the investors' returns. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
The results of subsidiaries acquired or disposed in the period are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
The results and net assets of subsidiaries whose accounts are denominated in
foreign currencies are retranslated into Sterling at average rates and
year-end rates respectively.
Where the Group has the power to participate in (but not control) the
financial and operating policy decisions of another
entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at
cost. Subsequently associates are accounted for using the equity method, where
the Group's share of post-acquisition
profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other
comprehensive income (except for losses in excess of the Group's investment in the associate unless there is an obligation
to make good those losses).
Business combinations
The Group applies the acquisition method of accounting for business combinations. The consideration transferred by the
Group to obtain control of a subsidiary is calculated as the sum of the
acquisition date fair values of assets transferred,
liabilities incurred and equity interests issued by the Group. Acquisition costs are expensed as incurred.
Revenue recognition
Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for the provision of
it's services to the client, net of discounts and sales taxes.
For the year ended 30 June 2020, the Group used the five-step model as prescribed under IFRS15 on the Group's revenue
transaction. This included the identification of the contract,
identification of the performance obligations, determination of the
transaction price, allocation of the transaction price to the performance
obligations and recognition of revenue. The
point of recognition arises when the Group satisfies the performance obligation by transferring control of a promised service
to the customer which could occur over time or at a point in time. Provision
is made for all foreseeable losses where the Company believes that a contract
will deem to be unprofitable, or a client fails to remunerate the Company for
services provided.
During the year, 84% of total revenue arose from the contract with one
customer.
Sale of Services
During the year the company entered into a contract to deliver management services to a digital and social publisher. With
regards to the provision of said services, a price is agreed in advance and these services are provided over the term of the
contract. Revenue is recognised on a straight line basis over the term of the
contract and the client is billed monthly in
arrears. The contract also contains a variable element of revenue. The company is entitled to a profit share on a rolling
3 month basis. The company would invoice the customer for the profit share on a quarterly basis. The income would be
recognised in the period that the profit was made by the customer. Any
profit share due for the period which was not
invoiced until after the period end will be included in accrued income.
Revenue that has been billed to the client, but which is yet to be paid is
accrued within trade receivables.
Discontinued operations
Discontinued operations represent major operations of the business that the Group have decided to terminate. The post-tax
profit or loss of the discontinued operations is presented as a single line on the face of the consolidated income statement.
The presentation of discontinued operations within prior periods is restated
to reflect consistent classification of discontinued operations across all
periods presented.
1. ACCOUNTING POLICIES (continued) Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate
at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in the
statement of comprehensive income.
Retirement benefit costs
The Group operates defined contribution retirement benefit scheme. Payments to these schemes are charged as an expense
in the period to which they relate. The assets of the scheme are held
separately from those of the Group in independently administered funds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes
items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to control the
reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is measured on an undiscounted basis using the tax rates that are
expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates
to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Property, plant and equipment
Items of plant and equipment are initially recognised at cost. As well as
purchase price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment, so as to write off their carrying value over their
expected useful economic lives. It is provided at the following rates:
Plant & machinery - 33% straight line
basis
Leasehold improvements - 33% straight line basis
Computer hardware - 33% straight line basis
Intangible fixed assets
Intangible assets comprise capitalised computer software which are initially
recognised at cost.
Amortisation is provided so as to write off their carrying value over their expected useful economic lives. It is provided at the
following rates:
Computer software -
33% straight line basis
Intangible assets also comprise intellectual property which is initially measured at cost. The useful economic life of the asset
is considered to be such that any amortisation charge would be immaterial to
the financial statements. The directors have therefore decided that an annual
impairment review rather than an systematic amortisation is more appropriate
for this asset.
Impairment of non-current assets
At each reporting date the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Financial assets
Financial assets are recognised when the Group becomes a party to the
contractual provisions of the financial asset.
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the
financial asset and substantially all of the risks and rewards are transferred.
The financial assets of the Group are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets are classified into the following categories:
-
Amortised cost
- Fair value
through profit or loss (FVTPL)
-
Fair value through other comprehensive income (FVOCI) The
classification is determined by both:
-
The Group's business model for managing the financial asset
-
The contractual cash flow characteristics of the financial asset
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs
and finance income.
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
-
They are held within a business model whose objective is to hold the financial assets and collect its contractual cash
flows
-
The contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest
on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted
where its effect is immaterial. The Group's cash and cash equivalents, trade and other receivables fall into this category.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest
rate. Losses are recognised in profit or loss and reflected in an allowance against trade and other receivables. When an event
occurring after the impairment was recognised causes the amount of impairment
loss to decrease, the decrease in impairment loss is reversed through profit
or loss.
1. ACCOUNTING POLICIES (continued)
Trade and other receivables
The group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance
as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for
default at any point during the life of the financial instrument. In
calculating, the Group uses its historical experience,
external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade and other receivables on a collective
basis.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. These are
initially and subsequently recorded at fair value.
Financial liabilities
The Group's principal financial liabilities include trade and other payables, leases and convertible debt none of which would
be classified as fair value through profit or loss.
Therefore, these financial liabilities are classified as financial liabilities at amortised cost, as defined below:
Other financial liabilities include the following items:
• Borrowings are initially recognised at fair value net of
any transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest
method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of
the liability carried in the statement of financial position. Interest
expense in this context includes initial transaction
costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
•
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
Convertible loan notes
Convertible loan notes issued by the Group comprise loan notes that can be converted to ordinary shares at the option of
the holder.
The liability component of the convertible loan notes is recognised on the
date of inception and is determined using a market interest rate for an
equivalent non-convertible instrument. The equity element is recognised as the
difference
between the value of the financial instrument as a whole and the value of the liability component. Any directly attributable
transaction costs are allocated to the equity and liability components in proportion to their initial carrying amounts.
Subsequently, the liability component of a compound financial instrument is
measured at amortised cost using the effective interest rate method.
Leased assets
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease
term of 12 months or less, or for leases of low-value assets. The payments associated with these leases are recognised in
profit or loss on a straight-line basis over the lease term.
Share capital
The group's ordinary shares are classified as equity instruments.
New standards adopted
The following new and revised Standards and Interpretations have been issued and are effective for the current financial year
of the Group:
IFRS 16 was adopted on 1 July 2019 without restatement of comparative figures. No transitional adjustments were required
upon adoption.
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided not to adopt early:
•
AS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material) (effective 1 January 2020)
•
IFRS 3 Business Combinations (Amendment - Definition of Business) (effective 1 January 2020)
• Revised Conceptual Framework for Financial
Reporting (effective 1 January 2020) Amendments to IFRS 9, IAS 39 and IFRS 7:
Interest Rate Benchmark Reform (effective 1 January 2020)
• Amendments to IAS 1: Classification of
Liabilities as Current or Non-current (effective 1 January 2022).
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
Significant management judgements are as follows:
Legacy Issues
• Due to the change in the Board, key management
and operations of the Group that took place in March 2019, it is possible that
there are unrecorded liabilities relating to the now discontinued activities
about which the Board are
unaware. The Board have undertaken, to the extent possible, a thorough review of the creditor position of the Parent
Company and the Group, with a core focus on the legacy business operations.
Notwithstanding the Board's assessment, there is a residual risk unforeseen
liabilities may arise. However, due to the publicity around the new
business, shutting down the old one and drawing down on the EHGOS facility, a number of claims were made against
the company. Since the period end, no additional creditors have made a claim
against the Group or the Parent Company. While it is important to consider
these liabilities in these accounts the Board have however made a
judgment that the risk of material unrecorded actual or contingent liabilities is now more than remote.
•
The Group's former Board under through its Cellplan subsidiary was promoting bespoke stem cell medical insurance
and launched a website to market the product. After due enquiry, the new Board is not aware that any such policies
were issued. There does however remain a residual risk that policies may have been issued. The board consider that
the incidence and financial impact is now more than remote.
3. LOSS FROM OPERATIONS
18 Month period ended
Year ended
30 June 30 June
2020 2019
£ £
The loss for the period is stated after charging:
Depreciation 2,503 417
Auditors remuneration - audit services 40,000 42,000
Auditors remuneration - corporate finance services 63,500 -
Expenses by nature £ £
Legal and professional fees 632,978 -
Consultancy fees 213,098 -
Other supplies and external services 359,101 83,979
Staff costs 999,686 243,506
Total operating expenses 2,204,863 327,485
Depreciation, amortisation and impairment of assets 2,503 417
Impairment of loans 150,000 -
Total administrative expenses 2,357,366
Direct costs incurred in connection with EHGOF financing facility 262,000 -
2,619,366 327,902
4. STAFF COSTS
18 Month
Year ended period ended
30 June 30 June
2020 2019
£ £
Staff costs (including directors) comprise:
Wages and salaries 905,958 1,473,681
Defined contribution pension cost 25,370 53,315
Social security contributions and similar taxes 68,358 144,073
Share-based payment expense - 11,807
999,686 1,682,876
Less: staff costs relating to discontinued activities - (1,439,370)
Staff costs relating to continuing activities 999,686 243,506
4. STAFF COSTS (continued)
The reason for the difference between the actual tax charge for the period and the standard rate of corporation tax in the
United Kingdom applied to losses for the period are as follows:
18 Month period ended
Year ended
30 June 30 June
2020 2019
Employee numbers £ £
The average number of staff employed by the group during the period amounted
to:
General and administration 7 15
Less: staff involved in discontinued operations - (8)
7 7
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities, and are the directors of the company.
Remuneration of the directors and highest paid director is shown in the Report
of the remuneration committee on page 20 in the Accounts.
5. DISCONTINUED OPERATIONS
In March 2019 the Board made the decision to discontinue the stem cell research operations. The operating loss until the
date of discontinuation of the operations is summarised as follows:
Year ended 18 Month
period ended
30 June 30 June
2020 2019
£ £
Revenue - 21,081
Administrative expenses - write back of creditor balances 450,062 (3,472,771)
Impairment of non-current assets - (629,616)
Operating profit/(loss) 450,062 (4,081,306)
Finance income - 2,174
Finance expense - (31,747)
Profit/(loss) before taxation 450,062 (4,110,879)
Taxation - (3,000)
Profit/(loss) for the period 450,062 (4,113,879)
Other comprehensive expense - -
Total comprehensive profit/(loss) for the period 450,062 (4,113,879)
6. FINANCE COSTS
18 Month period ended
Year ended
30 June 30 June
2020 2019
£ £
Finance costs
Penalties on redemption of convertible loan notes 277,380 1,814,563
Penalties on make whole agreement 72,000 -
Interest on leases 3,740 4,050
Total finance expense 353,120 1,818,613
7. TAXATION
18 Month
Year ended period ended
30 June 30 June
2020 2019
£ £
Current tax
Total current tax - -
The reason for the difference between the actual tax charge for the period and the standard rate of corporation tax in the
United Kingdom applied to losses for the period are as follows:
Year ended 18 Month
period ended
30 June 30 June
2020 2019
£ £
Loss before taxation (2,390,121) (6,260,394)
Tax using the parent company's domestic tax rate of 19% (2019: 19%) (454,123) (1,189,475)
Effects of:
Unrelieved tax losses and other deductions arising in the period 383,779 720,478
Expenses not deductible for taxation purposes 70,344 468,997
Total tax charged in the income statement - -
The deferred taxation of £1,522,231 (2019: £1,178,850) attributable to losses arising in the year and for losses carried
forward has not been recognised in these accounts due to the uncertainty over whether this will be recovered.
8. LOSS PER SHARE
18 Month period ended
Year ended
30 June 30 June
2020 2019
pence pence
Numerator
Loss for the period (2,371,776) (6,260,394)
Denominator
Weighted average number of ordinary shares used in basic EPS 2,500,412,604 282,378,357
Effects of:
Employee share options - 2,808,454
Weighted average number of ordinary shares used in diluted EPS 2,500,412,604 285,186,811
Basic and diluted loss per share (pence)
- continuing operations (0.11) (0.75)
- discontinued operations 0.00 (0.01)
9. PROPERTY, PLANT AND EQUIPMENT
GROUP Plant & Leasehold Computer
Machinery Improvements Hardware Total
£ £ £ £
Cost
Balance at 1 January 2018 345,490 185,849 61,948 593,287
Additions 10,282 - 21,147 31,429
Balance at 30 June 2019 355,772 185,849 83,095 624,716
Additions 18,000 - - -
Balance at 30 June 2020 373,772 185,849 83,095 624,716
Amortisation
Balance at 1 January 2018 43,868 63,201 19,627 126,696
Charge for the period - - 417 417
Impairment in the period 311,904 122,648 55,958 490,510
Balance at 30 June 2019 355,772 185,849 76,002 617,623
Charge for the year - - 2,503 2,503
Balance at 30 June 2020 355,772 185,849 78,505 620,126
Carrying amounts
Balance at 30 June 2020 18,000 - 4,590 22,590
Balance at 30 June 2019 - - 7,093 7,093
9. PROPERTY, PLANT AND EQUIPMENT (continued)
Right of use asset
The group does not lease any buildings or equipment which are required to be
disclosed under IFRS 16.
COMPANY Computer Hardware
Total
£ £
Cost
Balance at 1 January 2018 62,690 62,690
Additions 14,231 14,231
Balance at 30 June 2019 76,921 76,921
Additions - -
Balance at 30 June 2020 76,921 76,921
Amortisation
Balance at 1 January 2018 20,213 20,213
Charge for the period 417 417
Impairment in period 49,198 49,198
Balance at 30 June 2019 69,828 69,828
Charge for the year 2,503 2,503
Balance at 30 June 2020 72,331 72,331
Carrying amounts
Balance at 30 June 2020 4,590 4,590
Balance at 30 June 2019 7,093 7,093
10. INTANGIBLE ASSETS
Intellectual Computer
Property software Total
£ £ £
Cost
Balance at 1 January 2018 - 139,106 139,106
Additions - - -
Balance at 30 June 2019 - 139,106 139,106
Additions 21,600 - 39,600
Balance at 30 June 2020 21,600 139,106 178,706
Amortisation
Balance at 1 January 2018 - - -
Impairment - 139,106 139,106
Balance at 30 June 2019 - 139,106 139,106
Impairment - - -
Balance at 30 June 2020 - 139,106 139,106
Carrying amounts
Balance at 30 June 2020 21,600 - 21,600
Balance at 30 June 2019 - - -
11. INVESTMENTS
COMPANY
30 June 30 June
2020 2019
£ £
Investments in subsidiaries 2 -
Subsidiaries
Registered Country of Nature of
Entity office address incorporation business Notes
WideCells International Limited Waverley House, 9 Noel Street,
London, W1F 8GQ United Kingdom Holding company (c)
WideCells Portugal SA Rua Da Casa Branca,
97 Coimbra 3030-109, Portugal Portugal Trading company (a)
WideAcademy Limited Waverley House, 9 Noel Street,
London, W1F 8GQ United Kingdom Dormant company (a)
CellPlan Limited 27/28 Eastcastle Street,
London, W1W 8DH United Kingdom Dormant company (a)
CellPlan International Lda Edificio Tower Plaza Rotunda Eng,
Edgar Cardoso, no. 23, 11 F,
4400-676 Vila Nova de Gaia, Portugal Portugal Dormant company (b)
Iconic Labs UK Limited 27/28 Eastcastle Street, London,
W1W 8DH United Kingdom Trading company (c)
Iconic Labs IP Limited 27/28 Eastcastle Street,
London, W1W 8DH United Kingdom Trading company (c)
Nuuco Media Limited 27/28 Eastcastle Street,
London, W1W 8DH United Kingdom Trading company (d)
Coalition Media Limited 27/28 Eastcastle Street,
London, W1W 8DH United Kingdom Dormant company (f)
Associates
Registered Country of Nature of
Entity office address incorporation business Notes
Medium Channel Media Limited 27/28 Eastcastle Street,
London, W1W 8DH United Kingdom Dormant company (e)
Notes: (a) 100% owned by WideCells International Limited (b) 100% owned
by CellPlan Limited
(c) 100% owned by
Iconic Labs plc (d)
100% owned by Iconic Labs UK Limited
(e) 24% owned by
Iconic Labs plc (f)
50% owned by iconic Labs UK Limited From September 2019, Widecells Limited
has been placed into liquidation.
From November 2019, Widecells Espana has been placed into liquidation.
12. TRADE AND OTHER RECEIVABLE
GROUP 30 June 30 June
2020 2019
£ £
Trade receivables 110,409 -
Other receivables 25,726 -
Trade and other receivables 136,135 -
VAT recoverable - 15,922
Total receivables 136,135 15,922
Trade and other receivables
Trade and other receivables do not contain any impaired assets. The group does not hold any collateral as security and the
maximum exposure to credit risk at the consolidated statement of financial
position date is the fair value of each class of receivable.
Book values approximate to fair value at 30 June 2020 and 30 June 2019.
COMPANY 30 June 30 June
2020 2019
£ £
Other receivables 9,116 -
9,116 -
13. CASH AND CASH EQUIVALENTS
GROUP 30 June 30 June
2020 2019
£ £
Cash at bank available on demand 180,397 15,694
Bank overdraft - (97)
Total cash and cash equivalents 180,397 15,597
COMPANY 30 June 30 June
2020 2019
£ £
Cash at bank available on demand 144,138 4,339
Total cash and cash equivalents 144,138 4,339
14. SHARE CAPITAL
30 June 2020 Number 30 June 2019 Number
£ £
Authorised, allotted and fully paid - classified as equity
Ordinary shares of £0.0025 each - - 1,399,302,698 3,498,257
Ordinary shares of £0.00001 each 6,248,241,015 62,482 - -
Deferred shares of £0.00249 each 1,637,129,905 4,076,454 - -
Total 7,885,370,920 4,138,936 1,399,302,698 3,498,257
At 1 July 2019, the company had 1,399,302,698 Ordinary shares of £0.0025 in
issue. During the period, the company issued 237,837,207 Ordinary shares of
£0.0025 as follows:
•
20 August 2019 - 237,827,207 shares issued in respect of the conversion of convertible loan notes, at par.
On 27 February 2020, 1,637,129,905 Ordinary shares of £0.0025 were sub-divided into 1,637,129,905 Ordinary shares with a
nominal value of £0.00001 and 1,637,129,905 Deferred shares with a nominal value of £0.00249.
During the period, the company issued 4,611,111,110 Ordinary shares of
£0.00001 each as follows:
•
14 April 2020 - 555,555,555 shares issued in respect of a conversion of a convertible band, at a premium of 0.00009p
per share;
•
28 April 2020 - 555,555,555 shares issued in respect of a conversion of a convertible band, at a premium of 0.00009p
per share;
•
28 May 2020 - 800,000,000 shares issued in respect of a conversion of a convertible band, at a premium of
0.00009p per share;
•
28 May 2020 - 500,000,000 shares issued in respect of a conversion of a convertible band, at a premium of 0.00019p
per share;
•
2 June 2020 - 500,000,000 shares issued in respect of a conversion of a convertible band, at a premium of 0.00009p
per share;
•
15 June 2020 - 1,700,000,000 shares issued in respect of a conversion of a convertible band, at a premium of
0.00009p per share.
At 30 June 2020, the company had 6,248,241,015 Ordinary shares of £0.00001 in
issue.
In accordance with the Companies Act 2006, the company has no limit on its authorised share capital.
Pursuant to a resolution passed on 16 June 2016, the Company resolved that:
• The directors be generally authorised in accordance with
the Articles to exercise all powers of the company to allot Ordinary shares,
or grant rights to subscribe for, or convert any security into Ordinary
shares, up to a maximum aggregate nominal value of £500,000, provided always
that such authority conferred on the directors shall (unless previously
renewed, varied or revoked prior to that time) expire at the conclusion of the
company's next annual general meeting or on the date falling 18 months after
the date of the passing of the resolution, whichever is the sooner. The
company may make an offer or agreement which would or might require Ordinary
shares to be allotted
pursuant to the resolution referred to in paragraph 3.6.1 of the listing prospectus before the expiry of their authority to
do so, but allot the Ordinary shares pursuant to any such offer or agreement after that expiry date.
14. SHARE CAPITAL (continued)
• All pre-emption rights in the Articles to be waived:
(i) for the purposes of, or in connection with, the Placing, the issue of
the Conversion shares and the issue of the Warrant shares; (ii) generally for such purposes as the directors may think fit
(including the allotment of equity securities for cash) up to a maximum
aggregate amount of £40,543.54; and (iii) for the
purposes of the issue of securities offered (by way of a rights issue, open offer or otherwise) to existing holders of Ordinary
share, but subject to the directors having a right to make such exclusions or
other arrangements in connection with the offering as they deem necessary or
expedient; (A) to deal with the equity securities representing fractional
entitlements;
and (B) to deal with legal or practical problems in the laws of any territory, or the requirements of any regulatory body; on
the basis that the authorities conferred under the resolution referred to in
paragraph 3.6.2 of the listing prospectus shall (unless previously renewed,
varied or revoked prior to that time) expire at the conclusion of the
company's next annual general meeting or on the date falling 18 months after
the date of the passing of the resolution, whichever is the sooner. The
company may make an offer or agreement which would or might require equity
securities to be issued before the
expiry of its power to do so, but allot the equity securities pursuant to any such offer or agreement after that expiry date.
The holders of Ordinary shares have full voting, dividend and capital distribution rights. The Ordinary shares do not confer
any rights of redemption.
On or following the occurrence of a change of control the receipts from the
acquirer shall be applied to the holders of the Ordinary shares pro rata to
their respective holdings.
Ordinary shares and deferred shares are recorded as equity.
15. RESERVES
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share premium
Amount subscribed for share capita
in excess of nominal value
Retained deficit
All other net gains and losses and transactions
with owners (e.g. dividends) not recognised elsewhere
16. TRADE AND OTHER PAYABLES
GROUP 30 June 30 June
2020 2019
£ £
Trade payables 587,747 609,558
Other payables 620,931 831,587
Accruals 328,713 77,100
Tax and social security 162,403 218,061
Total 1,699,794 1,736,306
Book values approximate to fair values at 30 June 2020 and 30 June 2019.
COMPANY 30 June 30 June
2020 2019
£ £
Trade payables 539,418 381,749
Other payables 592,824 831,587
Accruals 92,880 77,100
Tax and social security - 204,561
Total 1,225,122 1,494,997
Book values approximate to fair values at 30 June 2020 and 30 June 2019.
17. LOANS AND BORROWING
GROUP 30 June 30 June
2020 2019
£ £
Non-Current
Leases - 11,141
Total - 11,141
30 June 30 June
2020 2019
£ £
Current
Leases 31,981 68,278
Directors' loans 12,613 -
Convertible loans 1,695,000 -
Total 1,739,594 68,278
Book values approximate to fair values at 30 June 2020 and 30 June 2019.
During the year, the company issued convertible loan notes totalling £2,155,000. At 30 June 2020, £1,695,000 was still
outstanding and included within loans and borrowings.
Leases are secured on the relevant assets.
COMPANY 30 June 30 June
2020 2019
£ £
Non-Current
Leases - 11,141
Total - 11,141
30 June 30 June
2020 2019
£ £
Current
Leases 31,981 68,278
Directors' loans 12,613 -
Convertible loans 1,695,000 -
Total 1,739,594 68,278
18. PROVISIONS
30 June 30 June
2020 2019
£ £
Provisions brought forward 40,000 -
Provision for costs relating to liquidation of subsidiary undertakings - 40,000
Released against costs in the period (6,000) -
Provisions carried forward 34,000 40,000
As detailed further in the strategic report, last year the Group made the decision to cease stem cell research operations.
This has led to number of subsidiary undertakings being liquidated. A provision for the anticipated costs relating to the
liquidation are included in these financial statements.
19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The group is exposed through its operations to the following financial risks:
•
Credit risk.
•
Market risk.
•
Liquidity risk.
In common with other businesses, the group is exposed to risks that arise from
use of financial instruments. This note
describes the group's objectives, policies and processes for managing those risks and the methods used to measure them.
The principal financial instruments used by the group, from which the
financial instrument risks arise, are as follows:
• Cash and
cash equivalents.
• Trade
and other payables.
• Loans
and borrowings.
A summary of the financial instruments held by category is provided below:
• Financial assets - amortised cost
• Financial liabilities - amortised cost
GROUP 2020 2019
£ £
Cash and cash equivalents 180,397 15,597
Trade and other receivables 136,135 -
Total financial assets - amortised cost 316,532 15,597
2020 2019
£ £
Trade and other payables 1,208,678 1,441,145
Loans and borrowings 1,739,594 79,419
Total liabilities - amortised cost 2,948,272 1,520,564
19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT (continued)
COMPANY 2020 2019
£ £
Cash and cash equivalents 144,138 4,339
Trade and other receivables 9,116 -
Total financial assets - amortised cost 153,254 4,339
2020 2019
£ £
Trade and other payables 1,132,242 1,213,336
Loans and borrowings 1,739,594 79,419
Total liabilities - amortised cost 2,871,836 1,292,755
The Board has overall responsibility for the determination of the group's risk
management objectives and policies.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Groups' competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to the financial instrument fails to meet its contractual
obligations. It is Group policy to assess the credit risk of new customers before entering into contracts.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with high credit status are accepted.
The Group does not enter into derivatives to manage credit risk.
Cash in bank
GROUP 2020 2019
£ £
Cash held at HSBC - S&P Rating AA 176,214 11,444
Cash held at Santander - S&P rating A 4,183 4,153
Total financial assets 180,397 15,597
COMPANY 2020 2019
£ £
Cash held at HSBC - S&P Rating AA 144,138 4,339
Total financial assets 144,138 4,339
19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT (continued) Market risk
Foreign exchange risk
Foreign exchange risk arises because the group has operations in Portugal and Spain, whose functional currency is not the
same as the functional currency of the group. The group's net assets arising from such overseas operations are exposed to
currency risk resulting in gains or losses on retranslation into sterling.
As of 30 June 2020 the group's exposure to foreign exchange risk was not material as the overseas operations had been
discontinued.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Board will continue to monitor long term cash projections and will
consider raising funds as required.
The following table sets out the contractual maturities (representing
undiscounted contractual cash-flows) of financial liabilities:
GROUP Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years
Up to 3 months Over 5 years
2020 £ £ £ £ £
Trade and other payables 1,141,178 67,500 - - -
Leases 28,877 3,104 - - -
Borrowings 1,695,000 12,613 - - -
Total 2,865,055 83,217 - - -
Between 3 and 12 Between 1 and 2 Between 2 and 5
Up to Over 5
3 months months years years years
2019 £ £ £ £ £
Trade and other payables 1,441,145 - - - -
Finance leases 32,127 36,151 11,141 - -
Total 1,473,272 36,151 11,141 - -
More details in regard to the line items are included in the respective notes:
• Trade
and other payables - note 16
• Loans
and borrowing - note 17
At the balance sheet date, the Group had liabilities due for settlement within 3 months of £2,865,055, compared to a cash
balance of £180,397. Since the year end, the Group have renegotiated repayment terms with suppliers and have arranged a
further funding agreement to ensure that operating costs and legacy liabilities can be settled.
£1,695,000 of borrowings re convertible loan notes which can be settled by
way of an issue of share capital.
19. FINANCIAL INSTRUMENTS - RISK MANAGEMENT (continued)
Capital risk management
The group monitors capital which comprises all components of equity (i.e. share capital, share premium and accumulated
deficit).
The directors are aware of the need for the Company to obtain capital in order to fund the growth of the business and are in
continual discussions with providers of both debt and equity capital. The
directors regularly review the status of such discussions and aim at all times
to have offers of capital funding available to the Company which more than
exceed the needs of the Company over the coming period.
In the medium term and in addition to the need to safeguard the entity's
ability to continue as a going concern, the directors are aware of the views
of members on certain financing structures and therefore have set an
objective to move towards a conventional, simplified capital structure based
on equity capital.
Further details about the directors' assessment of the Group's ability to continue as a going concern and the key
considerations there to are set out in the Corporate Governance Report on page 10
of the Accounts.
At present the directors do not intend to pay dividends but will reconsider
the position in future periods, as the group becomes profitable.
Reconciliation of movement in net cash
Repayment
of
Net cash at Loan
notes Loan notes borrowings New loans Net
cash
1 July issued in the
converted in (continuing in
at 30 June
2019 Cash flow period the
period activities) the period 2019
£
£ £
£ £
£ £
Cash at bank and in hand
15,597 164,800
- -
- - 180,397
Borrowings
(79,419) -
(2,195,000) 500,000
47,438 (12,613) (1,739,594)
Total financial liabilities
(63,822)
164,800 (2,195,000) 500,000
47,438 (12,613) (1,559,197)
Net cash at Loan notes Repayment Loan notes Repayment New loans Other Net cash
1 January issued in the of converted in of In non cash at 30 June
borrowings borrowings the period
(continuing (discontinued (discontinued
2018 Cash flow period activities) the period activities) activities) items 2019
£ £ £ £ £ £ £ £ £
Cash at bank and in hand 118,041 (102,444) – – – – – – 15,597
Borrowings (1,065,260) – (2,700,000) 88,747 2,700,000 865,172 (326,583) 358,505 (79,419)
Total financial liabilities (947,219) (102,444) (2,700,000) 88,747 2,700,000 865,172 (326,583) 358,505 (63,822)
20. RETIREMENT BENEFITS
The group operates a defined contribution pension scheme for the benefit of its employees. The assets of the scheme are
to be administered by trustees in funds independent from those of the group.
21. SHARE-BASED PAYMENTS
The group has issued options over ordinary shares under the Widecells Group Limited 2015 approved Enterprise Incentive
scheme. Exercise of an option is subject to continued employment.
The options that existed at the period end are as follows:
2020 2019
Weighted average exercise Weighted average exercise
price price
2020 2019
£ Number £ Number
Outstanding at beginning of accounting period - - 0.0490 3,610,870
Options granted in WideCells Group plc - - - -
Options cancelled in period - - 0.0490 (3,610,870)
Outstanding at period end - - - -
The Black-Scholes valuation model was used setting an implied volatility of 50%, interest rate of 5% and dividend yield of
1%. Each tranche of share options was valued separately using the actual
exercise price. The Group recognised total
expenses of £11,807 related to share based payment transactions in 2019. The expense was included in the results of
discontinued operations.
22. LEASES
The group is leasing the more expensive pieces of laboratory equipment for the
stem cell processing and storage facility in Manchester. The future payments
are as follows:
GROUP Minimum
lease payments Present value
Interest
2020 £ £ £
Not later than one year 31,981 632 31,349
Between one year and five years - - -
Later than five years - - -
31,981 632 31,349
Current liabilities 31,349
Non-current liabilities -
Minimum
lease Present
payments Interest value
2019 £ £ £
Not later than one year 70,978 2,700 68,278
Between one year and five years 11,773 632 11,141
Later than five years - - -
82,751 3,332 79,419
Current liabilities 68,278
Non-current liabilities 11,141
22. LEASES (continued)
COMPANY Minimum
lease
Present
payments Interest value
2020 £ £ £
Not later than one year 31,981 632 31,349
Between one year and five years - - -
Later than five years - - -
31,981 632 31,349
Current liabilities 31,349
Non-current liabilities -
Minimum
lease Present
payments Interest value
2019 £ £ £
Not later than one year 70,978 2,700 68,278
Between one year and five years 11,773 632 11,141
Later than five years - - -
82,751 3,332 79,419
Current liabilities 68,278
Non-current liabilities 11,141
23. CAPITAL COMMITMENTS
The group had no capital commitments at 30 June 2020 or 30 June 2019.
24. RELATED PARTY TRANSACTIONS
Details of directors' remuneration are given in the Remuneration Report.
In 2019, under the previous management, the company was loaned £330,325 by the directors and £158,832 was repaid to
the directors. Under the previous management, the company also loaned £34,658
to the directors. Upon resignation of
directorships, the directors in question confirmed that they had no outstanding claims against the Group and therefore the
balances owed to them at the date of their resignation have been written off to the income statement in the 2019 financial
period. In 2020, under the current management, the company was loaned £16,613 by the directors and repaid £4,340. This
amount was still outstanding at 30 June 2020.
In 2019, £150,000 was loaned to Medium Channel Media. The loan is considered
impaired in this set of accounts.
In 2020, the company received £nil (2019 - £2,166) interest on loans that it provided to the directors in the period. The
company also paid £nil (2019 - £2,150) of interest to directors.
Vivian Andrade, Joao Andrade's wife, received £nil (2019 - £1,987) of professional fees for providing the services of Quality
Manager to WideCells Portugal SA. £nil (2019 - £nil) was due to Vivian Andrade at the period end.
Luis Andrade, Joao Andrade's brother, received £nil (2019 - £6,001) of professional fees for providing the services of Group
IT Manager to Iconic Labs plc. £nil (2019 - £nil) was due to Luis Andrade at the period end.
There are no other related party transactions.
25. CONTINGENT LIABILITIES
The group had no contingent liabilities at 30 June 2020 or 30 June 2019.
26. POST BALANCE SHEET EVENTS
On 13 November, 6,231,610,203 new ordinary shares of £0.00001 each in the
capital of the Company at a price of
£0.00012 per placing share to raise total gross proceeds of £747,793 together with the entering into of a conventional
secured debt facility with Shard Merchant Capital for an amount up to £1,000,000.
27. ULTIMATE CONTROLLING PARTY
The directors do not consider that there is an ultimate controlling party of
the group.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to be in the
public domain.
**ENDS**
For further information, please visit the Company's website
www.iconiclabs.co.uk or contact:
Damon Heath Shard Capital Partners LLP Tel: +44 (0) 20 7186 9950
Iconic Labs ir@iconiclabs.co.uk
END
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