REG - SEEEN PLC - Final Results and Notice of AGM
30/06/2022 07:16
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RNS Number : 7309Q SEEEN PLC 30 June 2022
SEEEN plc
("SEEEN", the "Group" or the "Company")
Audited results for the year ended 31 December 2021
Update on 1H 2022
Notice of AGM
SEEEN plc, the global media and technology platform that offers proprietary AI
products and solutions to brands, creators and publishers for harvesting
video moments to enable discovery, sharing, e-commerce and improved digital
marketing yield is pleased to present its audited results for the year ended
31 December 2021 and an update on 1H 2022.
The Group is on track with its commercialisation plan and has momentum with
accelerating customer acquisition for its technology business and improved
profitability of its multichannel video network ("MCN").
Audited Full Year 2021 highlights:
● Global market demand in SEEEN's key markets is growing, especially
in Media Monitoring, which is expected to grow to $11 billion by 2028 (source:
Fortune Business Insights), and video e-commerce which, in the US, is expected
to grow to $35 billion by 2024 (source: Statista)
● Key Performance Indicators (KPIs) show strong operating progress
delivering EBITDA in line with market expectations
Financial KPIs
o Adjusted EBITDA* of ($1.47) million (adjusting for share-based payments
and non-core items), significantly reduced from ($2.12) million in 2020 as
Group transitions from product development to product sales
o Net cash of $2.1 million as of 31 December 2021
o Technology licensing sales of $0.1 million (2020: zero)
o MCN priority on profitability rather than sales
▪ Profits increase despite decrease in MCN revenue to $8.3 million
(2020: $10.1 million)
▪ Profitability driven by increased revenue per thousand views
(RPM)
▪ RPM growth of 29% to $1.24 (2020: $0.97), reflecting focus on
higher quality channel partners and increased video content relevance driven
by technology
Technology KPIs
o Two product releases:
▪ CreatorSuite: enables customers to drive increased views and
increased customer conversions
▪ Dialog-To-Clip: drives efficiencies for video editing in Adobe®
Premiere Pro® with AI driven in-video search
● Initial product sales:
o Vertical markets (consumer oriented - financial, sports, retail) targeted
with shorter sales cycles with four customers acquired
o Strategic customers for combined technology and managed services sales:
flagship customer announced
o E-commerce customer: US tyre retailer
* Non-core items include termination payments and one-off gain from
forgiveness of Payment Protection Plan loan issued in 2020
1H2022 Update:
KPIs
● On track to achieve monthly EBITDA break-even in early 2023 given
customer win momentum
● MCN Year To May 2022 has delivered record profitability reflecting
contribution of AI-led managed services to two new strategic customers
o Results achieved despite substantial revenue reduction for MCN reflecting
further loss of low margin views since March 2022 following outbreak of
Russia-Ukraine conflict
● Current cash position of $1.6 million enables the Group to
continue executing on sales pipeline
● Sales pipeline strong, delivering further customer wins and
corporate development partnership:
o Follow through in key vertical markets: eight wins led by multiple
financial customers
o E-commerce: recent launch with American Leak Detection with Internet lead
generation increased and initial e-commerce sales converted
▪ 4 initial e-commerce customers
o Corporate Development: Media monitoring strategic partnership announced
with Kinetiq, Inc. using video moments and objects identified within a video
to better manage and measure audience experiences
Notice of AGM: Copies of the Annual Report and Notice of Annual General
Meeting are today being posted to shareholders and will be made available on
the Company's website at seeen.com. The Company's AGM will be held at the
offices of Panmure Gordon (UK) Limited, One New Change, London EC4M 9AF at
3.00 p.m. on 28 July 2022.
Dr. Patrick DeSouza, Chairman of SEEEN, commented: "2021 was a foundational
year in that we transitioned effectively from a product development company
using EIS/VCT resources to commercialization and an emerging leadership
position in the marketplace. We have built strongly on our base operating
plan and delivered more high quality, referenceable customers during 1H
2022.
With the rise of Tik Tok and YouTube moments, short form video is becoming an
essential marketing vehicle for a video-first world. Our technology products
enable consumers, creators and brands to harvest such video moments for
commercial uses. Current market volatility only reinforces demand for our
technology because customers need to tap more efficiently into advertising
dollars and e-commerce opportunities. Our board and management team has
worked together in relentless fashion to navigate market conditions
successfully and drive sales. We appreciate the support that our shareholders
have provided in realizing a valuable market opportunity."
The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. 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
Patrick DeSouza, Chairman
Akiko Mikumo, Interim Co-CEO
David Anton, Interim Co-CEO
Adrian Hargrave, CFO
Panmure Gordon (Financial Adviser, Nominated Adviser & Joint Broker) Tel: +44 (0)20 7886 2500
Alina Vaskina / Harriette Johnson (Corporate Advisory)
Rupert Dearden (Corporate Broking)
Dowgate Capital Limited - Joint Broker Tel: +44 (0)20 3903 7721
Stephen Norcross
Chairman's Statement
SEEEN's two-and-a-half-year progress since IPO has followed a steady, upward
trajectory as management has deployed capital in executing a business plan.
Product development of video moments technology through 2020 has been followed
in 2021 by trials with media customers needing to publish short-form video to
compete for advertising dollars. The rise of TikTok and others have made our
customers and pipeline of prospects realize that video moments technology is a
"must have" for their businesses.
We continue to listen to our customers and are evolving our business model in
2022 to meet customer demand. We recognize that many business customers are
still catching-up with the consumer shift to a video-first world and need
additional support services from SEEEN. Yet despite all the macroeconomic
volatility, we have enthusiasm from customers for investing in our products
and services. During 2022, customers are now extending their initial
commercial relationship to include new use cases for our technology such as AI
monitoring of objects within the video to enable advertising attribution. To
be sure, we remain disciplined with our business plan to build a technology
company but need to prudently work with our trial customers to balance
short-run demand for custom features with building long-term shareholder value
with higher margin products that can be simply licensed. Nevertheless,
overall market demand for SEEEN's technology remains strong as consumers,
creators and brands each seek to exploit video moments. Moreover, in terms
of increasing long run exit value for our shareholders, we also see ongoing
attempts at consolidation between AI technology companies and video content
companies in order to more effectively exploit rising consumer demand.
In navigating the next phase of the business plan to translate promise into a
stream of customers and highly valuable business, our board and management
team have worked together closely during 2H 2021 and 1H 2022. Overall, we
appreciate the management team's progress, especially given Covid limitations
on organization building and direct engagement with customers and sales
opportunities. However, given the speed of market change, two of our Board
members were enlisted to accelerate our Go-To-Market plan in 2022. As
Interim Co-CEOs, Akiko Mikumo with respect to execution, and David Anton, with
respect to sales, have ensured that SEEEN is on-track with its progress from
technology development to market competitor. We thank the founders for their
early vision in launching our business and for continuing to support the
efforts of the board.
During 1H 2022, our choice to have the Board help accelerate SEEEN's
Go-to-Market execution has borne fruit with an increasing number of customer
wins. Particularly with the help of our senior leaders, such as the CFO and
CTO, we have won for our technology business both large strategic customers
such as a global publisher and smaller repeat sales within the vertical market
of financial publishing. The former enables us to demonstrate our ability to
upsell more of our technology products. The latter enables us to demonstrate
our ability to execute repeat sales quickly. These two types of wins validate
the excitement that we all have shared on this journey. It should be equally
noted that while we have reinforced the growth path for our technology
business, the President of our MCN video content business has also done an
outstanding job maintaining our revenue base and source of testing use cases
for our technology with our creators and their audiences. We feel that as
these three executives have stepped forward, our board members can take a step
back for 2H from day-to-day execution to provide stewardship on behalf of our
investor base. I especially thank Akiko and David for moving the proverbial
ball down the field in successfully helping with a transition from founders to
professional management to accelerate commercialisation.
We now move confidently towards 2H 2022 and beyond with referenceable
customers, a sales pipeline building on current customer successes and a
pipeline of product features that our customers need and for which we are able
to extract higher margin sales. Given strong market demand for short-form
entertainment during these difficult times, we look forward to working with
our investors to build significant shareholder value.
Dr. Patrick DeSouza
Chairman
Interim Co-CEOs Statement
As noted in the Chairman's statement, in the last two and a half years the
Group has progressed from a technology development business to a market
competitor characterised by a suite of proprietary AI products for short form
video creation that is increasingly attracting customers through a repeatable
sales model.
We were appointed as Interim Co-CEOs in March 2022, reflecting the Group's
transition away from the development phase and into a professional execution
phase with a focus on larger scale customers to whom we can sell multiple
products and services for video optimisation. During this period, we have
overseen a shift to accelerating customer success and deeper engagement with
our customers to determine our product roadmap, which includes analytics
tools, multi platform video publishing and a greater ability to analyse and
access moments from video back libraries.
This transition toward a commercial phase was initiated in 2021 and is
partially reflected in our financial statements for 2021. During the year, the
Group achieved its first technology sales, whilst reducing adjusted operating
losses to $1.4 million from $2.1 million in 2020 (adding back in amortisation,
share based payments and non-core items as discussed in the Strategic Report)
and statutory operating losses to $3.5 million from $4.0 million. This
progress towards profitability also reflects our greater focus on profitable
MCN channel partners. We have achieved such progress despite a decline in MCN
revenue from $10.3 million to $8.4 million due to the loss of some large
low-margin channels, as well as our efforts to re-focus our cost base to
actively drive technology-led revenues. At year end, we had $2.1 million in
cash with a much reduced cash cost base having utilised our EIS/VCT funds to
develop our product stack by the 30 September 2021 deadline. This 2 year
horizon from the Group's admission to AIM has successfully marked the
transition to a market competitor.
Foundational Year
2021 was a foundational year, as we continued the development of our platform
technologies and services (JetStream, CreatorSuite and Managed Video
Optimisation Services through our MCN) and made initial sales of each of these
core offerings to a significant customer. This has allowed us to define our
value add more sharply whilst working together with our customer base in
refining our product requirements. The market opportunity for brands,
agencies, publishers and creators to understand video content at a granular
(ie frame by frame) level with the help of our technology is immense. Through
our work with customers, it is clear that there is no tool available to
analyse video at scale and convert this analysis into short form moments that
viewers can engage with.
Our unique AI video analysis process, powered by our JetStream AI technology,
positions us strongly in the media monitoring and marketing technology
business segments, as well as ecommerce through video. SEEEN's technology
allows customers to accurately measure and catalogue their own and third party
video inventory in real time. As identified by various market research
publications, these media-tech segments are multi-billion dollar opportunities
with 15% annual growth expected for the rest of this decade as online video
continues to increase in volume and popularity versus legacy video publishing
activities.
Companies are actively positioning themselves to capitalise on this shift to
online video, as transactions such as Innovid's acquisition of TVSquared
($160m) and Comscore's acquisition of Shareablee ($45m) demonstrate. In each
of these examples, legacy video analytics providers are acquiring access to
solutions that allow them to perform analysis of social media trends at scale.
Our technology offers this solution for the unique challenge that is video.
Our confidence in respect of our market positioning and successful execution
is reinforced by three key factors:
1. Customer Penetration. In 2021 and 2022, we have won customers for all
of our core products and entered into a strategic partnership with Kinetiq,
Inc for entry into the media monitoring market. Discussed below are some of
our most significant customer wins that have allowed us to fine tune our
products for greater sales success;
2. Core Professional Team. We have established a management team that is
executing on our client requirements; working directly with clients to add
relevant product features that will accelerate the sale of our products to
similar potential customers;
3. KPI Data. Strong KPIs across our product suite that make our
technology a compelling proposition for customers, by delivering faster
results, more efficient workflows and, in particular for CreatorSuite, higher
revenue generation.
Customers
As indicated above, in organizing our Go-To-Market plan, we have executed on
three strategies to demonstrate for our shareholders a significant value
proposition. First, we sought to have a core execution model of customer
acquisition to drive the path to profitability. We sought a strategic large
customer that typically has a longer sales cycles to show our ability to
upsell such as a customer with higher margin products. At the same time, we
also sought to penetrate a vertical market so that we could demonstrate our
ability to execute a faster sales cycle. Within a vertical, there is typically
reduced customer acquisition costs because of a common return on investment
sale for similar customers. Second, we sought to position ourselves in the
media monitoring market given its dynamism and need for video moment
products. Finally, we sought to develop our e-commerce applications as
consumers rely on video moments to make impulse purchases. All three
strategies produce overlapping opportunities to increase shareholder value
through partnerships and possible acquisitions.
A. Core Sales Strategy
Global Publisher - In November 2021, we announced a key strategic win for our
MCN with a major global publisher to provide YouTube optimisation services.
This validated our strategic shift away from high revenue, but low margin,
channel partners to higher margin publishing and brand clients where our
technology was useful for large back catalogues and where technology upsales
can be made. Using our technology and YouTube expertise, we have helped
deliver record results for the global publisher. In April 2022, they achieved
record views and revenues on YouTube despite the weakening advertising
backdrop, more than doubling previous monthly records. These strong results
have continued since. As a result of this success, we have a case study to
show to similar publishers globally, including an additional win in this
vertical in April 2022 with a leading US web publisher. We continue to attack
this market to capitalise on the unique offering we have in this sector to
search through back catalogues and generate clips and new videos from these
video collections.
Financial Publishing Vertical Market - In November 2021, we importantly added
our first customer in the financial publishing vertical. This customer
implemented CreatorSuite for all of its new videos and has published videos
both directly to its own website and to YouTube. For most videos, the number
of people viewing is greater on the company's website than on YouTube, which
delivers a higher return per view versus the advertising income that can be
generated from YouTube videos. Since this initial win in the financial
publishing vertical, we have added three more customers in this sector with a
robust and growing pipeline in both the UK and the US. Such customers have
ranged from financial publishers seeking to drive subscriptions and direct
stock sales to event organisers who want to drive more attendance to in person
events and webinars.
Other Verticals
We expect to build on our success in this sector, as well as creating similar
repeatable sales opportunities in the sports, retailing and political
verticals where we have also made initial customer sales with successful
implementations.
B. E-Commerce
E-Commerce Customers. During 2021, we launched CreatorSuite to third parties
having initially trialled the technology on our own gtchannel.com website. Our
initial partner, TBC Corporation, the owner of multiple tire retailers in the
United States of America, paid us $0.1 million to produce videos and drive
traffic and ecommerce directly using their websites. This customer win built
on the Group's core MCN automotive focus and trials customers in the
automotive publishing space, such as Evasive Motorsports. Recently, we have
launched an e-commerce site for American Leak Detection to sell leak detection
products and services for that company's 150 locations across the US. This has
already yielded its first sales for the customer. Given the demand for home
services, we see a big opportunity ahead as we develop sales leads and convert
them into sales.
C. Corporate Development / Market Positioning
Media monitoring - During 2021, we began exploring opportunities to apply
JetStream to media monitoring for videos. Our initial pilot focused on
monitoring entertainment content to provide an equality score each video.
Building on this work, in February 2022 we announced a strategic partnership
with Kinetiq, Inc., a leading media intelligence platform that enables its
200+ global customers to measure the effectiveness of their paid, earned and
owned media, across thousands of broadcast, CTV and social channels. We have
since applied this technology to enable a brand to monitor video streaming for
logos, objects, facial, and other identifying images that promote their
brand. Media monitoring firms need our solutions to analyse video at scale
and further distribution discussions are ongoing. Working with these partners,
we anticipate selling higher priced solutions on a high margin, recurring
revenue basis.
Professional Execution
Since we took on the roles of Interim Co-CEO, we have been very impressed with
the focus and commercial ability of other members of the management team. We
have worked with the team to ensure we have built stronger relationships with
prospective and current customers, allowing us to: sell faster, gather
relevant data and define our product roadmap with relevant solutions that
customers can trial before wider roll-outs.
These include Adrian Hargrave, our CFO, has been highly active in both
bringing in new customers, with our wider sales team, across all our Customer
strategies while making sure operational matters are being executed in timely
fashion. Jacob Coby our CTO has been actively involved in client conversations
and leading both our AI team and outsource software engineers in driving new
product features, some of which have already been implemented as part of
CreatorSuite (such as playlists and automated transcripts for creating
moments). Jake Desjarlais as President of the MCN has pivoted the MCN away
from lower margin business towards larger publishers and brands. This has been
possible because of his expertise in developing channels with former clients
such as Warner Bros, Paramount, Marvel and Hulu. This professional experience
provides SEEEN with an edge in the marketplace to drive higher engagement and
increased revenues through content strategies and to create a relevant
technology roadmap for MCN channels.
KPIs
As discussed in our strategic report, we look at a variety of KPIs for the
business. These include Group-wide KPIs related to sales and profitability, as
well as product specific KPIs, which enhance the sales process.
Group KPIs - During 2021, we launched two new technology products based on our
JetStream AI technology stack: Dialog-To-Clip and CreatorSuite. During 2022,
we expect to add further modules to these products, as well as launching a new
product dedicated solely to media monitoring and additional ancillary products
to help our MCN client base create more efficient workflows and publish more
video content to increase views and revenues.
Since the start of 2022, to build on the success of our product
implementations, we are also looking at KPIs in relation to our sales funnel,
including number of leads, number of proposals and deals closing. To date, we
have been very successful in converting proposals into deals closing, with the
pace of conversion accelerating more recently. We are very focused on
increasing the number of leads generated and proposals prepared and we will be
monitoring these closely in order to guide our execution pathway. In
particular, we are very confident in our ability to develop repeatable sales
processes in key verticals, such as financial publishing, sports and retail
for CreatorSuite and with more traditional publishers.
Another relevant KPI now that we have multiple products available to customers
is the percentage of clients who are purchasing more than one product or
service from SEEEN. We have seen our first upsales in 2022, as well as package
sales of technology and managed services, including our MCN. As we deliver
results for a customer, an additional upsell is considerably faster and easier
than selling products and services to a new customer. Each of our management
team and senior leadership is very focused on this integrated approach to
selling to our client base. In some cases, where customers have bespoke
requirements, SEEEN will initially need to offer a managed services solution,
which can be priced appropriately. Such managed services can be automated if
we determine that sufficient market demand is present and feed the Group KPI
for product development described above.
Product KPIs - CreatorSuite has proven across a variety of different
implementations to bring several benefits to customers. These include
increased Google Organic Search views directly from video pages (up to 100%
increase), bounce rates of below 20% and clickthrough rates on end cards shown
of between 5% and 15%. These metrics together deliver increased traffic,
increased engagement and increased conversion for our customers. As part of
our selling package, we are building a ROI (return on investment) calculator
for our potential customers, so that they will immediately see the benefits
that momentised videos on their website will deliver for them.
With regards to the MCN, we consider KPIs surrounding total views, creator
channel partners and Revenue Per View, as described in more detail in the
strategic report.
Financials
We have a balance sheet sufficient to execute our business plan. During 2021
in realizing our product stack, we fully deployed our EIS/VCT investment
raised during the IPO. As at 31 December 2021, we had $2.1 million in cash.
In making the transition to professional management, we did a good job of
managing our burn rate. We reduced amounts spent on technology development
and reallocated amounts towards sales and marketing. Our cash position has
been assisted during 2022 as we have delivered more profitable revenues,
resulting in a net cash position of approximately $1.6 million at the date of
this release. We are mindful of our budget and constantly calibrate our cash
burn against our monthly gross revenues to ensure that we are both able to
grow the business organically, whilst protecting the business against any
unforeseen challenges, such as Covid-19 and the Russia-Ukraine conflict.
Our focus on profitability and cash generation is also evidenced by the
ongoing evolution of our MCN away from a revenue-only focus at the expense of
supporting profits. In making our transition, we shed certain onerous legacy
agency fees dating back to arrangements existing before the Group's admission
to AIM. This resulted in the loss of revenue from some of the MCN's low margin
channels. This reduction in MCN revenue from $10.3 million in 2020 to $8.3
million in 2021 will continue during 2022, however importantly the MCN is to
become increasingly profitable. We completed our most profitable MCN month
ever in April 2022 with similar levels of profitability projected for the rest
of the year. This has been achieved despite the loss of advertising income
from all views in Russia, which represented 25% of revenues in 2021.
With respect to technology sales, we completed our first technology sales in
2021 and generated $0.1 million of revenue. In 2022 and beyond, we expect this
number to accelerate with a greater emphasis on recurring revenues rather than
implementation fees.
As a result of the above, we generated an adjusted operating loss of $1.4
million (excluding Share Based Payments, Amortisation and Non-Core Items),
significantly down from $2.1 million in 2020. We are on track to reduce this
loss substantially during 2022 and with our ongoing customer momentum, we
expect that we should be able to reach EBITDA breakeven in early 2023.
Strategic Outlook
We entered 2022 positively, building on the foundations we laid in 2020 and
2021 and we feel that we now have the right management team in place to drive
the business forward. During the remainder of 2022, we will continue our
relentless focus on driving new customer wins with the strong data that we
have for implementations of CreatorSuite, JetStream and MCN services.
These customer wins are also enabling us to further differentiate from the
competition by building products that our customers are asking us for and
which will have a wider base of users looking to make more of their new and
existing video content. Customers need our multi-platform video publishing
tools and rapid analysis of extensive video back catalogues and a turnkey
media monitoring product.
We have leverageable assets. We have a strong technology team that has
executed an attractive product roadmap for customers. We will continue to look
to add professional expertise, particularly in relation to our sales efforts,
to ensure that we capitalise on our market opportunity. In building our firm
culture, given the team's responsiveness to operating challenges, we seek to
promote from within and reward success.
We have demonstrated our ability to marry Managed Video Optimisation Services
with our technology offerings for key clients in the publishing industry as
identified above. We will continue to seek deeper integration between our MCN
/ Optimisation Services and technology products through the remainder of 2022
and beyond. Beyond our focus on organic growth, where appropriate, we will
continue to look at accelerating market penetration by assessing acquisitions
where there is a strong client base, but no technology to leverage, thus
preventing true scaleability. We are attractive as we bring a turnkey
technology solution for customers.
We remain well positioned despite current market volatility as the world
continues to increase its dependence on video for information and decision
making. As we are seeing with our customer wins, tools to take advantage of
this shift are critical for publishers, brands and retailers.
Akiko Mikumo and David Anton
Interim Co-Chief Executive Officers
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 multichannel network ("MCN") that provides Managed Video
Optimisation Services. The two businesses have complementary assets and
provide synergies as the MCN has video creators and audiences around 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 video "micromoments" that enable consumers to access and
analyse the most relevant features of videos for themselves. The Group has
several KPIs against which it manages the business. 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.
In addition, the Group has seen increasing demand for its JetStream offering
directly. This has been evidenced by the announcement in February 2022 of a
strategic partnership with Kinetiq, Inc. to resell AI-led media monitoring for
its clients. Other such partners have been identified, as well as further use
cases. In such cases, the Group will consider providing a licence or a white
label service in order to accelerate the route to market.
Managed Video Optimisation Services
The Group's MCN aggregates creators of short form video content and publishes
such content on YouTube. This business unit forms the basis for the
Group's Managed Video Optimisation Services. Publishing partners, whether the
MCN'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 Managed Video Optimisation Services
business create for customers by working together.
First, the Group monitors the MCN 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. Example of such have been the launch
in 2020 of the new, micro-moment led GTChannel website (www.gtchannel.com) and
the launch of Dialog-To-Clip, the Adobe(®) Premiere Pro(®) plug-in, which
was tested with several MCN associates prior to launch in May 2021 and ongoing
pilots for additional technology products that streamline the creation and
editing of videos for YouTube and other publishing platforms. The MCN
provides a source of early-adopters for its technology products.
Non-Core / One-Time Costs (Gains)
During 2021, the Group focused on executing its business plan productizing its
technology with funding from EIS/VCT proceeds raised in the fundraising in
September 2019. Although the Group has stated its intention to seek
acquisition and partnership opportunities, no costs were spent on these areas.
The only non-core items for 2021 relate to approximately $0.3 million in
respect of termination payments, paid in September 2021, and a $0.2 million
gain in respect of the Payment Protection Programme (PPP) loan that was
forgiven in May 2021.
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 2021, the Group had $2.1m in
cash, following completion of the spending of EIS/VCT monies raised by the
Group at the time of its admission to AIM. This cash needed to be used by 30
September 2021 and has been successfully deployed to develop CreatorSuite and
JetStream to the point that each is a marketable product.
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 2021, the Group
released two new products. These were (i) CreatorSuite, which enables
customers to drive increased views and increased customer conversions and (ii)
Dialog-To-Clip, a plug-in generating efficiencies for video editing in
Adobe(®) Premiere Pro(®) with AI driven in-video search. CreatorSuite was
enhanced twice during 2021 with the release of moment creation direct from
transcripts and the release of playlists. Behind these products, the Group
continued to develop its AI-backbone, JetStream, a unique ensemble of video
analysis technologies.
(ii) Vertical Market Customers - At year end 2021, the Group
had signed contracts in vertical markets with 4 customers. Since year end, the
number of customers who had signed contracts with the Group had increased to
12.
(iii) Strategic Customers - At year end 2021, the Group had
signed contracts with one strategic customer to provide Managed Video
Optimisation Services. Since the year end, one further strategic customer has
been added. The Group has built a strong sales pipeline
(iv) E-Commerce Customers - At year end 2021, the Group had two
e-commerce led customers. Since the year end, the Group has added two further
customers in the e-commerce sector
(v) Corporate Development - Since year end, the Group has
entered into a strategic partnership with Kinetiq to focus on media monitoring
to help brands to understand their Return on Investment from marketing
(vi) MCN Creator Channels - At year-end 2021, the MCN had
approximately 10,000 creator channels, of which approximately 1,200 were
monetized. This is a reduction from the approximately 11,000 channels as at 31
December 2020, as the Group has focused on adding higher profit generating
channels with strategic upsales opportunities.
(vii) MCN Audience - At year-end 2021, the MCN had approximately
12.0 billion views, down 36.0 per cent (2020: 18.7 billion).
(viii) MCN Average RPM - At year-end 2021, the MCN had an average
RPM of $1.24, a 28.7 per cent. gain from 2020 (2020: $0.97).
(ix) Adjusted EBITDA - EBITDA adjusted for share-based payments
and non-core items was a loss of $1.47 million, in line with market
expectations for 2021 (2020: loss of $2.12 million).
(x) Non-Core Costs - During the year to 31 December 2021, there
was a net non-core costs of $0.1 million (2020: nil), as outlined above.
(xi) Net Cash - At the end of 2021, the Group had $2.1 million
in both gross and net cash. None of this money relates to the EIS/VCT funds
raised at time of admission to AIM and is therefore available for use by the
Group in an unrestricted fashion.
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.
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 MCNs,
this could have a significant impact on the operations of the Group's MCN
business
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 and anticorruption 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 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 a high proportion of key staff; the
loss of any of these staff may be detrimental to the Group.
Customer Risk
The Group has begun to sell its products to customers, who started
implementing CreatorSuite and JetStream related products in 2021 and
increasingly in 2022. 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.
Advertising Revenue Risk
The Group has historically been dependent on revenue from its YouTube MCN to
generate profitability and changes to the either 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 MCN
revenue in 2021. The impact of the war has also affected advertising against
videos discussing this topic.
Covid-19 Risk
COVID-19 could impact on the Group's ability to generate advertising income
due to lower customer spending as well as reduce customers' desire to spend
money on the new technologies produced by the Group given increased budgetary
constraints.
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. In the current geopolitical environment, as noted above, the
Group is monitoring the current crisis in the Ukraine and Russia to forecast
its impact on audiences and its MCN.
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 Financial 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 2021.
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 Interim Co-CEOs' Report.
Going Concern
At the time of approving the financial statements, the Directors have a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. In reaching
this conclusion the Directors have considered the financial position of the
Group, taking into consideration the recent fundraising, together with its
forecasts and projections until the end of 2022 that take into account
reasonably possible changes in trading performance including those that
ongoing effects of Coronavirus may cause. The going concern basis of
accounting has therefore been adopted in preparing the financial statements.
Dividends
The Directors do not recommend the payment of a dividend (31 December 2020:
nil).
Share Price
On 31 December 2021, the closing market price of SEEEN plc ordinary shares was
25.0 pence. The highest and lowest prices of these shares during the year to
31 December 2020 were 50.5 pence and 25.0 pence respectively.
Capital Structure
Details of the authorised and issued share capital are shown in Note 15. 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 from 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
On 23 February 2022, the Group announced a strategic partnership with Kinetiq,
Inc., a leading media intelligence platform that enables global customers to
measure the effectiveness of their paid, earned and owned media, across
thousands of broadcast, CTV and social channels around the world. The
companies provide "end-to-end" solutions for brands, networks and publishers
to better manage and measure audience experiences, as companies look to
migrate video content from traditional forms of media such as broadcast and
cable to social and CTV media platforms.
On 16 March 2022, the Group announced changes to its Board of Directors. Todd
Carter resigned as CEO and member of the Board to continue in a role
overseeing customer success and product strategy. Akiko Mikumo and David Anton
were each appointed as interim co-CEOs. Charles Burdick was proposed as an
Independent Non-Executive Director and was subsequently appointed on 26 May
2022. Kevin Kohn, CEO of Kinetiq, Inc, (see above) was also appointed as a
Board Observer. At the same time, the Group also announced that all of views
from its MCN business in Russia had ceased generating advertising revenue.
During 2021, approximately 25% of the Group's revenue was generated from views
within Russia. This is expected to lead to a decrease in MCN income for 2022,
however, as these channels had very low margins given distribution agreements
made prior to the Group's admission to AIM, the impact on profitability is
negligible.
Directors
The Directors who served the Company during the year and up to the date of
this report were as follows:
Executive Directors
Todd Carter (resigned 16 March 2022)
Scott Schlichter (resigned 4 August 2021)
Adrian Hargrave
Non-Executive Directors
Patrick DeSouza
Akiko Mikumo (became Executive Director 16 March 2022)
David Anton (became Executive Director 16 March 2022)
Mike Kelly (Resigned 9 April 2021)
Charles Burdick (appointed 26 May 2022)
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 six months to 31
December 2021 (31 December 2020: £Nil).
Directors' emoluments
12 months to 31 December 2021 Salary, Fees & Bonus Benefits Total
$ $ $
Executive Directors
T Carter 159,458 24,878 184,336
A Hargrave 104,589 17,723 122,312
S Schlichter* 263,187 27,957 291,144
Non-Executive Directors
P DeSouza** 12,500 - 12,500
A Mikumo** 12,500 - 12,500
D Anton** 12,500 - 12,500
M Kelly** 12,500 - 12,500
597,234 70,558 667,792
* Includes $146,520.55 paid as a one-off payment upon termination of contract.
** All of the Non-Executive Directors agreed to waive their cash compensation
in exchange for options at a premium to the prevailing share price in March
2021. Details of these options are in the table below
12 months to 31 December 2020 Salary, Fees & Bonus Benefits Total
$ $ $
Executive Directors
T Carter 200,000 26,534 226,534
S Schlichter 200,000 30,073 230,073
Non-Executive Directors
P DeSouza 50,000 - 50,000
A Mikumo 50,000 - 50,000
M Kelly 50,000 - 50,000
D Anton 50,000 - 50,000
600,000 56,607 656,607
Directors' interests
The Directors who held office at 31 December 2021 and subsequent to year end
had the following direct interest in the ordinary shares of the Company at 31
December 2021 and at the date of this report:
Number of shares at 31 December 2021 % held at 31 December 2021 Number of shares at 29 June 2022 % held at 29 June 2022
P DeSouza 5,426,165 10.9% 5,426,165 10.9%
T Carter 2,813,309 5.6% 1,958,309 3.9%
A Hargrave - - 125,000 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
Akiko Mikumo 152,083 45p 31/09/2020 - 31/09/2029
Akiko Mikumo 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
Charles Burdick 200,000 30p 26/05/2023 - 26/05/2033
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 6,666,666 13.3%
Scott Schlichter 5,870,406 11.8%
Canaccord Genuity Group Inc. 4,752,777 9.5%
Water Intelligence plc 3,855,033 7.7%
Taro Koki 3,601,436 7.2%
Sumitomo Corporation 2,314,815 4.6%
Rathbone Investment Management Limited 1,665,696 3.3%
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 Financial Officer
Corporate Governance
As a Board, we believe that practising 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 sections 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 three executive and two
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. Charles Burdick is the Company's independent
director. The Board is supported by four committees: Audit, Remuneration,
Nominations and Strategy. 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 2021 and the attendance of
directors is summarised below.
Board meetings Audit committee Remuneration committee
Possible (attended) Possible (attended) Possible (attended)
Todd Carter 6/6
Adrian Hargrave 4/4
Scott Schlichter 4/4
Patrick DeSouza 6/6 2/2
Akiko Mikumo 6/6 2/2 1/1
Mike Kelly 2/2 1/1 1/1
David Anton 6/6 2/2 1/1
Board Committees
Board Committees
The Board has established an Audit Committee, Remuneration Committee,
Nominations Committee and Strategy 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 Charles Burdick and comprises of himself and
Patrick DeSouza.
(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 Patrick DeSouza and comprises himself
and Charles Burdick.
(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.
(d) Advisory Panel and Board Observers
The Company has an Advisory Panel, comprised of Charlie Collier, Thomas Glocer
and Chris Welty. The purpose of the Advisory Panel is to enable the Directors
to draw upon the skills of these industry experts as well as supporting SEEEN
in accessing growth opportunities via the network of contacts of each member
of the Advisory Panel. The Advisory Panel meets on an ad-hoc basis and is
available for consultations with Directors as required.
In addition, the Company has two Board Observers, Taketo Kokubo of Sumitomo
Corporation and Kevin Kohn, the CEO of Kinetiq, Inc. with whom the Company
signed a strategic partnership in March 2022. Both of these individuals and
invited to Board meetings on an ad hoc basis.
(d) Advisory Panel and Board Observers
The Company has an Advisory Panel, comprised of Charlie Collier, Thomas Glocer
and Chris Welty. The purpose of the Advisory Panel is to enable the Directors
to draw upon the skills of these industry experts as well as supporting SEEEN
in accessing growth opportunities via the network of contacts of each member
of the Advisory Panel. The Advisory Panel meets on an ad-hoc basis and is
available for consultations with Directors as required.
In addition, the Company has two Board Observers, Taketo Kokubo of Sumitomo
Corporation and Kevin Kohn, the CEO of Kinetiq, Inc. with whom the Company
signed a strategic partnership in March 2022. Both of these individuals and
invited to Board meetings on an ad hoc basis.
Board Experience
All members of the board bring complementary skill sets to the Board. One
director is female and five are male. 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.
Akiko Mikumo, Interim Co-CEO
Term of office: Appointed 30 September 2019.
Akiko is a retired senior partner at Weil Gotshal and Manges LLP, one of the
world's leading law firms. She has over 35 years of mergers and
acquisitions, securities and governance experience. Her clients have included
some of the leading media and technology companies and investment firms. She
served as a member of the firm's Management Committee for over 12 years. Ms.
Mikumo was previously a director of Cambridge Science Corporation, a biotech
investment company in Cambridge, Massachusetts. Ms. Mikumo is a member of the
Advisory Board of University of California, Berkeley and is chair of the
Nominating Committee. Recently, she served as a fellow at Harvard's Advanced
Leadership Initiative. She is a graduate of University of California,
Berkeley and New York University School of Law.
David Anton, Interim Co-CEO
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.
Charles Burdick, Independent Non-Executive Director
Term of office: Appointed 16 May 2022.
Charles has a significant track record as an executive in media and
telecommunications, with roles including CFO and CEO of Telewest plc, a FTSE
100 cable TV and media company; CEO of HIT Entertainment plc, the children's
IPR company previously listed on AIM; and Chairman and CEO of Comverse
Technology, a NASDAQ-quoted technology business.
Adrian Hargrave, Chief Financial Officer
Term of office: Appointed 4 March 2021.
Adrian has been Chief Financial Officer of SEEEN plc since its admission to
AIM on 30 September 2019. Previously, he has been Corporate Development
Director at Water Intelligence plc. Prior to this, he worked as a corporate
financier and Qualified Executive with AIM companies for the last 15 years.
The Company Secretary is responsible for ensuring that Board procedures are
followed and that all applicable rules and regulations are complied with.
Adrian Hargrave, the CFO, currently performs the role of Company Secretary,
providing an advisory role to the Board. The Company Secretary is supported
and guided in this role by the Company's legal advisors.
The Directors have access to the Company's CFO/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 Chief Financial Officer manages a risk register for the Group that
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 Financial
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 through to completion 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 reports from the Chief Financial Officer,
other members of management and 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 are Charles Burdick
(Chairman) and Patrick DeSouza.
The Interim Co-CEOs and Chief Financial Officer are 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 2021 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 2021. The Committee currently comprises
Patrick DeSouza and Charles Burdick, with Patrick DeSouza as Chairman. Prior
to the appointment as Interim Co-CEOS, Akiko Mikumo and David Anton had formed
part of the Remuneration Committee. 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 2021. Following is an overview of how
the Board performed its duties during 2021.
Shareholders
The Chairman, Chief Executive Officer and Chief Financial 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 MCN,
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 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 International Financial Reporting Standards ("IFRSs").
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 2021,
which comprise:
· the Group statement of comprehensive income for the year ended 31
December 2021;
· the Group and parent company statements of financial position as
at 31 December 2021;
· 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
significant 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 conformity with the requirements of the
Companies Act 2006 and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
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 2021 and
of the Group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards in conformity
with the requirements of the Companies Act 2006;
· the parent company financial statements have been properly
prepared in accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006; 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, 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. 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 management's financial 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
2021 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 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.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group or parent company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
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 $150,000 (2020: $165,000), based
on 4.8% of loss before tax per draft figures obtained from pre-year end
management accounts. 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
$112,500 based on 0.6% of total assets 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 $105,000 (2020: $123,000)
for the Group and $78,750 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 to it all identified errors in excess
of $5,600 (2020: $8,250). Errors below that threshold would also be reported
to it 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 component auditors,
Marcum LLP. 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 going concern included above in the Conclusions Relating to
Going Concern section, 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 We evaluated, in comparison to the requirements set out in IAS 36,
management's assessment (using discounted cash flow models) as to whether
The carrying value of goodwill and other intangible assets at 31 December 2021 goodwill and/or other intangible assets were impaired. We challenged,
was $15.0 million (2020: $15.1 million). reviewed and considered by reference to external evidence, management's
impairment and fair value models as appropriate and their key estimates,
The Group's intangible assets comprise of goodwill arising on acquisition of including the discount rate. We reviewed the appropriateness and consistency
subsidiaries, customer relationships and technology developments. of the process for making such estimates.
When assessing the carrying value of goodwill and intangible assets, We obtained management's discounted cash flow models supporting the intangible
management makes judgements regarding the appropriate cash generating unit, asset valuation. We challenged the key assumptions into the model, including
strategy, future trading and profitability and the assumptions underlying the forecast revenue and gross margin, discount rates and growth rates. We
these. We considered the risk that goodwill and/or other intangible assets compared cash flow forecasts used in the impairment review to historical
were impaired. performance, and challenged where forecasts indicated performance that
deviated significantly from historical performance, in the absence of
The key judgements are in relation to revenue growth and customer significant changes in the business or market environment.
acquisitions. Changes in these factors could result in an impairment to the
carrying value of the goodwill and intangible assets. Discount rates and terminal growth rates were benchmarked to externally
derived data and our knowledge of sector performance, to evaluate the
reasonableness of these assumptions. Sensitivity analysis was performed on the
key assumptions such as growth, customer acquisitions, margin and discount
rates to identify those assumptions to which the goodwill or intangible asset
valuation was highly sensitive.
Carrying value of investments and intercompany receivables - Parent Company
The carrying value of investments in subsidiaries in the parent company We considered with management whether any further indications of impairment
financial statements at 31 December 2021 was $12.2 million (2020: $15.2 existed. This includes considering the existence of any indication of
million), as well as an intercompany balance of $2.8 million (2020: $2.9m discontinued operating activities, management's future plans for the business,
million), after an impairment in the current year of $5.1 million. The the ability of the business to achieve its business plan, together with the
valuation of these investments and the recovery of the intercompany balance carrying value of the group's intangible assets and the market capitalisation
are almost entirely dependent on the successful execution of the business of the Group.
plan. Changes in the carrying value of the groups intangible assets, or a
failure to execute the business plan would likely result in a further
impairment to the carrying value of the investments in and loans to
subsidiaries. In assessing whether any further impairment may be required, because the
value of the investment in subsidiaries is highly related to the
recoverability of the goodwill and intangible assets our work was
substantially that as set out in the KAM above.
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;
- 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 Glasby (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Consolidated Statement of Comprehensive Income
Year ended 31 December 2021 Year ended 31 December 2020
Notes $ $
Audited Audited
Revenue 8,537,729 10,135,053
Cost of sales (7,633,917) (9,040,727)
Gross profit 903,812 1,094,326
Administrative expenses
- Share-based payments 5 (349,925) (618,192)
- Amortisation of intangibles 9 (1,605,924) (1,214,564)
- Other administrative costs 3 (2,461,951) (3,215,463)
Total administrative expenses (4,417,800) (5,048,219)
Operating Loss (3,513,988) (3,953,893)
Finance expense 6 (3,835) (6,562)
Loss before tax (3,517,823) (3,960,455)
Taxation 7 323,510 340,740
Loss after tax (3,194,313) (3,619,715)
Other Comprehensive Income
Items that will not be reclassified to profit and loss
Exchange differences arising on translation of foreign operations (33,880) (317,805)
Total comprehensive loss for the year (3,228,193) (3,943,876)
Loss per share attributable to equity holders of Parent Cents Cents
Basic 8 (6.39) (7.25)
Diluted 8 (6.39) (7.25)
The results reflected above relate to continuing activities.
Consolidated Statement of Financial Position
31 December 2021 31 December 2020
Notes $ $
ASSETS
Non-current assets
Goodwill and indefinite life intangible assets 9 9,762,158 9,762,158
Other intangible assets, net 9 5,255,018 5,320,876
Trade and other receivables 1,800 1,800
15,018,976 15,084,834
Current assets
Trade and other receivables 11 751,524 1,790,074
Cash and cash equivalents 12 2,086,249 5,336,502
2,837,773 7,126,576
TOTAL ASSETS 17,856,749 22,211,410
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 15 7,400,732 7,400,732
Share premium 15 7,677,993 7,677,993
Merger relief reserve 8,989,501 8,989,501
Share based payment reserve 1,124,768 774,842
Foreign exchange reserve 165,855 199,735
Retained earnings (9,324,869) (6,130,556)
Total Shareholders' Equity 16,033,980 18,912,247
Non-current liabilities
Deferred tax liability 14 569,710 893,220
569,710 893,220
Current liabilities
Trade and other payables 13 1,253,059 2,207,943
Borrowing 20 - 198,000
Total Current Liabilities 1,253,059 2,405,943
TOTAL EQUITY AND LIABILITIES 17,856,749 22,211,410
The financial statements of SEEEN plc, company number 10621059, were approved
by the board of Directors and authorised for issue on the 29 June 2022. They
were signed on its behalf by:
Adrian Hargrave
Chief Financial Officer
Company Statement of Financial Position
Notes
31 December 31 December
2021 2020
$ $
ASSETS
Non-current assets
Investment in Subsidiaries 10 12,192,026 15,166,851
12,192,026 15,166,851
Current assets
Trade and other receivables 11 2,825,149 2,969,903
Cash and cash equivalents 12 1,301,405 4,399,957
4,126,554 7,369,860
TOTAL ASSETS 16,318,580 22,536,711
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 15 7,400,732 7,400,732
Share premium 15 7,677,993 7,677,993
Merger reserve 8,989,501 8,989,501
Share based payment reserve 1,124,768 774,842
Foreign exchange reserve 118,779 427,684
Retained earnings (9,197,895) (3,073,206)
Total Shareholders' Equity 16,113,878 22,197,546
Current liabilities
Trade and other payables 13 204,702 339,165
Total Liabilities 204,702 339,165
TOTAL EQUITY AND LIABILITIES 16,318,580 22,536,711
The loss for the financial year in the financial statements of the parent
Company, which related entirely to Plc costs, was $6,124,689 and $1,320,263
for the 12 months ended 31 December 2021 and 2020, respectively.
The financial statements of SEEEN plc, company number 10621059, were approved
by the board of Directors and authorised for issue on the 29 June 2022. They
were signed on its behalf by:
Adrian Hargrave
Chief Financial Officer
Consolidated Statement of Cash Flows
Year ended 31 December 2021 $ Year ended 31 December 2020 $
Cash flows from operating activities
Loss before tax (3,517,823) (3,947,618)
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 1,605,924 1,214,564
Gain on extinguishment of debt (198,000)
Share based payments 349,926 618,192
Interest paid 3,833 6,562
Operating cash flows before movements in working capital (1,756,140) (2,108,300)
Decrease/(Increase) in trade and other receivables 1,038,554 24,179
(Decrease)/Increase in trade and other payables (954,885) (223,865)
83,669 (199,686)
Cash used by operations (1,672,471) (2,307,986)
Income taxes paid - -
Net cash used by operating activities (1,672,471) (2,307,986)
Cash flows from investing activities
Purchase of intangible assets (1,540,066) (1,977,211)
Cash on acquisition - -
Net cash used in investing activities (1,540,066) (1,927,211)
Cash flows from financing activities
Proceed from loan - 198,000
Interest income/(paid) (3,833) (6,562)
Net cash (used by)/generated from financing activities (3,833) 191,438
Net increase/(decrease) in cash and cash equivalents (3,216,370) (4,043,759)
Effect of exchange rates on cash (33,882) (380,644)
Cash and cash equivalents at the beginning of year 5,336,502 9,760,905
Cash and cash equivalents at end of year 2,086,250 5,336,502
There have been no changes in liabilities arising from financing activities,
other than the forgiveness of the PPP loan in May 2021 as noted in Note 20 to
these accounts, which has not been recognised in this statement of cash flows.
Company Statement of Cash Flows
Year ended 31 December 2021 $ Year ended 31 December 2020 $
Cash flows from operating activities
Loss before tax (6,124,689) (1,320,263)
Adjustments for non-cash/non-operating items:
Share based payment expense 349,926 618,192
Change in carrying value of investment in subsidiaries 5,075,122 -
Operating cash flows before movements in working capital (699,641) (702,071)
Decrease (Increase) in trade and other receivables - -
(Decrease) Increase in trade and other payables (134,460) (428,319)
Cash used by operations (834,101) (1,130,390)
Income taxes - -
Net cash used by operating activities (834,101) (1,130,390)
Cash flows from investing activities - -
Loans to subsidiaries (2,326,770) (2,182,016)
Net cash used in investing activities (2,326,770) (2,182,016)
(Decrease)/Increase in cash and cash equivalents (3,160,871) (3,312,406)
Effect of exchange rates on cash 62,319 (126,287)
Cash and cash equivalents at the beginning of period 4,399,957 7,838,650
Cash and cash equivalents at end of period 1,301,405 4,399,957
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 29 June 2022.
2 Significant 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 international accounting
standards in conformity with the requirements of the Companies Act 2006
("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 financial statements have been prepared on a going concern basis, which
assumes that the Group will be able to meet its liabilities as they fall due
for the foreseeable future. The Group is dependent for its working capital
requirements on cash generated from operations and its cash holdings. The cash
holdings of the Group at 31 December 2021 and 31 December 2020 were $2.1
million and $5.3 million, respectively.
Given the stage of development of the Group's products, the Directors have
implemented a reduction in development spend, partially offset by an increase
in sales and marketing. The Directors have prepared detailed cash flow
projections which are based on their current expectations of trading
prospects, as well as scenarios where (i) sales fail to materialize as
expected and (ii) potential further impacts of COVID-19 pandemic and
advertising impacts caused by the Ukraine-Russia conflict on trading. Under
all these scenarios, the Group has sufficient cash resources for at least on
year from the date of these accounts, although the Board has plans to reduce
cash burn by approximately 50 per cent. from current levels should product
sales fail to materialize, which provides the Group with sufficient cash
resources for an extended period. Accordingly, the Directors have concluded
that it is appropriate to continue to adopt the going concern basis in
preparing these financial statements.
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.
Nature of MCN
SEEEN owns 100% of GT Channel, Inc, which operates a multichannel network
("MCN"). The MCN aggregates content supplied by creators. The MCN 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 MCN. 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 MCN with daily
reports on its receipt of revenue from brands against the MCN's content.
Revenue to the MCN is recognized upon receipt of such reports from YouTube.
The MCN pays the creators who have supplied videos to the MCN and these
payments are recognized as Cost of Sales in the Group's statement of
comprehensive income.
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 amortisation 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 reocgnised 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
A business segment is a group of assets and operations engaged in providing
products or services that is subject to risks and returns that are different
from those of other business segments. During the year to 31 December 2021,
the majority of revenue for the Group was generated from its MCN 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 SEEN, 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 2021 was
£1 = US$1.3757 (31 December 2020 was £1 = US$1.3627). The average exchange
rate for the year to 31 December 2021 was £1 = US$1.3520 (31 December 2020
was £1 = US$1.2837).
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.
(ii) 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
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
The Group also recognises lifetime ECLs for trade receivables and contract
assets. 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 reocgnised in the
financial statements.
Impairment of goodwill
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 requires estimates of the value
in use (or fair value less costs to sell) of subsidiaries to which goodwill
has been allocated. This requires the Directors to estimate the future cash
flows and an appropriate discount factor, in order that the net present value
of those cash flows can be determined. Discounted cash flow forecasts give due
consideration to the impact of COVID-19 on the future cash flows, and are
stress tested under a range of scenarios. Further details are provided in note
9 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. This requires the Directors to estimate the future cash flows
and an appropriate discount factor, in order that the net present value of
those cash flows can be determined. Discounted cash flow forecasts give due
consideration to the impact of COVID-19 on the future cash flows, and are
stress tested under a range of scenarios. Further details are provided in note
10 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 Expenses by nature
The Group's operating profit has been arrived at after charging:
Year ended Year ended
31 December 31 December
2021 2020
Note $ $
Employee costs 724,457 1,151,339
Severance costs 291,144 -
Consulting services 128,490 368,261
Agency fees 614,053 650,802
Rent 11,145 19,592
Professional fees 233,600 319,447
Listing fees 14,372 9,845
Other 444,690 696,177
Year ended Year ended
31 December 31 December
2021 2020
$ $
Auditors remuneration
Fees payable to the Group's auditor for audit of Parent Company and 37,856 37,227
Consolidated Financial Statements
Fees payable to the Group's auditor for non-audit services 4,056 53,902
The Group auditors are not the auditors of the US subsidiary companies. The
fees paid to the auditor of the US subsidiary companies were $40,000 (31
December 2020: $36,000) for the audit of these companies with no payments for
other services.
4 Employees and Executive Directors
The Executive Directors are considered to be the key management of the
business.
` Year ended 31 December 2021 Year ended 31 December 2020
$
$
Staff costs for all employees, including Executive Directors consist of:
Wages and Salaries 1,015,601 1,151,339
Share Based Payments Expense 349,925 618,192
1,365,526 1,721,138
Information regarding Executive Directors emoluments are as follows:
Year ended 31 December 2021 6 months ended 31 December 2020
$ $
Short-Term employee benefits
Directors' fees, salaries and benefits 547,234 600,000
Social Security Costs 70,558 56,607
617,792 150,000
The highest paid Executive Director received emoluments of $291,144, including
termination payment (31 December 2020: $230,073).
The average number of employees (including Directors) in the Group during the
year was:
Year ended 6 months ended
31 December 31 December
2021 2020
Directors (executive and non-executive) 5 5
Management 2 3
Other 3 4
10 11
Note: The Group also uses five 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.
5 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 2021
Weighted average exercise price (GBp)
2021
Outstanding at beginning of year 4,996,887 45.0
Granted during the year 3,400,000 62.9
Forfeited/lapsed during the year - -
Exercised during the year - -
Outstanding at end of the year 8,396,887 52.2
Exercisable at end of the year 4,996,887 45.0
During the year the Company issued options to existing directors and staff in
exchange for reducing their cash compensation, as well as issuing employee
incentivization grants for retention purposes. The Group has also issued
options in 2022 as outlined in Note 21 below.
Fair value of share options
During the year, the Group granted 3,400,000 Share Options to certain
Employees and Consultants with exercise prices ranging from 60 pence to 65
pence ($0.84 to $0.91) with graduated three year vesting and subject to
continued employment (or involvement in the case of consultant) by the
Company.
The fair value of options granted during 2021 has been calculated using the
Black Scholes model which has given rise to a fair value per share of 9.1p to
14.3p. This is based on a risk-free rate of 0.84% and volatility of 53.0% and
that the options will be exercised on the first date of the exercise period.
The Black Scholes calculations for the options granted during the year
resulted in an annual charge of $130,729 which has been expensed in 2021.
The weighted average remaining contractual life of the share options as at 31
December 2021 was 8.35 years.
Options arrangements that exist over the Company's shares at year end are
detailed below:
Grant 31 December 2021 31 December 2020 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 - 4/3/2021 60p 4/3/3024 4/3/2031
2021 Incentive Options 1,300,000 - 4/3/2021 65p 4/3/3024 4/3/2031
2021 Incentive Options 650,000 - 13/5/2021 65p 13/5/3024 13/5/2031
Total 8,396,887 4,996,887
All share options are equity settled on exercise.
Further options have been granted since 31 December 2021 and information on
these can be found in Note 21 (Subsequent Events) to these Accounts.
6 Finance expense
Year ended Year ended
31 December
31 December
2021
2020
$
$
Interest expense 3,833 6,562
7 Taxation
The major components of income tax expense for the periods ending 31 December
2021 and December 2020 are as follows:
Year ended Year
31 December 31 December
2021 2020
Group $ $
Current tax: - -
Current tax (benefit) on profits in the year - -
Prior year over provision - -
Total Tax charge (benefit) 0 -
Deferred tax current year (323,510) (340,740)
Deferred - -
Total Tax charge (benefit) (323,510) (340,740)
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:
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
2021 2020
$ $
Total loss on ordinary activities before tax (3,517,822) (3,947,618)
Loss on ordinary activities at the standard rate of corporation tax in the US (738,743) (829,000)
of 21% (30 June 2020: 21%)
Non-deductible expenses 51,557 118,989
eductible expenses
State taxes net of federal benefit (223,583) (227,980)
Other tax adjustments, reliefs and transfers 186 -
Adjustment in respect of prior year (648) (144)
Deferred tax not recognised / valuation allowance 587,721 585,022
Changes in rates - 15,069
Total Tax charge (323,510) (338,044)
At the balance sheet date, the Group had unused tax losses (as reported on the
Group's tax returns) of $11,787,927 available for offset against future
profits. $1,776,191 represents unrecognized deferred tax assets thereon. The
deferred tax asset has not been recognized due to uncertainty over timing of
utilization.
8 Earnings per share
The loss per share has been calculated using the profit for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
Year ended Year ended
31 December
31 December
2021
2020
Loss for the year attributable to equity holders of the Parent ($) (3,194,313) (3,619,715)
Weighted average number of ordinary shares 49,957,876 49,957,876
Diluted weighted average number of ordinary shares 49,957,876 49,957,876
Loss per share (cents) (6.39) (7.25)
Diluted loss per share (cents) (6.39) (7.25)
9 Intangible assets
Group Goodwill Arising on Consolidation Other Intangible Assets Development Costs Totals
$ $ $ $
Cost
At 31 December 2019 9,762,158 4,463,432 94,794 14,320,384
Additions - - 1,977,213 1,977,213
Amortisation - (1,190,249) (24,315) (1,214,564)
At 31 December 2020 9,762,158 3,273,183 2,047,692 15,083,033
Additions - - 1,540,066 1,540,066
Amortisation - (1,190,249) (415,675) (1,605,924)
At 31 December 2021 9,762,158 2,082,934 3,172,083 15,017,175
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 2021 31 December 2020
GTChannel, Inc 3,165,023 3,165,023
Tagasauris, Inc 3,643,678 3,643,678
Entertainment AI, Inc 2,953,457 2,953,457
Total 9,672,158 9,672,158
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 recoverable amount of the CGU has been determined from a review of the
current and anticipated performance of this unit through to the end of 2024.
In preparing this projection, a discount rate of 10% has been used based on
the weighted average cost of capital and a perpetual growth rate of 2% has
been assumed, justified by the longer term prospects for the online and
digital video industry. The discount rate was based on the Company's cost of
capital as estimated by management. Management has also made assumptions
around the growth / customer acquisition in relation to its products it has
launched in 2021 and 2022. This includes adding new, profitable channel
partners to its MCN, selling its media monitoring services through 3(rd)
parties and increasing its CreatorSuite client base. If management
assumptions were to reduce by 50%, i.e. if the Group was only able to obtain
half of the expected customer numbers across categories, this would reduce the
carrying value of the goodwill by $2 million. No other reasonable change in
the other assumptions made by management would presently result in an
impairment.
10 Investment in subsidiary undertakings
Company Cost of investment Loan to group undertaking Total
$
$
$
Cost
At 31 December 2020 12,984,835 2,182,106 15,166,851
Additions - 2,100,207 2,100,207
At 31 December 2021 12,984,835 4,282,313 17,267,058
Impairment
At 31 December 2020 - - -
At 31 December 2021 (5,075,122) - (5,075,122)
Carrying amount
At 31 December 2020 12,984,835 2,182,106 15,166,851
At 31 December 2021 7,909,713 4,282,313 12,192,026
The Directors annually assess the carrying value of the investment in the
subsidiaries and in their opinion an impairment provision of $5,075,122 is
required to bring the value of investments into line with the net assets of
the Group as a whole. In addition to the above, the Company also recognises
loans to group undertakings totalling $2,825,149 in current assets on the
Company balance sheet.
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.
11 Trade and other receivables
Group Company
31 December 31 December 31 December 31 December
2021
2020
2021
2020
$
$
$
$
Trade and other receivables 751,524 1,790,074 - -
Intercompany receivables - - 2,825,149 2,969,903
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.
12 Cash and cash equivalents
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2021
2020
2021
2020
$
$
$
$
Cash at bank and in hand 2,086,249 5,336,502 1,301,405 4,399,957
13 Trade and other payables
Group Company
Year Ended 31 December Year Ended 31 December Year Ended 31 December Year Ended 31 December
2021
2020
2021
2020
$
$
$
$
Trade payables 471,983 521,044 68,418 164,173
Accruals and other payables 781,076 1,686,899 136,284 174,991
1,253,059 2,207,943 204,702 339,164
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs and are payable within 3 months.
14 Deferred Tax
Total
$
Balance as at 1 January 2021 (893,220)
Deferred tax on acquisition of subsidiaries -
Deferred tax charge for the year 323,510
Balance At 31 December 2021 (569,710)
The deferred tax provision comprises:
31 December 2021 31 December 2020
$ $
Deferred tax liability arising from acquisition of intangible assets 569,710 893,220
Total 569,710 893,220
At the balance sheet date, the Group had unused tax losses (as reported on the
Group's tax returns) of $11,787,927 available for offset against future
profits. $1,776,191 represents unrecognized deferred tax assets thereon. The
deferred tax asset has not been recognized due to uncertainty over timing of
utilization.
15 Share capital
The issued share capital in the year was as follows:
Group & Company
Ordinary Shares of 12 pence each Number Shares held in treasury Number
Total Number
At 31 December 2020 49,957,876 - 49,957,876
At 31 December 2021 49,957,876 - 49,957,876
Group & Company
Share capital Share premium
$
$
At 31 December 2020 7,400,732 7,677,903
At 31 December 2021 7,400,732 7,677,903
During the year to 31 December 2021, the Company issued no new shares.
16 Financial instruments
Financial instruments
As at the dates presented, the Group has classified its financial instruments
as follows:
At 31 December 2021 Loans and Receivables at Amortized Cost Other Financial Liabilities at Amortized Cost Fair Value through Profit or Loss Total
$
$
$
$
Financial Assets
Cash 2,086,249 - - 2,086,249
Trade and Other Receivables 751,524 - - 751,524
Financial Liabilities
Trade and Other Payables - 1,253,059 - 1,253,059
Borrowings - Current - - - -
At 31 December 2020 Loans and Receivables at Amortized Cost Other Financial Liabilities at Amortized Cost Fair Value through Profit or Loss Total
$
$
$
$
Financial Assets
Cash 5,336,502 - - 5,336,502
Trade and Other Receivables 1,790,075 - - 1,790,075
Financial Liabilities
Trade and Other Payables - 2,207,943 - 2,207,943
Borrowings - Current - 198,000 - -
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 MCN business. The key counterparty for this business is
YouTube. The performance obligations arise at the time that MCN 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 2021 and 31 December 31 2020, 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 2021 31 December 2020
Current 751,524 1,789,834
31-60 days - -
61-90 days - -
>90 days - 240
751,524 1,790,074
Allowance for doubtful accounts - -
Total 751,524 1,790,074
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 2021, 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
2021
2020
2021
2020
$
$
$
$
Assets
Sterling 1,059,409 1,766,102 1,059,409 1,766,102
Liabilities
Sterling 370,082 284,890 370,082 284,890
As shown above, at 31 December 2021 the Group had Sterling denominated
monetary net assets of $689,327 (31 December 2020: $1,481,212). If Sterling
weakens by 10% against the US dollar, this would decrease net assets by
$68,933 (31 December 2020: $148,121) 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 $132,420 in the year to 31
December 2021 (year to 31 December 2020: loss of $350,241), 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, following the forgiveness of the PPP loan
received in May 2021. 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
The Directors are not aware of any related party transactions.
20 Borrowing
On April 30, 2020, the Company received a loan, from the bank, in the amount
of $198,000 under the Paycheck Protection Program (PPP) established by the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and is
administered by the U.S. Small Business Administration (SBA). Under the
terms of the CARES Act, the PPP loan recipients can apply for and be granted
forgiveness for all or a portion of the loan granted under the PPP, at which
time the Company will recognize the forgiven amount as income. Such
forgiveness will be determined, subject to limitations, based on the use of
loan proceeds for: payroll costs and mortgage interest, rent or utility costs
and the maintenance of employee and compensation levels. The Company used
the twenty-four-week forgiveness period and applied for forgiveness of the PPP
loan in accordance with the terms of the PPP. On 5 May 2021, the Company's PPP
loan was forgiven.
21 Subsequent events
On 23 February 2022, the Group announced a strategic partnership with Kinetiq,
Inc., a leading media intelligence platform that enables global customers to
measure the effectiveness of their paid, earned and owned media, across
thousands of broadcast, CTV and social channels around the world. The
companies provide "end-to-end" solutions for brands, networks and publishers
to better manage and measure audience experiences, as companies look to
migrate video content from traditional forms of media such as broadcast and
cable to social and CTV media platforms.
On 16 March 2022, the Group announced changes to its Board of Directors. Todd
Carter resigned as CEO and member of the Board to continue in a role
overseeing customer success and product strategy. Akiko Mikumo and David Anton
were each appointed as interim co-CEOs. Charles Burdick was proposed as an
Independent Non-Executive Director and was subsequently appointed on 26 May
2022, at which time he was granted an option over 200,000 ordinary shares of
12 pence each ("Ordinary Shares") at an exercise price of 30 pence per
Ordinary Share. Kevin Kohn, CEO of Kinetiq, Inc, (see above) was also
appointed as a Board Observer. At the same time, the Group also announced that
all of views from its MCN business in Russia had ceased generating advertising
revenue. During 2021, approximately 25% of the Group's revenue was generated
from views within Russia This is expected to lead to a decrease in MCN income
for 2022, however, as these channels had very low margins given distribution
agreements made prior to the Group's admission to AIM, the impact on
profitability is negligible.
22 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.
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