30 December 2024

 

This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

CEL AI plc

 

("Cel AI" or the "Company")

 

Annual results

 

Cel AI (LSE: CLAI), a company specialising in cutting-edge artificial intelligence (AI) to deliver tailored beauty advice and product recommendations as well as next-generation skincare and wellness products, announces its audited results for the year ended 31 August 2024.

 

The Annual Report will be available on the Company's website at https://www.getcel.ai/investors .

 

For further information please contact:

Cel AI
Director Michael Edwards	via FSCF +44 7572 873 300
First Sentinel Corporate Finance (FSCF)
Corporate Advisor Brian Stockbridge	+44 7858 888 007

 

 

 

 

 

CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 AUGUST 2024

 

Introduction

 

During the course of the year it became apparent to the Board of Directors that there was a need for a change of strategic direction for the Company. Whilst every effort had been made to create a profitable and cash generative business based around skincare products it was increasingly clear that to continue to pursue this strategy would potentially prejudice the long term survival of the company. The Board has decided that the correct strategic route for the business is to build on its experience in Artificial Intelligence and to utilise this in the AI field more generally and, more specifically, in the field of AI Agents.

 

As a result of this review, there were a number of changes in the management of the company. Darcy Taylor, Chairman and Interim CEO, resigned on 08 January 2024 and was replaced by Michael Edwards. On 30 April 2024 Gill Whitty-Collins resigned as Non-Executive Director at the end of her fixed term appointment. On 28 June 2024 Bruna Nikola, Finance Director resigned and was replaced by Nicholas Lyth. This resulted in a Board of Directors of two Operational Executives and two Non Executives. Mr Edwards is a significant shareholder in his own right.

 

As part of the strategic review of the company the Board of Directors have decided to cease all marketing, development and promotion of skincare products and to cease the active management of subsidiaries including King Tide Carbon Singapore. On 29 February 2024 CBX Cellular Goods Canada Ltd was dissolved and it is anticipated that all other subsidiaries currently in existence will be dissolved at the earliest opportunity. Certain physical inventory had been disposed during the year, the remaining inventory as at year end was 100% provided for obsolescence in the accounts and arrangements will be made for its disposal shortly. During the year the company's name was changed to CEL AI plc to more accurately reflect the change of strategic focus going forward.

 

Having reduced the cash burn of the company significantly the Board was in a position to reposition the company. Mr Edwards and Mr Lyth are both executive directors of companies with Artificial Intelligence and AI Agent exposure. The decision was made to manage the company's treasury by making a significant investment into the Solana ("SOL") crypto token. As a result, on 05 August 2024, 4,149 SOL were purchased at a price of £96.40 per token. These tokens were then staked onto a Delegator which generated further SOL as a yield. This yield can then be sold to offset the operational expense of the company. As at the date of signing of these financial statements, the number of SOL held has increased to 4,253 with a carrying value of approximately £630,000.

 

Having stabilised the company it is the intention of the Board to pursue profitable and cash generative opportunities in the Artificial Intelligence and AI Agent sectors to create profitable returns for shareholders.

 

Strategy & Operational Review and Outlook

 

The Company's previous strategy resulted in the cash reserves being depleted at an unsustainable rate so it was imperative that a change of direction was implemented. The current Board has significant experience in the Artificial Intelligence and AI Agent sectors and these generally require minimal operational expense beyond the normal running costs of a public company. The Board retain a positive outlook regarding the crypto sector up to the medium time frame and as such are confident to retain its position in the SOL token for the time being. The Company may sell some of these tokens going forward if a more value accretive opportunity presents itself.

 

I would like to thank our shareholders for their support. The Board of Directors sometimes have to make challenging decisions on the strategy of the Company and this was one of those time. We look forward to improvement and growth in performance in the year ahead.

 

 

 

 

Michael Edwards

Chairman

27 December 2024

 

 

 

STRATEGIC REPORT FOR THE YEAR ENDED 31 AUGUST 2024

 

The directors present their strategic report for the year ended 31 August 2024.

 

Principal activity

 

During the course of the year the Company exited the skincare sector and invested available funds into Solana crypto token for treasury management purposes and is actively seeking Artificial Intelligence and AI Agent opportunities.

 

Review of the business and future developments

 

The Company's medium to long-term goal, having stabilised its position is to expand in the Artificial Intelligence and AI Agent sectors.

 

Performance of the business during the year and at the end of the year:

 

The Company reported a loss of £1,827,461 for the year ended 31 August 2024 (2023: loss of £3,309,721). Of this loss, £583,624  was as a result of the write down in the inventory of skincare products.

 

Net assets of the Company at the year-end were £514,554 (2023: net assets £2,262,808).

 

Key Performance Indicators ("KPIs")

 

The Board aims to monitor the activities and performance of the Company regularly. The Directors regularly reviewed sales, stock levels, new product development, and cash reserves before the cessation of the skincare sector marketing and sales.

 

For now, the Directors consider that a KPI applicable to the Company is maintaining cash reserves held in cash and cryptocurrency assets.

 

                                                                                                                                                     2024                                     2023

 

Cash at bank                                                                                                                    £213,627                         £1,772,892

Cryptocurrency assets                                                                                                     £431,784                                       £Nil

 

Principal risks and uncertainties

 

The Company operates in an uncertain environment and is subject to a number of risk factors. The Directors consider the risk factors in this report will be relevant to the Company's activities. It should be noted that the list is not exhaustive and other risk factors not presently known or currently deemed immaterial may apply.

 

Nature of operations and cash levels

 

The Company's operations were at an early stage in nascent industries, with products in its wellness division and entry into the carbon removal. As part of the strategic review of the company during the year, the Board of Directors have decided to cease all marketing, development and promotion of skincare products and to cease the active management of subsidiaries including King Tide Carbon Singapore.

 

The Directors consider the principal risks for the Company to be the maintenance of cash while it focuses on developing businesses in the Artificial Intelligence and AI Agent sectors.

 

Reliance on key personnel

 

The Company's business is dependent on the services of a small management team and the loss of a key individual could have an adverse effect on the future of the Company's business. The Company's future success will also depend in part on its ability to attract and retain highly skilled personnel. This risk is managed by offering salaries that are competitive in the current market.

 

Regulatory risk

 

A breach with any environmental or regulatory requirements, including data protection and privacy breaches, may give rise to reputational, financial, or other sanctions against the Company, and therefore the Board considers these risks seriously and designs, maintains and reviews the policies and processes to mitigate or avoid these risks. The Board has a good record of compliance, but there is no assurance that the Company's activities will always be compliant.

 

 

Promotion of the Company for the benefit of the members as a whole

 

The Directors believe they have acted in the way most likely to promote the success of the Company for the  benefit of its members as a whole, as required by s172(1) of the Companies Act 2006.

 

The requirements of s172(1) are for the Directors to:

 

·      Consider the likely consequences of any decision in the long term

·      Act fairly between the members of the Company

·      Maintain a reputation for high standards of business conduct

·      Consider the interests of the Company's employees

·      Foster the Company's relationships with suppliers, customers and others, and

·      Consider the impact of the Company's operations on the community and the environment.

 

 

During the year, seven individuals served as directors of the company, of whom five were male and two were female. There are no employees other than the directors of the company during the year.

 

The application of the s172 requirements can be demonstrated in relation to some of the key decisions made  during the year, including the appointment of new directors, and hiring key executives for exploring and developing businesses in the Artificial Intelligence and AI Agent sectors.

 

This strategic report was approved by the board on 27 December 2024 and signed on its behalf by:

 

 

 

Michael Edwards

Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DIRECTORS' REPORT FOR THE YEAR ENDED 31 AUGUST 2024

 

 

The Directors present the Annual Report and the audited financial statements for the year ended 31 August 2024.

 

Principal activities

 

The Company established a biosynthetic CBD and CBG retail business and was admitted to the Official List (by way of a Standard Listing under Chapter 14 of the Listing Rules) and trading on the London Stock Exchange on 26 February 2021. The Company was incorporated in England and Wales. As at year end, the Company has one subsidiary; King Tide Carbon Pte. Ltd. incorporated in Singapore as part of the Company's May 9th, 2023, acquisition. During the current year the directors reviewed the strategy of the Company and decided to exit the skincare business and to cease the active management of subsidiaries including King Tide Carbon Singapore.

 

Directors

 

The Directors of the Company during the year ended 31 August 2024 and to the date of this report were:

Michael Edwards (appointed 08 January 2024)

Nicholas Lyth (appointed 28 June 2024)

Darcy Taylor (resigned 08 January 2024)

Bruna Nikolla (resigned 28 June 2024)

Gill Whitty Collins (resigned 30 April 2024)

Timothy Vincent Le Druillenec (appointed 16 June 2024 and resigned 28 June 2024)

                   Misha Sher

Matthew Lodge

     

 

Events after the reporting date

 

The company's position it has taken in the SOL crypto token has been value accretive and at the date of signing of the accounts has increased from an initial investment of £400,000 to £630,000

 

 

Future developments

 

See the Strategic Report for anticipated future developments of the Company.

 

Dividends

 

The Directors do not propose a dividend in respect of the year ended 31 August 2024 (2023: nil).

 

Corporate governance

 

As a Company listed on the standard segment of the Official UK Listing Authority, the Company was not  required to comply with the provisions of the UK Corporate Governance Code.

 

The Company does not choose to voluntarily comply with the UK Corporate Governance Code. The Directors are responsible for internal control in the Company and for reviewing effectiveness. Due to the size of the Company, all key decisions are made by the Board. The Directors have reviewed the effectiveness of the Company's systems during the year under review and consider that there have been no material losses, contingencies or uncertainties due to weaknesses in the controls. The Company will comply with the Quoted Company Alliance Code insofar as is appropriate having regard to the size and nature of the Company and the size and composition of the Board.

 

Diversity

 

As the company is at a very early stage, it is focused on appointing Board members with the best expertise to achieve its short-term objectives being strategic acquisitions. Once this has been achieved, the Board will implement a strategy to achieve the required targets on gender and ethnicity. During the year, seven individuals served as directors of the company, of whom five were male and two were female. At today's date, the board consists of four males.

 

 

 

Table for reporting the gender identity or sex

 

 

	Number of board members	Percentage of the board			Number of senior positions on the board (CEO, CFO, and Chairman)		Number in executive management		Percentage of executive management
Men	4	100%			2		-		-
Woman	-	-			-		-		-

 

 

Table for reporting on ethnic background

 

 

		Number of board members	Percentage of the board		Number of senior positions on the board (CEO, CFO, and Chairman)		Number in executive management		Percentage of executive management
White British or other White (including minority-white groups)		4	100%		2		-		-
Mixed/Multiple Ethnic Groups		-	-		-		-		-

 

 

 

Carbon and greenhouse gas emissions

 

The Company  had minimal sales revenue in the period, no employees other than Directors and no offices. Therefore, the Company has minimal carbon emissions and it is not practical to obtain emissions data at this stage. The Company consumed less than 40,000 KWh of energy in the United Kingdom and is currently exempt from the requirement to disclose its greenhouse gas and other emission producing sources under the Companies Act 2006 (Strategic Report and Directors Report) Regulations 2014.

 

Going concern

 

The Directors, having made due and careful enquiry, are of the opinion that the Company has adequate working capital to meet its obligations over the next 12 months. The Directors therefore have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. As a  result, the Directors have adopted the going concern basis of accounting in the preparation of the annual financial statements.

 

The Board presents a balanced and understandable assessment of the Company's position and prospects in all interim and price sensitive reports to regulators as well as in the information required to be presented by statutory requirements.

 

Employees

 

The Company is in early stages of development. As at 31 August 2024, the Company utilised the expertise of the Directors, consultants/contractors and there are no employees in the UK & Canada.

 

Climate - Related Financial Disclosure

 

CEL AI PLC acknowledges the detrimental consequences of climate change and remains steadfast in our commitment to evaluating and addressing both the influence of climate change on our operations and our broader impact on the environment. We recognise the growing interest and concerns of investors, employees, regulators, the local community, and other stakeholders regarding our approach to climate change planning and adaptation.

 

CEL AI PLC aligns its climate-related financial disclosures with global best practices, prominently guided by the four core elements outlined by the Task Force on Climate-related Financial Disclosures (TCFD).

 

 

Core Elements	Description
Governance	Structures and processes in place to oversee climate-related issues, including the role of the board, management, and relevant committees.
Strategy	Insights into the company's actual and potential impacts of climate-related risks and opportunities on its business, strategy, and financial planning
Risk Management	Processes used to identify, assess, and manage climate-related risks integrated into overall risk management. Adaptations to strategies in response to climate considerations.
Metrics and Targets	Disclosure of metrics and targets used to assess and manage relevant climate-related risks and opportunities, providing quantitative information on performance and progress.

 

 

 

Given the small size of our business, establishing a dedicated team within the Financial Stability Task Force has not been operationally feasible. However, we recognise the critical importance of oversight in managing climate-related risks. In lieu of a dedicated team, responsibilities for climate-related oversight are distributed among existing personnel with relevant expertise. This approach allows us to maintain a nimble and adaptive governance structure, ensuring that climate-related considerations are integrated into various aspects of our decision-making processes.

 

In our TCFD-aligned report, we acknowledge the existing gaps in achieving full compliance with the TCFD's Recommendations and Recommended Disclosures. As we embark on this journey, we commit to evaluating and enhancing our reporting practices continually. Looking ahead, we plan to develop a comprehensive roadmap towards full compliance over the next year. Recognising that improvement extends beyond reporting, we aim to bolster the Company's strategies, structures, resources, and tools to effectively manage climate-related risks and opportunities.

 

The table below shows our current progress against TCFD Recommendations

 

TCFD pillar	Recommended Disclosure	Company Summary
Governance	The Board's supervision of risks and opportunities associated with climate-related factors.	The Board of Directors exercises oversight over climate-related issues, integrating them within the broader framework of governance.
Strategy	The influence of climate-related risks and opportunities on the business, strategic decisions, and financial planning.	The Board are aware that air transportation has higher carbon emissions compared to other forms of public transport and will make every effort, where applicable, to transition our air transport to other modes of transport.
Risk Management	The company's protocols for effectively managing climate-related risks.	The process of identifying climate-related risks is seamlessly integrated into our regular operations. Although we may not have a dedicated task force, every team member is accountable for considering climate-related risks within their specific areas of responsibility.   This decentralized approach guarantees that climate considerations are incorporated into our day-to-day decision-making processes. Given our small team size, collaboration plays a vital role. We regularly facilitate cross-functional discussions to collectively evaluate climate-related risks. By leveraging the expertise of each team member, we ensure a comprehensive understanding of potential impacts on our market dynamics. This collaborative effort cultivates a shared awareness of the challenges posed by climate-related factors.
Metrics and targets	Metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk management process.	The carbon capture initiative entails goals for mitigating emissions and actively contributing to wider climate initiatives. These metrics underscore, where applicable the Company's steadfast dedication to comprehensive sustainability practices.

 

Financial risk management

 

The Company has a simple capital structure and its principal financial asset is cash. The Company's market risk principally refers to price risk associated with the crypto tokens. The Directors manage the Company's exposure to this risk by carefully monitoring crypto price movements on a daily basis.

 

Further details regarding risks are detailed in the Note 25 to the financial statements.

 

 

Provision of information to auditors

 

So far as each of the Directors is aware at the time this report is approved:

 

·      there is no relevant audit information of which the Company's auditors are unaware; and

·      the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

 

Auditors

 

PKF Littlejohn LLP will be proposed for reappointment in accordance with Section 485 of the Companies Act 2006. PKF Littlejohn LLP, the auditors, have indicated their willingness to continue in office as auditors.

 

 

Approved by the Board on 27 December 2024 and signed on its behalf by:

 

 

Nicholas Lyth

 Director and Company Secretary

 

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE YEAR ENDED 31 AUGUST 2024

 

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial period. Under that law the directors have prepared the Group and Company financial statements in accordance with UK-adopted international accounting standards and as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and Company for that year.

 

In preparing these financial statements, the directors are required to:

 

·      Select suitable accounting policies and then apply them consistently;

·      Make judgements and accounting estimates that are reasonable and prudent;

·      State whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the requirements of the Companies Act 2006 and, as regards the Group financial statements, in accordance with UK-adopted international accounting standards. They are also responsible for safeguarding the assets of the         Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other  irregularities.

 

Website publication

 

The directors are responsible for ensuring the annual report and the financial statements are made available  on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

Directors' responsibilities pursuant to DTR4 (Disclosure and Transparency Rules)

 

The directors confirm to the best of their knowledge and belief:

 

·      The Group and Company financial statements have been prepared in accordance with UK-adopted international accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and Company; and

·      The annual report includes a fair review of the development and performance of the business and financial position of the Group and Company, together with a description of the principal risks and uncertainties.

 

On behalf of the board.

 

 

Michael Edwards

Chairman

27 December 2024

 

 

 

 

DIRECTORS' REMUNERATION REPORT FOR THE YEAR ENDED 31 AUGUST 2024

 

 

This remuneration report sets out the Company's policy on the remuneration of executive and non-executive Directors together with details of Directors' remuneration packages and service contracts for the year ended 31 August 2024. Due to the size of the Board and the early stage upon the Company's listing, an independent remuneration committee is not considered appropriate. The Company did not appoint any third-party advisers in relation to directors' remuneration.

 

The items included in this report are unaudited unless otherwise stated.

 

Remuneration policy

 

In setting the policy, the Board has taken the following into account:

 

·      The need to attract, retain and motivate individuals of a calibre who will ensure successful leadership  and management of the Company;

·      The Company's general aim of seeking to reward all employees fairly according to the nature of their  respective roles and performance;

·      Remuneration packages offered by similar companies within similar sectors;

·      The need to align the interests of shareholders as a whole with the long-term growth of the Company;     and

·      The need to be flexible and adjust with operational changes throughout the term of this policy.

 

Current and future policy

 

Executive directors are paid monthly, and their compensation package includes a combination of fixed salaries, pensions, and any other performance-related bonuses. Any increase will be properly documented highlighting the reasons and mainly be based on comparisons with other companies of a similar size and sector.

 

UK-based executive directors are entitled to participate in the company's auto-enrolment pension scheme if they wish. No directors receive any benefits for life insurance, accidental death or critical illness cover, hospital  fees, dental care or similar. No director has any entitlement to a company car, fuel allowance, or equivalent benefits.

 

The Directors are reimbursed by the Company for any travel, hotel or other expenses that occur in connection with the discharge of their duties.

 

Non-executive directors may be entitled to remuneration based on recommendations of the Chairman and comparisons with other companies of a similar size in a similar sector.

 

No directors have received bonuses, and any eventual bonuses will be decided upon by the full board with each  director recusing himself or herself from discussions about his or her bonus.

 

The company does not have a remuneration committee. During the year, key decisions made by the full board in respect of remuneration were remuneration packages for Michael Edwards and Nicholas Lyth.

 

The Directors have considered the requirement to present information on the relative performance of spend on pay compared to shareholder dividends. As the company does not currently pay dividends, we have not considered it necessary to include such information.

 

 

Directors' remuneration (audited)

 

Details of the directors' remuneration during the year ended 31 August 2024 are as follows:

 

 

Director	Salary	Benefits-	Pension	2024	2023
	and fees	in-kind	Contributions	Total	Total
	£	£	£	£	£
Executive directors
Darcy Taylor (resigned 08 Jan 2024)	186,830	-	-	186,830	220,000
Bruna Nikolla (resigned 28 June 2024)	184,949	-	-	184,949	138,052
Anna Chokina (resigned	-	-		-	320,879
26 September 2022)
Simon Walters (resigned	-	-	-	-	10,237
21 December 2022)
Nicholas Lyth	6,000   -     -	-   -     -	-   -     -	6,000   -     -	-   -     -
(appointed 28 Jun 2024) Michael Edwards (appointed 08 Jan 2024) Timothy Vincent Le Druillenec (appointed 16 June 2024 and resigned 28 June 2024)
Non-executive directors
Darcy Taylor (resigned 08 Jan 2024)	-	-	-	-	4,000
Gill Whitty Collins (resigned 30 April 2024)	19,682	-	-	19,682	30,000
Matthew Lodge	14,877	-	-	14,877	10,000
Misha Sher	-	-	-	-	-
Peter Wall (resigned	-	-	-	-	17,500
21 December 2022)
Total	412,338	-	-	412,338	750,668

 

 

 

 

 

 

 

Service agreements and Letters of Appointment

 

Under a letter of appointment with Darcy Taylor dated 18 February 2020, conditional upon Admission, he was                      appointed as a non-executive director of the Company for an annual fee of £30,000, payable monthly in arrears. From 10 May 2022, Mr. Taylor's role changed to non-executive chairman, under a new two-year agreement at £48,000 per annum, payable monthly in arrears. On the 1 October 2022, he was appointed as an interim CEO, in addition to the chairman role, with a fee of £192,000 per annum.  

 

The appointment as chairman was for an initial term of 24 months and was terminable on three months' notice by either party. No compensation was payable for loss of office and the appointment may be terminated immediately if, among other things, Mr Taylor was in material breach of the terms of the appointment. He was appointed to oversee the transition of the company into new markets, with his role intended to last until a permanent CEO is established and to explore potential merger and acquisitions avenues.

 

Darcy Taylor resigned from the Board of Directors on 08 January 2024.

 

Bruna Nikolla was appointed as a director on 22 August 2022 and was the company's Chief Financial Officer and Company Secretary. She received a salary of £150,000 per annum, payable monthly in arrears.

 

Bruna Nikolla resigned from the Board of Directors on 28 June 2024.

 

Gill Whitty Collins was appointed as a non-executive director of the company on 12 May 2022 and is entitled to fees of £30,000 per year under a contract for services for an initial two-year period which could be terminated by either party giving three months' notice. Ms. Whitty Collins was expected to devote at least six days a year to perform duties for the Company. The appointment may be terminated immediately if, among other things, she was in material breach of the terms of the appointment.

 

Gill Whitty Collins resigned from the Board of Directors on 30 April 2024.

 

Misha Sher was appointed as a non-executive director of the company on 12 May 2022 and is entitled to fees of £30,000 per year under a contract for services for an initial two-year period which can be terminated by either party giving three months' notice. Mr. Sher is expected to devote at least six days a year to perform duties for the Company. The appointment may be terminated immediately if, among other things, he is in material breach of the terms of the appointment.

 

Matthew Lodge was appointed as a non-executive director of the company on 5 May 2023 and is entitled to fees of £30,000 per year under a contract for services for an initial two-year period which can be terminated by either party giving three months' notice. Mr. Lodge is expected to devote at least six days a year to perform duties for the Company. The appointment may be terminated immediately if, among other things, he is in material breach of the terms of the appointment.

 

Michael Edwards was appointed as Chairman on 08 January 2024. His contract for services is via Marallo Pte Ltd. His fee for the remainder of the financial year was nil.

 

Nicholas Lyth was appointed as Finance Director on 28 June 2024. His contract for services is via Dark Peak Services Ltd. This fee for the remainder of the financial year was £3,000 per month plus VAT.

 

Share warrants

 

Individuals who served as Directors as at the end of financial year hold warrants to subscribe for Ordinary shares in the company in the future, as shown in the table       below.

 

			At 0.97p each
Misha Sher			2,000,000
Matthew Lodge			5,000,000

The warrants at 0.97p per share were issued on 5 May 2023 and 10 May 2023 respectively. One third vested on 5 May 2024 and 10 May 2024 respectively with the remaining two thirds vesting in twenty-four equal monthly instalments thereafter.

 

Share options

 

Bruna Nikolla (who resigned on 28 June 2024) held options to subscribe for 7,000,000 Ordinary shares in the Company at 31 August 2024. Director Anna Chokina (who resigned on 26 September 2023) held options to subscribe for 16,781,594 Ordinary shares in the Company at 31 August 2024.

 

Statement of directors' shareholdings

 

The Directors who held office at 31 August 2024 and their respective beneficial interests in the Ordinary shares    of the Company at the year-end were:

 

	Ordinary shares	Share options
Michael Edwards	10,233,333	-

Corporate Governance Statement

 

The Company intends to comply with the provisions of the Corporate Governance Code published by the Quoted Companies Alliance (QCA Corporate Governance Code) insofar as is appropriate having regard to the size and nature of the Company and the size and composition of the Board.

 

The QCA has identified 10 principles that focus on the pursuit of medium to long-term growth in value for shareholders without stifling the entrepreneurial spirit in which a company was created.

 

Companies need to deliver growth in long-term shareholder value. This requires an efficient, effective and dynamic management framework and should be accompanied by good communication which helps to promote confidence and trust.

Deliver growth

Principle 1: Establish a strategy and business model which promote long-term value for shareholders.

The Company's strategy and business model were established and set out in the Company's IPO Admission Document. The strategy is reviewed, assessed and revised at Board meetings as required. The Company's strategy, business model and progress are communicated through the Strategic Report of each Annual Report.

Principle 2: Seek to understand and meet shareholder needs and expectations.

The Chairman meets with existing shareholders from time to time as do the Executive Directors.

The Company welcomes all attendees to its Annual General Meetings ("AGMs") and seeks to engage with them both formally and informally on the day.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success.

As a people-centric business, much of their 'day job' involves communication/meetings with both external third parties and the Company's staff. Minimising the environmental impact of these activities is actively encouraged through the Group's:

·    Employment policies eg travel, use of public transport, working from home

·    Use of Zoom, a web-based meeting facility.

 

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The Company's approach to risk management together with the principal risks and uncertainties applicable, their possible consequences and mitigation are set out in the Principal Risks and Uncertainties section of the Group's Annual Report. The Board reviews, evaluates and prioritises risks to ensure that appropriate measures are in place to effectively manage and mitigate those identified.

 

 

Maintain a dynamic management framework

Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair.

The Corporate Governance section of the Company's Annual Report details the composition of its Board and Committees. These are also included within the Investor Relations section of its website.

All of the Directors (both Executive and Non-executive) are committing the time necessary to fulfil their roles. Non-executive Directors sit on the Audit and Risk and Remuneration Committees.

Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities.

A biography of each Board member is included within the Investor Relations section of its website. These list current and past roles of each Board member and also describe the relevant business experience that each Director brings to the Board, plus their academic and professional qualifications.

The biographies show the balanced blend of skills and experience required to enable the Company to execute its strategic objectives within a corporate governance framework which has been tailored to its business activities.

Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.

The Corporate Governance section of the Annual Report describes the function of the Board and its Committees. Whilst the Company does not have a Nominations Committee, the Directors regularly review the structure, size, composition (including the skills, knowledge, experiences and diversity) of the Board and make recommendations to the Board with regard to any changes.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours.

Within the Annual Report, the Chairman's statement provides further evidence of the iteration and implementation of the framework that continues to develop the Company's culture and support both existing and new employees. This sets out the Company's purpose, values and culture.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

The Investor Relations area of the Company's website includes a Corporate Governance section which, in addition to the high-level explanation of the application of the QCA Code, describes the composition of the Board and its Committees, together with a brief biography of each Board member.

The roles of Committees are described, along with their terms of reference and matters reserved by the Board for its consideration.

 

 

Other matters

 

The Company does not have an annual or long-term incentive scheme in place for any of the Directors and as  such there are no disclosures in this respect.

 

This report was approved by the board on 27 December 2024 and signed on its behalf by:

 

 

Michael Edwards

Chairman

 

 

 

INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED 31 AUGUST 2024

 

Opinion

 

We have audited the financial statements of CEL Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2024 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

In our opinion:

 

·      the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 August 2024 and of the group's loss for the year then ended;

·      the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

·      the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

·      the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Conclusions relating to going concern

 

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and parent company's ability to continue to adopt the going concern basis of accounting included:

 

·      an assessment of management's assumptions in modelling future financial performance and cash flow requirements, including consideration of future plans and ensuring all commitments are reflected therein;

·      checking the mathematical accuracy of the spreadsheet used to model future financial performance and cash flow requirements; and

·      assessing whether management has adequately disclosed any conditions which may cast significant doubt on the ability of the group and parent company to continue as a going concern in the financial statements.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

Our application of materiality

 

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatements, we define materiality as the magnitude of misstatements that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced.

 

We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level of uncorrected misstatements that would be material for the financial statements as a whole.

 

We determined the group and parent company materiality for the financial statements as a whole to be £51,400 and £48,700 (2023: £99,100 and £97,600) respectively, calculated at 3% (2023: 3%) of loss before tax. We considered loss before tax to be an appropriate benchmark as the group undertook commercial operations in the year, together with cost controls and cash preservation measures. Performance materiality was set at 60% (2023: 60%) of overall materiality for the group and parent company at £30,800 and £29,200 (2023: £59,400 and £58,560) respectively, whilst the threshold for reporting unadjusted differences to those charged with governance was set at £2,570 for the group and £2,430 for the parent company (2023: £4,955 and £4,880). We agreed with management and the audit committee to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds.

 

The component materiality was set at group performance materiality. 

 

Our approach to the audit

 

In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain such as the valuation of share based payments and stock provisions. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The component was audited by the group audit team for consolidation purposes.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

Key Audit Matter

How our scope addressed this matter

Recognition and valuation of cryptocurrency assets - Group and parent company (refer to note 15) During the year, the parent company invested in cryptocurrency assets as a treasury management tool. Depending on the type of cryptocurrency held, the fair value at the reporting date could be subject to management judgement and estimation uncertainty depending on trading volumes and ability to exchange or convert into fiat cash. In addition, the cryptocurrency assets are held in digital wallets, which gives rise to an increased risk of ownership, completeness and existence and as such the recognition and valuation of cryptocurrency assets is a key audit matter.

Our audit work in this area included: ·      Confirming good title to and quantities of the cryptocurrency assets held within the parent company's wallet at year-end and subsequent to year-end by observing a director gaining access to the wallet via the unique reference access key; ·      Testing the original investment to the cash disbursement; ·      Performing an assessment of the fair values attributed to the cryptocurrency assets at the transaction date and year-end date, and agreeing to market prices to an independent source; ·      Recalculating the unrealised gain or loss and agreeing to other comprehensive income; ·      Performing an assessment of the liquidity of the cryptocurrency assets held and the ability to realise as fiat cash, if required; and ·      Discussing with management the strategy for the holding of cryptocurrency assets and reviewing the relevant accounting treatment applied. The directors' recognition and valuation of cryptocurrency assets was concluded as reasonable.

 

 

Other information

 

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

 

In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

 

In our opinion, based on the work undertaken in the course of the audit:

 

·    the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·    the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

 

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

·    adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

·    the parent company financial statements and the part of the directors' remuneration report to be audited are not in agreement with the accounting records and returns; or

·    certain disclosures of directors' remuneration specified by law are not made; or

·    we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

 

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the group and parent company financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

 

 

Auditor's responsibilities for the audit of the financial statements

 

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

·      We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research and cumulative audit knowledge.

·      We determined the principal laws and regulations currently relevant to the group and parent company in this regard to be those arising from Financial Conduct Authority Rules, the Food Standards Agency, Rules of the London Stock Exchange, Disclosure Guidance and Transparency Rules, UK tax legislation, and UK-adopted international accounting standards.

·      We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to, enquiries of management and review of minutes, review of Regulatory News Service (RNS) announcements and review of legal and regulatory correspondence.

·      We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the estimates, judgements and assumptions applied by management in their recognition and valuation of cryptocurrency assets; impairment assessment of unlisted equity interests and stock provisions represented the highest risk of material misstatement, and we addressed this by challenging the assumptions and judgements made by management in those areas. 

·      We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

 

 

Other matters which we are required to address

 

We were appointed by Board of Directors on 24 August 2021 to audit the financial statements for the year ended 31 August 2020 and subsequent financial periods. Our total uninterrupted period of engagement is five years, covering the years ended 31 August 2020 to 2023.

 

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit.

 

Our audit opinion is consistent with the additional report to the audit committee.

 

Use of our report

 

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

David Thompson (Senior Statutory Auditor)

 For and on behalf of PKF Littlejohn LLP

Statutory Auditor

 

15 Westferry Circus

Canary Wharf

London E14 4HD

 

27 December 2024