REG - Electric Guitar PLC - Interim Results
11/03/2025 07:15
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RNS Number : 0945A Electric Guitar PLC 11 March 2025
11 March 2025
Electric Guitar PLC
("Electric Guitar" or the "Company")
Interim Results for the six months ended 30 September 2024
The Board of Electric Guitar today announces the Company's unaudited results
for the six months ended 30 September 2024.
Highlights
In the six months to 30 September 2024, Electric Guitar PLC (LSE: ELEG)
pursued its mission to become the provider of choice of first-party data
solutions for the marketing and advertising industry, empowering businesses to
realise the value of their first-party data. In an era of changing consumer
attitudes towards the use of their data, tighter privacy legislation, and the
progressive loss of third-party cookies, first-party data has become key to
success in digital marketing.
· In May 2024:
o Completed the acquisition of 3radical Limited ('3radical') in an all-share
reverse takeover ('RTO') valued at £1.3m
o Transferred to AIM, raising £2.2m before expenses and a £0.6m loan
facility
· In August 2024 acquired Mymyne Limited ('Mymyne') in an all-share
acquisition, achieving substantial cost-savings
· Entered into multiple business collaborations to extend marketing
reach and product offerings during the period
Post balance sheet events
· On 26 November 2024, trading in the Company's shares was suspended
pending clarification of the Company's financial position
· On 24 December 2024, 3radical was placed into Creditors Voluntary
Liquidation ('CVL'), and the Company automatically reverted to being a cash
shell while exploring refinancing options
· A Company Voluntary Arrangement ('CVA') is today being proposed to
creditors and shareholders for the refinancing of the Company as a cash shell
· New investment of £0.3m proposed to provide working capital to
enable the Company's shares to be restored to trading on AIM and to continue
as a cash shell pending a further acquisition or investment
Contacts:
Electric Guitar PLC info@electricguitarplc.com
Richard Horwood, COO
Allenby Capital (Nominated Adviser and Broker) 020 3328 5656
Jeremy Porter / Piers Shimwell / Dan Dearden-Williams
CHAIR'S STATEMENT
For the six months ended 30 September 2024
I present the Company's unaudited interim results for the six months ended 30
September 2024.
Despite the recent insolvent liquidation of the Company's principal trading
subsidiary, I want to pay tribute to the untiring efforts of the Company's
management and staff in trying to make a success of the Company's business
since the reverse takeover transaction to acquire 3radical Ltd ("RTO"). The
Company's mission was well conceived and, on its acquisition, 3radical offered
a very credible base from which to try to grow.
The delivery of that mission was however challenged, principally by the impact
of the lack of investment in 3radical in the months leading up to the RTO,
which had taken longer than anticipated due to difficult stock market
conditions; and then by a tough macroeconomic environment coupled with a
volatile political landscape, both of which were damaging to customers'
confidence.
In addition, the Company's 'buy and build' mission of using its equity as both
acquisition currency and to raise further investment, was undermined by its
share price falling substantially from very soon after the RTO, ultimately
down some 90% by the time the shares were suspended in November 2024.
Achievements during the six months ended 30 September 2024
On 3 May 2024, the Company completed a £1.3m all-share acquisition of
3radical, a business with a well-established software platform already in use
by major clients around the world, that helped marketers engage their
customers by securing the first-party data marketers increasingly need.
As the Company had until then been a Special Purpose Acquisition Company
('SPAC'), its first acquisition was an RTO. At the request of 3radical's
major shareholders, on completing the RTO the Company cancelled its listing on
the Standard Segment of the FCA Official List and Main Market of the London
Stock Exchange, and had its shares admitted to the LSE's AIM market. At the
same time, it raised £2.2m in new equity (before expenses of £1.3m), as well
as securing a £0.6m loan facility from its largest shareholder, Sanderson
Capital Partners Ltd ('Sanderson').
On 28 August 2024, the Company completed the acquisition of Mymyne, a
developer of data-related software solutions, and the provider of related
sales and marketing services to 3radical, achieving significant
cost-savings. The all-share consideration comprised a value of £72,000 on
completion, and a maximum conditional further all-share consideration capped
at a maximum equity market value if and when payable of £268,600 (all of
which above £161,160 would, if earned, be self-financing, being a percentage
of revenues achieved from sales of Mymyne's IP in the following year).
During the period, the Company also entered into a number of business
collaborations to extend its marketing reach and product offerings, such as a
proposed joint venture to build AI-enhanced marketing and advertising
solutions.
Post balance sheet events
The Company's shares were suspended from trading on AIM on 26 November 2024,
after substantially reduced short and medium term trading projections from
3radical's management - driven in large measure by the withdrawal of
prospective customers following the Government's 30 October Budget and other
adverse macroeconomic conditions - and the lack of sufficient further funding
being available to the Company. On 24 December 2024, 3radical was placed
into CVL, despite efforts to sell it as a going concern.
At this point, with its principal trading business in liquidation, the Company
became an AIM Rule 15 cash shell. Having used all its available funds
(including by then £125k drawn from the £0.6m loan facility) to support the
3radical business and its own running costs, and as a result of being unable
to raise additional funds after potential investors withdrew abruptly from
discussions, coupled with the CVL of 3radical causing the £475k balance of
the Company's loan facility to no longer be available pursuant to its terms,
the Company had no way to pay down its own liabilities now estimated at
approximately £1.4m, comprising mainly outstanding fees due to advisers,
accrued salaries, and payments due to HMRC.
Since then, the Board has been in discussions to restructure and refinance the
Company that have culminated in the proposed CVA and fundraising, with a view
to eliminating the Company's debts and raising new working capital to enable
its shares to be restored to trading on AIM and to continue as a cash shell
pending a further acquisition or investment.
John C Hutchinson
Chair
10 March 2025
DIRECTORS REPORT
For the six months ended 30 September 2024
The directors present their report for the six months ended 30 September 2024.
Principal activities
The principal activity of the Company during the period to 30 September 2024
was that of identifying potential companies, businesses, or assets for
acquisition and, following the RTO of 3radical on 3 May 2024, the provision of
software services mainly for advertising and marketing.
On 3 May 2024, the Company completed its acquisition of 3radical, a software
solutions business. Consideration payable for 100% of the shares in 3radical
was £1.3m, which was settled in full through the issue of new ordinary shares
in the Company.
Principal risks and uncertainties
The principal risks currently faced by the Company relate to:
Inability to fund operations pending a further acquisition
Following the CVL of its main operating subsidiary on 24 December 2024 and the
consequential automatic reversion of the Company to being a cash shell from
that date, in order to continue operations to the point where the Company is
able to complete a further acquisition, the Company will need to ensure that
it has sufficient funds to meet all its listing and operating expenses through
to completion.
The Company currently has very limited working capital, and is today issuing
proposals to its creditors and shareholders for a CVA that will, if approved
by them, relieve the Company of substantially all its debts and enable it to
raise £0.3m in new equity to finance its working capital needs as a cash
shell. If the CVA is not approved, then it is likely that the Company will
be placed into immediate insolvent liquidation.
The Company's relationship with the directors and conflicts of interest
The Company is dependent on the directors to identify potential acquisition
opportunities and to execute acquisitions. In light of the reversion of the
Company to being a cash shell on 24 December 2024, following approval of the
proposed CVA at meetings, scheduled to be held on 27 March 2025, it is
anticipated that the roles of the current two executive directors will be made
redundant and that, except for Grahame Cook (a current non-executive director)
and Richard Horwood (currently Chief Operating Officer, but to become
non-executive following approval of the proposed CVA), all the other directors
will retire from the Board. It is also proposed that, following approval of
the proposed CVA, Sarfraz Munshi, a representative of Sanderson, will re-join
the Board as an additional non-executive director. Mr Munshi and the two
continuing non-executive directors are experienced and well-connected company
directors and, whilst they will focus on executing the Company's strategy,
they will also allocate a proportion of their time to other businesses which
may lead to the potential for conflicts of interest in their determination as
to how much time to assign to the Company's affairs.
The proposed acquisition of a new company may not be completed
If the Company does not complete a new acquisition, it may not be able to
fulfil its objectives and will likely require additional working capital, or
proposals to be put to shareholders as to the future of the Company. In
addition, if such an acquisition is commenced but not completed, the Company
may be left with substantial transaction costs.
Risks inherent in the acquisition of a new company
Although the Company and the directors will evaluate the risks inherent in any
particular target, they cannot offer any further assurance that all the
significant risk factors can be identified or properly assessed.
Reliance on external advisers
The directors rely on external advisers to help assess proposed acquisitions,
and there is a risk that such advisers fail to perform as required.
Failure to obtain additional financing to complete an acquisition or fund a
target's operations
There is no guarantee that the Company will be able to obtain any additional
financing needed either to complete an acquisition or to implement its plans
post-acquisition or, if available, to obtain such financing on terms which are
reasonable to the Company. In that event, the Company may be compelled to
restructure or abandon the acquisition or proceed with the acquisition on less
favourable terms, which may reduce the Company's return on investment. The
failure to secure additional financing on acceptable terms could have a
material adverse effect on the continued development or growth of the Company
and the acquired business.
Reliance on income from the acquired activities
Following an acquisition, the Company may be dependent on the income generated
by the acquired business or from the subsequent divestment of the acquired
business to meet the Company's expenses. If the acquired business is unable
to provide sufficient funds to the Company, the Company may be unable to pay
its expenses or make distributions and dividends on the ordinary shares.
Restrictions in offering ordinary shares as consideration for an acquisition
or requirements to provide alternative consideration
In certain jurisdictions, there may be legal, regulatory, or practical
restrictions on the Company using its ordinary shares as consideration for an
acquisition or which may mean that the Company is required to provide
alternative forms of consideration. Such restrictions may limit the
Company's acquisition opportunities or make a certain acquisition more costly,
which may have an adverse effect on the results of operations of the Company.
Financial review
The results for the period are set out on page 11. For the six months ended 30
September 2024, the Company reports a net loss of £4,268k (2023: net loss of
£591k) for the Company and its subsidiaries ('Group').
During the six months to 30 September 2024, the Group incurred significant
costs relating to the due diligence of 3radical, executing its acquisition and
funding its operating losses, as well as impairment losses recognised to write
off goodwill and other assets for 3radical. During the period, the Group
incurred a net cash outflow of £30k (2023: outflow of £402k). At 30
September 2024, the Company held cash at bank of £23k.
No dividends were paid. The directors do not recommend payment of an interim
dividend.
Basis of preparation - basis other than going concern
The financial statements have been prepared on a basis other than going
concern.
The Board has assessed the group's financial position as at 30 September 2024
and 5 March 2025. Subsequent to the reporting date, 3radical, the Company's
main subsidiary, entered into a CVL. The Company intends to enter into a CVA
to restructure its business and its liabilities during March 2025.
See notes 2.1 and 2.3 for key matters assessed by the Directors in determining
that the half-year financial statements should be prepared on a basis other
than going concern.
Events subsequent to the reporting date
Subsequent to the reporting date, 3radical was put into a CVL. The key events
leading to this decision by the Board were as follows:
· Until late November, management had projected sufficient revenue
growth in the second half of the financial year (to 31 March 2025) to enable
the Company to trade through to cashflow breakeven and profitability within
its existing resources.
· At the Company's 26 November 2024 Board meeting, the revenue
projections were significantly reduced, due principally to delayed purchasing
decisions by customers to assess the impact of the 30 October UK Budget and
worsening macro-economic indicators.
· As the Company's share price had declined substantially since the
RTO, since September 2024 the directors had been seeking alternative
international funding to be able to pursue the Company's core 'buy and build'
mission. Despite positive investor meetings, the prospective new investors
withdrew just before the Company's November Board meeting following a further
sharp decline in the Company's share price.
· In light of these factors, the Board concluded that, absent
substantial new funding that was not now available, neither the Company nor
3radical could reasonably be expected to be able to pay their liabilities as
they fell due, and the Company's shares were suspended from trading on AIM.
· After unsuccessfully marketing 3radical's business as a going
concern, 3radical Ltd was put into a CVL on 24 December 2024. The Company
then automatically became a cash shell, and the directors engaged in
negotiations to seek a restructuring and refinancing to enable it to continue
operating.
Refer to Chair's Statement for further subsequent events disclosures.
Directors
The directors who held office during the period and up to the date of approval
of the financial statements were as follows:
John Hutchinson
(Non-Executive Chair)
John Regan
(CEO)
Sarfraz Munshi
(Non-Executive, resigned 3 May 2024)
Richard Horwood (COO)
Grahame Cook
(Non-Executive, appointed 3 May 2024)
Caroline Worboys
(Non-Executive, appointed 3 May 2024)
David
Eldridge
(Appointed 3 May 2024 and resigned 17 June 2024)
On behalf of the board
John Hutchinson
Director
10 March 2025
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2024
Six months ended Six months ended 30/9/23
30/9/24
Note
£'000 £'000
(unaudited) (unaudited)
Discontinued operations
Revenue 57 -
Cost of sales (34) -
Gross profit 23 -
Administration expenses
- Acquisition costs 5 (585) (415)
- Impairment of goodwill 11 (2,269) -
- Other costs (1,435) (182)
Operating loss 4 (4,266) (597)
Finance costs (5) -
Finance income- interest received 3 6
Loss before income tax (4,268) (591)
Income tax - -
Loss for the period (4,268) (591)
Other comprehensive income:
Items that may be reclassified to profit or loss
Gains on translation of foreign operations 28 -
Loss and other comprehensive income for the period (4,240) (591)
Loss per share - discontinued operations
Basic (pence) (2.13) (1.02)
Diluted (pence) (2.13) (1.02)
The notes on pages 15 to 24 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2024
At At
30 Sept 2024 31 March 2024
Note £'000 £'000
(unaudited) As restated*
(audited)
NON-CURRENT ASSETS
Property, plant and equipment 3 5
CURRENT ASSETS
Other receivables 40 76
Cash and cash equivalents 23 -
63 76
TOTAL ASSETS 66 81
SHAREHOLDERS' EQUITY
Share capital 7 1,216 289
Share premium 8 3,649 949
Foreign currency translation reserve 28 -
Share-based payment reserve 8 49 -
Accumulated losses (6,414) (2,146)
TOTAL EQUITY- (deficiency) (1,472) (908)
CURRENT LIABILITIES
Borrowings 9 77 192
Trade and other payables 10 1,461 797
TOTAL LIABILITIES 1,538 989
TOTAL EQUITY AND LIABILITIES 66 81
TOTAL ASSETS
66
81
SHAREHOLDERS' EQUITY
Share capital
7
1,216
289
Share premium
Foreign currency translation reserve
8
3,649
28
949
-
Share-based payment reserve
8
49
-
Accumulated losses
(6,414)
(2,146)
TOTAL EQUITY- (deficiency)
(1,472)
(908)
CURRENT LIABILITIES
Borrowings
9
77
192
Trade and other payables
10
1,461
797
TOTAL LIABILITIES
1,538
989
TOTAL EQUITY AND LIABILITIES
66
81
*: The Company's statement of financial position has been restated in the
comparative period as described in Note 2.2.
These financial statements were approved by the Board of Directors and
authorised for issue on 10 March 2025 and were signed on its behalf by:
John Hutchinson, Director
Company number 13288812
The notes on pages 15 to 24 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2024
Share capital Share premium Retained losses Share-based payment reserve Foreign currency trans-lation reserve Totals
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2024 as restated* (audited) 289 949 (2,146) - - (908)
Changes in equity
New shares issued during the period 927 2,700 - - - 3,627
Share based payments - - - 49 - 49
Foreign exchange translation gains - - - - 28 28
Loss for the period - - (4,268) - - (4,268)
At 30 September 2024 (unaudited) 1,216 3,649 (6,414) 49 28 (1,472)
At 1 April 2023 (audited) 289 949 (783) - - 455
Change in equity
Loss for the period - - (591) - - (591)
At 30 September 2023 (unaudited) 289 949 1,374 - - (136)
* The Company's statement of changes in equity has been restated in the
comparative period as described in Note 2.2.
The notes on pages 15 to 24 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2024
6 months 6 months
ended ended
30 Sept 30 Sept 2023
2024
£'000 £'000
(unaudited) (unaudited)
Cash flow from operating activities
Loss for the period (4,268) (591)
Adjustments for:
Finance costs 5 -
Finance income (3) (6)
Share-based payment charges 49 -
Depreciation charges 1 -
Impairment of goodwill 2,269 -
Foreign currency differences (28) -
Decrease/(increase) in other receivables 74 (63)
Increase in trade and other payables 535 257
Net cash used in operating activities (1,366) (402)
Cash flow from investing activities
Finance income 3 6
Net cash from investing activities 3 6
Cash flow from financing activities
Proceeds from issue of shares 1,323 -
Net proceeds from borrowings 10 -
Net cash from financing activities 1,333 -
Net decrease in cash and cash equivalents (30) (396)
Cash and cash equivalents at the beginning of the period
- 492
Cash acquired on acquisition of subsidiaries 53 -
Cash and cash equivalents at the end of the period 23 96
The notes on pages 15 to 24 form part of these financial statements.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 September 2024
1. General information
Electric Guitar Plc is a public limited company, registered in England and
Wales. The Company's registered office is One Bartholomew Close, London, EC1A
7BL.
The principal activity of the Company during the period to 30 September 2024
was that of identifying potential companies, businesses, or assets for
acquisition and, following the RTO of 3radical on 3 May 2024, the provision of
software services mainly for advertising and marketing.
The functional and presentational currency is Great British Pounds Sterling
('£') and the financial statements have been rounded off to nearest thousands
of pounds (£'000).
2. Accounting policies
The following accounting policies have been applied:
2.1 Basis of preparation
These half-year financial statements ('HYFS') for the Company and its
subsidiaries ("the Group") have been prepared under historical cost convention
and in accordance with the recognition and measurement requirements of UK
adopted International Financial Reporting Standards (UK adopted IFRS). The
HYFS have been prepared on a basis other than going concern. Subsequent to the
reporting date, 3radical, the company's main subsidiary was put into
liquidation. The directors intend to restructure the operations and debt of
the remaining group entities through a CVA in March 2025. Assets are held at
their net realisable value. Liabilities are stated at their expected
settlement amount.
Comparatives disclosed in these HYFS, which related to the Company only, were
prepared under the historical cost convention and in accordance with the
recognition and measurement requirements of UK adopted International Financial
Reporting Standards ('IFRS'), applying a going concern basis of preparation.
The comparatives relate to the Company only and are therefore not entirely
comparable.
2.2 Prior period error
In the preparation of the Company's audited financial statements for the year
ended 31 March 2024, the statement of financial position overstated borrowings
by £60k, and understated other payables by £55k. The Company's statement
of comprehensive income incorrectly allocated facility fees on borrowings to
operating costs rather than finance costs and overstated losses by £5k.
The Company has corrected these errors in these interim financial statements
by restating the comparatives disclosed in the statement of financial position
as at 31 March 2024.
2.3 Basis other than Going Concern
The directors intend to restructure the operations and debt of the Group
through a creditors' voluntary arrangement in March 2025. In view of this, the
directors do not consider a going concern basis to be appropriate and these
financial statements have been prepared on a basis other than going concern,
assuming assets will be realised and the business in its current format will
be restructured into a new entity.
2.4 Basis of consolidation
The financial statements of the Group consolidate the results of the Company
and its subsidiary entities. A subsidiary is an entity controlled by the
Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to
affect those returns through its influence over the entity.
The financial statements of subsidiaries are included in the condensed
consolidated financial statements from the date on which control commences
until the date on which control ceases.
The consolidated financial statements present the results of the Company and
its subsidiaries (the Group) as if they formed a single entity. Intercompany
transactions and balances, including unrealised gains/losses between group
companies are therefore eliminated in full.
Where the Group ceases to control a subsidiary, the subsidiary is
deconsolidated from the date which control ceases. The net assets of the
subsidiary are included in a disposal calculation along with any consideration
received from the disposal, with any gain or loss recognised in the Statement
of Profit and Loss.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank.
2.6 Share capital and share premium
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any
transactions costs associated with the issuing of shares are deducted from
share premium.
2.7 Provisions for liabilities
Provisions are made where an event has taken place that gives the group a
legal or constructive obligation that requires settlement by a transfer of
economic benefit, and a reliable estimate can be made of the amount of the
obligation.
Provisions are charged as an expense to the income statement in the period
that the group becomes aware of the obligation and are measured at the best
estimate at the reporting date of the expenditure required to settle the
obligation, after taking into account relevant risks and uncertainties. When
payments are eventually made, they are charged to the provision carried in the
balance sheet.
2.8 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppliers. Accruals
and accounts payable are classified as current liabilities if payment is due
within one year or less. Trade payables are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest
method.
2.9 Financial liabilities
All financial liabilities are recognised in the consolidated statement of
financial position when the Company or its subsidiaries becomes party to the
contractual provision of a financial instrument.
Financial liabilities measured at amortised cost
Financial liabilities held at amortised cost comprise trade payables and other
payables and borrowings.
These financial liabilities are initially measured at fair value net of any
transaction costs directly attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense
over the period to repayment is at a market rate on the balance of the
liability carried in the consolidated statement of financial position.
Subsequent measurement
The amortised cost of a financial liability is the amount at which the
financial liability is measured on initial recognition, minus the principal
repayments, plus or minus the cumulative amortisation using effective interest
method of any difference between the initial amount recognised and the
maturity amount. Such amortisation amounts are recognised in the statement of
comprehensive income. Due to the short-term nature of trade and other
payables, they are stated at their nominal value, which approximates their
fair value.
2.10 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense. The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
2.11 Business combinations
The condensed consolidated half-year financial statements incorporate the
results of Electric Guitar plc and its subsidiaries as at 30 September 2024
and for the six months period then ended using the acquisition method of
accounting.
Business combinations falling within the scope of IFRS 3 Business Combinations
are accounted for using the acquisition method as at the acquisition date,
which is the date on which control is transferred to the group.
The Group measures goodwill at the acquisition date as the fair value of the
consideration transferred less the fair value of identifiable assets acquired
and liabilities assumed.
Costs relating to the acquisition, other than those associated with the issue
of equity instruments, are expensed as incurred.
2. Critical accounting judgements and estimates
The preparation of the financial statements in accordance with IFRS requires
the use of certain critical accounting estimates. It also requires management
to exercise their judgment in applying the Company's accounting policies.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including future conditions that are assessed to
be reasonable under the circumstances.
Critical accounting judgements applied by the directors in preparing these
half-year financial statements are disclosed in the basis of preparation (note
2.1) and basis other than going concern (note 2.3) accounting policies.
3. Employees and directors' remuneration
6 months ended 6 months ended
30 Sept 2024 30 Sept 2023
£'000 £'000
Wages and salaries 587 82
Social security costs 64 2
Other pension costs 6 2
657 86
4. Acquisition costs
During both half-year periods, the Company incurred one-off expenses towards
the acquisition of subsidiaries and admission to AIM.
6 months ended 6 months ended
30 Sept 2024 30 Sept 2023
£'000 £'000
Professional fees - purchase of subsidiaries 520 357
Listing fees 15 18
Other professional fees 50 40
585 415
5. Loss per share - discontinued activities
Basic earnings per share is calculated by dividing the loss attributable in
the period to equity holders of the Company by the weighted average number of
ordinary shares in issue during the period, excluding any ordinary shares
purchased by the Company and held as treasury shares.
6 months 6 months ended
ended 30 Sept 2023
30 Sept 2024
Loss for the period attributable to equity holders of the Company (£'000) (4,268) (591)
Weighted average number of ordinary shares 200,322,398 57,862,776
Loss per share (pence) (2.13) (1.02)
Share warrants issued by the Company have an anti-dilutive effect on loss per
share. Hence, under IFRS diluted loss per share is shown as being the same as
basic loss per share.
6. Share Capital
30 Sept 2024 31 March 2024
£'000 £'000
Issued and fully paid
243.3m Ordinary shares of 0.5p each
(31/3/24 - 57.9m) 1,216 289
Movements in issued share capital during the six months ended 30 September
2024 were:
No. of ordinary shares- 0.5p each Nominal
Value
£'000
At beginning of period 57,862,776 289
Shares issued on 3 May 2024
- Consideration paid to vendors of 3radical 61,184,843 306
- Cash subscription and placing 62,987,410 315
- Settlement of accrued directors' remuneration due to John Hutchinson
3,214,280 16
- Settlement of loans due to, and accrued directors' remuneration
issued to, Richard Horwood
1,441,140 7
- Settlement of debts owed to Sanderson (note 9) 25,476,190
128
- Settlement of loan due to third party 1,190,480 6
- Settlement of advisors' fees on AIM Admission 10,476,170 52
Shares issued on 9 August 2024
- Settlement of professional fees for £70k owed to advisors
9,589,042 48
Shares issued on 28 August 2024
- Initial consideration paid to vendors of Mymyne 9,834,521 49
At end of period 243,256,852 1,216
The issue price for all shares issued on 3 May 2024 was 2.1p per share. The
issue price for all shares issued in August 2024 was 0.73p per share. Ordinary
shares carry voting and dividend rights.
8. Reserves
Share premium account
The share premium account includes any premiums received on issue of share
capital.
Any transaction costs associated with the issuing of shares are deducted from
share premium.
Share-based payment reserve
Cumulative fair value of the charge/(credit) in respect of share warrants
granted and recognised as an expense in the Income Statement.
Foreign currency translation reserve
The translation reserve comprises translation differences arising from the
translation of financial statements of the Group's foreign entities into
Sterling (£).
Accumulated losses
This reserve records accumulated losses brought forward and carried forward.
9. Financial Liabilities - Borrowings - due less than one year
30 Sept 2024 31 March 2024
£'000 £'000
(As restated)
Current liability:
Borrowings owed to related party 77 192
On 26 March 2024, an unsecured loan facility of £600k was agreed with
Sanderson Capital Partners Limited ('£600k Facility').
Effective from 3 May 2024, a facility fee (satisfied in shares on the
Company's AIM Admission) of £100k was incurred in lieu of any further costs
of the £600k Facility, with a repayment date of 12 months from the Company's
AIM Admission, and an option to extend for a further 8 months for an
additional facility fee of £15k payable at the end of that extended period.
£50k of the £600k facility was drawn down on 19 September 2024.
On 3 May 2024, the previous £250k facility in place and all associated fees,
and all fees associated with the £600k Facility, were settled in full by the
issue of shares in the Company at a price of 2.1p per share.
10. Trade and other payables
30 Sept 2024 31 March 2024
£'000 £'000
(As restated)
Trade creditors 786 377
Social security and other taxes 158 12
Pension payable to directors' personal SIPPs 53 5
Accrued expenses and deferred income 464 403
1,461 797
Trade payables and accruals primarily comprise amounts payable for services
received from third parties. The Group has financial risk management policies
in place to monitor that all payables are paid within the pre-agreed credit
terms. The directors consider that the fair value approximates the carrying
value.
11. Business combination - acquisition of 3radical
On 3 May 2024, the Company completed its acquisition of 3radical, a software
solutions business. Consideration payable for 100% of the shares in 3radical
was £1.3m, which was settled in full through the issue of new ordinary shares
in the Company. At the time acquisition, 3radical was a business with a
well-established software platform already in use by major clients around the
world, which helped marketers engage their customers by securing the
first-party data marketers increasingly need.
The carrying values of 3radical's assets and liabilities on acquisition were
assessed as being in line with their fair values. No fair value adjustments
were assessed as necessary by the Directors. Goodwill was recognised on this
acquisition because the cost of the combination included a control premium.
Details of the fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill are as follows:
£'000
Cash at bank 35
Trade and other receivables 38
Trade and other payables (645)
Borrowings (347)
Net liabilities at acquisition (919)
Purchase consideration- satisfied through new ordinary shares issued 1,285
Goodwill on acquisition 2,204
During December 2024, 3radical was placed into CVL. The above goodwill asset
has been impaired in full at 30 September 2024 and is recognised within
impairment expense of £2,204k in the income statement.
12. Non-Cash Transactions
The Group entered into the following material non-cash transactions during the
period:
· On 3 May 2024, the Company completed its acquisition of 3radical, a
software solutions business. Consideration paid for 100% of the shares in 3R
was £1,285k, which was settled in full through the issue of 61.2 million new
ordinary shares in the company at an issue price of 2.1p per share (see note
7).
· On 3 May 2024, the Company settled borrowings owed to Sanderson
through the issue of 25.5 million ordinary shares in the Company at an issue
price of 2.1p per share (see note 7).
13. Related party transactions
During the period, the Company entered into the following transactions with
related parties, all of which were conducted on an arm's length basis:
· On 9 August 2024, 9.6m shares were issued to certain professional
advisors and consultants to settle their fees (see note 7). Included in this
amount was 5.5m shares issued to Tanvier Malik in relation to his role as
Capital Markets Consultant. Since Mr Malik controls Sanderson, a significant
shareholder of the Company, this transaction constitutes a related party
transaction.
· On 28 August 2024, the Company completed an all-share acquisition of
Mymyne, valuing it at up to a maximum of approximately £154k based on the
closing mid-market price of the Company's shares immediately prior to
announcing the proposed acquisition on 9 August 2024, which was approved by
shareholders in General Meeting on 27 August 2024. The Company recognised the
initial consideration of £72k (settled by the issue of 9,834,521 shares in
the Company - see Note 7) as the purchase price, but not the conditional
deferred consideration of up to a further 11,191,665 shares (worth up to a
maximum of £82k at the completion share price, and capped at a total of
£268.6k at the mid-market price of the Company's shares if and when payable)
as the likelihood of the conditional deferred amount being paid was uncertain.
John Regan, who serves as Electric Guitar's CEO, and John Hutchinson, who
serves as Electric Guitar's Chair, and both being directors of the Company,
were 36.9% and 9.5% shareholders of Mymyne respectively at the time of the
acquisition and therefore it was a related party transaction.
The fair value of net assets acquired on Mymyne's books was £8k, including
cash at bank of £18k. Goodwill arising on acquisition was £64k. During the
period this goodwill has been written off in full through the income
statement.
· See note 9 for details of transactions entered into with Sanderson
during the reporting period and the comparative period.
· The Company purchased services for £275k from BDB Pitmans LLP for
due diligence services on 3radical and its subsidiaries. John Hutchinson
serves as Chair of the Company and is managing partner of BDB Pitmans LLP.
· The Company purchased services for £95k from Mymyne Ltd. Of this
amount, £40k was for the provision of commercial due diligence services in
connection with the proposed acquisition of a previous target which did not
proceed. The remaining £55k was for the provision of commercial due
diligence services in connection with the RTO. John Regan, who serves as
Electric Guitar's CEO, and John Hutchinson, who serves as Electric Guitar's
Chair, and both being directors of the Company, were 36.9% and 9.5%
shareholders of Mymyne Ltd respectively at the time the services were
purchased.
14. Post balance sheet events
· On 26 November 2024, trading in the Company's shares on AIM was
suspended pending clarification of the Company's financial position.
· On 24 December 2024, 3radical was placed into CVL, and the Company
automatically reverted to being a cash shell while exploring refinancing
options.
· A CVA is today being proposed to creditors and shareholders for the
refinancing of the Company as a cash shell.
15. Controlling party
The Company considers that there is no ultimate controlling party.
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