REG - Cel AI PLC - Interim results
28/05/2024 07:00
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RNS Number : 9540P Cel AI PLC 28 May 2024
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014, as retained as part of the law of England and Wales. Upon
the publication of this announcement via the Regulatory Information Service,
this inside information is now considered to be in the public domain.
Press release
28 May 2024
Cel AI PLC
("Cel AI " or "the Company")
Interim results
Cel AI (LSE: CLAI), a UK-based company that uses artificial intelligence (AI)
to deliver the future of personalised beauty, with tailored beauty advice and
product recommendations in addition to its breakthrough skincare formulations
powered by CBG, announces its unaudited half-year results to 29 February 2024.
Highlights
· Net cash as at 29 February 2024 amounted to £1m (H1 2023: £2.93m);
· Operating Loss Reduction: Reduced operating loss by 66% (equivalent
to £1.2m), showcasing effective cost management strategies;
· New Leadership: Appointed Mike Edwards as new CEO and chairman to
spearhead breakthroughs in AI technology, leading the Company's ownership of
Cel AI, artificial intelligence platform and driving innovation forward;
· Rebranding for Competitiveness: Rebranded the Company from Cellular
Goods to Cel AI to enhance competitiveness, signalling a commitment to
innovation and market leadership.
Post-period highlights
· Customer Engagement Campaign: Started the campaign "Meet Cel", engaging with
customers to take them through the journey of education and awareness on
choosing the skincare products suitable for their individual needs;
Outlook
· Successfully completed the rightsizing of the business, significantly reducing
costs and extending the Company's financial runway;
· While the development of AI holds significant promise for the Company's
future, it's important to note that tangible results may require additional
time to materialize.
For further information please contact:
Cel AI
Michael (Mike) Edwards via FSCF
Chairman and interim CEO
First Sentinel Corporate Finance (FSCF)
Investor Relations
Emily Warrilow +44 7596 912660
IR@cellular-goods.com (mailto:IR@cellular-goods.com)
Media Relations
Emily Warrilow +44 7596 912660
Media@cellular-goods.com (mailto:Media@cellular-goods.com)
Corporate Broker & Adviser
Brian Stockbridge +44 7858 888 007
Novum Securities
Corporate Broker
Colin Rowbury
Jon Belliss +44 207 399 9427
About Cel AI PLC:
Cel AI offers an AI-driven skincare analysis tool that provides customers with
personalised skincare recommendations based on their individual skin type and
concerns. The tool utilises AI algorithms to analyse customer-provided
information and offer tailored product recommendations from a range of
skincare brands. Additionally, it develops and markets premium quality
skincare and wellness products based on proprietary formulations incorporating
lab-made cannabinoids. The Company is incorporated in the UK and listed on the
Main Market of the London Stock Exchange. For more information, visit
www.getcel.ai.
Forward-looking statements:
This document contains forward-looking statements which are subject to known
and unknown risks and uncertainties because they relate to future events, many
of which are beyond the Company's control. These forward-looking statements
include, without limitation, statements in relation to the Company's financial
outlook and future performance. No assurance can be given that future results
will be achieved; actual events or results may differ materially as a result
of risks and uncertainties facing the Company.
You are cautioned not to rely on these forward-looking statements, which speak
only as of the date of this announcement. The Company undertakes no obligation
to update or revise any forward-looking statement to reflect any change in its
expectations or any change in events, conditions or circumstances. Nothing in
this document is or should be relied upon as a warranty, promise or
representation, express or implied, as to the future performance of the
Company or the Group or their businesses.
INTERIM MANAGEMENT REPORT
Despite our strategic investments in initiatives such as SheerLux activities,
international expansion, and collaboration with Chill PLC, Teyllo and Sephora,
Cel AI PLC faced challenges in achieving growth due to the complex development
of the cannabinoid industry.
These efforts did not yield the anticipated increase in customer acquisition
and revenue generation. As a result, half-year sales for FY24 declined by 42%,
amounting to £17.9k up to February 2024, compared to £31k for the same
period in 2023.
In response to these performance challenges and to preserve cash, the Company
implemented cost reduction measures, reducing costs by 66% from £1.82m up to
February 2023 to £627.07k up to February 2024. Going forward, we have
successfully reduced our cash burn rate by a third, from £150k per month to
average £50k per month.
Our net cash position stood at £1m as of February 2024 (£1.77m as of August
2023).
Marketing and product strategy
Cel AI has expanded its market reach by opening international shipments to
Europe, unlocking broader international exposure. This strategic move aims to
capitalise on the demand for our products beyond domestic borders.
In addition to this expansion, two significant recognitions underscore the
quality and efficacy of our skincare offerings. Our products were recognised
as finalists in the Pure Beauty Awards, reflecting our commitment to
excellence. Furthermore, our Rejuvenating Face Serum received the Bronze Award
in the "Get The Gloss" Beauty Awards, affirming its effectiveness and
potential in the skincare industry.
A major development for Cel AI is the refocusing of our investment on our AI
tool development that will assist our customers in making the best skincare
decisions. We see this as a great opportunity for growth, allowing us to
leverage our expertise in the wellness industry more effectively and
lucratively.
To further engage and expand our customer base, we have initiated a social
media campaign. This campaign aims to raise brand awareness, showcase our
products' benefits, and foster community engagement. We are now working to
upgrade and optimise our campaign in this space to enhance its reach and
impact.
Additionally, our wholly owned subsidiary, King Tide Carbon (King Tide),
achieved a major milestone in November 2023 with the production of
kelp-derived biochar. This accomplishment paves the way for carbon dioxide
removal (CDR) credit production and a range of applications in agriculture,
environmental restoration, and industry. King Tide is also applying for entry
into several government grant schemes to unlock funds for future development
in the CDR space.
Product pipeline
Cel AI has made the strategic decision to redirect our focus this year towards
building Cel, an innovative tool aimed at enhancing customer engagement in a
more sophisticated manner.
The development of Cel is not only geared towards benefiting Cel AI but also
presents an opportunity to assist other companies with their customer base and
is expected to unlock new revenue streams. While we are currently in the
development phase, we remain optimistic about the future growth potential of
Cel AI.
Management structure
For the current scale of operations, the Board believes that Cel AI has the
right size of management team, with the right technical expertise to evolve
the business.
Current trading and outlook
The Company has made a solid start to the second half by advancing its
AI-driven tool, Cel, and engaging customers through social media campaigns and
iterative product generation via user feedback.
In addition to these advancements, the Company has taken significant steps to
reduce costs drastically. This cost-cutting measure aims to preserve existing
capital.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Notes Six months to 29 February 2024 Six months to 28 February 2023
Year ended 31 August 2023
£ £ £
Revenue 4 17,941 31,022 67,236
Cost of sales (7,682) (13,332) (25,796)
Gross profit 10,259 17,890 41,440
Administrative expenses (627,078) (1,827,329) (3,375,179)
Operating loss 5 (626,819) (1,809,439) (3,333,739)
Finance income 13,200 3,983 24,113
Loss before taxation (603,619) (1,805,456) (3,309,626)
Taxation - - (95)
Loss after taxation (603,619) (1,805,456) (3,309,721)
Other comprehensive loss Translation of foreign operations (580) (25) (24)
Total comprehensive loss for the period (604,199) (1,805,481) (3,309,745)
Basic and diluted loss per share - pence 6 0.11 0.36 0.62
All transactions arise from continuing operations.
The accompanying accounting policies and notes form an integral part of these
unaudited interim financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
As at 29 As at 28 February 2023 As at 31
February 2024
August 2023
Notes £ £ £
ASSETS
Current assets
Trade and other receivables 7 146,426 139,847 92,835
Cash and cash equivalents 1,000,992 2,930,032 1,772,892
Inventory 583,625 525,533 582,883
TOTAL ASSETS 1,731,043 3,595,412 2,448,610
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 8 (65,223) (392,889) (185,802)
TOTAL LIABILITIES (65,223) (392,889) (185,802)
NET ASSETS 1,665,820 3,202,523 2,262,808
EQUITY ATTRIBUTABLE
TO SHAREHOLDERS
Share capital 9 602,250 507,250 602,250
Share premium 12,988,101 12,513,101 12,988,101
Accumulated losses (13,644,230) (11,536,345) (13,040,611)
Share-based payment reserve 1,721,603 1,719,842 1,714,392
Foreign translation reserve (1,904) (1,325) (1,324)
TOTAL EQUITY 1,665,820 3,202,523 2,262,808
The accompanying accounting policies and notes form an integral part of these
unaudited interim financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share-based payment reserve
Ordinary share capital Foreign currency translation
Share premium Retained earnings
Total
£ £ £ £ £ £
Balance at 1 September 2022 507,250 12,513,101 (1,300) 1,564,070 (9,730,889) (4,852,232)
Loss for the period - - - - (1,805,456) (1,805,456)
Other comprehensive income - - (25) - - (25)
Total comprehensive income for the period - - (25) - (1,805,456) (1,805,481)
Share-based payments - - - 155,772 - 155,772
Total contributions by owners - - - 155,772 - 155,772
Balance at 29 February 2023 507,250 12,513,101 (1,325) 1,719,842 (11,536,345) 3,202,523
507,250 12,513,101 (1,325) 1,719,842 (11,536,345) 3,202,523
Balance at 1 March 2023
Loss for the period - - - - (1,504,266) (1,504,266)
Other comprehensive income - - 1 - - 1
Total comprehensive income for the period - - 1 - (1,504,266) (1,504,265)
Shares issued 95,000 475,000 570,000
Share-based payments - - - (5,450) -
(5,450)
Total contributions by owners 95,000 475,000 - (5,450) - 564,550
Balance at 31 August 2023 602,250 12,988,101 (1,324) 1,714,392 (13,040,611) 2,262,808
Balance at 1 September 2023 602,250 12,988,101 (1,324) 1,714,392 (13,040,611) 2,262,808
Loss for the period - - - - (603,619) (603,619)
Other comprehensive income - - (580) - - (580)
Total comprehensive income for the period - - (580) - (603,619)
(604,199)
Share-based payments - - - 7,211 - 7,211
Total contribution by owners - - - 7,211 - 7,211
Balance at 29 February 2024 602,250 12,988,101 (1,904) 1,721,603 13,644,230 1,665,820
The accompanying accounting policies and notes form an integral part of these
unaudited interim financial statements.
CONDENSED STATEMENT OF CASH FLOWS
Six months to 29 February 2024 Six months to 28 February 2023 Year ended 31 August 2023
£ £ £
Cashflow from operating activities
Loss before income tax (603,619) (1,805,456) (3,309,721)
7,211 155,772 150,322
Share-based payment charge
Increase in inventory (742) (21,406) (78,757)
Increase in trade and other receivables (53,591) 111,257 158,269
Increase in trade and other payables (120,579) 113,756 (93,331)
Research and development non cash - - 570,000
Foreign exchange differences (580) (25) (24)
Finance income 10,913 (2,682) (22,812)
Net cash flows used in operating activities (760,987) (1,448,784) (2,626,054)
Cash flows from investing activities
Finance income (10,913) 2,682 22,812
Net cash flow from investing activity (10,913) 2,682 22,812
Cash flows from financing activities
Proceeds from issue of shares, net of issue costs - -
-
Net cash inflow from financing activities - - -
Net movement in cash and cash equivalents (771,900) (1,446,102)
(2,603,242)
Opening cash and cash equivalents 1,772,892 4,376,134
4,376,134
Closing cash and cash equivalents 1,000,992 2,930,032
1,772,892
The accompanying accounting policies and notes form an integral part of these
unaudited interim financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Information on the Company
The Company is incorporated in England and Wales (registration number
11537452) and has a Standard Listing under Chapter 14 of the Listings Rules,
trading on the London Stock Exchange with ticker CLAI.
Cel AI uses advanced cutting-edge artificial intelligence (AI) to deliver the
future of personalised beauty, with tailored beauty advice and product
recommendations in addition to its breakthrough skincare formulations powered
by CBG.
2. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was approved for
issue by the Board on Saturday the 25th of May 2024.
The Company's directors are responsible for the preparation of the unaudited interim financial statements.
The preparation of unaudited interim financial statements in conformity with
IFRSs requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the unaudited interim
financial statements and the reported amounts of expenses during the period.
Although these estimates are based on management's best knowledge of the
amount, event or actions, actual results ultimately may differ from those
estimates.
The Directors consider that in the proper preparation of the unaudited interim
financial statements there were no critical or significant areas which
required the use of accounting estimates and exercise of judgement by
management while applying the Company's accounting policies.
This condensed consolidated interim financial information has not been audited
and does not include all of the information required for full annual financial
statements. The financial figures included within this interim report have
been computed in accordance with IFRS applicable to interim periods, and this
report constitutes an interim financial report as set out in International
Accounting Standard 34: Interim Financial Reporting.
There is no material difference between the fair value of financial assets and
liabilities and their carrying amount.
The functional and presentational currency is UK Sterling.
3. Going concern
The Directors have assessed the current financial position of the Company,
along with future cash flow requirements, to determine if the Company has the
financial resources to continue as a going concern for the foreseeable future.
The conclusion of this assessment is that it is appropriate that the Company
be considered a going concern. For this reason, the Directors continue to
adopt the going concern basis in preparing the unaudited interim financial
statements.
4. Revenue
The Company generated revenue from the sales of its products during the period of £17,941 (28 February 2023: £31,022 and 31 August 2023: £67,236).
5. Operating loss
Total administrative expenses include share-based payments of £7,211 (28
February 2023: £155,772). The related credit to equity is taken to retained
earnings.
6. Earnings per share
Basic earnings per share is calculated by dividing the loss attributable to
equity holders of the Company by the weighted average number of Ordinary
Shares in issue during the period.
29 February 2024 28 February 2023 31 August 2023
£ £ £
Loss used to calculate basic and diluted earnings per share (603,619) (1,805,456) (3,309,721)
Weighted average number of shares used in calculating 537,962,329 507,250,000
basic earnings per share 537,962,329
Weighted average number of shares used in calculating 537,962,329 507,250,000
diluted earnings per share 537,962,329
Basic loss per share (pence) (0.11) (0.36) (0.615)
Diluted loss per share (pence) (0.11) (0.36) (0.615)
7. Trade and other receivables
29 February 2024 28 February 2023 31 August 2023
£ £ £
Trade receivables 790 683 -
VAT debtor 16,115 38,654 31,491
Prepayments 28,437 99,376 59,100
Other debtors 101,084 1,134 2,244
146,426 139,847 92,835
There were no receivables that were past due or considered to be impaired.
There is no significant difference between the fair value of the other
receivables and the values stated above.
8. Trade and other payables
29 February 2024 28 February 2023 31 August 2023
£ £ £
Trade creditors 37,107 259,392 104,892
Accruals 23,491 36,891 56,926
Other creditors 4,625 96,606 23,984
65,223 392,889 185,802
All liabilities are payable on demand or have payment terms of less than 90
days.
9. Share capital
29 February 28 February 31 August
2024 2023 2023
£ £ £
602,250 507,250
Ordinary shares of £0.001 each 602,250
The Ordinary Shares have been classified as Equity. The Ordinary Shares have
attached to them full voting and capital distribution rights.
On 5 May 2023, 95,000,000 Ordinary Shares of £0.001 each were issued, on
conversion of warrants over 95,000,000 shares at 1p each, increasing the
number of Ordinary Shares to 602,250,000.
10. Capital and reserves
Share capital represents issued Ordinary Shares of £0.001 each, all of which
are fully paid.
Share premium is the amount subscribed for share capital in excess of nominal
value less attributable share issue expenses.
Retained earnings is the cumulative loss of the Company attributable to equity
shareholders.
11. Share-based payments
The Company has a total of 12,500,000 warrants to subscribe for additional
share capital of the Company. Each warrant entitles the holder to subscribe
for one Ordinary Share in the Company. Once vested, the right to convert each
warrant is unconditional.
The right to subscribe for Ordinary Shares in the Company is subject to
minimum vesting periods of up to three years.
No new warrants were issued in the period.
Warrants issued Weighted average exercise price (pence) 29 February 2024 28 February 2023 31 August
2023
Number Number Number
At the beginning of the period 3.62 41,460,000 50,460,000 50,460,000
Issued in the period - - - 12,000,000
Exercised in the year - - - (21,000,000)
Lapsed in the year 4.45 (28,960,000)
At the end of the period 1.37 12,500,000 50,460,000 41,460,000
In the period, the Company issued share options to employees as follows:
Share options issued Weighted average exercise price (pence) 29 February 2024 28 February 2023 31 August
2023
Number Number Number
At the beginning of the period 5.74p 24,331,594 22,550,000 22,550,000
Issued in year - - - 7,000,000
Lapsed in the period - - (5,218,406) (5,218,406)
At the end of period 5.74p 24,331,594 17,331,594 24,331,594
Equity-settled share-based payments are measured at fair-value (excluding the
effect of non-market-based vesting conditions) as determined through use of
the Black-Scholes technique, at the date of issue.
Volatility for the calculation of the share-based payment charge in respect of
the options issued was determined by reference to movements in the relative
share prices of a selected peer-group of companies listed on the London Stock
Exchange up to the date of admission and also proportionately on post
admission share-price movements of the Company where relevant.
The total share-based payment charge in the period was £7,211, which has been
charged to administrative expenses (six months to 28 February 2023: £155,772,
all of which was charged to administrative expenses; year to 31 August 2023:
£150,322, all of which was charged to administrative expenses). All warrants
and options have an exercise period between one and three years from the date
of issue.
The total of the share-based payment charge has been simultaneously credited
to retained earnings.
The total number of warrants issued to directors (including former directors)
is 9,000,000 and the total number of share options issued to directors is Nil.
Share-based payment charge for the period 29 February 2024 28 February 2023 31 August
2023
£ £ £
Administrative expenses 7,211 155,772 150,322
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