TIDMCHAL
RNS Number : 4633X
Challenger Acquisitions Limited
29 April 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA
OR JAPAN.
For immediate release 29 April 2019
Challenger Acquisitions Limited
("Challenger" or the "Company")
Final Results
Challenger Acquisitions Limited (LSE: CHAL), is pleased to
announce its final results for the period ended 31 December
2018.
CEO's Statement
The year 2018 started promising with the investment in the
Dallas wheel project, followed by success in restructuring a
significant convertible note. However, the failure of the Star
Sanctum event to get launched and the stalled financing for the New
York Wheel project were major disappointments. The year ended with
the recovery of a portion of the loan to Star Sanctum and active
negotiations to sell the investment in the Dallas wheel project
back to its developers, which was finalized and announced in early
2019.
In January 2018 we made a US$300,000 investment in a Dallas
wheel project through a convertible note. As this project
progressed during 2018 and it became likely that Challenger was not
going to invest more funds into this project, we entered into
discussions with the original developers to sell our position back
to them. In January 2019 we announced the change in the repayment
terms of the note to 6 monthly payments of US$50,000 plus interest
payable commencing 31 January 2019. To date we have received
payments for January, February and March.
In April 2018 the owner of the Star Sanctum event announced that
she was not proceeding with this event, which meant that our
GBP100,000 loan to Star Sanctum was at risk. After several
discussions and meetings with the Star Sanctum owner, we announced
in July 2018 an agreement to recover the full amount of the
principal over a 12-month period. In the third quarter of 2018,
GBP35,000 was received, in the fourth quarter of 2018 another
GBP25,000 was received, and to date in 2019 an additional GBP15,000
has been received.
Commencing the second quarter of 2018 we entered into active
discussions with one of our three remaining convertible note
holders to restructure the obligation. In August 2018 we organized
the transfer of their GBP639,000 note to one of the two remaining
convertible note holders for GBP95,000. This transaction allowed us
to cancel GBP544,556 in notes and GBP115,000 in accrued
interest.
2018 was a very difficult year for the New York Wheel project.
In the first quarter there was an expectation that the project
should be moving forward. In the second quarter the main contractor
and the New York Wheel developers commenced significant legal
action against each other. In the third quarter the New York Wheel
developer announced that the "Wheel remains committed to pursuing
this project". However, in October the New York Wheel developer
announced that "there appears to be no viable options for financing
the balance of the work required to complete the project". This
announcement and the resulting lack of development has impaired our
US$3 million equity investment in the New York Wheel project.
From January 2017 up to and including the end of January 2019,
there were no new Starneth projects. Consequently, in March 2019 we
agreed to transfer one previously pledged equity unit in the New
York Wheel to the principal of Starneth in exchange for a complete
release of all claims between the companies. This release allows us
to remove a 1,250,000 EUR liability from the Challenger Balance
Sheet in 2019.
In May and December 2018, I was able to increase my
shareholdings in Challenger. I now hold 10,150,000 ordinary shares
(3.8% of total shares outstanding).
At a corporate level, we added another non-executive director in
March 2019. We welcome George Lucan and his expertise in helping us
identify and secure an appropriate project for Challenger.
On behalf of the Challenger Board we would like to take this
opportunity to thank our shareholders, note holders and all
stakeholders for their patience and support during a very
challenging year.
Mark Gustafson
Chief Executive Officer
26 April 2019
For more information visit www.challengeracquisitions.com or
enquire to:
Challenger Acquisitions Limited
Mark Gustafson +1 604 454 8677
St Brides Partners Ltd (PR)
Cosima Akerman +44 (0) 20 7236 1177
Strategic and Operational Review
Challenger was formed in November 2014 to undertake one or more
acquisitions in the entertainment and leisure sectors with a
particular focus on the attractions sector.
The Company was admitted to the Official List by way of a
Standard Listing and commenced trading on the London Stock
Exchange's main market for listed securities on 19 February 2015.
The US$3 million investment in the New York Wheel was announced on
26 May 2015. The lack of funding for completing this project by the
New York Wheel developer was announced on 24 October 2018. The
acquisition of the Starneth companies was closed on 15 July 2015
and the disposition of the Starneth companies was announced on 30
January 2017. Challenger announced the GBP100k loan to the
London-based Star Sanctum on 7 November 2017 and an agreement to
recover the Star Sanctum loan was announced on 31 July 2018. The
US$300k investment in the Dallas-based wheel project was announced
on 18 January 2018 and the restructuring of the repayment terms of
the investment in this project was announced on 16 January
2019.
Challenger is actively searching for an appropriate acquisition
candidate in order to create long-term value for its
shareholders.
Mark Gustafson
Chief Executive Officer
26 April 2019
Financial Review
Overview
The Company incurred another loss in the year under review. The
New York Wheel investment was impaired completely, following the
news about the project being stopped and law cases being prepared.
The financing the Company has given to the Dallas wheel project
will be paid back by the project within the first half of 2019.
Also, the Star Sanctum investment is being paid back. The Star
Sanctum investment stayed completely impaired. These two cash flows
are supporting the Company in 2019 with liquidity.
Loss for the year
During the year, Company had no income and recorded a loss of
GBP2,008k (2017: GBP1,218k). The biggest cost driver in 2018 was
the write off of the New York Wheel investment with GBP2,302k,
followed by the interest for the convertible notes with GBP322k
(2017: GBP498k). Together with the fair value movement of the
investments of GBP98k (2017: (GBP219k)), the Company reports a
total comprehensive loss of GBP2,008k (2017: GBP1,218k).
Balance Sheet
The total amount of assets on the balance sheet as per the
balance sheet date is GBP277k (2017: GBP2,312k). The assets consist
mainly of the investment in the Dallas project of GBP234k. In
addition, the Company shows cash and cash equivalents of GBP29k
(2017: GBP79k) and trade and other receivables of GBP14k (2017:
GBP14k).
These assets have been financed by a mix of equity and
convertible notes. The equity at the balance sheet date amounted to
(GBP3,196k) (2017: (GBP1,438k)) and the liabilities to GBP3,473k
(2017: GBP3,750k). The liabilities consist of GBP3,166k (2017:
GBP680k) short term borrowing, GBP0k (2017: GBP2,669k) long term
borrowing, trade and other payables of GBP307k (2017: GBP401k).
Cash flow
During the year there was one funding transaction which
generated a cash inflow of GBP400k. In addition, there was a number
of non-cash transactions namely:
On 6 March 2018, 31,159,458 new ordinary shares were issued on
the conversion of GBP500k of the secured convertible note due 2
March 2018, GBP35k of the unsecured convertible note due 6 May 2018
and GBP75k of the unsecured convertible note due 8 June 2019. A
further 7,667,228 new ordinary shares were issued to the holders of
convertible notes as payment of interest due on the converted
amounts.
On 30 August 2018, the Company announced a reduction in
convertible notes due originally on 6 May 2015. The note holder
transferred GBP95,000 to another existing note holder and forgave
the remaining GBP545k in notes and approximately GBP115k in
interest.
On 6 September 2018, 47,500,000 new ordinary shares were issued
on the conversion of the remaining GBP95k in the convertible note
originally due 6 May 2015. Another 93,700 new ordinary shares were
issued as interest.
On 18 January 2018, the Company announced it had received
another GBP400k (GBP380k net of fees) out of the previously
announced convertible note facility due 8 June 2019.
Cash used in operations totalled GBP210k.
Closing cash
As at 31 December 2018, the Company held GBP29k (2017: GBP79k)
in the bank account.
Markus Kameisis
Chief Financial Officer
26 April 2019
Consolidated Statement of Comprehensive Income
The consolidated statement of comprehensive income of the group
is set out below.
Year ended Restated
31 December Year ended
2018 31 December
2017
Note GBP'000 GBP'000
Administrative expenses (157) (472)
Impairment of New York Wheel 9 (2,302) -
Forgiveness of a convertible loan note 10 672 -
Foreign exchange movement on investment 9 98 (219)
Operating loss (1,690) (691)
Finance costs 11 (318) (527)
------------- -------------
Loss before income taxes (2,008) (1,218)
Income tax expense 15 - -
------------- -------------
Loss after taxation (2,008) (1,218)
Loss for the year from continuing operations (2,008) (1,218)
Loss for the year from discontinued operations 24 - (146)
------------- -------------
Loss for year (2,008) (1,364)
Other comprehensive expense
Disposal of disposal group 24 - 146
Total other comprehensive income (2,008) 146
Total comprehensive loss attributable
to owners of the parent (2,008) (1,218)
------------- -------------
Loss per share:
Basic from continuing operations 16 (0.01) (0.01)
Diluted from continuing operations 16 (0.01) (0.01)
Consolidated Statement of Financial Position
The consolidated statement of financial position of the group as
at 31 December 2018 is set out below:
As at 31 Restated
December As at 31
2018 December
2017
Note GBP'000 GBP'000
Assets
Current assets
Cash and cash equivalents 7 29 79
Trade and other receivables 8 14 14
Short-term investments 9 234 -
---------- ----------
Total current assets 277 93
---------- ----------
Non-current assets
Long-term Investments 9 - 2,219
---------- ----------
Total non-current assets - 2,219
---------- ----------
Total assets 277 2,312
========== ==========
Equity and liabilities
Capital and reserves
Share capital account 6 8,324 7,579
Equity component of convertible
instruments 106 601
Retained earnings (11,626) (9,618)
---------- ----------
Total equity attributable to equity
holders (3,196) (1,438)
---------- ----------
Current liabilities
Borrowings 10 3,166 680
Trade and other payables 12 307 401
---------- ----------
Total current liabilities 3,473 1,081
---------- ----------
Non-current liabilities
Borrowings 10 - 2,669
---------- ----------
Total non-current liabilities - 2,669
---------- ----------
Total equity and liabilities 277 2,312
========== ==========
The financial statements were approved by the board of Directors
and authorised for issue on 26 April 2019 and are signed on
its behalf by:
Director - Mark Gustafson
Consolidated Statement of Changes in Equity
The statement of changes in equity of the group is set out
below:
Share Shares Equity component Retained Total
Capital to be Trans-lation of convertible earnings
account issued reserve instruments Available
for sale
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2017 4,583 775 (146) 1,064 462 (9,488) (2,750)
Effect of adoption
of new accounting
standards - - - - (462) 462 -
-------- ------- -------------- ---------------- ----------- --------- -------
As at 1 January
2017 as restated 4,583 775 (146) 1,064 - (9,026) (2,750)
Loss for the year - - - - - (1,364) (1,364)
Other comprehensive
loss - - 146 - - - 146
-------- ------- -------------- ---------------- ----------- --------- -------
Total comprehensive
loss for the year - - 146 - - (1,364) (1,218)
-------- ------- -------------- ---------------- ----------- --------- -------
Transaction with
owners
Issue of shares 2,996 - - - - - 2,996
Cancellation of
unissued shares - (775) - - - 775 -
Equity component
convertible notes
Release on settlement - - - 30 - - 30
of convertible
loans - - - (493) - - (493)
Forfeited options - - - - - (3) (3)
Total 2,996 (775) - (463) - 772 2,530
As at 31 December
2017 7,579 - - 601 - (9,618) (1,438)
-------- ------- -------------- ---------------- ----------- --------- -------
Share Equity component Retained Total
Capital of convertible earnings
account instruments Available
for sale
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December
2017 7,579 601 - (9,618) (1,438)
Loss for the
year - - - (2,008) (2,008)
Total comprehensive
loss for the
year - - - (2,008) (2,008)
-------- ---------------- ----------- --------- -------
Transaction with
owners
Issue of shares 745 - - - 745
Equity component
convertible notes:
Release on settlement
of convertible
loans - (495) - - (495)
Total 745 (495) - - 250
As at 31 December
2018 8,324 106 - (11,626) (3,196)
-------- ---------------- ----------- --------- -------
Share capital comprises the Ordinary Shares issued by the
Company.
Retained earnings represent the aggregate retained losses of the
Company since incorporation.
Equity component of convertible instruments represents the
equity element of instruments with a convertible element.
Consolidated Statement of Cash Flows
The cash flow statement of the group is set out below:
Year ended
31 December Restated
2018 Year ended
31 December
2017
GBP'000 GBP'000
Cash flow from operating activities
Loss for the period before taxation (2,008) (1,218)
Fair value adjustments 2,303 112
Non-cash profit convertible deal (672) -
Share option charge - (3)
Net unrealised FX effect (134) (260)
Interest 322 498
------------- --------------
Operating cash flows before movements
in working capital (189) (351)
Increase in receivables - (109)
Decrease in accounts payable and accrued
liabilities (21) (132)
------------- --------------
Net cash used in operating activities (210) (592)
Investment (220) -
Outflow on disposal of Starneth - (202)
------------- --------------
Net cash outflow from investing activities (220) (202)
Issue of convertible instruments net of
issue costs 380 600
Net cash inflow from financing activities 380 600
Net decrease in cash and cash equivalents (50) (194)
Cash and cash equivalent at beginning
of period 79 273
Cash and cash equivalent at end of period 29 79
Notes to the consolidated financial statements
1. GENERAL INFORMATION
The Company was incorporated under section II of the Companies
(Guernsey) Law 2008 on 24 November 2014, it is limited by shares
and has registration number 59383.
The Company has an investment of US$3m in New York Wheel
Investor LLC, a company that was set up to fund the equity
component for the project to build a New York Wheel which includes
an approximate 630-foot-high observation wheel with 36 capsules, a
68,000 square foot terminal and retail building, and a 950-space
parking garage. This investment was fully impaired as a result of
termination of the project and starting litigation in connection
with it. The Company entered into a new investment into the Dallas
Wheel project. The investment will be paid back during 2019.
The Company's registered office is located at PO Box 186, Royal
Chambers, St Julian's Avenue, St. Peter Port, Guernsey GY1 4HP,
Channel Islands.
The company has not prepared individual financial statements in
accordance with section 244 of the Companies (Guernsey) Law
2008.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements of Challenger Acquisitions
Limited for the year ended 31 December 2018 have been prepared in
accordance with International Financial Reporting Standards as
adopted by the EU (IFRS's as adopted by the EU), issued by the
International Accounting Standards Board (IASB), including
interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) applicable to the companies
reporting under IFRS. The consolidated financial statements have
been prepared under the historical cost convention, as modified by
the available-for-sale financial assets.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 3.
The financial information has been presented in British Pound
(GBP), being the functional currency of the Company.
Going concern
At 31 December 2018 the group had net current liabilities of
GBP3,196k. The financial statements have been prepared on the
assumption that the Company will continue as a going concern. Under
the going concern assumption, an entity is ordinarily viewed as
continuing in business for the foreseeable future with neither the
intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws or regulations.
In assessing whether the going concern assumption is appropriate,
the Directors take into account all available information for the
foreseeable future, in particular for the twelve months from the
date of approval of the financial information.
Based on the continued implementation of costs control measures,
the significant reduction in convertible note debt through
reorganization/settlement, the elimination of the contingent
obligation to the owners of the former Starneth business, the
continued support from the primary convertible note holder, and the
ongoing receipt of funds from the loans to Star Sanctum and the
Dallas wheel project, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the foreseeable future although future funding may be
required in the period. The primary note holder is supportive of
the Company and there are no material external creditors. In order
to support a new acquisition, the fundraising options may include a
substantial equity offering or a new financing facility. The
fundraising options are early stage and there is a material
uncertainty as to whether additional funding will be received and
therefore regarding the going concern basis of preparation. The
financial statements do not include any adjustments that would be
required if the going concern basis was not appropriate.
The Directors' objectives when managing capital are to safeguard
the Company's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders. At the date of this financial information, the
Company had been financed from equity and convertible notes. In the
future, the capital structure of the Company is expected to consist
of convertible notes and equity attributable to equity holders of
the Company, comprising issued share capital and reserves.
Standards and interpretations issued but not yet applied
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and, in
some cases, have not yet been adopted by the EU.
The directors do not expect that any of these standards and
interpretations will have a material impact on the financial
statements of the company.
Principles of consolidation and equity accounting
Subsidiaries
Subsidiaries are all entities over which the group has control.
The group controls an entity when the group is exposed to, or has
the right to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the group. They are deconsolidated
from the date that control ceases.
The group applies the acquisition method to account for business
combinations.
Intercompany transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Segment Reporting
For the purpose of IFRS 8, the Chief Operating Decision Maker
"CODM" takes the form of the board of directors. The Directors are
of the opinion that after the sale of the Starneth entities the
business of the Company comprised a single activity, being the
identification and acquisition of target companies or businesses in
the entertainment sector.
Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the
group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
British Pounds (GBP), which is Challenger Acquisitions functional
and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange
rates are generally recognised in profit or loss. Foreign exchange
gains and losses are presented in the statement of profit or loss,
within finance income or finance costs.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets
and liabilities carried at fair value are reported as part of the
fair value gain or loss. For example, translation differences on
non-monetary assets and liabilities such as equities held at fair
value through profit or loss are recognised in profit or loss as
part of the fair value gain or loss and translation differences on
non-monetary assets such as equities classified as
available-for-sale financial assets are recognised in other
comprehensive income.
Group companies
The results and financial position of foreign operations (none
of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
-- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet
-- income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the
dates of the transactions), and;
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of
such investments, are recognised in other comprehensive income.
When a foreign operation is sold or any borrowings forming part of
the net investment are repaid, the associated exchange differences
are reclassified to profit or loss, as part of the gain or loss on
sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, rebates and amounts collected on behalf
of third parties.
The group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for
each of the group's activities as described below. The group bases
its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each
arrangement.
Income Tax
The income tax expense or credit for the period is the tax
payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the company's subsidiaries
and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
Business Combinations
The acquisition method of accounting is used to account for all
business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the;
-- fair values of the assets transferred
-- liabilities incurred to the former owners of the acquired business
-- equity interests issued by the group
-- fair value of any asset or liability resulting from a
contingent consideration arrangement, and;
-- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the
acquisition date. The group recognises any non-controlling interest
in the acquired entity on an acquisition-by-acquisition basis
either at fair value or at the non-controlling interest's
proportionate share of the acquired entity's net identifiable
assets.
Acquisition-related costs are expensed as incurred.
The excess of the;
-- consideration transferred,
-- amount of any non-controlling interest in the acquired entity, and;
-- acquisition-date fair value of any previous equity interest
in the acquired entity over the fair value of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less
than the fair value of the net identifiable assets of the
subsidiary acquired, the difference is recognised directly in
profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes in fair
value recognised in profit or loss.
Impairment of assets
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other assets
are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the balance sheet.
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
Investments and other financial assets
Classification
The group classifies its financial assets in the following
categories:
-- financial assets at fair value through profit or loss,
-- loans and receivables,
-- held-to-maturity investments, and;
-- available-for-sale financial assets.
The classification depends on the purpose for which the
investments were acquired. Management determines the classification
of its investments at initial recognition and, in the case of
assets classified as held-to-maturity, re-evaluates this
designation at the end of each reporting period.
Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the group commits to
purchase or sell the asset. Financial assets are derecognised when
the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred
substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit or
loss are expensed in profit or loss.
The Group's investments in corporate debt securities which are
held within a business model whose objective is achieved both by
collecting contractual cash flows and by selling securities are
classified as held at fair value through profit or loss
(FVTPL).
Investments in equity securities have been classified as
measured at FVTPL.
Interest income from financial assets at fair value through
profit or loss is included in the net gains/(losses). Interest on
available-for-sale securities, held-to-maturity investments and
loans and receivables calculated using the effective interest
method is recognised in the statement of profit or loss as part of
revenue from continuing operations.
Impairment of financial assets
Financial assets are assessed for indicators of decline in fair
value at the end of the reporting period. The Company recognises an
allowance for expected credit losses (ECLs) for all debt
instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the
Company expects to receive, discounted at an approximation of the
original effective interest rate.
For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are
provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those
credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in profit or
loss.
Assets carried at amortized cost
For loans and receivables, the amount of the loss is measured as
the difference between the asset's carrying amount and the present
value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial
asset's original effective interest rate. The carrying amount of
the asset is reduced and the amount of the loss is recognised in
profit or loss. If a loan or held-to-maturity investment has a
variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined
under the contract. As a practical expedient, the group may measure
impairment on the basis of an instrument's fair value using an
observable market price.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in profit or
loss.
Assets classified as available-for-sale
If there is objective evidence of impairment for
available-for-sale financial assets, the cumulative loss - measured
as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously
recognised in profit or loss - is removed from equity and
recognised in profit or loss.
Impairment losses on equity instruments that were recognised in
profit or loss are not reversed through profit or loss in a
subsequent period.
If the fair value of a debt instrument classified as
available-for-sale increases in a subsequent period and the
increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment
loss is reversed through profit or loss.
Income recognition
Service income
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for
services, stated net of discounts, returns and value added taxes.
The Group recognises revenue when the amount of revenue can be
reliably measured and when it is probable that future economic
benefits will flow to the entity.
Interest income
The Group has no impact due to the adoption of IFRS 15 which
came into effect on 1 January 2018 as it neither generated any
revenue during the year nor prior year.
Interest income is recognised using the effective interest
method. When a receivable is impaired, the group reduces the
carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate
of the instrument, and continues unwinding the discount as interest
income. Interest income on impaired loans is recognised using the
original effective interest rate.
Dividends
The Directors do not propose a dividend in respect of the year
ended 31 December 2018.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include
transfers from equity of any gains or losses on qualifying cash
flow hedges of foreign currency purchases of property, plant and
equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting
period in which they are incurred.
The depreciation methods and periods used by the group are:
-- Vehicles - 3-5 years
-- Furniture, fittings and equipment - 3-8 years
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit or
loss.
Intangible assets
Goodwill
Goodwill is measured as described under "Business Combinations"
in this document. Goodwill on acquisitions of subsidiaries is
included in intangible assets. Goodwill is not amortised but it is
tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Gains and
losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose. The units or groups of units are identified at the
lowest level at which goodwill is monitored for internal management
purposes, being the operating segments.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months
after the reporting period. They are recognised initially at their
fair value and subsequently measured at amortised cost using the
effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
The fair value of the liability portion of a convertible bond is
determined using a market interest rate for an equivalent
non-convertible bond. This amount is recorded as a liability on an
amortised cost basis until extinguished on conversion or maturity
of the bonds. The remainder of the proceeds is allocated to the
conversion option. This is recognised and included in shareholders'
equity, net of income tax effects.
Employee benefits
Short term obligations
Liabilities for wages and salaries, including non-monetary
benefits and accumulating sick leave that are expected to be
settled wholly within 12 months after the end of the period in
which the employees render the related service are recognised in
respect of employees' services up to the end of the reporting
period and are measured at the amounts expected to be paid when the
liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
The obligations are presented as current liabilities in the
balance sheet if the entity does not have an unconditional right to
defer settlement for at least twelve months after the reporting
period, regardless of when the actual settlement is expected to
occur.
Share based payments
Employee options
The fair value of options granted is recognised as an employee
benefits expense with a corresponding increase in equity. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions (eg the entity's share price)
-- excluding the impact of any service and non-market
performance vesting conditions (eg profitability, sales growth
targets and remaining an employee of the entity over a specified
time period), and;
-- including the impact of any non-vesting conditions (eg the
requirement for employees to save or holdings shares for a specific
period of time).
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to
equity.
Social security contributions payable in connection with an
option grant are considered an integral part of the grant itself
and the charges are treated as cash-settled transactions.
The options are administered by Challenger Acquisitions Limited.
When the options are exercised, Challenger Acquisitions Limited
transfers the appropriate amount of shares to the employee. The
proceeds received net of any directly attributable transaction
costs are credited directly to equity.
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity under share premium as a
deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share is calculated by dividing:
-- the profit attributable to owners of the company, excluding
any costs of servicing equity other than ordinary shares
-- by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
-- the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and;
-- the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
3. CRITICAL ESTIMATES, JUDGEMENTS AND ERRORS
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the group's accounting policies.
This note provides an overview of the areas that involved a
higher degree of judgement or complexity, and of items which are
more likely to be materially adjusted due to estimates and
assumptions turning out to be wrong. Detailed information about
each of these estimates and judgements is included together with
information about the basis of calculation for each affected line
item in the financial statements. In addition, this note also
explains where there have been actual adjustments this year as a
result of an error and of changes to previous estimates.
Significant estimates and judgements
The areas involving significant estimates or judgements are:
-- Going concern
See accounting policies (note 2) for details of the assessment
made.
-- Fair value of the available for sale financial asset
The equity units in New York Wheel Investor LLC are not quoted,
in assessing the fair value of the asset in the prior year, the
Directors have applied a DCF model based on the projections
received from the New York Wheel. The calculated amount, including
anticipated delays, supported the USD 3 million shown on the
balance sheet as at 31 December 2017. Based on the developments of
the New York Wheel, mainly in regards to the full stop of the
construction works and the communication in regard to the failure
to secure additional funds, the Directors do not believe that the
project will be completed. Hence the directors took the decision to
fully impair the asset.
Estimates and judgements are continually evaluated. They are
based on historical experience and other factors, including
expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances.
4. FINANCIAL RISK MANAGEMENT
This note explains the group's exposure to financial risks and
how these risks could affect the group's future financial
performance. Current year profit and loss information has been
included where relevant to add further context.
Risk Exposure arising Measurement Management
from
------------------ ------------------------ ---------------------- -------------------
Market risk - Future commercial Cash flow forecasting No hedging
foreign exchange cash flows not Sensitivity analysis
denominated in
GBP No hedging
Recognised financial
assets and liabilities
not denominated
in GBP
Credit risk Cash and cash Aging analysis Diversification
equivalents, Credit ratings of bank deposits.
trade receivables, Follow-ups to
other receivables loan investment
Liquidity risk Borrowings and Rolling cash Availability
other liabilities flow forecasts of committed
credit lines
and borrowing
facilities
Foreign exchange risk
The Company is especially focused on the currency pairs USD/GBP
and EUR/GBP. The Company's biggest investment is denominated in
USD. An outstanding liability from the Starneth acquisition is in
EUR.
The group's exposure to foreign currency risk at the end of the
reporting period, expressed in GBP'000 was as follows:
Currency Assets Assets 10% change Liabilities Liabilities 10% change
in CCY in GBP in CCY in GBP
-------- -------- ----------- ------------ ------------ -----------
USD 328 257 (26) - - -
EUR 1 1 - 1,404 1,256 126
CHF 1 - - 1 1 -
The group's exposure to foreign currency risk at the end of the
prior period, expressed in GBP'000 was as follows:
Currency Assets Assets 10% change Liabilities Liabilities 10% change
in CCY in GBP in CCY in GBP
-------- -------- ----------- ------------ ------------ -----------
USD 3,003 2,222 (222) 8 6 1
EUR 1 1 - 1,341 1,190 119
CHF 1 1 - 1 1 -
During the year, GBP 10k foreign-exchange related losses were
recognised in profit or loss.
As described above the group is primarily exposed to changes in
USD/GBP and EUR/GBP exchange rates. The sensitivity of profit or
loss to changes in the exchange rates as summarized in the above
table arises mainly from the group's EUR denominated
liabilities.
Interest rate risk
The group's fixed rate borrowings are carried at amortised cost.
They are therefore not subject to interest rate risk as defined in
IFRS 7, since neither the carrying amount nor the future cash flows
will fluctuate because of a change in market interest rates.
Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions, as well as credit exposures
to customers, including outstanding receivables. To limit the risk
the group's main cash resources are held with banks with a minimum
external rating of A.
5. BUSINESS SEGMENTS
For the purpose of IFRS8, the Chief Operating Decision Maker
"CODM" takes the form of the board of Directors. The Directors are
of the opinion that after the sale of the Starneth entities the
business of the Company comprised a single activity, being the
identification and acquisition of target companies or businesses in
the entertainment sector.
6. SHARE CAPITAL
Issued and fully Number of shares Share capital
paid account
GBP'000
At 31 December
2017 182,103,088 7,579
----------------- --------------
Issue of shares 86,898,484 745
----------------- --------------
At 31 December
2018 269,001,572 8,324
----------------- --------------
During the year the company issued 78,659,458 shares to settle
convertible loans worth GBP705,444 and 8,239,026 shares to settle
interest accruing on the convertible loans of GBP40,273. The share
capital account represents the number of shares in the issue at the
fair value of the consideration received net of any discounts and
share issue expenses.
7. CASH AND CASH EQUIVALENTS
2018 2017
GBP'000 GBP'000
--------------------------------- -------- --------
Cash at bank and in hand 29 79
--------------------------------- -------- --------
Total cash and cash equivalents 29 79
8. TRADE AND OTHER RECEIVABLES
2018 2017
GBP'000 GBP'000
----------------------------------- -------- --------
Prepayments 14 14
Total trade and other receivables 14 14
The Company provided a GBP100k loan to a KTEG Limited in
relation to Star Sanctum event set to launch and operate
film-focused conventions. As the probability to receive back the
full amount of the loan decreased significantly, the whole amount
including accrued interest has been impaired last year. In the
period under review, the Company has received a total of GBP60k as
repayment of this loan. This is reflected in the extraordinary
result. The remaining GBP40k stays impaired as at the year end.
9. INVESTMENTS
Short-term
Long-term Investments
Investments
GBP'000 GBP'000
Fair value
At 31 December 2016 2,438 -
--------------- -------------
Additions - -
Foreign exchange movement (219) -
--------------- -------------
At 31 December 2017 2,219 -
--------------- -------------
Foreign exchange movement 83 -
in New York Wheel
Investment in Dallas Wheel
project - 220
Foreign exchange movement
in Dallas Wheel - 14
Impairment of New York Wheel (2,302) -
At 31 December 2018 - 234
-------------- -------------
2018 2017
Current GBP'000 GBP'000
----------------------------- -------- --------
Convertible notes 1,910 680
Deferred cash consideration 1,256 -
3,166 680
Non-current
----------------------------- -------- --------
Deferred cash consideration - 1,190
Convertible notes - 1,478
----------------------------- -------- --------
- 2,668
10. BORROWINGS
Note 1 Note Note Note Total
2 3 4
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- --------
Balance at 31 December
2017 (liability) 675 - 974 509 2,158
Balance at 31 December
2017 (equity) - 500 106 - 606
-------------------------- -------- -------- -------- -------- --------
Finance charge - 4 104 95 203
Forgiveness / repurchase (580) - - - (580)
Issued for cash - - - 380 380
Transaction Cost 20 20
Issued in lieu of
interest - - 81 - 81
Converted into shares (95) (500) - (75) (670)
Interest paid in
shares - (29) - (3) (32)
Interest paid in - - - - -
cash
(Increase)/decrease
in accrued interest - 25 (70) (105) (150)
-------------------------- -------- -------- -------- -------- --------
Balance at 31 December
2018 (liability) - - 1,089 821 1,910
Balance at 31 December
2018 (equity) - - 106 - 106
-------------------------- -------- -------- -------- -------- --------
Note 1
The notes are unlisted, unsecured, transferable and convertible
with a twelve-month maturity date which was extended during the
year to 6 May 2018. Interest was accrued at 12% per annum and
payable quarterly, or upon conversion, in cash or in Ordinary
Shares at the Company's discretion. The notes can be converted into
Ordinary Shares at a price per Ordinary Share equal to the lower of
GBP0.50 and 7.5% discount to the prevailing market price, defined
as the average of the lowest three volume weighted average prices
as quoted by Bloomberg for the period of 10 trading days prior to
the conversion date. The convertible note has been recognised as a
liability in accordance with IFRS 9 Financial Instruments as the
instrument provides an obligation to the company to either settle
the liability via a cash payment or via the issue of a variable
number of shares. The conversion feature represents an embedded
derivative; however, this has not been separately recognised as the
conversion feature is considered to be closely related to the host
contract. As a result of signing a settlement agreement with the
note holder, the outstanding note 1 loan amount was waived off to
the income statement as at 31 December 2018.
Note 2
On 2 March 2016 the Company issued convertible notes worth
GBP0.5 million. The notes are unlisted, secured, transferable and
convertible. Maturity date was 2 March 2018. The Company can redeem
the notes in cash or shares at $0.25 at Maturity at the Company's
discretion. The Secured Convertible Notes are secured by one common
unit of New York Wheel Investor LLC, representing a total value of
US$1 million. Interest was accrued at 5% per annum and payable
quarterly or at Maturity at the Company's discretion. The interest
can be paid in cash or shares, at the average of the 10-day closing
price prior to the end of each calendar quarter, at the Company's
discretion. The Company can redeem the notes at a 25% premium
anytime in cash. The Company repaid the accrued interest and the
principal in shares, on this basis the full GBP0.5 million net of
the GBP0.025 million transaction fees has been recognised in
equity.
Note 3
On 29 January 2016, the Company issued further GBP1 million of
secured convertible notes. The notes are unlisted, secured,
transferable and convertible. Maturity date is 30 June 2019. The
Secured Convertible Notes are secured by one common unit of New
York Wheel Investor LLC, representing a total value US$1 million.
Interest is accrued at 8% per annum and payable quarterly. One
eighth of the interest can be settled in cash or shares at the
Company's discretion. Seven eighths of the interest is settled in
new convertible notes with the same terms. The notes are
convertible in cash or shares at the option of the holder and can
be converted into Ordinary Shares at a fixed conversion price of
GBP0.80 per Ordinary Share. The Company can redeem the notes at a
10% premium anytime. As per the nature of this convertible
instrument, GBP106k has been recognised as an equity component in
of convertible instruments in consolidated statement of changes of
equity, using a discount rate of 12%.
Note 4
The last tranche of GBP 400,000 of the GBP1 million funding
facility announced by the Company on 13 June 2017, has been drawn
on 18 January 2018 and subsequently the Company has issued
convertible note for GBP400,000. The notes are unlisted, unsecured,
transferable and convertible. Maturity date is 8 June 2019. No
conversions can happen in the first 120 days. The maximum amount
that can be converted in any 30-day period is 20% of the principle
amount. The conversion price is the lowest volume weighted average
price over 10 days prior to the conversion. Interest rate is 8% per
annum and payable upon conversion at the Company's option in cash
or ordinary shares at the conversion price. The Company can redeem
in cash all or any part of the outstanding convertible note with a
25% premium to the principal amount.
11. FINANCE INCOME AND COSTS
2018 2017
GBP'000 GBP'000
-------------------------------------------- ------------------------------------- -------------------------------------
Interest
Income (21) (12)
Bank charges 7 9
Interest on
convertible
loan
notes 203 447
Interest on
deferred
consideration
and other
interest
payables 119 51
Net foreign
exchange
costs 10 32
-------------------------------------------- ------------------------------------- -------------------------------------
Finance costs 318 527
-------------------------------------------- ------------------------------------- -------------------------------------
12. TRADE AND OTHER PAYABLES
2018 2017
GBP'000 GBP'000
-------------------------------- -------- --------
Trade payables 149 220
Accrued expenses 158 181
-------------------------------- -------- --------
Total trade and other payables 307 401
13. EMPLOYEE BENEFIT EXPENSE
2018 2017
GBP'000 GBP'000
----------------------------------------- ------------------------------------- -------------------------------------
Wages and
salaries 30 69
Share
options
granted to
directors,
employees
and key
advisers - (3)
30 66
----------------------------------------- ------------------------------------- -------------------------------------
14. DIRECTORS' EMOLUMENTS
The Directors were paid emoluments of GBP30k as directors' fees
during the period under review (GBP69k in 2017). In the previous
year, there was a release of an existing bonus accrual that has
been included in administrative expenses. Of the GBP30k, GBP10k
were the director's fees for Mark Gustafson. Mr. Gustafson billed
an additional GBP12k (2017: GBP19k) as management fees, booked
under administrative expenses. At 31 December 2018 a total amount
of GBP 84k (2017: GBP87k) was unpaid and due to Mr. Gustafson for
management services and director fees. The total compensation for
Mr. Gustafson in the year under review was GBP22k.
These details and the details for the other Directors can be
found within the Director's remuneration report on page 20.
The Directors were the key management personnel of the
Group.
15. TAXATION
Challenger Acquisitions Limited is a Guernsey Corporation
subject to a corporate tax rate of nil, as at 31 December 2018.
Income tax
2018 2017
GBP'000 GBP'000
Current tax expense:
- Current tax on profits for the - -
year
- Adjustments in respect to prior - -
years
- Foreign current tax on profits - -
for the year
-------- --------
Total current tax - -
-------- --------
Deferred tax:
- Origination and reversal of - -
temporary differences
- Adjustments in respect to prior - -
years
--------
Total deferred tax - -
--------
Income tax expense - -
======== ========
A reconciliation of income tax expense, from continuing
operations, applicable to the loss before taxation at the statutory
tax rate to the income tax expense at the effective tax rate of the
Group is as follows:
31 Dec 31 Dec
2018 2017
GBP'000 GBP'000
Loss before taxation
from continuing operations (2,008) (1,218)
========== ==========
Tax calculated at domestic tax - -
rates applicable to losses in
respective countries:
Tax effects of:
Tax losses carried - -
forward
- -
========== ==========
The corporation tax rate in Guernsey is 0%, there are no
unrecognised tax losses.
16. LOSS PER SHARE
The calculation for loss per share (basic and diluted) for the
relevant period is based on the loss after income tax attributable
to equity holder for the period ending 31 December 2018 and is as
follows:
31 December 2018
Loss from continued operations attributable
to equity holders (GBP) (2,008,000)
------------
Weighted average number of shares 229,604,791
------------
Loss per share basic (GBP) (0.01)
------------
Weighted average number of shares for dilutive
calculation 229,604,791
Loss per share diluted (GBP) (0.01)
------------
31 December 2017
Loss from continued operations attributable
to equity holders (GBP) (1,218,000)
------------
Weighted average number of shares 93,005,288
------------
Loss per share basic (GBP) (0.01)
------------
Weighted average number of shares for dilutive
calculation 93,005,288
Loss per share diluted (GBP) (0.01)
------------
Basic loss per share is calculated by dividing the loss after
tax attributable to the equity holders of the group by the weighted
average number of shares in issue during the year.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all potential dilutive ordinary shares namely the conversion of
the convertible loan note in issue. The effect of these potential
dilutive shares would be anti-dilutive and therefore are not
included in the above calculation of diluted earnings per
share.
17. RELATED PARTY TRANSACTIONS
There were no related party transactions except for the
transactions disclosed in Note 14 to the accounts.
18. COMMITMENTS
The Company had not entered into any material capital
commitments as at 31 December 2018.
19. SHARE BASED PAYMENTS
On 29 July 2015, options to acquire 615,000 Ordinary Shares
("Options 2015") were granted to employees and consultants of the
Group. On 8 September 2015, options to acquire 730,000 Ordinary
Shares ("Options 2015") were granted to the directors of the
company. These Options 2015 have a fixed exercise price of 40
pence, and are exercisable in the following tranches; 25% as from
the date of grant and 25% every twelve months thereafter (and are
therefore fully vested after three years). They cannot be exercised
after the 5th anniversary of the grant. The group has no legal or
constructive obligation to repurchase or settle the options in
cash.
On 7 January 2016, options to acquire 160,000 Ordinary Shares
("Options 2016") were granted to consultants of the Group. These
options have a fixed exercise price of 45 pence, and are
exercisable in the following tranches:
Movements in the number of share options outstanding and their
related weighted average exercise prices are as follows: 25% as
from the date of grant and 25% every twelve months thereafter (and
are therefore fully vested after three years). They cannot be
exercised after the 5th anniversary of the grant. The group has no
legal or constructive obligation to repurchase or settle the
options in cash.
2018 2017
Average Options Average Options
exercise (thousands) exercise (thousands)
price in price in
GBP per GBP per
share option share option
-------------- ------------- -------------- -------------
Beginning of period 0.41 1,093 0.41 1,516
-------------- ------------- -------------- -------------
Granted 0.00 - 0.00 -
-------------- ------------- -------------- -------------
Forfeited 0.00 - 0.41 (423)
-------------- ------------- -------------- -------------
Exercised 0.00 - 0.00 -
-------------- ------------- -------------- -------------
Expired 0.00 - 0.00 -
-------------- ------------- -------------- -------------
End of period 0.41 1,093 0.41 1,093
-------------- ------------- -------------- -------------
Out of the outstanding 1,092,500 (2017: 1,092,500) share options
932,500 (2017: 855,000) were exercisable. No options were exercised
in 2017 and 2018.
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Grant-vest Expiry Exercise price Share options (thousands)
date in GBP
------------ --------- --------------- ----------------------------
2018
------------ --------- --------------- --------------------------
2015-01 2020-07 0.40 303
2015-02 2020-09 0.40 630
2016-01 2021-01 0.45 160
1,093
--------------------------
The weighted average fair value of the Options 2015 determined
using the Black-Scholes valuation model was 1.4 pence per option.
The significant inputs to the model were share price of 38 pence at
the grant date, exercise price of GBP0.40, volatility of 14%,
dividend yield of 0% an expected option life (to expiry) of 5 years
with 25% vesting each year and an annual risk-free interest rate of
0.5%. The volatility measured at the standard deviation of
continuously compounded share returns is based on the statistical
analysis of daily share prices from listing of the Company until
the grant date.
The weighted average fair value of the Options 2016 determined
using the Black-Scholes valuation model was 2.49 pence per option.
The significant inputs to the model were share price of 37.5 pence
at the grant date, exercise price of GBP0.45, volatility of 14%,
dividend yield of 0% an expected option life (to expiry) of 5 years
with 25% vesting each year and an annual risk-free interest rate of
0.5%. The volatility measured at the standard deviation of
continuously compounded share returns is based on the statistical
analysis of daily share prices from listing of the company until
the grant date.
As a result of the 422,500 options that forfeited in 2017, the
profit and loss had been credited with GBP3k and the share option
reserve has been decreased accordingly. No movements in the
period.
20. SUBSEQUENT EVENTS
In March 2019 the company agreed to transfer one previously
pledged equity unit in the New York Wheel to the principal of
Starneth in exchange for a complete release of all claims between
the companies. This release allows the company to remove a
1,250,000-euro liability from the Challenger Balance Sheet in
2019.
The company received an installment payment of GBP15,000 in
March 2019 from KETG Limited which was in relation to the Star
Sanctum Loan.
21. FINANCIAL INSTRUMENTS
The only financial instrument the Group held, in addition to
those disclosed elsewhere in these notes, as at 31 December 2018
was Cash and cash equivalents.
22. ULTIMATE CONTROLLING PARTY
As at 31 December 2018, no one entity owns greater than 50% of
the issued share capital. Therefore, the Company does not have an
ultimate controlling party.
23. CONTINGENCIES
Due to the Group's activities, matters arise that could give
rise to a contingent liability. No further details are given as it
could be seriously prejudicial to the position of the Group.
24. ASSETS OF DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE AND
DISCONTINUED OPERATIONS
At 31 December 2016 the assets and liabilities relating to the
Starneth Holdings BV and Starneth Europe BV were presented as held
for sale following the approval of the group's management to
proceed with the disposal of these companies. During the year to 31
December 2017 and on 6 January 2017 the sale completed.
The result of discontinued operations recognized in the year to
31 December 2017 related to the release of the translation reserve
of GBP146,000.
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 rns@lseg.com or visit www.rns.com.
END
FR UKANRKBASUAR
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April 29, 2019 12:24 ET (16:24 GMT)
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