REG - Engage XR Holdings - Final Results
08/03/2022 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220308:nRSH9283Da&default-theme=true
RNS Number : 9283D Engage XR Holdings PLC 08 March 2022
8 March 2022
ENGAGE XR Holdings Plc
("ENGAGE XR" or the "Group")
Final Results
ENGAGE XR Holdings Plc, a virtual reality ('VR') technology company, is
pleased to announce its results for the year ended 31 December 2021.
ENGAGE XR's aim is to become the world's largest crossed reality ('XR')
communications, training and virtual events platform provider, through the
commercialisation of ENGAGE, its proprietary online virtual communications
platform.
Financial Highlights:
· Group revenue increased by 68% on the prior year to €2.4 million
(FY20: €1.4 million)
· ENGAGE revenue up 200% to €1.8 million (FY20: €0.6 million)
· Cash position on 31 December 2021 was €7.8 million with no debt.
Cash balance was significantly strengthened by a successful €9.0 million
(€8.5 million net of expenses) fundraise
· Gross margin increased by 7% to 79% (FY20: 72%)
Operational Highlights:
· Increase in demand for ENGAGE services, which now has over 139
commercial customers
· ENGAGE was awarded ISO27001 certification, an internationally
recognised information management security standard. The Group expects this to
be a major help in accelerating the adoption of its new metaverse offering by
corporate users
· The Group signed significant contracts during 2021, including:
o A contract with 3M to use the ENGAGE platform to build its own MetaWorld
"3M Home". This exploratory VR pilot project demonstrated the Group's growing
appeal to enterprise clients in the metaverse space
o An initial six-figure dollar contract (to August 2023) with Optima Domi
LLC ("Optima Domi"), an innovative classical curriculum development company,
to service the first VR-based Florida charter school
o A six-figure euro contract with a Korean enterprise customer in December
2021
· Strengthened Board with the appointment of Kenny Jacobs, former
Chief Marketing Officer at Ryanair. Since the period end, in March 2022, the
Group has appointed a US-based Director of Marketing and a Chief Revenue
Officer who will help to further international expansion with a particular
focus on the US
· Expansion of strategic partnership with HTC with ENGAGE (sold as
VIVE Sessions in China) included in the software bundle of HTC's new headset,
the VIVE Focus 3 XR and rolled out on new HP ProBook laptops sold inside China
· In June 2021, the Group announced it was building its
enterprise-focused Metaverse offering, with the launch expected in the second
half of 2022
Medium-Term Outlook:
· The Group is on track to deliver its ambitious medium-term
financial objectives:
o Annual ENGAGE revenue growth in excess of 100% until €10 million target
achieved by 2025
o Gross margin to reach a level in excess of 80% once ENGAGE revenue is
between €5 million and €10 million annually
o 10% average month on month increase to reach 100,000 monthly users,
reflecting a target of 500 active customers
o Customer Retention Rate of at least 80%
o Growth in average annual contract value to €20,000+, reflecting the
targeted Enterprise and Institutional client base and ENGAGE value proposition
David Whelan, CEO, ENGAGE XR, said: "2021 was a pivotal year of growth for
our business with an impressive revenue increase of 68% thanks to the growth
in demand for ENGAGE. During the year, we continued to expand ENGAGE's client
list of blue-chip companies, and the platform reached a record 139 commercial
customers.
"We believe that one area that makes ENGAGE stand out compared to its
competition is data security. Therefore, we are very proud to have become the
only multi-user VR platform to have ISO 27001 certification in 2021.
"The really exciting growth opportunity for our business is providing
Metaverse services, via ENGAGE, to major enterprise clients. Our Metaverse
plans for ENGAGE are very different to Meta's Horizons, Microsoft's AltSpace
or Roblox. We are well positioned to become the enterprise solution for
companies seeking to enter the Metaverse to host meetings, events, product
launches, and conduct training. We are already capturing this opportunity
through our work with 3M, who is using our platform to build its own
'Metaworld'. We look forward to fully launching our metaverse offering in the
second half of this year.
"At ENGAGE XR we are expanding fast, and I expect 2022 to far eclipse the
achievements of previous years."
Investor Presentation
CEO David Whelan and CFO Seamus Larrissey will provide a live presentation
relating to the results via the Investor Meet Company platform on 8 March 2022
at 10:30am UK time.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9am UK time the day before the meeting or at any time during the live
presentation.
Investors can sign up to Investor Meet Company for free and add to meet Engage
XR Holdings Plc via:
https://www.investormeetcompany.com/engage-xr-holdings-plc/register-investor
(https://www.investormeetcompany.com/engage-xr-holdings-plc/register-investor)
For further information, please contact:
ENGAGE XR Holdings Plc Tel: +353 87 665 6708
David Whelan, CEO info@engagexr.co
Séamus Larrissey, CFO
Sandra Whelan, COO
finnCap Ltd (Nominated Adviser & Joint Broker) Tel: +44 (0) 20 7220 0500
Marc Milmo/ Seamus Fricker/James Balicki
Shard Capital Partners LLP (Joint Broker) Tel: +44 (0) 20 7186 9952
Damon Heath / Erik Woolgar
Davy (Joint Broker & Euronext Growth Advisor) Tel: +353 1 679 6363
Barry Murphy / Lauren O'Sullivan / Oisin Morgan
SEC Newgate (Financial PR) Tel: +44 (0)7540 106 366
Robin Tozer / Isabelle Smurfit engage@secnewgate.co.uk
The Directors of the Company take responsibility for this announcement. This announcement contains inside information for the purposes of the UK Market Abuse Regulation.
CHIEF EXECUTIVE'S REVIEW
Overview
2021 has been a busy year with many changes to our organisation. One of the
biggest changes was the rebranding of the Group to ENGAGE XR from VR Education
Holdings Plc as we moved away from building one-off education-based products
to a much broader immersive platform under the brand, ENGAGE.
Although these education-based products were profitable, the real growth
opportunity is providing Metaverse services via ENGAGE to major enterprise
clients. During the year, we have added great names to our client list,
including BMW, 3M, Abbott, Unilever, and Facebook (now META) to name just a
few. We also work with globally recognised international accountancy and
professional services firms, and each month, we have seen our client base
grow.
ENGAGE
We have seen a marked increase in demand for ENGAGE services, with more than
60% of our revenue coming through enterprise clients. To better target
enterprise clients, we have completely rebranded our website (www.engagevr.io)
to showcase our offer to them. Furthermore, our marketing and business
development teams have been refocused on this area. To support them, we have
hired a Director of Revenue, Richard Allin, and a new Head of Marketing, Kyle
Horner, who will start before the end of March 2022.
For enterprise customers, security is paramount. One area we believe that
makes ENGAGE stand out compared to its competition is its data security and
hosting abilities. For enterprise clients to adopt metaverse services, they
require extensive security clearance to know exactly how their data is handled
and where it is stored. In October 2021, ENGAGE was granted ISO 27001
certification and as of today, ENGAGE is the only multi-user VR platform to
have ISO 27001 certification. This certification makes it much easier for
blue-chip companies to work with us, and move their employees and clients away
from traditional video-based communications into the immersive spatial
environments ENGAGE provides.
Expansion
In mid-2021, we closed a placing of €8.5 million (net of expenses) to help
scale the business due to increased client demand. Our team has grown to serve
our expanding client base, with many new hires in our after-sales and virtual
event support teams. Our newly appointed Director of Revenue will have a
sizable budget to build our sales, lead generation and client onboarding
teams. The primary focus will be the US, and secondly, Asia.
To support our sales efforts in the US, we have engaged 5W Public Relations
("5WPR"), one of the larger US PR companies. With guidance from our new
Non-Executive Director, Kenny Jacobs (former Chief Marketing Officer of
Ryanair), and a new US-based Director of Marketing, 5WPR will be tasked with
making ENGAGE a widely recognised brand name in the US before the year-end.
The 5WPR contract starts in March 2022, and we expect to see significant
growth in our brand awareness in the following months.
The Metaverse
With Facebook changing its name to Meta, and Mark Zuckerberg outlining his
Metaverse vision, there has been increased interest in what we have been
building. In terms of the Metaverse, our plans for ENGAGE are very different
to Meta's Horizons, Microsoft's AltSpace or Roblox. All of these platforms are
focused on massive user growth, with the majority being aimed at a young
demographic to socialise and play games. Therefore, entertainment companies
will engage with these platforms to increase brand awareness. However,
enterprise clients seeking a metaverse solution to enable real business
dealings and host professional virtual events will choose ENGAGE.
History tends to repeat itself. The technological awakening we see in relation
to the Metaverse is following a similar path to what we saw with the emergence
of the internet in the late 1990s. Then, AOL tried to dominate the internet as
a single platform for everything and failed. Companies and individuals wanted
more control, security, and freedom to build what they needed with no
constraints. They ended up building out services on platforms such as .java,
.net and other web technologies, which were then self-hosted. We believe
that the same trend will happen with the Metaverse.
In the end, the Metaverse is simply an evolution of the internet. Our current
2D web screens will evolve into full 3D virtual worlds. Virtual interaction
will become as personal and as social as the physical world. We believe ENGAGE
is well-positioned as the enterprise solution for companies in a variety of
industries seeking to enter the Metaverse to host meetings, events, product
launches, and conduct training content.
Outlook
2021 was a pivotal year for the Group with strong client and revenue growth.
In the past six months, we have put in the foundations for future growth and
expect 2022 to far eclipse the achievements of previous years. As a business
we continue to see an increase in client numbers, and the interest in and
awareness of ENGAGE continue to grow. With a strong balance sheet and
excellent opportunities before us, we look forward to 2022 with confidence.
David Whelan
Chief Executive Officer
7 March 2022
CHIEF FINANCIAL OFFICER'S REVIEW
I am pleased to report that revenue for the year was up 68% on the prior year
from €1.4 million to €2.4 million, driven by a significant increase in
demand for the ENGAGE platform. ENGAGE revenue was up 200% on the prior year
from €0.6 million to €1.8 million.
EBITDA loss was €2.8 million compared to a loss of €2.1 million in the
prior year and loss before tax was €3.1 million compared to a loss in the
prior year of €2.7 million. This increased EBITDA loss is primarily driven
by increased headcount in the year.
Operating cashflows were a net outflow of €2.6 million for the period. The
current run-rate of staff costs and other ongoing costs is approximately
€0.25m per month.
At the balance sheet date, trade and other receivables were €646k, ahead of
trade and other payables at €482k. Trade receivables represented an average
of 58 debtor days (2020: 42 days). This increase is driven by some large
invoices near the year end.
The Group's cash position on 31 December 2021 was €7.8 million with no debt.
The cash balance was significantly strengthened during the year by a
successful €9.0 million (€8.5 million net of expenses) fundraise.
Séamus Larrissey
Chief Financial Officer
7 March 2022
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations € €
Revenue 3 2,386,313 1,416,567
Cost of Sales 5 (492,396) (403,622)
Gross Profit 1,893,917 1,012,945
Administrative Expenses 5 (5,007,421) (3,734,071)
Operating Loss (3,113,504) (2,721,126)
Finance Costs 8 (16,767) (7,316)
Loss before Income Tax (3,130,271) (2,728,442)
Income Tax credit 9 - -
Loss for the financial year (3,130,271) (2,728,442)
Other comprehensive income - -
Total comprehensive loss for the year attributable to owners of the parent (3,130,271) (2,728,442)
Earnings per Share (EPS) attributable to owners of the parent
Basic earnings per share 10 (0.011) (0.011)
Diluted earnings per share 10 (0.010) (0.011)
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2021
Note 2021 2020
€ €
Non-Current Assets
Property, Plant & Equipment 11 102,075 83,834
Intangible Assets 12 426,454 964,126
528,529 1,047,960
Current Assets
Trade and other receivables 14 645,890 358,277
Cash and short-term deposits 15 7,790,060 2,032,717
8,435,950 2,390,994
Total Assets 8,964,479 3,438,954
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 16 290,451 241,751
Share premium 16 33,503,300 24,547,516
Other reserves 17 (11,775,474) (11,337,058)
Retained earnings 18 (13,555,767) (10,429,815)
Total Equity 8,462,510 3,022,394
Non-Current Liabilities
Lease liabilities 20 7,883 20,392
Current Liabilities
Trade and other payables 21 481,576 357,421
Lease liabilities 20 12,510 38,747
494,086 396,168
Total Liabilities 501,969 416,560
Total Equity and Liabilities 8,964,479 3,438,954
The accompanying notes form an integral part of these financial statements.
On behalf of the board
Sandra
Whelan
Séamus Larrissey
Director
Director
7 March
2022
7 March 2022
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2021
Note 2021 2020
€ €
Non-Current Assets
Investment in subsidiaries 13 30,477,062 15,028,809
Other receivables 14 - 8,184,821
30,477,062 23,213,630
Current Assets
Trade and other receivables 14 1,035 20,041
Cash and short-term deposits 15 1,476,744 578,420
1,477,779 598,461
Total Assets 31,954,841 23,812,091
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 16 290,451 241,751
Share premium 16 33,503,300 24,547,516
Other reserves 17 (694,055) (247,188)
Retained earnings 18 (1,223,374) (791,234)
Total Equity 31,876,322 23,750,845
Current Liabilities
Trade and other payables 20 78,519 61,246
Total Liabilities 78,519 61,246
Total Equity and Liabilities 31,954,841 23,812,091
The accompanying notes form an integral part of these financial statements.
On behalf of the board
Sandra
Whelan
Séamus Larrissey
Director
Director
7 March
2022
7 March 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2020 193,136 21,587,539 (11,287,395) (7,705,536) 2,787,744
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (2,728,442) (2,728,442)
Total comprehensive income - - - (2,728,442) (2,728,442)
Transactions with owners
recognised directly in equity
New shares issued 48,615 2,959,977 - - 3,008,592
Share issue costs - - (70,720) - (70,720)
Share option expense - - 21,057 4,163 25,220
Balance at 31 December 2020 241,751 24,547,516 (11,337,058) (10,429,815) 3,022,394
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2021 241,751 24,547,516 (11,337,058) (10,429,815) 3,022,394
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (3,130,271) (3,130,271)
Total comprehensive income 241,751 24,547,516 (11,337,058) (13,560,086) (107,877)
Transactions with owners
recognised directly in equity
New shares issued 48,700 8,955,784 - - 9,004,484
Share issue costs - - (538,060) - (538,060)
Share option expense - - 99,644 4,319 103,963
Balance at 31 December 2021 290,451 33,503,300 (11,775,474) (13,555,767) 8,462,510
The accompanying notes form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2020 193,136 21,587,539 (194,087) (1,173,957) 20,412,631
Total comprehensive income
Other comprehensive income - - - - -
Profit for the year - - - 382,723 382,723
Total comprehensive income - - - 382,723 382,723
Transactions with owners
recognised directly in equity
New shares issued 48,615 2,959,977 - - 3,008,592
Share issue costs - - (70,720) - (70,720)
Share option expense - - 17,619 - 17,619
Balance at 31 December 2020 241,751 24,547,516 (247,188) (791,234) 23,750,845
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2021 241,751 24,547,516 (247,188) (791,234) 23,750,845
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (432,140) (432,140)
Total comprehensive income 241,751 24,547,516 (247,188) (1,223,374) 23,318,705
Transactions with owners recognised directly in equity
New shares issued 48,700 8,955,784 - - 9,004,484
Share issue costs - - (538,060) - (538,060)
Share option expense - - 91,193 - 91,193
Balance at 31 December 2021 290,451 33,503,300 (694,055) (1,223,374) 31,876,322
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations € €
Loss before income tax (3,130,271) (2,728,442)
Adjustments to reconcile loss before tax to net cash flows:
Depreciation of fixed assets 5 97,458 70,747
Amortisation of intangible assets 5 537,672 583,829
Finance Costs 8 16,767 7,316
Share Option Expense 103,963 25,222
Movement in trade & other receivables (287,613) (153,373)
Movement in trade & other payables 124,155 164,528
(2,537,869) (2,030,173)
Bank interest & other charges paid (16,767) (7,316)
Net Cash used in Operating Activities (2,554,636) (2,037,489)
Cash Flows from Investing Activities
Purchases of property, plant & equipment 11 (115,699) (12,852)
Payments to develop Intangible Assets 12 - (114,222)
Net cash used in investing activities (115,699) (127,074)
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares 8,466,424 2,937,872
Payment of lease liabilities (38,746) (33,444)
Net cash generated from financing activities 8,427,678 2,904,428
Net increase in cash and cash equivalents 5,757,343 739,865
Cash and cash equivalents at beginning of year 15 2,032,717 1,292,852
Cash and cash equivalents at end of year 15 7,790,060 2,032,717
The accompanying notes form an integral part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations € €
(Loss)/profit before income tax (432,140) 382,723
Adjustments to reconcile loss before tax to net cash flows:
Finance Costs 629 521
Share Option Expense 91,193 17,619
Movement in trade & other receivables 8,203,827 (2,851,429)
Movement in trade & other payables 17,273 (74,776)
(304,039) (2,525,342)
Bank interest & other charges paid (629) (521)
Net Cash used in Operating Activities (304,668) (2,525,863)
Cash Flows from Investing Activities
Capital contribution 12 (15,448,253) -
Net cash used in investing activities (15,448,253) -
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares 8,466,424 2,937,872
Net cash generated from financing activities 8,466,424 2,937,872
Net increase in cash and cash equivalents 898,324 412,009
Cash and cash equivalents at beginning of year 15 578,420 166,411
Cash and cash equivalents at end of year 15 1,476,744 578,420
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
ENGAGE XR Holdings plc ("the Company") is publicly traded on the Alternative
Investment Market ("AIM") of the London Stock Exchange and on the Euronext
Growth Market ("Euronext Growth"), a market regulated by Euronext Dublin. The
Company is incorporated and domiciled in the Republic of Ireland. The
registered office is Unit 9, Cleaboy Business Park, Old Kilmeaden Road,
Waterford and the registered number is 613330. The company was previously
known as VR Education Holdings plc.
The Company is the parent company of ENGAGE XR Limited, previously known as
Immersive VR Education Limited. ENGAGE XR Limited is incorporated and
domiciled in the Republic of Ireland with the same registered office as the
Company. On 12 March 2018 the Company acquired ENGAGE XR Limited and
contemporaneously listed on London's AIM market and Dublin's Euronext Growth
market. As part of the Admission process, the Group raised £6 million before
expenses, through an oversubscribed placing of 60,000,000 new ordinary shares
at a placing price of 10p each. On 12 June 2020 HTC Corporation invested
€3.0 million in the Group and were issued 48,284,102 ordinary shares at an
issue price of €0.062 per share. Net proceeds after expenses were €2.94
million.
The Group is principally engaged in the development of the educational Virtual
Reality platform ENGAGE. The Company also develops and sells Virtual Reality
experiences for the education market.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of the Financial
Statements are set out below. These policies have been consistently applied
to all the years presented, unless otherwise stated. The consolidated
Financial Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union issued
by the International Accounting Standards Board ("IASB") including related
interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC").
Basis of Consolidation
The consolidated financial statements incorporate those of ENGAGE XR Holdings
plc and its subsidiary ENGAGE XR Limited.
All financial statements are made up to 31 December 2021. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the date on which
control ceases. Control is achieved when the group is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The Group re-assess whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the elements
of control.
Business Combination
Acquisition of ENGAGE XR Limited
The Company entered into an agreement to acquire the entire issued share
capital of ENGAGE XR Limited on 12 March 2018. The acquisition was effected by
way of issue of shares. Due to the relative size of the companies, ENGAGE XR's
shareholders became the majority shareholders in the enlarged capital of the
Company. The transaction fell outside of IFRS 3 ("Business Combinations") and
as such has been treated as a group reconstruction.
Therefore, although the Group reconstruction did not become unconditional
until 12 March 2018, these consolidated financial statements are presented as
if the Group structure has always been in place, including the activity from
incorporation of the Group's subsidiaries.
Furthermore, as ENGAGE XR Holdings plc was incorporated on 13 October 2017,
while the enlarged group began trading on 12 March 2018, the Statement of
Comprehensive Income and consolidated Statement of Changes in Equity and
consolidated Cash Flow Statements are presented as though the Group was in
existence for the whole year. On this basis, the Directors have decided that
it is appropriate to reflect the combination using merger accounting
principles as the transaction falls outside the scope of IFRS 3 and as such
has been treated as a Group reconstruction. No fair value adjustments have
been made as a result of the combination.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future
periods.
Judgements
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the financial statements:
Capitalised development costs
In applying the requirements of IAS 38 Intangible Assets, the Group assessed
various development projects against the criteria required for capitalisation.
Certain projects that did not meet the criteria regarding the ability to
determine whether those projects would generate sufficient future economic
benefits were expensed. The judgements reflect the early stage of the VR/AR
market and will change over time.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising that are
beyond the control of the Group. Such changes are reflected in the assumptions
when they occur.
Capitalised development costs impairment review
The Group's impairment review undertaken to assess the carrying value of
capitalised development costs includes certain assumptions on future revenues
and costs associated with the underlying technology. Those cashflows are
discounted at an appropriate discount rate. These estimates and assumptions
are reviewed on an on-going basis. Changes in accounting estimates may be
necessary if there are changes in the circumstances on which the estimate was
based or as a result of new information or more experience. Such changes are
recognised in the period in which the estimate is revised.
Going Concern
The financial statements are presented on a going concern basis. In forming
this opinion, the Directors have considered all the information available to
them. This includes management prepared forecasts, due consideration of the
ability to raise funds on the open market in respect of the dual listing on
the Alternative Investment Market on the London Stock Exchange and on the
Enterprise Securities Market, a market regulated by Euronext Dublin and the
timing as to when such funds will be received. Based on their consideration of
these matters the Directors believe the Group and Company to be a going
concern.
In response to the significant impact that the coronavirus pandemic is having
on the global economy, the Group has reviewed the potential impact upon on its
business and revenue generation. The Directors anticipate experience sales
will be relatively unaffected both during and immediately after the lockdown
period, however there is scope to adjust levels of expenditure in the longer
term, if required.
These financial statements do not include adjustments relating to the
recoverability and classification of recorded asset amounts nor to the amounts
and classification of liabilities that might be necessary should the group not
continue as a going concern. Thus, the Directors continue to adopt the going
concern basis of accounting in preparing the financial statements.
Foreign Currency Translation
(a) Functional and Presentation Currency
Items included in the Financial Statements of the Group are measured using the
currency of the primary economic environment in which the entity operates
("functional currency").
The Financial Statements are presented in euro (€), which is the Group's
functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses that
relate to borrowings and cash and cash equivalents are presented in the income
statement within 'finance income or costs'. All other foreign exchange gains
and losses are presented in the income statement within Administrative
Expenses.
Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification. An asset is current when
it is:
· Expected to be realised or intended to be sold or consumed in the
normal operating cycle
· Held primarily for the purpose of trading
· Expected to be realised within twelve months after the reporting
period; or
· Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period
All other assets are classified as non-current.
A liability is current when:
· It is expected to be settled in the normal operating cycle
· It is held primarily for the purpose of trading
· It is due to be settled within twelve months after the reporting
period Or
· There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period
The Group classifies all other liabilities as non-current.
Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
Fair value measurement
The Group measures financial instruments such as derivatives at fair value at
each balance sheet date. The Company has applied IFRS 9 for all periods
presented.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous
market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or
receivable, and represents amounts receivable for goods and services supplied,
stated net of discounts, returns and Value-Added Taxes (VAT).
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the
entity, and specific criteria have been met for each of the Group's
activities, as described below. The Group bases its estimates on historical
results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Where the Group makes sales relating to a future financial period, these are
deferred and recognised under 'deferred revenue' on the Statement of Financial
Position. The Group currently has two revenue streams:
ENGAGE Revenue
The Group is primarily focused on developing a proprietary VR platform which
is sold through licences and professional services revenue. This is considered
"ENGAGE Revenue" for reporting purposes. Revenue is recognised when the
license is delivered to the customer, or when all performance obligations have
been achieved.
Showcase Experiences
The Group also develops proprietary educational VR content which is sold
through licences. This is considered "Showcase Experience Revenue" for
reporting purposes. Revenue is recognised when the license key is delivered to
the customer, or when all performance obligations have been achieved.
Revenue is received net of commission from the platforms where the Group
licenses their content. The gross amount of revenue is recognised in revenue
with the corresponding commission portion recognised in cost of sales.
Other Revenue
The Group develops educational VR content on behalf of customers based on
specific customer requirements. This is considered "Other Revenue" for
reporting purposes. Such revenue is recognised on a percentage completion
basis unless there are significant performance obligations that would require
deferral until such obligations are delivered. Stage of completion is measured
by reference to labour hours incurred to date as a percentage of total
estimated labour hours for each contract. When the contract outcome cannot be
measured reliably, revenue is recognised only to the extent that the expenses
incurred are eligible to be recovered. This is generally during the early
stages of development where the specifications need to pass through the
customer's approval as part of the development.
The disaggregation of revenue, required under IFRS 15, has been prepared on
the basis of the two revenue streams outlined above and is included in Note 3.
Government Grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the expected useful life of the
related asset.
Property, Plant and Equipment
All property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include transfers
from equity of any gains/losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to
allocate their cost less residual value over their estimated useful lives, as
follows:
Office equipment - 3 - 5 years
Furniture, fittings and equipment - 5 years
Leasehold improvements - over the life of the leased asset
Property, Plant and Equipment (continued)
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight line basis.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period. Gains and losses on
disposals are determined by comparing the proceeds with the carrying amount,
and are recognised in the income statement.
Intangible Assets
Research costs are expensed as they are incurred. Development costs that are
directly attributable to the design and testing of identifiable and unique
commercial software controlled by the Group are recognised as intangible
assets when the following criteria are met:
· it is technically feasible to complete the software product so that
it will be available for use and sale;
· management intends to complete the software product and use or sell
it;
· there is an ability to use or sell the software product;
· it can be demonstrated how the software product will generate
future economic benefits;
· adequate technical, financial and other resources to complete the
development and use or sell the software product are available; and
· the expenditure attributable to the software product during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include the software development employee costs and subcontracted
development costs.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over
their estimated useful lives, which do not exceed 3 years and commences after
the development is complete and the asset is available for use. Intangible
assets in relation to Showcase Experiences are amortised over their estimated
useful lives based on the pattern of consumption of the underlying economic
benefits. The ENGAGE platform is amortised on a straight line basis over 3
years. Amortisation is included in Administrative Expenses.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication
that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or CGU's fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from
other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount.
Impairment of non-financial assets (continued)
The Group bases its impairment calculation on detailed budgets and forecast
calculations, which are prepared separately for each of the Group's CGUs to
which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. A long-term growth rate
is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the statement of
profit or loss in expense categories consistent with the function of the
impaired asset.
For assets, an assessment is made at each reporting date to determine whether
there is an indication that previously recognised impairment losses no longer
exist or have decreased. If such indication exists, the Group estimates the
asset's or CGU's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable amount
since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior
years.
Trade Receivables
Trade receivables are amounts due from customers for licenses sold or services
performed in the ordinary course of business. If collection is expected in one
year or less (or in the normal operating cycle of the business if longer),
they are classified as current assets. If not they are presented as
non-current assets.
Trade receivables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. The Group holds the trade receivables with the objective of
collecting the contractual cash flows.
The Group provides for known bad debts and other accounts over a certain age
in line with Group policy. The realisation of the asset may differ from the
provision estimated by management.
Cash and Cash Equivalents
In the Statement of Cash Flows, cash and cash equivalents comprise cash in
hand and short-term deposits. Bank overdrafts are shown within borrowings in
current liabilities on the Statement of Financial Position.
Capital Contributions
A capital contribution represents irrevocable, non-repayable amounts
contributed from connected parties. Capital contributions are accounted for as
a contribution when they are approved, through the profit and loss account
reserve.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Where the
issuance of the new shares or options occurs in a subsequent period from when
the incremental costs are incurred these costs are prepaid until the issuance
takes place.
Share Based Payments
The Group has an equity settled employee incentive plan. The cost of equity
settled transactions with employees is measured by reference to the fair value
at the date at which they are granted and is recognised as an expense over the
vesting period, which ends on the date on which the relevant employees become
fully entitled to the award. Fair value is determined using an appropriate
pricing model. In valuing equity-settled transactions, no account is taken of
any vesting conditions, other than conditions linked to the price of the
shares of the Group. No expense is recognised for awards that do not
ultimately vest.
At each reporting date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired and
management's best estimate of the achievement or otherwise of non-market
conditions number of equity instruments that will ultimately vest. The
movement in cumulative expense since the previous reporting date is recognised
in the profit and loss within administration expenses, with a corresponding
entry in the balance sheet in share options reserve.
Where the terms of an equity-settled award are modified or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative. Where an
equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any cost not yet recognised in the Statement of
Comprehensive Income for the award is expensed immediately.
Trade Payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not,
they are presented as non-current liabilities. Trade payables are recognised
initially at fair value, and subsequently measured at amortised cost using the
effective interest method.
Leases
The Group leases office premises and motor vehicles under rental contracts for
fixed periods but may contain extension options. Lease terms are negotiated on
an individual basis and contain different terms and conditions. The lease
agreements entered into by the Group do not impose any covenants other than
the security interests in the leased assets that are held by the lessor.
From 1 January 2019 leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for
use by the Group. Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
· Fixed payments less any lease incentives receivable;
· Variable lease payments that are based on an index or a rate;
· The exercise price of a purchase option if the Group is reasonably
certain to exercise that option; and
· Payments of penalties for terminating the lease.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined the lessee's incremental
borrowing rate is used. Lease payments are allocated between principal and
finance cost. The finance charge is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining
balance of the liability.
Payments associated with short-term leases (12 months or less) and leases of
low-value assets are recognised on a straight-line basis as an expense in
profit or loss.
Current and Deferred Income Tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised directly in equity. In this case the tax is also recognised
directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Financial Statements. However, the deferred tax is not
accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the time of the
transaction, affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted, or
substantially enacted, by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised, or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised. Deferred income tax assets and
liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred
income tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
Research and development tax credit
The Group undertakes certain research and development activities that qualify
for the receipt of a research and development (R&D) tax credit from the
Irish tax authorities. Such grants are recognised as a credit against related
costs on a cash receipts basis.
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial Assets
Initial Recognition and Measurement
In accordance with IFRS9, 'Financial Instruments' the Group has classified its
financial assets as 'Financial assets at amortised cost'. The Group determines
the classification of its financial assets at initial recognition. All
financial assets are recognised initially at fair value plus, in the case of
assets not at fair value through the Statement of Comprehensive Income,
transaction costs that are attributable to the acquisition of the financial
asset and expected credit losses based on historical collection experience of
similar assets.
Subsequent Measurement
The subsequent measurement of financial assets depends on their classification
as described below:
Financial Assets Carried at Amortised Cost
This category applies to trade and other receivables due from customers in the
normal course of business. All amounts which are not interest bearing are
stated at their recoverable amount, being invoice value less provision for any
expected credit losses. These assets are held at amortised cost. The group
classifies its financial assets as at amortised cost only if both of the
following criteria are met:
I. the asset is held within a business model with the objective of
collecting the contractual cash flows; and
II. the contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal outstanding.
Financial assets at amortised cost comprise current trade and other
receivables due from customers in the normal course of business and cash and
cash equivalents. The Group does not hold any material financial assets at
fair value through other comprehensive income or at fair value through the
Statement of Comprehensive Income. The Group does not hold any derivatives and
does not undertake any hedging activities.
Trade receivables are initially recognised at their transaction price. The
group does not expect to have any contracts where the period between the
transfer of the promised goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the group does not adjust any of
the transaction prices for the time value of money. Other financial assets are
recognised initially at fair value plus transaction costs that are directly
attributable to the acquisition of the financial asset. Trade and other
receivables are subsequently measured at amortised cost less provision for
expected credit losses.
Impairment of Financial Assets
The Group assesses on a forward looking basis the expected credit losses
associated with its financial assets measured at amortised cost. The Group
applies the simplified approach to providing for expected credit losses
prescribed by IFRS 9, which permits the use of the lifetime expected loss
provision for all trade receivables. To measure the expected credit losses,
trade receivables have been grouped based on shared credit risk
characteristics and the days past due. For other financial assets at amortised
cost, the Group determines whether there has been a significant increase in
credit risk since initial recognition. The Group recognises twelve
month expected credit losses if there has not been a significant increase in
credit risk and lifetime expected credit losses if there has been a
significant increase in credit risk.
Expected credit losses incorporate forward looking information, take into
account the time value of money when there is a significant financing
component and are based on days past due; the external credit ratings of its
customers; and significant changes in the expected performance and behaviour
of the borrower.
Financial assets are written off when there is no reasonable expectation of
recovery. Where receivables have been written off, the Group continues to
engage in enforcement activity to attempt to recover the receivable due. Where
recoveries are made, these are recognised in the Statement of Comprehensive
Income.
Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognised initially at fair value net of
directly attributable transaction costs.
The Group's financial liabilities include trade and other payables.
After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest rate
method (EIR). Gains and losses are recognised in the Statement of
Comprehensive Income when the liabilities are derecognised as well as through
the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance costs in the Statement of Comprehensive
Income. This category generally applies to interest-bearing loans and
borrowings.
Derecognition of Financial Assets and Liabilities
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is derecognised when: (1) The rights
to receive cash flows from the asset have expired, or (2) The Group has
transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a
third party under a 'pass-through' arrangement, and either (a) the Group has
transferred substantially all the risks and rewards of the asset, or (b) the
Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the assets.
Derecognition of Financial Assets and Liabilities (continued)
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the Statement of Comprehensive
Income.
New standards, interpretations and amendments adopted by the Group and Company
The Group and Company have applied the following standards and amendments for
the first time from 1 January 2021:
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
- Classification of Liabilities as Current or Non-current -
Amendments to IAS 1
- Definition of Accounting Estimates - Amendments to IAS 8
There has been no material impact on the financial statements as a result of
the adoption of the new and amended standards.
There are no new and revised IFRSs that have been issued but are not yet
effective that the Directors believe are expected to have a material impact on
the Group and Company.
3. Segment Reporting
2021 2020
Revenue by Type € €
ENGAGE revenue 1,791,416 599,362
Showcase experience revenue 469,467 750,235
Other revenue 125,430 66,970
Total Revenue 2,386,313 1,416,567
4. Capital Management
For the purpose of the Company's capital management, capital includes issued
capital, share premium and all other equity reserves. The primary objective of
the Group's capital management is to maximise the shareholder value.
Group 2021 2020
€ €
Lease liabilities (20,393) (59,139)
Trade and other payables (481,576) (357,421)
Less: cash and short-term deposits 7,790,060 2,032,717
Net Funds 7,288,091 1,616,157
Equity 8,462,510 3,022,394
Total Equity 8,462,510 3,022,394
Capital and net funds 15,750,601 4,638,551
5. a. Expenses by nature
2021 2020
€ €
Depreciation charges 97,458 70,747
Amortisation expense 537,672 583,829
Operating Lease Payments 8,514 11,275
Foreign Exchange (Gain) / Loss (85,789) 24,412
Staff Costs 3,356,152 2,371,432
Other Expenses 1,585,810 1,190,225
5,499,817 4,251,915
Wages and salaries capitalised - (115,138)
Other expenses capitalised - 916
Total cost of sales and administrative expenses 5,499,817 4,137,693
Disclosed as:
Cost of sales 492,396 403,622
Administrative expenses 5,007,421 3,734,071
Total cost of sales and administrative expenses 5,499,817 4,137,693
b. Auditor Remuneration
Services provided by the Company's auditor
During the year, the Company obtained the following services from the
Company's auditor:
2021 2020
€ €
Fees payable to the Company's auditor for the audit of the financial
statements
46,600 44,444
6. Employees
Employee Benefit Expense 2021 2020
€ €
Wages and salaries 2,906,329 2,111,980
Social security costs 314,091 214,326
Defined contribution pension costs 31,769 19,904
Share option expense 103,963 25,222
Capitalised employee costs - (115,138)
Total Employee Benefit Expense 3,356,152 2,256,294
Average Number of People Employed 2021 2020
Average number of people (including executive Directors)
employed:
Operations 44 34
Administration 3 3
Marketing 2 2
Total Average Headcount 49 39
7. Directors' remuneration
Below is the Directors' remuneration for the year ended 31 December 2021 and
for the year ended 31 December 2020
31 December 2021
Salaries and fees Pension benefits Options / Warrants issued Total
Group
€ € € €
Executive Directors
David Whelan 176,917 4,824 - 181,741
Sandra Whelan 144,417 5,002 - 149,419
Séamus Larrissey 128,167 6,333 - 134,500
Non-executive Directors
Richard Cooper 85,552 - 16,700 102,252
Praveen Gupta - - - -
Kenny Jacobs 3,033 - - 3,033
Frank Poore - - 74,493 74,493
Harry Kloor 23,228 - - 23,228
Tony Hanway 27,000 - - 27,000
588,314 16,159 91,193 695,666
31 December 2020
Salaries and fees Pension benefits Options / Warrants issued Total
Group
€ € € €
Executive Directors
David Whelan 146,255 3,437 - 149,692
Sandra Whelan 110,115 3,675 - 113,790
Séamus Larrissey 110,635 4,875 919 116,429
Non-executive Directors
Richard Cooper 68,295 - 16,700 84,995
Michael Boyce 18,071 - - 18,071
Tony Hanway 31,715 - - 31,715
Praveen Gupta - - - -
Harry Kloor 8,974 - - 8,974
494,060 11,987 17,619 523,666
The options issued are a non-cash amount and are accounted for in line with
the treatment of the other share options issued to employees under IFRS 2.
Further notes on Share Based Payments are included in Note 19.
8. Finance Costs
2021 2020
€ €
Interest expense:
- Lease interest 2,863 3,445
- Bank charges 13,904 3,871
Total finance costs 16,767 7,316
9. Income Tax
2021 2020
€ €
Current tax:
Current tax on loss for the year - -
Total current tax - -
Deferred tax (Note 21) - -
Income Tax - -
The tax assessed for the year differs from that calculated using the standard
rate of corporation tax in Ireland (12.5%). The differences are explained
below:
2021 2020
€ €
Loss Before Tax (3,130,271) (2,728,442)
Tax calculated at domestic tax rates applicable to loss in
Ireland of 12.5% (391,284) (341,055)
Tax effects of:
- Depreciation in excess of capital allowances 7,400 5,868
- Expenses not deductible for tax purposes 39,780 66,642
- Tax losses for which no deferred tax asset was recognised 344,104 268,545
Total tax - -
10. Earnings per share (EPS)
2021 2020
Loss attributable to equity € €
holders of the Group:
Continuing Operations (3,130,271) (2,728,442)
Weighted average number of shares for Basic EPS 290,451,146 241,750,955
Effects of dilution from share options and warrants 23,455,846 13,954,862
Weighted average number of ordinary shares adjusted for the effect of dilution 313,906,992 255,705,817
Basic loss per share from continuing operations (0.011) (0.011)
Diluted loss per share from continuing operations (0.010) (0.011)
11. Property, Plant & Equipment
Fixtures,
Leasehold fittings and equipment Office Right of use
Group improvements Equipment assets Total
€ € € € €
Cost of Valuation
At 1 January 2020 20,341 7,025 166,031 145,702 339,099
Additions - - 12,852 25,799 38,651
Disposals - - - (15,470) (15,470)
At 31 December 2020 20,341 7,025 178,883 156,031 362,280
Additions - - 115,699 - 115,699
At 31 December 2021 20,341 7,025 294,582 156,031 477,979
Depreciation
At 1 January 2020 12,498 4,937 126,815 78,919 223,169
Charge (note 5) 4,607 1,125 31,572 33,443 70,747
Disposals - - - (15,470) (15,470)
At 31 December 2020 17,105 6,062 158,387 96,892 278,446
Charge (note 5) 3,236 694 54,781 38,747 97,458
At 31 December 2021 20,341 6,756 213,168 135,639 375,904
Net Book Amount
At 31 December 2020 3,236 963 20,496 59,139 83,834
At 31 December 2021 - 269 81,414 20,392 102,075
Depreciation expense of €97,458 (2020: €70,747) has been charged in
'Administrative Expenses'.
Right of use asset relates to properties and vehicles
held under lease
12. Intangible Assets
Software in development costs
Group Total
€ €
Cost
At 1 January 2020 2,022,009 2,022,009
Additions 114,222 114,222
At 31 December 2020 2,136,231 2,136,231
Additions - -
At 31 December 2021 2,136,231 2,136,231
Amortisation
At 1 January 2020 588,276 588,276
Charge 583,829 583,829
At 31 December 2020 1,172,105 1,172,105
Charge 537,672 537,672
At 31 December 2021 1,709,777 1,709,777
Net Book Value
At 31 December 2020 964,126 964,126
At 31 December 2021 426,454 426,454
The software being developed relates to the creation of virtual reality
experiences and an online virtual learning and corporate training platform.
ENGAGE is an online virtual learning and corporate training platform currently
in development by the Company. A desktop version was released in December 2018
and the mobile version was released in December 2019. Amortisation commenced
when the mobile version launched.
Titanic VR which is available for sale across all major VR capable platforms
since November 2018 has commenced being amortised in the period. Raid on the
Ruhr launched during 2019 and amortisation commenced during the period. Space
Shuttle launched during 2020 and amortisation commenced during the period.
Amortisation expense of €537,672 (2020: €583,829) has been charged in
'Administrative Expenses'.
An impairment review was carried out at the balance sheet date. No impairment
arose.
13. Investments in Subsidiaries
Company €
At 1 January 2020 15,028,809
Additions -
At 31 December 2020 15,028,809
Capital contributions 15,448,253
At 31 December 2021 30,477,062
Investments in subsidiaries are recorded at cost, which is the fair value of
the consideration paid.
On 12 March 2018, the Company acquired all of the issued capital of ENGAGE XR
Limited for a consideration of €15,000,000 which was settled by issuing
133,089,739 Ordinary Shares in the Company. The Company incurred expenses
totalling €28,809 as part of the transaction.
On 31 December 2021 the Company resolved to enter into a capital contribution
agreement with ENGAGE XR Limited to facilitate the funding of the wholly owned
subsidiary. An amount of €7,263,432 was forwarded during 2021 and
€8,184,821 was converted from the termination of the intercompany loan
agreement in force since 1 January 2020.
Country of incorporation and residence Proportion of equity shares held by the company
Name Nature of business
Virtual Reality Technology
ENGAGE XR Limited Ireland 100%
This subsidiary undertaking is included in the consolidation. The proportion
of the voting rights in the subsidiary undertaking held directly by the Parent
Company does not differ from the proportion of ordinary shares held.
14. Trade and Other Receivables
Non-Current Group Company
2021 2020 2021 2020
€ € € €
Amounts due from related parties - - - 8,184,821
- - - 8,184,821
Amounts due from related parties relates to an intercompany loan agreement
entered into on 1 January 2020 between the parent company and the subsidiary
undertaking. The interest rate on this agreement is 14% per annum and the loan
is due for repayment no later than the date falling 10 years from the date of
the agreement. At 31 December 2021 the company resolved to terminate the
intercompany loan agreement and waive the interest charged for 2021. A capital
contribution agreement was put in place effective from 31 December 2021 to
replace the intercompany loan agreement.
Current Group Company
2021 2020 2021 2020
€ € € €
Trade receivables 381,568 163,355 - -
Less: provision for impairment of receivables - - - -
Trade receivables - net 381,568 163,355 - -
Prepayments 110,640 68,708 768 19,994
Accrued income 139,512 123,114
Other debtors 3,100 3,100 - -
VAT 11,070 - 267 47
645,890 358,277 1,035 20,041
As at 31 December 2021, trade receivables of €381,568 (2020: €163,355)
were fully performing and deemed fully recoverable. No bad debt provision
charge was incurred during 2021 (2020: €Nil).
The Group assesses exposure to credit risk arising from outstanding
receivables on an annual basis. The maximum exposure to credit risk at the
reporting date is the carrying value of each of the receivables above. The
Group does not consider the credit risk of any receivable has increased post
recognition.
The Group does not expect any losses from outstanding receivables in the
current year.
The carrying amounts of the Company's trade and other receivables are
denominated in the following currencies:
Group Company
2021 2020 2021 2020
€ € € €
Euro - Neither past due nor impaired 330,287 90,801 - -
Dollar - Neither past due nor impaired 51,282 72,554 - -
381,568 163,355 - -
15. Cash and short-term deposits
Group Company
2021 2020 2021 2020
€ € € €
Cash at bank and on hand 7,790,060 2,032,717 1,476,744 578,420
7,790,060 2,032,717 1,476,744 578,420
16. Issued Share Capital and Premium
Number of shares Ordinary shares Share premium Total
€ € €
At 1 January 2020 193,136,406 193,136 21,587,539 21,780,675
Ordinary Shares Issued 48,284,102 48,285 2,951,715 3,000,000
Exercise of Share Options 330,447 330 8,262 8,592
At 31 December 2020 241,750,955 241,751 24,547,516 24,789,267
At 1 January 2021 241,750,955 241,751 24,547,516 24,789,267
Ordinary Shares Issued 48,350,191 48,350 8,947,034 8,995,384
Exercise of Share Options 350,000 350 8,750 9,100
At 31 December 2021 290,451,146 290,451 33,503,300 33,793,751
As at 31 December 2021 the number of shares authorised for issue were
290,451,146 (2020: 241,750,955). The par value of the shares authorised for
issue were €0.001 each (2020: €0.001 each).
On 22 June 2021 following a successful placing, an amount of €9.0 million
was raised by the Group and 48,350,191 ordinary shares were issued at an issue
price of €0.186 per share. Net proceeds after expenses were €8.46
million.
On 5 November 2021, as a result of the exercise of share options, 350,000
ordinary shares in the Company at an exercise price of €0.026 per share
providing the Company with gross proceeds of €9,100.
17. Other Reserves
Group Company
€ €
At 1 January 2020 (11,287,395) (194,087)
Share issue costs (70,720) (70,720)
Share option expense 21,057 17,619
At 31 December 2020 (11,337,058) (247,188)
At 1 January 2021 (11,337,058) (247,188)
Share issue costs (538,060) (538,060)
Share option expense 99,644 91,193
At 31 December 2021 (11,775,474) (694,055)
18. Retained Earnings
Group Company
€ €
At 1 January 2020 (7,705,536) (1,173,957)
Loss/(profit) for the year (2,728,442) 382,723
Share option expense - transfer on exercise 4,163 -
At 31 December 2020 (10,429,815) 791,234
At 1 January 2021 (10,429,815) 791,234
(Loss)/profit for the year (3,130,271) 432,140
Share option expense - transfer on exercise 4,319 -
At 31 December 2021 (13,555,767) 1,223,374
Capital contributions represent irrevocable, non-repayable amounts contributed
from connected parties.
19. Share Based Payments
There were 200,000 (2020: 200,000) employee options granted during 2021 at an
exercise price of €0.20 (2020: €0.10) per share and these vest subject to
continued service by the employee over a period of 3 years. Options expire at
the end of a period of 7 years from the Grant Date or on the date on which the
option holder ceases to be an employee.
The movement in employee share options and weighted average exercise prices
are as follows for the reporting periods presented:
2021 2020
At 1 January 4,298,042 4,465,526
Granted during period 200,000 200,000
Exercised during period (350,000) (330,447)
Forfeited during period (29,629) (37,037)
At 31 December 4,118,413 4,298,042
Options outstanding at 31 December
Number of shares 4,118,413 4,298,042
Weighted average remaining contractual life 1.37 years 2.05 years
Weighted average exercise price per share €0.038 €0.031
Range of exercise price €0.0001 - €0.20 €0.0001 - €0.135
Exercisable at 31 December
Number of shares 2,585,324 2,783,473
Weighted average exercise price per share €0.032 €0.026
350,000 options (2020: 330,447) options were exercised during the period at a
price of €0.026 per share. The weighted average exercise price of options
granted during the period was €0.20 (2020: €0.10). The expense recognised
in respect of employee share-based payment expense and credited to the
share-based payment reserve in equity was €25,151 (2020: €21,057).
The Company has measured the fair value of the services received as
consideration for equity instruments of the Company, indirectly by reference
to the fair value of the equity instruments. The table below sets out the
options and warrants that were issued during the period and the principal
assumptions used in the Black Scholes valuation model.
Employee Employee
Number of options 100,000 100,000
Grant date 7 July 7 July
Vesting period 3 years 3 years
Share price at date of grant £0.175 £0.175
Exercise price €0.20 €0.20
Volatility 57% 57%
Option life 7 years 7 years
Dividend yield 0% 0%
Risk free investment rate 0.14% 0.14%
Fair value per option at grant date €0.0989 €0.0989
Weighted average remaining contractual life in years 6.52 6.52
The expected life is based on historical data and current expectations and is
not necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumptions that the historical volatility over a
period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome.
On 1 October 2021, 17,406,069 share warrants were granted to Frank Poore upon
his appointment as a non-executive Director, at an exercise price of €0.174
(GBP £0.15) per share. The warrants expire at the end of a period of 5 years
from the grant date or on the date the employee leaves. The vesting
conditions in relation to these options are set out in the table below.
Tranche 1 Tranche 2 Tranche 3
Grant Date 1 October 2021 1 October 2021 1 October 2021
Number of Warrants 5,802,023 5,802,023 5,802,023
Vesting Criteria By end 29 July 2023 By end 29 July 2024 By end 29 July 2025
Exercise Price GBP £0.15 GBP £0.15 GBP £0.15
Trigger Price GBP £0.30 GBP £0.60 GBP £0.90
Volatility 43% 43% 43%
Risk Free Rate of Return 0.62% 0.62% 0.62%
Dividend Yield 0% 0% 0%
Option Life 5 Years 5 Years 5 Years
Fair Value €0.063 €0.031 €0.023
Expense €365,070 €178,441 €134,452
The cumulative expense of €677,963 is recognised in line with the vesting
conditions and on a straight line basis. An amount of €74,493 is included in
administration expenses.
20. Leases
Amounts recognised in the Statement Of Financial Position
The Statement Of Financial Position shows the following amounts relating to
leases:
Group Company
Right of Use Assets 2021 2020 2021 2020
€ € € €
Buildings 1,813 23,571 - -
Vehicles 18,579 35,568 - -
20,392 59,139 - -
Group Company
Lease Liabilities 2021 2020 2021 2020
€ € € €
Current 12,510 38,747 - -
Non-current 7,883 20,392 - -
20,393 59,139 - -
Amounts recognised in the Consolidated Statement Of Total Comprehensive Income
The Consolidated Statement Of Total Comprehensive Income shows the following
amounts relating to leases:
Depreciation charge of right-of-use assets 2021 2020
€ €
Buildings 21,758 21,758
Vehicles 16,989 11,685
38,747 33,443
Interest expense (included in finance cost) 2,863 3,445
21. Trade and Other Payables
Group Company
2021 2020 2021 2020
€ € € €
Trade Payables 23,763 24,156 3,653 9,022
PAYE/PRSI 129,972 70,106 25,914 18,150
VAT - 2,004 - -
Deferred Income 108,901 80,000 - -
Accrued Expenses 218,940 181,155 48,952 34,074
481,576 357,421 78,519 61,246
Terms and conditions of the above financial
liabilities:
· Trade payables are non-interest bearing and are normally settled on
30-day terms
· PAYE/PRSI payables are non-interest bearing and are normally
settled on 30-day terms
· VAT payables are non-interest bearing and are normally settled on
60-day terms
· Deferred income is non-interest bearing and are settled over
varying terms throughout the year
· Accrued expenses are non-interest bearing are settled over varying
terms throughout the year
22. Deferred Tax
Deferred income tax assets are recognised for tax loss carry-forwards to the
extent that the realisation of the related tax benefit through future taxable
profits is probable. The Company did not recognise deferred income tax assets
of €1,313,216 (2020: €899,370) in respect of losses and depreciation in
excess of capital allowances amounting to €10,505,731 (2019: €7,194,960)
that can be carried forward against future taxable income.
23. Related Parties
During the year the Directors received the following emoluments:
Group Company
2021 2020 2020 2019
Directors € € € €
Aggregate emoluments 588,313 494,059 588,313 494,059
Share option expense 91,193 17,619 91,193 17,619
679,506 511,678 679,506 511,678
Included in the above is an amount of €85,552 (2020: €68,295) paid to
Luclem Estates and Advisory Limited, a company in which Richard Cooper, a
director of the Company, is also a director. These fees relate to Richard
Cooper's consultancy services to the Company. As at 31 December 2021 €Nil
was outstanding.
24. Capital Management
The capital of the company is managed as part of the capital of the group as a
whole. Full details, are contained in note 4 to the consolidated financial
statements.
25. Events after the reporting date
The Company has evaluated all events and transactions that occurred after 31
December 2021 up to the date of signing of the financial statements.
No material subsequent events have occurred that would require adjustment to
or disclosure in the financial statements.
26. Contingent Liabilities
The company has indicated that it will guarantee the liabilities (as defined
in Section 397 of the
Companies Act 2014) of €17,496,026 (2020: €8,540,183) its Irish
subsidiary, ENGAGE XR Limited for the year ended 31 December 2021.
27. Ultimate controlling party
The Directors believe that there is no ultimate controlling party as no one
shareholder has control of the Company.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Group's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Group's control, are difficult to predict, and could cause actual results
to differ materially from those expressed or forecasted in the forward-looking
statements.
The Group cautions security holders and prospective security holders not to
place undue reliance on these forward-looking statements, which reflect the
view of the Group only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to events as
of the date on which the statements are made. The Group will not undertake any
obligation to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or unanticipated
events occurring after the date of this announcement except as required by law
or by any appropriate regulatory authority.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UBOBRUNUORARRecent news on ENGAGE XR Holdings
See all newsREG - Engage XR Holdings - Notice of Results
AnnouncementRCS - Engage XR Holdings - ASU+GSV Summit, Launch of Titanic VR & ENGAGE 4.0
AnnouncementRCS - Engage XR Holdings - ENGAGE XR attending Leap 2025 with PwC Middle East
AnnouncementRCS - Engage XR Holdings - Launch of Education Offering at Bett 2025
AnnouncementREG - Engage XR Holdings - Pre-Close Trading Update
Announcement