TIDMFITB
RNS Number : 2771B
Fitbug Holdings PLC
03 April 2017
Fitbug Holdings Plc / Epic: FITB.L / Index: AIM
RNS REGULATORY ANNOUNCEMENT:
Embargoed 7.00am - 3 April 2017
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
FITBUG HOLDINGS PLC ('FITBUG' OR 'THE COMPANY')
FINAL RESULTS FOR YEARED 31 DECEMBER 2016
Fitbug Holdings, the AIM quoted digital wellness technology
provider for corporate organisations, announces its results for the
year ended 31 December 2016.
Key Highlights
-- Revenues for the year ended 31 December 2016 GBP1,077,000 (31
December 2015: GBP1,259,000)
-- Loss for the year ended 31 December 2016 of GBP3,536,000
reduced by 42% in comparison with the loss for 2015 of
GBP6,303,000
-- Business shifted from retail devices to corporate digital
wellness: B2B sales have increased to 82% of the Group's
revenues
-- Operating costs savings of over 30% compared with aggregate
operating costs incurred in 2015
-- Recurring service revenues started to accumulate during the year
-- Settled litigation with Fitbit
-- Successfully raised GBP2.61m in cash in July 2016
-- Converted GBP8.4m of long term debt into equity in July 2016
-- Outsourced development function to access additional talent
and other support functions to drive efficiencies
-- Since the year end, the Company has raised a further GBP1m
(before expenses) by way of a share placing.
Anna Gudmundson, Chief Executive, commenting on the results,
said: "In 2016 we executed the most significant parts of our
strategy to turn the business around and to reposition Fitbug as a
B2B digital services provider in the corporate wellness industry.
In practice, this involved major cost optimisation, as well as a
series of restructuring initiatives designed to break from Fitbug's
past and allow the business to move forward with speed and
focus.
During 2016 we achieved the following main objectives: we proved
the opportunity in the corporate wellness market, we reduced
long-term debt over the year by a net GBP6.8m and we raised a total
of GBP2.61m in cash. We also dramatically reduced our losses before
tax from GBP6.3m to GBP3.5m, we closed down our loss-making retail
operations, and we outsourced development to access additional
talent and other support functions to drive cost efficiencies. The
benefits from the cost savings from the restructuring in 2016 are
expected to have a positive impact into the first half of 2017,
with the Group making up to 30% savings in personnel costs in
comparison with the first half of 2016. As a result of shifting the
business from retail devices to corporate digital wellness, 82% of
the Group's revenues are now business to business.
We have started 2017 with a strong pipeline of quality
prospects. We have also embarked on a direct-to-corporate sales
programme. This will allow Fitbug to focus on creating a greater
number of good quality business leads both in the short and longer
term, and not rely only on our strategic partners."
"We have successfully brought a digital corporate wellness
product to market in an extremely short space of time." Gudmundson
summarised. "In 2016 the Group rolled it out to paying customers
while simultaneously maturing and better refining the proposition
to meet market needs."
Donald Stewart, Chairman, said: "While Fitbug's financial
performance in 2016 is what might be expected in a year of
turnaround and change of commercial direction, our headline results
do not betray the amount of activity which has gone into achieving
them. Most importantly in 2016 we have witnessed the economic acorn
for future growth: the Group's first sight of recurring service
revenues. This is the foundation on which the future of the
business will be built.
"We are currently experiencing healthy interest in the Group's
products with a continuous flow of enquiries and conversations with
direct and indirect customers. Many of these customers are
household names and the Board is in no doubt that corporate
interest in health and wellness is growing. The Directors believe
that this is an idea whose time has come.
"The Board remains mindful, as always, that the road to
conversion of many of these potential customers from first contact
to sales is long. As a result the Group's needs for further
development capital, particularly to expand its bandwidth to deal
with the many potential opportunities which it is currently
experiencing, continue as the sales process continues to
develop."
Contacts:
Anna Gudmundson / Donald Stewart Fitbug Holdings Plc 020 7449 4949
Mark Brady / Neil Baldwin SPARK Advisory Partners Limited (Nominated Adviser) 020 3368 3551
Claire Louise Noyce / William Lynne / Niall
Pearson Hybridan LLP, Broker 020 3764 2341
Stephanie Forrest T/F/D, Public Relations 07917 695755
NOTES:
1 Basis of preparation
The condensed Group financial statements for the year ended 31
December 2016 included in this report do not constitute statutory
accounts. The condensed Group financial statements are extracted
from the Group's statutory financial statements for the year ended
31 December 2016. The auditor has reported on those statutory
financial statements; their report was unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006 or
equivalent preceding legislation, but did contain a paragraph of
emphasis of matter relating to going concern without qualifying
their report.
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs.
The condensed Group financial statements have been prepared on a
basis consistent with that adopted in the previous year's published
financial statements and in accordance with IFRSs.
The Group expects to publish statutory financial statements for
the year ended 31 December 2016 that comply with both IFRSs as
adopted for use in the European Union and IFRSs as compliant with
the Companies Act 2006 and Article 4 of the EU IAS Regulations
based on the information presented in this announcement.
The condensed financial statements were approved by the Board on
2 April 2017.
Audited statutory accounts for the year ended 31 December 2015
have been delivered to the registrar of companies. The Independent
Auditors' Report on the Annual Report and Financial Statements for
2015 was unqualified, did not contain a statement under 498(2) or
498(3) of the Companies Act 2006, but did contain a paragraph of
emphasis of matter relating to going concern without qualifying
their report.
2. Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 December
2016 will be despatched to shareholders on or around 4 April 2017
and will be available on the Company's website -
www.fitbugholdings.com from that time.
Chairman and Chief Executive's Statement
Overview
2016 has been dominated by the Group's continued focus on
implementing its turnaround strategy. We have witnessed encouraging
progress, which has involved concentrating our resources on
providing digital wellness solutions to the corporate sector
through our key partners.
In light of the Group's new strategy, first announced at the end
of 2015, we regard Fitbug's financial performance in 2016 as an
improvement over 2015 in certain important areas. During the year
B2B sales have increased to 82% of the Group's revenues and the
Group has achieved significant aggregate operating costs savings of
over 30% compared with aggregate operating costs incurred in 2015,
and with operating losses for the year reduced by 42%.
Otherwise Fitbug's financial performance in 2016 is what might
be expected in a year of turnaround and change of commercial
direction.
Revenues for the year at GBP1.1m are slightly behind 2015
(GBP1.26m). Sales started strongly in the first half of 2016. The
second half illustrated that when dealing with major corporate
organisations the path to sales is long with many twists and turns.
The lower revenues in the second half can be largely attributed to
unanticipated delays in the implementation of their plans by a
small number of major customers.
In spite of that the Board is satisfied that the new course for
the business has been set. Although sales of devices remained a
significant part of the Group's revenues in 2016, recurring service
revenues also started to accumulate during the year. This is an
important green shoot illustrating and underpinning the changing
nature of the Group's business. Ultimately recurring service
revenues will form the bedrock of the Group's income.
Most significantly during the year the Group's change of
direction was fully endorsed by the Kirsh Group, which through NW1
and Kifin remains our largest shareholder and long term lender, as
Fitbug successfully raised GBP2.61m in cash from them and other
investors and converted GBP8.4m of their long term debt into equity
in July 2016.
Business Transformation
Much has changed at Fitbug during 2016.
We started the year by settling our litigation with Fitbit. It
had become clear that pursuing matters further was a distraction to
Fitbug's business and that, given our new strategy, was not where
the future of Fitbug lay.
We had some encouraging sales in the first half, particularly to
a large corporate customer.
In the second half we witnessed considerable interest in the
Group's products as we engaged with many new potential corporate
customers and potential commercial partners including outsourcing
and benefits groups, financial institutions, consultancies,
retailers, and on-line service providers. But as commonly happens
with large corporate customers, their health and wellness plan
deployments were delayed or slowed resulting in lower sales in the
second half than the Board had expected.
As part of our root and branch restructuring of the Group during
2016 the number of permanent staff has been reduced by two-thirds
and, in order to allow remaining staff to focus clearly on core
business issues, much of our support functions, including finance,
payroll, IT support and HR, have been outsourced. Unfortunately as
part of this process we have had to say farewell to many Fitbug
"lifers". However, we have also said hello during the year to some
highly talented new blood rising to the challenges of our new
business direction. We now have a substantially smaller, more
focused and more experienced team.
Our digital wellness platform has been further developed and
rolled out with paying customers both internationally and at home
in the UK. Our commercial website has also been completely
rewritten and renewed.
In the second half of the year we created a new development team
in Bulgaria where we can find the talented people we need to help
us to keep developing our digital offering.
In December 2016 we announced that we have started working with
Olympic gold medallist Sally Gunnell OBE. By combining Sally's
workplace wellbeing programmes and strong corporate network with
Fitbug's digital platform this arrangement has already resulted in
a number of new customer opportunities for the Group and has borne
fruit with our successful MTR Crossrail case study and a contract
with a major consumer goods company.
Financial Summary
Fitbug's financial results for the year ended 31 December 2016
show revenues of GBP1,077,000 (31 December 2015: GBP1,259,000) and
a loss after tax of GBP3,536,000 (31 December 2015: loss
GBP6,303,000). Fitbug's cash balance at 31 December 2016 was
GBP23,000 (2015: GBP698,000).
On 25 July 2016 the Group raised GBP2,611,066 by way of a
placing and open offer, underwritten by NW1, issuing 613,916,438
new ordinary shares at 0.25p per share to raise GBP1,534,791 and
new loan notes for the balance of GBP1,076,275. In addition GBP8.4m
of debt was converted into 336,000,000 ordinary shares issued at
2.5p per share. The new loan notes have transferrable rights to
subscribe for up to GBP1,076,275 of Fitbug ordinary shares at 0.25p
per share for 5 years provided exercise does not result in the
holder or any person with whom the holder is acting in concert (as
defined in the City Code) holding, in aggregate, over 49.9% of the
then issued share capital.
Outlook
Following the period end Fitbug successfully raised a further
GBP1m through a placing of 500m new ordinary shares at 0.2 pence
per share on 25 January 2017.
We have also announced a number of new contracts with a variety
of corporate customers including a global financial services
company, a consumer goods company and a successful case study with
MTR Crossrail.
We are currently experiencing healthy interest in the Group's
products with a continuous flow of enquiries and conversations with
direct and indirect customers. Many of these customers are
household names and the Board is in no doubt that corporate
interest in health and wellness is growing. The Directors believe
that this is an idea whose time has come.
In our ongoing relationships with our existing partners and in
working with new direct customers we are continually reviewing how
to accelerate our route to market and improve our value
proposition. To support this effort obtaining continuous feedback
is an important part of the way we work.
The Board remains mindful, as always, that the road to
conversion of many of these potential customers from first contact
to sales is long. As a result the Group's needs for further
development capital, particularly to expand its bandwidth to deal
with the many potential opportunities which it is currently
experiencing, continue as the sales process continues to
develop.
Donald Stewart, Chairman, Fitbug Holdings plc
Anna Gudmundson, Chief Executive, Fitbug Holdings plc
Company number: 04466195
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Year ended 31 Year ended
December 31 December
2016 2015
Note GBP'000 GBP'000
Revenue 5 1,077 1,259
Cost of sales (749) (647)
=============================================== ====== ============================ ===========================
Gross profit before exceptional
items 328 612
Exceptional write down of obsolete
inventory 146 (736)
Exceptional write back of returns
provision 106 -
=============================================== ====== ============================ ===========================
Gross profit/(loss) 580 (124)
Operating and administrative expenses
- normal 6 (4,134) (5,241)
Operating and administrative income/(expenses)
- exceptional 7 49 (1,162)
Finance income 11 - 2
Finance costs 11 (203) (5)
=============================================== ====== ============================ ===========================
Loss before taxation (3,708) (6,530)
Income tax 12 172 227
Loss for the year and total comprehensive
income
for the year attributable to equity
holders of the parent (3,536) (6,303)
=============================================== ====== ============================ ===========================
Loss per share (pence) (0.01) (2.5)
=============================================== ====== ============================ ===========================
Consolidated Statement of Financial Position
as at 31 December 2016
31 December 31 December
Note 2016 2015
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 14 18 29
============================== ====== ========================== ==========================
18 29
============================== ====== ========================== ==========================
Current assets
Inventories 16 167 577
Trade and other receivables 17 420 751
Cash and cash equivalents 18 23 698
============================== ====== ========================== ==========================
610 2,026
============================== ====== ========================== ==========================
Total assets 628 2,055
============================== ====== ========================== ==========================
Non-current liabilities
Borrowings 20 (1,915) (8,739)
============================== ====== ========================== ==========================
(1,915) (8,739)
============================== ====== ========================== ==========================
Current liabilities
Trade and other payables 19 (675) (894)
Borrowings 20 (75) (575)
============================== ====== ========================== ==========================
(750) (1,469)
============================== ====== ========================== ==========================
Total liabilities (2,665) (10,208)
============================== ====== ========================== ==========================
Net liabilities (2,037) (8,153)
============================== ====== ========================== ==========================
Equity
Share capital 22 3,764 2,815
Share premium account 22 13,543 4,715
Retained deficit (19,344) (15,683)
============================== ====== ========================== ==========================
Total equity (2,037) (8,153)
============================== ====== ========================== ==========================
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share premium
account
Share capital GBP'000 Retained Total equity
GBP'000 deficit GBP'000
GBP'000
================================== ======================== ========================== =========================
Balance as at 1 January
2015 2,408 4,144 (9,853) (3,301)
Loss and total
comprehensive income
for the year - - (6,303) (6,303)
Issue of shares for cash 407 609 - 1,016
Costs of raising funds - (38) - (38)
Share-based payments - - 473 473
========================== ======= ======================== ========================== =========================
Balance as at 31
December 2015 2,815 4,715 (15,683) (8,153)
Loss and total
comprehensive income
for the year - - (3,536) (3,536)
Issue of shares 949 8,985 - 9,934
Costs of raising funds - (157) - (157)
Share-based payments (125) (125)
========================== ======= ======================== ========================== =========================
Balance as at 31
December 2016 3,764 13,543 (19,344) (2,037)
========================== ======= ======================== ========================== =========================
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
=================================================== =====================================
2016 2015
GBP'000 GBP'000
Cash flows from operating activities
(3,536) (6,303)
Loss after taxation Adjustments for:
Depreciation and amortisation 11 82
Share-based payments (125) 473
Fx gain loss - (74
Fx adjustment on consolidation - (66)
Finance income - (2)
Finance expense 203 5
Returns provision (106) 216
Write off development costs - 569
Impairment of Stock (146) 736
=================================================== ============= ======================
Cash flows from operating activities before
changes in working capital and provisions (3,699) (4,364)
Decrease in inventories 556 206
Decrease in trade and other receivables 437 95
Decrease in trade and other payables (329) (797)
=================================================== ============= ======================
Net cash used in operations (3,035) (4,860)
Cash flow from investing activities
Purchase of property, plant and equipment - 26
Development costs capitalised - (167)
Finance income - 2
=================================================== ============= ======================
Net cash flow from investing activities - (139)
Cash flow from financing activities
Issue of ordinary shares for cash 1,535 1,015
Costs directly related to issue of shares (157) (38)
Loan advances 1,076 1,300
Finance expense (94) (5)
=================================================== ============= ======================
Net cash generated from financing activities 2,360 2,272
=================================================== ============= ======================
(Decrease)/increase in cash and cash equivalents
in the year (675) 2,727
Cash and cash equivalents at beginning
of year 698 3,425
=================================================== ============= ======================
Cash and cash equivalents at the end of
the year 23 698
=================================================== ============= ======================
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
1 General information
Fitbug Holdings PLC ("the Company") and its subsidiaries
(together "the Group") develops products and services in the health
and leisure sectors and has its main centre of operation in the
UK.
The company is a public limited company which is listed on the
Alternative Investment Market (AIM) of the London Stock Exchange
and is incorporated and domiciled in the UK. The address of the
registered office is 6th Floor, Kildare House, 3 Dorset Rise,
London, EC4Y 8EN.
The registered number of the company is 04466195.
2 Basis of preparation and significant accounting policies
The consolidated financial statements and company financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRS's) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations as
endorsed by the European Union ("IFRS-EU"), and those parts of the
Companies Act applicable to companies reporting under IFRS.
These consolidated financial statements have been prepared under
the historical costs convention, as modified for the fair value of
certain financial instruments.
Going concern
The financial statements have been prepared on a going concern
basis which assumes that the Group and the Company will raise
sufficient resources to enable them to continue trading for the
foreseeable future.
The directors have prepared financial forecasts which are based
on the business strategy implemented and proven in 2016, as
detailed in the report of the directors on pages -- to --, together
with new funding, which show there will be sufficient facilities
available to the Group for its short-term funding requirements.
The forecasts include significant growth from new customers and
the board believe that this income will be achieved. Whilst there
is no reason to suggest that the targets cannot be met and
exceeded, in common with other businesses, achieving significant
growth is not certain.
To support the development of the business and planned growth in
2017, the board consider that it will be necessary to secure
further longer term funding and whilst that may be uncertain, they
are considering a number of options and believe that they will be
able to raise funds when they are required.
The directors therefore continue to adopt a going concern basis
for preparing these financial statements, which do not include any
adjustments that would otherwise be necessary.
Impact of new standards
At the date of approval of these financial statements, no
standards and interpretations were in issue but not yet effective
which are expected to have a material impact on the financial
statements in the future. There were no standards adopted for the
first time in the current financial year which had a material
impact on the financial statements.
Profit for the year
As permitted by Section 408 of the Companies Act 2006, the
Company has elected not to present its own profit and loss in these
financial statements. Fitbug Holdings plc reported a loss on
ordinary activities after tax GBP2,914,000 for the year ended 31
December 2016 (2015: GBP5,377,000).
Basis of consolidation
The Group financial statements consolidate the financial
statements of the company and its subsidiary undertakings.
The Group is permitted to apply the provisions of s612 of the
Companies Act 2006, concerning merger relief, where applicable. In
the event of a share exchange which gives rise to a holdings of
more than 90% in a subsidiary company, any premium arising is
included in the merger reserve.
Acquired companies have been included in the consolidated
financial statements using the purchase method of accounting when
the transaction can be identified as a business combination.
Subsidiaries are entities over which the Group has power to
govern the financial and operating policies. The cost of investment
in a subsidiary is eliminated against the Group's share in the net
assets at the date of acquisition. All inter-company receivables,
payables, income and expenses are eliminated. Subsidiaries are
fully consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue to be consolidated
until the date that such control ceases.
On disposal of a subsidiary, the consideration received is
compared with the carrying cost at the date of disposal and the
gain or loss is recognised in the income statement.
Where control of a subsidiary undertaking is lost as a result of
the subsidiary issuing equity to a third party or as a consequence
of a subsidiary entering into a statutory insolvency arrangement in
the results of the subsidiary are excluded from the consolidated
income statement from the date that control is lost. The remaining
investment in the former subsidiary is classified as an investment,
an associate or a joint venture investment in accordance with the
terms of the relevant transaction.
Goodwill
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
acquired entity over the Group's interest in the fair value of the
assets, liabilities and contingent liabilities, acquired. Goodwill
which is recognised as an asset is reviewed for impairment at least
annually. Any impairment is recognised immediately in the income
statement and is not subsequently reviewed.
Impairment of Goodwill and other non-financial assets
Non-financial assets are subject to impairment tests whenever
events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an asset
exceeds its recoverable amount (i.e. the higher of the value in use
and fair value less costs to sell) the asset is written down
accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carries out on the
asset's cash-generating unit (i.e. the lowest group of assets in
which the asset belongs for which there are separately identifiable
cash flows). Goodwill is allocated on initial recognition to each
of the group's cash-generating units that are expected to benefit
from the synergies of the combination giving rise to goodwill.
Impairment losses are included in the administrative expenses line
item in the consolidated income statement, except to the extent
they reverse gains previously recognised in the consolidated
statement of changes in equity. An impairment loss recognised for
goodwill is not reversed.
Revenue recognition
The Group is involved in the development and sale of products in
the wearables sector. Revenue represents the total amount
recognised by the Group for goods and services provided to third
parties, excluding VAT and similar taxes.
The Group derives its revenue principally from the sale of
wearable products and services. Revenue is recognised on
delivery.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Cost is based on the cost of purchase on a first in, first
out basis. Net realisable value is based on estimated selling price
less additional costs to completion and disposal.
Leases
The determination of whether an arrangement is, or contains a
lease, is based on the substance of the arrangement at inception
date and whether fulfilment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a
right to use the asset.
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases. Operating lease payments are recognised as an
expense in profit or loss on a straight line basis over the lease
term.
Capitalised leased assets are depreciated over the shorter of
the estimated useful life of the asset and the lease term, if there
is no reasonable certainty that the Group will obtain ownership by
the end of the lease term.
Operating lease payments are recognised as an expense in the
profit and loss on a straight line basis over the lease term.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the Statement of
Financial Position date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the consolidated financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
Statement of Financial Position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the Statement of Financial Position date.
Deferred tax is charged or credited in the Statement of
Comprehensive Income, except when it relates to items charged or
credited in other comprehensive income, in which case the deferred
tax is also dealt with in Other Comprehensive Income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting year, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Historical cost includes expenditure that is directly attributable
to the acquisition of the items. Cost may also include transfer
from equity of any gains/losses on qualifying cash flow hedges of
foreign currency purchases of tangible fixed assets.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probably 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 the replaced part is derecognised.
All other repairs and maintenance are charged to the Statement of
Comprehensive Income during the financial year in which they are
incurred.
Depreciation is calculated using the straight-line method to
allocate their cost amounts to their residual values over their
estimated useful lives, as follows:
-- Property, plant and equipment 3 years
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting year, with the
effect of any changes in estimate accounted for on a prospective
basis.
A tangible fixed asset is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued
use of the asset. The gain or loss arising on the disposal or
scrappage of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is
recognised in the Statement of Comprehensive Income.
Research and development expenditure
Expenditure on research is charged to the income statement in
the year in which it is incurred. Development costs are charged to
the income statement in the year of expenditure, unless individual
projects can demonstrate all of the following:
-- The technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- The intention to complete the intangible asset and use or sell it;
-- The ability to use or sell the intangible asset;
-- How the intangible asset will generate probable future economic benefits, specifically demonstrating the existence of a market for the output of the intangible asset or the intangible asset itself, or, if it will be used internally, the usefulness of the intangible asset;
-- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- Its ability to reliably measure the expenditure attributable
to the intangible asset during its development.
In such circumstances the costs are carried forward as an
intangible non-current asset and amortised over a period not
exceeding 3 years commencing in the period the assets are available
for use.
The Group uses the straight line method of amortisation and the
amount is included in "Administrative expenses" in the Income
Statement.
Valuation of investments
In the Company's financial statements investment in subsidiary
undertakings are stated at cost less and permanent diminution.
Impairment of fixed asset investments
An impairment review of fixed asset investments is conducted
annually and any resulting impairment loss is measured and
recognised on a consistent basis.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets 'at fair value through profit or loss'
(FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS)
financial assets and 'loans and receivables'. The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Financial liabilities
Financial liabilities are classified as either financial
liabilities 'at FVTPL' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
They are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant year. The effective interest rate is the
rate that exactly discounts estimated future cash payments through
the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on
initial recognition.
Trade payables are measured at amortised cost using the
effective interest method, less any impairment. Interest payable is
recognised by applying the effective interest rate, except for
short-term payables when the recognition of interest would be
immaterial.
Debt for equity swaps
Where equity shares are issued in settlement of outstanding
debt, the equity issued is valued at fair value with any difference
between the fair value of equity issued and carrying value of debt
taken to profit or loss.
Trade and other receivables
Trade and other receivables are amounts due from customers for
services performed in the ordinary course of business. If
collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non- current
assets.
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less and bank
overdrafts. In the balance sheet, bank overdrafts are shown within
borrowings in current liabilities.
Trade and other payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers.
Creditors are recognised initially at fair value and are
subsequently measured at amortised cost, using the effective
interest method. Interest is recognised in the Statement of
Comprehensive Income.
Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new share or options are
shown in equity as deduction net of tax, before proceeds.
Share based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the income statement
over the vesting period. Non-market vesting conditions are taken
into account by adjusting the number of equity instruments expected
to vest at each balance sheet date so that, ultimately, the
cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted.
As long 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.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the income statement over the remaining vesting period. Where
equity instruments are granted to persons other than employees, the
income statement is charged with fair value of goods and services
received.
Share options that were cancelled during the year have been
adjusted for by accelerating the total share option expense and
recognised in full in the current year. This treatment has been
applied to staff who had options and who were made redundant during
the year. Share options forfeited during the year have been
adjusted for by reversing the share option expense previously
recognised in respect of those options and this has been applied to
options where staff have left during the year.
Functional and presentation currency
Items included in the consolidated financial statements of the
Group are measured using the currency of the primary economic
environment in which the Group operates ("the functional
currency"). The consolidated financial statements are presented in
Pounds Sterling (GBP) which is also the Group's functional
currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Comprehensive Income.
Foreign operations
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing at the year end. Revenue
and expenditure items are translated at the average exchange rates
for the year, unless exchange rates fluctuate significantly during
that year, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, are recognised
in other comprehensive income and accumulate in equity.
Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are
capitalised as part of the costs of that asset, until such time
when substantially all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete.
Capitalisation of borrowing costs commences when the expenditure
directly attributable to the asset is incurred, when the borrowing
costs are incurred and when the activities that are necessary to
prepare the asset for its intended use or sale are undertaken.
Any investment income earned as a result of temporary investment
of specific borrowings awaiting expenditure on a qualifying asset,
is reduced from the amount capitalised.
All other borrowing costs are recognised as an expense in the
statement of comprehensive income in the period to which they
relate.
3 Critical accounting estimates and judgements
The group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under
circumstances. In the future, actual experience will differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial
year are discussed below.
Recognition of assets in respect of product development
The Group's accounting policy is described in note 2 above. The
directors have to make key assumptions in relation to the estimated
future revenues that will be derived from such expenditure in
concluding whether an intangible asset should be recognised.
Share based payments
In order to calculate the charge for share-based compensation as
required by IFRS 2, the Group makes estimates principally relating
to the assumptions used in its option-pricing model as set out in
note 24.
Trade receivables
All customers are credit checked and receive credit rating
reviews; a full review of the debtor ledger is carried out to
determine if a bad debt provision is required for each balance.
Impairment review
Impairment testing is carried out for all non-current assets at
the year end date or where there is an indication that impairment
exists. For the purposes of impairment testing, the carrying
amounts of the non-current assets are reviewed and an impairment
loss is recognised where the carrying amounts exceed the assets
recoverable amount.
Useful lives
Depreciation methods, useful lives and residual balances are
reviewed at each Consolidated Statement of Financial Position date.
The gain or loss arising on the disposal or retirement of a
tangible fixed asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is
recognised in the Consolidated Statement of Comprehensive
Income.
4 Loss per share
The loss per share from continuing and discontinued operations
is based on a loss of the year attributable to equity holders of
the Parent Company of GBP2,914,000 (2015 - GBP5,377,000) and the
weighted average number of ordinary shares in issue for the year of
701,905,347 (2015 - 255,510,256).
The exercise of the outstanding options would reduce the loss
per share and hence have an anti-dilutive effect.
There were 113,837,413 (2015 - 4,200,000) shares that could
potentially be issued under the terms of options as described in
note 24 and a further 430,510,000 (2015 - 33,333,334) shares that
could be potentially issued under the terms of the convertible loan
as discussed in note 20 that will potentially reduce future
earnings per share.
5 Analysis of turnover
2016 2015
GBP'000 GBP'000
======================================== ========= ===========
An analysis of turnover by geographical
location is as follows:
United Kingdom 314 1,027
United States 34 (18)
Asia and rest of world 272 250
EMEA (outside UK) 457 -
======================================== ========= ===========
1,077 1,259
======================================== ========= ===========
An operating segment is a distinguishable component of the Group
that engages in business activities from which it many earn
revenues and incur expenses, whose operating results are regularly
reviewed by the Board to make decisions about the allocation of
resources and an assessment of performance and about which discrete
financial information is available.
The Board has defined that the Group's only operating segment
during the period is the development of products and services in
the health and leisure sectors. All of the results are allocated to
this segment.
6 Loss for the year
2016 2015
GBP'000 GBP'000
============================================= ========= =========
The loss for the year has been arrived
at after charging:
Staff costs (note 9) 1,035 2,063
Depreciation of plant and equipment 11 13
Amortisations of intangible assets - 69
Operating lease rentals - property 122 108
Operating lease rentals - other - 6
Auditors' remuneration 32 27
Foreign exchange gain (24) (74)
============================================= ========= =========
7 Exceptional items
2016 2015
GBP'000 GBP'000
============================================= ========= =========
Share based payment (note 24) (125) -
Redundancy costs 76 -
Legal costs - 594
Write down of development costs 568
============================================= ========= =========
(49) 1,162
============================================= ========= =========
8 Auditors' remuneration
2016 2015
GBP'000 GBP'000
============================================= ========= =========
Fees payable to the Group's auditors in
respect of:
The auditing of accounts of the Company
pursuant to legislation 19 19
Audit of the company's subsidiaries pursuant
to legislation 13 8
Other services in relation to taxation 6 4
============================================= ========= =========
38 31
============================================= ========= =========
9 Staff numbers and costs
The average monthly number of employees
(including executive directors)
was: 2016 2015
No. No.
========================================== ====================== ================
Administrative `10 5
Development 4 9
Sales 2 6
Support and project management 2 7
Marketing 1 -
========================================== ====================== ================
19 27
========================================== ====================== ================
Their aggregate remuneration comprised:
2016 2015
GBP'000 GBP'000
========================================== ====================== ================
Wages and salaries 1,078 1,432
Social security costs 61 155
Pension costs 21 3
Share based payments (125) 473
========================================== ====================== ================
1,035 2,063
========================================== ====================== ================
10 Remuneration of directors
2016 2015
GBP'000 GBP'000
========================================== ====================== ================
Emoluments 296 418
========================================== ====================== ================
Highest paid director:
Emoluments 192 123
========================================== ====================== ================
Director's remuneration above relates to remuneration paid to
the directors of the parent Company by any Group company for the
periods for which they were directors there. During the year, two
directors accrued benefits under defined contribution pension
schemes (2015: none).
The directors consider that the key management comprises the
directors of the company, and their emoluments are set out
below:
Salary & Share Benefits Pension Total 2016 Total 2015
Fees based in kind
payments
==================== ======== =========== ======== ======= =================== ==========
Executive Directors
Anna Gudmundson 180 - 1 11 192 60
==================== ======== =========== ======== ======= =================== ==========
Richard Goodlad 10 - - 10 -
Fergus Kee - - - 34
Paul Landau - - - 488
Andrew Bummer - - - 62
Ann Jones - - - 116
==================== ======== =========== ======== ======= =================== ==========
Non-Executive
Directors
Donald Stewart 52 - 52 7
David Turner 3 - 3 9
Allan Fisher 3 - 3 9
Tyler Tarr 10 - 10 -
Heidi Steiger 4 - 4
Mark Ollila 22 - 22 -
==================== ======== =========== ======== ======= =================== ==========
Total 284 - 1 11 296 785
==================== ======== =========== ======== ======= =================== ==========
11 Finance income and
expenses
2016 2015
GBP'000 GBP'000
============================== ============================== ===============================
Bank interest receivable - 2
============================== ============================== ===============================
Total finance income - 2
Other interest payable 2 -
Interest payable on loan
from major shareholder (201) (5)
============================== ============================== ===============================
Total finance expenses (203) (5)
============================== ============================== ===============================
12 Taxation
2016 2015
GBP'000 GBP'000
================================ ========= ===================
Current tax
Income tax credit for the
year (172) (227)
================================ ========= ===================
Total current tax (credit) (172) (227)
Deferred tax
Current year
- -
Adjustments in previous periods - -
================================ ========= ===================
Total deferred tax - -
================================ ========= ===================
Total tax (credit) (172) (227)
================================ ========= ===================
Reconciliation of effective tax rate
Tax assessed for the year is lower than (2015: lower than) the
standard rate corporation tax of 20% (2015: 20.50%). The
differences are explained below:
2016 2015
GBP'000 GBP'000
=============================================== ======== ========
Profit before tax (3,708) (6,530)
Tax using the UK corporation tax rate of 20%
(2015: 20.00%) (742) (1,306)
Share based payment disallowed (25) -
Expenses not deductible for tax purposes other
than goodwill amortisation and impairment 25 95
Other income not taxable 1 -
Tax losses carried forward 743 1,215
Research and development tax credit (172) (227)
Depreciation in excess of capital allowances (1) (4)
=============================================== ======== ========
Total tax (credit)/charge (172) (227)
=============================================== ======== ========
Subject to the agreement of HMRC, the Group has UK tax losses of
approximately GBP19,040,000 (2015 - GBP17,230,000) and US tax
losses of approximately GBP2,310,000 (2015 - GBP1,928,000) to carry
forward against future taxable profits. No deferred tax asset has
been recognised in relation to the trading losses available for
offset against future taxable profits. The Group and the Company
have not recognised deferred tax asset due to there being
insufficient evidence of short term recoverability.
13 Intangible assets
Intangible assets represent goodwill arising on the acquisition
of subsidiary undertakings and capitalised costs of developing
software products.
Goodwill on consolidation Development costs Total
GBP'000 GBP'000 GBP'000
================================ ============================ =================== ==========
Cost
At 1 January 2015 - 966 966
Additions - 167 167
Written down - (1,133) (1,133)
================================ ============================ =================== ==========
At 31 December 2015 and at 31 - - -
December 2016
================================ ============================ =================== ==========
Depreciation
At 1 January 2015 - 495 495
Charge for year - 69 69
Written down Foreign Exchange - (564) (564)
================================ ============================ =================== ==========
At 31 December 2015 and at 31 - - -
December 2016
================================ ============================ =================== ==========
Net book value
At 31 December 2015 and at 31 - - -
December 2016
================================ ============================ =================== ==========
At 31 December 2014 - 471 471
================================ ============================ =================== ==========
14 Property, plant and
equipment Group 2016 2015
GBP'000 GBP'000
======================= ========= ===========
Cost
At 1 January 97 155
Additions 19 26
Disposals (71) (84)
======================= ========= ===========
At 31 December 45 97
======================= ========= ===========
Depreciation
At 1 January 68 139
Charge for year 11 13
On disposals (52) (84)
======================= ========= ===========
At 31 December 27 68
======================= ========= ===========
Net book value
At 31 December 18 29
======================= ========= ===========
At 31 December 29 16
======================= ========= ===========
15 Investments
Investments
in subsidiaries
Company GBP'000
--------------------------------------------- -----------------
Cost
As at 1 January 2016 and 31 December 2016 1,171
============================================= =================
Impairment
As at 1 January 2016 and 31 December 2016 -
============================================= =================
Net Book Value
As at 31 December 2016 1,171
============================================= =================
As at 31 December 2016 1,171
============================================= =================
The companies in which the Company's interest at the year end is
more than 20% are as follows:
Name Country of Principal Percentage
incorporation activity of Shareholding
---------------- ----------------- ----------------- -----------------
Provision of
online health
and well-being
Fitbug Limited England & Wales services 100%
Provision of
online health
and well-being
Fitbug Inc. United States services 100%
Shares in Fitbug Inc. are held by Fitbug Limited.
All shares held are ordinary equity shares. The percentages
above reflect both holding and voting rights.
16 Inventories
Group
2016 2015
GBP'000 GBP'000
----------------------- --------- ---------
Goods held for resale 167 577
----------------------- --------- ---------
167 577
======================= ========= =========
The costs of inventories recognised as an expenses during the
period in respect of continuing operations was GBP749,000 (2015 -
GBP648,000)
17 Trade and other receivables
Group
2016 2015
GBP'000 GBP'000
=============================== ===================== ========= =============
Trade receivables 158 188
Provision for credit notes - (12)
Amounts owed by Group - -
companies
Prepayments & accrued
income 34 294
Income tax receivable 172 227
Other debtors 56 54
=============================== ===================== ========= =============
420 751
=============================== ===================== ========= =============
Trade receivables disclosed above are classified as financial
assets at amortised cost. The average credit period on sales of
goods is 88 days (2015: 51 days) from the date of invoice.
Allowances for doubtful debts are recognised against trade
receivables that are aged over 30 days and based on estimated
irrecoverable amounts determined by reference to past default
experience of the counterparty and an analysis of the
counterparty's current financial position.
Of the trade receivables disclosed above, the amounts that are
past due at the end of the reporting period but against which the
Group has not recognised an allowance for doubtful receivables
because the amounts are still considered recoverable are sumarised
below. The group does not hold any collateral or other credit
enhancements over those balances nor does it have a legal right to
set off against any amounts owed by the Group to the
counterparty.
Group
2016 2015
GBP'000 GBP'000
============================== ============= ========= =============
31-60 days 3 5
61-90 days 6 (13)
91-120 days 15 145
>120 days 124 -
============================== ============= ========= =============
148 137
============================== ============= ========= =============
2016 Group 2015
GBP'000 GBP'000
============================== ============= ========= =============
Balance at the start of the
year 12 4
Provision for credit notes - 12
Receivables written off in
the year as uncollectable (111) (4)
============================== ============= ========= =============
At 31 December 2016 (99) 12
============================== ============= ========= =============
The creation and release of provision for impaired receivables
has been included in "operating and administrative expenses" in the
Consolidated Statement of Comprehensive Income. Amounts charged to
the provision account are generally when there is no expectation of
recovering additional cash.
All amounts impaired during the year are debts that were aged
over 90 days.
The creation of a credit note provision has been included in
revenue and is in respect of anticipated returns of retail stock in
trade where the purchaser has the full right of return.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security.
Employee loans of GBP262,499 (2015 - GBP262,499) relating to
former employees of the group were outstanding at 31 December 2016
against which a provision for irrecoverable amounts of GBP262,499
(2015 - GBP262,499) has been made. The employee loans are interest
free and repayment is due when the former employees sell their
shares in Fitbug Holdings plc.
18 Cash and cash equivalents
Group
2016 2015
GBP'000 GBP'000
--------------------------- --------- ---------
Cash and cash equivalents 23 698
--------------------------- --------- ---------
The Group's cash and cash equivalents are held primarily in
Sterling and US Dollars as disclosed in note 25.
19 Trade and other payables
Amounts falling due within
one year
2016 Group 2015
GBP'000 GBP'000
================================ ======= ======= =======
Trade payables 347 355
Other payables 21 34
Provision for credit notes - 372
Amounts owed to Group companies - -
Taxation and social security 35
Accruals and deferred income 272 133
================================ ======= ======= =======
675 894
================================ ======= ======= =======
The number of days outstanding between receipt of invoice and
date of payment, calculated by reference to the amount owed in
respect of trade payables as at 31 December 2016 as a proportion of
amounts invoiced by suppliers during the year was 209 days (2015 -
23 days).
Amounts owed to group undertakings are unsecured, interest free,
have no fixed date of repayment and are repayable on demand.
20 Borrowings
Group
2016 2015
GBP'000 GBP'000
========================== ========= ========= =============
Current liabilities
Convertible loan - 500
Director's loans 75 75
========================== ========= ========= =============
75 575
========================== ========= ========= =============
Non-current liabilities
Shareholder loans 1,915 8,239
Other loan - 500
========================== ========= ========= =============
1,915 8,739
========================== ========= ========= =============
Director's loans
Loans from former directors were to be repayable on 30 June
2016, or earlier at the discretion of the company. Loans were not
repaid at this time and interest is now being repaid monthly at an
annual rate of 8%. The former directors have the option to convert
the outstanding loan amounts to ordinary shares in Fitbug Holdings
PLC.
Shareholder Loans
As at 31 December 2016, the company has loans outstanding to NW1
totalling GBP1,915,275.
Of this amount, GBP500,000 is in the form of a secured loan note
repayable on 31 July 2018 carrying interest of 4 per cent per year
over the Bank of England base rate, and GBP1,076,275 will be in the
form of a secured loan note repayable on 31 July 2019, again
carrying interest of 4 per cent per year over the Bank of England
base rate. The remaining GBP339,000 loan will be repayable on 31
July 2020 and will carry interest at 2.5% per year over the Bank of
England base rate.
Convertible loan
The GBP500,000 balance of the loan issued under a convertible
loan note instrument dated 28 June 2012 is for a term to 30th June
2016 and NW1 exercised its right to convert this to New Ordinary
shares at the end of July 2016.
The maturity analysis of the loans is as follows:
Group
2016 2015
GBP'000 GBP'000
------------------------- ------------------------- -------------------------
Repayable:
Within one year 575
Repayable 1 and 5 years 1,915 8,739
------------------------- ------------------------- -------------------------
1,915 9,314
========================= ========================= =========================
21 Operating leases
Non-cancellable operating lease rentals are payable as
follows:
Group
2016 2015
GBP'000 GBP'000
===================== ========= ======= =============
Less than one year 115 78
Between one and five
years - 263
Over 5 years - 252
===================== ========= ======= =============
115 593
===================== ========= ======= =============
22 Share capital and share premium
Issue price Ordinary Shares Share premium
Allotted, called No. GBP GBP'000 GBP'000
up and fully paid
====================== ============= =========== ================================ ================
At 31 December 2015 281,450,530 0.025 2,815 4,715
Issue of shares for
equity 340,800,000 0.0025 340 511
Issue of shares for
equity 296,000,000 0.025 296 7,104
Issue of shares for
equity 40,000,000 0.025 40 960
Issue of shares for
equity 77,116,438 0.0025 77 116
Issue of shares for
equity 196,000,000 0.0025 196 294
Costs of issuing
shares (157)
====================== ============= =========== ================================ ================
As at 31 December
2016 1,231,366,968 - 3,764 13,543
====================== ============= =========== ================================ ================
Holders of these shares are entitled to dividends as declared
from time to time and are entitled to one vote per share at general
meetings of the Company.
All shares are equally eligible to receive dividends and the
repayment of capital and represent equal votes at meetings of
shareholders.
23 Earnings per share
Loss for the year and total comprehensive
income 3,536,000
Weighted average number of ordinary shares
in issue 701,905,343
=========================================== ===========
Loss per share 0.01
=========================================== ===========
24 Share-based payment
Fitbug Holdings plc operates equity-settled share-based
remuneration for employees which are Enterprise Management
Incentive ("EMI") Schemes. For the EMI scheme set up on 31 December
2014, the Group granted options to all current employees. These
options vest over the three years from the grant date and expire on
the 10th anniversary of the grant date. The only other vesting
condition for all schemes is that the employee remains in the
Group's employment. During the year all but one of fifteen
employees' 2014 share options were forfeited or cancelled. All
options issued under the 2009 and 2011 schemes were forfeited
during 2015. In July 2016 new options were granted to Directors and
employees. The 2016 options have the same conditions as the 2014
options.
Details of options in existence over ordinary shares are
summarised below:
a) EMI Schemes
2016 2015
Number Weighted average Number Weighted average
exercise price (pence) exercise price (pence)
Outstanding at
the
beginning of
the year 8,700,000 9.00 23,100,000 8.46
Granted during
the year 113,837,413 0.37 - -
Forfeited/cancelled
during
the year 8,700,000 9.00 (14,400,000) 8.34
==================== =========== ====================== ============ ======================
Outstanding and
exercisable
at the end of
the year 113,837,413 0.37 8,700,000 9.00
==================== =========== ====================== ============ ======================
The weighted average exercise price of options outstanding at
the end of the year was 0.37p (2015 - 9.00p) and their weighted
average remaining contractual life was 9.5 years (2015 - 9.01
years).
The fair value of the options granted during 2016 was determined
using the Black-Scholes model and was determined to be immaterial;
no expense is recognised within these financial statements. The
credit recognised within these financial statements is the net
effect of options cancelled and forfeited in the year.
The share-based remuneration expense (note 7) comprises:
2016 2015
GBP'000 GBP'000
------------------------ --------- ---------
Equity-settled schemes (125) 473
------------------------ --------- ---------
25 Financial instruments
In common with other businesses, the Group is exposed to risks
that arise from its 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. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
The significant accounting policies regarding financial
instruments are disclosed in note 2.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processed for managing those risks or the methods used to measure
them from previous years unless otherwise stated in this note.
Policies and risks
The Company's financial instruments comprise equity investments
and cash. Equity is used to raise finance for the Company's
operations and acquisitions.
The Company has not entered into any derivative transactions.
The equity investments held by the Company are susceptible to
changes in value arising from market factors. The performance of
each investment is constantly monitored by the directors and the
Company's advisers. At the balance sheet date, equity investments
consist of interests in subsidiaries.
The Company is exposed to interest rate risk and fair value risk
on its borrowings as set out in note 20 which are subject to a
variable rate of interest. Currency risk is described below.
Liquidity risk is described in notes 2 to the consolidated
financial statements and below:
Currency exposures
The monetary assets and liabilities of the Company are
denominated in Sterling and, accordingly, the Company is not
exposed to currency exchange fluctuations.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Loans and receivables
2016 2015
GBP'000 GBP'000
=============================== ======== ========
Current financial assets
Trade and other receivables 213 231
Cash and cash equivalents 23 698
=============================== ======== ========
Total current financial assets 236 929
=============================== ======== ========
Financial liabilities measured at amortised cost
2016 2015
GBP'000 GBP'000
==================================== ======== ========
Current financial liabilities
Trade and other payables 443 389
Borrowings 75 575
==================================== ======== ========
Non-current financial liabilities 518 969
Long term borrowings 1,915 8,739
==================================== ======== ========
Total current financial liabilities 2,433 9,703
==================================== ======== ========
There is no significant difference between the fair value and
the carrying value of financial instruments.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, while
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 finance function. The Board receives regular reports from
the Finance Director through which it reviews the effectiveness of
the processes put in place and the appropriateness of the
objectives and policies it sets.
The overall objective of the board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Risk management
The Group's Board of Directors has overall responsibility for
the establishment and oversight of the Group's risk management
framework. The Board of Directors has established the risk
management committee, which is responsible for developing and
monitoring the Group's risk management policies. The committee
reports regularly to the Board of Directors on its activities.
Capital risk management
The Group considers its capital to comprise its ordinary share
capital, share premium and retained deficit as its equity capital.
In managing its capital, the Group's primary objective is to
provide a return for its equity shareholders through capital growth
and future dividend income. Going forward the Group will seek to
maintain a gearing ratio that balances risks and returns at an
acceptable level and also to maintain a sufficient funding base to
enable the Group to meet its working capital and strategic
investment needs. In making decisions to adjust its capital
structure to achieve these aims, either through new share issues or
the issue of debt, the Group considers not only its short-term
position but also its long term operational and strategic
objectives.
Equity has been exhausted by cumulative losses to date.
Details of the Group's capital are disclosed in the Group
Statement of Changes in Equity.
There have been no other significant changes to the Group's
management objectives, policies and processes in the year nor has
there been any change in what the Group considers to be
capital.
Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk.
Currency risk
The Group is not exposed to any significant currency risk. The
Group also manages its currency exposure by retaining the majority
of its cash balances in sterling.
Financial assets and liabilities are held in the following
currencies at the year-end:
2016 2015
Sterling US Sterling US
GBP'000 Dollars GBP'000 Dollars
GBP'000 GBP'000
--------------- ---------------------------- ------- ---------------- ------------------ ------- ---------------
Trade and other
receivables 213 4 229 2
Cash and cash
equivalents 22 1 648 50
Trade and other
payables 442 1 345 44
Borrowings 1,915 - 9,314 -
Liquidity risk
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. However, the Group continues to absorb cash in its
operations for the time being and management recognises the risk of
insufficient cash and capital to carry on its activities and
safeguard the Group's ability to continue as a going concern.
The Board receives cash flow projections on a regular basis
which are monitored regularly. The Board will not commit to
material expenditure in respect of its ongoing development
programme prior to being satisfied that sufficient funding is
available to the Group to finance the planned programmes. Regular
reviews will ensure that further steps will be taken to cut
additional overheads if necessary
It should be noted that some of the Group's financial
instruments are due for repayment in more than one year (see note
20).
Interest rate risk and fair value risk
There is no significant interest rate risk in respect of
temporary surplus funds invested in deposits and other
interest-bearing accounts with financial institutions as the
operations of the Group are not dependent on the finance income
received. The Group was, however, exposed to interest rate risk on
the loan from NW1 Investments Limited which attracts a rate of
interest of 2.5% and 4% above the base lending rate of the Bank of
England from 30 July 2016. The Group is subject to fair value risk
on fixed interest loans described in note 20 which total
GBP1,915,000. The Board does not undertake hedging
arrangements.
Credit risk
Credit risk arises principally from the Group's trade and other
receivables. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument. The maximum
exposure to credit risk equals the carrying value of these items in
the financial statements. Further information in respect of the
Group's credit risk is disclosed in note 17.
Credit risk with cash and cash equivalents is reduced by placing
funds with banks with high credit ratings.
Trade and other receivables
The fair value of trade and other receivables is estimated as
the present value of future cash flows, discounted at the market
rate of interest at the Statement of Financial Position date if the
effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the Statement of Financial Position date if the
effect is material.
Interest-bearing borrowings
Fair value, which after initial recognition is determined for
disclosure purposes only, is calculated based on the present value
of future principal and interest cash flows, discounted at the
market rate of interest at the balance sheet date.
26 Pension commitments
Fitbug Limited operates a defined contributions pension scheme.
The assets of the scheme are held separately from those of the
Company in an independently administered fund. The pension cost
charge represents contributions payable by Fitbug Limited to the
fund and amounted to
GBP20,220 (2015 - GBP3,333). Contributions totalling GBP11,797
(2015 - GBPnil) were payable to the fund at the reporting date and
included in other creditors.
27 Related parties
At the year end the group owed former directors D Turner
GBP25,000 (2015: GBP25,000) and A Fisher GBP50,000 (2015:
GBP50,000). Interest of GBP2,000 (2015:
GBPnil) and GBP4,000 (2015: GBPnil) was payable on the loans
respectively. After it was agreed to pay interest on the loans from
1 January 2016 and was accrued at a rate of 8%.
Loans from and transactions with NW1 Investments Limited, a
company in which the family of D Turner and A Fisher have a
material interest, are disclosed in note 20 to the consolidated
financial statements.
END
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