Final Results

RNS Number : 6657J

Ultimate Sports Group PLC

30 June 2017

 

Ultimate Sports Group Plc ('USG' or 'the Company')

Final Results for the year ended 31 December 2016

Ultimate Sports Group Plc, the AIM listed investment vehicle, is pleased to announce its results for the year ended 31 December 2016.

Chairman's Statement and Chief Executive's Review

For the year ended 31^st December 2016, we are reporting an operating loss before adjusted items of £287,433 (2015: loss before adjusted items £259,830).

These figures exclude website development costs and amortisation of £141,763 for 2016 and £71,813 in the previous year.

Additionally and as a result of terminating our small-sided football league activities, the results exclude non-recurring losses of £158,747 in 2016 and £77,436 in the previous year.

USG's net cash balances at 31^st December 2016 were £129,437 (2015: £357,915).  The Directors are not recommending the payment of a dividend.

Share Placing

In June 2016, USG issued 5 million new Ordinary shares at 10p per share to raise £500,000 before expenses.  Following the share placing and allotments during the year, the Company had 20,486,638 Ordinary shares in issue at 31 December 2016. Since the year end, the Company has raised £212,500 before expenses through a placing of 2,125,000 shares at 10p per share.

Ultimate Player.me

UltimatePlayer.me is a new digital platform that increases the participation and enjoyment of children in school sports.

The platform is operating as a Freemium business model - aiming to achieve web scale of free users with a percentage encouraged to subscribe as members.

Given that the platform is built to be used by coaches with children it has a complex set of users to satisfy and there have been a number of challenges successfully dealt with:

·     Coaches must be motivated to use the platform (for free) with their classes

·     Parents must be comfortable to allow their children to join the platform, and help their children engage with it, ultimately getting enough value to purchase memberships and products

·     Children must be excited enough about the platform to want to log in regularly and to participate in the platform

We have successfully dealt with the challenges because the young players embrace it.  In our experience when a coach uses the platform with a class, their players are excited to participate.  They change their behaviour in the classes, wanting to develop a wider range of skills and ultimately they participate in more classes.  They are excited by awards and actively engage with their parents in the evenings to check their results.

Equally, we have found that the early adopter coaches are enthusiastic about the platform and we have feedback on what it has achieved for them.

We have also had very positive feedback from parents.  They value awards, and the increased interest of their children in the sports that they are participating in.  Over 50% of parents activate their children on the platform once invited.  Parents are also needed to help their children log on to the site in the evenings, and are doing so in high numbers.

The traction that the platform has gained with both children and parents, has led to10% of active players over a 3 month period purchasing memberships.

We have also demonstrated that parents are happy to purchase UltimatePlayer.me merchandise.

We believe that the dynamics of the platform are functioning as planned: coaches are signing up, inviting children who are participating and their parents are spending on memberships and merchandise.

The cost of development to date is represented by the investment we have made of £729,157.

The pilot for Ultimate Player, which is currently being used by a number of coaches and children, has indicated very positive results. The board is now exploring avenues to exploit it. 

Pantheon Leisure Plc ("Pantheon")

USG holds 85.87% of the issued share capital of Pantheon which in turn owns 100% of the operating business of Pantheon's Sport and Leisure division.

Pantheon's Sport and Leisure division comprises two trading companies, Sport in Schools Limited ("ESS") also known as The Elms Sport in Schools and Football Partners Limited ("FPL") also known as The Elms Small Sided football.

The business of FPL was sold in November 2016 to Powerplay Team Sports Limited, a company operating in the same sector for a consideration of up to £100,000 with cash payable on deferred terms and subject to certain conditions.  Those conditions have now been fulfilled and £82,500 has been received with a further final payment of £17,500 due in October 2017.

Pantheon trading companies made a trading loss of £36,212 before exceptional items for the year (2015: Profit £67,243).

On a turnover of £1,246,888 (2015: £1,243,011), ESS has contributed divisional profit (before exceptional item) of £122,535 as compared with £144,679 to 31 December 2015.

ESS specialises in the delivery of primary school sport - covering the National Curriculum during the day and The Extended Day before and after school hours (breakfast, lunchtime and after-school clubs).

The majority of the breakfast and lunchtime clubs are provided and paid for by the school, whilst the majority of after-school clubs are paid for by the parents.

Holiday camps are a successful area for ESS where it provides sports tuition during the school holidays.  The majority of the camps are paid for by parents, whilst a few are paid for by the school.

The ESS directors have developed bespoke skill sets which have been adopted with great enthusiasm by its full time staff and part time coaches.  On average, some 20,000 children are coached between 12 to 25 hours a week.  All its coaches are highly qualified (minimum level 2), DBS checked, child protection vetted and rigorously trained by ESS in all the main disciplines required by the National Curriculum.  The management of ESS constantly monitors and assesses the level of performance of its coaches throughout the school year.

Outlook

The continuing success of the sports tuition activities of ESS is encouraging and the directors consider that together with the gradual acceptance of the Ultimate Player.me website, there is potential for growth.

We look forward to updating shareholders on progress.

Notice of Annual General Meeting

The Annual General Meeting of the Company in respect of the year ended 31 December 2016 will be

held at the Hellenic Centre, 16/18 Paddington Street, London W1U 5AS on 30 August 2017 at 11:00 am.

R.L. Owen

G.M. Simmonds

Consolidated statement of comprehensive income for the year ended 31 December 2016

			2016		Restated 2015
			£		£
Continued activities
Revenue			1,248,490		1,243,011
Cost of sales			(717,020)		(628,348)
Gross profit			531,470		614,663
Administrative expenses			(818,903)		(874,493)
Loss before website costs written off			(287,433)		(259,830)
Website costs and amortisation			(141,763)		(71,813)
Operating loss			(429,196)		(331,643)
Finance income			1,602		1,150
Finance costs			(3,972)		(3,972)
Other gains and losses			-		55,480
Profit/(loss) before taxation			(431,566)		(278,985)
Taxation			6,836		(23,334)
Profit/(loss) after taxation			(424,730)		(302,319)
Discontinued activities
Revenue			373,935		431,510
Cost of sales and expenses			(532,682)		(508,946)
Operating loss			(158,747)		(77,436)
Attributable to:
Equity holders of the parent company			(566,581)		(377,424)
Non-controlling interests			(16,896)		(2,331)
			(583,477)		(379,755)
Other comprehensive loss:
Revaluation losses on available-for-sale investments taken to equity			(3,275)		(14,553)
Taxation on items taken directly to equity			618		23,334
Other comprehensive profit/(loss)			(2,657)		8,781
Comprehensive loss attributable to:
Equity holders of the parent company			(569,238)		(368,643)
Minority interest			(16,896)		(2,331)
Total comprehensive loss			(586,134)		(370,974)

Loss per share (basic and diluted)

(Loss)/Earnings from operations per share			(0.0318)p		(0.02655)p
Other comprehensive earnings/(loss) per share			(0.0001)p		0.00045p
Total comprehensive loss per share			(0.0319)p		(0.02610)p

Consolidated statement of financial position as at 31 December 2016

				2016		2015
				£		£
Non current assets
Goodwill and other intangibles				564,546		487,021
Property, plant and equipment				31,570		80,975
Total non-current assets				596,116		567,996
Current assets
Available-for-sale investments				25,998		29,273
Trade and other receivables				97,702		182,254
Cash and cash equivalents				129,437		357,915
Total current assets				253,137		569,442
Total assets				849,253		1,137,438
Current liabilities
Trade and other payables				222,547		385,114
Borrowings				17,377		18,877
Total current liabilities				239,924		403,991
Non-current liabilities
Borrowings				30,562		47,939
Total non-current liabilities				30,562		47,939
Total liabilities				270,486		451,930
Net assets				578,767		685,508
Equity
Share capital				2,048,664		1,526,164
Share premium account				393,454		401,039
Merger reserve				325,584		325,584
Fair value reserve				(1,507)		1,150
Retained earnings				(2,123,512)		(1,569,380)
Equity attributable to shareholders' of the parent company				642,683		684,557
Non- controlling interests				(63,916)		951
Total Equity				578,767		685,508

Consolidated statements of changes in equity

	Share capital	Share premium	Merger reserve	Fair value reserve	Retained earnings	To equity holders of the parent company	Non-controlling interest	Total
	£	£	£	£	£	£	£	£
Balance at 1 January 2015	1,426,164	304,289	325,584	92,268	(1,204,404)	943,901	3,282	947,183
Issue of new shares	100,000	96,750	-	-	-	196,750	-	196,750
Released on sale of available for sale investments	-	-	-	(99,900)	-	(99,900)	-	(99,900)
Revaluation profits taken to equity	-	-	-	(14,552)	-	(14,552)	-	(14,552)
Deferred tax on items taken directly to equity	-	-	-	23,334	-	23,334	-	23,334
Share based payment	-	-	-	-	12,448	12,448	-	12,448
Loss for the year	-	-	-	-	(377,424)	(377,424)	(2,331)	(379,755)
Reserves at 1 January 2016	1,526,164	401,039	325,584	1,150	(1,569,380)	684,557	951	685,508
Issue of new shares	522,500	18,000	-	-	-	540,500	-	540,500
Share issue costs	-	(25,585)	-	-	-	(25,585)	-	(25,585)
Released on sale of available for sale investments	-	-	-	(3,275)	-	(3,275)	-	(3,275)
Deferred tax on items taken directly to equity	-	-	-	618	-	618	-	618
adjustment for non- controlling interest	-	-	-	-	-	-	(47,971)	(47,971)
Share based payment	-	-	-	-	12,449	12,449	-	12,449
Loss for the year	-	-	-	-	(566,581)	(566,581)	(16,896)	(583,477)
At 31 December 2016	2,048,664	393,454	325,584	(1,507)	(2,123,512)	642,683	(63,916)	578,767

Consolidated statement of cash flows for the year ended 31 December 2016

				2016		2015
				£		£
Cash flow from all operating activities
(Loss)/profit before taxation				(590,313)		(356,421)
Adjustments for:
Finance income				(1,602)		(1,150)
Finance expense				3,972		3,972
Amortisation of intangible assets				57,089		9,306
Other gains and losses				-		(55,480)
Depreciation				53,406		46,181
Share based payments				12,448		12,448
Operating cash flow before working capital movements				(465,000)		(341,144)
Decrease/(increase) in receivables				84,552		(40,074)
(Decrease)/increase in payables				(162,567)		46,333
Net cash absorbed by operations				(543,015)		(334,885)
Taxation				7,454		-
Cash flow from investing activities
Finance income				1,602		1,150
Property, plant and equipment acquired				(4,001)		(10,563)
Social media website development costs				(134,614)		(270,250)
Acquisition of non- controlling interest				(47,970)
Proceeds on disposal of available for sale investments				-		89,230
Net cash from investing activities				(184,983)		(190,433)
Cash flow from financing activities
Finance expense				(3,972)		(3,972)
Funds from share issue				514,915		196,750
Repayment of borrowings				(18,877)		(18,877)
Net cash from financing activities				492,066		173,901
Net (decrease)/increase in cash and cash equivalents in the year				(228,478)		(351,417)
Cash and cash equivalents at the beginning of the year				357,915		709,332
Cash and cash equivalents at the end of the year				129,437		357,915

Notes to the group and parent company financial statements

            General information

Ultimate Sports Group Plc is a company incorporated in the United Kingdom and its activities are as described in the chairman's statement and directors' report.

These financial statements are prepared in pounds sterling because that is the currency of the primary economic environment in which the group operates.

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 28 June 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.

            Basis of Accounting

The consolidated financial statements of the group for the year ended 31 December 2016 have been prepared under the historical cost convention except for the revaluation of available-for-sale investments to fair value and are in accordance with International Financial Reporting standards ("IFRS") as adopted by the EU. These policies have been applied consistently except where otherwise stated.

The following new and amended IFRSs have been adopted during the year.

IFRS 14 Regulatory Deferral Accounts

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

Equity Method in Separate Financial Statements (Amendments to IAS 27)

Annual Improvements 2012-2014 Cycle

Disclosure Initiative (Amendments to IAS 1)

Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)

There were no material changes in the financial statements as a result of adopting new or revised accounting standards during the year.

            Significant accounting policies

(a)        Basis of consolidation

The financial statements of the group incorporate the financial statements of the company and entities controlled by the company which are its subsidiary undertakings.  Control is achieved where the company has the power to govern the financial and operating policies of its subsidiary undertakings so as to benefit from their activities.

Details of subsidiary undertakings are set out in note 16.

All intra-group transactions and balances have been eliminated in preparing the consolidated financial statements.

(b)        Revenue

Revenue arises from the disposal of available-for-sale investments and income from sports and leisure activities undertaken by the company and its subsidiary undertakings. In the case of sports and leisure activities it represents invoiced and accrued amounts for services supplied in the year, exclusive of value added tax and trade discounts.

(c)        Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the group's interest in the fair value of the identifiable assets and liabilities of subsidiary entities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. 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 reversed.

For the purpose of impairment testing, goodwill is allocated to each of the group's cash generating units expected to benefit from synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRS's has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

c)         Development costs

Development costs are written off in arriving at the operating profit or loss for the year unless the directors are satisfied as to the technical, commercial and financial viability of individual project. In this situation, the expenditure is recognised as an asset and is reviewed for impairment on an annual basis.

Any impairment is recognised immediately in the income statement and is not subsequently reversed.

Development costs not written off in the year are amortised over a 10 year life which commenced in   September 2015 with the initial launch of the website.

(d)        Plant and equipment

             Plant and equipment are stated at cost less depreciation.  Depreciation is provided at rates calculated to write off the cost less their estimated residual value over their expected useful lives.

            The rates applied to these assets are as follows:

Plant & equipment	25%  & 10% straight line
Motor vehicles	33.3%  straight line

(e)        Operating leases

             Rentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor, are charged against revenue as and when incurred.

(f)         Deferred taxation

             Deferred taxation is provided in full in respect of timing differences between the treatment of certain items for taxation and accounting purposes.  The deferred tax balance is not discounted.

The recognition of deferred tax assets is limited to the extent that the group anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences.  

 (g)       Trade receivables

             Trade receivables are recognised at fair value.  A provision for impairment of trade receivables is established where there is objective evidence that the company or group will not be able to collect all amounts due according to the original terms of the receivables.  Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or liquidation and default or delinquency of payments are considered indicators that the trade receivable is impaired.  The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement within administrative expenses.  When a trade receivable is uncollectable it is written off against the allowance account for trade receivables.

(h)        Investments

            Investments are classified as available for sale, and are measured at fair value. Gains or losses in changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Impairment losses recognised in profit or loss are not subsequently reversed through profit or loss.

Fair value of quoted investments is based on current bid prices. If an investment is suspended from trading, fair value is based on quoted bid prices on the first day that trading recommences following suspension.

             Investments in subsidiary undertakings are stated at cost less provision for impairment in the parent company balance sheet.

(i)         Cash and cash equivalents

            Cash and cash equivalents include cash in hand and deposits held at call with banks.  Bank overdrafts are shown as borrowings within current liabilities.

             Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Ordinary shares are classified as equity. Incremental costs directly attributable to new shares are shown in equity as a deduction from the proceeds.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

            Significant accounting policies (continued)

Borrowings are recognised initially at fair value, net of transaction costs incurred.  Borrowings are subsequently stated at amortised cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the statement of financial position.

            Critical accounting judgements and key sources of estimation uncertainty

Deferred tax asset

At the present time the directors' do not consider that there is sufficient certainty regarding the utilisation of tax losses available in the group. As a result, no deferred tax asset has been recognised.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is the deemed cost on first time application of IFRS.

Details of the impairment review calculation are given in note 15.

Impairment of investment in subsidiary undertakings

The company holds listed investments through various subsidiary undertakings. The values of these investments have been assessed based on their current quoted market value. These values have been used to estimate the recoverable value of the subsidiary undertakings. Where the estimated recoverable value of the company's investments in these subsidiary undertakings is less than the carrying value, the investment has been written down to the estimated recoverable value.

            Going concern

The directors have prepared financial forecasts covering the 12 months following approval of these financial statements, which show the Group can, subject to certain directors personally settling hire purchase liabilities of £33,187, continue to carry on trading within its existing finance facilities over that period.  The forecasts, however, exclude expenditure on the marketing and promotion of the Ultimate Player online platform, which is a fundamental part of the Group's plans to enable a return to profitability. If such funds cannot be raised to support this expenditure, there is significant uncertainty as to whether the Group will be able to continue to trade for the foreseeable future.

Development costs associated with the Ultimate Player platform are included as an intangible asset with a carrying value of £504,492.  Without expenditure being incurred to market and promote the platform it will be difficult to generate revenues to support its carrying value as an intangible asset.

The directors are pursuing a number of options to raise the funding necessary to enable the launch of Ultimate Player.  On the assumption that the directors are able to secure sufficient funding, the directors consider 1) it appropriate to prepare the financial statements on the going concern basis, and 2) that no impairment in value is required to be reflected in the financial statements in respect of the carrying value of the intangible asset, or amounts due to the Company from Ultimate Player Limited. The financial statements do not therefore include the adjustments that would result if the Company and the Group are unable to continue as a going concern.

 Operating loss

				2016		2015
The operating loss is stated after charging /(crediting):				£		£
Auditors' remuneration  -  audit services				25,840		20,200
Operating lease rentals -  land and buildings				10,905		12,001
Depreciation of property, plant and equipment				53,406		46,181
Amortisation - Website development				57,089		9,306

Included in the audit fee for the group is an amount of £6,000 (2015: £3,000) in respect of the Company.

The auditors received fees of £1,250 (2015: £1,250) in respect of the provision of services in connection with advice relating to the group's interim results, and general advice.

Taxation

					2016		2015
					£		£
Deferred tax charge/(credit)
Origination and reversal of temporary differences					618		23,334
Total deferred tax charge/(credit)					618		23,334
Research and development tax credits					(7,454)		-
Tax (credit)/charge in income statement					(6,836)		23,334

No income tax charge arises based on the loss for the year (2015: nil).

The group has unutilised tax losses of £7,315,000 (2015: £6,842,000) which includes £2,982,000 (2015: £2,724,000) in relation to the company's subsidiary undertakings. Where it is anticipated that future taxable profits will be available to utilise these losses a deferred tax asset or a reduction in deferred tax liability is recognised as appropriate. Tax losses available in the parent company are available for offset only against income and gains of that company.

Factors affecting the tax charge in the year

					2016		2015
					£		£
(Loss)/profit on ordinary activities before taxation					(590,313)		(356,421)
Loss on ordinary activities before taxation at the standard rate of UK corporation tax of 20% (2015: 20.25%)					(118,063)		(72,175)
Effects of:
Expenses not deductible for tax purposes					3,016		2,521
Dividend income					(300)		(182)
Temporary differences in respect of  depreciation and capital allowances not reflected in deferred tax					21,140		7,804
Unutilised tax losses not recognised as a deferred tax asset					94,207		62,032
Adjustment on available-for-sale investments					618		23,334
Research and development tax credits					(7,454)		-
Tax charge/(credit)					(6,836)		23,334

In recognition of the effects on taxation arising from the revaluation of the group's available-for-sale investments, a deferred tax adjustment to the provision by £618 (2015: £23,334) has been made and reflected as an adjustment to equity. During the year claims for tax credits in relation to research and development costs were made giving rise to cash credits of £7,454. These claims related to expenditure incurred to December 2014.

Loss per share

Basic loss per share has been calculated on the group's loss attributable to equity holders of the parent company of £566,581 (2015: £377,424) and on the weighted average number of shares in issue during the year, which was 17,809,583 (2015:14,302,364).

Comprehensive loss per share is based on the same number of shares and on the comprehensive loss for the year attributable to the equity holders in the parent company of £569,238 (2015: £368,643).

In view of the group loss for the year, share warrants and options to subscribe for ordinary shares in the company are anti-dilutive and therefore diluted earnings per share information is not presented. There are options outstanding at 31 December 2016 on 577,500 ordinary shares.

Loss for the financial year

As permitted by Section 400 of the Companies Act 2006, the profit and loss account for the company is not presented as part of these financial statements.

The consolidated loss for the year of £583,477 (2015: loss: £379,755) includes a loss of £294,214 (2015: loss £494,573) dealt with in the accounts of the company.

            Goodwill, intangibles and development costs

					2016		2015
					£		£
Cost  at 1 January					496,327		226,077
Additions in the year					134,614		270,250
Cost at 31 December					630,941		496,327
Amortisation at 1 January					9,306		-
Charged in the year					57,089		9,306
Amortisation at 31 December					66,395		9,306
Carrying value at 31 December					564,546		487,021

             Goodwill of £59,954 included above relates to the acquisition of Pantheon Leisure Plc which is included at its deemed cost on first time application of IFRS.

            The Group acquired £100 of intangible assets in 2013 at the time of acquisition of a subsidiary.

Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units ("CGUs") that are expected to benefit from that business combination. The carrying amount of goodwill relates wholly to the leisure activities business segment.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding forecast revenues and operating costs. Management have taken into account the following two elements:

(i)   Based on current enquiries into the Sport in Schools activities, revenues will continue to grow in 2017 and 2018; and

(ii)  Operational costs are monitored and controlled.

Development costs

During the year, subsidiary undertakings incurred costs developing the sports related social media website totalling £134,614 (2015: £270,250).

Subsidiaries

The following companies were subsidiaries at the balance sheet date and the results and year end position of these companies has been included in these consolidated financial statements.

Subsidiary undertakings	Description and proportion of share capital owned	Country of incorporation or registration	Nature of business
Westside Acquisitions Limited	Ordinary 100%	England & Wales	Holding company
Reverse Take-Over Investments Limited *	Ordinary 100%	England & Wales	Acquisition and development of shell companies
Westsidetech Limited	Ordinary 100%	England & Wales	Dormant
Westside Mining Plc	Ordinary 100%	England & Wales	Investment - inactive
Westside Sports Limited	Ordinary 100%	England & Wales	Holding company
Ultimate Player Limited	Ordinary 100%	England & Wales	Social media website
Football Data Services Limited	Ordinary 100%	England & Wales	Website data services
FootballFanatix Limited	Ordinary 100%	England & Wales	Social media website
Pantheon Leisure Plc **	Ordinary 85.87%	England & Wales	Holding company
Sport in Schools Limited ***	Ordinary 85.87%	England & Wales	Sports coaching in schools
Football Partners Limited ***	Ordinary 85.87%	England & Wales	Small sided football leagues
The Elms Group Limited	Ordinary 85.87%	England & Wales	Non trading
Footballdirectory.co.uk Limited	Ordinary 85.87%	England & Wales	Dormant

*           33¹/₃% held indirectly through Westside Acquisitions Limited

**          held indirectly through Westside Sports Limited

***        held indirectly through Pantheon Leisure Plc

Property, plant and equipment

Group		Plant and equipment		Motor Vehicles		Total
		£		£		£
Cost
At 1 January 2015		133,879		83,662		217,541
Additions		10,563		-		10,563
Disposals		-		-		-
Cost at 31 December 2015		144,442		83,662		228,104
Additions		4,001		-		4,001
Disposals		-		-		-
At 31 December 2016		148,443		83,662		232,105
Depreciation
At 1 January 2015		93,976		6,972		100,948
Charge for the year		18,293		27,888		46,181
Disposals		-		-		-
At 31 December 2015		112,269		34,860		147,129
Charge for the year		25,518		27,888		53,406
Disposals		-		-		-
At 31 December 2016		137,787		62,748		200,535
Carrying value
At 31 December 2016		10,656		20,914		31,570
At 31 December 2015		32,173		48,802		80,975

Available-for-sale investments

The group holds the following investments which are stated at fair value:

	Group				Company
	2016		2015		2016		2015
Investments admitted to trading on AIM:	£		£		£		£
Current assets
Aeorema Communications Plc	7,650		9,675		-		-
SigmaRoc Plc	18,348		19,598		1,688		1,688
Total	25,998		29,273		1,688		1,688

The group has not designated any investments as financial assets at fair value through profit or loss.

Details of investment held at 31 December were:-

Aeorema Communications Plc:

30,000 ordinary shares in Aeorema Communications Plc ('Aeorema') representing 0.37% of Aeorema's issued share capital.  There were no sales or purchases in the year.

At 26 June 2017, the market bid price was 25p per share valuing the group's holding of 30,000 Aeorema shares at £7,500.

SigmaRoc Plc (formerly Messaging International Plc)

In August 2016, following the disposal of its subsidiary, SigmaRoc Plc (formerly Messaging International Plc) a new venture commenced under new management. In January 2017, the company undertook a share consolidation, whereby every 104 existing ordinary shares were consolidated into 1 new ordinary share, The group's holding of 86,193 new shares represents 0.08% of the shares in issue.

At 26 June 2017, the market bid price was 40p per share valuing its holding in SigmaRoc shares at £34,477.

Non-current assets

Group

The group has no receivables and loan notes classified as non-current assets.

Current assets

	Group				Company
	2016		2015		2016		2015
	£		£		£		£
Trade receivables	41,763		71,973		-		-
Other receivables	34,612		59,202		5,364		25,973
Amounts due from subsidiary undertakings	-		-		955,667		647,992
Prepayments and deferred expenditure	21,327		51,079		10,962		11,603
	97,702		182,254		971,993		685,568

The average credit period given for trade receivables at the end of the year is 9 days (2015:16 days). Trade receivables are stated net of a provision for irrecoverable amounts of £Nil (2015: £Nil).

Amounts due from subsidiary undertakings are stated net of provisions for irrecoverable amounts which total £576,722 (2015: £548,332).

The total charge in the year in respect of irrecoverable receivables in the group accounts was £Nil (2015: £Nil).

As at 31 December, the ageing analysis of trade receivables is as follows:

	Total				Due but not impaired
	£				£		£		£
					<3 months		3 - 6 months		>6 months
2016	41,763				41,763		-		-
2015	71,973				71,973		-		-

Trade and other payables

	Group				Company
	2016		2015		2016		2015
	£		£		£		£
Trade payables	29,102		60,145		-		-
Other payables	48,263		91,480		-		-
Taxes and social security	71,960		107,746		-		-
Amounts due to subsidiary undertakings	-		-		273,573		209,573
Accruals and deferred income	73,222		125,743		9,500		31,508
	222,547		385,114		283,073		241,081

The average credit period taken for trade payables at the end of the year is 12 days (2015: 29 days).

Bank overdraft

Sport in Schools Limited and Football Partners Limited have bank overdraft facilities of £50,000 and £20,000 respectively which are secured by guarantees of up to £50,000 and £20,000 for each company given by Ultimate Sports Group Plc. Both overdrafts are repayable on demand.

Deferred tax

The following are the deferred tax liabilities and assets recognised by the group and movements during the current and previous year:

Deferred tax liabilities (Restated)		Fair value gains	Tax losses offset	Total
		£	£	£
At 1 January 2015		23,621	(23,621)	-
Charged in the income statement		-	23,334	(23,334)
Credited directly to equity		(23,334)	-	23,334
At 31 December 2015		287	(287)	-
Charged in the income statement			618	(618)
Credited directly to equity		(618)		618
At 31 December  2016		(331)	331	-

Unutilised tax losses available for offset against future fair value gains are deducted in computing net deferred tax liabilities.

Borrowings

	Group				Company
	2016		2015		2016		2015
	£		£		£		£
Due within one year
Interest free loans	3,500		5,000		-		-
Hire purchase finance	13,877		13,877		13,877		13,877
Total due within one year	17,377		18,877		13,877		13,877
Due after more than one year
Interest free loans	2,000		5,500		-		-
Hire purchase finance	28,562		42,439		28,562		42,439
Total due after more than one year	30,562		47,939		28,562		42,439
Total borrowings	47,939		66,816		42,439		56,316

     Issued share capital

Shares of 10p each			Number of shares		£
At 1 January 2015			14,261,638		1,426,164
Shares issued in the year			1,000,000		100,000
At 1 January 2016			15,261,638		1,526,164
Shares issued in the year			5,225,000		522,500
At 31 December 2016			20,486,638		2,048,664

In June 2016, the company raised £500,000 before costs from a placing at a price of 10p per share resulting in the issue of a further 5,000,000 shares of 10p each.

In September 2016, the company issued a further 225,000 shares at 10p per share in consideration of £22,500 of development expenditure.  

At 31 December 2016 the company's issued shares carry no rights to fixed income.

Share options and warrants

On 17 January 2011 the company adopted an unapproved share option scheme details of which are given in note 27.

To date the company has granted 577,500 to key executives and employees engaged in the development of the social network. At the year end and at the date of this report there are 392,500 options to acquire ordinary share.

The market price of the company's shares at 31 December 2016 was 12.50p and the price range during the financial year was 12.5p and 22.5p.

Financial commitments

The group is committed to making the following future minimum lease payments under non-cancellable operating leases which fall due as follows:

	2016	2015
	£	£
Within one year
Land and buildings	14,091	12,001
Between two and five years
Land and buildings	49,732	45,499
After five years
Land and buildings	46,189	52,500
	110,012	110,000

Statement of changes in equity

Retained earnings represent the cumulative retained profit or loss of the group.

Share premium is the amount subscribed for share capital in excess of nominal value and is a capital reserve required by UK company law.

The merger reserve is a non-statutory reserve and represents the difference between the fair value and nominal value of the shares exchanged for shares on acquisition of Reverse Take-Over Investments Plc which took place in 2003.

The fair value reserve represents the cumulative surplus and deficits on recognition of available-for-sale investments at fair value, less tax attributable to the net surplus.

No dividend was paid during the year (2015: Nil).

Post balance sheet events

Since the year end, the company raised a further £212,500 on 29 March 2017 by the issue of 2,125,000 ordinary shares at 10p per share. There are no other post balance sheet events to be disclosed by way of note.

Related parties

Details of the remuneration of directors are given in note 8. In addition to the information given in that note, the following provides further details of related party transactions involving the company and its directors.

The directors are considered to be the key management personnel of the group.

Simmonds & Co 

The group made payments of £35,080 [excluding VAT] (2015 £31,200) as contributions towards office and secretarial costs to Simmonds & Co, Chartered Accountants, a practice in which G Simmonds is sole proprietor.

Share-based payment transaction

At the date of this report, 577,500 share options have been granted to employees or key executives involved in the group's trading operations.

These include:-

Share options to acquire 210,000 shares were originally awarded in 2011 and amended in 2012.

Share options to acquire 367,500 shares were awarded to employees and key executives in 2014.

Options are valued using the Black-Scholes option pricing model.  The fair value per option granted and the assumptions used in the calculation are as follows:

Grant date	17 January 2011	6 March 2014	30 April 2014
Share price at grant date	25p per share	27.5p per share	27.5p per share
Exercise price	25p per share	27.5p per share	27.5p per share
Shares under option	210,000	167,500	200,000
Expected volatility	17.0%	20.9%	20.9%
Option life (years)	10 years	7 Years	7 Years
Expected life (years)	10 Years	7 Years	7 Years
Risk-free interest rate	2.0%	2.0%	2.0%
Fair value per option	0.4p	0.07p	0.07p
Annual charge under IFRS 2	£8,970	£1,586	£1,892

In accordance with IFRS2, the fair value of the share options issued and recognised as a charge in the accounts for the year is £12,448 (2015 - £12,448).

In arriving at the above:-

The expected volatility is based on historical volatility, the expected life is the average expected period to exercise and the risk-free rate of return is the yield on a zero-coupon UK government bond for a term consistent with the assumed option life.

At the date of this report there remained share options to acquire 392,500 shares in place.

 Notes to statements of cash flows

a)   Analysis of net funds

	At 1 January 2016 £	Cash Flow          £	Non-cash movements £		At  31 December 2016 £
Group
Cash and cash equivalents	357,915	(228,478)	-		129,437
Borrowings	(66,816)	18,877	-		(47,939)
Net funds	291,099	(209,601)	-		81,498
Company
Cash and cash equivalents	209,296	(33,507)	-		175,789
Borrowings	(56,316)	13,877	-		(42,439)
Net funds	152,980	(19,630)	-		133,350

  (b) Reconciliation of net cash flow to movement in net funds

			Group £		Company £
(Decrease) in cash and cash equivalents in the year			(228,478)		(33,507)
Cash inflow from new borrowings			-		-
Cash outflow on borrowings repaid in the year			18,877		13,877
Movement in net funds/(debt)			(209,601)		(19,630)

General

A copy of the report and accounts are being posted to shareholders today and will be available on the Company's website www.ultimatesportsgroup.me later today.

**ENDS**                                                             

For further information please visit www.ultimatesportsgroup.me or contact:

Ultimate Sports Group PLC Geoffrey Simmonds, Chief Executive	[phone]
St Brides Partners Ltd (Financial PR) Charlotte Page / Isabel de Salis	[phone]
Cantor Fitzgerald Europe (Nomad and Joint Broker) Marc Milmo / Catherine Leftley	[phone]
Northland Capital Partners Limited (Joint Broker) Matthew Johnson / Chris Coleman	[phone]
Dowgate Capital Stockbrokers Limited (Joint Broker) Neil Badger / Jason Robertson	[phone]

 

END

 

 

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