REG - SEEEN PLC - Audited results for the year to 31 December 2023
05/07/2024 07:00
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RNS Number : 2477V SEEEN PLC 05 July 2024
SEEEN plc
("SEEEN", the "Group" or the "Company")
Audited results for the year ended 31 December 2023
Update on 1H 2024
Notice of AGM
SEEEN plc, the media and technology platform that delivers AI-led Key Video
Moments to drive increased views and revenues across all video content, is
pleased to present its audited results for the year ended 31 December 2023 and
an update on 1H 2024. In addition, the Company gives notice of its annual
general meeting ("AGM").
The Company's annual report and accounts for the year ended 31 December 2023
(the "Accounts") are now available from the Company's website
https://seeen.com/ (https://seeen.com/) and will be sent to shareholders
today. Following the publication of the Accounts this morning, the temporary
suspension of the Company's securities from trading on AIM is expected to be
lifted at 07.30 a.m. today, 5 July 2024.
Overview
2023:
· Technology sales more than doubled in 2023, following release of
CreatorSuite 2.0 during 3Q 2023, reflecting our customers' increased need to
capitalise on shorter viewer attention spans by driving engagement and sales
· Gross margins improved approximately 50% to 23.4%, reflecting
increased mix of technology-led sales
· CSP (SEEEN's YouTube Creator Service Partner business) is
profitable, including new strategic clients attracted to our CSP because of
our new ShortsCut technology
1H 2024:
· Continued sales momentum, accelerating during 2Q 2024 with more
than $600,000 of annualized new revenues won since the start of 2Q
· First sales into the education and training market vertical using
video moment reminders for American Leak Detection service technicians as a
key reference customer for marketing to the services sector
· Strong pipeline of more than $5 million in potential annualised
revenue through direct sales opportunities with additional opportunities
through reseller channels
· Completed fundraising of £763,000 principally to fund continued
sales momentum and further develop IP in the training market
Full Year 2023 highlights:
● Product Sales. At year end, the Group has:
o 5 strategic customers (large publishers)
o 28 vertical market customers (sports, retail, services, financial
publishing)
o 10 e-commerce led customers
● Revenues
o Recurring technology revenues of approximately $0.23 million more than
doubled in the year (2022: $0.08 million)
o Total Group revenues of $2.1 million (2022: $3.3 million), reflecting: (i)
final elimination of unprofitable revenue from CSP channel partners with no
technology upselling potential; (ii) loss of all CSP advertising revenue in
Russia since the start of the Ukrainian conflict
● Profitability
o Adjusted EBITDA* loss of ($0.6) million, in line with current market
expectations, reduced from ($0.8) million in 2022 despite Group investment in
additional sales staff
▪ Non-core goodwill and intangible impairment of $2.6 million,
reflecting the move away from commercialisation of JetStream's standalone
offerings
o Improved gross margin of 23.4% (2022: 15.5%), reflecting increasing mix of
technology sales and higher margin CSP channel partners
* Adjusted EBITDA is defined as Earnings before Depreciation and Amortisation,
adding back Share Based Payments and goodwill and intangible asset Impairment
1H 2024 Update:
● Continued progress with selling the Group's technology products
across different verticals with announced transactions for London Broncos and
A7FL to supply video-led website and commerce
● Since the start of 2Q, the Group has added more than $600,000 in
annualised revenue across various business lines
o Return to growth of CSP with more than $450,000 in annualised revenue
added from customers that are using SEEEN's technology, especially ShortsCut,
to increase their social video revenue streams
o Additional $150,000 of annualised technology sales, including:
▪ First training-based Key Video Moments sale to American Leak
Detection
▪ Upsells to existing CSP customers for our technology
▪ Video-led website developments
▪ Ongoing vertical customer sales
● Completed fundraising of £763,000 of new ordinary shares (plus
conditional subscription for a convertible loan note for £325,000 and the
issue of warrants to raise up to an additional £880,000) in June 2024
principally to fund continued sales momentum and further develop IP in the
training market
Notice of AGM: Copies of the Annual Report and Notice of Annual General
Meeting are today being posted to shareholders and will shortly be made
available on the Company's website at seeen.com. The Company's AGM will be
held at the offices of SEEEN plc, Hones Yard, 1 Waverley Lane, Farnham, Surrey
GU9 8BB at 10.00 a.m. on 30 July 2024.
Adrian Hargrave, CEO of SEEEN, commented: "We continued to add momentum behind
our technology products and sales during 2023 and the first half of 2024 and
returned the CSP business to profitability and growth. After our team's hard
work, we are grateful to our investors for their ongoing support, including in
our recent fundraise.
We continue to add highly referenceable customers with strong case studies,
which have resulted in our customers benefitting from increased sales and
advertising revenues, as well as faster training times. Video is becoming
increasingly important for all companies to communicate with all stakeholders
who have shorter attention spans: customers, viewers, employees and suppliers.
With our AI-led Key Video Moments, we remain strongly positioned to deliver
value for our growing customer base by exploiting these shorter attention
spans.
Building on the momentum across our business lines and the ever increasing
move in the market towards exploiting shorter attention spans, our team looks
forward to the remainder of 2024 and beyond and updating shareholders on
continued progress with customer wins and reseller opportunities, as we
execute against our significant pipeline."
The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/ 2014 (which forms part of Domestic UK law pursuant to the European Union
(Withdrawal) Act 2018). Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
Enquiries:
SEEEN plc Tel: +44 (0)7775 701 838
Adrian Hargrave, CEO
Dowgate Capital Limited - Joint Broker Tel: +44 (0)20 3903 7721
Stephen Norcross
Capital Plus Partners Limited - Joint Broker Tel: +44 (0)20 3821 6167
Jonathan Critchley / Jon Levinson
Allenby Capital (Nominated Adviser & Joint Broker) Tel: +44 (0)20 3328 5656
Alex Brearley/George Payne (Corporate Finance)
Tony Quirke/Amrit Nahal (Sales and Corporate Broking)
Focus IR (Investor Relations) Tel: +44 (0)7866 384 707
Paul Cornelius / Kat Perez seeen@focusir.com
Chairman's Statement
One year ago in these pages, we noted our team's "relentless execution,
on-going enthusiasm for seizing the customer opportunity and focus on
fundamentals despite difficult market conditions." We are pleased to
update our shareholders on how during 2023 and 1H 2024 our team has delivered
on what they stated they would do in last year's report. As a result, the
Company has made significant positive strides in its ability to grow and to
sustain long-term shareholder value.
Needless to say, there have been marketplace challenges over the last year for
early-stage companies around the world. Our team's determination, enthusiasm
and focus has enabled it to rise to the challenge. In going to battle for
our shareholders, the team has advanced an exciting and proprietary video
moments-based set of products and refined our unique selling proposition (USP)
using clear return on investment data to attract more customers.
In our CEO's statement, Adrian discusses the team's delivery of results in
more detail. As a prelude, let me outline three key deliverables for our
shareholders: (i) attracting financial resources to succeed; (ii) growing
both our technology product business with more new customers and our CSP
business in more profitable ways by bundling new technology offerings for
content creators and (iii) positioning our Company to partner with much bigger
companies looking to resell our video moment products to meet new holes in
their portfolios of offerings given accelerating global market demand for
AI-based video moments.
First, in June 2024, the Company completed its second round of funding in
eighteen months. In doing so, it communicated to new investors its
sustainability and path to cash flow positive. Continually proving
financeability is an essential part of the journey for any early-stage
company.
Second, the team has leveraged our proprietary technology products in adding
more customers to approach cash flow positive during 2024. We have doubled
high gross margin product sales in the last twelve months. Further, with
respect to our CSP business, we have successfully transitioned from previous
management's approach of aggregating unprofitable revenue as a service
provider to gain market share to now increasing gross margin by 30% since 2021
and adding new sources of profitable revenue by bundling our ShortsCut
technology product for our CSP content creators.
Third, we see two market trends - Continuous Customer Engagement and Real-time
Skills Reinforcement - that encourage us to partner with large companies to
fill their need for an AI video moments product to upsell fresh offerings to
their customers.
With respect to the former, as companies around the world become increasingly
oriented towards data science, large Customer Relationship Management (CRM)
software providers and their customers seek to leverage captured end-user data
for on-going marketing engagement with end-users through short-form video.
With respect to the latter, educational technology companies are trying to
provide companies with ways to upgrade employee skills in real time by using
short form video for cognitive reminders of techniques or compliance steps.
In both circumstances, SEEEN holds a proprietary solution for market demand
with AI-video moments.
Now that the latest funding is complete, we are training our sights not only
on crossing-over to cash flow positive but also seeking reseller opportunities
to accelerate beyond cash flow positive. We look forward to our team's
delivery for the coming year.
Dr. Patrick DeSouza
Chairman
CEO's Statement
Overview
During 2023 and 1H 2024, we continued to execute against our plan from our
December 2022 fundraising. We made prudent decisions, balancing changing
market conditions against our strategic goal of returning the Company to
strong fundamentals, integrating our new management team and making additions
to our board. Our business plan for 2023 and 2024 was to first navigate the
market in order to get to cash flow positive while still spending resources on
a sales team for our technology products. Despite a tough market for all
early-stage companies because of macroeconomic headwinds, we successfully made
progress towards that end. We have integrated a new team, our CSP business
is cash flow breakeven with profitable new sales. Our technology business
has increased sales. We have narrowed the distance to cash flow positive.
As a result, we are grateful for continued investor confidence (both new and
old investors) as evidenced by our fundraising announced in May 2024 in
supporting us to take the next steps on the journey to drive real shareholder
value as a technology company.
Key deliverables, which are addressed in more detail below and in the
Strategic Report, against this plan included:
(i) an acceleration in customer acquisition, driven by our new
sales infrastructure;
(ii) the release of new technology products, most notably
CreatorSuite 2.0, which drives increased monetisation from video through
contextual video commerce and enabling advertising, which have also
contributed to an acceleration in sales from our technology products;
(iii) margin expansion across the whole Group, and the CSP in
particular, as we have leveraged our technology to drive a higher margin and
more sustainable customer base; and
(iv) cross selling into existing customers leveraging our
customer success function.
The above has enabled us to increase our gross margin to 23.4%, up by 50% from
2022 (2022: 15.5%), resulting in a consistent gross profit at approximately
$0.5 million (2022: $0.5 million). This reflects the increasing shift to high
margin technology-enabled sales with such sales more than doubled, whilst
reducing the amount of our legacy low margin CSP business, which reduced
overall revenues to $2.1 million (2022: $3.3 million). This in turn resulted
in a reduced Adjusted EBITDA loss of $0.6 million (2022: loss of $0.8
million). After taking into account amortisation of intangible assets,
including intangibles generated at the time of the Company's acquisition of
its subsidiaries, and goodwill and intangible impairment of $2.6 million to
reflect the estimated value in use of these assets, the Group's operating loss
reduced by 51% to $5.2m (2022: loss of $10.7m).
This momentum has continued since the end of the year with our announced deals
in the sports vertical with London Broncos and A7FL, as well as initial work
with American Leak Detection, a related party of the Group, in using our Key
Video Moments for training and a return to growth of our CSP driven by our
technology-enabled services. As noted above, we are grateful to our old and
new shareholders for supporting us through our May fundraising to enable us to
continue investing in our growth plan.
In the same way as we have done since the 2022 fundraising, we will continue
to prudently balance market conditions against our growth plan, against our
first strategic goal of cross-over to cash flow positive - the hallmark of
sustainable growth. With board and management working together, we have
reinforced good governance processes with frequent scenario testing. As
explained more fully in the Going Concern section of the Director's Report,
both board and management work together in a formal way to review market
conditions and changing sales scenarios (both upside and downside), all with
the objective of first attaining the strategic goal of cash flow positive - a
direction that we have delivered on in 2023 and 1H 2024. It is anticipated
that our May fundraise will enable us to continue driving new customer
acquisition and build out our IP for our training products. We hope to
accelerate past cash flow positive in due course and seek to reinvest for
strong, sustainable growth, but we will remain prudent as always with the
management of all investments to ensure that step one is cash flow positive
before thoughts of "acceleration."
We remain excited about the market opportunity available to the Group, which
remains significant as the world consumes more short form, actionable video
for both recreation and education. As a result of these shifts, brands and
platforms are looking at how best to monetise these views. The traditional
method of advertising remains at the forefront in many industries, but for
e-commerce, education and brands, this is often not possible or advisable and
the move to video commerce and skills-based video training is strengthening,
with both of these industries expected to show CAGRs (Compound Annual Growth
Rate) of more than 15% over the next five years.
Now that we have developed a suite of products that we are commercialising,
our operational focus in the near term is on execution at a sales level, which
includes our customer success function that will enable us to increase our
average customer value. We will opportunistically look to develop further IP,
as well as strategic partnerships and potentially acquisitions in key
verticals where we can acquire a large and profitable customer base where we
can sell our technology. As we execute against our plan, we are on track to
achieve cash flow breakeven and build a valuable company within this exciting
marketplace.
Executing Against the Plan
Execution Team Upgrades
A key feature of 2023 was the hiring of personnel to drive sales and customer
success for the Group. As the Group typically charges both a flat Software as
a Service ("SaaS") style fee and a performance fee to most of its customers,
both functions are extremely important in executing the Group's business plan.
We hired sales people in both the US and the UK with a core focus on selling
our CreatorSuite 2.0 services and the success of these hires can be seen in
the customer momentum we have delivered throughout the year. Equally, our
customer success team has been vital in securing both performance fees and
upsales to our existing customers. Furthermore, our offering is so valued by
some existing customers that they have also acted as "sales agents" and
delivered customer referrals for us, part of which is driven by the results
from our customer success team. We will continually assess whether we should
add to these teams to accelerate our market capture.
Technology-Enabled Customer Wins - Video Commerce and Continuous Customer
Engagement
As discussed above, we added to our sales team during 2023. Their success can
be evidenced by the customer momentum we generated during the year. We have
more than doubled our technology sales in the year to approximately $230,000.
One key customer win during the year was the addition of a significant
financial publisher in the US, delivering CreatorSuite 2.0 to them and
creating a bespoke website and interactive video platform for their flagship
annual conference. This case study has helped us increase our pipeline of
events companies and US publishers against which we expect to generate
significant momentum in the rest of 2024 and into 2025.
Early in the year, we added our first FAST (Free Advertising Supported
Television) channel as a customer for our CSP, based on our ability to create
Key Video Moments and publish these either as YouTube Shorts or by re-mixing
these Key Video Moments into new content for that customer. During the year,
we delivered significant growth for this channel, as well as upselling
technology-based services to them. The success of this relationship was
further evidenced by the addition of a second FAST Channel in 4Q 2023, which
was a direct introduction from our existing client. The quality of the work
that we have delivered, together with customer references positions us very
well in this sector.
In addition to this, we have continued to win new customers in all of our key
vertical markets, including sports, ecommerce and services with several case
studies that demonstrate that we (i) drive increased sales conversions on
pages with shoppable video, (ii) increase clickthrough rates to approximately
10% and (iii) reduce the cost of customer acquisition in pay per click
campaigns. In addition, during 2024, we have entered into further contracts in
these markets, such as the announced partnerships with London Broncos and
A7FL, as well as our first contracts within the non-profit sector and for a
university. These customers are drawn to our technology offering because of
the ability to drive video commerce and continuous customer engagement, as
they use videos to build up and monetise their subscribers by offering them
short highlights from matches that they can snack "on the go". The video
commerce market is increasingly established with the large social video
platforms offering a solution, however we believe that SEEEN's CreatorSuite
2.0 is a much more flexible and bespoke solution for driving direct online
sales in a market that is estimated to grow by a CAGR of 32% to a total size
of $2.8 trillion by 2028. 1
We currently have a pipeline of more than 100 opportunities totalling more
than $5 million in potential annualised revenues and with our larger, embedded
sales team, together with case studies and a strong customer success function,
we will seek to continue to execute aggressively against this pipeline of both
upsells and sales to new customers.
CSP business
During 2023, the Group's CSP business' revenues fell 44%, but this reflected
the combination of the final loss of all revenues from views generated in
Russia, as well as lower margin channels that the Group decided not to renew
its relationships with. The gross margin for this business therefore rose by
approximately 10%, maintaining the profitability of the CSP, even before
upselling our technology products to channels within the CSP. As discussed
above, we added two flagship customers to our CSP, both of which are FAST
channels, which have provided strong case studies for further growth.
During 2024, the CSP has returned to growth, as evidenced by more than
$400,000 of annualised revenues being won since 1 April 2024. This has been
driven by both our case studies and our new product, ShortsCut, which we use
to index video back catalogues and create vertical short form video or e-mixed
"new" content which drives increased views, subscribers and above all revenue
for our channel partners. We believe that this technology differentiator will
allow us to continue expanding the margins for our CSP business.
A final strategic element that we have executed well has been the ability to
cross sell our technology products and services into our CSP. Since I became
CEO in mid-2022, this has been a key focus, moving the Group away from small,
low margin, one-off customers to genuine partners who want to use our
technology for more of their video publishing and monetisation requirements.
Training and Real Time Skills Reinforcement
A new offering that we have developed during 2024, leveraging our relationship
with American Leak Detection ("ALD"), which is a related party of the Group,
is aimed at the training and skills market. Through American Leak Detection,
we have developed Key Video Moments for training that technicians can call up
on their iPads whilst in the field for quick reminders of what equipment they
need and how to use such equipment or complete a complex task. This increases
the number of jobs that ALD technicians can complete each day, generating a
strong ROI for ALD and happier customers as their problems are fixed first
time. We have been integrating this solution directly into ALD's Salesforce
Learning Management System and plan to complete this integration with part of
the proceeds from our recent fundraising. This will provide us with the
opportunity to sell our Key Video Moments solutions to all other firms that
use the Salesforce Learning Management System.
Our training offering also encompasses webinars and digital marketing
training. We have also implemented this at ALD, where we have run webinars
with their digital marketing team and made these available after the event to
franchisees as Key Video Moments with easily downloaded associated documents
and examples. We have seen success here with both corporate owned stores and
franchisees purchasing access to our Key Video Moments library to drive better
local Search Engine Optimisation results.
ALD provides us with a case study from which we can sell to other franchise
and services businesses in need of re-skilling and training at scale across
organisations. This is already a large market and is estimated to grow to $900
billion by 2028 at a CAGR of 14%. 2
Summary
As we head into the second half of 2024 and look to 2025, we continue to be
grateful for the support of all our shareholders. Our focus remains on
executing against our plan to deliver more customers, revenues and profits to
drive to cash flow breakeven during 2024. We have a solid platform to achieve
this with referenceable customers, reseller opportunities and strong results
from our key offerings. Leveraging these and the tailwinds from fast growing
end markets, we are well positioned to deliver for all of our shareholders.
Adrian Hargrave
Chief Executive Officer
Strategic Report
Business Review and Key Performance Indicators
This Strategic Report outlines the business indicators to help the Board
evaluate both the Group's current performance and the progress being made by
the Group in applying its technology assets to its own and third-party media
assets to create a leading video technology platform business.
Group's Business
SEEEN is organized into two businesses: (i) video moments AI technology and
(ii) a YouTube Creator Service Provider ("CSP") (formerly called Multichannel
Network ("MCN")) that provides technology-led social video optimisation
services. The two businesses have complementary assets and provide synergies
as the CSP has video creators and audiences from which the Group may design
and test video moments technology products. The synergistic nature of these
business lines means that the Board and management consider the Group and its
progress as one business as opposed to separate reporting entities.
Technology Business
The Group owns various intangible assets - patents, trade secrets, licenses
and product designs - that underlie a suite of AI proprietary products focused
on the production of Key Video Moments (ie short segments of videos, which are
most likely to lead to an impulse response from viewers) that enable consumers
to access and analyse the most relevant features of videos for themselves.
Through our primary technology product, CreatorSuite 2.0, our core offering is
to provide our customers with such Key Video Moments and to make these
shoppable and interactive to drive product sales and customer engagement. This
is increasingly essential for video asset owners, because we provide the
ability to make more money directly from video, allowing customers to take
advantage of both advertising and video e-commerce. In an environment where
advertising revenues are under pressure, companies need to both understand and
justify their content creation spending and are increasingly focused on making
more money from their existing back catalogues.
Our customers see strong results from their implementations of CreatorSuite
2.0, delivering a return on investment through 7-15% clickthrough rates from
videos, which directly drives increased sales and increased engagement and
data, such as newsletter sign ups. In addition, with the new advertising
functionality built in, our customers can also make more money through both
increased video views driven by our Search Engine Optimisation for videos, as
well as running both adverts and our proprietary interactive features.
Another of our technology products, ShortsCut, uses our AI tools to benefit
our CSP customers to identify Key Video Moments for use as YouTube Shorts,
Instagram Reels and TikToks. As each of these platforms continue to grow in
importance, preparing new, original short form content by leveraging existing
video collections is the fastest and cheapest way for these publishers to
generate the regular diet of such videos required to be successful on these
platforms.
The Group has several KPIs against which it manages the business. A full list
is given below. In relation to technology, the Group monitors the following
KPI:
i. KPI: number of product releases and substantial upgrades released by
the Group during the year, which the Group can sell to its current and
prospective customer base.
In unlocking shareholder value, the Group measures not only new product
releases, but also progress in terms of customers for the Group's
technology. The Group has three approaches to developing its sales pipeline
each captured with a KPI.
i. KPI: number of customers acquired with basic licenses in a monthly
recurring income structure. The Group's strategy is to penetrate certain
vertical markets such as financial publishing, sports and retail. These
verticals may be characterized as having relatively shorter sales cycles with
similar repeatable customers.
ii. KPI: number of strategic customers acquired around which the Group
can provide technology but also upsell managed services.
iii. KPI: number of customers that deploy the Group's technology for
e-commerce applications as opposed to publishing video moments.
Creator Service Provider Services
The Group's CSP provides services to creators on YouTube through standalone
service agreements and by aggregating channels and publishing such content on
YouTube. Publishing partners, whether the CSP's creator channels or third
party businesses, rely on the Group's know-how to create a content strategy
that increases views and therefore digital ad revenue and brand awareness on
YouTube. YouTube receives such digital ad revenue producing gross revenues.
After YouTube deducts its commission, the Company receives net revenue from
YouTube. The economics of the multichannel network creates various KPIs which
help the Board to monitor the business plan of its Managed Video Optimisation
Services. These KPIs measure critical attributes: (i) number of creator
channels producing monetizable content; (ii) number of views/audience
attracted to such content; (iii) digital ad yield from such content and
accompanying audience expressed as Revenue Per Thousand. From these KPIs and
the margins retained from creator channel partners, the Company creates its
forecasts on net revenues and profit before taxes.
Synergies from the Technology and Media Businesses
As noted above, additional shareholder value is extracted from the synergies
that the technology business and the CSP's Managed Video Optimisation Services
business create for customers by working together.
First, the Group monitors the CSP data as a standalone business unit.
Second, the Group also analyses the use of its technology features to attract
an audience and content creators for the Company to test and subsequently
productize its video moments technology. Examples of this included the launch
in 2020 of the new, micro-moment led GTChannel website (www.gtchannel.com),
the launch of Dialog-To-Clip, which was integrated into CreatorSuite and, most
recently ShortsCut, a search tool based on visuals, activities, speech and
various other classifiers which accelerates the process of finding and
publishing sub-60 second videos for content creators from their own back
catalogue, allowing them to publish "new" content without the traditional
costs of production.
Non-Core / One-Time Costs (Gains)
The only non-core items for 2023 relate to the approximately $2.6 million
impairment of goodwill and intangible assets discussed below and in Note 10 to
the Accounts.
Capital
The Board is mindful that it needs to apply its finances prudently to position
the Group to succeed through building both a leading technology stack and
sales and marketing function. At 31 December 2023, the Group had a cash
position of $1.1m.
Amortisation of intangible assets and goodwill impairment
The Group continues to amortise its intangible assets as per its policies set
out in the notes to the accounts. During the year, the Group amortised $1.9
million relating to a combination of both intangible assets from the
acquisitions of subsidiaries, as well as products developed since the Group's
admission to AIM.
After analysing the sales growth and projected cost of capital associated with
investment in these projects, the carrying value is less than the value in use
and hence the goodwill from the time of the acquisition has been impaired by
$2.1 million and the intangible assets relating to such assets has been
impaired by $0.5 million.
KPIs
As identified in the Group's previous annual report, the Board considered
certain KPIs for the Group. As the Group evolves, it is expected that the KPIs
for the business will evolve also and the Company expects to update these at
the time of its interim report. KPIs were identified in the last annual report
and the Board has started looking at additional KPIs against which it monitors
the Group's progress. These KPIs are as follows:
(i) Technology Product Releases - During 2023, the Group
delivered a significant release with CreatorSuite 2.0 and also developed
ShortsCut, initially for internal use within the CSP. The new functionality
within CreatorSuite 2.0 included fully bespoke interactive in-video Calls To
Action and End Cards, as well as advertising functionality. Since the initial
release, there has been some limited additional work in relation to
CreatorSuite 2.0, including the development of a reels gallery and a moving
CTAs within the video.
(ii) Vertical Market Customers - At year end 2023, the Group
had signed contracts in vertical markets with 28 customers
(iii) Strategic Customers - At year end 2023, the Group had
signed contracts with five strategic customers to provide Managed Video
Optimisation Services
(iv) E-Commerce Customers - At year end 2023, the Group had ten
e-commerce led customers
(v) Corporate Development - During 2023, building on the Group's
first strategic partnership with Kinetiq to focus on media monitoring to help
brands, the Group entered into its first re-seller agreement within the
investor relations sector
(vi) CSP Creator Channels - At year-end 2023, the Group had
approximately 900 monetized channels. This is slightly lower than the number
of channels at year end 2022, albeit the Group has continued to focus on
adding higher profit generating channels with strategic upselling
opportunities whilst allowing low margin channels to leave the CSP
(vii) CSP Audience - At year-end 2023, the CSP had approximately
4.4 billion views, down 56 per cent (2022: 10.0 billion), although this was
offset by a much higher watch time per view of 19% which drives higher
revenues per view
(viii) Adjusted EBITDA - EBITDA adjusted for share-based payments
and non-core costs was a loss of $0.6 million, in line with current market
expectations for 2023 (2022: loss of $0.8 million)
(ix) Non-Core Costs - During the year to 31 December 2023, there
were net non-core costs of $2.7 million, reflecting $2.1 million of impairment
of goodwill and $0.5 million of impairment of intangible assets reflecting the
estimated value in use of the Group's intangible assets (2022: $7.6 million),
discussed above, and a small impairment for aged receivables
(x) Net Cash - At the end of 2023, the Group had $1.1 million in
both gross and net cash
Technology Development
2021 2022 2023
Creator Suite CreatorSuite 1.0 Dialog-To-Clip integration V2.0 released, including advertising integration
and interactive shoppable in-video CTAs
Moments based Playlists
JetStream JetStream Sound and audio indexing Activity based searches
Logo recognition Integrating ChatGPT
CSP technology Dialog-To-Clip ShortsCut Clipping Tool produced and used by CSP for customer upsells
Cumulative Technology Customer Numbers
2021 2022 2023
Strategic 1 3 5
Vertical 4 14 28
eCommerce-led 2 4 10
Principal Risks and Uncertainties
The Group's objectives, policies and processes for measuring and managing risk
are described in note 17. The principal risks and uncertainties to which the
Group is exposed include:
Technological advances within the industry
The technology industry as a whole evolves rapidly with new entrants and ideas
continuously changing the market. There is a risk that competitors react to
opportunities faster, rendering the Group's technology uncompetitive which
could have a material adverse impact on the prospects of the Group. The Group
has a technology which already has commercial traction, for which it completed
a fundraising in December 2022. In addition to investing in sales, part of the
fundraising is being used to develop CreatorSuite 2.0, which addresses
additional functionalities that customers are requesting as the marketplace
evolves. The Group released CreatorSuite 2.0 in 3Q 2023, which includes more
flexible in-video ecommerce options and advertising to accelerate sales in key
target markets. If the development of such products is not possible or delayed
to unforeseen implementation concerns, then the Group's future revenue and
profitability is likely to be impacted against internal projections/
Customer Risk
The Group is selling its products to customers, who have implemented
CreatorSuite and JetStream related products. The Company is subject to such
customers continuing to use the Group's products and also its ability to win
new customers as projected using these initial customers as reference
customers. The Board is particularly aware of this risk should the economy
undergo a recession and therefore customers reduce their expenditure on new
products.
YouTube / Google changes
The Group's revenues have predominantly been sourced from YouTube advertising
revenue. Should YouTube alter its terms of business for creators and CSPs,
this could have a significant impact on the operations of the Group's CSP
business.
Advertising Revenue Risk
The Group has historically been dependent on revenue from its YouTube CSP to
generate profitability and changes to the market conditions or regulations and
the terms of advertising on YouTube could affect the Group's ability to
generate revenues and profits. This has been felt most recently by the impact
of the Russia-Ukraine war, following which all views from Russia have been
demonetized, which represented approximately 25% of the Group's CSP revenue in
2021, as well as lower advertising levels more generally.
Data Protection and General Data Protection Regulation ("GDPR")
Data protection, driven in Europe by GDPR, is becoming increasingly relevant
in the handling of consumer data. Any failures to follow relevant data
protection rules could result in significant monetary penalties.
Money-laundering and Anti-Corruption Regulations
As the Group has to make payments to its network of creators, it is
responsible for ensuring that all payments made to creators comply with all
money-laundering, anticorruption and sanctions regulations of the
jurisdictions in which it operates. Historically, the Group has outsourced
payments or made them through recognised payment wallet providers, however as
the Group may be required to make direct transfers to creators, the Group
monitors the increased risks associated with these direct payments.
Foreign exchange risk
The Group has employees and contractors based overseas who are paid in foreign
currencies and may enter into contracts priced in foreign currencies. It is
therefore exposed to adverse exchange rate movements which could cause its
costs to increase (relative to its reporting currency) resulting in reduced
profitability for the Group.
Credit Risk
The Group's credit risk is primarily attributable to its cash and cash
equivalents and trade receivables. The credit risk on other classes of
financial assets is considered insignificant.
Liquidity Risk
The Group manages its liquidity risk primarily through the monitoring of
forecasts and actual cash flows.
Organisational Risk
As a small Group, there is a reliance on key staff; the loss of any of these
staff may be detrimental to the Group.
Market and Geopolitical Volatility
The Group monitors general market conditions for their impact on sales cycles
and capital markets. In the current economic environment, rapidly changing
inflation indicators and interest rates affect corporate spending on
technology and on advertising on YouTube and other social channels. Despite
the volatile capital markets conditions, the Group completed a fundraising in
June 2024.
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most likely promote
the success of the Group for the benefit of its stakeholders. A discussion
of s172 is presented in the Statement on Corporate Governance. The Strategic
Report incorporates actions taken by the Group to ensure compliance with s172.
By order of the Board
Adrian Hargrave
Chief Executive Officer
Directors' Report
The Directors present their report on the affairs of SEEEN plc (the "Company")
and its subsidiaries, referred to as the Group, together with the audited
Financial Statements and Independent Auditors' report for the year ended 31
December 2023.
Principal Activities
The Group is a global media and technology platform whose mission is to
leverage its AI and machine learning technology to more efficiently momentize
video and to license such capabilities to brands, creators and publishers to
enable discovery, sharing and e-commerce.
Results
The financial performance for the year for each of the Group and the Company,
including the Group's Statement of Comprehensive Income and each of the
Group's and the Company's financial position at the end of the year, is shown
in the Financial Statements.
Future Developments
The Company has chosen in accordance with section 414C(11) of the Companies
Act 2006 to include the disclosure of likely future developments in each of
the Chairman's Report and the CEO's Report beginning.
Going Concern
The Directors have prepared a business plan and cash flow forecast for the
period 1 July 2024 to 31 December 2025 ("Forecast Period"). The business
plan starts with several disclosed updates in finance and operations. First,
in May 2024 the Company announced a successful fund raise amounting to $0.7
million before expenses which added to existing cash. Second, as of 30 June
2024, the CSP business is operating at cash flow breakeven. Third, as of 30
June 2024, our technology business has recognised revenue of $0.35 million in
the prior 12 months and as at 30 June 2024 is running at annualised recurring
revenue of $0.4 million, before any one-off projects and performance fees.
Fourth, the Company has narrowed its annualised losses on an operating basis
(excluding amortisation) to less than $0.5 million. The Forecast contains
certain growth assumptions about CSP and technology sales and the operating
margins following such sales, as well as prudently managing overhead expenses
including R&D. These assumptions have been tested with various
operating and market scenarios covering the range of outcomes.
The Board has reviewed these scenarios and the forecasts and various
uncertainties that could arise given market conditions. The board has
identified and number of mitigating actions that could be considered if the
assumptions noted above are not achieved, including further cost saving
measures and obtaining new financing which it has previously been able to do,
but which would eventually give rise to a material uncertainty that may cast
significant doubt over the ability of the Group to continue as a going concern
if the mitigating actions are not implemented.
Notwithstanding the material uncertainties and the mitigating actions
identified, the Directors have concluded that it is appropriate for the
consolidated financial statements to be prepared on the going concern basis
and do not reflect any adjustments that would be necessary if this basis were
inappropriate.
Dividends
The Directors do not recommend the payment of a dividend (2022: nil).
Share Price
On 31 December 2023, the closing market price of SEEEN plc ordinary shares was
6.13 pence. The highest and lowest prices of these shares during the year to
31 December 2023 were 6.35 pence and 2.65 pence respectively.
Capital Structure
Details of the authorised and issued share capital are shown in Note 16. No
person has any special rights of control over the Company's share capital and
all issued shares are fully paid.
Treasury Operations & Financial Instruments
The Group operates a centralised treasury function which is responsible for
managing liquidity, interest and foreign currency risks associated with the
Group's activities.
The Group's principal financial instrument is cash, the main purpose of which
is to fund the Group's operations.
The Group has various other financial assets and liabilities such as trade
receivables and trade payables naturally arising through its operations.
The Group's exposure and approach to capital and financial risk, and approach
to managing these is set out in note 17 to the consolidated financial
statements.
Subsequent Events
Since 31 December 2023, the following Board change has taken place; Akiko
Mikumo ceased to be a director of the Company on 1 February 2024.
On 30 May 2024, the Group announced a fundraise through the issue of new
ordinary shares at 3 pence each to raise up to £763,000 with associated
warrants issued (to raise up to £800,000) to incoming investors to acquire
further new ordinary shares at a price of 4.5 pence per new ordinary share.
These shares were admitted on 4 June and 19 June 2024. In addition the Group
entered into a conditional subscription agreement with Gresham House Asset
Management Limited (a related party by virtue of its shareholding) to issue
convertible loan notes with a face value of £325,000 at a conversion price of
3 pence per share and with an interest rate of 12 per cent. per annum, as well
as other standard customary provisions.
Directors
The Directors who served the Company during the year and up to the date of
this report were as follows:
Executive Directors
Adrian Hargrave
Non-Executive Directors
Patrick DeSouza
David Anton
Mark Williams (appointed 18 May 2023)
Akiko Mikumo (resigned 1 February 2024)
Charles Burdick (resigned 3 April 2023)
Directors' Indemnity
The Company's Articles of Association provide, subject to the provisions of UK
legislation, an indemnity for Directors and officers of the Company in respect
of liabilities they may incur in the discharge of their duties or in the
exercise of their powers, including any liabilities relating to the defence of
any proceedings brought against them which relate to anything done or omitted,
or alleged to have been done or omitted, by them as officers or employees of
the Company. Appropriate directors' and officers' liability insurance cover is
in place in respect of all the Directors.
Directors' Conflicts of Interest
In the event that a Director becomes aware that they, or their connected
parties, have an interest in an existing or proposed transaction involving the
Group, they will notify the Board in writing or at the next Board meeting.
Political Donations
The Group did not make any political donations during the year to 31 December
2023 (2022: £Nil).
Directors' emoluments
12 months to 31 December 2023 Salary, Fees & Bonus in Cash Benefits* Total
$ $ $
Executive Directors
A Hargrave 161,629 8,321 169,950
Non-Executive Directors
P DeSouza 30,000 - 30,000
A Mikumo - - -
D Anton 30,000 - 30,000
M Williams 34,812 - 34,812
241,441 8,321 249,762
* The directors did not receive any other emoluments, compensation or cash or
non-cash benefits other than that disclosed above. The Company contributed
$2,235 to Adrian Hargrave's pension and did not make any contributions to a
pension scheme in relation to the other directors in the 12 months to 31
December 2023.
12 months to 31 December 2022 Salary, Fees & Bonus in Cash Benefits Total
$ $ $
Executive Directors
T Carter* 31,250 5,437 36,687
A Hargrave 135,551 18,484 154,035
Non-Executive Directors
P DeSouza - - -
A Mikumo - - -
D Anton - - -
C Burdick** - - -
166,801 23,921 190,722
* Todd Carter was subsequently employed for a further three months following
his resignation as a director, the compensation for which is not outlined in
here.
** Upon his appointment to the Board on 27 May 2022, Charles Burdick agreed to
waive his Board fees for the 2022 financial year and in exchange was granted
an option to acquire 200,000 ordinary shares in the Company at an exercise
price of 30 pence (vesting 1/3rd on the first anniversary, 1/3rd on the second
anniversary and 1/3rd on the third anniversary, all vestings subject to him
remaining a Director of the Company)
No directors received any pension contributions from the Group during the
course of the year.
Directors' interests
The Directors who held office at 31 December 2023 and subsequent to year end
had the following direct interest in the ordinary shares of the Company at 31
December 2023 and at the date of this report:
Number of shares at 31 December 2023 % held at 31 December 2023 Number of shares at 29 June 2024 % held at 29 June 2024
P DeSouza 5,426,165 5.8% 7,426,165 6.3%
A Hargrave 1,142,414 1.2% 1,985,747 1.7%
D Anton 0 0.0% 1,333,333 1.1%
M Williams 0 0.0% 333,333 0.3%
In addition to the above, the following directors have options over the
following shares
Name Options Exercise Price Exercise Period
Adrian Hargrave 273,749 45p 31/09/2020 - 31/09/2029
Adrian Hargrave 50,000 60p 04/03/2022 - 04/03/2031
Adrian Hargrave 250,000 65p 04/03/2022 - 04/03/2031
Patrick DeSouza 600,000 60p 04/03/2022 - 04/03/2031
David Anton 152,083 45p 31/09/2020 - 31/09/2029
David Anton 200,000 60p 04/03/2022 - 04/03/2031
Substantial Shareholders
As well as the Directors' interests reported above, the following interests of
3.0% and above as at the date of this report were as follows:
Number of shares % held
Gresham House Asset Management Limited 27,800,169 23.4%
Water Intelligence plc 5,938,366 5.0%
Scott Schlichter 5,870,406 4.9%
181 Fund 10,557,442 8.9%
Dowgate Capital Limited 9,811,633 8.3%
Employees
The Group has established employment policies which are compliant with current
legislation and codes of practice. The Group is an equal opportunities
employer.
Independent Auditors
Crowe U.K. LLP has expressed their willingness to continue in office. In
accordance with section 489 of the Companies Act 2006, resolutions for their
re-appointment and to authorise the Directors to determine the Independent
Auditors' remuneration will be proposed at the forthcoming Annual General
Meeting.
Statement of disclosure to the Independent Auditor
Each of the persons who are directors at the time when this Directors' report
is approved has confirmed that:
· so far as that director is aware, there is no relevant audit
information of which the Company and the Group's auditor is unaware; and
· that director has taken all the steps that ought to have been taken
as a director in order to be aware of any relevant audit information and to
establish that the Company and the Group's auditor is aware of that
information.
By order of the Board
Adrian Hargrave
Chief Executive Officer
Corporate Governance
As a Board, we believe that practicing good Corporate Governance is essential
for building a successful and sustainable business in the long-term interests
of all stakeholders. SEEEN's shares are listed on AIM, a market operated by
the London Stock Exchange.
SEEEN has adopted the QCA Corporate Governance Code. The Company has adopted a
share dealing code for the Board and employees of the Company which is in
conformity with the requirements of Rule 21 of the AIM Rules for Companies.
The Company takes steps to ensure compliance by the Board and applicable
employees with the terms of such code.
The following pages outline the structures, processes and procedures by which
the Board ensures that high standards of corporate governance are maintained
throughout the Group.
Further details can be found on our website at seeen.com.
Takeovers and Mergers
The Company is subject to The City Code on Takeovers and Mergers.
Board
The Board, chaired by Dr. Patrick DeSouza, comprises one executive and three
non-executive directors and it oversees and implements the Company's corporate
governance programme. As Chairman, Dr. DeSouza is responsible for the
Company's approach to corporate governance and the application of the
principles of the QCA Code. David Anton and Mark Williams are the Company's
independent directors. The Board is supported by three committees: Audit,
Remuneration and Nominations. The Audit and Remuneration Committees are the
principal committees for Corporate Governance.
Each Board member commits sufficient time to fulfill their duties and
obligations to the Board and the Company. They are required to attend at least
4 Board meetings annually and join Board calls that take place between formal
meetings and offer availability for consultation when needed.
Board papers are sent out to all directors in advance of each Board meeting
including management accounts and accompanying reports from those responsible.
Meetings held during the year to 31 December 2023 and the attendance of
directors is summarised below.
Board meetings Audit committee Remuneration committee
Possible (attended) Possible (attended) Possible (attended)
Adrian Hargrave 5/5
Patrick DeSouza 5/5 2/2 1/1
David Anton 5/5 2/2 1/1
Mark Williams 3/3 2/2
Akiko Mikumo 5/5 1/1
Board Committees
The Board has established an Audit Committee, Remuneration Committee and
Nominations Committee with delegated duties and responsibilities.
(a) Audit Committee
The Audit Committee has the primary responsibility for monitoring the quality
of internal control, ensuring that the financial performance of the Company is
properly measured and reported on and for reviewing reports from the Company's
auditors. The Audit Committee will meet at least twice a year at appropriate
times in the reporting and audit cycle and otherwise when required. The Audit
Committee will also meet with the Company's auditors at least once a year.
The Audit Committee is chaired by Patrick DeSouza and comprises of himself,
David Anton and Mark Williams.
(b) Remuneration Committee
The Remuneration Committee is responsible for the review and recommendation of
the scale and structure of remuneration for executive directors and other
designated senior management, taking into account all factors which it deems
necessary. The Remuneration Committee considers all aspects of the executive
directors' remuneration including pensions, benefits and share option awards.
No director will be involved in any decision as to his or her own
remuneration. The Remuneration Committee will meet at least twice a year and
otherwise when required. In exercising this role, the Directors shall have
regard to the recommendations put forward in the QCA Corporate Governance Code
and, where appropriate, the QCA Remuneration Committee Guide and associated
guidance.
The Remuneration Committee is chaired by David Anton and comprises himself,
Patrick DeSouza and Mark Williams.
(c) Nominations and Strategy Committee
Given the size of the Group, it is considered appropriate that all members of
the Board sit on the Nominations and Strategy Committees. As such, whenever
matters arise that would be appropriate for such committees, these will be
considered at Board meetings.
Board Experience
All members of the board bring complementary skill sets to the Board. The
board believes that its blend of relevant experience, skills and personal
qualities and capabilities is sufficient to enable it to successfully execute
its strategy. In addition, the Board receives regular updates from, amongst
others, its nominated adviser, legal counsel and company secretary in relation
to key rule changes and corporate governance requirements, as well as regular
liaison with audit firms both in the UK and the US in respect of key
disclosure and accounting requirements for the group, especially as accounting
standards evolve. In addition, each new director appointment is required to
receive AIM rule training from the Company's nominated adviser at the time of
their appointment.
Patrick J. DeSouza, Chairman
Term of office: Appointed 30 September 2019.
Since 2010 Dr. DeSouza has been the Executive Chairman of Water Intelligence
plc, a rapidly growing AIM quoted business focusing on technology
transformation of the water industry. He has 25 years of operating and
financial advisory leadership experience with both public and private
companies in media and technology and asset management industries. Over the
last 15 years, Dr. DeSouza has also invested in and incubated technology
companies centered at Yale University. Dr. DeSouza has served at the White
House on the National Security Council. He is a graduate of Columbia
College, Yale Law School and Stanford Graduate School. He is a member of the
Council on Foreign Relations.
David Anton, Independent Non-Executive Director
Term of office: Appointed 30 September 2019.
David is Chief Executive Officer of Anton & Partners, a leading
advertising, branding, and marketing communication company with a 20-year
track record of creating impact for some of the world's most notable brands in
fashion, lifestyle, financial and automotive sectors. David is a serial
entrepreneur and has founded various successful companies. He is an investor
in and advisor to Village Roadshow Productions, leading movie production
company. David has advised, co-founded and invested in multiple companies such
as Tori Burch, Roqu Media International, Village Roadshow and Spotify among
others.
Mark Williams, Independent Non-Executive Director
Term of office: Appointed 18 May 2023.
Mark brings particular expertise in working with technology companies in
shaping and executing their Go-To-Market and Commercial strategy. His
experience builds on the Company's fundraising in December 2022 to invest in
its sales acceleration across all customer types. Mark started his executive
sales career at Lucent Technologies and subsequently moved to Adobe. More
recently, he has held a variety of interim and advisory sales and commercial
roles at Aurora Commerce, LucidCX, eCommera, Acuity Risk Management and
Countercept. Since 2006, Mark has been a director of Sales Strategies Limited,
which is a consultancy that provides advisory and delivery of business growth
solutions for early-stage technology companies. Mark holds a diploma in
company direction from the Institute of Directors and has prior AIM company
experience as an interim non-board Commercial Director of Imaginatik plc.
Adrian Hargrave, Chief Executive Officer
Term of office: Appointed 4 March 2021 (CEO since 11 July 2022).
Adrian became CEO in July 2022, having been the Group's CFO since admission to
AIM. Prior to becoming CEO, Adrian had already led sales to the Group's
largest customers. Prior to joining SEEEN, Adrian was a Corporate Development
Director at Water Intelligence plc. Adrian started his career in investment
banking and stockbroking, having worked at Citigroup, Deloitte, Cenkos and
finnCap. He is a graduate of Cambridge University.
The Directors have access to the Company Secretary, NOMAD, lawyers and
auditors as and when required and are able to obtain advice from other
external bodies when necessary.
Board Performance and Effectiveness
The performance and effectiveness of the Board, its committees and individual
Directors is reviewed by the Chairman and the Board on an ongoing basis.
Training is available should a Director request it, or if the Chairman feels
it is necessary. The performance of the Board is measured by the Chairman with
reference to the Company's achievement of its strategic goals.
Risk Management
The Directors recognise their responsibility for the Group's system of
internal control and have established systems to ensure that an appropriate
and reasonable level of oversight and control is provided. The Group's systems
of internal control are designed to help the Group meet its business
objectives by appropriately managing, rather than eliminating, the risks to
those objectives. The controls can only provide reasonable, not absolute,
assurance against material misstatement or loss.
The risk register for the Group identifies key risks in the areas of corporate
strategy, financial, clients, staff, environmental and the investment
community. The Audit Committee is provided with a copy of the register. The
register is reviewed periodically and is updated as and when necessary.
Within the scope of the annual audit, specific financial risks are also
evaluated in detail, including in relation to foreign currency, interest
rates, debt covenants, taxation and liquidity.
The annual budget is reviewed and approved by the Board. Financial results,
with comparisons to budget and latest forecasts are reported on a monthly
basis to the Board together with a report on operational achievements,
objectives and issues encountered. Significant variances from plan are
discussed at Board meetings and actions set in place to address them.
Approval levels for authorisation of expenditure are at set levels throughout
the management structure with any expenditure in excess of pre-defined levels
requiring approval from the Non-Executive Chairman, and the Chief Executive
Officer.
Measures continue to be taken to review and embed internal controls and risk
management procedures into the business processes of the organisation and to
deal with areas of improvement which come to the management's and the Board's
attention. We expect the internal controls for the business to change as the
business expands both geographically and in terms of product development.
The Company's auditors are encouraged to raise comments on internal control in
their management letter following their audit, and the points raised and
actions arising are monitored by the Audit Committee.
Corporate Culture
The Group aims to operate ethically and be socially responsible in its
actions. Importantly, the Board recognises that the Group's employees are its
most important asset.
The Group is committed to achieving equal opportunities and to complying with
relevant anti-discrimination legislation. It is established Group policy to
offer employees and job applicants the opportunity to benefit from fair
employment, without regard to their sex, sexual orientation, marital status,
race, religion or belief, age or disability. Employees are encouraged to train
and develop their careers.
The Group has continued its policy of informing all employees of matters of
concern to them as employees, both in their immediate work situation and in
the wider context of the Group's well-being.
In addition, all directors and senior employees are required to abide by the
Group's share dealing code, which was updated at the time of admission to AIM.
Audit Committee Annual Review
The role of the Audit Committee is to monitor the quality of internal controls
and check that the financial performance of the Group is properly assessed and
reported on. It receives and reviews both internal reports and those from the
external auditors relating to the interim and annual accounts and the
accounting and internal control systems in use throughout the Group. The
members of the Audit Committee for these meetings were Patrick DeSouza, David
Anton and Mark Williams.
The CEO is invited to attend parts of meetings. The external auditors attend
meetings to discuss the conclusions of their work and meet with the members of
the Committee. The Committee is able to call for information from management
and consults with the external auditors directly as required.
The objectivity and independence of the external auditors is safeguarded by
reviewing the auditors' formal declarations, monitoring relationships between
key audit staff and the Company and tracking the level of non-audit fees
payable to the auditors.
The Audit Committee met twice in 2023 to review the annual accounts and the
interim accounts. The Committee will review with the independent auditor its
judgements as to the acceptability of the Company's accounting principles.
In addition, the Committee monitors the auditor firm's independence from
Company management and the Company.
Remuneration Committee Annual Review
The Remuneration Committee met once in 2023. The Committee currently comprises
all of the Non-Executive Directors, with Patrick DeSouza as Chairman. The
Remuneration Committee is responsible for reviewing the performance of
Executive Directors and determining the remuneration and basis of service
agreement. The Remuneration Committee also determines the payment of any
bonuses to Executive Directors and the grant of options. No Director plays a
part in any discussion regarding his or her own remuneration.
Relations with Shareholders
The Company is available to hold meetings with its shareholders to discuss
objectives and to keep them updated on the Company's strategy, Board
membership and management.
The board also welcome shareholders' enquiries, which may be sent via the
Company's website seeen.com (http://www.entertainmentai.co.uk) .
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most likely promote
the success of the Group for the benefit of its stakeholders. The board of
directors consider, both individually and together, that they have acted in
the way they consider, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole (having
regard to the stakeholders and matters indicated in S172) in the decisions
taken during the year ended 31 December 2023. Following is an overview of how
the Board performed its duties during 2023.
Shareholders
The Chairman, Chief Executive Officer, members of the Board and senior
executives on the management team have regular contact with major
shareholders. The Board receives regular updates on the views of
shareholders which are taken into account when the Board makes its
decisions. In particular, the Company met with its largest shareholders to
report on progress at the time of publication of its annual audited results
and its interim unaudited results. The Company received feedback during that
process, as well as subsequent meetings and calls alongside trading updates
issued by the Group.
Employees
The Group encourages an environment of openness and debate and welcomes all
feedback from within.
The Board communicates with senior management and employees. The Group also
operates regular internal Company-wide meetings via video conference calls,
which staff can access as required and is a source of both discussion and
sharing information relevant to employees. Details of the Group's performance
are shared with all employees at appropriate times using these methods.
The Group expects a high standard from its staff and provides training to
achieve this. Where possible, as new roles in the organisation arise, the
Group aims to promote from within.
Customers and Partners
The Group has a different set of customers and partners for its various
products and services. YouTube is the Group's primary customer for its CSP,
as it receives videos from the Group and its channel partners against which it
generates advertising revenue. In addition, the Group has direct customer
relationships for both technology products and its Managed Video Optimisation
Services where customers pay a monthly fee to the Group, which is often
structured as a fixed component and a variable fee for performance. All
customers and channel partners are treated with professionalism and the Group
aims to work with all such stakeholders in developing its product roadmap
further.
Community
The Group is aware that the dissemination of video carries with it social
responsibility to the broader community. Board and management are committed to
the highest levels of professionalism in the aggregation and dissemination of
video content and to ensure compliance with relevant data protection and
compliance regulations.
Statement of Directors' Responsibilities
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with the Companies Act 2006 and for being
satisfied that the Financial Statements give a true and fair view. The
Directors are also responsible for preparing the Financial Statements in
accordance with UK adopted International Accounting Standards.
Company law requires the Directors to prepare Financial Statements for each
financial period which give a true and fair view of the state of affairs of
the Company and the Group and of the profit or loss of the Company and the
Group for that period. In preparing those Financial Statements, the Directors
are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the Financial
Statements; and
· prepare the Financial Statements on the going concern basis unless
it is inappropriate to presume that the Company and the Group will continue in
business.
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements. The Directors are responsible for keeping
adequate accounting records that are sufficient to show and explain the
Company's transactions, disclose with reasonable accuracy at any time the
financial position of the Company and the Group, and to enable them to ensure
that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and Financial
Statements are made available on a website. Financial Statements are published
on the Group's website (seeen.com (http://www.entertainmentai.co.uk) ) in
accordance with legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Group's website is
the responsibility of the Directors - the work carried out by the auditors
does not involve the consideration of these matters and, accordingly, and the
auditors accept no responsibly for any changes that may have occurred in the
accounts since they were initially presented on the website. The Directors'
responsibility also extends to the ongoing integrity of the Financial
Statements contained therein.
Independent Auditors' report to the members of SEEEN plc
Opinion
We have audited the financial statements of SEEEN plc (the "Parent Company")
and its subsidiaries (the "Group") for the period ended 31 December 2023,
which comprise:
· the Group statement of comprehensive income for the year ended 31
December 2023;
· the Group and parent company statements of financial position as
at 31 December 2023;
· the Group and parent company statements of changes in equity for
the year then ended;
· the Group and parent company statements of cash flows for the
year then ended; and
· the notes to the financial statements, including a summary of
material accounting policies.
The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and accordance with UK adopted
international accounting standards.
In our opinion:
· the financial statements give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 31 December 2023 and
of the Group's loss for the year then ended;
· the group and parent company financial statements have been
properly prepared in accordance with UK adopted international accounting
standards; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2 in the accounting policies, concerning the Group's
ability to continue as a going concern. The matters explained in Note 2
indicate that if assumptions included in the forecast are not met including
growth in revenue the Group may need to raise further finance to fund its
working capital needs, the quantum and timing of additional financing is
uncertain. These events or conditions along with the matters set forth in Note
2 indicate the existence of a material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Our evaluation of the Directors assessment of the group and parent company's
ability to continue to adopt the going concern basis of accounting included:
· Reviewing Directors cash flow projections for the Group and
parent company for a period of more than 12 months from the date of approval
of the financial statements.
· Checking the numerical accuracy of management's financial
projections.
· Challenging management on the assumptions underlying those
projections and sensitised them to reduce anticipated net cash inflows from
future trading activities.
· Considering potential downside scenarios and the resultant impact
on available funds.
· Obtained the latest financial results post year end 31 December
2023 to review how the group and parent company are trending toward achieving
the forecast.
· Performed sensitivity analysis on key inputs of the forecast by
calculating the impact of various scenarios, (being: 1. Revenue and cost base
in line with post year end activity to date; 2. Growth assumptions brought in
line with impairment model), and considering the impact on the group and
parent company's ability to continue as a going concern in the event of not
meeting the forecast.
· Assessing the completeness and accuracy of the matters described
in the going concern disclosure within the significant accounting policies as
set out in Note 2.
· Obtained details of post year end fundraising and agreeing
supporting documentation and cash received;
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
Group financial statements as a whole to be $135,000 (2022: $150,000), based
on 5% of loss before tax per draft figures obtained from pre-year end
management accounts. We reviewed this during the course of the audit to
reconfirm that the level was set at an appropriate amount. As the Group is a
trading group, we determined that the use of a trading-based metric was the
most appropriate to use for determining materiality.
Materiality for the parent Company financial statements as a whole was set at
$45,000 (2022: $96,00) based on 5% of loss before tax per draft figures from
pre-year end management accounts.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit materiality as
adjusted for the judgements made as to the entity risk and our evaluation of
the specific risk of each audit area having regard to the internal control
environment. Performance materiality was set at 70% of materiality for the
financial statements as a whole, which equates to $94,500 (2022: $105,000) for
the Group and $31,500 (2022: $62,700) for the parent company. We applied this
percentage in our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and directors' remuneration.
We agreed with the Directors to report all identified errors in excess of
$6,750 (2022: $7,500). Errors below that threshold would also be reported to
them if, in our opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
SEEEN Plc is located in London, United Kingdom. Our audit was conducted
remotely. The operations of its subsidiaries, Tagasuris Inc., GT Channel Inc.,
and EAI Inc. are in the United States. We conducted specific audit procedures
in relation to these entities which were undertaken by a local audit team.
The primary audit team interacted regularly with the local team across all
stages of the audit, reviewed working papers and were responsible for the
planning, scope and direction of the audit process. This, together with the
additional procedures performed at Group level, gave us sufficient and
appropriate evidence for our opinion on the Group financial statements.
All group companies were within the scope of audit testing.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
We set out below, together with the material uncertainty related to going
concern included above, those matters we considered to be key audit matters.
This is not a complete list of all risks identified by our audit.
Key audit matter How the scope of our audit addressed the key audit matter
Carrying value of goodwill and other intangible assets (see note 10) We evaluated, in comparison to the requirements set out in IAS 36,
management's assessment (using discounted cash flow models) as to whether the
The carrying value of goodwill and other intangible assets at 31 December 2023 impairment of goodwill and/or other intangible assets was underprovided.
totalled $2.4million (2022: $6.0 million) being goodwill of $nil (2022:
$2.1million) and other intangibles of $2.4 million (2022: $3.0 million). We obtained management's discounted cash flow models supporting the intangible
asset carrying amount. We challenged the key assumptions into the model,
The Group's intangible assets comprise of goodwill arising on acquisition of including the forecast revenue and gross margin, discount rates and growth
subsidiaries, customer relationships and technology developments. rates. We compared cash flow forecasts used in the impairment review to
historical performance, and challenged where forecasts indicated performance
When assessing the carrying value of goodwill and intangible assets, that deviated significantly from historical performance, in the absence of
management makes judgements regarding the strategy, future trading and significant changes in the business or market environment.
profitability and the assumptions underlying these. We considered the risk
that goodwill and/or other intangible assets were impaired. Discount rates and terminal growth rates were benchmarked to externally
derived data and our knowledge of sector performance, to evaluate the
The key judgements are in relation to revenue growth and customer reasonableness of these assumptions. Sensitivity analysis was performed on the
acquisitions. Changes in these factors could result in an impairment to the key assumptions such as growth, customer acquisitions, margin and discount
carrying value of the goodwill and intangible assets. rates to identify those assumptions to which the goodwill or intangible asset
valuation was highly sensitive.
Following our challenge the carrying value of goodwill and other intangible
assets was subject to an impairment during the year of $2.6 million in total,
being a $2.1million impairment to goodwill and an impairment of $0.5 million
to other intangible assets, (2022: $7.7million impairment to goodwill).
Carrying value of investments and intercompany receivables - Parent Company
(see note 11 and 12)
For investments in subsidiaries we assessed the Group's cash flow forecasts
The carrying value of investments in subsidiaries in the parent company and compared the Group's assumptions to externally derived data in relation to
financial statements at 31 December 2023 was $2.4 million (2022: $5.0 key inputs such as projected economic growth and discount rates.
million), as well as an intercompany balance of $nil (2022: $2.7m million),
after an impairment in the current year of $2.6m (2022: $7.7 million). The
valuation of these investments and the recovery of the intercompany balance
are almost entirely dependent on the successful execution of the business To challenge the reasonableness of the assumptions we also assessed the
plan. historical accuracy of the Group's forecasting. We performed scenario-specific
models including changes to the discount rate, long-term growth rates and
A failure to execute the business plan would likely result in a further forecast cash flows.
impairment to the carrying value of the investments in and loans to
subsidiaries.
We found that the resulting estimate of the recoverable amount of investments
indicated impairment.
In relation to intercompany balances we assessed the recoverability of such
balances in accordance with IFRS 9.
We found that the intercompany balances required provision under IFRS 9.
Following our challenge and in line with the procedures noted above on the
discounted cashflow model an impairment of $2.6m was recognised.
Our audit procedures in relation to these matters were designed in the context
of our audit opinion as a whole. They were not designed to enable us to
express an opinion on these matters individually and we express no such
opinion.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are
applicable to the Group and the procedures in place for ensuring compliance.
Based on our understanding of the Group and industry, discussions with
management and the Board of Directors we identified financial reporting
standards and Companies Act 2006 as having a direct effect on the amounts and
disclosures in the financial statements. Our work included direct enquiry of
management, reviewing Board and relevant committee minutes and inspection of
correspondence.
As part of our audit planning process we assessed the different areas of the
financial statements, including disclosures, for the risk of material
misstatement. This included considering the risk of fraud where direct
enquiries were made of management and those charged with governance concerning
both whether they had any knowledge of actual or suspected fraud and their
assessment of the susceptibility of fraud. We considered the risk was greater
in areas involving significant management estimate or judgement. Based on this
assessment we designed audit procedures to focus on key areas of estimate or
judgement, this included specific testing of journal transactions, both at the
year end and throughout the year.
Other laws and regulations where non-compliance may have a material effect on
the Group's operations are Data Protection and GDPR.
Our audit procedures included:
- enquiry of management about the Group's policies, procedures and
related controls regarding compliance with laws and regulations and if there
are any known instances of non-compliance, fraud or misappropriation;
- examining supporting documents for all material balances,
transactions and disclosures;
- review of minutes of meetings of the Board of Directors;
- enquiry of management about litigations and claims;
- evaluation of the selection and application of accounting policies
related to subjective measurements and complex transactions, in particular
those items included in the Key Audit Matters;
- analytical procedures to identify any unusual or unexpected
relationships;
- testing the appropriateness of journal entries recorded in the
general ledger and other adjustments made in the preparation of the financial
statements; and
- review of accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with all laws
and regulations.
The potential effects of inherent limitations are particularly significant in
the case of misstatement resulting from fraud because fraud may involve
sophisticated and carefully organized schemes designed to conceal it,
including deliberate failure to record transactions, collusion or intentional
misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
John Charlton (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Consolidated Statement of Comprehensive Income
Year Year
ended ended
31 December 2023 31 December 2022
Notes $ $
Audited Audited
Revenue 2,051,384 3,253,055
Cost of sales (1,571,054) (2,749,415)
Gross profit 480,330 503,640
Administrative expenses
- Share-based payments 6 (109,924) (108,825)
- Amortisation and impairment of intangibles 10 (2,416,146) (2,061,137)
- Impairment of goodwill 10 (2,090,132) (7,672,026)
- Other administrative costs 4 (1,139,896) (1,356,636)
Total administrative expenses (5,756,098) (11,198,624)
Operating Loss (5,275,768) (10,694,984)
Finance income 7 5,728 -
Loss before tax (5,270,040) (10,694,984)
Taxation 8 129,584 423,308
Loss after tax (5,140,456) (10,271,676)
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Exchange differences arising on translation of foreign operations 15,544 (162,164)
Total comprehensive loss for the year (5,124,912) (10,433,840)
Loss per share attributable to equity holders of Parent Cents Cents
Basic 9 (5.51) (20.48)
Diluted 9 (5.51) (20.48)
The results reflected above relate to continuing activities.
Consolidated Statement of Financial Position
31 December 2023 31 December 2022
Notes $ $
ASSETS
Non-current assets
Goodwill and indefinite life intangible assets 10 - 2,090,132
Other intangible assets 10 2,357,931 3,924,317
Trade and other receivables 1,800 1,800
2,359,731 6,016,249
Current assets
Trade and other receivables 12 947,132 2,905,576
Cash and cash equivalents 13 1,060,864 1,236,664
2,007,996 4,142,240
TOTAL ASSETS 4,367,727 10,158,489
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 16 7,454,052 7,454,052
Share premium 16 10,180,736 10,180,736
Merger relief reserve 8,989,501 8,989,501
Share based payment reserve 1,343,517 1,233,593
Foreign exchange reserve 19,235 3,691
Retained earnings (24,737,000) (19,596,545)
Total Shareholders' Equity 3,250,041 8,265,028
Non-current liabilities
Deferred tax liability 15 17,408 146,992
17,408 146,992
Current liabilities
Trade and other payables 14 1,100,278 1,746,469
1,100,278 1,746,469
TOTAL EQUITY AND LIABILITIES 4,367,727 10,158,489
The financial statements of SEEEN plc, company number 10621059, were approved
by the board of Directors and authorised for issue on the 4 July 2024. They
were signed on its behalf by:
Adrian Hargrave
Chief Executive Officer
Company Statement of Financial Position
Notes
31 December 31 December
2023 2022
$ $
ASSETS
Non-current assets
Investment in Subsidiaries 11 2,373,722 4,981,583
2,373,722 4,981,583
Current assets
Trade and other receivables 12 188,030 4,803,999
Cash and cash equivalents 13 898,468 853,317
1,086,498 5,657,316
TOTAL ASSETS 3,460,220 10,638,899
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 16 7,454,052 7,454,051
Share premium 16 10,180,736 10,180,736
Merger reserve 8,989,501 8,989,501
Share based payment reserve 1,343,517 1,233,593
Foreign exchange reserve 19,235 (333,591)
Retained earnings (24,700,692 (17,583,998)
Total Shareholders' Equity 3,286,349 9,940,292
Current liabilities
Trade and other payables 14 173,871 698,607
173,871 698,607
TOTAL EQUITY AND LIABILITIES 3,460,220 10,638,899
The loss for the financial year in the financial statements of the parent
Company was $7,116,695 and $8,386,104 for the 12 months ended 31 December 2023
and 2022, respectively.
The financial statements of SEEEN plc, company number 10621059, were approved
by the board of Directors and authorized for issue on the 4 July 2024. They
were signed on its behalf by:
Adrian Hargrave
Chief Executive Officer
Consolidated Statement of Cash Flows
Year ended 31 December 2023 Year ended 31 December
$ 2022
$
Cash flows from operating activities
Loss before tax (5,270,039) (10,694,984)
Adjustments for non-cash/non-operating items:
Amortisation and impairment of intangible assets 2,416,146 2,061,137
Impairment of goodwill 2,090,132 7,672,026
Share based payments 109,924 108,825
Interest income (5,728) -
Operating cash flows before movements in working capital (659,565) (852,996)
Increase in trade and other receivables (134,005) (3,635)
(Decrease)/increase in trade and other payables (646,191) 435,441
(780,196) 431,806
Cash used by operations (1,439,761) (421,190)
Income taxes paid - -
Net cash used by operating activities (1,439,761) (421,190)
Cash flows from investing activities
Purchase of intangible assets (849,760) (730,437)
Net cash used in investing activities (849,760) (730,437)
Cash flows from financing activities
Proceeds from issue of shares 2,092,449 463,314
Interest income/(paid)
Net cash generated from financing activities 2,092,449 463,614
Net decrease in cash and cash equivalents (197,072) (688,013)
Effect of exchange rates on cash 21,272 (161,572)
Cash and cash equivalents at the beginning of year 1,236,664 2,086,249
Cash and cash equivalents at end of year 1,060,864 1,236,664
Company Statement of Cash Flows
Year ended 31 December 2023 Year ended 31 December 2022
$ $
Cash flows from operating activities
Loss before tax (7,116,693) (8,386,104)
Adjustments for non-cash/non-operating items:
Share based payment expense 109,924 108,825
Change in carrying value of investment in subsidiaries 2,607,863 7,672,026
Provision against intercompany receivable 3,774,592 -
Operating cash flows before movements in working capital (624,314) (605,253)
Decrease (Increase) in trade and other receivables (1,251,074) -
(Decrease) Increase in trade and other payables (524,736) 493,908
Cash used by operations (2,400,124) (111,345)
Income taxes - -
Net cash used by operating activities (2,400,124) (111,345)
Cash flows from investing activities - -
Loans to subsidiaries - (461,583)
Net cash used in investing activities - (461,583)
Cash flows from financing activities
Proceeds from issue of shares 2,092,449 463,314
Net cash/generated from financing activities 2,092,449 463,614
(Decrease)/Increase in cash and cash equivalents (307,675) (109,315)
Effect of exchange rates on cash 352,826 (338,773)
Cash and cash equivalents at the beginning of period 853,317 1,301,405
Cash and cash equivalents at end of period 898,468 853,317
There have been no changes in liabilities arising from financing activities.
Notes to the Financial Statements
1 General information
The Group is a global media and technology platform whose mission is to
leverage its AI and machine learning technology to more efficiently momentize
video and to license such capabilities to brands, creators and publishers to
enable discovery, sharing and e-commerce. The Company is a public limited
company domiciled in the United Kingdom and incorporated under registered
number 10621059 in England and Wales. The Company's registered office is 27-28
Eastcastle Street, London W1W 8DH.
The Company is listed on AIM, a market operated by the London Stock Exchange.
These Financial Statements were authorised for issue by the Board of Directors
on 4 July 2024.
2 Material accounting policies
Basis of preparation
These Financial Statements of the Group and Company are prepared on a going
concern basis, under the historical cost convention except for certain
financial instruments which are carried at fair value as specified within the
individual accounting policies.
These financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The Parent Company
financial statements present information about the Company as a separate
entity.
Both the Company and consolidated financial statements have been prepared and
approved by the Directors in accordance with UK adopted International
Accounting Standards ("Adopted IFRSs"). On publishing the Company financial
statements here together with the consolidated financial statements, the
Company is taking advantage of the exemption in s408 of the Companies Act 2006
not to present its individual income statement and statement of comprehensive
income and related notes.
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements.
The Financial Statements are presented in US Dollars ($), rounded to the
nearest dollar.
Going concern
The Directors have prepared a business plan and cash flow forecast for the
period 1 July 2024 to 31 December 2025 ("Forecast Period"). The business
plan starts with several disclosed updates in finance and operations. First,
in May 2024 the Company announced a successful fund raise amounting to $0.7
million before expenses which added to existing cash. Second, as of 30 June
2024, the CSP business is operating at cash flow breakeven. Third, as of 30
June 2024, our technology business has recognised revenue of $0.35 million in
the prior 12 months and as at 30 June 2024 is running at annualised recurring
revenue of $0.4 million, before any one-off projects and performance fees.
Fourth, the Company has narrowed its annualised losses on an operating basis
(excluding amortisation) to less than $0.5 million. The Forecast contains
certain growth assumptions about CSP and technology sales and the operating
margins following such sales, as well as prudently managing overhead expenses
including R&D. These assumptions have been tested with various
operating and market scenarios covering the range of outcomes.
The Board has reviewed these scenarios and the forecasts and various
uncertainties that could arise given market conditions. The board has
identified and number of mitigating actions that could be considered if the
assumptions noted above are not achieved, including further cost saving
measures and obtaining new financing which it has previously been able to do,
but which would eventually give rise to a material uncertainty that may cast
significant doubt over the ability of the Group to continue as a going concern
if the mitigating actions are not implemented.
Notwithstanding the material uncertainties and the mitigating actions
identified, the Directors have concluded that it is appropriate for the
consolidated financial statements to be prepared on the going concern basis
and do not reflect any adjustments that would be necessary if this basis were
inappropriate.
Basis of consolidation
The accompanying consolidated financial statements of SEEEN plc include its
wholly owned subsidiaries: GT Channel, Inc., Tagasauris Inc., and SEEEN,
Inc.
The Consolidated Statement of Comprehensive Income includes the results of all
subsidiary undertakings for the period from the date on which control passes.
Control is achieved where the Company (or one of its subsidiary undertakings)
obtains the power to govern the financial and operating policies of an
investee entity so as to derive benefits from its activities.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Company. The cost of an acquisition is measured as the
fair value of the assets given, equity instruments issued, and liabilities
incurred or assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective
of the extent of any non-controlling interest. The excess of the cost of
acquisition over the fair value of the Company's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the
difference is recognized directly in the income statement.
All Inter-company transactions and balances and unrealized gains or losses on
transactions between Group companies are eliminated in full.
Revenue recognition
Under IFRS 15, revenue is recognized when a customer obtains control of a good
or a service and thus has the ability to direct the use of and obtain the
benefits from the good or service.
CSP
SEEEN owns 100% of GT Channel, Inc, which operates a Creator Service Provider
("CSP") (formerly multichannel network ("MCN")). The CSP aggregates content
supplied by creators. The CSP then provides such content to YouTube, who is
the customer. YouTube then directs the use of such content to gain the
benefit of digital ad revenue from brands. YouTube takes forty-five per
cent. of the gross amount of digital ad revenue and then pays the CSP. The
Group recognises the payment received from YouTube as revenue, being the net
amount after the deduction of forty-five per cent. of the gross advertising
revenue. YouTube provides the CSP with daily reports on its receipt of revenue
from brands against the CSP's content. Revenue to the CSP is recognized upon
receipt of such reports from YouTube.
The CSP pays the creators who have supplied videos to the CSP and these
payments are recognized as Cost of Sales in the Group's statement of
comprehensive income.
Technology Income
The Group derives revenue from licensing software as a service and bespoke
development work.
For software as a service, under IFRS 15 three distinct performance
obligations have been identified for these contracts.
• Hosted software licenses;
• performance based results;and
• maintenance and support.
Revenue from the provision of the hosted software licence is recognised evenly
over the period in which the licence is hosted by the Group. This policy
reflects the continuous transfer of the service to the customer throughout the
contracted licence period. For renewals of hosted licences, the revenue is
recognised over the period of the contract.
Revenue related to the success of the Group's software products in driving
specific customer targets, such as sales of products or clickthroughs onto
landing pages, is recognised monthly utilizing the Group's analytics tools to
measure the performance of the Group's technology. Customers are invoiced
monthly in relation to these performance based results.
Revenue related to ongoing support and periodic updates is recognised evenly
over the licence period as the Group is unable to predict at inception of the
licence when the support and updates will be required to be provided to the
customer.
For bespoke development work, revenue is recognised on completion of the work
in those contracts where it is considered that control of the work does not
pass until all development work has been completed. Bespoke development work
does not create an asset with an alternative use to the Group and, in those
contracts where the Group does have an enforceable contractual right to
payment for performance completed to date, revenue is recognised over time.
Property, plant and equipment
All property, plant and equipment is stated at cost less accumulated
depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
Equipment and displays: 5 to 7 years
Motor vehicles: 5 years
Leasehold improvements: 7 years or lease term, whichever is
shorter
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each reporting date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount. Assets that are no longer of
economic use to the business are retired.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
income statement.
Goodwill
Goodwill represents the excess of the fair value of the consideration over the
fair values of the identifiable net assets acquired.
Goodwill arising on acquisitions is not subject to amortisation but is subject
to annual impairment testing. Any impairment is recognised immediately in the
Consolidated Statement of Comprehensive Income and not subsequently reversed.
Other intangible assets
Intangible assets are recorded as separately identifiable assets and amortised
at historical cost less any accumulated amortisation. These assets are
amortised over their definite useful economic lives on the straight-line
method.
Amortisation is computed using the straight-line method over the definite
estimated useful lives of the assets as follows:
Years
Customer
lists
4
Product
development
4
Any amortisation is included within total administrative expenses in the
statement of comprehensive income.
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis.
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each reporting date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
Statement of Comprehensive Income.
Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred
on development projects (relating to the design and testing of new or improved
products) are recognised as intangible assets when the following criteria are
fulfilled.
· It is technically feasible to complete the intangible asset so that
it will be available for use or resale;
· Management intends to complete the intangible asset and use or sell
it;
· There is an ability to use or sell the intangible;
· It can be demonstrated how the intangible asset will generate
possible future economic benefits;
· Adequate technical, financial and other resource to complete the
development and to use or sell the intangible asset are available; and
· The expenditure attributable to the intangible asset during its
development can be reliably measured.
Other development expenditures that do not meet these criteria are recognised
as an expense in the period incurred. Development costs previously recognised
as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets and are
amortised from the point at which they are ready for use on a straight-line
basis over the asset's estimated useful life.
Segment reporting
The Board consider the Company to be one cash generating unit for the purposes
of management reporting. During the year to 31 December 2023, the majority of
revenue for the Group was generated from its CSP operation. As the Group's
revenue mix evolves, the Directors expect to split out revenue by type in the
Accounts.
Impairment reviews
Assets that are subject to amortisation and depreciation are reviewed for
impairment when events or changes in circumstances indicate that the carrying
amount may not be fully recoverable. Assets that are not subject to
amortisation and depreciation are reviewed on an annual basis at each year end
(including goodwill) and, if there is any indication that an asset may be
impaired, its recoverable amount is estimated. The recoverable amount is the
higher of its net selling price and its value in use. Any impairment loss
arising from the review is charged to the Statement of Comprehensive Income
whenever the carrying amount of the asset exceeds its recoverable amount.
Share based payments
The Group has made share-based payments to certain Directors, employees and
advisers by way of issue of share options. The fair value of these payments is
calculated either using the Black Scholes option pricing model or by reference
to the fair value of any fees or remuneration settled by way of granting of
options. The expense is amortisation on a straight-line basis over the period
from the date of award to the first date of exercise, based on the best
estimate of the number of shares that will eventually vest.
Taxation
Income tax expense represents the sum of the current tax and deferred tax
charge for the year.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the Statement of Comprehensive
Income because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never
taxable or deductible. The Group's and Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the year end.
Deferred tax
Deferred income taxes are provided in full, using the liability method, for
all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Financial Statements. Deferred
income taxes are determined using tax rates that have been enacted or
substantially enacted and are expected to apply when the related deferred
income tax asset is amortisation or the related deferred income tax liability
is settled.
The principal temporary differences arise from depreciation or amortisation
charged on assets and tax losses carried forward. Deferred tax assets relating
to the carry forward of unused tax losses and are recognised to the extent
that it is probable that future taxable profit will be available against which
the unused tax losses can be utilised. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent that it is
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with
banks, and other short term highly liquid investments with original maturities
of three months or less.
Foreign currencies
(i) Functional and presentational currency
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which each entity operates ("the
functional currency") which is considered by the Directors to be Pounds
Sterling (£) for the Parent Company and US Dollars ($) for SEEEN, Inc,
GTChannel, Inc and Tagasauris, Inc. The Financial Statements have been
presented in US Dollars which represents the dominant economic environment in
which the Group operates.
The effective exchange rate at 31 December 2023 was £1 = US$1.2747 (31
December 2022 was £1 = US$1.2098). The average exchange rate for the year to
31 December 2023 was £1 = US$1.2433 (2022 was £1 = US$1.2322).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. 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 statement
of comprehensive income.
(iii) Group Companies
The results and financial position of all the Group entities that have a
functional currency different from the presentational currency are translated
into the presentational currency as follows:
(a) assets and liabilities for each statement of financial position
presented are translated at closing rate at the date of the statement;
(b) the income and expenses are translated at average exchange rates
for period where there is no significant fluctuation in rates, otherwise a
more precise rate at a transaction date is used; and
(c) all resulting exchange differences are recognised in other
comprehensive income and accumulated in the foreign exchange reserve.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Loans and receivables
Trade receivables, loans, and other receivables held with the objective to
collect the contractual cash flows are classified as subsequently measured at
amortised cost. These are initially measured at fair value plus transaction
costs. At each period end, there is an assessment of the expected credit loss
in accordance with IFRS 9; with any increase or reduction in the credit loss
provision charged or released to other selling and administrative expenses in
the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
The Group also recognises lifetime ECLs for trade receivables. The ECLs on
these financial assets are estimated using a provision matrix based on the
Group's historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both
the current as well as the forecast conditions at the reporting date,
including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when
there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12‑month ECL.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair
value, net of transaction costs and are subsequently measured at amortised
cost using the effective interest method.
Equity instruments
An equity instrument is any instrument with a residual interest in the assets
of the Company after deducting all of its liabilities. Equity instruments
(ordinary shares) are recorded at the proceeds received, net of direct issue
costs.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with International
Financial Reporting Standards requires the use of judgements together with
accounting estimates and assumptions that affect the reported amounts of
assets and liabilities and the reported amounts of income and expenses during
the reporting period. Although these judgements and estimates are based on
management's best knowledge of current events and actions, the resulting
accounting treatment estimates will, by definition, seldom equal the related
actual results.
The following are the critical judgements and estimations that the Directors
have made in the process of applying the Company's accounting policies and
that have the most significant effect on the amounts recognised in the
financial statements.
Impairment of goodwill and other intangible assets
Impairment of the valuation of the goodwill relating to the acquisition of
subsidiaries is considered annually for indicators of impairment to ensure
that the asset is not overstated within the financial statements. The annual
impairment assessment in respect of goodwill and other intangible assets
requires estimates of the value in use (or fair value less costs to sell) of
subsidiaries to which goodwill has been allocated. Given the nature of the
business, estimating the future cash flows and appropriate discount factor, in
order to determine the net present value of those cash flows is an area of
estimation uncertainty. The carrying amount at the end of the period for
goodwill was $0, based on the assumptions made by the Directors as provided in
note 10 to the financial statements.
Impairment of investment in subsidiaries
Impairment of the valuation of the investment in subsidiaries relating to the
acquisition of subsidiaries and subsequent funding of such subsidiaries is
considered annually for indicators of impairment to ensure that the asset is
not overstated within the financial statements. The annual impairment
assessment in respect of such investment requires estimates of the value in
use (or fair value less costs to sell) of subsidiaries to which investment has
been allocated. Given the nature of the business, estimating the future cash
flows and appropriate discount factor, in order to determine the net present
value of those cash flows is an area of estimation uncertainty. The carrying
value of these investments at the end of the period was $2.4 million. Further
details on the assumptions made by the Directors in these estimations are
provided in note 11 to the financial statements.
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised intangible
assets requires judgements to be made in respect of estimating the useful
lives of the intangible assets to determine an appropriate
amortisation rate. Technology and website development costs are being
amortised on a straight-line basis over the period during which the economic
benefits are expected to be received, which has been estimated at 4 years.
3 Segmental reporting
Management currently identifies one operating segment in the company under
IFRS 8:
Year ended Year ended
31 December 31 December
2023 2022
$ $
CSP Revenue 1,811,747 3,164,705
Technology Revenue 239,637 88,350
Total Revenue 2,051,384 3,253,055
Revenue is attributed to the following geographical locations:
Year ended Year ended
31 December 31 December
2023 2022
$ $
USA 1,940,462 3,190,967
ROW 110,922 62,088
2,051,384 3,253,055
4 Expenses by nature
The Group's operating profit has been arrived at after charging:
Year ended Year ended
31 December 31 December
2023 2022
$ $
Employee costs 335,420 369,255
Severance costs - 91,333
Consulting services 84,566 84,713
Agency fees 24,401 58,011
Rent 4,126 -
Professional fees 152,878 202,974
Listing fees 16,020 17,012
Other 522,484 533,338
Subtotal (1,139,895) (1,356,636)
Year ended Year ended
31 December 31 December
2023 2022
$ $
Auditors remuneration
Fees payable to the Group's auditor for audit of Parent Company and 49,000 48,059
Consolidated Financial Statements
Fees payable to the Group's auditor for non-audit services - -
The Group auditors are not the auditors of the US subsidiary companies. The
fees paid to the auditor of the US subsidiary companies were $45,000 (2022:
$45,000) for the audit of these companies with no payments for other
services.
5 Employees and Executive Directors
The Executive Directors are considered to be the key management of the
business.
Year ended 31 December 2023 Year ended 31 December 2022
$
$
Staff costs for all employees, including Executive Directors consist of:
Wages and Salaries 335,420 606,130
Share Based Payments Expense 109,924 108,825
445,344 714,955
Information regarding Directors emoluments are as follows:
Year ended 31 December 2023 Year ended 31 December 2022
$ $
Short-Term employee benefits
Directors' fees, salaries and benefits 241,441 211,130
Social Security Costs 8,321 24,497
249,762 235,627
The highest paid Executive Director received emoluments of $169,950 (2022:
$154,035).
The average number of employees (including Directors) in the Group during the
year was:
Year ended Year ended
31 December 31 December
2023 2022
Directors (executive and non-executive) 5 4
Management 2 1
Other 8 3
14 8
Note: The Group also uses two full time consultants on its proprietary
technology products and other third party contractors whose workload is varied
each month for software engineering and product development. These costs are
represented in Consulting Services in Note 3 above.
6 Share options
The Company grants share options at its discretion to Directors, management
and advisors. These are accounted for as equity settled options. Should the
options remain unexercised after a period of ten years from the date of grant
the options will expire unless an extension is agreed to by the Board. Options
are exercisable at a price equal to an exercise price determined by the Board.
Details for the share options and warrants granted, exercised, lapsed and
outstanding at the year-end are as follows:
Number of share options 2023
Weighted average exercise price (GBp)
2023
Outstanding at beginning of year 8,596,887 51.7
Granted during the year - -
Forfeited/lapsed during the year (133,333) 30.0
Exercised during the year - -
Outstanding at end of the year 8,463,554 52.1
Exercisable at end of the year 4,996,887 45.0
During 2022 the Company granted options to Charles Burdick upon appointment to
the Board. 133,333 of these lapsed when Charles Burdick left the group.
Fair value of share options
The Black Scholes calculations for the options held during 2023 resulted in an
annual charge of $109,924 (2022, $108,825) which has been expensed in 2023.
The weighted average remaining contractual life of the share options as at 31
December 2023 was 6.36 years.
Options arrangements that exist over the Company's shares at year end are
detailed below:
Grant 31 December 2023 31 December 2022 Date of Grant Exercise price Exercise period
From To
AIM Admission Grant Options 4,996,887 4,996,887 30/9/2019 45p 30/9/2020 30/9/2029
2021 Director Fee Options 1,450,000 1,450,000 4/3/2021 60p 4/3/2024 4/3/2031
2021 Incentive Options 1,300,000 1,300,000 4/3/2021 65p 4/3/2024 4/3/2031
2021 Incentive Options 650,000 650,000 13/5/2021 65p 13/5/2024 13/5/2031
2022 Director Options 66,667 200,000 27/5/2022 30p 27/5/2025 27/5/2032
Total 8,463,554 8,596,887
All share options are equity settled on exercise.
7 Finance income
Year ended Year ended
31 December
31 December
2023
2022
$
$
Interest income 5,728 -
Interest income on loan provided to shareholders in Tagasauris, Inc to buy
shares in Tagasauris, Inc prior to its acquisition by SEEEN plc.
8 Taxation
The major components of income tax expense for the periods ending 31 December
2023 and December 2022 are as follows:
Year ended Year ended
31 December 31 December
2023 2022
Group $ $
Current tax: - -
Current tax (benefit) on profits in the year - -
Prior year over provision - -
Total Tax charge (benefit) 0 -
Deferred tax current year (129,584) (423,308)
Deferred - -
Total Tax charge (benefit) (129,584) (423,308)
The tax on the Company's loss before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits and
losses as follows:
Year ended Year ended
31 December 31 December
2023 2022
$ $
Total loss on ordinary activities before tax (5,254,855) (10,694,984)
Loss on ordinary activities at the standard rate of corporation tax in the US (1,103,520) (2,245,947)
of 21% (2022: 21%)
Non-deductible expenses 571,090 1,630,970
State taxes net of federal benefit (163,700) (199,154)
Other tax adjustments, reliefs and transfers 6,307 (4,697)
Adjustment in respect of prior year (430) (64,631)
Deferred tax not recognised / valuation allowance 560,669 460,151
Changes in rates - -
Total Tax charge (129,584) (423,308)
At the balance sheet date, the Group had unused tax losses (as reported on the
Group's tax returns) of $16,830,145 available for offset against future
profits. $2,685,722 represents unrecognized deferred tax assets thereon. The
deferred tax asset has not been recognized due to uncertainty over timing of
utilization.
9 Earnings per share
The loss per share has been calculated using the profit for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
Year ended Year ended
31 December
31 December
2023
2022
Loss for the year attributable to equity holders of the Parent ($) (5,140,455) (10,271,676)
Weighted average number of ordinary shares 93,345,815 50,131,428
Diluted weighted average number of ordinary shares 93,345,815 50,131,428
Loss per share (cents) (5.51) (20.48)
Diluted loss per share (cents) (5.51) (20.48)
10 Intangible assets
Group Goodwill Arising on Consolidation Other Intangible Assets Development Costs Totals
$ $ $ $
Net Book Value
At 31 December 2021 9,762,158 2,082,934 3,172,083 15,017,175
Additions - - 730,437 730,437
Amortisation/impairment (7,672,026) (1,190,249) (870,888) (9,733,163)
At 31 December 2022 2,090,132 892,685 3,031,632 6,014,449
Additions - - 849,760 849,760
Amortisation/impairment (2,090,132) (892,685) (1,523,461) (4,506,278)
At 31 December 2023 - - 2,357,931 2,357,931
The cost of other intangible assets comprises customer lists and technology
development acquired at the date of acquisition. The other intangible assets
are being amortised over a period of 4 years. Amortisation is charged to
administrative costs in the Statement of Comprehensive Income.
Goodwill and Impairment
The carrying value of goodwill in respect of each acquisition was as follows:
31 December 2023 31 December 2022
GTChannel, Inc - 700,322
Tagasauris, Inc - 827,994
Entertainment AI, Inc - 561,816
Total - 2,090,132
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired. In order to perform this
test, management is required to compare the carrying value of the relevant
cash generating unit ("CGU") including the goodwill with its recoverable
amount. The recoverable amount of the CGU is determined from a value in use
calculation. Management has assessed that there is one CGU encompassing all of
the Group's subsidiaries. This is based on the Group's business plan as stated
in its admission document, as well as considering how the Group is managed and
directed. The subsidiary entities offer a combination of cross-supplied
technology and services that will enable the Group to create a Multi Platform
Network. This synergistically leverages the Group's technology, current
customer base and wider business plan and strategic partners. These features
are each supplied by the different acquisitions made in the period and as
such, the Directors consider provisionally that it is most appropriate that
the CGU consist of all three subsidiaries.
The Group is selling products to customers based on its proprietary technology
for the publishing, sports, retail and services market segments. During 3Q
2023, the Group released its new product CreatorSuite 2.0, as well as further
development of ShortsCut, an internal tool which is expected to be a driver of
growth within the CSP business. The Board has considered these new releases as
drivers of growth, together with continued momentum of customer acquisition.
Despite these drivers of growth, using the following key assumptions in this
impairment review: (i) a perpetuity growth rate from 2028 of 2%, (ii) a
discount rate of 20.0%, (iii) a 2.5% annual increase in costs and (iii)
customer acquisition remaining consistent with levels since the beginning of
2024 with three new technology customers per month, one strategic customer
every four months and minimal growth in the CSP through to the end of 2028
with no increase, the carrying value is less than the value in use and hence
the goodwill from the time of the acquisition should be fully impaired. In
addition, the Group has also impaired the value of intangible assets,
reflecting the estimated value in use of the Group's intangible assets .
Should the key assumptions be varied to include no further client growth, this
would result in a full impairment of the Group's intangible assets.
11 Investment in subsidiary undertakings
Company Cost of investment Loan to group undertaking Total
$
$
$
Cost
At 31 December 2022 12,984,835 4,743,896 17,728,731
At 31 December 2023 12,984,835 4,743,896 17,728,731
Impairment
At 31 December 2022 (12,747,148) - (12,747,148)
At 31 December 2023 (12,984,835) (2,370,176) (15,355,011)
Carrying amount
At 31 December 2022 237,687 4,743,896 4,981,583
At 31 December 2023 - 2,373,720 2,373,720
The Directors annually assess the carrying value of the investment in the
subsidiaries and in their opinion an impairment provision of $2,607,863 is
required to reflect the value in use derived from the Group's impairment
assessment.
The subsidiary undertakings during the year were as follows:
Country of incorporation Interest held
%
Registered office address
GTChannel, Inc. 199 Whitney Avenue, New Haven, Connecticut 06511 U.S. US 100%
Tagasauris, Inc. 199 Whitney Avenue, New Haven, Connecticut 06511 U.S. US 100%
Entertainment AI, Inc. 199 Whitney Avenue, New Haven, Connecticut 06511 U.S. US 100%
All subsidiaries are owned directly by the Parent Company.
12 Trade and other receivables
Group Company
31 December 31 December 31 December 31 December
2023
2022
2023
2022
$
$
$
$
Trade and other receivables 947,132 2,905,576 188,030 2,092,449
Intercompany receivables - - - 2,711,550
In determining the recoverability of accounts receivable, the Company
considers any changes in the credit quality of the accounts receivable from
the date credit was initially granted up to the reporting date. The accounts
receivable that are neither past due nor impaired relate to customers that the
Company has assessed to be creditworthy based on the credit evaluation process
performed by management which considers both customers' overall credit profile
and its payment history with the Company. Any loss allowance is determined in
accordance with IFRS 9.
As at 31 December 2022, the amount receivable on the issue of shares from the
December 2022 fundraising was $2,092,449, which was all received in 2023.
There were no such amounts receivable as at 31 December 2023.
13 Cash and cash equivalents
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2023
2022
2023
2022
$
$
$
$
Cash at bank and in hand 1,060,864 1,236,664 898,468 853,317
14 Trade and other payables
Group Company
Year Ended 31 December Year Ended 31 December Year Ended 31 December Year Ended 31 December
2023
2022
2023
2022
$
$
$
$
Trade payables 550,856 1,058,385 60,512 510,456
Accruals and other payables 549,422 688,084 113,359 188,151
1,100,278 1,746,469 173,871 698,607
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs and are payable within 3 months.
15 Deferred Tax
Total
$
Balance as at 1 January 2023 (146,992)
Deferred tax charge for the year 129,584
Balance At 31 December 2023 (17,408)
The deferred tax provision comprises:
31 December 2023 31 December 2022
$ $
Deferred tax liability arising from acquisition of intangible assets - 142,917
Deferred tax liability relating to other timing differences 17,408 4,075
Total 17,408 146,992
At the balance sheet date, the Group had unused tax losses (as reported on the
Group's tax returns) of $16,830,145 available for offset against future
profits. $2,685,722 represents unrecognized deferred tax assets thereon. The
deferred tax asset has not been recognized due to uncertainty over timing of
utilization.
16 Share capital
The issued share capital in the year consisted of ordinary shares of 0.1 pence
each and deferred shares of 11.9 pence each and was as follows:
Group & Company
Number of Shares Nominal Value of Shares $
Ordinary Deferred Ordinary Deferred Total
At 31 December 2022 93,345,815 49,957,876 114,992 7,339,059 7,454,051
Issue of Shares - - - - -
At 31 December 2023 93,345,815 49,957,876 114,993 7,339,059 7,454,052
.
Group & Company
Share capital Share premium
$
$
At 31 December 2022 7,454,052 10,180,736
At 31 December 2023 7,454,052 10,180,736
17 Financial instruments
Financial instruments
As at the dates presented, the Group has classified its financial instruments
as follows:
At 31 December 2023 Loans and Receivables at Amortized Cost Other Financial Liabilities at Amortized Cost Fair Value through Profit or Loss Total
$
$
$
$
Financial Assets
Cash 1,060,864 - - 1,060,864
Trade and Other Receivables 947,132 - - 947,132
Financial Liabilities
Trade and Other Payables - 1,100,278 - 1,100,278
At 31 December 2022 Loans and Receivables at Amortized Cost Other Financial Liabilities at Amortized Cost Fair Value through Profit or Loss Total
$
$
$
$
Financial Assets
Cash 1,236,664 - - 1,236,664
Trade and Other Receivables 2,724,615 - - 2,724,615
Financial Liabilities
Trade and Other Payables - 1,417,943 - 1,417,943
Credit risk management
The Company is exposed to credit risk associated with its accounts receivable.
Credit risk is minimized substantially by ensuring the credit worthiness of
the entities with which it carries on business. Most of the Group's revenues
are derived from its CSP business. The key counterparty for this business is
YouTube. The performance obligations arise at the time that CSP videos
generate advertising or other income on YouTube. YouTube makes a monthly
payment to the Group, approximately 20 days in arrears. In the periods to 31
December 2023 and 31 December 2022, the Company did not experience any
significant instance of non-payment from its customers and expects this to
continue to be the case, thus a provision has not been made for potentially
uncollectable amounts.
The Company's accounts receivable aging as follows:
31 December 2023 31 December 2022
Current 947,132 2,724,615
31-60 days - -
61-90 days - -
>90 days - -
947,132 2,724,615
Allowance for doubtful accounts - -
Total 947,132 2,724,615
Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market rates. The
Company's exposure to interest rate risk is based on short-term fixed interest
rates. At 31 December 2023, the Company's exposure to interest rate risk was
determined to be nominal.
Capital risk management
In managing its capital, the Group's primary objective is to maintain a
sufficient funding base to enable working capital, research and development
commitments and strategic investment needs to be met and therefore to
safeguard the Group's ability to continue as a going concern in order to
provide returns to shareholders and benefits to other stakeholders. In making
decisions to adjust its capital structure to achieve these aims, including
through new share issues, the Group considers not only its short-term position
but also its long term operational and strategic objectives.
The capital structure of the Group currently consists of equity comprising
issued capital, reserves and retained earnings. The Group is not subject to
any externally imposed capital requirements. The Group monitors this
expenditure and is on track to spend the required funds by such date.
Foreign currency risk management
Foreign exchange transaction risk arises when individual Group operations
enter into transactions denominated in a currency other than the dominant
economic currency of the Group. The principal risk arises from the Group's
holding company and payments made in relation to the holding company's
activities in the United Kingdom.
The carrying amount of the Group's foreign currency denominated monetary
assets and monetary liabilities were:
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2023
2022
2023
2022
$
$
$
$
Assets
Sterling 951,623 848,305 951,623 848,305
Liabilities
Sterling 60,512 369,809 60,512 369,809
As shown above, at 31 December 2023 the Group had Sterling denominated
monetary net assets of $891,111 (2022: $478,496). If Sterling weakens by 10%
against the US dollar, this would decrease net assets by $89,111 (2022:
$47,850) with a corresponding impact on reported losses. Changes in exchange
rate movements resulted in a loss from exchange differences on a translation
of foreign exchange of $14,665 in the year to 31 December 2023 (year to 31
December 2022: loss of $663,130), resulting primarily from the holding of cash
in sterling.
Liquidity risk management
Ultimate responsibility for liquidity management rests with management. The
Group's policy is to ensure that it will have sufficient cash to allow it to
meet its liabilities when they become due and so cash holdings may be high
during certain periods throughout the period. The Group currently has no bank
borrowing or overdraft facilities. All liabilities are current and expected to
be settled within 3 months.
The Group's policy in respect of cash and cash equivalents is to limit its
exposure by reducing cash holding in the operating units and investing amounts
that are not immediately required in funds that have low risk and are placed
with a reputable bank.
18 Contingent liabilities
The Directors are not aware of any material contingent liabilities.
19 Related party transactions
During the year, the Group performed digital marketing services for American
Leak Detection, a subsidiary of Water Intelligence plc, which is a related
party of the Group as SEEEN plc's Chairman, Dr Patrick DeSouza is Executive
Chairman and a significant shareholder in Water Intelligence plc, totalling
$36,114 during 2023 pursuant to related party arrangements in place since the
Group's admission to AIM.
The Directors are not aware of any other related party transactions.
20 Subsequent events
Since 31 December 2023, Akiko Mikumo ceased to be a director and resigned on 1
February 2024.
On 30 May 2024, the Group announced a fundraise through the issue of new
ordinary shares at 3 pence each to raise up to £763,000 with associated
warrants issued (to raise up to £885,000) to incoming investors to acquire
further new ordinary shares at a price of 4.5 pence per new ordinary share.
These shares were admitted on 4 June and 19 June 2024. In addition the Group
entered into a conditional subscription agreement with Gresham House Asset
Management Limited (a related party by virtue of its shareholding) to issue
convertible loan notes with a face value of £325,000 at a conversion price of
3 pence per share and with an interest rate of 12 per cent. per annum, as well
as other standard customary provisions.
21 Control
The Company is under the control of its shareholders and not any one party.
The shareholdings of the directors and entities in which they are related are
as outlined within the Director's Report.
1
https://www.globenewswire.com/news-release/2023/05/15/2668528/0/en/Global-Video-Commerce-Market-Analysis-By-Product-Category-By-Region-Size-and-Trends-with-Impact-of-COVID-19-and-Forecast-up-to-2028.html
(https://www.globenewswire.com/news-release/2023/05/15/2668528/0/en/Global-Video-Commerce-Market-Analysis-By-Product-Category-By-Region-Size-and-Trends-with-Impact-of-COVID-19-and-Forecast-up-to-2028.html)
2 https://straitsresearch.com/report/virtual-training-and-simulation-market
(https://straitsresearch.com/report/virtual-training-and-simulation-market)
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