REG - SEEEN PLC - Results for the year ended 31 December 2022
30/06/2023 07:00
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RNS Number : 4771E SEEEN PLC 30 June 2023
SEEEN plc
("SEEEN", the "Group" or the "Company")
Audited results for the year ended 31 December 2022
Update on 1H 2023
Notice of AGM
SEEEN plc, the media and technology platform that delivers AI-led Key Video
Moments to drive increased views and revenues across all video content, is
pleased to present its audited results for the year ended 31 December 2022 and
an update on 1H 2023.
Overview
2022:
· Significant traction from proprietary technology sales
· Focus on profitability for Creator Service Provider (CSP)
business
· Shift in revenue mix from CSP to higher value technology sales
· Successful fundraise in December 2022 to accelerate technology
sales and selected customer-led product development in 2023
1H 2023:
· Sales wins have accelerated, including 2 strategic partners sales
worth more than $1 million in annual revenues and $250,000 in gross profit
· Added further 12 vertical and e-commerce customers with latter
doubling in one-half year
· Expected release of CreatorSuite 2.0 in July 2023 with additional
features including advertising and flexible in-video shoppable Calls To Action
to accelerate sales further
Accelerating Technology Customer Numbers
2021 2022 1H 2023
Strategic 1 3 4
Vertical 4 14 22
eCommerce-led 2 4 8
Note: This table represents the cumulative number of technology customers
Full Year 2022 highlights:
● Global market demand in SEEEN's key markets is growing, especially
video commerce which, globally, is expected to grow at a CAGR of 32% to $2.8
trillion by 2028 (source: Reportlinker)
● Successful fundraising of £2.6 million (gross) to accelerate
sales through an enhanced sales and marketing team and selected technology
upgrades
● Product Sales. At year end, the Group has:
o 4 strategic customers (large publishers)
o 14 vertical market customers (sports, retail, services, financial
publishing)
o 4 e-commerce led customers
● Revenues
o Changing mix of revenue, reflecting higher margin technology
commercialisation
o Revenues from customers using CreatorSuite, the Group's primary technology
product, of approximately $1.0 million (2021: $0.1 million)
o Recurring technology revenues of approximately $0.1 million (2021: $0.1
million, of which approximately half was professional services fees)
o Total Group revenues of $3.3 million (2021: $8.5 million), reflecting: (i)
elimination of unprofitable revenue from CSP channel partners with no
technology upselling potential; (ii) loss of all CSP advertising revenue in
Russia since the start of the Ukrainian conflict
● Profitability
o Adjusted EBITDA* loss of ($0.8) million, in line with current market
expectations, significantly reduced from ($1.5) million in 2021 as the Group
continued to focus on product sales, which has accelerated further since year
end
▪ Non-core one-off goodwill impairment of $7.5 million relating to
termination of Video Experience Platform, which targeted "experience-based"
market segments
o Improved gross margin of 15.2% (2021: 10.6%), reflecting increasing mix of
technology sales and higher margin CSP channel partners
* Adjusted EBITDA is defined as Earnings before Depreciation and Amortisation,
adding back Share Based Payments, One-Off Termination Costs and Goodwill
Impairment
1H 2023 Update:
● Two strategic customer wins combined worth in excess of $1 million
in revenues and $250,000 in gross profit annually
o Cross-selling already being achieved across CSP and technology
● 12 vertical customers added across sports, ecommerce and financial
publishing
o Implementations showing strong results, including doubling sales on
product pages and 20% Click Through Rates on our new in-video commerce Calls
To Action
● Cash position at 29 June of $2.2 million enables the Group to
continue executing on sales pipeline and achieve cash flow breakeven
● 1H 2023 CSP revenues consistent with 4Q 2022, whilst undergoing
YouTube business plan review and now positioned to grow in 2H 2023,
particularly with brands, publishers and sports clubs
● CreatorSuite 2.0 expected to be released in July with advertising
and flexible Calls To Action built in; success already achieved in 2Q 2023
with trial version and strong pipeline to execute against as updated product
is delivered
● Appointment of sales focused Non-Executive Director, Mark
Williams, and experienced AIM CFO, Carmel Warren
Notice of AGM: Copies of the Annual Report and Notice of Annual General
Meeting are today being posted to shareholders and will shortly be made
available on the Company's website at seeen.com. The Company's AGM will be
held at the offices of Allenby Capital Limited, 5(th) Floor, 5 St Helen's
Place, London EC3A 6AB at 12 noon on 26 July 2023.
Dr. Patrick DeSouza, Chairman of SEEEN, commented: "The board is appreciative
of the team and pleased with the dramatic commercial progress achieved during
the trailing twelve months - both for our number of technology sales and
improved profitability at the CSP. We now look forward during 2H to
communicating our revenue-enhancing value proposition for customers. We will
also be demonstrating our unique technology at various fora."
Adrian Hargrave, CEO of SEEEN, commented: "2022 was a transformational year
for the business, as we achieved commercial traction for our high margin
technology products. This has only accelerated in 2023, having completed our
fundraising in late 2022. We are well positioned to accelerate our technology
sales in a fast-growing market with the release of CreatorSuite 2.0. The
reaction from customers has been positive and our case study data reinforces
that in-video commerce is gaining importance. We are ahead of the competition
in providing a solution that allows both advertising and bespoke Calls To
Action. This allows publishers, sports clubs and brands to "double dip" on
video revenue streams from advertising and video commerce. When combined with
our Key Video Moments to determine the most actionable parts of a video, we
can significantly boost our customers' revenues. This is essential for our
customer base who want to gain a greater ROI from their video assets. Our AI
is also helping our CSP, as we are able to identify and curate Key Video
Moments. These can be published as YouTube Shorts, TikToks and Instagram Reels
easily without creating new content. This is increasingly important as
companies seek to publish across multiple platforms, without having to create
new content for each platform.
We are grateful for the support of our shareholders and all of our employees
as we look forward to delivering a profitable and valuable company in a
fast-growing marketplace."
The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/ 2014 (which forms part of Domestic UK law pursuant to the European Union
(Withdrawal) Act 2018). Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
Enquiries:
SEEEN plc Tel: +44 (0)7775 701 838
Adrian Hargrave, CEO
Carmel Warren, CFO
Dowgate Capital Limited - Joint Broker Tel: +44 (0)20 3903 7721
Stephen Norcross
Allenby Capital (Nominated Adviser & Joint Broker) Tel: +44 (0)20 3328 5656
Alex Brearley/George Payne (Corporate Finance)
Tony Quirke/Amrit Nahal (Sales and Corporate Broking)
Chairman's Statement
As discussed more fully in our CEO's Statement, the big headline for our
shareholders and for the marketplace is that over the trailing twelve months -
2H 2022 to 1H 2023 - we have turned the corner from technology development to
sales and corporate development. Moreover, the number of sales wins has
actually been accelerating during 1H 2023 and we see a path to cash flow
positive which is the key milestone for any early-stage growth company.
On behalf of our shareholders, we appreciate the team's relentless execution,
on-going enthusiasm for seizing the customer opportunity and focus on
fundamentals despite difficult financial market conditions.
To better understand both our progress and our ability to improve our share
price, which is one indicator of market recognition of our progress, let me
outline five dimensions to our business which are reflected in our Accounts,
especially our Strategic Report.
First, our value proposition resonates with customer needs. We stand apart
because our technology offerings help customers drive their businesses forward
in a practical way that shows a return on investment. The new front-end to
our website says it all: "Monetize Viewer Impulse With Our AI-Led Interactive
Video." Short attention spans are here to stay and companies seek to connect
immediately with their audiences to drive impulse decision-making, especially
for e-commerce purchases from video moments. As a result, market trends
favour SEEEN. Moreover, the introduction of next generation of AI tools now
make video generative through more emotional content that enables continuous
customer engagement with fresh video prompts or "moments" to maximize the
possibilities for purchases.
Second, our sales traction and pipeline involve both strategic customers such
as media publishers and vertical market customers such as football and rugby
clubs. It is important to have a mix of both. Strategic customers have
"home run" value but longer sales cycles. Vertical market customer wins, to
extend the baseball metaphor, produce singles and doubles but close with more
frequency as a "follow the pack" mentality ensues. Winning teams have a
consistent combination of both types of outcomes - home runs and singles to
diversify risk of timing in closing sales. Moreover, each type reinforces
the sales pipeline as more customers see adoption grow on a more widespread
basis.
Third, customer traction also helps focus the product roadmap because one can
more precisely prioritize capital expenditure needs based on testable use
cases that point to customer success features. Early stage companies often are
reliant on market studies and the concept of "build it and they will come."
Our forward-looking product roadmap and intellectual property filings of
derivative works are now characterized by being "sales-informed."
Fourth, in gaining sales traction, we are able to focus our headcount expense
better. During 1H, we hired two more salespersons with experience in markets
where we already have customers. Recently, we have added a board member with a
background in building sales teams.
Fifth, and most importantly, we have the resources to succeed. At the
midpoint of our trailing twelve-month shift to a sales-centric company, we
completed a capital raise that provides us the resources to drive forward the
above four dimensions of our business: (i) customer-centric value proposition;
(ii) mix of customers that reinforce the sales pipeline build; (iii) product
and IP roadmap driven by use cases for which customers will pay; and (iv)
passionate, customer-focused headcount.
Again on behalf of our board and the shareholders, we appreciate the
persistence of our team in driving forward with confidence despite volatile
market conditions over the past twelve months. We look forward to
communicating during further acceleration of progress during 2H 2023 and
beyond.
Dr. Patrick DeSouza
Chairman
CEO's Statement
Overview
2022 was a transformative year for the business. The Board and
shareholders sought to accelerate the shift from technology development to
commercialization. In July, I was appointed CEO to continue delivering against
the Group's plan to accelerate high-margin technology sales, whilst restoring
and growing the profitability of GTChannel, our YouTube Creator Service
Provider ("CSP" or formerly Multichannel Network ("MCN")). This culminated in
December 2022 with additional support from our investors, as SEEEN raised
£2.6 million to further accelerate execution of our plan to deliver
technology sales and development. We have already been executing against these
targets in 2023, with multiple sales to two new significant strategic
customers, worth over $1 million in annual revenues and approximately $250,000
in annual gross profit contribution, as well as 12 new vertical and e-commerce
customers providing us with increasing marketplace momentum and customer
referrals.
These larger customer wins come against a backdrop of continued momentum in
winning vertical customers, which are smaller in size but larger in volume and
with simple deployments. We have won an additional 12 customers in these
vertical markets during Q2 2023, split between sports, ecommerce and financial
publishing. Most of these deals have a small base fee and a performance based
element based on sales generated for our customers from video views. We have a
strong pipeline against which to execute, which has been reinforced by
attendance at trade shows and events for e-commerce, sports and investor
relations companies. In each case, we have been able to build a significant
sales pipeline of customers, as we have a unique technology offering for the
market.
In addition to success in executing against our plan, we have a technology
that is well suited for the current market backdrop. Since late 2022,
generative AI has become increasingly prevalent, both for textual and visual
creations. SEEEN's technology aids such advances by enabling customers to
"re-mix" their existing content and create "new" content at minimal marginal
cost, as opposed to spending money on making new video content. In addition,
with the large amount of videos available to SEEEN through our CSP and
open-source availability, we have been able to train AI models to look for
objects and phrases that customers can re-publish.
Our core offering of providing our customers with AI-led Shoppable Key Video
Moments (ie short segments of videos, which are most likely to lead to an
impulse response from viewers) are increasingly essential for video asset
owners, because we provide the ability to make more money directly from video,
allowing customers to take advantage of both advertising and video e-commerce.
In an environment where advertising revenues are under pressure, companies
need to both understand and justify their content creation spending and are
increasingly focused on making more money from their existing back catalogues.
We provide this solution.
We have also improved the value proposition and profitability of our CSP.
During 2022, gross margins within the CSP improved by over 30%. Our AI tools
benefit our CSP customers to identify Key Video Moments for use as YouTube
Shorts, Instagram Reels and TikToks. As each of these platforms continue to
grow in importance, preparing new, original short form content by leveraging
existing video collections is the fastest and cheapest way for these
publishers to publish the regular diet of such videos required to be
successful on these platforms.
With the above momentum on small scale execution, we are on track to achieve
cash flow breakeven and accelerate more aggressively to capitalise on the
market opportunity presented to us.
Commercializing the Large Market Opportunity
The last few months has seen an explosion in interest for generative AI,
including most notably ChatGPT, but also services which create images and
video from text. SEEEN offers services around video creation by leveraging our
AI for creating Key Video Moments. When combined with the increased
understanding and awareness of generative AI, we are well positioned to take
advantage of three additional trends and sell into these high-value publishing
and e-commerce markets.
The first of these is the growth of video e-commerce, whereby viewers are
getting more used to buying products and services directly whilst watching
videos on the internet and mobiles. This market is forecast to grow by a CAGR
of 32% to a total size of $2.8 trillion by 2028 (source: Reportlinker, May
2023). Solutions for better, contextual commerce offerings within video will
continue to grow, including away from social media platforms, so that
publishers, brands and sports clubs can earn money directly and own the first
party data.
The second of these is the increasing growth of Short Form videos, as
attention spans have diminished and people want access to content, products
and services as quickly as possible. The pandemic accelerated these trends as
platforms such as TikTok and Instagram Reels grew substantially. YouTube also
created YouTube Shorts, its attempt to take market share in short form views
and as of February 2023, YouTube started sharing advertising revenue from
YouTube Shorts with creators, unlike the other social platforms, reinforcing
itself as the platform of choice for commercially-focused video publishers.
With our CSP offering, SEEEN is well positioned to help all YouTube creators
as YouTube Shorts increases in importance versus traditional longer form
YouTube videos.
The third trend is the increasing move towards Continuous Customer Engagement,
as most brands, publishers and sports clubs want to be consistently at the
front of viewers' minds to sell ongoing services and products, rather than
one-off transactions. Video continues to increase as part of companies'
marketing, selling, support and training processes.
With our shoppable Key Video Moments, we are best positioned to address the
needs of larger publishers and e-commerce brands.
2022 and 2023 Delivery
2022
During 2022, the Group significantly improved its adjusted EBITDA (EBITDA
adding back share-based payments and one-off costs as defined in KPI (x) in
the Strategic Report), halving its loss to $0.8m (2021: loss of $1.5m) as the
Group focused on commercialisation. This focus resulted in revenue reducing to
$3.3m, as the Group migrated from low margin channels, as well as a weaker
YouTube advertising market and the loss of all revenue from views in Russia,
which had accounted for 25% of revenue in 2021. Significantly, the Group also
increased its gross margin to approximately 15% from approximately 10%,
through both focusing on more profitable channel partners for its YouTube CSP
and the increased level of recurring technology sales achieved against 2021.
During the year, the Group also shifted its focus from development of
technology products to commercialisation, with additional functionality
developed during 2022 to meet customer needs. As a result, we significantly
reduced our capitalised expenditure to $0.7m (2021: $1.5m) and focused on
commercialization. Improvements to our existing technology set, included
building additional AI models and functionality for CreatorSuite, such as
Moment-based automated playlists and direct clipping from transcripts. As part
of this focus on commercialisation and profitability, the Group discontinued
investment in Video Experience Platforms for "experience-based" market
segments to focus on the sales identified above. This resulted in a $7.5
million impairment of goodwill created at the time of the acquisition of the
Group's three subsidiary businesses.
At year end, we had pro forma cash resources of $3.3 million. The Group had
approximately $1.2 million of gross and net cash with an additional $2.1
million receivable committed but not yet received from the equity fundraising
in December 2022. We received the money in January after the balance sheet
date for this audit.
2023 Subsequent Events
We have a mix of two types of Sales: Strategic (Higher Value Opportunities
with longer sales cycles) and Vertical (Smaller technology adopters with
shorter sales cycles). Each contribute to our business model in different
ways. Many of our Vertical sales also include a significant level of
implementation fees and cross-selling. We also have momentum on a third type
of sale - ecommerce opportunities, where we share a percentage of the sales
generated from viewers who purchased after interacting with our technology.
During 2Q 2023, after making additional sales hires, the pace of customer
acquisition has accelerated with 14 total wins, doubling the amount achieved
during 2022.
Strategic Customers
In terms of sales goals, we have landed two strategic customers in the first
half of the year of 2023, in line with our target of a customer every quarter.
In the first sale, we signed the customer up for our CSP services, which are
worth approximately $1m per annum. More recently, we upsold technology
services worth $5,000 a month relating to creating short form content from
their existing videos to publish across multiple social video platforms.
In the second strategic customer sale, we signed a US based financial
publisher to our technology services in order to leverage their events videos
with Key Video Moments to drive sign-ups to future events and ongoing online
and magazine subscriptions. This customer is expecting to launch their newly
designed website to take advantage of these moments during July and is
expected to be worth approximately $80,000 of technology sales to SEEEN in
this financial year. Cross-selling opportunities exist with this customer as
the new version of CreatorSuite is launched, allowing the publisher to take
advantage of both advertising and e-commerce revenues from within video, as
well as assistance with YouTube through SEEEN'S CSP offering.
Vertical Customers
In terms of vertical customers, we have won 12 new customers in the last two
months, in line with the targets to win at least five customers per month from
a strengthened sales team. In 1Q 2023, we hired sales people to focus on
e-commerce in the US and sports in the UK and have won customers in both
verticals. These customer implementations have been going live and our
revenues include a mix of monthly fees and e-commerce upside.
CRM and e-Commerce Value Proposition
Within some of these implementations, we have integrated our technology with
large software systems and platforms. For example, we have integrated with (i)
Salesforce to send out automated video commerce emails to customers and (ii)
Shopify to integrate our shoppable Calls To Action directly with the Shopify
cart. As noted above, the ability to link customers directly from CRM
databases to direct purchases is increasingly important for all brands and
video is a key component of delivering this Continuous Customer Engagement.
This is evidenced by the fact that for customers using our video technology,
product pages with our shoppable videos have seen double the level of sales as
against other product pages. We have also seen clickthrough rates of up to 25%
from videos onto purchase pages, which is much higher than the 6% average seen
on YouTube and 8% on Vimeo. These are strong validations of our contextual
video commerce offering and we expect to continue to further accelerate sales
into all of our core vertical markets; being e-commerce, sports and services,
especially as we release the new version of CreatorSuite in July armed with
these case studies.
YouTube and Our CSP Business
In terms of providing the basis for growing our CSP business, during the first
half of 2023, in line with many other similar businesses, SEEEN underwent a
review by YouTube of its business plans and customer targeting for 2023 and
beyond. During part of this period, SEEEN's ability to add new channel
partners to the CSP was partially restricted, as we were still able to add new
channels with YouTube's approval. However, following the review, SEEEN is now
in a position to add new channel partners at its full discretion to re-start
CSP growth in the second half 2023 with YouTube's support.
Given the review referenced above, CSP revenue growth in 2023 is expected to
be smaller versus 2022 than we originally anticipated, but SEEEN is continuing
to target higher margin channels, where customers want to use SEEEN's
technology to leverage their large video back catalogues to create Shorts and
new re-mixed content from different Key Video Moments.
Technology Development
Finally, we have two new products that we are expecting to release to the
market, as described at the time of our fundraising. In July, we will release
CreatorSuite 2.0, which combines all the original benefits of CreatorSuite,
together with two important additional features: advertising and fully
customisable end cards to allow the video player and associated Calls To
Action to be fully "on brand" for our customers. We have already made the
above referenced sales on a beta version of this product, where we provide a
managed service solution, we will be able to leverage our sales and customer
success teams by delivering a "self-serve" tool that customers can use to
optimise their video collections for monetisation. In addition, the ability to
both advertise and provide video commerce is highly attractive to publishers
and sports clubs in particular, as it allows them to "double dip" on revenues
from videos, without having to choose only one of the options, which is the
case with other video player solutions.
For example, for publishers who already monetise video through advertising,
CreatorSuite 2.0 allows them to continue to make money from pre-roll adverts
in front of videos, as well as selling subscriptions to additional video
services or affiliate sales from products that are shown within the video, but
the sale is fulfilled by a third party, such as Amazon. For sports clubs, who
have a passionate fan base, videos can include adverts, as fans will still
want to watch the video and shoppable or informational elements can also be
included. On a recent season ticket launch video, we saw clickthrough rates
(CTRs) of more than 20% from viewers to the sign-up page, significantly higher
than any CTRs achieved through more generic video offerings.
We have also enhanced our AI tools and expect to release a product during 3Q
2023 which allows YouTube channels to import all of their videos and search
for specific Key Video Moments based on specific terms. Our product, which
will be branded in 2H 2023 upon commercialization, will provide the customer
with clips from videos around these topics based on a combination of models:
visual, activity and speech. This product is already being used by our CSP to
create YouTube Shorts for a strategic publishing client, but we expect to
offer this as an additional CSP service to attract a larger, more profitable
partner base or as a standalone service to channels.
Summary
As we head into the second half of 2023, we are very excited about the
prospects for the Group. We have shown significant sales momentum for our
technology and services, despite not having yet completed our upgraded
technology stack. We do not expect significant further investment in the near
term in further technology and will continue to aggressively pursue the market
opportunity presented by the interest in generative AI and video commerce
solutions globally. Given the rapidly evolving landscape, we will also seek
further strategic partnerships in order to access a customer base faster,
whilst offering a unique solution for our partners. If appropriate, we will
also consider strategic acquisitions that would help us accelerate customer
growth. This focus on growth, combined with our case studies places us well to
deliver on our commitments to deliver significant growth in shareholder value
over the near and medium term, whilst achieving cash flow breakeven.
Adrian Hargrave
Chief Executive Officer
Strategic Report
Business Review and Key Performance Indicators
This Strategic Report outlines the business indicators to help the Board
evaluate both the Group's current performance and the progress being made by
the Group in applying its technology assets to its own and third-party media
assets to create a leading video technology platform business.
Group's Business
SEEEN is organized into two businesses: (i) video moments AI technology and
(ii) a YouTube Creator Service Provider ("CSP") (formerly called Multichannel
Network ("MCN")) that provides technology-led social video optimisation
services. The two businesses have complementary assets and provide synergies
as the CSP has video creators and audiences from which the Group may design
and test video moments technology products. The synergistic nature of these
business lines means that the Board and management consider the Group and its
progress as one business as opposed to separate reporting entities.
Technology Business
The Group owns various intangible assets - patents, trade secrets, licenses
and product designs - that underlie a suite of AI proprietary products focused
on the production of Key Video Moments (ie short segments of videos, which are
most likely to lead to an impulse response from viewers) that enable consumers
to access and analyse the most relevant features of videos for themselves.
Our core offering is to provide our customers with such Key Video Moments and
to make these shoppable and interactive to drive product sales and customer
engagement. This is increasingly essential for video asset owners, because we
provide the ability to make more money directly from video, allowing customers
to take advantage of both advertising and video e-commerce. In an environment
where advertising revenues are under pressure, companies need to both
understand and justify their content creation spending and are increasingly
focused on making more money from their existing back catalogues.
Additionally, our AI tools benefit our CSP customers to identify Key Video
Moments for use as YouTube Shorts, Instagram Reels and TikTok. As each of
these platforms continue to grow in importance, preparing new, original short
form content by leveraging existing video collections is the fastest and
cheapest way for these publishers to publish the regular diet of such videos
required to be successful on these platforms.
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.
Creator Service Provider Services
The Group's CSP provides services to creators on YouTube through standalone
service agreements and by aggregating channels and publishing such content on
YouTube. Publishing partners, whether the CSP's creator channels or third
party businesses, rely on the Group's know-how to create a content strategy
that increases views and therefore digital ad revenue and brand awareness on
YouTube. YouTube receives such digital ad revenue producing gross revenues.
After YouTube deducts its commission, the Company receives net revenue from
YouTube. The economics of the multichannel network creates various KPIs which
help the Board to monitor the business plan of its Managed Video Optimisation
Services. These KPIs measure critical attributes: (i) number of creator
channels producing monetizable content; (ii) number of views/audience
attracted to such content; (iii) digital ad yield from such content and
accompanying audience expressed as Revenue Per Thousand. From these KPIs and
the margins retained from creator channel partners, the Company creates its
forecasts on net revenues and profit before taxes.
Synergies from the Technology and Media Businesses
As noted above, additional shareholder value is extracted from the synergies
that the technology business and the Managed Video Optimisation Services
business create for customers by working together.
First, the Group monitors the CSP data as a standalone business unit.
Second, the Group also analyses the use of its technology features to attract
an audience and content creators for the Company to test and subsequently
productize its video moments technology. Examples of this included the launch
in 2020 of the new, micro-moment led GTChannel website (www.gtchannel.com),
the launch of Dialog-To-Clip, which was integrated into CreatorSuite and, most
recently a search tool based on visuals, activities, speech and various other
classifiers which accelerates the process of finding and publishing sub-60
second videos for content creators from their own back catalogue.
Non-Core / One-Time Costs (Gains)
The only non-core items for 2022 relate to approximately $0.1 million in
respect of termination payments, paid in June 2022, as well as the $7.5
million impairment of goodwill discussed below and in Note 9 to the Accounts.
Capital
The Board is mindful that it needs to apply its finances prudently to position
the Group to succeed through building both a leading technology stack and
sales and marketing function. At 31 December 2022, the Group had a pro forma
cash position of $3.3m (pending receipt of final amounts from a late December
2022 fundraising which arrived in early January 2023). Of this cash, $1.8m is
EIS/VCT qualifying and needs to be used on new product development and
marketing within two years of receipt.
Amortisation of intangible assets and goodwill impairment
The Group continues to amortise its intangible assets as per its policies set
out in the notes to the accounts. During the year, the Group amortised $2.0
million relating to a combination of both intangible assets from the
acquisitions of subsidiaries, as well as products developed primarily during
2020 and 2021.
The Group is selling these products to customers, but the Board has deemed the
Video Experience Platform and related products previously targeted for
"experience-based" market segments will not find traction in the current
market and will not provide future cashflow for the Group. After analysing the
sales growth and projected cost of capital associated with investment in these
projects, the carrying value is less than the value in use and hence the
goodwill from the time of the acquisition has been impaired by $7.5 million.
KPIs
As identified in the Group's previous annual report, the Board considered
certain KPIs for the Group. As the Group evolves, it is expected that the KPIs
for the business will evolve also and the Company expects to update these at
the time of its interim report. KPIs were identified in the last annual report
and the Board has started looking at additional KPIs against which it monitors
the Group's progress. These KPIs are as follows:
(i) Technology Product Releases - During 2022, the Group
released product updates for CreatorSuite and further developed its AI tools
for direct re-sale. For CreatorSuite, the following product updates were (i)
integrating transcription-based moments, leveraging the Group's previous
Dialog-To-Clip product and (ii) enhanced playlists for publishing related Key
Video Moments together. In respect of its AI tools, the Group further enhanced
all of its core models and in particular released a new model based on
activities identified within video.
(ii) Vertical Market Customers - At year end 2022, the Group
had signed contracts in vertical markets with 14 customers. Since the year
end, the Group has now added 8 further customers in the e-commerce sector,
totalling 22
(iii) Strategic Customers - At year end 2022, the Group had
signed contracts with three strategic customers to provide Managed Video
Optimisation Services. Since the year end, two further strategic customers
have now been added, with one loss totalling five strategic customers. The
Group has built a strong sales pipeline, which it expects to accelerate
against as advertising is added to the functionality of CreatorSuite
(iv) E-Commerce Customers - At year end 2022, the Group had four
e-commerce led customers. Since the year end, the Group has now added four
further customers in the e-commerce sector, bringing the total to 8
(v) Corporate Development - During 2022, the Group entered into
a strategic partnership with Kinetiq to focus on media monitoring to help
brands to understand their Return on Investment from marketing. The Group has
also made initial sales to within the e-commerce sector to customers who could
act as re-seller partners going forward.
(vi) CSP Creator Channels - At year-end 2022, the Group had
approximately 900 monetized channels. This is a reduction from the
approximately 1,200 channels as at 31 December 2021, as the Group has
continued to focus on adding higher profit generating channels with strategic
upselling opportunities.
(vii) CSP Audience - At year-end 2022, the CSP had approximately
10.0 billion views, down 16.7 per cent (2021: 12.0 billion).
(viii) CSP Average RPM - Given the ongoing shift in viewing on
YouTube from standard form to YouTube Shorts, the Board has discontinued
reviewing this KPI, as readily comparable and relevant data is no longer
available, given that the RPM for Shorts is approximately 1/100(th). Combined
with the loss of monetization from views in Russia, this means that Average
RPM is no longer a core or reliable to report metric
(ix) Adjusted EBITDA - EBITDA adjusted for share-based payments
and non-core costs was a loss of $0.8 million, in line with current market
expectations for 2022 (2021: loss of $1.5 million).
(x) Non-Core Costs - During the year to 31 December 2022, there
was a net non-core costs of $7.6 million, reflecting $7.5 million of
impairment of goodwill and $0.1 million in respect of termination payments
(2021: $0.1 million), as outlined above.
(xi) Net Cash - At the end of 2022, the Group had $1.2 million
in both gross and net cash, however allowing for the committed but unreceived
funds from its fundraising, the Group had cash resources available to it
totalling $3.3 million. $1.8 million of this money relates to the EIS/VCT
funds raised for use in new product development and marketing. Subsequent to
year end, the Company received all of the outstanding proceeds from the
fundraising during January 2023.
Technology Development
2021 2022 2023 YTD
Creator Suite CreatorSuite 1.0 Dialog-To-Clip integration Advertising integration
Beta - flexible interactive shoppable in-video CTAs
Moments based Playlists
JetStream JetStream Sound and audio indexing Activity based searches
Logo recognition Integrating ChatGPT
MCN technology Dialog-To-Clip Beta version of Shorts Clipping Tool
Cumulative Technology Customer Numbers
2021 2022 2023 YTD
Strategic 1 3 4
Vertical 4 14 22
eCommerce-led 2 4 8
Principal Risks and Uncertainties
The Group's objectives, policies and processes for measuring and managing risk
are described in note 17. The principal risks and uncertainties to which the
Group is exposed include:
Technological advances within the industry
The technology industry as a whole evolves rapidly with new entrants and ideas
continuously changing the market. There is a risk that competitors react to
opportunities faster, rendering the Group's technology uncompetitive which
could have a material adverse impact on the prospects of the Group. The Group
has a technology which already has commercial traction, for which it completed
a fundraising in December 2022. In addition to investing in sales, part of the
fundraising is being used to develop CreatorSuite 2.0, which addresses
additional functionalities that customers are requesting as the marketplace
evolves. The Group anticipates releasing the CreatorSuite 2.0 in July 2023,
which will include more flexible in-video ecommerce options and advertising to
accelerate sales in key target markets. If the development of such products is
not possible or delayed to unforeseen implementation concerns, then the
Group's future revenue and profitability is likely to be impacted against
internal projections/
Customer Risk
The Group is selling its products to customers, who have implemented
CreatorSuite and JetStream related products. The Company is subject to such
customers continuing to use the Group's products and also its ability to win
new customers as projected using these initial customers as reference
customers. The Board is particularly aware of this risk should the economy
undergo a recession and therefore customers reduce their expenditure on new
products.
YouTube / Google changes
The Group's revenues have predominantly been sourced from YouTube advertising
revenue. Should YouTube alter its terms of business for creators and CSPs,
this could have a significant impact on the operations of the Group's CSP
business.
Advertising Revenue Risk
The Group has historically been dependent on revenue from its YouTube CSP to
generate profitability and changes to the market conditions or regulations and
the terms of advertising on YouTube could affect the Group's ability to
generate revenues and profits. This has been felt most recently by the impact
of the Russia-Ukraine war, following which all views from Russia have been
demonetized, which represented approximately 25% of the Group's CSP revenue in
2021, as well as lower advertising levels more generally.
Data Protection and General Data Protection Regulation ("GDPR")
Data protection, driven in Europe by GDPR, is becoming increasingly relevant
in the handling of consumer data. Any failures to follow relevant data
protection rules could result in significant monetary penalties.
Money-laundering and Anti-Corruption Regulations
As the Group has to make payments to its network of creators, it is
responsible for ensuring that all payments made to creators comply with all
money-laundering, anticorruption and sanctions regulations of the
jurisdictions in which it operates. Historically, the Group has outsourced
payments or made them through recognised payment wallet providers, however as
the Group may be required to make direct transfers to creators, the Group
monitors the increased risks associated with these direct payments.
Foreign exchange risk
The Group has employees and contractors based overseas who are paid in foreign
currencies and may enter into contracts priced in foreign currencies. It is
therefore exposed to adverse exchange rate movements which could cause its
costs to increase (relative to its reporting currency) resulting in reduced
profitability for the Group.
Credit Risk
The Group's credit risk is primarily attributable to its cash and cash
equivalents and trade receivables. The credit risk on other classes of
financial assets is considered insignificant.
Liquidity Risk
The Group manages its liquidity risk primarily through the monitoring of
forecasts and actual cash flows.
Organisational Risk
As a small Group, there is a reliance on key staff; the loss of any of these
staff may be detrimental to the Group.
Market and Geopolitical Volatility
The Group monitors general market conditions for their impact on sales cycles
and capital markets. In the current economic environment, rapidly changing
inflation indicators and interest rates affect corporate spending on
technology and on advertising on YouTube and other social channels. Despite
the volatile capital markets conditions, the Group completed a fundraising in
December 2022 to ensure that the Group could continue to build on commercial
momentum achieved during 2022.
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most likely promote
the success of the Group for the benefit of its stakeholders. A discussion
of s172 is presented in the Statement on Corporate Governance. The Strategic
Report incorporates actions taken by the Group to ensure compliance with s172.
By order of the Board
Adrian Hargrave
Chief Executive Officer
Directors' Report
The Directors present their report on the affairs of SEEEN plc (the "Company")
and its subsidiaries, referred to as the Group, together with the audited
Financial Statements and Independent Auditors' report for the year ended 31
December 2022.
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 momentise
video and to license such capabilities to brands, creators and publishers to
enable discovery, sharing and e-commerce.
Results
The financial performance for the year for each of the Group and the Company,
including the Group's Statement of Comprehensive Income and each of the
Group's and the Company's financial position at the end of the year, is shown
in the Financial Statements.
Future Developments
The Company has chosen in accordance with section 414C(11) of the Companies
Act 2006 to include the disclosure of likely future developments in each of
the Chairman's Report and the CEO's Report.
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 Company's recent fundraising in December
2022, together with its forecasts and projections until the end of 2024 that
take into account reasonably possible changes in trading performance. 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 2021:
nil).
Share Price
On 31 December 2022, the closing market price of SEEEN plc ordinary shares was
6.5 pence. The highest and lowest prices of these shares during the year to 31
December 2022 were 22.0 pence and 6.5 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 its operations.
The Group's exposure and approach to capital and financial risk, and approach
to managing these is set out in note 17 to the consolidated financial
statements.
Subsequent Events
Since 31 December 2022, the following Board changes have taken place; the
Company announced the resignation of Charles Burdick on 6 February 2023 and he
ceased to be a director of the Company on 6 April 2023. Mark Williams was
appointed as a director of the Company on 18 May 2023.
In addition, the Group has continued to win a significant level of customers
during 2023, including two new strategic customers worth over $1 million in
annual revenues and approximately $250,000 in annual gross profit
contribution, as well as 12 other customer contracts and implementations.
Directors
The Directors who served the Company during the year and up to the date of
this report were as follows:
Executive Directors
Adrian Hargrave
Todd Carter (resigned 16 March 2022)
Non-Executive Directors
Patrick DeSouza
Akiko Mikumo
David Anton
Charles Burdick (resigned 6 April 2023)
Mark Williams (appointed 18 May 2023)
Directors' Indemnity
The Company's Articles of Association provide, subject to the provisions of UK
legislation, an indemnity for Directors and officers of the Company in respect
of liabilities they may incur in the discharge of their duties or in the
exercise of their powers, including any liabilities relating to the defence of
any proceedings brought against them which relate to anything done or omitted,
or alleged to have been done or omitted, by them as officers or employees of
the Company. Appropriate directors' and officers' liability insurance cover is
in place in respect of all the Directors.
Directors' Conflicts of Interest
In the event that a Director becomes aware that they, or their connected
parties, have an interest in an existing or proposed transaction involving the
Group, they will notify the Board in writing or at the next Board meeting.
Political Donations
The Group did not make any political donations during the year to 31 December
2022 (31 December 2021: £Nil).
Directors' emoluments
12 months to 31 December 2022 Salary, Fees & Bonus in Cash Benefits Total
$ $ $
Executive Directors
T Carter* 31,250 5,437 36,687
A Hargrave 135,551 18,484 154,035
Non-Executive Directors
P DeSouza** - - -
A Mikumo** - - -
D Anton** - - -
C Burdick*** - - -
166,801 23,921 190,722
* Todd Carter was subsequently employed for a further three months following
his resignation as a director, the compensation for which is not outlined in
here.
** All of the Non-Executive Directors agreed to waive their cash compensation
in exchange for options. Those non-executive directors still on the Board of
the Company will be granted share options after the publication of these
Accounts at a premium to the prevailing share price.
*** Upon his appointment to the Board on 27 May 2022, Charles Burdick agreed
to waive his Board fees for the 2022 financial year and in exchange was
granted an option to acquire 200,000 ordinary shares in the Company at an
exercise price of 30 pence (vesting 1/3rd on the first anniversary, 1/3rd on
the second anniversary and 1/3rd on the third anniversary, all vestings
subject to him remaining a Director of the Company)
In the 12 months to 31 December 2022, the directors did not receive any other
emoluments, compensation or cash or non-cash benefits other than that
disclosed above.
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
577,234 70,558 647,792
* 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 below table. Details of these
options are in the table on the next page.
Directors' interests
The Directors who held office at 31 December 2022 and subsequent to year end
had the following direct interest in the ordinary shares of the Company at 31
December 2022 and at the date of this report:
Number of shares at 31 December 2022 % held at 31 December 2022 Number of shares at 29 June 2023 % held at 29 June 2023
P DeSouza 5,426,165 5.8% 5,426,165 5.8%
A Hargrave 788,833 0.8% 788,833 0.8%
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
Substantial Shareholders
As well as the Directors' interests reported above, the following interests of
3.0% and above as at the date of this report were as follows:
Number of shares % held
Gresham House Asset Management Limited 27,800,169 29.8%
Canaccord Genuity Group Inc. 4,752,777 5.1%
Water Intelligence plc 5,938,366 6.4%
Scott Schlichter 5,870,406 6.3%
Dowgate Capital Limited 7,073,430 7.6%
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.
Related Party Transactions
For the purposes of AIM Rule 19, the Company entered into the following
related party transactions during 2022:
Adrian Hargrave, SEEEN's Chief Executive and a related party as defined in the
AIM Rules for Companies, subscribed for 583,333 new ordinary shares in a
placing of new ordinary shares on 30 December 2022, which represented an
amount of approximately £35,000 at the issue price of 6 pence per new
ordinary share.
Dr Patrick DeSouza, SEEEN's Chairman, who was at the time a substantial
shareholder of the Company and a related party as defined in the AIM Rules for
Companies, has an interest in 25.07 per cent. of the issued share capital of
Water Intelligence plc ("Water Intelligence") and Water Intelligence is
therefore a related party of the Company pursuant to the AIM Rules for
Companies. Water Intelligence subscribed for 2,083,333 new ordinary shares in
a placing of new ordinary shares on 30 December 2022, which represented an
amount of approximately £125,000 at the issue price of 6 pence per new
ordinary share.
Gresham House Asset Management Limited ("Gresham House"), a substantial
shareholder of the Company and a related party as defined in the AIM Rules for
Companies, subscribed for 21,133,503 new ordinary shares in a placing of new
ordinary shares on 30 December 2022, which represented an amount of
approximately £1.3 million at the issue price of 6 pence per new ordinary
share. As announced by the Company on 7 December 2022, in connection with its
participation in this placing, pursuant to an agreement between Gresham House
and the Company, it was agreed, inter alia, that, for as long as Gresham House
is the registered holder of a minimum of 10 per cent. of the Company's
ordinary shares in issue from time to time, Gresham House shall be entitled to
appoint one director to the Company's Board as a nominee director.
Statement of disclosure to the Independent Auditor
Each of the persons who are directors at the time when this Directors' report
is approved has confirmed that:
· so far as that director is aware, there is no relevant audit
information of which the Company and the Group's auditor is unaware; and
· that director has taken all the steps that ought to have been taken
as a director in order to be aware of any relevant audit information and to
establish that the Company and the Group's auditor is aware of that
information.
By order of the Board
Adrian Hargrave
Chief Executive Officer
Corporate Governance
As a Board, we believe that practicing good Corporate Governance is essential
for building a successful and sustainable business in the long-term interests
of all stakeholders. SEEEN's shares are listed on AIM, a market operated by
the London Stock Exchange.
SEEEN has adopted the QCA Corporate Governance Code. The Company has adopted a
share dealing code for the Board and employees of the Company which is in
conformity with the requirements of Rule 21 of the AIM Rules for Companies.
The Company takes steps to ensure compliance by the Board and applicable
employees with the terms of such code.
The following outline the structures, processes and procedures by which the
Board ensures that high standards of corporate governance are maintained
throughout the Group.
Further details can be found on our website at seeen.com.
Takeovers and Mergers
The Company is subject to The City Code on Takeovers and Mergers.
Board
The Board, chaired by Dr. Patrick DeSouza, comprises one executive and four
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. Akiko Mikumo, David Anton and Mark Williams are
the Company's independent directors. The Board is supported by three
committees: Audit, Remuneration and Nominations. The Audit and Remuneration
Committees are the principal committees for Corporate Governance.
Each Board member commits sufficient time to fulfill their duties and
obligations to the Board and the Company. They are required to attend at least
4 Board meetings annually and join Board calls that take place between formal
meetings and offer availability for consultation when needed.
Board papers are sent out to all directors in advance of each Board meeting
including management accounts and accompanying reports from those responsible.
Meetings held during the year to 31 December 2022 and the attendance of
directors is summarised below.
Board meetings Audit committee Remuneration committee
Possible (attended) Possible (attended) Possible (attended)
Todd Carter 2/6
Adrian Hargrave 6/6
Patrick DeSouza 6/6 2/2 1/1
Akiko Mikumo 6/6 1/1
David Anton 5/6 1/1
Charles Burdick 3/4 2/2 1/1
Board Committees
The Board has established an Audit Committee, Remuneration Committee and
Nominations Committee with delegated duties and responsibilities.
(a) Audit Committee
The Audit Committee has the primary responsibility for monitoring the quality
of internal control, ensuring that the financial performance of the Company is
properly measured and reported on and for reviewing reports from the Company's
auditors. The Audit Committee will meet at least twice a year at appropriate
times in the reporting and audit cycle and otherwise when required. The Audit
Committee will also meet with the Company's auditors at least once a year.
The Audit Committee is chaired by Patrick DeSouza and comprises of himself,
Akiko Mikumo, David Anton and Mark Williams.
(b) Remuneration Committee
The Remuneration Committee is responsible for the review and recommendation of
the scale and structure of remuneration for executive directors and other
designated senior management, taking into account all factors which it deems
necessary. The Remuneration Committee considers all aspects of the executive
directors' remuneration including pensions, benefits and share option awards.
No director will be involved in any decision as to his or her own
remuneration. The Remuneration Committee will meet at least twice a year and
otherwise when required. In exercising this role, the Directors shall have
regard to the recommendations put forward in the QCA Corporate Governance Code
and, where appropriate, the QCA Remuneration Committee Guide and associated
guidance.
The Remuneration Committee is chaired by Akiko Mikumo and comprises herself,
Patrick DeSouza, David Anton and Mark Williams.
(c) Nominations Committee
Given the size of the Group, it is considered appropriate that all members of
the Board sit on the Nominations Committees. As such, whenever matters arise
that would be appropriate for such committees, these will be considered at
Board meetings.
Board Experience
All members of the board bring complementary skill sets to the Board. One
director is female and four 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, Independent Non-Executive Director
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, Independent Non-Executive Director
Term of office: Appointed 30 September 2019.
David is Chief Executive Officer of Anton & Partners, a leading
advertising, branding, and marketing communication company with a 20-year
track record of creating impact for some of the world's most notable brands in
fashion, lifestyle, financial and automotive sectors. David is a serial
entrepreneur and has founded various successful companies. He is an investor
in and advisor to Village Roadshow Productions, leading movie production
company. David has advised, co-founded and invested in multiple companies such
as Tori Burch, Roqu Media International, Village Roadshow and Spotify among
others.
Mark Williams, Independent Non-Executive Director
Term of office: Appointed 18 May 2023.
Mark brings particular expertise in working with technology companies in
shaping and executing their Go-To-Market and Commercial strategy. His
experience builds on the Company's fundraising in December 2022 to invest in
its sales acceleration across all customer types. Mark started his executive
sales career at Lucent Technologies and subsequently moved to Adobe. More
recently, he has held a variety of interim and advisory sales and commercial
roles at Aurora Commerce, LucidCX, eCommera, Acuity Risk Management and
Countercept. Since 2006, Mark has been a director of Sales Strategies Limited,
which is a consultancy that provides advisory and delivery of business growth
solutions for early-stage technology companies. Mark holds a diploma in
company direction from the Institute of Directors and has prior AIM company
experience as an interim non-board Commercial Director of Imaginatik plc.
Adrian Hargrave, Chief Executive Officer
Term of office: Appointed 4 March 2021 (CEO since 11 July 2022).
Adrian became CEO in July 2022, having been the Group's CFO since admission to
AIM. Prior to becoming CEO, Adrian had already led sales to the Group's
largest customers. Prior to joining SEEEN, Adrian was a Corporate Development
Director at Water Intelligence plc. Adrian started his career in investment
banking and stockbroking, having worked at Citigroup, Deloitte, Cenkos and
finnCap. He is a graduate of Cambridge University.
The Board is supported by Carmel Warren, the CFO appointed on 1 June 2023, who
also acts as Company Secretary is responsible for ensuring that Board
procedures are followed and that all applicable rules and regulations are
complied with. Carmel provides an advisory role to the Board in her capacity
as both CFO and Company Secretary. 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 Executive
Officer.
Measures continue to be taken to review and embed internal controls and risk
management procedures into the business processes of the organisation and to
deal with areas of improvement which come to the management's and the Board's
attention. We expect the internal controls for the business to change as the
business expands both geographically and in terms of product development.
The Company's auditors are encouraged to raise comments on internal control in
their management letter following their audit, and the points raised and
actions arising are monitored by the Audit Committee.
Corporate Culture
The Group aims to operate ethically and be socially responsible in its
actions. Importantly, the Board recognises that the Group's employees are its
most important asset.
The Group is committed to achieving equal opportunities and to complying with
relevant anti-discrimination legislation. It is established Group policy to
offer employees and job applicants the opportunity to benefit from fair
employment, without regard to their sex, sexual orientation, marital status,
race, religion or belief, age or disability. Employees are encouraged to train
and develop their careers.
The Group has continued its policy of informing all employees of matters of
concern to them as employees, both in their immediate work situation and in
the wider context of the Group's well-being.
In addition, all directors and senior employees are required to abide by the
Group's share dealing code, which was updated at the time of admission to AIM.
Audit Committee Annual Review
The role of the Audit Committee is to monitor the quality of internal controls
and check that the financial performance of the Group is properly assessed and
reported on. It receives and reviews 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 for these meetings
were Charles Burdick and Patrick DeSouza, although for 2023 all of the
Non-Executive Directors are part of the Audit Committee.
The CEO and CFO 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 2022 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 2022. The Committee currently comprises
all of the Non-Executive Directors, with Patrick DeSouza as Chairman. The
Remuneration Committee is responsible for reviewing the performance of
Executive Directors and determining the remuneration and basis of service
agreement. The Remuneration Committee also determines the payment of any
bonuses to Executive Directors and the grant of options. No Director plays a
part in any discussion regarding his or her own remuneration.
Relations with Shareholders
The Company is available to hold meetings with its shareholders to discuss
objectives and to keep them updated on the Company's strategy, Board
membership and management.
The board also welcome shareholders' enquiries, which may be sent via the
Company's website seeen.com (http://www.entertainmentai.co.uk) .
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most likely promote
the success of the Group for the benefit of its stakeholders. The board of
directors consider, both individually and together, that they have acted in
the way they consider, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole (having
regard to the stakeholders and matters indicated in S172) in the decisions
taken during the year ended 31 December 2022. Following is an overview of how
the Board performed its duties during 2022.
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 CSP,
as it receives videos from the Group and its channel partners against which it
generates advertising revenue. In addition, the Group has direct customer
relationships for both technology products and its Managed Video Optimisation
Services where customers pay a monthly fee to the Group, which is often
structured as a fixed component and a variable fee for performance. All
customers and channel partners are treated with professionalism and the Group
aims to work with all such stakeholders in developing its product roadmap
further.
Community
The Group is aware that the dissemination of video carries with it social
responsibility to the broader community. Board and management are committed to
the highest levels of professionalism in the aggregation and dissemination of
video content and to ensure compliance with relevant data protection and
compliance regulations.
Statement of Directors' Responsibilities
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with the Companies Act 2006 and for being
satisfied that the Financial Statements give a true and fair view. The
Directors are also responsible for preparing the Financial Statements in
accordance with UK adopted International Accounting Standards.
Company law requires the Directors to prepare Financial Statements for each
financial period which give a true and fair view of the state of affairs of
the Company and the Group and of the profit or loss of the Company and the
Group for that period. In preparing those Financial Statements, the Directors
are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the Financial
Statements; and
· prepare the Financial Statements on the going concern basis unless
it is inappropriate to presume that the Company and the Group will continue in
business.
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements. The Directors are responsible for keeping
adequate accounting records that are sufficient to show and explain the
Company's transactions, disclose with reasonable accuracy at any time the
financial position of the Company and the Group, and to enable them to ensure
that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and Financial
Statements are made available on a website. Financial Statements are published
on the Group's website (seeen.com (http://www.entertainmentai.co.uk) ) in
accordance with legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Group's website is
the responsibility of the Directors - the work carried out by the auditors
does not involve the consideration of these matters and, accordingly, and the
auditors accept no responsibly for any changes that may have occurred in the
accounts since they were initially presented on the website. The Directors'
responsibility also extends to the ongoing integrity of the Financial
Statements contained therein.
Independent Auditors' report to the members of SEEEN plc
Opinion
We have audited the financial statements of SEEEN plc (the "Parent Company")
and its subsidiaries (the "Group") for the period ended 31 December 2022,
which comprise:
· the Group statement of comprehensive income for the year ended 31
December 2022;
· the Group and parent company statements of financial position as
at 31 December 2022;
· 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 standardsand, 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 2022 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;
· 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 as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
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
2022 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 (2021: $150,000), based
on 4.9% of loss before tax per draft figures obtained from pre-year end
management accounts. We reviewed this during the course of the audit to
reconfirm that the level was set at an appropriate amount. As the Group is a
trading group, we determined that the use of a trading-based metric was the
most appropriate to use for determining materiality.
Materiality for the parent Company financial statements as a whole was set at
$96,000 (2021: $112,500) based on 5% of loss before tax per draft figures from
pre-year end management accounts.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit materiality as
adjusted for the judgements made as to the entity risk and our evaluation of
the specific risk of each audit area having regard to the internal control
environment. Performance materiality was set at 70% of materiality for the
financial statements as a whole, which equates to $105,000 (2021: $105,000)
for the Group and $62,700 (2021: $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 all identified errors in excess of
$7,500 (2021: $5,600). 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, Tagasauris 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 local
auditors under a subcontract arrangement.
The primary audit team interacted regularly with the component teams across
all stages of the audit, reviewed working papers and were responsible for the
planning, scope and direction of the audit process. This, together with the
additional procedures performed at Group level, gave us sufficient and
appropriate evidence for our opinion on the Group financial statements.
All group companies were within the scope of audit testing.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. We set out below,
together with 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 matters How the scope of our audit addressed the key audit matter
Carrying value of goodwill and other intangible assets (see note 9) We evaluated, in comparison to the requirements set out in IAS 36,
management's assessment (using discounted cash flow models) as to whether the
The carrying value of goodwill and other intangible assets at 31 December 2022 impairment of goodwill and/or other intangible assets was underprovided. We
was $6.0 million (2021: $15.0 million). challenged, reviewed and considered by reference to external evidence,
management's impairment and fair value models as appropriate and their key
The Group's intangible assets comprise of goodwill arising on acquisition of estimates, including the discount rate. We reviewed the appropriateness and
subsidiaries, customer relationships and technology developments. consistency 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 strategy, future trading and asset valuation. We challenged the key assumptions into the model, including
profitability and the assumptions underlying these. We considered the risk the forecast revenue and gross margin, discount rates and growth rates. We
that goodwill and/or other intangible assets were impaired. compared cash flow forecasts used in the impairment review to historical
performance, and challenged where forecasts indicated performance that
The key judgements are in relation to revenue growth and customer deviated significantly from historical performance, in the absence of
acquisitions. Changes in these factors could result in an impairment to the significant changes in the business or market environment.
carrying value of the goodwill and intangible assets.
Discount rates and terminal growth rates were benchmarked to externally
The carrying value of goodwill and other intangible assets was subject to an derived data and our knowledge of sector performance, to evaluate the
impairment during the year of $7.7m. 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
(see note 10)
We considered with management whether any further indications of impairment
The carrying value of investments in subsidiaries in the parent company existed. This includes considering the existence of any indication of
financial statements at 31 December 2022 was $4.9 million (2021: $12.2 discontinued operating activities, management's future plans for the business,
million), as well as an intercompany balance of $2.8 million (2021: $2.8m the ability of the business to achieve its business plan, together with the
million), after an impairment in the current year of $7.7m (2021: $5.1 carrying value of the group's intangible assets and the market capitalisation
million). The valuation of these investments and the recovery of the of the Group.
intercompany balance are almost entirely dependent on the successful execution
of the business 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 In assessing whether any further impairment may be required, because the
subsidiaries. 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, fraud or misappropriation;
- examining supporting documents for all material balances,
transactions and disclosures;
- review of minutes of meetings of the Board of Directors;
- enquiry of management about litigations and claims;
- evaluation of the selection and application of accounting policies
related to subjective measurements and complex transactions, in particular
those items included in the Key Audit Matters;
- analytical procedures to identify any unusual or unexpected
relationships;
- testing the appropriateness of journal entries recorded in the
general ledger and other adjustments made in the preparation of the financial
statements; and
- review of accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with all laws
and regulations.
The potential effects of inherent limitations are particularly significant in
the case of misstatement resulting from fraud because fraud may involve
sophisticated and carefully organized schemes designed to conceal it,
including deliberate failure to record transactions, collusion or intentional
misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
John 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 2022 Year ended 31 December 2021
Notes $ $
Audited Audited
Revenue 3,253,055 8,537,729
Cost of sales (2,749,415) (7,633,917)
Gross profit 503,640 903,812
Administrative expenses
- Share-based payments 5 (108,825) (349,925)
- Amortisation of intangibles 9 (2,061,137) (1,605,924)
- Impairment of goodwill 9 (7,672,026) -
- Other administrative costs 3 (1,356,636) (2,461,951)
Total administrative expenses (11,198,624) (4,417,800)
Operating Loss (10,694,984) (3,513,988)
Finance expense 6 - (3,835)
Loss before tax (10,694,984) (3,517,823)
Taxation 7 423,308 323,510
Loss after tax (10,271,676) (3,194,313)
Other Comprehensive Income
Items that will be reclassified to profit and loss
Exchange differences arising on translation of foreign operations (162,164) (33,880)
Total comprehensive loss for the year (10,433,840) (3,228,193)
Loss per share attributable to equity holders of Parent Cents Cents
Basic 8 (20.48) (6.39)
Diluted 8 (20.48) (6.39)
Consolidated Statement of Financial Position
31 December 2022 31 December 2021
Notes $ $
ASSETS
Non-current assets
Goodwill and indefinite life intangible assets 9 2,090,132 9,762,158
Other intangible assets, net 9 3,924,317 5,255,018
Trade and other receivables 1,800 1,800
6,016,249 15,018,976
Current assets
Trade and other receivables 11 2,905,576 751,524
Cash and cash equivalents 12 1,236,664 2,086,249
4,142,240 2,837,773
TOTAL ASSETS 10,158,489 17,856,749
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 15 7,454,052 7,400,732
Share premium 15 10,180,736 7,677,993
Merger relief reserve 8,989,501 8,989,501
Share based payment reserve 1,233,593 1,124,768
Foreign exchange reserve 3,691 165,855
Retained earnings (19,596,545) (9,324,869)
Total Shareholders' Equity 8,265,028 16,033,980
Non-current liabilities
Deferred tax liability 14 146,992 569,710
146,992 569,710
Current liabilities
Trade and other payables 13 1,746,469 1,253,059
Total Current Liabilities 1,746,469 1,253,059
TOTAL EQUITY AND LIABILITIES 10,158,489 17,856,749
The financial statements of SEEEN plc, company number 10621059, were approved
by the board of Directors and authorised for issue on the 29 June 2023. They
were signed on its behalf by:
Adrian Hargrave
Chief Executive Officer
Company Statement of Financial Position
Notes
31 December 31 December
2022 2021
$ $
ASSETS
Non-current assets
Investment in Subsidiaries 10 4,981,583 12,192,026
4,981,583 12,192,026
Current assets
Trade and other receivables 11 4,803,999 2,825,149
Cash and cash equivalents 12 853,317 1,301,405
5,657,316 4,126,554
TOTAL ASSETS 10,638,899 16,318,580
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 15 7,454,051 7,400,732
Share premium 15 10,180,736 7,677,993
Merger reserve 8,989,501 8,989,501
Share based payment reserve 1,233,593 1,124,768
Foreign exchange reserve (333,591) 118,779
Retained earnings (17,583,998) (9,197,895)
Total Shareholders' Equity 9,940,292 16,113,878
Current liabilities
Trade and other payables 13 698,607 204,702
Total Liabilities 698,607 204,702
TOTAL EQUITY AND LIABILITIES 10,638,899 16,318,580
The loss for the financial year in the financial statements of the parent
Company, which related entirely to Plc costs, was $8,386,104 and $6,124,689
for the 12 months ended 31 December 2022 and 2021, 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 2023. They
were signed on its behalf by:
Adrian Hargrave
Chief Executive Officer
Consolidated Statement of Cash Flows
Year ended 31 December 2022 $ Year ended 31 December 2021 $
Cash flows from operating activities
Loss before tax (10,694,984) (3,517,823)
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 2,061,137 1,605,924
Impairment of goodwill 7,672,026 -
Gain on extinguishment of debt - (198,000)
Share based payments 108,825 349,926
Interest paid - 3,833
Operating cash flows before movements in working capital (852,996) (1,756,140)
Decrease/(Increase) in trade and other receivables (3,635) 1,038,554
(Decrease)/Increase in trade and other payables 435,441 (954,885)
431,806 83,669
Cash used by operations (421,190) (1,672,471)
Income taxes paid - -
Net cash used by operating activities (421,190) (1,672,471)
Cash flows from investing activities
Purchase of intangible assets (730,437) (1,540,066)
Net cash used in investing activities (730,437) (1,540,066)
Cash flows from financing activities
Proceeds from issue of shares 463,314 -
Interest income/(paid) - (3,833)
Net cash generated from/(used by) financing activities 463,614 (3,833)
Net increase/(decrease) in cash and cash equivalents (688,013) (3,216,370)
Effect of exchange rates on cash (161,572) (33,883)
Cash and cash equivalents at the beginning of year 2,086,249 5,336,502
Cash and cash equivalents at end of year 1,236,664 2,086,249
Company Statement of Cash Flows
Year ended 31 December 2022 $ Year ended 31 December 2021 $
Cash flows from operating activities
Loss before tax (8,386,104) (6,124,689)
Adjustments for non-cash/non-operating items:
Share based payment expense 108,825 349,926
Change in carrying value of investment in subsidiaries 7,672,026 5,075,122
Operating cash flows before movements in working capital (605,253) (699,641)
Decrease (Increase) in trade and other receivables - -
(Decrease) Increase in trade and other payables 493,908 (134,460)
Cash used by operations (111,345) (834,101)
Income taxes - -
Net cash used by operating activities (111,345) (834,101)
Cash flows from investing activities - -
Loans to subsidiaries (461,583) (2,326,770)
Net cash used in investing activities (461,583) (2,326,770)
Cash flows from financing activities
Proceeds from issue of shares 463,314 -
Net cash/generated from financing activities 463,614 -
(Decrease)/Increase in cash and cash equivalents (109,315) (3,160,871)
Effect of exchange rates on cash (338,774) 62,319
Cash and cash equivalents at the beginning of year 1,301,405 4,399,957
Cash and cash equivalents at end of year 853,317 1,301,405
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 momentise
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 2023.
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 UK adopted International
Accounting Standards ("Adopted IFRSs"). On publishing the Company financial
statements here together with the consolidated financial statements, the
Company is taking advantage of the exemption in s408 of the Companies Act 2006
not to present its individual income statement and statement of comprehensive
income and related notes.
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements.
The Financial Statements are presented in US Dollars ($), rounded to the
nearest dollar.
Going concern
The financial statements have been prepared on a going concern basis, which
assumes that both the Group and the Company will be able to meet their
liabilities as they fall due for the foreseeable future. Both the Group and
the Company are dependent for their working capital requirements on their cash
holdings, amounts received from the December 2022 fundraising and ongoing
income from the Group's operations. The cash holdings of the Group at 31
December 2022 and 31 December 2021 were $1.2 million (with approximately $2.1
million in further equity funding committed but not yet received from the
December 2022 fundraising after fees related to the fundraising, which was
subsequently received during January 2023) and $2.1 million, respectively. The
cash holdings of the Company at 31 December 2022 and 31 December 2021 were
$0.9 million (with approximately $2.1 million in further equity funding
committed but not yet received from the December 2022 fundraising after fees
related to the fundraising, which was subsequently received during January
2023) and $1.3 million, respectively.
Given the recent fundraising, the Directors have prioritised spending in 1H23
on (i) new features for CreatorSuite 2.0 demanded by customers and (ii)
investments in the Group's sales function. Following the release of
CreatorSuite 2.0, the Group's focus will remain on commercializing its
technology and services offering. The Directors have prepared detailed cash
flow projections which are based on their current expectations of trading
prospects, as well as scenarios where sales fail to materialize as expected.
Under all these scenarios, the Group has sufficient cash resources for at
least one year from the date of these accounts, although the Board has plans
to reduce cash burn significantly 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 CSP
SEEEN owns 100% of GT Channel, Inc, which operates a Creator Service Provider
("CSP") (formerly multichannel network ("MCN")). The CSP aggregates content
supplied by creators. The CSP then provides such content to YouTube, who is
the customer. YouTube then directs the use of such content to gain the
benefit of digital ad revenue from brands. YouTube takes forty-five per
cent. of the gross amount of digital ad revenue and then pays the CSP. The
Group recognises the payment received from YouTube as revenue, being the net
amount after the deduction of forty-five per cent. of the gross advertising
revenue. YouTube provides the CSP with daily reports on its receipt of revenue
from brands against the CSP's content. Revenue to the CSP is recognized upon
receipt of such reports from YouTube.
The CSP pays the creators who have supplied videos to the CSP and these
payments are recognized as Cost of Sales in the Group's statement of
comprehensive income.
Property, plant and equipment
All property, plant and equipment is stated at cost less accumulated
depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
Equipment and displays: 5 to 7 years
Motor vehicles: 5 years
Leasehold improvements: 7 years or lease term, whichever is
shorter
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each reporting date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount. Assets that are no longer of
economic use to the business are retired.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
income statement.
Goodwill
Goodwill represents the excess of the fair value of the consideration over the
fair values of the identifiable net assets acquired.
Goodwill arising on acquisitions is not subject to amortisation but is subject
to annual impairment testing. Any impairment is recognised immediately in the
Consolidated Statement of Comprehensive Income and not subsequently reversed.
Other intangible assets
Intangible assets are recorded as separately identifiable assets and amortised
at historical cost less any accumulated amortisation. These assets are
amortised over their definite useful economic lives on the straight-line
method.
Amortisation is computed using the straight-line method over the definite
estimated useful lives of the assets as follows:
Years
Customer
lists
4
Product
development
4
Any amortisation is included within total administrative expenses in the
statement of comprehensive income.
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis.
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each reporting date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
Statement of Comprehensive Income.
Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred
on development projects (relating to the design and testing of new or improved
products) are recognised as intangible assets when the following criteria are
fulfilled.
· It is technically feasible to complete the intangible asset so that
it will be available for use or resale;
· Management intends to complete the intangible asset and use or sell
it;
· There is an ability to use or sell the intangible;
· It can be demonstrated how the intangible asset will generate
possible future economic benefits;
· Adequate technical, financial and other resource to complete the
development and to use or sell the intangible asset are available; and
· The expenditure attributable to the intangible asset during its
development can be reliably measured.
Other development expenditures that do not meet these criteria are recognised
as an expense in the period incurred. Development costs previously recognised
as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets and are
amortised from the point at which they are ready for use on a straight-line
basis over the asset's estimated useful life.
Segment reporting
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 2022,
the majority of revenue for the Group was generated from its CSP operation. As
the Group's revenue mix evolves, the Directors expect to split out revenue by
type in the Accounts.
Impairment reviews
Assets that are subject to amortisation and depreciation are reviewed for
impairment when events or changes in circumstances indicate that the carrying
amount may not be fully recoverable. Assets that are not subject to
amortisation and depreciation are reviewed on an annual basis at each year end
(including goodwill) and, if there is any indication that an asset may be
impaired, its recoverable amount is estimated. The recoverable amount is the
higher of its net selling price and its value in use. Any impairment loss
arising from the review is charged to the Statement of Comprehensive Income
whenever the carrying amount of the asset exceeds its recoverable amount.
Share based payments
The Group has made share-based payments to certain Directors, employees and
advisers by way of issue of share options. The fair value of these payments is
calculated either using the Black Scholes option pricing model or by reference
to the fair value of any fees or remuneration settled by way of granting of
options. The expense is amortisation on a straight-line basis over the period
from the date of award to the first date of exercise, based on the best
estimate of the number of shares that will eventually vest.
Taxation
Income tax expense represents the sum of the current tax and deferred tax
charge for the year.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the Statement of Comprehensive
Income because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never
taxable or deductible. The Group's and Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the year end.
Deferred tax
Deferred income taxes are provided in full, using the liability method, for
all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Financial Statements. Deferred
income taxes are determined using tax rates that have been enacted or
substantially enacted and are expected to apply when the related deferred
income tax asset is amortisation or the related deferred income tax liability
is settled.
The principal temporary differences arise from depreciation or amortisation
charged on assets and tax losses carried forward. Deferred tax assets relating
to the carry forward of unused tax losses and are recognised to the extent
that it is probable that future taxable profit will be available against which
the unused tax losses can be utilised. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent that it is
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with
banks, and other short term highly liquid investments with original maturities
of three months or less.
Foreign currencies
(i) Functional and presentational currency
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which each entity operates ("the
functional currency") which is considered by the Directors to be Pounds
Sterling (£) for the Parent Company and US Dollars ($) for SEEEN, Inc,
GTChannel, Inc and Tagasauris, Inc. The Financial Statements have been
presented in US Dollars which represents the dominant economic environment in
which the Group operates. The effective exchange rate at 31 December 2022 was
£1 = US$1.2098 (31 December 2021 was £1 = US$1.3757). The average exchange
rate for the year to 31 December 2022 was £1 = US$1.2322 (31 December 2021
was £1 = US$1.3520).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the statement
of comprehensive income.
(iii) Group Companies
The results and financial position of all the Group entities that have a
functional currency different from the presentational currency are translated
into the presentational currency as follows:
(a) assets and liabilities for each statement of financial position
presented are translated at closing rate at the date of the statement;
(b) the income and expenses are translated at average exchange rates
for period where there is no significant fluctuation in rates, otherwise a
more precise rate at a transaction date is used; and
(c) all resulting exchange differences are recognised in other
comprehensive income and accumulated in the foreign exchange reserve.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Loans and receivables
Trade receivables, loans, and other receivables held with the objective to
collect the contractual cash flows are classified as subsequently measured at
amortised cost. These are initially measured at fair value plus transaction
costs. At each period end, there is an assessment of the expected credit loss
in accordance with IFRS 9; with any increase or reduction in the credit loss
provision charged or released to other selling and administrative expenses in
the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
The Group also recognises lifetime ECLs for trade receivables. The ECLs on
these financial assets are estimated using a provision matrix based on the
Group's historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both
the current as well as the forecast conditions at the reporting date,
including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when
there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12‑month ECL.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair
value, net of transaction costs and are subsequently measured at amortised
cost using the effective interest method.
Equity instruments
An equity instrument is any instrument with a residual interest in the assets
of the Company after deducting all of its liabilities. Equity instruments
(ordinary shares) are recorded at the proceeds received, net of direct issue
costs.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with International
Financial Reporting Standards requires the use of judgements together with
accounting estimates and assumptions that affect the reported amounts of
assets and liabilities and the reported amounts of income and expenses during
the reporting period. Although these judgements and estimates are based on
management's best knowledge of current events and actions, the resulting
accounting treatment estimates will, by definition, seldom equal the related
actual results.
The following are the critical judgements and estimations that the Directors
have made in the process of applying the Company's accounting policies and
that have the most significant effect on the amounts recognised in the
financial statements.
Impairment of goodwill
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. 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. 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
2022 2021
$ $
Employee costs 369,255 724,457
Severance costs 91,333 291,144
Consulting services 84,713 128,490
Agency fees 58,011 614,053
Rent - 11,145
Professional fees 202,974 233,600
Listing fees 17,012 14,372
Other 533,338 444,690
Subtotal (1,356,636) (2,461,951)
Year ended Year ended
31 December 31 December
2022 2021
$ $
Auditors remuneration
Fees payable to the Group's auditor for audit of Parent Company and 48,059 37,856
Consolidated Financial Statements
Fees payable to the Group's auditor for non-audit services - 4,056
The Group auditors are not the auditors of the US subsidiary companies. The
fees paid to the auditor of the US subsidiary companies were $45,000 (31
December 2021: $40,000) 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 2022 Year ended 31 December 2021
$
$
Staff costs for all employees, including Executive Directors consist of:
Wages and Salaries 606,130 1,015,601
Share Based Payments Expense 108,825 349,925
714,955 1,365,526
Information regarding Executive Directors emoluments are as follows:
Year ended 31 December 2022 6 months ended 31 December 2021
$ $
Short-Term employee benefits
Directors' fees, salaries and benefits 211,130 547,234
Social Security Costs 24,497 70,558
235,627 617,792
The highest paid Executive Director received emoluments of $154,035 (31
December 2021: $291,144, including termination payment).
The average number of employees (including Directors) in the Group during the
year was:
Year ended Year ended
31 December 31 December
2022 2021
Directors (executive and non-executive) 4 5
Management 1 2
Other 3 3
8 10
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 2022
Weighted average exercise price (GBp)
2022
Outstanding at beginning of year 8,396,887 52.2
Granted during the year 200,000 30.0
Forfeited/lapsed during the year - -
Exercised during the year - -
Outstanding at end of the year 8,596,887 51.7
Exercisable at end of the year 4,996,887 45.0
During the year the Company granted options to Charles Burdick upon
appointment to the Board.
Fair value of share options
During the year, the Group granted 200,000 Share Options with an exercise
price of 30 pence ($0.378) with graduated three year vesting and subject to
continuing to be a director of the Company.
The fair value of options granted during 2022 has been calculated using the
Black Scholes model which has given rise to a fair value per share of 2.7p.
This is based on a risk-free rate of 1.47% and volatility of 52.5% 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 $108,825 which has been expensed in 2022.
The weighted average remaining contractual life of the share options as at 31
December 2022 was 7.35 years.
Options arrangements that exist over the Company's shares at year end are
detailed below:
Grant 31 December 2022 31 December 2021 Date of Grant Exercise price Exercise period
From To
AIM Admission Grant Options 4,996,887 4,996,887 30/9/2019 45p 30/9/2020 30/9/2029
2021 Director Fee Options 1,450,000 1,450,000 4/3/2021 60p 4/3/2024 4/3/2031
2021 Incentive Options 1,300,000 1,300,000 4/3/2021 65p 4/3/2024 4/3/2031
2021 Incentive Options 650,000 650,000 13/5/2021 65p 13/5/2024 13/5/2031
2022 Director Options 200,000 - 27/5/2022 30p 27/5/2025 27/5/2032
Total 8,596,887 8,396,887
All share options are equity settled on exercise.
6 Finance expense
Year ended Year ended
31 December
31 December
2022
2021
$
$
Interest expense - 3,833
7 Taxation
The major components of income tax expense for the periods ending 31 December
2022 and December 2021 are as follows:
Year ended Year
31 December 31 December
2022 2021
Group $ $
Current tax: - -
Current tax (benefit) on profits in the year - -
Prior year over provision - -
Total Tax charge (benefit) - -
Deferred tax current year (423,308) (323,510)
Deferred - -
Total Tax charge (benefit) (423,308) (323,510)
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
2022 2021
$ $
Total loss on ordinary activities before tax (10,694,984) (3,517,822)
Loss on ordinary activities at the standard rate of corporation tax in the US (2,245,947) (738,743)
of 21% (2021: 21%)
Non-deductible expenses 1,630,970 51,557
State taxes net of federal benefit (199,154) (223,583)
Other tax adjustments, reliefs and transfers (4,697) 186
Adjustment in respect of prior year (64,631) (648)
Deferred tax not recognised / valuation allowance 460,151 587,721
Changes in rates - -
Total Tax charge (423,308) (323,510)
At the balance sheet date, the Group had unused tax losses (as reported on the
Group's tax returns) of $14,983,247 available for offset against future
profits. $2,232,267 represents unrecognized deferred tax assets thereon. The
deferred tax asset has not been recognized due to uncertainty over timing of
utilization.
8 Earnings per share
The loss per share has been calculated using the profit for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
Year ended Year ended
31 December
31 December
2022
2021
Loss for the year attributable to equity holders of the Parent ($) (10,271,676) (3,194,313)
Weighted average number of ordinary shares 50,131,428 49,957,876
Diluted weighted average number of ordinary shares 50,131,428 49,957,876
Loss per share (cents) (20.48) (6.39)
Diluted loss per share (cents) (20.48) (6.39)
9 Intangible assets
Group Goodwill Arising on Consolidation Other Intangible Assets Development Costs Totals
$ $ $ $
Net Book Value
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
Additions - - 730,437 730,437
Amortisation (7,672,026) (1,190,249) (870,888) (9,733,163)
At 31 December 2022 2,090,132 892,685 3,031,632 6,014,449
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 2022 31 December 2021
GTChannel, Inc 700,322 3,165,023
Tagasauris, Inc 827,994 3,643,678
Entertainment AI, Inc 561,816 2,953,457
Total 2,090,132 9,762,158
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 Group is selling products to customers based on our proprietary technology
for the publishing, sports, retail and services market segments. The Board has
deemed the Video Experience Platform and related products previously targeted
for "experience-based" market segments will not find traction in the current
market and will not provide future cashflow for the Group. After analysing the
sales growth and projected cost of capital associated with investment in these
projects, the carrying value is less than the value in use and hence the
goodwill from the time of the acquisition should be impaired. Key assumptions
in this impairment review included: (i) a perpetuity growth rate from 2025 of
2%, (ii) a discount rate of 16.0% and (iii) customer acquisition remains
consistent with 2Q 2023 levels and does not increase.
10 Investment in subsidiary undertakings
Company Cost of investment Loan to group undertaking Total
$
$
$
Cost
At 31 December 2021 12,984,835 4,282,313 17,267,148
Additions - 461,583 461,583
At 31 December 2022 12,984,835 4,743,896 17,728,731
Impairment
At 31 December 2021 (5,075,122) - (5,075,122)
Impairment (7,672,026) - (7,672,026)
At 31 December 2022 (12,747,148) - (12,747,148)
Carrying amount
At 31 December 2021 7,909,713 4,282,313 12,192,026
At 31 December 2022 237,687 4,743,896 4,981,583
The Directors annually assess the carrying value of the investment in the
subsidiaries and in their opinion an impairment provision of $7,672,026 is
required to reflect the termination of progress with selling Video Experience
Platforms, as envisaged at the time of the acquisition of the subsidiaries.
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
2022
2021
2022
2021
$
$
$
$
Trade and other receivables 2,905,576 751,524 2,092,449 -
Intercompany receivables - - 2,711,550 2,825,149
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.
Of the total trade and other receivables, sums committed but not yet received
from the December 2022 fundraising were $2,092,449. These have subsequently
been received during January 2023.
12 Cash and cash equivalents
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2022
2021
2022
2021
$
$
$
$
Cash at bank and in hand 1,236,664 2,086,249 853,317 1,301,405
13 Trade and other payables
Group Company
Year Ended 31 December Year Ended 31 December Year Ended 31 December Year Ended 31 December
2022
2021
2022
2021
$
$
$
$
Trade payables 1,058,385 471,983 510,456 68,418
Accruals and other payables 688,083 781,076 188,152 136,284
1,746,468 1,253,059 698,608 204,702
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 2022 (569,710)
Deferred tax charge for the year 423,308
Balance At 31 December 2022 (146,992)
The deferred tax provision comprises:
31 December 2022 31 December 2021
$ $
Deferred tax liability arising from acquisition of intangible assets 142,917 569,710
Total 142,917 569,710
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
Number of Shares Nominal Value of Shares $
Ordinary Deferred Ordinary Deferred Total
At 31 December 2021 49,957,876 - 7,400,732 - 7,400,732
Reclassification of Shares 49,957,876 49,957,876 61,673 7,339,059 7,400,732
Issue of Shares 43,387,939 - 53,320 - 53,320
At 31 December 2022 93,345,815 49,957,876 114,992 7,339,059 7,454,052
.
Group & Company
Share capital Share premium
$
$
At 31 December 2021 7,400,732 7,677,903
At 31 December 2022 7,454,051 10,180,736
During the year to 31 December 2022, the Company issued 43,387,939 ordinary
shares of 0.1 pence each at an issue price of 6 pence per ordinary share.
Simultaneously, the Company undertook a capital reorganization whereby each
previous ordinary share of 12 pence each was subdivided into 1 new ordinary
share of 0.1 pence each and 1 deferred share of 11.9 pence each ("Deferred
Shares"). These Deferred Shares do not have any voting rights and very limited
economic rights after holders of ordinary shares have together received the
nominal amounts paid up on such shares, plus £10,000,000,000. In addition,
they will not carry any right to participate in any dividend or other
distribution. In each case a payment, on a return of capital, to any one
holder of Deferred Shares shall satisfy the payment required. The Company will
be authorised at any time to effect a transfer of the Deferred Shares without
reference to the holders thereof and for no consideration pursuant to and in
accordance with the Companies Act. Accordingly, the Deferred Shares will, for
all practical purposes, be valueless and it is the Board's intention, at an
appropriate time, to have the Deferred Shares cancelled, whether through an
application to the Companies Court or otherwise in accordance with the
Companies Act. No share certificates will be issued for the Deferred Shares.
16 Financial instruments
Financial instruments
As at the dates presented, the Group has classified its financial instruments
as follows:
At 31 December 2022 Loans and Receivables at Amortized Cost Other Financial Liabilities at Amortized Cost Fair Value through Profit or Loss Total
$
$
$
$
Financial Assets
Cash 1,236,664 - - 1,236,664
Trade and Other Receivables 2,724,615 - - 2,724,615
Financial Liabilities
Trade and Other Payables - 1,471,943 - 1,471,943
Borrowings - Current - - - -
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 - - - -
Credit risk management
The Company is exposed to credit risk associated with its accounts receivable.
Credit risk is minimized substantially by ensuring the credit worthiness of
the entities with which it carries on business. Most of the Group's revenues
are derived from its CSP business. The key counterparty for this business is
YouTube. The performance obligations arise at the time that CSP videos
generate advertising or other income on YouTube. YouTube makes a monthly
payment to the Group, approximately 20 days in arrears. In the periods to 31
December 2022 and 31 December 2021, 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. In addition, as at 31 December 2022, $2,092,449 of the
accounts receivable related to fundraising amounts committed but not received
from the Company's December 2022 fundraising. Such sums were subsequently
received during January 2023.
The Company's accounts receivable aging as follows:
31 December 2022 31 December 2021
Current 2,724,615 751,524
31-60 days - -
61-90 days - -
>90 days - -
2,724,615 751,524
Allowance for doubtful accounts - -
Total 2,724,615 751,524
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 2022, 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
2022
2021
2022
2021
$
$
$
$
Assets
Sterling 848,305 1,059,409 848,305 1,059,409
Liabilities
Sterling 369,809 370,082 369,809 370,082
As shown above, at 31 December 2022 the Group had Sterling denominated
monetary net assets of $478,496 (31 December 2021: $689,327). If Sterling
weakens by 10% against the US dollar, this would decrease net assets by
$47,850 (31 December 2021: $68,933) 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 $663,130 in the year to 31
December 2022 (year to 31 December 2021: loss of $132,420), resulting
primarily from the holding of cash in sterling.
Liquidity risk management
Ultimate responsibility for liquidity management rests with management. The
Group's policy is to ensure that it will have sufficient cash to allow it to
meet its liabilities when they become due and so cash holdings may be high
during certain periods throughout the period. The Group currently has no bank
borrowing or overdraft facilities. All liabilities are current and expected to
be settled within 3 months.
The Group's policy in respect of cash and cash equivalents is to limit its
exposure by reducing cash holding in the operating units and investing amounts
that are not immediately required in funds that have low risk and are placed
with a reputable bank.
18 Contingent liabilities
The Directors are not aware of any material contingent liabilities.
19 Related party transactions
Adrian Hargrave, SEEEN's Chief Executive and a related party as defined in the
AIM Rules for Companies, subscribed for 583,333 new ordinary shares in a
placing of new ordinary shares on 30 December 2022, which represented an
amount of approximately £35,000 at the issue price of 6 pence per new
ordinary share.
Dr Patrick DeSouza, SEEEN's Chairman, who was at the time a substantial
shareholder of the Company and a related party as defined in the AIM Rules for
Companies, has an interest in 25.07 per cent. of the issued share capital of
Water Intelligence plc ("Water Intelligence") and Water Intelligence is
therefore a related party of the Company pursuant to the AIM Rules for
Companies. Water Intelligence subscribed for 2,083,333 new ordinary shares in
a placing of new ordinary shares on 30 December 2022, which represented an
amount of approximately £125,000 at the issue price of 6 pence per new
ordinary share.
Gresham House Asset Management Limited ("Gresham House"), a substantial
shareholder of the Company and a related party as defined in the AIM Rules for
Companies, subscribed for 21,133,503 new ordinary shares in a placing of new
ordinary shares on 30 December 2022, which represented an amount of
approximately £1.3 million at the issue price of 6 pence per new ordinary
share. As announced by the Company on 7 December 2022, in connection with its
participation in this placing, pursuant to an agreement between Gresham House
and the Company, it was agreed, inter alia, that, for as long as Gresham House
is the registered holder of a minimum of 10 per cent. of the Company's
ordinary shares in issue from time to time, Gresham House shall be entitled to
appoint one director to the Company's Board as a nominee director.
The Directors are not aware of any other related party transactions.
20 Subsequent events
Since 31 December 2022, the following Board changes have taken place; Charles
Burdick announced his resignation on 3 February 2023 and ceased to be a
director of the Company on 6 April 2023. Mark Williams was appointed as a
director of the Company on 18 May 2023.
In addition, the Group has continued to win a significant level of customers
during 2023, including two new strategic customers worth over $1 million in
annual revenues and approximately $250,000 in annual gross profit
contribution, as well as 12 other customer contracts and implementations.
21 Control
The Company is under the control of its shareholders and not any one party.
The shareholdings of the directors and entities in which they are related are
as outlined within the Director's Report
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