TIDMIME

RNS Number : 9115N

Immediate Acquisition PLC

07 June 2022

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Tuesday, 7 June 2022

Immediate Acquisition Plc

("IME" or "the Group" or "the Company")

2021 Preliminary Results

Immediate Acquisition Plc (AIM: IME) today announces its preliminary results for the year ended 31 December 2021.

 
                                             2021 
   FINANCIAL HIGHLIGHTS                       GBP 
 Revenue                                2,940,692 
 Gross profit                           1,941,667 
 EBITDA                                 (359,454) 
 Profit / (Loss) after taxation         (438,597) 
 Debt (loans plus lease liabilities)       53,959 
 Net funds (cash less debt)               568,829 
                                       ---------- 
 

Post period end highlights

-- Disposal of wholly owned subsidiary, Immedia Broadcast Limited, for a total consideration of GBP2.0 million comprising of GBP1.718 million paid on completion of the disposal on 9 May 2022 with the balance of GBP282,000 payable in 12 equal monthly instalments, beginning one month after completion.

-- Executive Directors, Ross Penney and John Trevorrow, stepped down from the Board on 9 May 2022.

   --      Change of Company name to Immediate Acquisition Plc. 
   --      Disposal of the Sprift Loan for cash consideration of GBP1.05m. 

-- Including investment in Audioboom, at the date of this report the Company has unaudited net assets in excess of GBP3.8m, of which all are cash or liquid investments.

-- The Directors continue to investigate a number of potential acquisitions in the technology and fintech sector; none of which they have yet committed to pursue at this time.

Tim Hipperson, Non-executive Chairman, commented:

"With the disposal of Immedia Broadcast Limited now complete we are absolutely focused on our capital growth strategy including the monetisation of the Company's remaining assets, of which we have already disposed of the Sprift Loan, and the pursuit of an acquisition of a company in the technology or fintech sectors which would constitute a reverse takeover under the AIM Rules for Companies.

"The Board has already identified a number of exciting opportunities in our target sectors and is confident that any acquisition will deliver meaningful shareholder value. We will report on further progress as soon as we are in a position to do so."

 
 For further information please contact: 
 Immediate Acquisition Plc                      Tel: +44 (0) 203 515 0233 
  Tim Hipperson, Non-executive Chairman 
  Simon Leathers, Non-executive Director 
 SPARK Advisory Partners Limited (Nomad)        Tel: +44 (0) 203 368 3550 
  Mark Brady 
  Neil Baldwin 
 SP Angel Corporate Finance LLP (Broker)        Tel: +44 (0) 207 470 0470 
  Abigail Wayne 
 Buchanan Communications                        Tel: +44 (0) 207 466 5000 
  Chris Lane 
 

Chairman's Statement

In my statement in the 2020 preliminary results I expressed the expectation that 2021 would offer significant opportunities as well as challenges. As predicted, that has turned out to be the case.

In an eventful period we raised more funds at the start of the year with a view to bolstering our working capital and transactional capabilities. The original transaction that was under consideration in the early part of the year, with Sprift Technologies Ltd, did not complete although we remained invested via a loan note as announced on 26 March and 15 July 2021 until the recently announced disposal and focus on monetising our remaining assets. We do however continue to investigate suitable opportunities to enhance shareholder value through a strategic acquisition or reverse takeover and have already identified a number of exciting opportunities in our target sectors: technology and fintech .

Our trading business, Immedia Broadcast Ltd, continued to suffer depressed demand in H1 because of the continuing Covid pandemic before enjoying a well-deserved period of success in the second half of the year. I commend the entire team for their talent, commitment and perseverance in materially turning round the 2021 outturn. I offer every one of them my heartfelt thanks.

Financial highlights

Revenue increased 27% from the previous year to GBP2,940,692 (2020: GBP2,310,872), producing an improved loss before tax of GBP438,597 (2020: loss of GBP733,181) - because of increased sales and margin improvements as well as a full year of the cost reduction and financial efficiency measures implemented in 2020.

Immedia Broadcast Ltd (IBL)

Owing to the cost of operation, it remained the view of the Board that IBL would trade more efficiently without the financial and regulatory burden of the AIM listing and the Group therefore sought expressions of interest from third parties. None of these was at a level commensurate with the trading prospects of IBL so, having received shareholder approval, on 9 May 2022 the Group sold IBL to AVC Immedia Limited, a company led by CEO Ross Penney.

Trading and profitability were on an upward curve throughout 2021, and we are pleased that in H2 2021 we achieved not only profitability at the EBITDA level in every month but also two of the most successful months the company has ever posted. Whilst the upturn in trade was significant and trading in Q1 2022 was promising, the operations remain too small to readily absorb the costs of being a PLC and generate a return for investors. Accordingly, the Independent Directors believe that, despite the UK's apparent recovery from the pandemic, there remains significant uncertainties in the economy and the growth of the Group would continue to be limited in the foreseeable future. This conviction led to the disposal of IBL which completed on 9 May 2022.

Capital

In January 2021 the Group raised further gross proceeds of GBP3.0 million via the placing of 10,400,000 new Ordinary Shares at GBP0.25 per share and a subscription for 1,600,000 new Ordinary Shares at GBP0.25 per share.

AudioBoom

I am delighted that the Company's investment in AudioBoom Group plc (AIM:BOOM) has proved to be of long term strategic benefit. I commend AudioBoom's management on the huge progress made and look forward to further developments.

Warrant Extension

On 8 January 2021, pursuant to a placing and subscription to raise GBP3 million, the Company announced the issue of 12,000,000 new warrants, exercisable at a price of 35 pence for a period of 12 months from admission, subsequently announced as 8 February 2021. In order to maintain the Company's access to capital and enable the Company to assess and complete potential corporate actions in a timely manner the Board has agreed to extend the final exercise date of the warrants to 30 June 2022 or, if the Company publishes an Admission Document prior to 30 June 2022 relating to a reverse takeover, the Business Day falling two Business Days prior to the date of the General Meeting relating to the reverse takeover. As part of the fundraising, Mark Horrocks subscribed for 1,600,000 subscription shares (and so received 1,600,000 new warrants). As Mark Horrocks is a Director and substantial shareholder, any extension of the new warrants was a related party transaction pursuant to AIM Rule 13. The directors, other than Mark Horrocks, having consulted with the Company's nominated adviser believed that the terms of the new warrant extension are fair and reasonable insofar as shareholders are concerned.

Sprift Loan

On 15 July 2021 the Company entered into a cost recovery agreement with Sprift Technologies Limited ("Sprift"). Driven largely by consecutive monthly growth in Estate Agent subscriptions and the provision of property data APIs, Sprift Technologies generated revenue growth of circa 100% in the eight months ended 30 September 2021 compared to the equivalent period last year. In the interest of facilitating further growth of the Borrower, on 20 December 2021 the Company entered a revised facility agreement ("Facility Agreement") with Sprift and Mark Horrocks that increased the facility size from GBP1.05m to GBP2.55m, defined equity conversion terms in the event of defined liquidity events and set out board participation rights. No further funding was provided by the Company under this agreement. Mark Horrocks is a party to the Facility Agreement and as such this is a related party transaction pursuant to AIM Rule 13. The directors independent of the Facility Agreement, having consulted with the Company's nominated adviser, believed that the terms of the Facility Agreement were fair and reasonable insofar as shareholders are concerned.

On 6 June 2022 the Company disposed of the GBP1.05m Sprift Loan to Mark Horrocks for GBP1.05m in cash consideration. This was a related party transaction pursuant to AIM Rule 13 and the directors independent of disposal, having consulted with the Company's nominated adviser, believed that the terms of the disposal are fair and reasonable insofar as shareholders are concerned.

Outlook

Immediate Acquisition plc

Post completion of the IBL disposal and the sale of the Sprift Loan, the Company name has been changed to Immediate Acquisition Plc and intends to adopt a capital growth strategy through the monetisation of its remaining investments, in an orderly manner, and the pursuit of an acquisition of a company in the technology or fintech sectors. This is in line with the Company's ambition to deliver meaningful shareholder value.

Tim Hipperson

Chairman

Consolidated Statement of Profit or Loss

 
 For the Year Ended 31 December           2021          2020 
                                           GBP           GBP 
 CONTINUING OPERATIONS 
 Revenue                             2,940,692     2,310,872 
 Cost of sales                       (999,025)     (924,824) 
                                  ------------  ------------ 
 Gross profit                        1,941,667     1,386,048 
 Administrative expenses           (2,458,683)   (2,126,783) 
 Other income                           12,397        68,127 
                                  ------------  ------------ 
 Operating profit/(loss)             (504,618)     (672,608) 
 Finance income                         72,505           116 
 Finance costs                         (6,483)      (60,689) 
                                  ------------  ------------ 
 Loss before taxation                (438,597)     (733,181) 
 Tax on loss                                 -             - 
                                  ------------  ------------ 
 Loss for the financial year         (438,597)     (733,181) 
                                  ------------  ------------ 
 
 
                                2021     2020 
 Earnings/(loss) per share 
 Basic (pence per share)      (2.77)   (5.22) 
 Diluted (pence per share)    (2.77)   (5.22) 
                             -------  ------- 
 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

 
 For the Year Ended 31 December                 2021        2020 
                                                 GBP         GBP 
 Loss for the year                         (438,597)   (733,181) 
 Other comprehensive income 
 Item that will not be reclassified 
  to profit or loss: 
  Fair value gain on equity investments 
  not held for trading designated 
  as fair value through OCI                  768,766      42,600 
                                          ----------  ---------- 
 Total comprehensive income/(loss) 
  for the year                               330,168   (690,581) 
                                          ----------  ---------- 
 

Consolidated Statement of Financial Position

 
 As at 31 December                        2021          2020 
                                           GBP           GBP 
 ASSETS 
 NON-CURRENT ASSETS 
 Goodwill                              191,018       191,018 
 Owned 
  Intangible assets                     28,577        38,401 
  Property, plant and equipment        106,678       101,500 
 Right-of-use 
  Property, plant and equipment          9,230        74,408 
 Investments                         1,175,349       157,500 
                                  ------------  ------------ 
                                     1,510,852       562,827 
 CURRENT ASSETS 
 Inventories                           161,556       124,094 
 Trade and other receivables         2,254,937       575,449 
 Cash and cash equivalents             622,788       464,232 
                                  ------------  ------------ 
                                     3,039,281     1,163,775 
                                  ------------  ------------ 
 TOTAL ASSETS                        4,550,133     1,726,602 
 LIABILITIES 
 NON-CURRENT LIABILITIES 
 Financial liabilities                (39,716)      (45,663) 
 Provisions                           (70,000)      (42,500) 
                                  ------------  ------------ 
                                     (109,716)      (88,163) 
 CURRENT LIABILITIES 
 Trade and other payables          (1,594,058)   (1,803,183) 
 Contract liabilities                (101,587)     (145,195) 
 Financial liabilities                (14,242)      (92,471) 
                                  ------------  ------------ 
                                   (1,709,887)   (2,040,849) 
                                  ------------  ------------ 
 TOTAL LIABILITIES                 (1,819,604)   (2,129,012) 
                                  ------------  ------------ 
 Net assets/(liabilities)            2,730,529     (402,410) 
                                  ------------  ------------ 
 EQUITY 
 Called up share capital             3,758,184     2,558,184 
 Share premium                       5,189,313     3,586,541 
 Merger reserve                      2,245,333     2,245,333 
 Share-based payment reserve            40,218        40,218 
 Investment valuation reserve          836,265        67,500 
 Retained losses                   (9,338,784)   (8,900,186) 
                                  ------------  ------------ 
 TOTAL EQUITY                        2,730,529     (402,410) 
                                  ------------  ------------ 
 

Consolidated Statement of Changes in Equity

 
                                  Called       Share      Retained      Merger   Share-based   Investment       Total 
                                up Share     premium        losses     reserve       payment    valuation      equity 
                                 capital                                             reserve      reserve 
                                     GBP         GBP           GBP         GBP           GBP          GBP         GBP 
                              ----------  ----------  ------------  ----------  ------------  -----------  ---------- 
 Balance 
  at 
  31 December 
  2020                         2,558,184   3,586,541   (8,900,186)   2,245,333        40,218       67,500   (402,410) 
 Loss for 
  the year                             -           -     (438,597)           -             -            -   (438,597) 
 Other comprehensive 
  income                               -           -             -           -             -      768,765     768,765 
                              ----------  ----------  ------------  ----------  ------------  -----------  ---------- 
 Total comprehensive 
  income for 
  the year                             -           -     (438,597)           -             -      768,765     330,168 
 Transactions 
  with shareholders 
   Share options                       -           -             -           -             -            -           - 
    exercised 
   Share-based                         -           -             -           -             -            -           - 
    payments 
   Shares placed/subscribed    1,200,000   1,602,772             -           -             -            -   2,802,772 
                              ----------  ----------  ------------  ----------  ------------  -----------  ---------- 
 Total transactions 
  with shareholders            1,200,000   1,602,772             -           -             -            -   2,802,772 
                              ----------  ----------  ------------  ----------  ------------  -----------  ---------- 
 Balance 
  at 31 December 
  2021                         3,758,184   5,189,313   (9,338,783)   2,245,333        40,218      836,265   2,730,529 
                              ----------  ----------  ------------  ----------  ------------  -----------  ---------- 
 

Consolidated Statement of Cash Flows

 
For the Year Ended 31 December                2021       2020 
                                               GBP        GBP 
Cash flows from operating activities 
Cash used in operations                (1,251,072)  (366,488) 
 
Net cash flow from operating 
 activities                            (1,251,072)  (366,488) 
Cash flows from investing activities 
Purchase of tangible fixed assets         (67,619)   (52,145) 
Purchases of marketable securities       (249,083)          - 
Investment loan                        (1,050,000)          - 
Interest received                           72,504          - 
Cash from sale of assets                        42        116 
                                       -----------  --------- 
Net cash flow from investing 
 activities                            (1,294,156)   (52,029) 
Cash flows from financing activities 
New loans in year                                -     50,000 
Loan principal repaid                      (5,517)  (300,000) 
Share issue                              3,000,000  1,100,000 
Costs of share issue                     (197,228)   (50,800) 
Exercise of share options                        -      2,500 
Repayment of lease liabilities            (86,986)  (111,208) 
Interest paid                              (6,483)   (45,317) 
                                       -----------  --------- 
Net cash flow from financing 
 activities                              2,703,784    645,175 
                                       -----------  --------- 
Increase/(decrease) in cash and 
 cash equivalents                          158,556    226,658 
Cash and cash equivalents at 
 beginning of year                         464,232    237,574 
                                       -----------  --------- 
Cash and cash equivalents at 
 end of year                               622,788    464,232 
                                       -----------  --------- 
 

Immedia Group Plc

NOTES TO THE FINANCIAL INFORMATION

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The financial information for the year ended 31 December 2021 is derived from the statutory accounts for that year. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and included a reference by way of emphasis to the disposal of Immedia Broadcast Limited subsequent to the year end date.

The statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 31 December 2021 have not yet been delivered to the Registrar of Companies. The 2021 accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Annual Report and Notice of Annual General Meeting will be posted to the shareholders by 30 June 2022 and will be made available on the Company's website ( www.imeplc.com ) at that time.

This preliminary announcement was approved by the Board on 6 June 2022.

   1.         ACCOUNTING POLICIES 

Basis of preparation

Both the parent company financial statements and the consolidated financial statements have been prepared and approved by the Directors in accordance with UK-adopted international accounting standards. The total comprehensive income was GBP330,168 (2020 loss: GBP690,581), reflecting an increase in the carrying value of GBP768,766 in our strategic investment in the AIM-quoted spoken word audio platform Audioboom Group PLC (AIM:BOOM). The Company's loss for the year was GBP649,784 (2020 loss: GBP341,928).

The financial statements were approved by the Board of Directors on the date as shown on the Consolidated and Company Statement of Financial Position.

Statement of compliance

The AIM Rules require that the consolidated financial statements of the Group be prepared in accordance with International Financial Reporting Standards.

Judgements made by the Directors in the application of these accounting policies that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 2.

Measurement convention

The consolidated financial statements have been prepared on the historical cost basis except where explicitly stated otherwise.

Basis of consolidation

   (i)   Subsidiaries 

Subsidiaries are entities controlled by the Group. Control exists when the Group has power over the investee significantly to direct the activities; exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the investor's returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The Group also included an Employee Benefit Trust which is considered to be a quasi-subsidiary under the control of the Group.

   (ii)   Acquisitions 

Acquisitions are accounted for using the acquisition method. The cost of an acquisition is measured at fair value at the date of exchange of the consideration. Identifiable assets and liabilities of the acquired business are recognised at their fair value at the date of acquisition. To the extent that the cost of an acquisition exceeds the fair value of the net assets acquired the difference is recorded as goodwill. Where the fair value of the net assets acquired exceeds the cost of an acquisition the difference is recorded in profit and loss.

(iii) Transactions eliminated on consolidation

Intra-group balances and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

(iv) Merger

On 20 November 2003 a new holding company was brought into the Group. This was carried out by a share for share exchange and the existing shareholders of Immedia Broadcast Limited received 1,000 10p ordinary shares in Immedia Group Plc for every share held. There was no cash consideration. As part of its transition to IFRS on 1 January 2006 the Group did not restate the Group reconstruction which had been accounted for as a merger as permitted by UK GAAP.

Going concern

The Group meets its day to day working capital requirements through the combined use of its cash balances, the monetization of investments, receivable and payable balances.

Following the disposal of Immedia Broadcast Limited for cash consideration of GBP1.7m and the disposal of the Sprift Loan for cash consideration of GBP1.05m and the investment in Audioboom, at the date of this report the Company has net assets in excess of GBP3.8m, of which all are cash or liquid investments. Accordingly the Directors believe that this represents more than adequate resources to continue to pay its liabilities as they fall due in the year ahead, including some headroom to deal with possible shortfalls against expectations judged reasonable. The Directors have also considered whether that headroom would be adequate to deal with any reasonable abortive costs associated with potential acquisitions should they not proceed and consider it adequate.

Accordingly, whether or not the transactions to change the make up of the Group are completed, the Directors believe there is reasonable assurance that the Group has adequate resources to continue in operation for the foreseeable future, being at least 12 months from the date of signing of the financial statements, and continue to adopt the going concern assumption.

Changes in accounting policies

There are no new standards or amendments to standards which are material to the accounts and mandatory for the first time for the financial year ended 31 December 2021.

Accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by all Group entities.

   a)     Revenue 

Revenue represents the amounts receivable by the Group for the provision of its goods and services, excluding value added tax.

Production services comprise the broadcasting of live and as live radio programmes to customers' premises using appropriate technologies, together with the production of advertising content for use in those programmes. Revenue from these services is billed on time-based subscriptions and recognised as the performance obligation is fulfilled. Additionally, the creation of digital web and app designs, digital solutions for audio visual content, 3D, virtual reality and augmented reality content provided by the AVC Immedia division are all included in production services. Revenue from these services is billed and recognised on completion as that is when the performance obligation is met.

Operations revenue from equipment sales which includes delivery and configuration is recognised over time; revenue from content delivery and equipment maintenance and hire services is billed on time-based subscriptions and is recognised monthly on completion when the performance obligation is met.

To the extent that invoices are raised to a different pattern from the revenue recognition described above, appropriate adjustments are made through contract assets and contract liabilities to account for revenue when underlying service has been performed or goods have transferred to the customer.

   b)    Other income 

The Company has other income for the sub-lease of its Aberdeen offices.

   c)     Finance income and cost 

Finance income comprises interest income on bank deposits and interest income from customers on deferred payment terms, both of which are recognised as accrued using the effective interest method.

Finance cost comprises interest expense on borrowings including leases which is recognised in profit or loss using the effective interest method.

   d)    Taxation 

The tax expense comprises current and deferred tax. Tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income. In this case, the tax is also recognised directly in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

   e)    Research and development expenditure 

Recognition and measurement

Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.

Costs that are directly attributable to the development phase of new customised technologies are recognised as intangible assets provided they meet the following recognition requirements:

-- completion of the intangible asset is technically feasible so that it will be available for use or sale;

   --      the Group intends to complete the intangible asset and use or sell it; 
   --      the Group has the ability to use or sell the intangible asset; 

-- the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

-- there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

-- the expenditure attributable to the intangible asset during its development can be measured reliably. Development costs not meeting the criteria for capitalisation are recognised as expenses as incurred.

   f)     Foreign currencies 

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

   g)     Employee benefit 
   (i)   Defined contribution plans 

Obligations for the contributions to defined contribution pension plans are recognised as an expense in profit or loss when they are due.

   (ii)   Share-based payments options 

The Group operated an equity settled compensation scheme which grants options to qualifying employees. The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the expected number of share options that vest unless this adjustment is due to the share price not achieving the set thresholds for vesting.

(iii) Share-based payments warrants

The Group also operated an equity settled compensations scheme which grants warrants. The warrants have a life of 5 years from grant date and expire if not exercised. The grant date fair value of warrants granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the warrants. The amount recognised as an expense is adjusted to reflect the expected number of share warrants that vest unless this adjustment is due to the share price not achieving the set thresholds for vesting.

(iv) Employee benefit trust

The Group operates an employee trust ("EBT") for the benefit of its employees through Immedia Broadcasting Trustees Limited which acts as Trustee. Transactions for the EBT are treated as being those of the Group and are therefore reflected in the consolidated financial statements. The trust's purchases and sales of shares in the Company are debited and credited directly to equity.

   h)    Goodwill 

Goodwill arises on the acquisition of subsidiaries and is stated at cost less any accumulated impairment losses. Goodwill, which under IFRSs is not amortised, is tested annually for impairment.

For acquisitions on or after 1 January 2006, goodwill represents the excess of the cost of the acquisitions over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.

   i)      Amortisation of intangible assets 

Amortisation is recognised as an administrative expense in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for intangible assets are as follows:

   Brand -                                               ten years 
   Proprietary software -                    five years 
   Customer contracts -                      three to four years 
   Content delivery -                           three years 
   j)      Investment in subsidiaries 

Investments in subsidiaries held in the parent company accounts are stated at cost less impairment. Investments in subsidiaries are reviewed for impairment on an annual basis or when events or other changes in circumstances indicate that the investment carrying value may be impaired.

   k)     Impairment 
   (i)   Non-financial assets 

Assets that have indefinite lives (goodwill) are tested for impairment annually. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The test for impairment under IAS 36 compares the carrying value of an asset against its economic value (recoverable amount to the business), where economic value is defined as the higher of the asset's fair value less costs to sell or its value in use. (These measures are based on the net present value of future cash flows). If the carrying value exceeds the economic value, impairment exists.

An impairment loss is recognised if the carrying amount of an asset or the cash-generating unit in which the asset is used exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

Impairment losses are recognised in consolidated statement of profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis.

   (ii)   Financial assets 

All financial assets are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

An impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

   l)      Property, plant and equipment 
   (i)   Recognition and measurement 

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

   (ii)   Subsequent costs 

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of any part that is replaced is derecognised. The cost of the day-to-day servicing of property, plant and equipment is recognised in income and expenditure as incurred.

(iii) Depreciation

Depreciation is recognised as an expense in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives.

The estimated useful lives for the current and comparative periods are as follows:

   Plant and equipment -                              three to seven years 

Fixture and fittings

   Office and IT equipment -                 three to ten years 

Leasehold improvements - unexpired period of original term of leases, ranging from 1.5 to eight years

   Network equipment -                         three to five years or contract term if shorter 
   Leasehold property -                                length of property lease 

Depreciation methods, useful lives and residual values are reviewed at each statement of financial position date.

   m)   Financial instruments 

Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Investments other than investments in subsidiaries are classified as either held-for-trading or not at initial recognition. At the year-end date all investments are classified as not held for trading. An irrevocable election has been made to recognise changes in fair value in other comprehensive income.

Trade receivables are held in order to collect the contractual cash flows and are initially measured at the transaction price as defined in IFRS 15, as the contracts of the Group do not contain significant financing components. Impairment losses are recognised based on lifetime expected credit losses in profit or loss.

Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment due to their short-term nature. A provision for impairment is established based on 12-month expected credit loses unless there has been a significant increase in credit risk when lifetime expected credit losses are recognised. The amount of any provision is recognised in profit or loss. Cash and cash equivalents comprise cash balances held by the Group and overnight call deposits.

Financial liability and equity instruments issues by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issues by the Company are recorded at the proceeds received, net of direct issue costs.

   n)    Inventories 

Inventories include audio, screen and content delivery equipment and are measured at the lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods purchased for resale, the weighted average purchase price is used. For work in progress and finished goods, cost is taken as production cost which includes an appropriate proportion of attributable overheads.

   o)    Contract assets 

When equipment supplied within an audio services contract is paid for over the contract term, the Group continues to recognise equipment sales revenues consistently with the revenue recognition policy in 2. a) Revenue .

   p)    Trade and other payables 

Trade and other payables are recognised at fair value on initial recognition and subsequently at amortised costs.

   q)    Borrowings 

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

   r)     Leases 

A right of use asset and a lease liability have been recognised for all leases except leases of low value assets, which are considered to be those with a fair value below GBP4,500, and those with a duration of 12 months or less. Right of use assets have been measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date.

The Group depreciates right of use assets on a straight-line basis from the lease commencement date to the earlier of the useful life of the right of use asset or the end of the lease term. Where impairment indicators exist, right of use assets will be assessed for impairment.

The lease liabilities are measured at the present value of the lease payments due to the lessor over the lease term, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

After initial measurement, any payments made will reduce the liability and the interest accrued will increase it. Any reassessment or modification will lead to a remeasurement of the liability. In such case, the corresponding adjustment will be reflected in the right of use asset, or profit and loss if the right of use asset is already reduced to zero.

   s)     Provisions 

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Amounts provided in respect of leasehold premises dilapidations are the only constituent of the provisions balance.

   t)     Equity and reserves 

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premium received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The Company also has warrants in issue following an equity fund raising process. The warrants had a life of 1 year from grant date, since extended to 30 June 2022, and will expire if not exercised. The grant date fair value of warrants granted to investors is recognised as an expense against Share Premium, with a corresponding increase in equity, The amount recognised as an expense is adjusted to reflect the expected number of share warrants that vest unless this adjustment is due to the share price not achieving the exercise price threshold.

Merger reserve represents the consolidation difference that arises under merger accounting. This consists of the difference between the cost of investment and the nominal value of the share capital acquired.

Other reserves include share-based payment charges.

The investment revaluation reserve includes accumulated gains and losses on financial assets.

Retained losses include retained profits and losses relating to current and prior years and purchases and sales of own shares by the Employee Benefit Trust.

All transactions with owners of the parent are recorded separately within equity.

   u)    Earnings per share 

Basic or diluted

The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shared outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

   v)     Segment reporting 

In identifying its operating segments, management has historically followed the Group's service lines, which represent the main products and services by the Group. There were two operating segments: production and operations.

The Chief Operating Decision Maker, which is deemed to be the executive Board, reviews management information which is the same as is reported and prepared under IFRS.

The revenue streams in the production segment comprise the content created for customers, including audio based (live and recorded radio, music, advertising and branding) and visual based (video, music advertising and branding, digital web and app designs, and digital solutions for audio visual, 3D, virtual reality and augmented reality content), together with all applicable licensing charges.

The revenue streams in the operations segment comprise the supply, installation and sale or hire of equipment to deliver content to customers, the delivery of the content (including via broadband or satellite technologies), and the maintenance of the equipment.

   2.   USE OF ESTIMATES AND JUDGEMENTS 

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these judgements and estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

   3.   REVENUE 
   a)     Segmental reporting 

The Chief Operating Decision Maker, which is deemed to be the executive Board consider that the Group has just one operating segment, being the provision of audio visual communication products and services.

Analysis of sales and cost of sales between the two main service lines, production and operations is provided for information in the table below. The production revenue streams comprise the content created for customers, including audio based (live and recorded radio, music, advertising and branding) and visual based (video, music advertising and branding, digital web and app designs, and digital solutions for audio visual, 3D, virtual reality and augmented reality content), together with all applicable licensing charges. The operations revenue streams comprise the supply, installation and sale or hire of equipment to deliver content to customers, the delivery of the content (including via broadband or satellite technologies), and the maintenance of the equipment.

 
                                   2021                                    2020 
                   Production   Operations         Total   Production   Operations         Total 
                          GBP          GBP           GBP          GBP          GBP           GBP 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 Revenue            2,879,891       60,801     2,940,692    2,180,313      130,559     2,310,872 
 Cost of 
  sales             (968,353)     (30,672)     (999,025)    (873,807)     (51,017)     (924,824) 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 Gross profit       1,911,538       30,129     1,941,667    1,306,506       79,542     1,386,048 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 Administrative 
  expenses                                   (2,458,683)                             (2,126,783) 
 Other income                                     12,397                                  68,127 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 Loss from 
  operations                                   (504,618)                               (672,608) 
 Finance 
  income                                          72,505                                     116 
 Finance 
  cost                                           (6,484)                                (60,689) 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 Loss before 
  tax                                          (438,597)                               (733,181) 
                  -----------  -----------  ------------  -----------  -----------  ------------ 
 

Geographical analysis:

 
                                 2021        2020 
                                  GBP         GBP 
                           ----------  ---------- 
 UK                         2,554,416   2,032,591 
 Europe excluding the UK      103,360     133,703 
 RoW                          282,916     144,578 
                           ----------  ---------- 
 Total                      2,940,692   2,310,872 
                           ----------  ---------- 
 

*included in above are sales to Canada GBP177,969 (2020: GBP79,530) and USA GBP62,622 (2020: GBP61,373). There were no material sales to other countries.

Significant customers

There were three customers where revenue was greater than 10% of the total (2020: three). Revenue from each of these customers is derived from both production and operations segments.

Significant customer analysis:

 
                    202 1                   2020 
             Revenue   % of total   Revenue   % of total 
                 GBP      revenue       GBP      revenue 
            --------  -----------  --------  ----------- 
 Customer 
  1          500,863         17.0   499,848         21.6 
 Customer 
  2          438,457         14.9   439,494         19.0 
 Customer 
  3          309,754         10.5   243,401         10.5 
            --------  -----------  --------  ----------- 
 

Analysis of revenue between goods and services:

 
                        2021        2020 
                         GBP         GBP 
                  ----------  ---------- 
 Services          2,333,654   2,096,479 
 Goods               607,038     214,393 
 Total revenues    2,940,692   2,310,872 
 

Analysis of revenue recognition

 
                                       2021        2020 
                                        GBP         GBP 
                                 ----------  ---------- 
 Recognised at a point in time    1,609,267     951,680 
 Recognised over time             1,331,425   1,359,192 
                                 ----------  ---------- 
 Total revenues                   2,940,692   2,310,872 
                                 ----------  ---------- 
 
   b)    Contract liabilities 
 
                                2021      2020 
                                 GBP       GBP 
                            --------  -------- 
 Current - Media services    101,587   145,195 
                            --------  -------- 
 

During the year, the Company recognised revenue of GBP142,687 that was included in the contract liability at the beginning of the period.

Revenue recognised in relation to contract liabilities

Where media services are billed in advance, income is deferred until it can be recognised in accordance with the revenue recognition policy as detailed in note 2 .

Analysis of future obligations:

 
                                                 2021      2020 
                                                  GBP       GBP 
                                           ----------  -------- 
 Performance obligations to be satisfied 
  in the next year                          1,033,274   753,542 
                                           ----------  -------- 
 Performance obligations to be satisfied 
  in the subsequent year                      202,788     3,420 
                                           ----------  -------- 
 
   4.   EMPLOYEES AND DIRECTORS 

Staff costs

 
                               Group              Company 
                            2021        2020   2021      2020 
                             GBP         GBP    GBP       GBP 
                      ----------  ----------  -----  -------- 
 Wages and salaries    1,166,184   1,066,787      -   163,278 
 Social security 
  costs                  124,538     127,496      -    30,660 
 Other pension 
  costs                   34,734      32,760      -     9,295 
                      ----------  ----------  -----  -------- 
 Total                 1,325,456   1,227,043      -   203,233 
                      ----------  ----------  -----  -------- 
 

The Group also made payments of fees to Non-Executive Directors of GBP81,510 (2020: GBP33,899).

The average number of employees during the year was as follows:

 
                      Group        Company 
                   2021   2020   2021   2020 
 Administration 
  and sales          12     13      -      2 
 Production and 
  distribution       15     15      -      - 
                  -----  -----  -----  ----- 
 Total               27     28      -      2 
                  -----  -----  -----  ----- 
 

Directors' remuneration

 
                                           2021      2020 
                                            GBP       GBP 
                                       --------  -------- 
 Directors' remuneration                211,677   200,385 
 Directors' pension contributions to 
  money purchase schemes                  8,200     7,515 
 Payments to Directors for loss of 
  office                                      -   101,240 
                                       --------  -------- 
 

The number of directors to whom retirement benefits were accruing was as follows:

 
                           202 1   2020 
 Money purchase schemes        2      3 
 

Information regarding the highest paid director is as follows:

 
                                               2021      2020 
                                                GBP       GBP 
                                           --------  -------- 
 Emoluments etc                             119,245   110,661 
 Pension contributions to money purchase 
  schemes                                     4,600     4,280 
                                           --------  -------- 
 

Remuneration for each individual director, which is required to be disclosed under the AIM rules, is shown in the Directors' Report in the Report and Accounts.

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END

FR UNRARUNUNRUR

(END) Dow Jones Newswires

June 07, 2022 02:00 ET (06:00 GMT)

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