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REG - 7digital Group PLC - Interim Results

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RNS Number : 9158A  7digital Group PLC  28 September 2022

28 September 2022
 

7digital Group plc

("7digital", "the Group" or "the Company")

 

7digital (AIM: 7DIG), the global leader in B2B end-to-end digital music
solutions, announces its interim results for the six months ended 30 June
2022.

 

Financial Highlights

·    Total revenue increased by 21% to £3.9m (H1 2021: £3.3m), including
licensing revenue growth of 45% to £2.5m (H1 2021: £1.7m)

·    Gross margin improved to 70.2% (H1 2021: 62.6%)

·    Achieved adjusted positive EBITDA of £0.03m (H1 2021: loss of
£1.0m)*

·    Operating loss reduced to £0.2m (H1 2021: £1.9m)

·    Cash and cash equivalents of £0.03m as at 30 June 2022 (H1 2021:
£0.5m); as at 27 September 2022, cash and cash equivalents were £0.6m**

* Adjusted to exclude other adjusting items, amortisation, foreign exchange,
depreciation and share-based payments (see note 5 to the financial statements)

** Including fundraising announced on 23 September 2022

 

 

Operational Highlights

·    Secured 5 new licensing customers and 3 contract expansions or
extensions, including:

o  A new contract worth at least £1m with a pan-Asian consumer services
company

o  A contract expansion worth at least €2.2m with a B2B music streaming
service

o  Further progress in social media industry with a new two-year contract
with Lomotif, one of the top worldwide social video-sharing apps

·    Sustained ramp-up in licensing revenue post period; as at 27
September 2022 the total contracted licensing revenue for full year 2022 is
43% greater than that generated in 2021

 

 

Paul Langworthy, CEO of 7digital, said:

 

"This was a great six months for 7digital. We delivered strong revenue growth
and achieved adjusted EBITDA profitability as the new and expanded contracts
we won last year and in the early part of this year began to ramp up. We
continued to win new customers and sign renewals with existing customers, many
of which are multi-year agreements. Some of these deals also include
significant usage terms, which we expect to drive further increases in revenue
as these clients scale their own services.

 

"We entered the second half of the year delivering against a strong contracted
order book and with a solid new business pipeline. The business has already
secured a 43% increase in contracted platform licensing revenue for FY 2022
over FY 2021. As a result, we are on track to deliver strong revenue growth
for 2022 and we look forward to reporting on our further progress."

 

Enquiries

 

7digital
 
c/o 020 4582 3500

Paul Langworthy, CEO

 

Strand Hanson Limited (Nominated and Financial
Adviser)                           020 7409 3494

Richard Johnson, James Harris, James Bellman

 

Arden Partners plc
(Broker)
020 7614 5900

Ruari McGirr

 

Gracechurch Group (Financial
PR)
                020 4582 3500

Harry Chathli, Claire Norbury

 

 

About 7digital (www.7digital.com (http://www.7digital.com/) )

 

7digital is the global leader in B2B end-to-end digital music solutions. The
core of its business is the provision of robust and scalable technical
infrastructure and extensive global music rights used to create music
streaming and radio services for a diverse range of customers - including
consumer brands, mobile carriers, broadcasters, automotive systems, record
labels and retailers. 7digital also offers radio production and music curation
services, editorial strategy and content management expertise.

 

7digital fosters industry growth and innovation by simplifying access to music
for clients. From years of being the largest independent producer of
programming for the BBC and powering services for partners like Soundtrack
Your Brand, Global Eagle, GrandPad and Fender, 7digital is perfectly
positioned to lead innovation at the intersection of digital music and
next-generation radio services.

Operational Review

 

The six months to 30 June 2022 was a strong period for the Group as it
delivered a significant increase in revenue to £3.9m (H1 2021: £3.3m) and
achieved adjusted EBITDA profitability of £0.03m (H1 2021: loss of £1.0m).
This growth was driven by the Group's licensing business, based on new
customers won in the prior year coming on stream as well as contract renewals
and expansions with existing customers during the period. The Group also
continued to win new licensing customers. Many of these new and renewed
contracts are multi-year agreements, which enhances visibility over future
revenues.

 

During the period, the Group secured 5 new licensing customers, which included
a new two-year contract worth at least £1m with a pan-Asian consumer services
company. The new customer will be using several unique services provided by
7digital's music-as-a-service platform, which was selected after a competitive
tender, to deliver an app-based music streaming service to enhance its
engagement with its customers.

 

In further success in the social media industry, one of the Group's core
target segments, 7digital won a new two-year contract with Singapore-based
Lomotif, one of the top worldwide social video-sharing apps. The Group's
music-as-a-service platform will provide music used by creators in the Lomotif
app globally. The initial contract will cover licenced major label content in
the app's current territories and will accommodate expansion in content from
newly licenced labels as well as usage. As such, this contract also reflects
the increasing transitioning of the Group's pricing model to align revenue
with usage that expands as the customer grows.

 

The Group signed a long-term contract with Utopia Music AG, a B2B music
fintech company that exists to build technology and data accounting to improve
the way the music industry pays royalties to the creators for the music
copyrights consumption, as well as a two-year contract with a new music and
data B2B platform designed to better meet the monetisation needs of the
rightsholder community. Using 7digital's global music database capabilities,
in addition to Utopia's existing data capabilities, Utopia's customers will be
able to monitor and measure the consumption of their music copyrights
globally. In so doing, Utopia's customers can leverage data for faster, more
accurate payouts of royalties to copyright holders.

 

In progress with existing licensing customers, the Group secured 3 contract
renewals or expansions during the first half of the year (H1 2021: 4),
reflecting the value of 7digital's platform and services to its customers.
This included a contract expansion with a B2B music streaming service
customer, worth a minimum of €2.2m over a three-year period. 7digital has
been providing services to the customer since 2016, with contract renewals on
an annual basis. This latest contract expands the relationship to a long-term
agreement, providing the Group with greater visibility over revenue.

 

Outside of licensing, eMusic Live, the Company's live streaming platform in
partnership with eMusic.com, livestreamed Hangout Music Festival and Cali
Vibes Festival, festivals of the world's largest entertainment company, AEG
Presents. eMusic Live also livestreamed the iHeartCountry Festival of
iHeartMedia, the largest audio company in the US. At the end of the period, as
announced on 30 June 2022, the Group entered into an agreement with eMusic.com
that expands 7digital's potential revenue generating opportunities with eMusic
Live to include a portion of net revenue derived from all activity on the
platform rather than just from providing the digital music tracks for download
in the eMusic Live experience. The Group does not, however, anticipate
generating revenue under this new agreement in the current year.

 

Board Changes

 

As announced on 23 September 2022, Mark Foster, who has been a Non-executive Director of the Group since April 2015, has been appointed Interim Chairman following the resignation of Tamir Koch, who stepped down from his role as Chairman to focus more time on the development of eMusic Blockchain. Tamir Koch remains on the Board as a Non-executive Director. Alongside this, and as described further in the Financial Review below, the Group has terminated the loan that had previously been secured with Tamir Koch, as announced on 30 June 2022, with no accrual of interest.

 

Financial Review

 

Revenue for the first half of 2022 increased by 21% to £3.9m compared with
£3.3m for the first half of the prior year, reflecting significant growth in
licensing revenue and good growth in content revenue. Licensing revenue
continued to be the largest contributor to Group revenue, accounting for 63%
(H1 2021: 52%), with 30% provided by Content (H1 2021: 32%) and 7% by Creative
(H1 2021: 16%). The reduction in creative revenue, which was more than offset
by the growth elsewhere in the business, is primarily due to H1 2021
benefitting from a rollover of projects that had been delayed due to COVID-19.
As at 30 June 2022, the Group had deferred licensing revenue relating to set
up fees of £345k of which £183k is expected to be received by the Group in
H2 2022, £131k in the year ending 31 December 2023 and £31k in future
periods.

 

Gross margin for the first half of 2022 improved substantially to 70.2% (H1
2021: 62.6%), reflecting the higher margin nature of the Group's licensing
business. Gross profit for the period increased to £2.8m (H1 2021: £2.0m),
reflecting the increase in revenue and gross margin.

 

Adjusted administrative expenses were reduced by 11% to £2.7m (H1 2021:
£3.1m). This decrease of £0.3m was attributable to salary savings of £0.2m
and a reduction in bad debt provision of £0.1m.

 

The Group achieved a substantial reduction in operating loss of 87% to £0.2m
(H1 2021: £1.8m), which is primarily a combination of:

·    £0.7m increase in revenue;

·    £0.3m reduction in adjusted administrative expenses;

·    £0.1m reduction in depreciation and amortisation due to the removal
of right-of-use assets;

·    £0.2m decrease in share-based payments; and

·    £0.1m reduction in both non-operating expenses and FX expenses.

 

As a result, the Group achieved adjusted EBITDA profitability of £0.03m
compared with a loss of £1.0m for the first half of the prior year (adjusted
for other adjusting items, amortisation, foreign exchange, depreciation and
share-based payments).

 

Loss per share was 0.01 pence (H1 2021: 0.07 pence loss).

 

As at 30 June 2022, the Group had cash and cash equivalents of £0.03m (30
December 2021: £0.4m). Post period, the Group has received £0.5m in the form
of a loan, as announced on 23 September 2022, from Magic Investments S.A., a
significant shareholder represented by David Lazarus who is a Non-executive
Director of the Group, that has been fully drawn. Alongside entering the new
loan, and as noted above, the Group terminated a shareholder loan that had
been previously secured with Tamir Koch, as announced on 30 June 2022. The
Group will fully repay the £50k that had been drawn under the loan from Tamir
Koch, which has been terminated with no accrual of interest. As at 27
September 2022, the Group had cash and cash equivalents of £0.6m.

 

Outlook

 

7digital entered the second half of 2022 with a strong contracted order book
as well as a solid new business pipeline, some of which has transitioned to
contract since period end. Accordingly, the Group is on track to deliver
strong total revenue growth for the full year.

 

The licensing business is expected to continue to be the key contributor to
Group revenue and to drive growth. Contracted licensing revenue for full year
2022 is 43% higher than that generated in 2021. The Group also expects content
and creative revenue to remain constant year-on-year.

 

As a result, the Board remains confident in 7digital's prospects and looks
forward to reporting on the Company's progress.

CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

 

                                                                               Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                                        Notes  £'000                                        £'000                                      £'000
 Continuing operations
 Revenue                                                                2      3,941                                        3,270                                      6,732
 Cost of sales                                                                 (1,172)                                      (1,222)                                    (2,409)
 Gross profit                                                                  2,769                                        2,048                                      4,323

 Administrative expenses                                                       (3,002)                                      (3,895)                                    (7,969)

 Adjusted operating loss                                                5      (116)                                        (1,320)                                    (2,527)
 - Share-based payments                                                 18     (126)                                        (359)                                      (556)
 - Foreign exchange                                                            41                                           (62)                                       (54)
 - Other adjusting items                                                3      (32)                                         (106)                                      (509)

 Operating loss                                                         4      (233)                                        (1,847)                                    (3,646)

 Finance income and costs                                               7      (97)                                         (62)                                       (273)
 Loss before income tax                                                        (330)                                        (1,909)                                    (3,919)

 Taxation on continuing operations                                             -                                            -                                          -
 Loss from continuing activities                                               (330)                                        (1,909)                                    (3,919)

 Profit from discontinued operations                                           -                                            -                                          -
 Loss for the period attributable to owners of the parent company              (330)                                        (1,909)                                    (3,919)

 Loss per share (pence)
 Basic and diluted - loss from continuing operations                    8      (0.01)                                       (0.07)                                     (0.14)
 Basic and diluted - loss attributable to ordinary equity holders       8      (0.01)                                       (0.07)                                     (0.14)

 Consolidated Statement of Comprehensive Income
                                                                               Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                                               £'000                                        £'000                                      £'000
 Loss for the period                                                           (330)                                        (1,909)                                    (3,919)

 Items that may be reclassified subsequently to profit or loss:
 Exchange differences on translation of foreign operations                     225                                          (17)                                       5
 Other comprehensive loss                                                      (105)                                        (1,926)                                    (3,914)

 Total comprehensive loss attributable to owners of the parent company         (105)                                        (1,926)                                    (3,914)

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2022 (unaudited)

 

                                                Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                                         Notes  £'000                       £'000                     £'000
 Assets
 Non-current assets
 Intangible assets                       9      703                         415                       559
 Property, plant and equipment           10     96                          88                        114
 Right-of-use assets                     11     -                           1,026                     -
                                                799                         1,529                     673
 Current assets
 Trade and other receivables             12     1,422                       986                       698
 Contract assets                                86                          148                       70
 Cash and cash equivalents                      28                          513                       363
                                                1,536                       1,647                     1,131
 Total assets                                   2,335                       3,176                     1,804
 Current liabilities
 Trade and other payables                13     (5,482)                     (3,982)                   (4,781)
 Derivative liability                           (51)                        (46)                      (46)
 Contract liabilities                           (454)                       (238)                     (288)
 Lease liability                         11     -                           (510)                     -
 Loans and borrowings                    14     (50)                        -                         -
 Provisions for liabilities and charges  15     (533)                       (737)                     (697)
                                                (6,570)                     (5,513)                   (5,812)
 Net current liabilities                        (5,034)                     (3,866)                   (4,681)

 Non-current liabilities
 Loans and borrowings                    14     (2,000)                     (1,000)                   (2,000)
 Contract liabilities                           (67)                        (140)                     (77)
 Lease liability                         11     -                           (752)                     -
 Provisions for liabilities and charges  15     -                           (42)                      -
                                                (2,067)                     (1,934)                   (2,077)
 Total liabilities                              (8,637)                     (7,447)                   (7,889)
 Net liabilities                                (6,302)                     (4,271)                   (6,085)

 Equity
 Share capital                           16     14,844                      14,844                    14,844
 Share premium account                          17,705                      17,705                    17,705
 Other reserves                                 (3,248)                     (3,557)                   (3,361)
 Retained earnings                              (35,603)                    (33,263)                  (35,273)
 Total deficit                                  (6,302)                     (4,271)                   (6,085)

 

 

 

CONSOLIDATED CASHFLOW STATEMENT

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

                                                                            Unaudited six months ended 30 June 2022    Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                                    Notes   £'000                                      £'000                                      £'000
 Loss for the period                                                        (330)                                      (1,909)                                    (3,919)
 Adjustments for:
 Taxation                                                                   -                                          -                                          -
 Finance Cost                                                      7        97                                         62                                         273
 Profit on sale of fixed assets                                             -                                          -                                          5
 Profit on disposal of subsidiary undertaking                               -                                          -                                          -
 Foreign exchange                                                           (41)                                       62                                         54
 Amortisation of intangible assets                                 9        120                                        57                                         173
 Amortisation of right-of-use asset                                11       -                                          203                                        328
 Depreciation of fixed assets                                      10       28                                         28                                         54
 Share-based payments                                              18       126                                        359                                        556
 Increase in provisions                                            15       (164)                                      (188)                                      (932)
 Decrease in accruals and deferred income                                   209                                        (99)                                       (155)
 Decrease in trade and other receivables                                    (740)                                      299                                        672
 Decrease in trade and other payables                                       415                                        (1,537)                                    (511)
 Cash flows used in operating activities                                    (280)                                      (2,663)                                    (3,402)
 Interest expense paid                                                      (97)                                       (34)                                       (231)
 Net cash used in operating activities                                      (377)                                      (2,697)                                    (3,633)

 Investing activities
 Purchase of property, plant and equipment, and intangible assets           (274)                                      (204)                                      (516)
 Net cash generated/(used) in investing activities                          (274)                                      (204)                                      (516)

 Financing activities
 Net proceeds from bank and shareholder loans                      14       50                                         750                                        1,750
 Principal paid on lease liabilities                               11       -                                          (96)                                       (28)
 Net cash generated from financing activities                               50                                         654                                        1,722

 Net decrease in cash and cash equivalents                                  (601)                                      (2,247)                                    (2,427)
 Cash and cash equivalents at beginning period                              363                                        2,839                                      2,839
 Effect of foreign exchange rate changes                                    266                                        (79)                                       (49)
 Cash and cash equivalents at end of period                                 28                                         513                                        363

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

 

                                              Share capital      Share premium account      Share-based payment reserve      Other reserves      Retained earnings      Total

                                              £'000              £'000                      £'000                            £'000               £'000                  £'000

 At 1 January 2021                            14,844             17,705                     461                              (4,360)             (31,354)               (2,704)
 Loss for the period                          -                  -                                                           -                   (1,909)                (1,909)
 Other comprehensive loss for the period      -                  -                                                           (17)                -                      (17)
 Share-based payments                         -                  -                          359                              -                   -                      359
 At 30 June 2021 - reported                   14,844             17,705                     820                              (4,377)             (33,263)               (4,271)
 Loss for the period                          -                  -                          -                                -                   (2,010)                (2,010)
 Other comprehensive loss for the period      -                  -                          -                                22                  -                      22
 Share-based payments                         -                  -                          144                              -                   -                      144
 Share warrants                               -                  -                          30                               -                   -                      30
 At 31 December 2021 - reported               14,844             17,705                     994                              (4,355)             (35,273)               (6,085)
 Loss for the period                          -                  -                          -                                -                   (330)                  (330)
 Other comprehensive loss for the period      -                  -                          -                                225                 -                      225
 Share-based payments                         -                  -                          (112)                            -                   -                      (112)
 At 30 June 2022                              14,844             17,705                     882                              (4,130)             (35,603)               (6,302)

 

 

NOTES TO THE INTERIM RESULTS

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

 
1.    Presentation of financial information and accounting policies

Basis of preparation

The condensed consolidated financial statements are for the six months to 30
June 2022.

 

The information for the six months ended 30 June 2021 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. The
information for the year ending 31 December 2021 is taken from the Annual
Reports and Financial Statements 2021 of 7digital Group plc.

 

The combined financial information has been prepared in accordance with
7digital Group plc accounting policies. 7digital Group plc accounting policies
are in accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union and as issued by the International Accounting
Standards Board, and are set out in the 7Ddigital Group plc Annual Reports and
Financial Statements 2021.

 

Going concern

The Group made a loss before/after tax of £330k for the period (2021:
£1,909k) and at the period-end had a net current liability position of
£5,034k (December 2021: £4,681k). The Directors note that the Group has
generated positive adjusted EBITDA since May 2022 to date and are optimistic
that the Group will achieve its forecast revenue for the remainder of 2022 and
for 2023.

 

£0.5m funding was received in September 2022 from David Lazarus,  a major
shareholder and director. In addition, certain existing shareholders will
continue to provide support of up to £4m to the Group, enabling the Group to
continue trading as a going concern. The shareholders who have pledged their
support will provide this support as and when the Group requires it to ensure
there is sufficient cash over a period of at least 12 months from 30 June
2022. On this basis, the Directors have prepared the financial statements on a
going concern basis.

 

Revenue

The Group comprises of mainly three types of revenues

1)    Licensing fees (also known as B2B sales)

a.    Setup Fees

b.    Monthly development and support fees

c.     Usage fees

2)    Content ("download") revenues (also know as B2C sales)

3)    Creative revenues

 

Each type of revenue is detailed below

 

Revenue comprises of:

I. Licensing revenues

7digital defines licensing revenues as fees earned both for access to the
Group's platform and for development work on that platform in order to adapt
functions to customer needs. The Board considers that the provision of
Technology Licensing Services comprises three separately identifiable
components:

The description of the licence fees compromise three categories;

1.     Set-up fees which grant initial access to the platform, allow use
of our catalogue and associated metadata and mark the start of work to define
a client's exact requirements and create the detailed specifications of a
service. Recognition of set-up fees is detailed below.

2.     Monthly development and support fees which cover the costs of
developer and customer support time. These are usually fixed and are paid
monthly once a service has been specified in detail; they are calculated at
commercial rates based on the number of developer or support days required.
Recognition of these fees is detailed below.

3.     Usage fees which cover certain variable costs like bandwidth which
can be re-charged to clients with an administrative margin are recognised at
point in time based on usage.

 

II. Content ("download") revenues

Content revenues are recognised at the value of services supplied and on
delivery of the content. The Group manages several content stores, and the
income is recognised in the month it relates to. Majority of the revenue
converts directly to cash; any accrued revenue converts to trade receivables
within 30 days.

III. Creative revenues

Creative revenues relate to the sale of programmes and other content. 7digital
also undertakes bespoke radio programming for its customers.  As the
programmes are being created the associated revenue is recognised when the
programme is delivered and accepted by the client. These mainly include the
production of weekly radio programmes, as well as the one-off production of
episodes.

 

In the case of one-off productions which required the Group to provide
progress reports to its customers and where the Group has no alternative use
of the programme produced, the Group recognises revenue over the period i.e.,
based on percentage of completion, for the rest of the regular programs and
contents, where the Group does not own the IP, the group measures the revenue
based on delivery of the content i.e., at a point in time.

 

Contracts with multiple performance obligations

Many of the Group's contracts include a variety of performance obligations,
including Licensing revenue (set-up fees, monthly revenue for using 7digital's
API licence platform and usage fees), however these may not be distinct in
nature. Under IFRS 15, the Group evaluates the segregation of the agreed goods
or services based on whether they are 'distinct', if both the customer
benefits from them either on its own or together with other readily available
resources, and it is 'separately identifiable' within the contract.

 

To determine whether to recognise revenue, the Group follows a 5-step process:

-       Identifying the contract with customers

-       Identifying the performance obligations

-       Determining the transaction price

-       Allocating the transaction price to the performance obligations

-       Recognising revenue when/ as performance obligations are
satisfied.

Performance Obligations and timing of revenue recognition

Revenue generated from B2B customer contracts often identify separate
goods/services, with these generally being the access of the API licence
platform, and the associated monthly licence maintenance fees and content
usage fees.

 

The list of obligations as per the contract that are deemed to be one
performance obligation in case of Licensing revenue are (B2B):

-       The licences provide access to the 7digital platform

-       The development and support fees which cover the costs of
developer and customer support time

-       Usage fees which cover certain variable costs like bandwidth and
content.

A key consideration is whether Licensing fees give the customer the right to
use the API Licence as it exists when the licence is granted, or access to API
which will, amongst other considerations, be significantly updated during the
API licence period.

 

The Group grants the customer a limited, revocable, non-exclusive and
non-transferable licence in the Territory during the Term, to use the 7digital
API and the content to enable the provision of the Music Service to the End
Users via Application.

 

Set-up fees represent an obligation under the contract, which is not a
distinct performance obligation, as the customer is not able to access the
platform without them. These are therefore spread over the period of the
contract agreed initially with the customers.

 

Monthly licence maintenance fees indicate service contracts that provide
ongoing support over a period of time. Revenue is recognised over the term of
the contract on a straight-line basis.

 

In the case of Creative Revenue, the sole performance obligation is to deliver
the content specified as per contract, whether this be the delivery of regular
content throughout the period (e.g., a radio series), or the production of a
longer, one-off episode.

 

The only obligation for the Group is to deliver the content production agreed
in the contract. Control and risks are passed to the customer on delivery of
the episode produced, news bulletins etc. The right to the IP varies from
project to project. If the customer suggests a specific programme idea to
tender, they will then own the underlying rights of the recordings and the IPR
is exclusive to the customer; 7digital's only performance obligation would be
to produce the content.

 

In the case of one-off productions for an identifiable customer contract where
7digital is required to update the client on the progress of work completed,
the Group applies an output method to determine the stage of completion and
amount of revenue to recognise.

 

Payment terms vary depending on the specific product or service purchased.
With licence fees, the set-up fees element is invoiced and paid upfront, while
monthly maintenance revenues and usage fees are normally invoiced on a monthly
basis. In the case of download sales, the cost is paid immediately by the
customer upon download of the music/songs content from the 7digital platform.
In the case of creative revenues, the payment terms are generally 50% on
signing with the balance on delivery. All contracts are subject to these
standard payment terms, to the extent that the parties involved expressly
agree in writing that the conflicting terms of any agreement shall take
precedence.

 

In the case of fixed-price contracts, the customer pays the fixed amount based
on a monthly schedule. If the services rendered by the Group exceed the
payment, a contract asset (Accrued Income) is recognised; if the payments
exceed the services rendered, a contract liability (Deferred Revenue) is
recognised.

 

Determine transaction price and allocating to each performance obligation

The transaction price for Licensing fees (set-up fees and monthly licence fee)
is fixed as per contract and is explicitly noted in the contract. In the case
of usage fees, the per gigabyte fee is determined and agreed in the contract.
In the case of creative revenue, the transaction fees for radio services and
one-off series are determined by taking into account the length of the
production (this may vary for commercials, radio programs, tv shows, series,
etc.). Any variations in transaction price are agreed and charged additionally
depending on the obligations to be performed. None of the five factors (i.e.,
variable consideration, constraining estimates of variable consideration, the
existence of a significant financing component in the contract, non-cash
consideration, and consideration payable to a customer identified) are
particularly relevant to 7digital's customer contracts. The transaction price
included in 7digital's contracts is generally easily identifiable and is for
cash consideration.

 

Other adjusting items

Other adjusting items are those items the Group considers to be non-recurring
or material in nature that should be brought to the readers' attention in
understanding the Group's financial statements. Other adjusting items consist
of one-off acquisition costs, costs related to non-recurring legal and
statutory events, restructuring costs and other items which are not expected
to re-occur in future years.

 

Foreign currency

For the purpose of the consolidated financial statements, the results and
financial position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Company, and the presentation currency
for the consolidated financial statements.

 

In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not
retranslated.

 

Exchange differences arising on the settlement of monetary items and on the
retranslation of monetary items, are included in profit and loss for the
period.

 

For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average monthly rate of exchange ruling at the date of the
transaction, unless exchange rates fluctuate significantly during that month,
in which case the exchange rates at the date of transactions are used.

 

Intangible assets

Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives. Intangible assets are recognised on business combinations if they are
separable from the acquired entity or give rise to contractual/legal rights.
The amounts ascribed to such intangibles are arrived at by using appropriate
valuation techniques.

 

Intangible assets (Bespoke Applications) arising from the internal development
phase of projects is recognised if, and only if, all of the following have
been demonstrated:

 

-      The technical feasibility of completing the intangible asset so
that it will be available for use or sale

-      The intention to complete the intangible asset and use or sell it

-      The ability to use or sell the intangible asset

-      How the intangible asset will generate probable future economic
benefits

-     The availability of adequate technical, financial and other
resources to complete the development and to use or sell the intangible asset;
and

-      The ability to measure reliably the expenditure attributable to
the intangible asset during its development.

 

The amount initially recognised for internally generated intangible assets is
the sum of the expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognised, development expenditure is
charged to profit or loss in the period in which it is incurred.

 

Internally generated intangible assets are amortised over their useful
economic lives on a straight-line basis, over 3 years.

 

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As
well as the purchased price, cost includes directly attributable costs and the
estimated present value of any future unavoidable costs of dismantling and
removing items. The corresponding liability is recognised within provisions.

 

Depreciation is provision on all items of property, plant and equipment, so as
to write off their carrying value over their expected useful economic lives.
It is provided at the following rates:

Property
           - 33.33% per annum straight line

Computer equipment                                   - 33.33%
per annum straight line

Fixtures and fittings
 - 33.33% per annum straight line

 

Impairment of tangible and other intangible assets

Impairment tests on goodwill and other intangible assets with indefinite
useful economic lives are undertaken annually at the financial year end.
Other non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable
amount (i.e., the higher of value in use and fair value less costs to sell),
the asset is written down accordingly.

 

Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the smallest group of assets to
which it belongs for which there are separately identifiable cash flows; its
cash generating units ('CGUs'). Goodwill is allocated on initial recognition
to each of the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.

 

Impairment charges are included in profit or loss, except to the extent they
reverse gains previously recognised in other comprehensive income. An
impairment loss recognised for goodwill is not reversed.

 

Leases

All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:

• Leases of low value assets; and

• Leases with a duration of 12 months or less.

 

Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease.

 

On initial recognition, the carrying value of the lease liability also
includes:

• amounts expected to be payable under any residual value guarantee;

• the exercise price of any purchase option granted in favour of the group
if it is reasonably certain to assess that option; and

• any penalties payable for terminating the lease, if the term of the lease
has been estimated on the basis of termination option being exercised.

 

Critical accounting judgements and key areas of estimation uncertainty

In the application of the Group accounting policies, which are described
above, the Directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period which the
estimate is revised if the revisions affect only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.

 

Content cost of sales

The API platform has the ability to analyse the usage reports derived from
download sales and which are distributed to the publishers on a quarterly
basis. These usage reports assist management in calculating publisher cost of
sales and publisher accruals. There is some uncertainty with regards the
publisher accrual as publisher costs are based on complex annual calculations
taking into account market share which are primarily determined by the
publishing suppliers. Management considers the usage reports for the publisher
element to be the most effective method of determining the true cost of
publisher content. Using data usage reports, historical invoicing patterns and
supplier confirmations, management have determined that there was no
adjustment for prior periods.

 

Impairment of accounts receivables

The management and Directors have made certain estimates and judgements in the
application of IFRS 9 when measuring expected credit losses and the assessment
of expected credit loss provisions required for accounts receivable balances.

 

Capitalsation of internally developed software

Distinguishing the research and development phases of a new customised
software project and determining whether the recognition requirements for the
capitalisation of development costs are met, requires judgement. After
capitalisation, management monitors whether the recognition requirements
continue to be met and whether there are any indicators that capitalised costs
may be impaired.

 

2.    Revenue

 

2.1. Business segments

 

For management purposes, the Group is organised into three continuing
operating divisions - Licensing, Content and Creative. The principal activity
of Licensing is the creation of software solutions for managing and delivering
digital content. The principal activity of the Content division is the sales
of digital music direct to consumers.  The principal activity of Creative is
the production of audio and video programming for broadcasters. These
divisions comprise the Group's operating segments for the purposes of
reporting to the Group's chief operating decision maker, the Chief Executive
Officer.

                                                   Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                   £'000                                        £'000                                      £'000
 Revenue
 Licensing                                         2,489                                        1,713                                      3,797
 Content                                           1,182                                        1,033                                      2,073
 Creative                                          270                                          524                                        862
 Total                                             3,941                                        3,270                                      6,732

 Gross profit
 Licensing                                         2,394                                        1,580                                      3,512
 Content                                           197                                          156                                        334
 Creative                                          177                                          312                                        477
 Total                                             2,768                                        2,048                                      4,323

 Operating profit attributable to revenue streams
 Licensing                                         2,252                                        1,503                                      3,308
 Content                                           192                                          151                                        318
 Creative                                          175                                          309                                        470
 Total                                             2,619                                        1,963                                      4,096

 Amortisation of right to use of asset             -                                            (203)                                      (328)
 Corporate expenses                                (2,852)                                      (3,607)                                    (7,414)
 Financing income & costs                          (97)                                         (62)                                       (273)
 Taxation                                          -                                            0                                          0
 Loss for the period                               (330)                                        (1,909)                                    (3,919)

2.2. Geographical information

 

                                                                        Revenue
                           Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                           £'000                                        £'000                                      £'000
 Continuing operations
 United Kingdom            688                                          922                                        1,674
 United States of America  1,544                                        1,026                                      2,229
 Europe                    1,151                                        1,011                                      2,018
 Rest of World             558                                          311                                        811
                           3,941                                        3,270                                      6,732

2.3. On-going operations

 

                     Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Var       Var
                     £'000                                        £'000                                      £'000     %
 Revenue
 Licensing           2,489                                        1,713                                      776       45%
 Content             1,182                                        1,033                                      149       14%
 Creative            270                                          524                                        (254)     -48%
 Total               3,941                                        3,270                                      671       21%

 Gross profit
 Licensing           2,394                                        1,580                                      814       52%
 Content             197                                          156                                        41        26%
 Creative            177                                          312                                        (135)     -43%
 Total               2,768                                        2,048                                      720       35%

 Gross profit%
 Licensing           96%                                          92%                                                  4%
 Content             17%                                          15%                                                  2%
 Creative            66%                                          60%                                                  6%
 Total               70%                                          63%                                                  7%

 Corporate expenses  (2,736)                                      (3,080)                                    344       -11%
 Adjusted EBITDA     32                                           (1,032)                                    1,064     -103%

 

 

3.    Other adjusting items

 

                                                          Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                          £'000                                        £'000                                      £'000
 Consultancy costs                                        -                                            -                                          (153)
 Provision for uncertain recoverability of cash advances  -                                            -                                          (112)
 Exceptional legal fees                                   (32)                                         (43)                                       (93)
 Corporate restructuring provision                        -                                            (63)                                       (65)
 Technology provision                                     -                                            -                                          (86)
                                                          (32)                                         (106)                                      (509)

 

 

 

4.    Operating loss

 

                                                  Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                  £'000                                        £'000                                      £'000
 Net foreign exchange (profit)/loss               (41)                                         62                                         54
 Amortisation of intangible assets                120                                          57                                         173
 Amortisation of right to use asset               -                                            203                                        328
 Depreciation of property, plant & equipment      28                                           28                                         54
 Profit on sale of right-of-use asset             -                                            -                                          5
 Share-based payment expense                      126                                          359                                        556

 

 

5.    Reconciliation of non-IFRS financial KPIs
 

This note reconciles the adjusted operating loss to the adjusted EBITDA loss.
This note reconciles these key performance indicators to individual lines in
the financial statements. In the Directors' view it is important to consider
the underlying performance of the business during the period. Therefore, the
directors have used certain alternative performance measures (APMs) which are
not IFRS compliant metrics. The main effect has been that the APMs exclude
other adjusting items, amortisation, foreign exchange, depreciation and
share-based payments to reflect the underlying cash utilisation for the
performance of the business. The APMs are consistent with those established
within the prior year annual report and their derivation is set out in the
table below.

Reconciliation of adjusted operating loss and adjusted EBITDA profit/loss:

                                       Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                       £'000                                        £'000                                      £'000
 Statutory operating loss              (233)                                        (1,847)                                    (3,646)
 Other adjusting items                 32                                           106                                        509
 Foreign exchange                      (41)                                         62                                         54
 Share-based payment expense           126                                          359                                        556
 Adjusted operating loss               (116)                                        (1,320)                                    (2,527)
 Profit on sale of right-of-use asset  -                                            -                                          5
 Depreciation and amortisation         148                                          288                                        382
 Adjusted EBITDA profit/loss           32                                           (1,032)                                    (2,140)

 

 

 

 

 

 

 

 

 

 

6.    Staff costs

 

                                                 Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                 No.                                          No.                                        No.
 Number of production, R&D, and sales staff      37                                           43                                         39
 Number of management and administrative staff   14                                           14                                         12
                                                 51                                           57                                         51

                                                 £'000                                        £'000                                      £'000
 Wages and salaries                              1,656                                        1,683                                      3455
 Redundancy payments                             -                                            63                                         63
 Social security costs                           186                                          197                                        364
 Other pension costs                             53                                           55                                         109
 Share-based payments                            126                                          359                                        556
                                                 2,021                                        2,357                                      4,547

 

7.    Finance income and charges

 

                                        Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                        £'000                                        £'000                                      £'000
 Interest receivable                    -                                            -                                          7
 Interest expenses on leased liability  -                                            (28)                                       (49)
 Other charges similar to interest      (97)                                         (34)                                       (231)
 Finance costs                          (97)                                         (62)                                       (273)

 

8.    Earnings per share

 

                                                                          Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
 Basic and Diluted EPS
 Loss attributable to shareholders - continuing operations: (£'000)       (330)                                        (1,909)                                    (3,919)

 Weighted average number of shares (Nos)                                  2,722,085,961                                2,722,085,961                              2,722,085,961
 Per share amount - continuing operations (pence)                         (0.01)                                       (0.07)                                     (0.14)
 Per share amount - loss attributable to ordinary equity holders (pence)  (0.01)                                       (0.07)                                     (0.14)

 

 

 

 

 

 

9.    Intangible assets

 

                                  Bespoke applications
                                  £'000
 Cost
 At 1 January 2021                3,522
 Additions                        185
 At 30 June 2021                  3,707
 Additions                        260
 At 31 December 2021              3,967
 Additions                        264
 At 30 June 2022                  4,231

 Amortisation
 At 1 January 2021                3,235
 Charge for the period            57
 At 30 June 2021                  3,292
 Charge for the period            116
 At 31 December 2021              3,408
 Charge for the period            120
 At 30 June 2022                  3,528

 Net book value
 At 30 June 2022                  703
 At 30 June 2021                  415
 At 31 December 2021              559

 

 

Additions relate to internally developed software relating to the 7digital
platform. Amortisation charges are included within the administrative expenses
within the Income Statement. The useful life of each group of intangible
assets varies according to the underlying length of benefit expected to be
received.

 

 

10.  Tangible assets

 

                                             Computer equipment & capitalised software
                                             £'000
 Cost
 At 1 January 2021                           236
 Additions                                   19
 At 30 June 2021                             255
 Additions - restated                        53
 Disposals                                   (110)
 At 31 December 2021 - restated              198
 Additions                                   10
 At 30 June 2022                             208

 Amortisation
 At 1 January 2021                           139
 Charge for the period                       28
 At 30 June 2021                             167
 Charge for the period - restated            27
 Disposals                                   (110)
 At 31 December 2021 - restated              84
 Charge for the period                       28
 At 30 June 2022                             112

 Net book value
 At 30 June 2022                             96
 At 30 June 2021                             88
 At 31 December 2021                         114

 

There was a misanalysis between additions and charge for the year in the 31
December 2021 financial statements; the net book value of £114k remains
unchanged.

 

 

 

11.  Leases

 

On 1 July 2020, the Group entered into a lease that was expected to run until
August 2023. During 2021, the Group successfully negotiated an exit agreement
in regard to this lease which required the Group to pay £500k as a settlement
over 15 months to December 2022. The £500k settlement was shown in provisions
for liabilities and charges and £105k remains un-invoiced at 30 June 2022
(see note 15).

 

As from October 2021, the Group is using service-office space on an
as-and-when basis.

 

 Right-of-use assets                                           Land and buildings
                                                               £'000
 At 1 January 2021                                             1,184
 Addition                                                      44
 Amortisation                                                  (202)
 At 30 June 2021                                               1,026
 Changes to initial lease                                      79
 Disposal                                                      (963)
 Amortisation                                                  (142)
 At 31 December 2021                                           -
 Disposal                                                      -
 Amortisation                                                  -
 At 30 June 2022                                               -

 Lease liability                                               Land and buildings
                                                               £'000
 At 1 January 2021                                             1,330
 Interest expense                                              28
 Lease payments                                                (96)
 At 30 June 2021                                               1,262
 Changes to initial lease                                      109
 Provision created on termination of property lease            (500)
 Disposal                                                      (958)
 Interest expense                                              19
 Lease payments                                                68
 At 31 December 2021                                           -
 Interest expense                                              -
 Lease payments                                                -
 At 30 June 2022                                               -

 Analysed:
 Current                                                       -
 Non-current                                                   -
 Total                                                         -

 

 

12.  Trade and other receivables

 

 

                                                                      Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                                                                      £'000                       £'000                     £'000
 Trade receivable for the sale of goods                               2,307                       1,569                     1,721
 Less: Provision for impairment of trade receivables                  (1,151)                     (972)                     (1,173)
 Net trade receivables                                                1,156                       597                       548
 Other debtors                                                        146                         283                       84
 Total financial assets at amortised cost (excluding cash & cash      1,302                       880                       632
 equivalents)
 Prepayments                                                          120                         106                       66
 Total trade and other receivables                                    1,422                       986                       698
 Less: non-current portion - other debtors                            -                           (80)                      -
 Current portion                                                      1,422                       906                       698

 

13.  Trade and other payables

 

                                  Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                                  £'000                       £'000                     £'000
 Current Liabilities
 Trade payables                   2,332                       1,102                     1,752
 Other taxes and social security  1,460                       1,324                     1,429
 Other payables                   144                         20                        107
 Accrued costs                    1,546                       1,536                     1,493
                                  5,482                       3,982                     4,781

 Non-Current Liabilities
 Other payables                   -                           -                         -
                                  -                           -                         -

 

14.  Loans and borrowings

 

                                       Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                                       £'000                       £'000                     £'000

 Bank loans repayable within one year  50                          -                         -
 Bank loans repayable over one year    2,000                       1,000                     2,000

 

On 28 September 2020, the Group secured a £1m revolving loan facility with
Investec for a period of 36 months guaranteed by two of the Directors. The
arrangement allows a maximum of 4 draw downs in any 12 month period of no less
than £250k per draw down. As at 30 June 2021 the whole facility had been
drawn down. The total loan Interest, payable quarterly, is calculated at 6%
above Investec bank rate on the drawn portion of the facilty and 2% on the
undrawn portion. An arrangement fees of £30k was agreed and payable in
5,437,883 warrants.

 

On 18 October 2021, the Group secured a further £1m revolving loan facility
with Investec for the period to 28 September 2023 guaranteed by two of the
Directors. The arrangement allows a maximum of 4 draw downs in any 12 month
period of no less than £250k per draw down. An arrangement fees of £30k was
agreed, of which £4k was payable at the time of this draw down and £26k
payable in 1,382,488 warrants. As at 31 December 2021 the whole facility had
been drawn down during the year. The total loan Interest, payable quarterly,
is calculated at 6% above Investec bank rate on the drawn portion of the
facilty and 2% on the undrawn portion.

 

As at 30 June 2022, a total of £2,000k of capital and £31k interest (which
is included in accrued costs) was due to Investec.

 

On 23 June 2022, the Group received £50k as part of a drawdown from the
previously annouced shareholder loan. The amount will be refunded by the end
of September 2022 as disclosed in the Group's announcement of 23 September
2022.

 

15.  Provisions

 

                                    Unaudited 30 June 2022      Unaudited 30 June 2021      Audited 31 Dec 2021
                                    £'000                       £'000                       £'000
 Current
 Provision for closure of business  49                          180                         101
 Legal provision                    -                           372                         -
 Property provision                 105                         -                           225
 Other provisions                   379                         227                         371
                                    533                         779                         697

 Of which is: current               533                         737                         697
 Of which is: non-current           -                           42                          -

At 30 June 2022, the provision for closure of business of £49k relates to the
French entity, which was liquidated on 16 September 2020; the balance is being
paid off in four instalments of £10k to September 2022 and 3 instalments
thereafter of £3k to December 2022.

 

During 2021, the Group successfully negotiated an exit agreement in regard to
a lease signed in July 2020. The settlement required the Group to pay £500k
over 15 months to December 2022. At 30 June 2022, £105k represents the final
two payments of £52.5k each (net of VAT) due to be paid at end of September
2022 and December 2022. An extra £52.5k (£63k gross) is included in trade
payables at 30 June 2022 and paid in July 2022.

 

At 30 June 2022, other provisions consist of £234k provision for technology
costs that may become due and £145k payroll taxes on share options.

 

16.  Share capital

                                      Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                                      No. of shares               No. of shares             No. of shares
 Allotted, called up and fully paid:
 Ordinary shares of 0.01p each        2,722,085,961               2,722,085,961             2,722,085,961
 Deferred shares of 0.99p each        419,622,489                 419,622,489               419,622,489
 Deferred shares of £0.09 each        115,751,517                 115,751,517               115,751,517

                                      £'000                       £'000                     £'000
 Allotted, called up and fully paid   14,844                      14,844                    14,844

 

17.  Related party transactions

 

During the six month period, the Group invoiced and recognised £46k (31
December 2021: £100k) of revenue to eMusic (a subsidiary of TriPlay Inc.), a
company of which Tamir Koch is a director. At 30 June 2022, the Group was owed
£279k (31 December 2021: £208k), of which £208k was  provided for at 30
June 2022 (31 December 2021: £208k).

 

During the six month period, the Group paid £nil (31 December 2021: £5.0k)
to MIDiA Research for music market research services, a company of which Mark
Foster is a director. At 30 June 2022, the Group owed £nil (31 December 2021:
£nil).

 

During the period, the Group paid £nil (31 December 2021: £112k) to eMusic
for the new venture eMusic Live. At 30 June 2022, the Group was owed £112k
(31 December 2021: £112k) of which £112k (31 December 2021: £112k) was
provided for.

 

During the period, the Group paid fees of £65k (31 December 2021: £252k) to
MJ Advisory which is Michael Juskiewicz's personal service company based in
the US. At 30 June 2022, the Group owed £13k (31 December 2021: £nil).

 

Transactions between the Parent Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.

 

18.  Share-based payments

 

On 27 May 2021, the Group granted 65,477,778 share options to all staff which
were valued at £818k. The fair value of the share options has been calculated
using the Black-Scholes model at the grant date. The key inputs into the
Black-Scholes model are detailed below:

 

                                 2021

                                 Options

 Share price at date of grant    1.13p
 Exercise price                  0.00p
 Volatility                      100%
 Option life                     10 yrs.
 Risk-free interest rate         0.5%

 

 

The total expense recognised for the periods arising from equity-settled
share-based payment transactions is summarised as below:

 

 

                                                                     Unaudited six months ended 30 June 2022      Unaudited six months ended 30 June 2021    Audited full year to 31 Dec 2021
                                                                     £'000                                        £'000                                      £'000
 Shares options                                                      112                                          313                                        503
 Employer contribution payable on share options                      9                                            46                                         76
 Provision made/(released) for shares to be issued for remuneration  5                                            -                                          (23)
                                                                     126                                          359                                        556

 

 

The share-based payment reserve is detailed below:

 

                 Unaudited 30 June 2022      Unaudited 30 June 2021    Audited 31 Dec 2021
                 £'000                       £'000                     £'000
 Shares options  1,050                       820                       938
 Share warrants  56                          -                         56
                 1,106                       820                       994

 

19.  Post balance sheet events
 

On 23 September 2022, the Group entered into an agreement with Magic
Investments S.A., a significant shareholder represented by David Lazarus who
is a director of the Group, for a loan of £500k. The loan is repayable on or
before 1 October 2023; attracts interest at 5% per annum, payable on a
quarterly basis; the Principal Amount will be repayable in one lump sum on the
Repayment Date; and is unsecured.

 
The funds will be used by the Group for working capital purposes and to fully repay the £50k previously drawn on a loan from Tamir Koch, announced on 30 June 2022, which has now been terminated with no accrual of interest.
 
20.  Contingent liabilities

 

The Group does not have any contingent liabilities.

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