TIDMCHAL
RNS Number : 7550K
Challenger Acquisitions Limited
30 August 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA
OR JAPAN.
For Immediate Release
30 August 2019
Challenger Acquisitions Limited
("Challenger" or the "Company")
Interim Results
Challenger Acquisitions Limited (LSE: CHAL) is pleased to
announce its interim results for the period ended 30 June 2019.
Interim Management Report
As stated in our final results on 29 April 2019 Challenger is
seeking out a new project that can properly utilise the public
company platform from a financial and regulatory perspective. The
following is a list of significant changes for the first six months
of this year and to the date of this report:
In January 2018 we made a US$300,000 investment in a Dallas
wheel project through a convertible note. In January 2019 we
announced our plan to sell this investment back to the developers
in exchange for 6 monthly payments of US$50,000 plus interest
payable commencing 31 January 2019. As of 30 June 2019 we have
received US$250,000 plus interest. To date we have received US
$275,000 plus interest with the remaining US$25,000 scheduled to be
received on 31 October 2019.
In April 2018 the owner of the Star Sanctum event announced that
this event was not proceeding. We announced in July 2018 an
agreement to recover the full amount of the GBP100,000 loan
principal over a 12 month period. As of 30 June 2019 we have
received a total of GBP75,000 (GBP60,000 received in 2018). To date
we have received GBP93,000 with the remaining GBP7,000 scheduled to
be received in September 2019.
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 the first half of
2019.
We also added another non-executive director in March 2019. We
welcome George Lucan and his expertise to actively 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.
Other Matters
The 2018 Annual General Meeting ("AGM") was held in London,
England on 17 June 2019. All resolutions were passed at the
AGM.
Financial and Corporate Overview
During the six month period we received US$250,000 from the
developers of the Dallas Wheel from the original convertible note
of US$300,000 and GBP15,000 from the owner of Star Sanctum from the
original loan of GBP100,000 (60,000 received in 2018). No
additional funds were received from the issuance of new unsecured
convertible notes. The funds received from the repayment of the
convertible note to the Dallas Wheel and the loan to Star Sanctum
has enabled the Company to continue operating this year. Cost
control measures have continued to be implemented throughout the
Company in 2019.
The half year results report a profit of GBP1,086k (2018 six
month loss was GBP298k), comprised of the reversal of the 1,250,000
euro liability plus accrued interest related to the Starneth
transaction, personnel costs of GBP18k, administrative expenses of
GBP72k and non-cash finance costs of GBP108k. This result is driven
primarily by regulatory costs for Challenger, the public company
costs in dealing with shareholders, and costs associated with the
active search for a new project.
Corporate activities to date include the recovery of funds from
the Dallas Wheel convertible note and the Star Sanctum loan,
continued cost reduction measures, evaluation of potential projects
and communicating with noteholders and shareholders.
Outlook
Looking forward we expect positive results from the ongoing
process to seek out, evaluate and review a potential project that
can utilise the public company platform in a manner that makes
sense from a financial and regulatory perspective.
I would like to take this opportunity to thank our patient
stakeholders and the Board for their continued support.
Mark Gustafson
Chief Executive Officer
29 August 2019
Responsibility Statement
The Directors are responsible for preparing the Interim Report
in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority ('DTR') and with
International Accounting Standard 34 on Interim Financial Reporting
(IAS 34).
The Directors confirm that the interim financial statements have
been prepared in accordance with IAS 34 and that as required by DTR
4.2.7 and DTR 4.2.8, the Interim Report includes a fair review
of:
-- important events that have occurred during the first six months of the year;
-- the impact of those events on the financial statements;
-- a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
-- details of any related party transactions that have
materially affected the Company's financial position or performance
in the six months ended 30 June 2019.
The Directors who served during the period and up to the date of
signing the interim financial statements were:
Richard Marin
Mark Gustafson
Gene Stice
George Lucan
Company Secretary:
Markus Kameisis
Markus Kameisis
By Order of the Board
Markus Kameisis
Chief Financial Officer
29 August 2019
Condensed Consolidated Statement of Comprehensive Income
The condensed consolidated statement of comprehensive income of
the Group for the six month period from 1 January 2019 to 30 June
2019 is set out below.
Period ended Period ended
30 June 30 June
2019 2018
(unaudited) (unaudited)
Note GBP'000 GBP'000
Administrative expenses (90) (126)
Profit from sale of financial asset 1,269 -
Recovery of written off loan receivable 15 -
-------------- --------------
Operating profit / loss on ordinary
activities before taxation 1,194 (126)
Finance costs (108) (172)
-------------- --------------
Profit / Loss before income taxes 1,086 (298)
Income tax expense - -
-------------- --------------
Profit / Loss after taxation 1,086 (298)
Profit / Loss for the period 1,086 (298)
Fair value movement on available for
sale financial asset - 61
-------------- --------------
Total comprehensive profit / loss attributable
to owners of the parent 1,086 (237)
-------------- --------------
Profit / Loss per share:
Basic & diluted 8 0.004 (0.001)
Condensed Consolidated Statement of Financial Position
The condensed consolidated statement of financial position as at
30 June 2019 is set out below:
As at 30
June As at 31 December
2019 2018
unaudited audited
Note GBP'000 GBP'000
Assets
Current assets
Cash and cash equivalents 37 29
Trade and other receivables 11 14
Short-Term investments 42 234
----------- ------------------
Total current assets 90 277
----------- ------------------
Total assets 90 277
=========== ==================
Equity and liabilities
Capital and reserves
Share capital account 5 8,324 8,324
Equity component of convertible
instruments 106 106
Accumulated deficit (10,540) (11,626)
Total equity attributable to equity
holders (2,110) (3,196)
Current liabilities
Borrowings 9 1,923 3,166
Trade and other payables 277 307
----------- ------------------
Total current liabilities 2,200 3,473
Total equity and liabilities 90 277
Condensed Consolidated Statement of Changes in Equity
The unaudited condensed consolidated statement of changes in
equity of the Group for the period from 1 January 2018 to 30 June
2018 is set out below:
Share Equity component Available
Capital of convertible for sale Retained
account instruments reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On 1 January 2018 7,579 601 243 (9,861) (1,438)
Loss for the period - (298) (298)
Other comprehensive
loss - 61 61
-------- ---------------- --------- --------- -------
Total comprehensive
loss for the period - 61 (298) (237)
-------- ---------------- --------- --------- -------
Transaction with
owners
Issue of shares 650 - - - 650
Equity component
convertible notes - (495) - - (495)
-------- ---------------- --------- --------- -------
Total 650 (495) - - 155
As at 30 June 2018 8,229 106 304 (10,159) (1,520)
-------- ---------------- --------- --------- -------
The unaudited condensed consolidated statement of changes in
equity of the Group from 1 January 2019 to 30 June 2019 is set out
below:
Share Equity component Available
Capital of convertible for sale Retained
account instruments reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On 1 January 2019 8,324 106 - (11,626) (3,196)
Profit for the period - - - 1,086 1,086
Total comprehensive
profit for the period - - - 1,086 1,086
-------- ---------------- --------- --------- -------
As at 30 June 2019 8,324 106 - (10,540) (2,110)
-------- ---------------- --------- --------- -------
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.
Condensed Consolidated Statement of Cash Flows
The condensed consolidated cash flow statement of the Group from
1 January 2019 to 30 June 2019 is set out below:
Period ended Period ended
30 June 30 June
2019 2018
Unaudited Unaudited
GBP'000 GBP'000
Net cash used in operating activities
Profit / Loss for the period before taxation 1,086 (298)
Non-Cash Profit from sale of financial (1,269) -
asset
Interest 108 172
Operating cash flows before movements in
working capital (75) (126)
Decrease (increase) in receivables 195 (5)
Increase (decrease) in accounts payable
and accrued liabilities (30) (1)
------------- -------------
Net cash used in operating activities 90 (132)
Investment in available for sale financial
asset - (220)
Net cash outflow from investing activities - (220)
Issue of ordinary shares net of issue costs - -
Issue of convertible instruments - 400
Finance Expenses (82) (92)
Net cash inflow from financing activities (82) 308
Net increase (decrease) in cash and cash
equivalents 8 (44)
============= =============
Cash and cash equivalent at beginning of
period 29 79
Cash and cash equivalent at end of period 37 35
============= =============
Notes to the Condensed Consolidated Interim Report
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 had 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
the termination of the project and litigation between New York
Wheel Investor LLC and one of the primary contractors. One share
with a nominal value of US$1m was given to the former Starneth
owners to pay the debt resulting from the second tranche of the
purchase contract. The Company entered into a new investment into
the Dallas Wheel project. This investment is currently being
recovered and the whole amount should be paid back by 31 October
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. BASIS OF PREPARATION
The interim condensed unaudited financial statements for the
period ended 30 June 2019 have been prepared in accordance with IAS
34 Interim Financial Reporting. They do not include all the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the group's financial position and
performance since the last annual consolidated financial statements
as at the year ended 31 December 2018. The results for the period
ended 30 June 2019 are unaudited.
The condensed unaudited consolidated financial statements for
the period ended 30 June 2019 have adopted accounting policies
consistent with those followed in the preparation of the Group's
annual consolidated financial statements for the year ended 31
December 2018.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
Significant estimates and judgements
The areas involving significant estimates or judgements are:
-- Going concern
At 30 June 2019 the group had net current liabilities of
GBP2,110k. 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 fund raising options may include
a substantial equity offering or a new financing facility. The fund
raising 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.
4. 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 the Company comprised a single activity, being
the identification and acquisition of target companies or
businesses in the entertainment sector.
5. SHARE CAPITAL
Issued and fully paid Number of shares Share capital
account
GBP'000
----------------- --------------
At 31 December 2018 269,001,572 8,324
----------------- --------------
Issue of shares - -
----------------- --------------
At 30 June 2019 269,001,572 8,324
----------------- --------------
On 30 June 2019, the number of Ordinary Shares authorised for
issue was unlimited. All Ordinary Shares have equal voting rights
and rank equally on a winding up.
6. CASH AND CASH EQUIVALENTS
Period ended Period ended
30 June 2019 31 December
2018
(unaudited) (audited)
GBP'000 GBP'000
--------------------------------- -------------- -------------
Cash at bank and in hand 37 29
--------------------------------- -------------- -------------
Total cash and cash equivalents 37 29
7. TRADE AND OTHER RECEIVABLES
Period ended Period ended
30 June 2019 31 December
2019
(unaudited) (audited)
GBP'000 GBP'000
----------------------------------- -------------- -------------
Prepayments 11 14
Total trade and other receivables 11 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 GBP15k as
repayment of this loan (GBP60k received in 2018). This is reflected
in the statement of comprehensive income. The balance of GBP25k
remains impaired.
8. INVESTMENTS
Long-term Short-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
-------------- -------------
Repayments from the Dallas
Wheel (192)
-------------
At 30 June 2019 - 42
-------------- -------------
The company holds investments in the New York Wheel Investor
LLC, which is fully written off and the Dallas Wheel Project, which
is shown under short-term investments.
In the previous year the Company invested US$300k into the
Dallas Wheel project. This financing was in the form of a
convertible loan. On 31 December 2018 the Company signed a contract
to change the repayment terms for its investment in the Dallas
wheel. The Company will receive US$50,000 plus interest each month
for the first six month in 2019 until the US$300,000 investment is
repaid. The contract has been changed and the last payment is
scheduled to be received on 31 October 2019. Until the date of this
interim report, the Company has received all payments as foreseen.
Therefore the Directors do not see any indications that the nominal
investment amount should be impaired. The fair value of the Dallas
wheel project was GBP42k as at 30 June 2019.
The equity units in New York Wheel Investor LLC are not quoted,
in the prior year the Directors had regard to recent transactions
in equity units of the New York Wheel and therefore assessed the
value as a level 3 valuation. As the project has been stopped and
the probability of the project restarting is very low, the
investment in the New York Wheel was written off in full.
One unit of the New York Wheel investment was held as security
over the second part of the deferred cash consideration of EUR 1.25
million. In March 2019 this previously pledged equity unit in the
New York Wheel was transferred to the principal of Starneth in
exchange for a complete release of all claims between the
companies.
A further unit of the New York Wheel investment was held as
security over the 29 January 2016 convertible loan.
9. Borrowings
Period ended Period ended
30 June 2019 31 December
2018
(unaudited) (audited)
Current GBP'000 GBP'000
----------------------------- -------------- -------------
Convertible notes 1,923 1,910
Deferred cash consideration - 1,256
1,923 3,166
Non-current
----------------------------- -------------- -------------
Deferred cash consideration - -
Convertible notes - -
----------------------------- -------------- -------------
- -
Note 3 Note 4 Total
GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- --------
Balance at 31 December 2018
(liability) 1,089 821 1,910
Balance at 31 December 2018
(equity) 106 - 106
-------------------------------- -------- -------- --------
Finance charge 58 34 92
(Increase)/decrease in accrued
interest (49) (30) (79)
-------------------------------- -------- -------- --------
Balance at 31 December 2018
(liability) 1,098 825 1,923
Balance at 31 December 2018
(equity) 106 - 106
-------------------------------- -------- -------- --------
Note 3
On 29 January 2016, the Company issued 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. 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 GBP400,000 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. 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.
Deferred Consideration
Deferred consideration relates to the acquisition of the
Starneth Group in 2015. Part of the purchase price was two deferred
cash payments. The payments are in equal amounts of EUR 1,250,000
and payable at the first and second anniversary of the transaction.
As part of the disposal of the Starneth participation as announced
on 30 January 2017, the terms of these payments were changed as
follows: the second tranche was waived as part of the sale
agreement and the first tranche remains payable. The company has
not recognised an asset in this regard due to the uncertainty over
whether any success fees will become due. The liability has been
settled as of 31 March 2019 in exchange for one equity unit of the
New York Wheel. Refer to Note 8 for detail on the security and the
New York Wheel.
10. 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 from 1 January 2019 to 30 June 2019
and is as follows:
Period ended Period ended
30 June 2019 30 June 2018
(unaudited) (unaudited)
-------------- --------------
Profit/Loss attributable to equity
holders (GBP) 1,086,000 (237,000)
-------------- --------------
Weighted average number of shares 269,001,572 207,435,531
-------------- --------------
Profit/Loss per share basic (GBP) 0.004 (0.001)
-------------- --------------
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.
11. SUBSEQUENT EVENTS
On 10 July 2019, the Company announced an amendment to the
repayment agreement with the Dallas Wheel. According to this
amendment, the last tranche, which was payable at 30 June, is now
payable in two more tranches (US$26,375 on 31 July 2019, which has
been received and US$25,000 on 30 August 2019). A second amendment
was recently signed which defers the final payment of US$25,000 to
31 October 2019.
On the same date the Company announced the receipt of a further
GBP18,000 from the owner of Star Sanctum.
12. RELATED PARTY TRANSACTIONS
There were no related party transactions in the period under
review.
13. ULTIMATE CONTROLLING PARTY
As at 30 June 2019, no one entity owns greater than 50% of the
issued share capital. Therefore the Company does not have an
ultimate controlling party.
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
IR SDEFDSFUSESA
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