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ICONIC LABS PLC — Earnings Release 2019
Oct 31, 2019
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Earnings Release
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RNS Number : 8922R
Iconic Labs PLC
31 October 2019
31 October 2019
Iconic Labs Plc ("Iconic Labs" or the "Company")
Preliminary Results
Iconic Labs (LSE:ICON), a multi-divisional new media and technology business, is pleased to announce its unaudited preliminary results for the 18 month period ending 30 June 2019. A copy of the full report will be available on the Company's website www.iconiclabs.co.uk/investor-relations.
Chairman's Statement:
I am pleased to report these report and accounts which cover the eighteen-month period to 30 June 2019, during which profound change has occurred at the Company. The new team lead by John Quinlan has spent significant energy in cleaning up liabilities attached to Widecells Group Plc, the previous operational business, and securing a platform from which to implement the new strategy of building a multi-divisional new media and technology business.
The previous business
The Company was originally founded to pursue an opportunity relating to stem cell storage and evolved into planning to promote an insurance product related to the stem cell activity. It never achieved any commercial traction, with total revenues for the period of just £21,000, set against administrative expenses for the discontinued business of £5,801,450 together with substantial accrued liabilities.
Clearly this was unsustainable, and even with the convertible secured debenture facility that they entered into with the European High Growth Opportunities Securitization Fund ('EHGOSF'), and which we inherited, it is hard to see how the business could have survived. As if that were not bad enough, the actual number for administrative expenses could have been much higher as prior to taking control, we negotiated with many large creditors to substantially reduce liabilities.
On taking control, we made available a modest sum to the existing team to see if they could gain traction on revenues, but after a short period they communicated that they were not confident about taking that business forward and so we took the decision to shut it down to focus entirely on the new media strategy.
The bulk of the legacy liabilities have now been paid off, with some remaining debts being settled on a termed basis. These amount to approximately £400,000 as at the date of this letter. Without the work of the team and the funding that was put in place to deal with these debts there would inevitably have been a catastrophic loss for both shareholders and creditors.
New business and management team
As part of the plan, the board put in place a new team to develop a multi divisional new media and technology business within the Company. The team have an excellent background, having been instrumental in building UNILAD into the largest social media publisher in the world, all on the back of just two hundred pounds of share capital.
Unfortunately, for the first months the team had to spend more time dealing with unexpected legacy issues and liabilities, which have impacted the implementation of the new strategy. However, I believe over the last few months we have begun to see traction for the services and execution of the model. The acquisition of Gay Star News, a top three UK LGBTI publisher and the management agreement with The Tab, the UK's leading youth and student culture focussed publisher, have played a major part in this, and the team continues to seek out publishers and platforms to work with or even acquire.
Capital Structure
We are very aware that the capital structure of the Company is a source of frustration to shareholders, albeit the convertible facility with EHGOSF is one that we inherited. Our aim as a board is to move the Company towards a conventional, simplified capital structure with no convertible or other facilities. While we need to keep all options open while we resolve the final parts of the legacy issues and the overhang of securities held by EHGOSF, we are confident that once through these final issues, we will be in a position to finance the growth of the Company from conventional debt and equity issuance if needed.
Outlook
We have a team in place that has a track record of building social media focussed businesses. The implementation of the strategy has been slower than we anticipated, and we have been constrained by capital being diverted to legacy issues. However, I believe we have turned the corner and we ask that shareholders bear with us while we complete the final parts of the transition and move the Company to where we and you want to go, that being a leading profitable new media and technology business.
David Sefton
Chairman
31 October 2019
Chief Executive's Statement
Dear Shareholder
Our plans and strategy remain to build a leading new media and technology division and we are now beginning to see real progress. The restructuring and ultimately winding down of the legacy stem cell and insurance operations took more of our focus over the last months than we had originally planned, but with this process now close to completion, I am delighted that the team are now able to focus on the new media and technology business that is Iconic Labs.
Our plan for the business has two related elements: organic growth based upon deploying the team's skills and commercial experience in the sector alongside acquiring publishing platforms which we can leverage to sell those skills. As such, the critical first steps have been to acquire control (whether through a management contract or outright acquisition) of strategic publishing platforms.
The first of these has been through the acquisition of leading LGBTI publisher Gay Star News ('GSN'), and we have also agreed heads of terms for the acquisition of social media agency Social Alchemist Limited. Finally, we have entered into an agreement with Medium Channel Media Limited ("MCM") a media focussed investment company, to provide management services to The Tab, the largest social media publisher in the student market.
The acquisition of GSN is the first part of Iconic Labs' strategy to build critical mass and in particular expand its proprietary targeted distribution channels that the Company can utilise under the Iconic Labs brand offering. This strategy of acquiring digital brands and audiences will help contribute revenues in the short and medium term but also build capital value in the long term through the further development of these brands and the revenue potential they bring.
We believe GSN represents excellent value at £33,000 having generated revenues of over £500,000 last year. After careful due diligence we concluded that it is possible to achieve the similar levels of revenue but with a fraction of the historical cost base. We are currently working hard at relaunching GSN and this will immediately allow us to generate revenue from on-site digital advertising. However, we believe the greater revenue long term will come from combining the access to the GSN audience and data with the consulting services that the central Iconic Labs team offer; importantly we have already booked revenues in excess of the purchase price.
We see the GSN acquisition as representing a model for many future acquisitions. Buying established digital brands which have substantial revenue potential and then using our skills, experience and contacts to increase the Company's profitability and grow its long-term value as a brand while also crucially contributing to the central Iconic Labs business.
Our progress on organic revenue generation logically trails the work on publishing platforms but we are fully focused on business development. We are now seeing success in developing a pipeline and beginning to close on a variety of revenue contracts. The contract with MCM is due to be worth a minimum of £25,000 a month as soon as they conclude their acquisition of The Tab and we are looking forward to closing more contracts in Q4 which is traditionally a busy and profitable period for the industry.
While there has been no formal launch or trade PR around Iconic Labs, we have already had significant interest and a pipeline of opportunities for a variety of contracts that we are looking to close and execute. The current pipeline and interest give us confidence that our strategy and offering of creative fee-based services to potential clients is the right one. As previously announced, we have negotiated a marketing consultancy engagement with a Fintech company on a long-term retainer basis, and although this has yet to be formally signed, we believe that this model will become increasingly in demand across the industry.
I believe the future looks positive as we execute our plans and focus on building a pipeline of organic revenues as well as making good value acquisitions and investments. The media and advertising industries are in a state of flux and the opportunities for a disruptive new business like ours that combines owning valuable audiences with being able to offer a unique product suite and content creation to clients puts us in a great position for the future.
Overall, we are seeing some real signs of progress on both the revenue generation and acquisition parts of the business and we are looking forward to building on this in the future.
John Quinlan
Chief Executive
31 October 2019
Strategic Report:
Introduction
Iconic Labs PLC is a company domiciled in England. The Company was incorporated on 24 May 2016 and this is the third set of financial statements prepared by the Company. The Company has raised from a variety of means in the past, including a number of equity placings and debt facilities.
During this financial year the company has evolved from a stem cell and insurance company called Widecells Group PLC into a media and technology company, and has been renamed Iconic Labs PLC.
Change in Business Model
The business model for the Company has changed dramatically from the original Widecells business to the new Iconic labs business. The original Widecells company was founded to pursue an opportunity relating to stem cell storage and evolved into planning to promote an insurance product related to the stem cell activity. This has now been shut down and the business discontinued.
The new Iconic Labs is a media and technology business focused on providing online marketing, content and technology driven products. The Company plans to create complimentary divisions that will allow it to provide a broad-based, all-encompassing offering allowing clients to build their online branding and awareness, generate significant revenues as well as building its own brand platforms and products that have long term capital value.
Principal Activities and Business Review
The Market Opportunity
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 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, and will be for the foreseeable future, 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 a 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 & 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.
Current Business Strategy
The directors believe that there is a significant opportunity in the publishing and advertising market because of technological and structural changes. The directors feel 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 desirable to partners and clients, and critical to establishing a successful modern media company.
Current Business
Online Media Brands and Complimentary Agency and Consultancy Services
The Consultancy and Agency:
The first phase of the Company's strategy has been launching the agency and consultancy offering. This has already been soft launched to some clients and has achieved a promising reception.
This is a product based on the teams unique expertise and experience that is in high demand in the industry 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.
Monthly Insights
Data analysis enables the brand to have a better understanding of what was working on their own digital and social channels whilst also being prepared to react to their competitors' content
Content Creation & Distribution
Work closely with insights to produce content that can be distributed across various social channels
Post Campaign Analysis
Analysis to establish sentiment & content performance to ensure insightful, creative and efficient future campaigns
Combining with Online Media Brands
This is a powerful offering in its own right but we believe that its effectiveness and demand is multiplied many times by being used in conjunction with the ownership and access to established online media brands and their access to consumer data, talent and audience.
The ability to offer potential clients and partners unique access to audience, data and insights with the backing and credibility of an established and trusted brand is a unique selling point to brands and the company believes this will be best way of establishing a strong client base and selling numerous products and services.
Future Growth and Potential Roll Up Opportunity
The directors believe that a result of this model of pairing an online media brand with a consultancy offering the company will need to be selective in which brands and markets the Company looks to target and have strict criteria for any growth in this area.
The Company is targeting established brands in high growth markets that complement the skill and experience of its team. While these involve the development of new brands in areas in line but will be predominantly based around a 'roll up' of available brands in the sector. The desire to own and operate established brands is a crucial part of the reasoning behind a 'roll up'.
Additional Business Divisions:
The directors are confident in achieving success with the first parts of the business and then 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
Key strengths of Team and Strategy:
Team:
The Directors believe the biggest strength of the Company is the team. They have a unique set of skills, experience and contacts, having established UNILAD in 2014 and developing it into the world's largest social media publisher. UNILAD showed year-on-year annual revenue growth in excess of 100% with revenues reaching more than £10 million and the Directors believe the team can help Iconic Labs grow substantial revenues.
Strategy:
· To compete effectively in a competitive advertising space achieving some consolidation of similar businesses and scale is very important:
· This allows the company to be of a size and offer enough relevant services that it becomes a viable proposition in terms of its ability to deliver for larger brands with significant budgets.
· Opportunity for cross and up selling to the different business units with client portfolios and pipelines
· Cost synergies across all the businesses with an ability to centralise finance, tech,
· Increased efficiency and effectiveness with shared access to single tech, data and insights platform
· Legacy Issues
Legacy Issues:
Upon taking control, a modest sum of funding was made available to the existing Widecells team to see if they could get some traction on revenues. However, after a short period of time they communicated that they were not confident about taking the business forward and so we shut it down.
There were significant legacy issues, some of which were not known to the new management upon taking control of the business. An audit of the true creditor position of the company was taken and an assessment made of how to restructure the company's debts and its subsidiaries. The Company has received legal and professional advice at every stage is fully confident that it is in control of the liabilities and any processes required to manage them.
The management negotiated with creditors, some of whom were former directors and secured legally binding settlement agreements to substantially reduce the debt position of PLC.
There were some debts, such as to HMRC, the pensions regulator and the LSE that the company has paid or plans to pay in full. There are still around £400k of legacy debts that the Company is in the final stage of discharging in accordance with agreed payment plans.
There were and are a number of subsidiaries that had incurred significant debts. The Company has taken substantial legal and professional advice and is confident it is not responsible for these debts and does not intend to pay them.
Status of Subsidiaries:
· Widecells Brazil - Dissolved April 2018
· Widecells Limited - Has entered liquidation process; Antony Batty and Co appointed liquidator
· WideAcademy - Dormant
· Widecells Espana - Dormant
· Widecells Portugal - Directors are absent but are responsible for producing accounts. Company is working to produce these in their absence.
· Cellplan International LDA - Directors are absent but are responsible for producing accounts. Company is working to produce these in their absence.
· Cellplan Limited - Shareholder of Cellplan International LDA. Dormant
· Widecells International Limited - Dormant
Key Performance Indicators:
Given the change of business in the period the historic KPIs are no longer relevant as they form part of the Widecells business and are will not be brought forward from the prior year. The new Iconic labs business is at an early stage of development and will be focused on the areas of cash management and operating results.
The board is focused on increasing revenues and increasingly getting towards profitability over time, so these will be key operating performance indicators in the future.
Financial Review:
Financial Review of Widecells Group PLC
The Widecells Group PLC business has been discontinued and the group had administrative expenses of £5,801,450 and a total loss for the period ending June 30 2019 of £5,809,942.
Financial review of Ionic Labs
On March 18th 2019 a new media and technology division of the business called Iconic Labs was formed and which became the main division of the business.
The administration expenses of Iconic Labs were £303,902 till the end of the period. These costs are related to cleaning up to time of management and team in restructuring old business as well as the launch of the new media and technology business.
Iconic Labs had yet to record any revenue by the end of the period and the total loss was £307,952.
| Notes | Period ended 30 June 2019 Continuing £ |
Period ended 30 June 2019 Discontinuing £ |
|||||
| Revenue | - | 21,081 | |||||
| Administrative expenses | 5 | (303,902) | (5,801,450) | ||||
| Loss from operating activities | (303,902) | (5,780,369) | |||||
| Finance income | 7 | - | 2,174 | ||||
| Finance costs | 7 | (4,050) | (31,747) | ||||
| Loss before taxation | (307,952) | (5,809,942) | |||||
| Taxation | 8 | - | - | ||||
| Loss for the period | (307,952) | (5,809,942) | |||||
| Exchange translation on foreign operations | - | - | |||||
| Total comprehensive loss for the period | (307,952) | (5,809,942) | |||||
The results for 2017 relate entirely to discontinued operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2019
| Notes | Period ended 30 June 2019 Continuing £ |
Period ended 30 June 2019 Discontinuing £ |
Period ended 30 June 2019 Total £ |
Year ended 31 December 2017 £ |
|||||
| Revenue | - | 21,081 | 21,081 | 50,765 | |||||
| Administrative expenses | 5 | (303,902) | (5,801,450) | (6,105,352) | (2,840,228) | ||||
| Loss from operating activities | (303,902) | (5,780,369) | (6,084,271) | (2,789,463) | |||||
| Finance income | 7 | - | 2,174 | 2,174 | - | ||||
| Finance costs | 7 | (4,050) | (31,747) | (35,797) | (17,264) | ||||
| Loss before taxation | (307,952) | (5,809,942) | (6,117,894) | (2,806,727) | |||||
| Taxation | 8 | - | - | - | (2,126) | ||||
| Loss for the period | (307,952) | (5,809,942) | (6,117,894) | (2,808,853) | |||||
| Exchange translation on foreign operations | - | - | - | (32,798) | |||||
| Total comprehensive loss for the period | (307,952) | (5,809,942) | (6,117,894) | (2,841,651) | |||||
| Loss per ordinary share | |||||||||
| Basic and diluted | 9 | - | (0.02) | (0.02) | (0.05) | ||||
| The results for 2017 relate entirely to discontinued operations. | |||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
| Notes | 30 June 2019 £ |
31 December 2017 £ |
||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 10 | 7,093 | 466,591 | |||||||||
| Intangible assets | 11 | - | 139,106 | |||||||||
| 7,093 | 605,697 | |||||||||||
| Current assets | ||||||||||||
| Stock | 13 | - | 27,850 | |||||||||
| Trade and other receivables | 14 | - | 9,551 | |||||||||
| VAT recoverable | 14 | 15,922 | 173,703 | |||||||||
| Cash and cash equivalents | 15 | 15,597 | 615,219 | |||||||||
| 31,519 | 826,323 | |||||||||||
| Total assets | 38,612 | 1,432,020 | ||||||||||
| Equity | ||||||||||||
| Share capital | 19 | 3,498,257 | 162,053 | |||||||||
| Share premium | 20 | 5,124,900 | 3,460,854 | |||||||||
| Merger reserve | 20 | - | (185,728) | |||||||||
| Translation reserve | 20 | - | (32,798) | |||||||||
| Share-based payment reserve | 20 | - | 331,975 | |||||||||
| Retained deficit | 20 | (10,297,770) | (4,305,132) | |||||||||
| (1,674,613) | (568,776) | |||||||||||
| Non-current liabilities | ||||||||||||
| Loans and borrowings | 17 | 11,141 | 207,551 | |||||||||
| 11,141 | 207,551 | |||||||||||
| Current liabilities | ||||||||||||
| Trade and other payables | 16 | 1,633,806 | 935,536 | |||||||||
| Loans and borrowings | 17 | 68,278 | 857,709 | |||||||||
| 1,702,084 | 1,793,245 | |||||||||||
| Total liabilities | 1,713,225 | 2,000,796 | ||||||||||
| Total equity and liabilities | 38,612 | 1,432,020 |
………………………………………
John Quinlan
Director
31 October 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2019
| Share capital £ |
Share premium £ |
Merger reserve £ |
Translation reserve £ |
Share- based payment reserve £ |
Retained deficit £ |
Total Equity £ |
|
| Balance at 31 December 2016 | 135,145 | 2,159,000 | (185,728) | - | 211,513 | (1,496,279) | 823,651 |
| Loss for the period | - | - | - | - | - | (2,808,853) | (2,808,853) |
| Foreign exchange translation | - | - | - | (32,798) | - | - | (32,798) |
| Total comprehensive loss for the period | - | - | - | (32,798) | - | (2,808,853) | (2,841,651) |
| Transactions with owners: | |||||||
| Share-based payment charges | - | - | - | - | 120,462 | - | 120,462 |
| Issue of shares | 26,908 | 1,371,789 | - | - | - | - | 1,398,697 |
| Costs of placings | - | (69,935) | - | - | - | - | (69,935) |
| Total contribution by and distribution to owners | 26,908 | 1,301,854 | - | - | 120,462 | - | 1,449,224 |
| 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 | - | - | - | - | - | (6,117,894) | (6,117,894) |
| Foreign exchange translation | - | - | - | - | - | - | - |
| Total comprehensive loss for the period | - | - | - | - | - | (6,117,894) | (6,117,894) |
| 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 placings | - | (230,575) | - | - | - | - | (230,575) |
| Total contribution by and distribution to owners | 3,336,204 | 1,664,046 | - | - | 11,807 | - | 5,012,057 |
| Transfer between reserves | - | - | 185,728 | 32,798 | (343,782) | 125,256 | - |
| Balance at 30 June 2019 | 3,498,257 | 5,124,900 | - | - | - | (10,297,770) | (1,674,613) |
The currency translation reserve comprises all foreign currency adjustments arising from the translation of the financial statements of the foreign operation. During the year, the Board decided that a number of the reserves related to historic balances which are no longer relevant given the changes in the group during the period. The merger reserve, translation reserve and share-based payment reserve have been transferred to retained deficit during the period.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2019
| Notes | Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Total comprehensive loss for the period | (6,117,894) | (2,808,853) | ||||||||||||
| Depreciation and amortisation | 5 | 417 | 113,191 | |||||||||||
| Impairment of assets | 5 | 629,616 | - | |||||||||||
| Share-based payment charge | 22 | 11,807 | 120,462 | |||||||||||
| Net interest expense | 7 | 33,623 | 17,264 | |||||||||||
| (5,442,431) | (2,557,936) | |||||||||||||
| Decrease/(Increase) in stock | 27,850 | (24,963) | ||||||||||||
| Decrease/(Increase) in trade and other receivables | 167,333 | (101,133) | ||||||||||||
| Increase/(decrease) in trade and other payables | 698,270 | 543,205 | ||||||||||||
| Net cash used in operating activities | (4,548,978) | (2,140,827) | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Purchase of tangible fixed assets | 10 | (31,429) | (323,989) | |||||||||||
| Net cash used in investing activities | (31,429) | (323,989) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Issue of share capital | 5,230,825 | 1,398,697 | ||||||||||||
| Costs of issuing share capital | (230,575) | (69,935) | ||||||||||||
| Interest received | 7 | 2,174 | - | |||||||||||
| Interest paid | 7 | (35,797) | (17,264) | |||||||||||
| Convertible debt issued | - | 50,000 | ||||||||||||
| Issue of finance leases | - | 153,003 | ||||||||||||
| Repayment of finance leases | (174,787) | - | ||||||||||||
| Proceeds from borrowings | - | 150,000 | ||||||||||||
| Repayment of borrowings | (313,877) | (198,604) | ||||||||||||
| Net cash flows from financing activities | 4,477,963 | 1,465,897 | ||||||||||||
| Net decrease in cash and cash equivalents | (102,444) | (998,919) | ||||||||||||
| Cash and cash equivalents at beginning of period | 118,041 | 1,149,758 | ||||||||||||
| Effect of foreign exchange rate changes | - | (32,798) | ||||||||||||
| Cash and cash equivalents at period end | 15 | 15,597 | 118,041 | |||||||||||
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
| Notes | 30 June 2019 £ |
31 December 2017 £ |
|||||||
| Non-current assets | |||||||||
| Property, plant and equipment | 10 | 7,093 | 42,477 | ||||||
| Investments | - | 76,000 | |||||||
| Non-current assets | 7,093 | 118,477 | |||||||
| Current assets | |||||||||
| Trade and other receivables | 14 | - | 1,696,772 | ||||||
| Cash and cash equivalents | 15 | 4,339 | - | ||||||
| 4,339 | 1,696,772 | ||||||||
| Total assets | 11,432 | 1,815,249 | |||||||
| Equity | |||||||||
| Share capital | 19 | 3,498,257 | 162,053 | ||||||
| Share premium | 20 | 5,124,900 | 3,460,854 | ||||||
| Share-based payment reserve | 20 | - | 331,975 | ||||||
| Retained deficit | 20 | (10,162,141) | (3,352,643) | ||||||
| (1,538,984) | 602,239 | ||||||||
| Non-current liabilities | |||||||||
| Loans and borrowings | 17 | 11,141 | 113,321 | ||||||
| 11,141 | 113,321 | ||||||||
| Current liabilities | |||||||||
| Trade and other payables | 16 | 1,470,997 | 833,805 | ||||||
| Bank debt and commercial loans | 17 | - | 25,000 | ||||||
| Directors loans | 17 | - | 100,000 | ||||||
| Loans and borrowings | 17 | 68,278 | 140,884 | ||||||
| 1,539,275 | 1,099,689 | ||||||||
| Total liabilities | 1,550,416 | 1,213,010 | |||||||
| Total equity and liabilities | 11,432 | 1,815,249 | |||||||
The Company's loss and total comprehensive loss for the period ended 30 June 2019 was £7,153,280 (December 2017: £2,310,506 )
…………………………………………
John Quinlan
Director
31 October 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2019
| Share capital £ |
Share premium £ |
Share-based payments reserve £ |
Retained deficit £ |
Total equity £ |
|
| Balance at 31 December 2016 | 135,145 | 2,159,000 | 211,513 | (1,042,137) | 1,463,521 |
| Loss for the year | - | - | - | (2,310,506) | (2,310,506) |
| Total comprehensive loss for period | - | - | - | (2,310,506) | (2,310,506) |
| Transactions with owners | |||||
| Share-based payment charge | - | - | 120,462 | - | 120,462 |
| Issue of shares | 26,908 | 1,371,789 | - | - | 1,398,697 |
| Cost of placings | - | (69,935) | - | - | (69,935) |
| Total contributions by and distributions to owners | 26,908 | 1,301,854 | 120,462 | - | 1,449,224 |
| Balance at 31 December 2017 | 162,053 | 3,460,854 | 331,975 | (3,352,643) | 602,239 |
| Loss for the period | - | - | - | (7,153,280) | (7,153,280) |
| Total comprehensive loss for period | - | - | - | (7,153,280) | (7,153,280) |
| 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 |
| Transfer between reserves | - | - | (343,782) | 343,782 | - |
| Balance at 30 June 2019 | 3,498,257 | 5,124,900 | - | (10,162,141) | (1,538,984) |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
1. Accounting Policies
Basis of preparation and going concern
Iconic Labs plc is a public company incorporated and domiciled in England and Wales. The address of the Company's registered office is 27-28 Eastcastle Street, London, W1W 8DH. The consolidated financial statements of the Group as at and for the period ended 30 June 2019 comprise the financial statements of the Company and its subsidiary undertakings.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board and as adopted by the European Union.
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.
The consolidated financial statements have been prepared on the historical cost basis.
These consolidated financial statements are presented in Pounds Sterling ('GBP'), which is considered by the directors to be the functional and most appropriate presentation currency.
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, which is defined as twelve months from the signing of this report. For this reason, the directors continue to adopt the going-concern basis of accounting in preparing the financial statements.
New standards and interpretations not yet adopted
Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after 1 January 2019 or later periods, but which the Group has not early adopted.
IFRS 16 - Leases
The standard has been developed to provide information to the users of the financial statements on the lease transactions undertaken by the entity, in order for them to assess the amount, timing and uncertainty of cash flows arising from leases.
The standard is effective for periods beginning on or after 1 January 2019.
On application of the standard, the company will be required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
The directors consider that the effect of IFRS16 will be that some of the Group's leases will be capitalised and recognised on the balance sheet. The effect has not yet been fully documented by the directors.
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.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
The consolidated financial statements consist of the results of the following entities:
| Entity | Summary description |
| Iconic Labs plc (previously Widecells Group plc) | Ultimate holding company |
| WideCells International Limited | Holding company of subsidiaries |
| WideCells Limited | Trading company |
| WideCells Portugal SA | Trading company |
| WideCells Espana SL | Trading company |
| WideAcademy Limited | Trading company |
| CellPlan Limited | Holding company |
| CellPlan International Lda | Trading company |
Revenue
The Group recognises the introduction of IFRS 15 for the accounting period under review and does not consider that it has a material impact on the Group's income.
Revenue represents the fair value of consideration received or receivable in the period, net of discounts and sales taxes.
Sales income derives from the procurement and marketing of cord blood stem cell storage. Revenue is recognised as detailed below:
Revenue is recognised when it is probable that the economic benefits associated with a transaction will flow to the Group and the amount of revenue and associated costs can be measured reliably. Where the work has been carried out and it is certain that the income is due, appropriate adjustments are made through deferred and accrued income on a percentage of completion basis. Deferred income comprises of income received in advance of the consideration being due and has been included within current liabilities on the basis that the revenue becomes due within 12 months from the balance sheet date. Accrued income includes the value of work performed during the period and where a right to consideration has arisen, which was not invoiced until after the period end.
Interest is recognised, in profit and loss, using the effective-interest rate method.
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.
The adjustment in 'Other comprehensive income' arises because of the difference between the value of the assets and liabilities of foreign operations (including goodwill and the fair-value adjustments arising on acquisition) when acquired compared to the value when translated to GBP at exchange rates at the reporting date. The income and expenditure earned and incurred by the Group's overseas operations are translated to GBP at the average exchange rate at the date of each transaction.
Financial assets
The group does not have any financial assets which it would classify as fair value through profit or loss, available for sale or held to maturity. Therefore, all financial assets are classed as loans and receivables as defined below:
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.
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 loans and receivables. Interest on the impaired asset continues to be recognised. 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.
Loans and receivables comprise trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in their fair value. These are initially and subsequently recorded at fair value.
Bank overdrafts are shown within loans and borrowings in current liabilities on the statement of financial position.
Financial liabilities
The group does not have any financial liabilities that 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.
Share capital
The group's ordinary shares are classified as equity instruments.
Tangible fixed assets
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 other 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 and 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 |
Leased assets
Where substantially all of the risks and rewards incidental to the ownership of a leased asset have been transferred to the group, the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed by the lessor.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the group, the total rentals payable under the lease are charged to the statement of consolidated income on a straight-line basis over the lease term.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost or net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Share-based payments
Where equity settled share-based payments are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As along as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where 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 the statement of consolidated income over the remaining vesting period.
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. There are no estimates or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period.
3. Revenue
Revenue in all periods principally arises from the provision of services. In 2016 this was from the planning phase of an R&D contract with Qiginex, which ran through 2017 and 2018 in the UK. Revenues also include sales of Cellplan and INDUS products.
4. Segment Information
Operating segments are components of the entity that:
· Engages in business activity from which it earns revenues and incurs expenses;
· Of which discrete financial information is available;
· Whose operating results are reviewed regularly by the chief operating decision maker
Until sales begin in the new operating divisions of CellPlan and Wideacademy, the group has 3 main operating segments, all of which have the same intended source of revenue from the WideCells division:
· United Kingdom
· Portugal
· Spain
The group's reportable segments are geographical business units that offer WideCells products and services into different markets. They are managed separately as each business is operated from a different location.
Measurement of operating segment profit or loss, assets and liabilities
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.
The group evaluates performance on the basis of profit or loss from operations but excluding non-recurring losses and the effects of share-based payments.
| 2019 | UK £ |
Portugal £ |
Spain £ |
Cellplan £ |
Wideacademy £ |
Total £ |
| Sales and services provided | 20,761 | - | - | 320 | - | 21,081 |
| Total revenue from external customers | 20,761 | - | - | 320 | - | 21,081 |
| Total gross profit | 20,761 | - | - | 320 | - | 21,081 |
| Segment EBITDA | (5,050,075) | (34,885) | (9,003) | (292,258) | (68,019) | (5,454,240) |
| Depreciation, amortisation and impairment | (466,504) | - | - | (163,529) | - | (630,033) |
| Loss from operations | (5,516,579) | (34,885) | (9,003) | (455,786) | (68,019) | (6,084,272) |
| Finance income/(expense) | (27,778) | 1,297 | - | - | (7,141) | (33,622) |
| Tax | - | - | - | - | - | - |
| Group loss after tax | (5,544,357) | (33,588) | (9,003) | (455,786) | (75,160) | (6,117,894) |
| Total assets | 34,712 | 621 | 580 | 2,699 | - | 38,612 |
| Total liabilities | 1,650,050 | - | - | 63,175 | - | 1,713,225 |
All of the activities outside of the UK have been discontinued. The results of the UK operation relate to continuing and discontinued operations as follows:
| 2019 | UK Continuing £ |
UK Discontinued £ |
UK Total £ |
| Sales and services provided | - | 20,761 | 20,761 |
| Total revenue from external customers | - | 20,761 | 20,761 |
| Total gross profit | - | 20,761 | 20,761 |
| Segment EBITDA | (303,485) | (4,746,590) | (5,050,075) |
| Depreciation, amortisation and impairment | (417) | (466,087) | (466,504) |
| Loss from operations | (303,902) | (5,212,677) | (5,516,579) |
| Finance income/(expense) | (4,050) | (23,728) | (27,778) |
| Tax | - | - | - |
| Group loss after tax | (307,952) | (5,236,405) | (5,544,357) |
| 2017 | UK £ |
Portugal £ |
Spain £ |
Cellplan £ |
Wideacademy £ |
Total £ |
| Sales and services provided | 49,501 | 1,264 | - | - | - | 50,765 |
| Total revenue from external customers | 49,501 | 1,264 | - | - | - | 50,765 |
| Total gross profit | 49,501 | 1,264 | - | - | - | 50,765 |
| Segment EBITDA | (2,311,794) | (352,110) | (12,368) | - | - | (2,676,272) |
| Depreciation and amortisation | (107,555) | (5,636) | - | - | - | (113,191) |
| Loss from operations | (2,419,349) | (357,746) | (12,368) | - | - | (2,789,463) |
| Finance expense | (17,185) | (80) | 1 | - | - | (17,264) |
| Tax | - | (2,126) | - | - | - | (2,126) |
| Group loss after tax | (2,436,534) | (359,952) | (12,367) | - | - | (2,808,853) |
| Total assets | 1,341,263 | 82,690 | 8,067 | - | - | 1,432,020 |
| Total liabilities | 1,913,128 | 80,691 | 6,977 | - | - | 2,000,796 |
The results for 2017 relate entirely to discontinued operations.
5. Loss from Operations
| Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
|
| The loss for the period is stated after charging/(crediting): | ||
| Depreciation | 417 | 113,721 |
| Impairment of assets | 629,616 | - |
| Auditors remuneration - group | 42,000 | 44,427 |
| Auditors remuneration - company | - | 25,149 |
| Operating lease - property | 81,473 | 114,152 |
| Share-based payments expense | 11,807 | 120,462 |
| Foreign exchange gains | 6,273 | (54,881) |
| Expenses by nature: | £ | £ |
| Supplies and external services | 2,425,820 | 1,568,974 |
| Other expenses | 1,366,623 | (46,938) |
| Staff costs | 1,682,876 | 1,205,001 |
| Total operating expenses | 5,475,319 | 2,727,037 |
| Depreciation, amortisation and impairment of assets | 630,033 | 113,191 |
| 6,105,352 | 2,840,228 |
6. Staff Costs
| Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
|
| Staff costs (including directors) comprise: | ||
| Wages and salaries | 1,473,681 | 900,811 |
| Defined contribution pension cost | 53,315 | 44,427 |
| Benefits | - | 25,149 |
| Social security contributions and similar taxes | 144,073 | 114,152 |
| Share-based payments expense | 11,807 | 120,462 |
| 1,682,876 | 1,205,001 |
| Employee Numbers | 2019 | 2017 |
| The average number of staff employed by the group during the period amounted to: | ||
| General and administration | 15 | 17 |
| 15 | 17 |
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 corporate governance report. In addition to the amounts disclosed in the corporate governance report, the full share-based payment charge of £11,807 (2017: £120,462) relates to key management personnel.
7. Finance Income and Expense
| Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
|
| Finance income | ||
| Other interest received | 2,174 | - |
| Total finance income | 2,174 | - |
| Finance expense | ||
| Bank loans and overdrafts | 35,797 | 17,264 |
| Total finance expense | 35,797 | 17,264 |
8. Taxation
| Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
|
| Current tax | ||
| Overseas taxation payable on profits for the period | - | 2,126 |
| Total current tax and tax credit | - | 2,126 |
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:
| 2019 £ |
2017 £ |
|
| Loss before taxation | (6,117,894) | (2,806,727) |
| Tax using the parent company's domestic tax rate of 19% (2017: 19,25%) | (1,162,400) | (540,295) |
| Effects of: | ||
| Unrelieved tax losses and other deductions arising in the period | 693,403 | 463,295 |
| Expenses not deductible for taxation purposes | 468,997 | 77,000 |
| Local overseas taxes | - | (2,126) |
| Total tax charged in the income statement | - | (2,126) |
The deferred taxation of £1,154,625 (2017: £534,212) attributable to losses arising in the period and for losses carried forward has not been recognised in these accounts due to the uncertainty over whether this will be recovered.
9. Loss per share
| Period ended 30 June 2019 £ |
Year ended 31 December 2017 £ |
|
| Numerator | ||
| Loss for the period | (6,117,894) | (2,808,853) |
| Denominator | ||
| Weighted average number of ordinary shares used in basic EPS | 282,378,357 | 59,993,454 |
| Effects of: | ||
| Employee share options | 2,808,454 | 3,485,518 |
| Conversion share warrants | - | 205,479 |
| Broker share warrants | - | 727,272 |
| Weighted average number of ordinary shares used in diluted EPS | 285,186,811 | 64,411,723 |
| Basic and diluted loss per share | (0.02) | (0.05) |
10. Tangible Assets
Group
| Plant & Machinery £ |
Leasehold Improvements £ |
Computer Hardware £ |
Total £ |
|
|---|---|---|---|---|
| Cost | ||||
| Balance at 1 January 2017 | 225,708 | 154,620 | 27,715 | 408,043 |
| Additions | 119,782 | 29,130 | 32,788 | 181,700 |
| Effect of foreign exchange | - | 2,099 | 1,445 | 3,544 |
| Balance at 31 December 2017 | 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 |
| Amortisation | ||||
| Balance at 1 January 2017 | - | 10,077 | 3,068 | 13,145 |
| Charge for the year | 43,868 | 53,103 | 16,220 | 113,191 |
| Effect of foreign exchange | - | 21 | 339 | 360 |
| Balance at 31 December 2017 | 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 |
| Carrying amounts | ||||
| Balance at 30 June 2019 | - | - | 7,093 | 7,093 |
| Balance at 31 December 2017 | 301,622 | 122,648 | 42,321 | 466,591 |
Company
| Computer Hardware £ |
Total £ |
|||
|---|---|---|---|---|
| Cost | ||||
| Balance at 1 January 2017 | 16,659 | 16,659 | ||
| Additions | 46,031 | 46,031 | ||
| Balance at 31 December 2017 | 62,690 | 62,690 | ||
| Additions | 14,231 | 14,231 | ||
| Balance at 30 June 2019 | 76,921 | 76,921 | ||
| Amortisation | ||||
| Balance at 1 January 2017 | 473 | 473 | ||
| Charge for the year | 19,741 | 19,741 | ||
| Balance at 31 December 2017 | 20,214 | 20,214 | ||
| Charge for the period | 417 | 417 | ||
| Impairment in period | 49,197 | 49,197 | ||
| Balance at 30 June 2019 | 69,828 | 69,828 | ||
| Carrying amounts | ||||
| Balance at 30 June 2019 | 7,093 | 7,093 | ||
| Balance at 31 December 2017 | 42,477 | 42,477 |
11. Intangible Assets
| | | | | | | | | Computer software
£ | Total
£ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cost | | | | | | | | | |
| Balance at 1 January 2017 | | | | | | | | - | - |
| Additions | | | | | | | | 139,106 | 139,106 |
| Balance at 31 December 2017 and at 30 June 2019 | | | | | | | | 139,106 | 139,106 |
| | | | | | | | | | |
| Amortisation | | | | | | | | | |
| Balance at 1 January 2017 | | | | | | | | - | - |
| Charge for the year | | | | | | | | - | - |
| Balance at 31 December 2017 | | | | | | | | - | - |
| | | | | | | | | | |
| Impairment | | | | | | | | 139,106 | 139,106 |
| Balance at 30 June 2019 | | | | | | | | 139,106 | 139,106 |
| | | | | | | | | | |
| Carrying amounts | | | | | | | | | |
| Balance at 30 June 2019 | | | | | | | | - | - |
| Balance at 31 December 2017 | | | | | | | | 139,106 | 139,106 |
12. Subsidiaries
| Entity | Country of Incorporation | Nature of business | Notes |
| WideCells International Limited | United Kingdom | Holding company | (c) |
| WideCells Limited | United Kingdom | Trading company | (a) |
| WideCells Portugal SA | Portugal | Trading company | (a) |
| WideCells Espana SL | Spain | Trading company | (a) |
| WideAcademy Limited | United Kingdom | Trading company | (a) |
| CellPlan Limited | United Kingdom | Holding company | (a) |
| CellPlan International Lda | Portugal | Trading company | (b) |
| Iconic Labs UK Limited | United Kingdom | Trading company | (c) |
| Iconic Labs IP Limited | United Kingdom | Trading company | (c) |
Notes: (a) 100% owned by WideCells International Limited (b) 100% owned by CellPlan Limited
(c) 100% owned by Iconic Labs plc
Iconic Labs UK Limited was incorporated on 14th June 2019 and Iconic Labs IP Limited was incorporated on 19th June 2019. The companies did not trade in the period ended 30 June 2019.
13. Inventories
Group
| 30 June 2019 £ |
31 December 2017 £ |
|
| Raw materials and consumables | - | 27,850 |
14. Trade and other receivables
Group
| 30 June 2019 £ |
31 December 2017 £ |
|
| Trade receivables | - | 2,029 |
| Other receivables | - | 7,522 |
| Trade and other receivables | - | 9,551 |
| VAT recoverable | 15,922 | 173,703 |
| Total receivables | 15,922 | 183,254 |
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. No trade receivables are overdue but not impaired.
Book values approximate to fair value at 30 June 2019 and 31 December 2017.
Company
| 30 June 2019 £ |
31 December 2017 £ |
|
| Amounts due from group companies | - | 1,580,016 |
| Other receivables | - | 116,756 |
| - | 1,696,772 |
15. Cash and cash equivalents
Group
| 30 June 2019 £ |
31 December 2017 £ |
|
| Cash at bank available on demand | 15,694 | 615,219 |
| Bank overdraft | (97) | (497,178) |
| Total cash and cash equivalents | 15,597 | 118,041 |
Company
| 30 June 2019 £ |
31 December 2017 £ |
|
| Cash at bank available on demand | 4,339 | 615,219 |
| Bank overdraft | - | (497,178) |
| Total cash and cash equivalents | 4,339 | 118,041 |
16. Trade and other payables
Group
| 30 June 2019 £ |
31 December 2017 £ |
||
|---|---|---|---|
| Trade payables | 544,558 | 634,310 | |
| Other payables and accruals | 884,687 | 234,713 | |
| Tax and social security | 204,561 | 66,434 | |
| Deferred revenue | - | 79 | |
| Total | 1,633,806 | 935,536 |
Book values approximate to fair values at 30 June 2019 and 31 December 2017.
Company
| 30 June 2019 £ |
31 December 2017 £ |
||
|---|---|---|---|
| Trade payables | 381,749 | 601,276 | |
| Other payables and accruals | 884,687 | 188,313 | |
| Tax and social security | 204,561 | 44,216 | |
| 1,470,997 | 833,805 |
Book values approximate to fair values at 30 June 2019 and 31 December 2017.
17. Loans and borrowings
Group
| Non-current | 30 June 2019 £ |
31 December 2017 £ |
|
|---|---|---|---|
| Bank loans | - | 66,667 | |
| Other loans | - | - | |
| Finance leases | 11,141 | 140,884 | |
| Total | 11,141 | 207,551 |
| Current | 30 June 2019 £ |
31 December 2017 £ |
|
|---|---|---|---|
| Bank overdraft | - | 497,178 | |
| Bank loans | - | 72,210 | |
| Other loans | - | 25,000 | |
| Finance leases | 68,278 | 113,321 | |
| Directors' loans | - | 100,000 | |
| Convertible loans | - | 50,000 | |
| Total | 68,278 | 857,709 |
Book values approximate to fair values at 30 June 2019 and 31 December 2017.
The convertible loans converted to equity following the share placing in June 2018.
Finance leases are secured on the relevant assets.
Company
| Non-current | 30 June 2019 £ |
31 December 2017 £ |
|
|---|---|---|---|
| Other loans | - | - | |
| Finance leases | 11,141 | 113,321 | |
| Total | 11,141 | 113,321 |
| Current | 30 June 2019 £ |
31 December 2017 £ |
|
|---|---|---|---|
| Other loans | - | - | |
| Bank debt and commercial loans | - | 25,000 | |
| Directors' loans | - | 100,000 | |
| Finance leases | 68,278 | 140,884 | |
| Total | 68,278 | 265,884 |
18. 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:
· Trade receivables
· 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 - loans and receivables
· Financial liabilities - amortised cost
Group:
| 2019 £ |
2017 £ |
|
| Cash and cash equivalents | 15,599 | 615,219 |
| Trade receivables | - | 2,029 |
| Total financial assets | 15,599 | 617,248 |
| 2019 £ |
2017 £ |
|
| Trade and other payables | 1,429,245 | 869,023 |
| Loans and borrowings | 79,419 | 1,065,260 |
| Total liabilities - amortised cost | 1,508,664 | 1,934,283 |
Company:
| 2019 £ |
2017 £ |
|
| Cash and cash equivalents | 4,339 | - |
| Trade receivables | - | - |
| Total financial assets | 4,339 | - |
| 2019 £ |
2017 £ |
|
| Trade and other payables | 1,266,436 | 789,589 |
| Loans and borrowings | 79,419 | 379,205 |
| Total liabilities - amortised cost | 1,345,855 | 1,168,794 |
The Board has overall responsibility for the determination of the group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's Management Committee. The Board received quarterly reports from the Management Committee.
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 development partner or a counterparty to the financial instrument fails to meet its contractual obligations. The group is mainly exposed to credit risk from credit sales. It is group policy, implemented locally, 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
| 2019 £ |
2017 £ |
|
| Cash held at HSBC - S&P Rating AA | 11,444 | 610,707 |
| Cash held at Santander - S&P rating A | 4,153 | 4,512 |
| Total financial assets | 15,597 | 615,219 |
Company
| 2019 £ |
2017 £ |
|
| Cash held at HSBC - S&P Rating AA | 4,339 | - |
| Cash held at Santander - S&P rating A | - | - |
| Total financial assets | 4,339 | - |
The group is continually reviewing the credit risk associated with holding money on deposit in banks and seeks to mitigate this risk by holding deposits with banks with high credit status.
Market risk
Cash flow interest rate risk
The group is exposed to cash flow interest rate risk from short term borrowings at variable rate.
It is group policy that all borrowings are approved by the directors to ensure that it is not taking on significant risk related to possible movements in interest rates. Although the Board accepts that this policy neither protects the group entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with variability in interest payments, it considers that it achieves appropriate balance of exposure to these risks.
During the period, the Groups borrowings at variable rate were denominated in sterling.
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. Given the levels of materiality, the group does not hedge its net investments in overseas operations as the cost of doing so is disproportionate to the exposure.
Foreign exchange risks also arise when individual group entities enter into transactions denominated in a currency other than their functional currency; the group has several customers and a regular supplier who are invoiced in currency other than sterling. These transactions are not hedged because the cost of doing so is disproportionate to the risk.
As of 30 June 2019 and 31 December 2017 the group's exposure to foreign exchange risk was not material.
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.
It is the group's aim to settle balances as they become due.
The Board will continue to monitor long term cash projections in light of its development plan and will consider raising funds as required to fund long term development projects. Development expenditure can be curtailed as necessary to preserve liquidity.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
Group:
| 2019 | Up to 3 months £ |
Between 3 and 12 months £ |
Between 1 and 2 years £ |
Between 2 and 5 years £ |
Over 5 years £ |
| Trade and other payables | 1,463,818 | 169,988 | - | - | - |
| Finance leases | 32,127 | 36,151 | 11,141 | - | - |
| Total | 1,495,945 | 206,139 | 11,141 | - | - |
| 2017 | Up to 3 months £ |
Between 3 and 12 months £ |
Between 1 and 2 years £ |
Between 2 and 5 years £ |
Over 5 years £ |
| Trade and other payables | 869,023 | - | - | - | - |
| Bank loans and overdrafts | 514,890 | 53,137 | 70,749 | - | - |
| Finance leases | 35,237 | 88,167 | 115,359 | 37,223 | - |
| Directors' and other loans | 114,037 | 10,963 | - | - | - |
| Convertible loans | - | 54,000 | - | - | - |
| Total | 1,533,187 | 206,267 | 186,108 | 37,223 | - |
More details in regard to the line items are included in the respective notes:
· Trade and other payables - note 16
· Loan and borrowings - note 17
Capital risk management
The group monitors capital which comprises all components of equity (i.e. share capital, share premium and accumulated deficit).
The group's objectives when maintaining capital are:
· To safeguard the entity's ability to continue as a going concern and continue to provide returns for shareholders and benefits for other stakeholders
· To provide an adequate return to shareholders by pricing products and services commensurably with the level of risk.
At present the directors do not intend to pay dividends but will reconsider the position in future periods, as the group becomes profitable.
19. Share Capital
| 30 June 2019 | 31 December 2017 | |||
| Number | £ | Number | £ | |
| Authorised, allotted and fully paid - classified as equity | ||||
| Ordinary shares of £0.0025 each | 1,399,302,698 | 3,498,257 | 64,821,010 | 162,053 |
| Total | 1,399,302,698 | 3,498,257 | 64,821,010 | 162,053 |
The following shares issues took place during the period:
· 28 June 2018 - 68,698,355 shares issued at a premium of 2.75p per shares
· 26 October 2018 - 2,500,000 shares issued in respect of a conversion of a convertible band, at a premium of 0.15p per share
· 26 October 2018 - 3,333,333 shares issued in respect of a conversion of a convertible band, at a premium of 0.5p per share
· 6 November 2018 - 2,000,000 shares issued in respect of a conversion of a convertible band, at par
· 12 November 2018 - 10,000,000 shares issued in respect of a conversion of a convertible band, at par
· 11 March 2019 - 60,000,000 shares issued in respect of a conversion of a convertible band, at par
· 12 March 2019 - 80,000,000 shares issued in respect of a conversion of a convertible band, at par
· 18 March 2019 - 115,000,000 shares issued in respect of a conversion of a convertible band, at par
· 21 March 2019 - 150,000,000 shares issued in respect of a conversion of a convertible band, at par
· 21 March 2019 - 19,200,000 shares issued in respect of settlement of outstanding fees with a supplier, at par
· 21 March 2019 - 210,000,000 shares issued, at par
· 2 April 2019 - 5,000,000 shares issued in respect of settlement of outstanding fees with a supplier, at par
· 29 April 2019 - 200,000,000 shares issued, at par
· 21 May 2019 - 100,000,000 shares issued in respect of a conversion of a convertible band, at par
· 31 May 2019 - 108,750,000 shares issued in respect of a conversion of a convertible band, at par
· 19 June 2019 - 200,000,000 shares issues, at par
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.
· 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.
They 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 are recorded as equity.
20. Reserves
The following describes the nature and purpose of each reserve within equity:
| Reserve | Description and purpose |
| Share premium | Amount subscribed for share capital in excess of nominal value |
| Merger reserve | Amounts arising on acquisition of non-controlling interest and share for share exchange |
| Translation reserve | Reserve related to translation of foreign currency assets and liabilities |
| Share-based payment reserve | Reserve related to share options |
| Retained deficit | All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere |
21. 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. The pension costs charges for each period are 10% for directors and 5% for staff and included in staff costs.
22. Share-Based Payment
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:
| 2019 Weighted average exercise price £ |
2019 Number | 2017 Weighted average exercise price £ |
2017 Number | |
| Outstanding at beginning of accounting period | 0.0490 | 3,610,870 | 0.0025 | 2,200,000 |
| Options granted in WideCells Group plc | - | - | 0.1215 | 1,410,870 |
| Options cancelled in period | 0.0490 | (3,610,870) | ||
| Outstanding at period end | - | - | 0.0490 | 3,610,870 |
The directors' interests in the share options are as follows:
| Outstanding at 1 January 2018 (Number) |
Granted in period (Number) | Cancelled in period (Number) | Outstanding at 30 June 2019 (Number) |
|
| Peter Hollands | 1,600,000 | - | (1,600,000) | - |
| David Bridgland | 1,200,000 | - | (1,200,000) | - |
| Marilyn Orcharton | 270,290 | - | (270,290) | - |
| Alan Greenberg | 540,580 | - | (540,580) | - |
| 3,610,870 | - | (3,610,870) | - |
23. Leases
Finance Leases
The group is leasing the more expensive pieces of laboratory equipment for the stem cell processing and storage facility in Manchester. These finance leases are over 3 years and the future payments are as follows:
Group:
| 2019 | Minimum lease payments £ |
Interest £ |
Present value £ |
| 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 |
| 2017 | Minimum lease payments £ |
Interest £ |
Present value £ |
| Not later than one year | 123,404 | 10,083 | 113,321 |
| Between one year and five years | 152,582 | 11,698 | 140,884 |
| Later than five years | - | - | - |
| 275,986 | 21,781 | 254,205 | |
| Current liabilities | 113,321 | ||
| Non-current liabilities | 140,884 |
Company:
| 2019 | Minimum lease payments £ |
Interest £ |
Present value £ |
| 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 | ||
| 2017 | Minimum lease payments £ |
Interest £ |
Present value £ |
| Not later than one year | 123,404 | 10,083 | 113,321 |
| Between one year and five years | 152,582 | 11,698 | 140,884 |
| Later than five years | - | - | - |
| 275,986 | 21,781 | 254,205 | |
| Current liabilities | 113,321 | ||
| Non-current liabilities | 140,884 |
Operating Leases
The group had commitments under non-cancellable operating leases as set out below:
| 2019 Property £ |
2019 Equipment £ |
2017 Property £ |
2017 Equipment £ |
|
| Not later than one year | - | - | 82,882 | 587 |
| Between one year and five years | - | - | 41,261 | 587 |
| Later than five years | - | - | - | - |
| - | - | 124,143 | 1,174 |
24. Capital Commitments
The group had no capital commitments at 30 June 2019 or 31 December 2017.
25. Related party Transactions
At 1 January 2018, the former directors of the company had loaned £100,000 to the company. During the period, the company was loaned a further £330,325 by the former directors and £158,832 was repaid to the former directors. The company also loaned £34,658 to the former directors. Upon resignation of directorships, the former directors 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.
The company received £2,166 interest on loans that it provided to the former directors in the period. The company also paid £2,150 of interest to former directors.
Vivian Andrade, Joao Andrade's wife, received £1,987 (2017 - £2,655) of professional fees for providing the services of Quality Manager to WideCells Portugal SA. £nil (2017 - £nil) was due to Vivian Andrade at the period end.
Luis Andrade, Joao Andrade's brother, received £6,001 (2017 - £6,049) of professional fees for providing the services of Group IT Manager to Iconic Labs plc. £nil (2017 - £nil) was due to Luis Andrade at the period end.
There are no other related party transactions.
26. Contingent Liabilities
The group had no contingent liabilities at 30 June 2019 or 31 December 2017.
27. Post Balance Sheet Events
On 4 September 2019, Widecells Limited appointed liquidators in order for the company to be voluntarily wound up.
On 5 September 2019, the Group acquired 24% of the issued share capital of Student Media Ventures Limited.
On 9 September 2019, the Group acquired 100% of the issued share capital of Nuuco Media Limited.
On 10 September 2019, the Group acquired 24% of the issued share capital of Medium Channel Media Limited
28. Ultimate Controlling Party
The directors do not consider that there is an ultimate controlling party of the group.
**ENDS**
For further information, please visit the Company's website www.iconiclabs.co.uk, email [email protected] or contact:
| John Quinlan | Iconic Labs Plc | c/o SBP Tel: +44 (0) 20 7236 1177 |
| Damon Heath | Shard Capital Partners LLP | Tel: +44 (0) 20 7186 9950 |
| Erik Woolgar | Shard Capital Partners LLP | Tel: +44 (0) 20 7186 9950 |
| Hugo de Salis | St Brides Partners Limited | Tel: +44 (0) 20 7236 1177 |
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
END
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