2021 Preliminary Results
07/06/2022 07:00
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RNS Number : 9115N Immediate Acquisition PLC 07 June 2022
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via the
Regulatory Information Service, this inside information is now considered to
be in the public domain.
Tuesday, 7 June 2022
Immediate Acquisition Plc
("IME" or "the Group" or "the Company")
2021 Preliminary Results
Immediate Acquisition Plc (AIM: IME) today announces its preliminary results
for the year ended 31 December 2021.
2021
FINANCIAL HIGHLIGHTS £
Revenue 2,940,692
Gross profit 1,941,667
EBITDA (359,454)
Profit / (Loss) after taxation (438,597)
Debt (loans plus lease liabilities) 53,959
Net funds (cash less debt) 568,829
Post period end highlights
· Disposal of wholly owned subsidiary, Immedia Broadcast Limited, for a
total consideration of £2.0 million comprising of £1.718 million paid on
completion of the disposal on 9 May 2022 with the balance of £282,000 payable
in 12 equal monthly instalments, beginning one month after completion.
· Executive Directors, Ross Penney and John Trevorrow, stepped down
from the Board on 9 May 2022.
· Change of Company name to Immediate Acquisition Plc.
· Disposal of the Sprift Loan for cash consideration of £1.05m.
· Including investment in Audioboom, at the date of this report the
Company has unaudited net assets in excess of £3.8m, of which all are cash or
liquid investments.
· The Directors continue to investigate a number of potential
acquisitions in the technology and fintech sector; none of which they have yet
committed to pursue at this time.
Tim Hipperson, Non-executive Chairman, commented:
"With the disposal of Immedia Broadcast Limited now complete we are absolutely
focused on our capital growth strategy including the monetisation of the
Company's remaining assets, of which we have already disposed of the Sprift
Loan, and the pursuit of an acquisition of a company in the technology or
fintech sectors which would constitute a reverse takeover under the AIM Rules
for Companies.
"The Board has already identified a number of exciting opportunities in our
target sectors and is confident that any acquisition will deliver meaningful
shareholder value. We will report on further progress as soon as we are in a
position to do so."
For further information please contact:
Immediate Acquisition Plc Tel: +44 (0) 203 515 0233
Tim Hipperson, Non-executive Chairman
Simon Leathers, Non-executive Director
SPARK Advisory Partners Limited (Nomad) Tel: +44 (0) 203 368 3550
Mark Brady
Neil Baldwin
SP Angel Corporate Finance LLP (Broker) Tel: +44 (0) 207 470 0470
Abigail Wayne
Buchanan Communications Tel: +44 (0) 207 466 5000
Chris Lane
Chairman's Statement
In my statement in the 2020 preliminary results I expressed the expectation
that 2021 would offer significant opportunities as well as challenges. As
predicted, that has turned out to be the case.
In an eventful period we raised more funds at the start of the year with a
view to bolstering our working capital and transactional capabilities. The
original transaction that was under consideration in the early part of the
year, with Sprift Technologies Ltd, did not complete although we remained
invested via a loan note as announced on 26 March and 15 July 2021 until the
recently announced disposal and focus on monetising our remaining assets. We
do however continue to investigate suitable opportunities to enhance
shareholder value through a strategic acquisition or reverse takeover and have
already identified a number of exciting opportunities in our target sectors:
technology and fintech.
Our trading business, Immedia Broadcast Ltd, continued to suffer depressed
demand in H1 because of the continuing Covid pandemic before enjoying a
well-deserved period of success in the second half of the year. I commend
the entire team for their talent, commitment and perseverance in materially
turning round the 2021 outturn. I offer every one of them my heartfelt
thanks.
Financial highlights
Revenue increased 27% from the previous year to £2,940,692 (2020:
£2,310,872), producing an improved loss before tax of £438,597 (2020: loss
of £733,181) - because of increased sales and margin improvements as well as
a full year of the cost reduction and financial efficiency measures
implemented in 2020.
Immedia Broadcast Ltd (IBL)
Owing to the cost of operation, it remained the view of the Board that IBL
would trade more efficiently without the financial and regulatory burden of
the AIM listing and the Group therefore sought expressions of interest from
third parties. None of these was at a level commensurate with the trading
prospects of IBL so, having received shareholder approval, on 9 May 2022 the
Group sold IBL to AVC Immedia Limited, a company led by CEO Ross Penney.
Trading and profitability were on an upward curve throughout 2021, and we are
pleased that in H2 2021 we achieved not only profitability at the EBITDA level
in every month but also two of the most successful months the company has ever
posted. Whilst the upturn in trade was significant and trading in Q1 2022
was promising, the operations remain too small to readily absorb the costs of
being a PLC and generate a return for investors. Accordingly, the Independent
Directors believe that, despite the UK's apparent recovery from the pandemic,
there remains significant uncertainties in the economy and the growth of the
Group would continue to be limited in the foreseeable future. This
conviction led to the disposal of IBL which completed on 9 May 2022.
Capital
In January 2021 the Group raised further gross proceeds of £3.0 million via
the placing of 10,400,000 new Ordinary Shares at £0.25 per share and a
subscription for 1,600,000 new Ordinary Shares at £0.25 per share.
AudioBoom
I am delighted that the Company's investment in AudioBoom Group plc (AIM:BOOM)
has proved to be of long term strategic benefit. I commend AudioBoom's
management on the huge progress made and look forward to further developments.
Warrant Extension
On 8 January 2021, pursuant to a placing and subscription to raise £3
million, the Company announced the issue of 12,000,000 new warrants,
exercisable at a price of 35 pence for a period of 12 months from admission,
subsequently announced as 8 February 2021. In order to maintain the Company's
access to capital and enable the Company to assess and complete potential
corporate actions in a timely manner the Board has agreed to extend the final
exercise date of the warrants to 30 June 2022 or, if the Company publishes an
Admission Document prior to 30 June 2022 relating to a reverse takeover, the
Business Day falling two Business Days prior to the date of the General
Meeting relating to the reverse takeover. As part of the fundraising, Mark
Horrocks subscribed for 1,600,000 subscription shares (and so received
1,600,000 new warrants). As Mark Horrocks is a Director and substantial
shareholder, any extension of the new warrants was a related party transaction
pursuant to AIM Rule 13. The directors, other than Mark Horrocks, having
consulted with the Company's nominated adviser believed that the terms of the
new warrant extension are fair and reasonable insofar as shareholders are
concerned.
Sprift Loan
On 15 July 2021 the Company entered into a cost recovery agreement with Sprift
Technologies Limited ("Sprift"). Driven largely by consecutive monthly growth
in Estate Agent subscriptions and the provision of property data APIs, Sprift
Technologies generated revenue growth of circa 100% in the eight months ended
30 September 2021 compared to the equivalent period last year. In the interest
of facilitating further growth of the Borrower, on 20 December 2021 the
Company entered a revised facility agreement ("Facility Agreement") with
Sprift and Mark Horrocks that increased the facility size from £1.05m to
£2.55m, defined equity conversion terms in the event of defined liquidity
events and set out board participation rights. No further funding was provided
by the Company under this agreement. Mark Horrocks is a party to the Facility
Agreement and as such this is a related party transaction pursuant to AIM Rule
13. The directors independent of the Facility Agreement, having consulted with
the Company's nominated adviser, believed that the terms of the Facility
Agreement were fair and reasonable insofar as shareholders are concerned.
On 6 June 2022 the Company disposed of the £1.05m Sprift Loan to Mark
Horrocks for £1.05m in cash consideration. This was a related party
transaction pursuant to AIM Rule 13 and the directors independent of disposal,
having consulted with the Company's nominated adviser, believed that the terms
of the disposal are fair and reasonable insofar as shareholders are concerned.
Outlook
Immediate Acquisition plc
Post completion of the IBL disposal and the sale of the Sprift Loan, the
Company name has been changed to Immediate Acquisition Plc and intends to
adopt a capital growth strategy through the monetisation of its remaining
investments, in an orderly manner, and the pursuit of an acquisition of a
company in the technology or fintech sectors. This is in line with the
Company's ambition to deliver meaningful shareholder value.
Tim Hipperson
Chairman
Consolidated Statement of Profit or Loss
For the Year Ended 31 December 2021 2020
£ £
CONTINUING OPERATIONS
Revenue 2,940,692 2,310,872
Cost of sales (999,025) (924,824)
Gross profit 1,941,667 1,386,048
Administrative expenses (2,458,683) (2,126,783)
Other income 12,397 68,127
Operating profit/(loss) (504,618) (672,608)
Finance income 72,505 116
Finance costs (6,483) (60,689)
Loss before taxation (438,597) (733,181)
Tax on loss - -
Loss for the financial year (438,597) (733,181)
2021 2020
Earnings/(loss) per share
Basic (pence per share) (2.77) (5.22)
Diluted (pence per share) (2.77) (5.22)
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(#_TOC_250003)
For the Year Ended 31 December 2021 2020
£ £
Loss for the year (438,597) (733,181)
Other comprehensive income
Item that will not be reclassified to profit or loss: 768,766 42,600
Fair value gain on equity investments not held for trading designated as fair
value through OCI
Total comprehensive income/(loss) for the year 330,168 (690,581)
Consolidated Statement of Financial Position (#_TOC_250002)
As at 31 December 2021 2020
£ £
ASSETS
NON-CURRENT ASSETS
Goodwill 191,018 191,018
Owned
Intangible assets 28,577 38,401
Property, plant and equipment 106,678 101,500
Right-of-use
Property, plant and equipment 9,230 74,408
Investments 1,175,349 157,500
1,510,852 562,827
CURRENT ASSETS
Inventories 161,556 124,094
Trade and other receivables 2,254,937 575,449
Cash and cash equivalents 622,788 464,232
3,039,281 1,163,775
TOTAL ASSETS 4,550,133 1,726,602
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities (39,716) (45,663)
Provisions (70,000) (42,500)
(109,716) (88,163)
CURRENT LIABILITIES
Trade and other payables (1,594,058) (1,803,183)
Contract liabilities (101,587) (145,195)
Financial liabilities (14,242) (92,471)
(1,709,887) (2,040,849)
TOTAL LIABILITIES (1,819,604) (2,129,012)
Net assets/(liabilities) 2,730,529 (402,410)
EQUITY
Called up share capital 3,758,184 2,558,184
Share premium 5,189,313 3,586,541
Merger reserve 2,245,333 2,245,333
Share-based payment reserve 40,218 40,218
Investment valuation reserve 836,265 67,500
Retained losses (9,338,784) (8,900,186)
TOTAL EQUITY 2,730,529 (402,410)
Consolidated Statement of Changes in Equity
Called up Share capital Share premium Retained losses Merger reserve Share-based payment reserve Investment valuation reserve Total equity
£ £ £ £ £ £ £
Balance at 2,558,184 3,586,541 (8,900,186) 2,245,333 40,218 67,500 (402,410)
31 December 2020
Loss for the year - - (438,597) - - - (438,597)
Other comprehensive income - - - - - 768,765 768,765
Total comprehensive income for the year - - (438,597) - - 768,765 330,168
Transactions with shareholders
Share options exercised - - - - - - -
Share-based payments - - - - - - -
Shares placed/subscribed 1,200,000 1,602,772 - - - - 2,802,772
Total transactions with shareholders 1,200,000 1,602,772 - - - - 2,802,772
Balance at 31 December 2021 3,758,184 5,189,313 (9,338,783) 2,245,333 40,218 836,265 2,730,529
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2021 2020
£ £
Cash flows from operating activities
Cash used in operations (1,251,072) (366,488)
Net cash flow from operating activities (1,251,072) (366,488)
Cash flows from investing activities
Purchase of tangible fixed assets (67,619) (52,145)
Purchases of marketable securities (249,083) -
Investment loan (1,050,000) -
Interest received 72,504 -
Cash from sale of assets 42 116
Net cash flow from investing activities (1,294,156) (52,029)
Cash flows from financing activities
New loans in year - 50,000
Loan principal repaid (5,517) (300,000)
Share issue 3,000,000 1,100,000
Costs of share issue (197,228) (50,800)
Exercise of share options - 2,500
Repayment of lease liabilities (86,986) (111,208)
Interest paid (6,483) (45,317)
Net cash flow from financing activities 2,703,784 645,175
Increase/(decrease) in cash and cash equivalents 158,556 226,658
Cash and cash equivalents at beginning of year 464,232 237,574
Cash and cash equivalents at end of year 622,788 464,232
Immedia Group Plc
NOTES TO THE FINANCIAL INFORMATION
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 435 of the Companies Act
2006.
The financial information for the year ended 31 December 2021 is derived from
the statutory accounts for that year. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and
included a reference by way of emphasis to the disposal of Immedia Broadcast
Limited subsequent to the year end date.
The statutory accounts for the year ended 31 December 2020 have been delivered
to the Registrar of Companies. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under either Section
498 (2) or Section 498 (3) of the Companies Act 2006 and did not include
references to any matters to which the auditor drew attention by way of
emphasis.
The statutory accounts for the year ended 31 December 2021 have not yet been
delivered to the Registrar of Companies. The 2021 accounts will be delivered
to the Registrar of Companies following the Company's Annual General Meeting.
The Annual Report and Notice of Annual General Meeting will be posted to the
shareholders by 30 June 2022 and will be made available on the Company's
website (www.imeplc.com (http://www.imeplc.com) ) at that time.
This preliminary announcement was approved by the Board on 6 June 2022.
1. ACCOUNTING POLICIES
Basis of preparation
Both the parent company financial statements and the consolidated financial
statements have been prepared and approved by the Directors in accordance with
UK-adopted international accounting standards. The total comprehensive income
was £330,168 (2020 loss: £690,581), reflecting an increase in the carrying
value of £768,766 in our strategic investment in the AIM-quoted spoken word
audio platform Audioboom Group PLC (AIM:BOOM). The Company's loss for the
year was £649,784 (2020 loss: £341,928).
The financial statements were approved by the Board of Directors on the date
as shown on the Consolidated and Company Statement of Financial Position.
Statement of compliance
The AIM Rules require that the consolidated financial statements of the Group
be prepared in accordance with International Financial Reporting Standards.
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are
discussed in note 2.
Measurement convention
The consolidated financial statements have been prepared on the historical
cost basis except where explicitly stated otherwise.
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the
Group has power over the investee significantly to direct the activities;
exposure, or rights, to variable returns from its involvement with the
investee and the ability to use its power over the investee to affect the
amount of the investor's returns. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases. The Group also included an
Employee Benefit Trust which is considered to be a quasi-subsidiary under the
control of the Group.
(ii) Acquisitions
Acquisitions are accounted for using the acquisition method. The cost of an
acquisition is measured at fair value at the date of exchange of the
consideration. Identifiable assets and liabilities of the acquired business
are recognised at their fair value at the date of acquisition. To the extent
that the cost of an acquisition exceeds the fair value of the net assets
acquired the difference is recorded as goodwill. Where the fair value of the
net assets acquired exceeds the cost of an acquisition the difference is
recorded in profit and loss.
(iii) Transactions eliminated on consolidation
Intra-group balances and any unrealised income and expenses arising from
intra-group transactions are eliminated in preparing the consolidated
financial statements.
(iv) Merger
On 20 November 2003 a new holding company was brought into the Group. This was
carried out by a share for share exchange and the existing shareholders of
Immedia Broadcast Limited received 1,000 10p ordinary shares in Immedia Group
Plc for every share held. There was no cash consideration. As part of its
transition to IFRS on 1 January 2006 the Group did not restate the Group
reconstruction which had been accounted for as a merger as permitted by UK
GAAP.
Going concern
The Group meets its day to day working capital requirements through the
combined use of its cash balances, the monetization of investments, receivable
and payable balances.
Following the disposal of Immedia Broadcast Limited for cash consideration of
£1.7m and the disposal of the Sprift Loan for cash consideration of £1.05m
and the investment in Audioboom, at the date of this report the Company has
net assets in excess of £3.8m, of which all are cash or liquid investments.
Accordingly the Directors believe that this represents more than adequate
resources to continue to pay its liabilities as they fall due in the year
ahead, including some headroom to deal with possible shortfalls against
expectations judged reasonable. The Directors have also considered whether
that headroom would be adequate to deal with any reasonable abortive costs
associated with potential acquisitions should they not proceed and consider it
adequate.
Accordingly, whether or not the transactions to change the make up of the
Group are completed, the Directors believe there is reasonable assurance that
the Group has adequate resources to continue in operation for the foreseeable
future, being at least 12 months from the date of signing of the financial
statements, and continue to adopt the going concern assumption.
Changes in accounting policies
There are no new standards or amendments to standards which are material to
the accounts and mandatory for the first time for the financial year ended 31
December 2021.
Accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements, and have been
applied consistently by all Group entities.
a) Revenue
Revenue represents the amounts receivable by the Group for the provision of
its goods and services, excluding value added tax.
Production services comprise the broadcasting of live and as live radio
programmes to customers' premises using appropriate technologies, together
with the production of advertising content for use in those programmes.
Revenue from these services is billed on time-based subscriptions and
recognised as the performance obligation is fulfilled. Additionally, the
creation of digital web and app designs, digital solutions for audio visual
content, 3D, virtual reality and augmented reality content provided by the AVC
Immedia division are all included in production services. Revenue from these
services is billed and recognised on completion as that is when the
performance obligation is met.
Operations revenue from equipment sales which includes delivery and
configuration is recognised over time; revenue from content delivery and
equipment maintenance and hire services is billed on time-based subscriptions
and is recognised monthly on completion when the performance obligation is
met.
To the extent that invoices are raised to a different pattern from the revenue
recognition described above, appropriate adjustments are made through contract
assets and contract liabilities to account for revenue when underlying service
has been performed or goods have transferred to the customer.
b) Other income
The Company has other income for the sub-lease of its Aberdeen offices.
c) Finance income and cost
Finance income comprises interest income on bank deposits and interest income
from customers on deferred payment terms, both of which are recognised as
accrued using the effective interest method.
Finance cost comprises interest expense on borrowings including leases which
is recognised in profit or loss using the effective interest method.
d) Taxation
The tax expense comprises current and deferred tax. Tax is recognised in the
statement of profit or loss, except to the extent that it relates to items
recognised in other comprehensive income. In this case, the tax is also
recognised directly in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the statement of financial position method,
providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following temporary
differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit, and differences relating
to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. Deferred tax is measured at the tax rates
that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by
the reporting date.
A deferred tax asset is recognised to the extent that it is probable that
future taxable profits will be available against which temporary differences
can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
e) Research and development expenditure
Recognition and measurement
Expenditure on research (or the research phase of an internal project) is
recognised as an expense in the period in which it is incurred.
Costs that are directly attributable to the development phase of new
customised technologies are recognised as intangible assets provided they meet
the following recognition requirements:
· completion of the intangible asset is technically feasible so
that it will be available for use or sale;
· the Group intends to complete the intangible asset and use or
sell it;
· the Group has the ability to use or sell the intangible asset;
· the intangible asset will generate probable future economic
benefits. Among other things, this requires that there is a market for the
output from the intangible asset or for the intangible asset itself, or, if it
is to be used internally, the asset will be used in generating such benefits;
· there are adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset; and
· the expenditure attributable to the intangible asset during its
development can be measured reliably. Development costs not meeting the
criteria for capitalisation are recognised as expenses as incurred.
f) Foreign currencies
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the statement of financial position date
are translated at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date
of the transaction.
g) Employee benefit
(i) Defined contribution plans
Obligations for the contributions to defined contribution pension plans are
recognised as an expense in profit or loss when they are due.
(ii) Share-based payments options
The Group operated an equity settled compensation scheme which grants options
to qualifying employees. The grant date fair value of options granted to
employees is recognised as an employee expense, with a corresponding increase
in equity, over the period in which the employees become unconditionally
entitled to the options. The amount recognised as an expense is adjusted to
reflect the expected number of share options that vest unless this adjustment
is due to the share price not achieving the set thresholds for vesting.
(iii) Share-based payments warrants
The Group also operated an equity settled compensations scheme which grants
warrants. The warrants have a life of 5 years from grant date and expire if
not exercised. The grant date fair value of warrants granted to employees is
recognised as an employee expense, with a corresponding increase in equity,
over the period in which the employees become unconditionally entitled to the
warrants. The amount recognised as an expense is adjusted to reflect the
expected number of share warrants that vest unless this adjustment is due to
the share price not achieving the set thresholds for vesting.
(iv) Employee benefit trust
The Group operates an employee trust ("EBT") for the benefit of its employees
through Immedia Broadcasting Trustees Limited which acts as Trustee.
Transactions for the EBT are treated as being those of the Group and are
therefore reflected in the consolidated financial statements. The trust's
purchases and sales of shares in the Company are debited and credited directly
to equity.
h) Goodwill
Goodwill arises on the acquisition of subsidiaries and is stated at cost less
any accumulated impairment losses. Goodwill, which under IFRSs is not
amortised, is tested annually for impairment.
For acquisitions on or after 1 January 2006, goodwill represents the excess of
the cost of the acquisitions over the Group's interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities of the
acquiree.
i) Amortisation of intangible assets
Amortisation is recognised as an administrative expense in profit or loss on a
straight-line basis over the estimated useful lives of intangible assets,
other than goodwill, from the date that they are available for use. The
estimated useful lives for intangible assets are as follows:
Brand
-
ten years
Proprietary software - five years
Customer contracts - three to four
years
Content delivery - three
years
j) Investment in subsidiaries
Investments in subsidiaries held in the parent company accounts are stated at
cost less impairment. Investments in subsidiaries are reviewed for impairment
on an annual basis or when events or other changes in circumstances indicate
that the investment carrying value may be impaired.
k) Impairment
(i) Non-financial assets
Assets that have indefinite lives (goodwill) are tested for impairment
annually. Assets that are subject to amortisation or depreciation are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.
The test for impairment under IAS 36 compares the carrying value of an asset
against its economic value (recoverable amount to the business), where
economic value is defined as the higher of the asset's fair value less costs
to sell or its value in use. (These measures are based on the net present
value of future cash flows). If the carrying value exceeds the economic value,
impairment exists.
An impairment loss is recognised if the carrying amount of an asset or the
cash-generating unit in which the asset is used exceeds its recoverable
amount. A cash-generating unit is the smallest identifiable asset group that
generates cash flows that largely are independent from other assets and
groups.
Impairment losses are recognised in consolidated statement of profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the units and
then to reduce the carrying amount of the other assets in the unit on a pro
rata basis.
(ii) Financial assets
All financial assets are subject to review for impairment at least at each
reporting date to identify whether there is any objective evidence that a
financial asset or a group of financial assets is impaired.
An impairment loss in respect of goodwill is not subsequently reversed. In
respect of other assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
l) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition
of the asset. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the Company and
its cost can be measured reliably. The carrying amount of any part that is
replaced is derecognised. The cost of the day-to-day servicing of property,
plant and equipment is recognised in income and expenditure as incurred.
(iii) Depreciation
Depreciation is recognised as an expense in profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of property,
plant and equipment. Leased assets are depreciated over the shorter of the
lease term and their useful lives.
The estimated useful lives for the current and comparative periods are as
follows:
Plant and equipment
- three to seven
years
Fixture and fittings
Office and IT equipment - three to ten years
Leasehold improvements - unexpired period of
original term of leases, ranging from 1.5 to eight years
Network equipment - three to
five years or contract term if shorter
Leasehold property
- length of
property lease
Depreciation methods, useful lives and residual values are reviewed at each
statement of financial position date.
m) Financial instruments
Financial assets and financial liabilities are recognised in the statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument.
Investments other than investments in subsidiaries are classified as either
held-for-trading or not at initial recognition. At the year-end date all
investments are classified as not held for trading. An irrevocable election
has been made to recognise changes in fair value in other comprehensive
income.
Trade receivables are held in order to collect the contractual cash flows and
are initially measured at the transaction price as defined in IFRS 15, as the
contracts of the Group do not contain significant financing components.
Impairment losses are recognised based on lifetime expected credit losses in
profit or loss.
Other receivables are held in order to collect the contractual cash flows and
accordingly are measured at initial recognition at fair value, which
ordinarily equates to cost and are subsequently measured at cost less
impairment due to their short-term nature. A provision for impairment is
established based on 12-month expected credit loses unless there has been a
significant increase in credit risk when lifetime expected credit losses are
recognised. The amount of any provision is recognised in profit or loss. Cash
and cash equivalents comprise cash balances held by the Group and overnight
call deposits.
Financial liability and equity instruments issues by the Group are classified
in accordance with the substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
issues by the Company are recorded at the proceeds received, net of direct
issue costs.
n) Inventories
Inventories include audio, screen and content delivery equipment and are
measured at the lower of cost and net realisable value. In determining the
cost of raw materials, consumables and goods purchased for resale, the
weighted average purchase price is used. For work in progress and finished
goods, cost is taken as production cost which includes an appropriate
proportion of attributable overheads.
o) Contract assets
When equipment supplied within an audio services contract is paid for over the
contract term, the Group continues to recognise equipment sales revenues
consistently with the revenue recognition policy in 2.a) Revenue.
p) Trade and other payables
Trade and other payables are recognised at fair value on initial recognition
and subsequently at amortised costs.
q) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least twelve
months after the reporting date.
r) Leases
A right of use asset and a lease liability have been recognised for all leases
except leases of low value assets, which are considered to be those with a
fair value below £4,500, and those with a duration of 12 months or less.
Right of use assets have been measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct costs incurred
by the Group, an estimate of any costs to dismantle and remove the asset at
the end of the lease, and any lease payments made in advance of the lease
commencement date.
The Group depreciates right of use assets on a straight-line basis from the
lease commencement date to the earlier of the useful life of the right of use
asset or the end of the lease term. Where impairment indicators exist, right
of use assets will be assessed for impairment.
The lease liabilities are measured at the present value of the lease payments
due to the lessor over the lease term, discounted using the interest rate
implicit in the lease if that rate is readily available or the Group's
incremental borrowing rate.
After initial measurement, any payments made will reduce the liability and the
interest accrued will increase it. Any reassessment or modification will lead
to a remeasurement of the liability. In such case, the corresponding
adjustment will be reflected in the right of use asset, or profit and loss if
the right of use asset is already reduced to zero.
s) Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events; it is probable that an outflow of
resources will be required to settle the obligation; and the amount has been
reliably estimated. Amounts provided in respect of leasehold premises
dilapidations are the only constituent of the provisions balance.
t) Equity and reserves
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premium received on issue of share capital. Any
transaction costs associated with the issuing of shares are deducted from
share premium, net of any related income tax benefits.
The Company also has warrants in issue following an equity fund raising
process. The warrants had a life of 1 year from grant date, since extended to
30 June 2022, and will expire if not exercised. The grant date fair value of
warrants granted to investors is recognised as an expense against Share
Premium, with a corresponding increase in equity, The amount recognised as an
expense is adjusted to reflect the expected number of share warrants that vest
unless this adjustment is due to the share price not achieving the exercise
price threshold.
Merger reserve represents the consolidation difference that arises under
merger accounting. This consists of the difference between the cost of
investment and the nominal value of the share capital acquired.
Other reserves include share-based payment charges.
The investment revaluation reserve includes accumulated gains and losses on
financial assets.
Retained losses include retained profits and losses relating to current and
prior years and purchases and sales of own shares by the Employee Benefit
Trust.
All transactions with owners of the parent are recorded separately within
equity.
u) Earnings per share
Basic or diluted
The Group presents basic and diluted earnings per share ("EPS") data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shared outstanding
for the effects of all dilutive potential ordinary shares, which comprise
share options granted to employees.
v) Segment reporting
In identifying its operating segments, management has historically followed
the Group's service lines, which represent the main products and services by
the Group. There were two operating segments: production and operations.
The Chief Operating Decision Maker, which is deemed to be the executive Board,
reviews management information which is the same as is reported and prepared
under IFRS.
The revenue streams in the production segment comprise the content created for
customers, including audio based (live and recorded radio, music, advertising
and branding) and visual based (video, music advertising and branding, digital
web and app designs, and digital solutions for audio visual, 3D, virtual
reality and augmented reality content), together with all applicable licensing
charges.
The revenue streams in the operations segment comprise the supply,
installation and sale or hire of equipment to deliver content to customers,
the delivery of the content (including via broadband or satellite
technologies), and the maintenance of the equipment.
2. USE OF ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these judgements and estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
3. REVENUE
a) Segmental reporting
The Chief Operating Decision Maker, which is deemed to be the executive Board
consider that the Group has just one operating segment, being the provision of
audio visual communication products and services.
Analysis of sales and cost of sales between the two main service lines,
production and operations is provided for information in the table below.
The production revenue streams comprise the content created for customers,
including audio based (live and recorded radio, music, advertising and
branding) and visual based (video, music advertising and branding, digital web
and app designs, and digital solutions for audio visual, 3D, virtual reality
and augmented reality content), together with all applicable licensing
charges. The operations revenue streams comprise the supply, installation
and sale or hire of equipment to deliver content to customers, the delivery of
the content (including via broadband or satellite technologies), and the
maintenance of the equipment.
2021 2020
Production Operations Total Production Operations Total
£ £ £ £ £ £
Revenue 2,879,891 60,801 2,940,692 2,180,313 130,559 2,310,872
Cost of sales (968,353) (30,672) (999,025) (873,807) (51,017) (924,824)
Gross profit 1,911,538 30,129 1,941,667 1,306,506 79,542 1,386,048
Administrative expenses (2,458,683) (2,126,783)
Other income 12,397 68,127
Loss from operations (504,618) (672,608)
Finance income 72,505 116
Finance cost (6,484) (60,689)
Loss before tax (438,597) (733,181)
Geographical analysis:
2021 2020
£ £
UK 2,554,416 2,032,591
Europe excluding the UK 103,360 133,703
RoW 282,916 144,578
Total 2,940,692 2,310,872
*included in above are sales to Canada £177,969 (2020: £79,530) and USA
£62,622 (2020: £61,373). There were no material sales to other countries.
Significant customers
There were three customers where revenue was greater than 10% of the total
(2020: three). Revenue from each of these customers is derived from both
production and operations segments.
Significant customer analysis:
2021 2020
Revenue % of total revenue Revenue % of total revenue
£
£
Customer 1 500,863 17.0 499,848 21.6
Customer 2 438,457 14.9 439,494 19.0
Customer 3 309,754 10.5 243,401 10.5
Analysis of revenue between goods and services:
2021 2020
£ £
Services 2,333,654 2,096,479
Goods 607,038 214,393
Total revenues 2,940,692 2,310,872
Analysis of revenue recognition
2021 2020
£ £
Recognised at a point in time 1,609,267 951,680
Recognised over time 1,331,425 1,359,192
Total revenues 2,940,692 2,310,872
b) Contract liabilities
2021 2020
£ £
Current - Media services 101,587 145,195
During the year, the Company recognised revenue of £142,687 that was included
in the contract liability at the beginning of the period.
Revenue recognised in relation to contract liabilities
Where media services are billed in advance, income is deferred until it can be
recognised in accordance with the revenue recognition policy as detailed in
note 2.
Analysis of future obligations:
2021 2020
£ £
Performance obligations to be satisfied in the next year 1,033,274 753,542
Performance obligations to be satisfied in the subsequent year 202,788 3,420
4. EMPLOYEES AND DIRECTORS
Staff costs
Group Company
2021 2020 2021 2020
£ £ £ £
Wages and salaries 1,166,184 1,066,787 - 163,278
Social security costs 124,538 127,496 - 30,660
Other pension costs 34,734 32,760 - 9,295
Total 1,325,456 1,227,043 - 203,233
The Group also made payments of fees to Non-Executive Directors of £81,510
(2020: £33,899).
The average number of employees during the year was as follows:
Group Company
2021 2020 2021 2020
Administration and sales 12 13 - 2
Production and distribution 15 15 - -
Total 27 28 - 2
Directors' remuneration
2021 2020
£ £
Directors' remuneration 211,677 200,385
Directors' pension contributions to money purchase schemes 8,200 7,515
Payments to Directors for loss of office - 101,240
The number of directors to whom retirement benefits were accruing was as
follows:
2021 2020
Money purchase schemes 2 3
Information regarding the highest paid director is as follows:
2021 2020
£ £
Emoluments etc 119,245 110,661
Pension contributions to money purchase schemes 4,600 4,280
Remuneration for each individual director, which is required to be disclosed
under the AIM rules, is shown in the Directors' Report in the Report and
Accounts.
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