TIDMSEEN
RNS Number : 7309Q
SEEEN PLC
30 June 2022
SEEEN plc
("SEEEN", the "Group" or the "Company")
Audited results for the year ended 31 December 2021
Update on 1H 2022
Notice of AGM
SEEEN plc, the global media and technology platform that offers
proprietary AI products and solutions to brands, creators and
publishers for harvesting video moments to enable discovery,
sharing, e-commerce and improved digital marketing yield is pleased
to present its audited results for the year ended 31 December 2021
and a n update on 1H 2022.
The Group is on track with its commercialisation plan and has
momentum with accelerating customer acquisition for its technology
business and improved profitability of its multichannel video
network ("MCN").
Audited Full Year 2021 highlights:
-- Global market demand in SEEEN's key markets is growing,
especially in Media Monitoring, which is expected to grow to $11
billion by 2028 (source: Fortune Business Insights), and video
e-commerce which, in the US, is expected to grow to $35 billion by
2024 (source: Statista)
-- Key Performance Indicators (KPIs) show strong operating
progress delivering EBITDA in line with market expectations
Financial KPIs
o Adjusted EBITDA* of ($1.47) million (adjusting for share-based
payments and non-core items), significantly reduced from ($2.12)
million in 2020 as Group transitions from product development to
product sales
o Net cash of $2.1 million as of 31 December 2021
o Technology licensing sales of $0.1 million (2020: zero)
o MCN priority on profitability rather than sales
-- Profits increase despite decrease in MCN revenue to $8.3 million (2020: $10.1 million)
-- Profitability driven by increased revenue per thousand views (RPM)
-- RPM growth of 29% to $1.24 (2020: $0.97), reflecting focus on
higher quality channel partners and increased video content
relevance driven by technology
Technology KPIs
o Two product releases:
-- CreatorSuite : enables customers to drive increased views and
increased customer conversions
-- Dialog-To-Clip : drives efficiencies for video editing in
Adobe(R) Premiere Pro(R) with AI driven in-video search
-- Initial product sales:
o Vertical markets (consumer oriented - financial, sports,
retail) targeted with shorter sales cycles with four customers
acquired
o Strategic customers for combined technology and managed
services sales: flagship customer announced
o E-commerce customer: US tyre retailer
* Non-core items include termination payments and one-off gain
from forgiveness of Payment Protection Plan loan issued in 2020
1H2022 Update:
KPIs
-- On track to achieve monthly EBITDA break-even in early 2023 given customer win momentum
-- MCN Year To May 2022 has delivered record profitability
reflecting contribution of AI-led managed services to two new
strategic customers
o Results achieved despite substantial revenue reduction for MCN
reflecting further loss of low margin views since March 2022
following outbreak of Russia-Ukraine conflict
-- Current cash position of $1.6 million enables the Group to
continue executing on sales pipeline
-- Sales pipeline strong, delivering further customer wins and
corporate development partnership:
o Follow through in key vertical markets: eight wins led by
multiple financial customers
o E-commerce: recent launch with American Leak Detection with
Internet lead generation increased and initial e-commerce sales
converted
-- 4 initial e-commerce customers
o Corporate Development: Media monitoring strategic partnership
announced with Kinetiq, Inc. using video moments and objects
identified within a video to better manage and measure audience
experiences
Notice of AGM : Copies of the Annual Report and Notice of Annual
General Meeting are today being posted to shareholders and will be
made available on the Company's website at seeen.com. The Company's
AGM will be held at the offices of Panmure Gordon (UK) Limited, One
New Change, London EC4M 9AF at 3.00 p.m. on 28 July 2022.
Dr. Patrick DeSouza, Chairman of SEEEN, commented: "2021 was a
foundational year in that we transitioned effectively from a
product development company using EIS/VCT resources to
commercialization and an emerging leadership position in the
marketplace. We have built strongly on our base operating plan and
delivered more high quality, referenceable customers during 1H
2022.
With the rise of Tik Tok and YouTube moments, short form video
is becoming an essential marketing vehicle for a video-first world.
Our technology products enable consumers, creators and brands to
harvest such video moments for commercial uses. Current market
volatility only reinforces demand for our technology because
customers need to tap more efficiently into advertising dollars and
e-commerce opportunities. Our board and management team has worked
together in relentless fashion to navigate market conditions
successfully and drive sales. We appreciate the support that our
shareholders have provided in realizing a valuable market
opportunity."
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
SEEEN plc
Patrick DeSouza, Chairman Tel: +44 (0)7775 701
Akiko Mikumo, Interim Co-CEO 838
David Anton, Interim Co-CEO
Adrian Hargrave, CFO
Panmure Gordon (Financial Adviser, Tel: +44 (0)20 7886 2500
Nominated Adviser & Joint Broker)
Alina Vaskina / Harriette Johnson
(Corporate Advisory)
Rupert Dearden (Corporate Broking)
Dowgate Capital Limited - Joint Broker Tel: +44 (0)20 3903 7721
Stephen Norcross
Chairman's Statement
SEEEN's two-and-a-half-year progress since IPO has followed a
steady, upward trajectory as management has deployed capital in
executing a business plan. Product development of video moments
technology through 2020 has been followed in 2021 by trials with
media customers needing to publish short-form video to compete for
advertising dollars. The rise of TikTok and others have made our
customers and pipeline of prospects realize that video moments
technology is a "must have" for their businesses.
We continue to listen to our customers and are evolving our
business model in 2022 to meet customer demand. We recognize that
many business customers are still catching-up with the consumer
shift to a video-first world and need additional support services
from SEEEN. Yet despite all the macroeconomic volatility, we have
enthusiasm from customers for investing in our products and
services. During 2022, customers are now extending their initial
commercial relationship to include new use cases for our technology
such as AI monitoring of objects within the video to enable
advertising attribution. To be sure, we remain disciplined with our
business plan to build a technology company but need to prudently
work with our trial customers to balance short-run demand for
custom features with building long-term shareholder value with
higher margin products that can be simply licensed. Nevertheless,
overall market demand for SEEEN's technology remains strong as
consumers, creators and brands each seek to exploit video moments.
Moreover, in terms of increasing long run exit value for our
shareholders, we also see ongoing attempts at consolidation between
AI technology companies and video content companies in order to
more effectively exploit rising consumer demand.
In navigating the next phase of the business plan to translate
promise into a stream of customers and highly valuable business,
our board and management team have worked together closely during
2H 2021 and 1H 2022. Overall, we appreciate the management team's
progress, especially given Covid limitations on organization
building and direct engagement with customers and sales
opportunities. However, given the speed of market change, two of
our Board members were enlisted to accelerate our Go-To-Market plan
in 2022. As Interim Co-CEOs, Akiko Mikumo with respect to
execution, and David Anton, with respect to sales, have ensured
that SEEEN is on-track with its progress from technology
development to market competitor. We thank the founders for their
early vision in launching our business and for continuing to
support the efforts of the board.
During 1H 2022, our choice to have the Board help accelerate
SEEEN's Go-to-Market execution has borne fruit with an increasing
number of customer wins. Particularly with the help of our senior
leaders, such as the CFO and CTO, we have won for our technology
business both large strategic customers such as a global publisher
and smaller repeat sales within the vertical market of financial
publishing. The former enables us to demonstrate our ability to
upsell more of our technology products. The latter enables us to
demonstrate our ability to execute repeat sales quickly. These two
types of wins validate the excitement that we all have shared on
this journey. It should be equally noted that while we have
reinforced the growth path for our technology business, the
President of our MCN video content business has also done an
outstanding job maintaining our revenue base and source of testing
use cases for our technology with our creators and their audiences.
We feel that as these three executives have stepped forward, our
board members can take a step back for 2H from day-to-day execution
to provide stewardship on behalf of our investor base. I especially
thank Akiko and David for moving the proverbial ball down the field
in successfully helping with a transition from founders to
professional management to accelerate commercialisation.
We now move confidently towards 2H 2022 and beyond with
referenceable customers, a sales pipeline building on current
customer successes and a pipeline of product features that our
customers need and for which we are able to extract higher margin
sales. Given strong market demand for short-form entertainment
during these difficult times, we look forward to working with our
investors to build significant shareholder value.
Dr. Patrick DeSouza
Chairman
Interim Co-CEOs Statement
As noted in the Chairman's statement, in the last two and a half
years the Group has progressed from a technology development
business to a market competitor characterised by a suite of
proprietary AI products for short form video creation that is
increasingly attracting customers through a repeatable sales
model.
We were appointed as Interim Co-CEOs in March 2022, reflecting
the Group's transition away from the development phase and into a
professional execution phase with a focus on larger scale customers
to whom we can sell multiple products and services for video
optimisation. During this period, we have overseen a shift to
accelerating customer success and deeper engagement with our
customers to determine our product roadmap, which includes
analytics tools, multi platform video publishing and a greater
ability to analyse and access moments from video back
libraries.
This transition toward a commercial phase was initiated in 2021
and is partially reflected in our financial statements for 2021.
During the year, the Group achieved its first technology sales,
whilst reducing adjusted operating losses to $1.4 million from $2.1
million in 2020 (adding back in amortisation, share based payments
and non-core items as discussed in the Strategic Report) and
statutory operating losses to $3.5 million from $4.0 million. This
progress towards profitability also reflects our greater focus on
profitable MCN channel partners. We have achieved such progress
despite a decline in MCN revenue from $10.3 million to $8.4 million
due to the loss of some large low-margin channels, as well as our
efforts to re-focus our cost base to actively drive technology-led
revenues. At year end, we had $2.1 million in cash with a much
reduced cash cost base having utilised our EIS/VCT funds to develop
our product stack by the 30 September 2021 deadline. This 2 year
horizon from the Group's admission to AIM has successfully marked
the transition to a market competitor.
Foundational Year
2021 was a foundational year, as we continued the development of
our platform technologies and services (JetStream, CreatorSuite and
Managed Video Optimisation Services through our MCN) and made
initial sales of each of these core offerings to a significant
customer. This has allowed us to define our value add more sharply
whilst working together with our customer base in refining our
product requirements. The market opportunity for brands, agencies,
publishers and creators to understand video content at a granular
(ie frame by frame) level with the help of our technology is
immense. Through our work with customers, it is clear that there is
no tool available to analyse video at scale and convert this
analysis into short form moments that viewers can engage with.
Our unique AI video analysis process, powered by our JetStream
AI technology, positions us strongly in the media monitoring and
marketing technology business segments, as well as ecommerce
through video. SEEEN's technology allows customers to accurately
measure and catalogue their own and third party video inventory in
real time. As identified by various market research publications,
these media-tech segments are multi-billion dollar opportunities
with 15% annual growth expected for the rest of this decade as
online video continues to increase in volume and popularity versus
legacy video publishing activities.
Companies are actively positioning themselves to capitalise on
this shift to online video, as transactions such as Innovid's
acquisition of TVSquared ($160m) and Comscore's acquisition of
Shareablee ($45m) demonstrate. In each of these examples, legacy
video analytics providers are acquiring access to solutions that
allow them to perform analysis of social media trends at scale. Our
technology offers this solution for the unique challenge that is
video.
Our confidence in respect of our market positioning and
successful execution is reinforced by three key factors:
1. Customer Penetration. In 2021 and 2022, we have won customers
for all of our core products and entered into a strategic
partnership with Kinetiq, Inc for entry into the media monitoring
market. Discussed below are some of our most significant customer
wins that have allowed us to fine tune our products for greater
sales success;
2. Core Professional Team. We have established a management team
that is executing on our client requirements; working directly with
clients to add relevant product features that will accelerate the
sale of our products to similar potential customers;
3. KPI Data. Strong KPIs across our product suite that make our
technology a compelling proposition for customers, by delivering
faster results, more efficient workflows and, in particular for
CreatorSuite, higher revenue generation.
Customers
As indicated above, in organizing our Go-To-Market plan, we have
executed on three strategies to demonstrate for our shareholders a
significant value proposition. First, we sought to have a core
execution model of customer acquisition to drive the path to
profitability. We sought a strategic large customer that typically
has a longer sales cycles to show our ability to upsell such as a
customer with higher margin products. At the same time, we also
sought to penetrate a vertical market so that we could demonstrate
our ability to execute a faster sales cycle. Within a vertical,
there is typically reduced customer acquisition costs because of a
common return on investment sale for similar customers. Second, we
sought to position ourselves in the media monitoring market given
its dynamism and need for video moment products. Finally, we sought
to develop our e-commerce applications as consumers rely on video
moments to make impulse purchases. All three strategies produce
overlapping opportunities to increase shareholder value through
partnerships and possible acquisitions.
A. Core Sales Strategy
Global Publisher - In November 2021, we announced a key
strategic win for our MCN with a major global publisher to provide
YouTube optimisation services. This validated our strategic shift
away from high revenue, but low margin, channel partners to higher
margin publishing and brand clients where our technology was useful
for large back catalogues and where technology upsales can be made.
Using our technology and YouTube expertise, we have helped deliver
record results for the global publisher. In April 2022, they
achieved record views and revenues on YouTube despite the weakening
advertising backdrop, more than doubling previous monthly records.
These strong results have continued since. As a result of this
success, we have a case study to show to similar publishers
globally, including an additional win in this vertical in April
2022 with a leading US web publisher. We continue to attack this
market to capitalise on the unique offering we have in this sector
to search through back catalogues and generate clips and new videos
from these video collections.
Financial Publishing Vertical Market - In November 2021, we
importantly added our first customer in the financial publishing
vertical. This customer implemented CreatorSuite for all of its new
videos and has published videos both directly to its own website
and to YouTube. For most videos, the number of people viewing is
greater on the company's website than on YouTube, which delivers a
higher return per view versus the advertising income that can be
generated from YouTube videos. Since this initial win in the
financial publishing vertical, we have added three more customers
in this sector with a robust and growing pipeline in both the UK
and the US. Such customers have ranged from financial publishers
seeking to drive subscriptions and direct stock sales to event
organisers who want to drive more attendance to in person events
and webinars.
Other Verticals
We expect to build on our success in this sector, as well as
creating similar repeatable sales opportunities in the sports,
retailing and political verticals where we have also made initial
customer sales with successful implementations.
B. E-Commerce
E-Commerce Customers. During 2021, we launched CreatorSuite to
third parties having initially trialled the technology on our own
gtchannel.com website. Our initial partner, TBC Corporation, the
owner of multiple tire retailers in the United States of America,
paid us $0.1 million to produce videos and drive traffic and
ecommerce directly using their websites. This customer win built on
the Group's core MCN automotive focus and trials customers in the
automotive publishing space, such as Evasive Motorsports. Recently,
we have launched an e-commerce site for American Leak Detection to
sell leak detection products and services for that company's 150
locations across the US. This has already yielded its first sales
for the customer. Given the demand for home services, we see a big
opportunity ahead as we develop sales leads and convert them into
sales.
C. Corporate Development / Market Positioning
Media monitoring - During 2021, we began exploring opportunities
to apply JetStream to media monitoring for videos. Our initial
pilot focused on monitoring entertainment content to provide an
equality score each video. Building on this work, in February 2022
we announced a strategic partnership with Kinetiq, Inc., a leading
media intelligence platform that enables its 200+ global customers
to measure the effectiveness of their paid, earned and owned media,
across thousands of broadcast, CTV and social channels. We have
since applied this technology to enable a brand to monitor video
streaming for logos, objects, facial, and other identifying images
that promote their brand. Media monitoring firms need our solutions
to analyse video at scale and further distribution discussions are
ongoing. Working with these partners, we anticipate selling higher
priced solutions on a high margin, recurring revenue basis.
Professional Execution
Since we took on the roles of Interim Co-CEO, we have been very
impressed with the focus and commercial ability of other members of
the management team. We have worked with the team to ensure we have
built stronger relationships with prospective and current
customers, allowing us to: sell faster, gather relevant data and
define our product roadmap with relevant solutions that customers
can trial before wider roll-outs.
These include Adrian Hargrave, our CFO, has been highly active
in both bringing in new customers, with our wider sales team,
across all our Customer strategies while making sure operational
matters are being executed in timely fashion. Jacob Coby our CTO
has been actively involved in client conversations and leading both
our AI team and outsource software engineers in driving new product
features, some of which have already been implemented as part of
CreatorSuite (such as playlists and automated transcripts for
creating moments). Jake Desjarlais as President of the MCN has
pivoted the MCN away from lower margin business towards larger
publishers and brands. This has been possible because of his
expertise in developing channels with former clients such as Warner
Bros, Paramount, Marvel and Hulu. This professional experience
provides SEEEN with an edge in the marketplace to drive higher
engagement and increased revenues through content strategies and to
create a relevant technology roadmap for MCN channels.
KPIs
As discussed in our strategic report, we look at a variety of
KPIs for the business. These include Group-wide KPIs related to
sales and profitability, as well as product specific KPIs, which
enhance the sales process.
Group KPIs - During 2021, we launched two new technology
products based on our JetStream AI technology stack: Dialog-To-Clip
and CreatorSuite. During 2022, we expect to add further modules to
these products, as well as launching a new product dedicated solely
to media monitoring and additional ancillary products to help our
MCN client base create more efficient workflows and publish more
video content to increase views and revenues.
Since the start of 2022, to build on the success of our product
implementations, we are also looking at KPIs in relation to our
sales funnel, including number of leads, number of proposals and
deals closing. To date, we have been very successful in converting
proposals into deals closing, with the pace of conversion
accelerating more recently. We are very focused on increasing the
number of leads generated and proposals prepared and we will be
monitoring these closely in order to guide our execution pathway.
In particular, we are very confident in our ability to develop
repeatable sales processes in key verticals, such as financial
publishing, sports and retail for CreatorSuite and with more
traditional publishers.
Another relevant KPI now that we have multiple products
available to customers is the percentage of clients who are
purchasing more than one product or service from SEEEN. We have
seen our first upsales in 2022, as well as package sales of
technology and managed services, including our MCN. As we deliver
results for a customer, an additional upsell is considerably faster
and easier than selling products and services to a new customer.
Each of our management team and senior leadership is very focused
on this integrated approach to selling to our client base. In some
cases, where customers have bespoke requirements, SEEEN will
initially need to offer a managed services solution, which can be
priced appropriately. Such managed services can be automated if we
determine that sufficient market demand is present and feed the
Group KPI for product development described above.
Product KPIs - CreatorSuite has proven across a variety of
different implementations to bring several benefits to customers.
These include increased Google Organic Search views directly from
video pages (up to 100% increase), bounce rates of below 20% and
clickthrough rates on end cards shown of between 5% and 15%. These
metrics together deliver increased traffic, increased engagement
and increased conversion for our customers. As part of our selling
package, we are building a ROI (return on investment) calculator
for our potential customers, so that they will immediately see the
benefits that momentised videos on their website will deliver for
them.
With regards to the MCN, we consider KPIs surrounding total
views, creator channel partners and Revenue Per View, as described
in more detail in the strategic report.
Financials
We have a balance sheet sufficient to execute our business plan.
During 2021 in realizing our product stack, we fully deployed our
EIS/VCT investment raised during the IPO. As at 31 December 2021,
we had $2.1 million in cash. In making the transition to
professional management, we did a good job of managing our burn
rate. We reduced amounts spent on technology development and
reallocated amounts towards sales and marketing. Our cash position
has been assisted during 2022 as we have delivered more profitable
revenues, resulting in a net cash position of approximately $1.6
million at the date of this release. We are mindful of our budget
and constantly calibrate our cash burn against our monthly gross
revenues to ensure that we are both able to grow the business
organically, whilst protecting the business against any unforeseen
challenges, such as Covid-19 and the Russia-Ukraine conflict.
Our focus on profitability and cash generation is also evidenced
by the ongoing evolution of our MCN away from a revenue-only focus
at the expense of supporting profits. In making our transition, we
shed certain onerous legacy agency fees dating back to arrangements
existing before the Group's admission to AIM. This resulted in the
loss of revenue from some of the MCN's low margin channels. This
reduction in MCN revenue from $10.3 million in 2020 to $8.3 million
in 2021 will continue during 2022, however importantly the MCN is
to become increasingly profitable. We completed our most profitable
MCN month ever in April 2022 with similar levels of profitability
projected for the rest of the year. This has been achieved despite
the loss of advertising income from all views in Russia, which
represented 25% of revenues in 2021.
With respect to technology sales, we completed our first
technology sales in 2021 and generated $0.1 million of revenue. In
2022 and beyond, we expect this number to accelerate with a greater
emphasis on recurring revenues rather than implementation fees.
As a result of the above, we generated an adjusted operating
loss of $1.4 million (excluding Share Based Payments, Amortisation
and Non-Core Items), significantly down from $2.1 million in 2020.
We are on track to reduce this loss substantially during 2022 and
with our ongoing customer momentum, we expect that we should be
able to reach EBITDA breakeven in early 2023.
Strategic Outlook
We entered 2022 positively, building on the foundations we laid
in 2020 and 2021 and we feel that we now have the right management
team in place to drive the business forward. During the remainder
of 2022, we will continue our relentless focus on driving new
customer wins with the strong data that we have for implementations
of CreatorSuite, JetStream and MCN services.
These customer wins are also enabling us to further
differentiate from the competition by building products that our
customers are asking us for and which will have a wider base of
users looking to make more of their new and existing video content.
Customers need our multi-platform video publishing tools and rapid
analysis of extensive video back catalogues and a turnkey media
monitoring product.
We have leverageable assets. We have a strong technology team
that has executed an attractive product roadmap for customers. We
will continue to look to add professional expertise, particularly
in relation to our sales efforts, to ensure that we capitalise on
our market opportunity. In building our firm culture, given the
team's responsiveness to operating challenges, we seek to promote
from within and reward success.
We have demonstrated our ability to marry Managed Video
Optimisation Services with our technology offerings for key clients
in the publishing industry as identified above. We will continue to
seek deeper integration between our MCN / Optimisation Services and
technology products through the remainder of 2022 and beyond.
Beyond our focus on organic growth, where appropriate, we will
continue to look at accelerating market penetration by assessing
acquisitions where there is a strong client base, but no technology
to leverage, thus preventing true scaleability. We are attractive
as we bring a turnkey technology solution for customers.
We remain well positioned despite current market volatility as
the world continues to increase its dependence on video for
information and decision making. As we are seeing with our customer
wins, tools to take advantage of this shift are critical for
publishers, brands and retailers.
Akiko Mikumo and David Anton
Interim Co-Chief Executive Officers
Strategic Report
Business Review and Key Performance Indicators
This Strategic Report outlines the business indicators to help
the Board evaluate both the Group's current performance and the
progress being made by the Group in applying its technology assets
to its own and third-party media assets to create a leading video
technology platform business.
Group's Business
SEEEN is organized into two businesses: (i) video moments AI
technology and (ii) a YouTube multichannel network ("MCN") that
provides Managed Video Optimisation Services. The two businesses
have complementary assets and provide synergies as the MCN has
video creators and audiences around which the Group may design and
test video moments technology products. The synergistic nature of
these business lines means that the Board and management consider
the Group and its progress as one business as opposed to separate
reporting entities.
Technology Business
The Group owns various intangible assets - patents, trade
secrets, licenses and product designs - that underlie a suite of AI
proprietary products focused on the production of video
"micromoments" that enable consumers to access and analyse the most
relevant features of videos for themselves. The Group has several
KPIs against which it manages the business. In relation to
technology, the Group monitors the following KPI:
i. KPI: number of product releases and substantial upgrades
released by the Group during the year, which the Group can sell to
its current and prospective customer base.
In unlocking shareholder value, The Group measures not only new
product releases, but also progress in terms of customers for the
Group's technology. The Group has three approaches to developing
its sales pipeline each captured with a KPI.
i. KPI: number of customers acquired with basic licenses in a
monthly recurring income structure. The Group's strategy is to
penetrate certain vertical markets such as financial publishing,
sports and retail. These verticals may be characterized as having
relatively shorter sales cycles with similar repeatable
customers.
ii. KPI: number of strategic customers acquired around which the
Group can provide technology but also upsell managed services.
iii. KPI: number of customers that deploy the Group's technology
for e-commerce applications as opposed to publishing video
moments.
In addition, the Group has seen increasing demand for its
JetStream offering directly. This has been evidenced by the
announcement in February 2022 of a strategic partnership with
Kinetiq, Inc. to resell AI-led media monitoring for its clients.
Other such partners have been identified, as well as further use
cases. In such cases, the Group will consider providing a licence
or a white label service in order to accelerate the route to
market.
Managed Video Optimisation Services
The Group's MCN aggregates creators of short form video content
and publishes such content on YouTube. This business unit forms the
basis for the Group's Managed Video Optimisation Services.
Publishing partners, whether the MCN's creator channels or third
party businesses, rely on the Group's know-how to create a content
strategy that increases views and therefore digital ad revenue and
brand awareness on YouTube. YouTube receives such digital ad
revenue producing gross revenues. After YouTube deducts its
commission, the Company receives net revenue from YouTube. The
economics of the multichannel network creates various KPIs which
help the Board to monitor the business plan of its Managed Video
Optimisation Services. These KPIs measure critical attributes: (i)
number of creator channels producing monetizable content; (ii)
number of views/audience attracted to such content; (iii) digital
ad yield from such content and accompanying audience expressed as
Revenue Per Thousand. From these KPIs and the margins retained from
creator channel partners, the Company creates its forecasts on net
revenues and profit before taxes.
Synergies from the Technology and Media Businesses
As noted above, additional shareholder value is extracted from
the synergies that the technology business and the Managed Video
Optimisation Services business create for customers by working
together.
First, the Group monitors the MCN data as a standalone business
unit. Second, the Group also analyses the use of its technology
features to attract an audience and content creators for the
Company to test and subsequently productize its video moments
technology. Example of such have been the launch in 2020 of the
new, micro-moment led GTChannel website ( www.gtchannel.com) and
the launch of Dialog-To-Clip, the Adobe (R) Premiere Pro (R)
plug-in, which was tested with several MCN associates prior to
launch in May 2021 and ongoing pilots for additional technology
products that streamline the creation and editing of videos for
YouTube and other publishing platforms. The MCN provides a source
of early-adopters for its technology products.
Non-Core / One-Time Costs (Gains)
During 2021, the Group focused on executing its business plan
productizing its technology with funding from EIS/VCT proceeds
raised in the fundraising in September 2019. Although the Group has
stated its intention to seek acquisition and partnership
opportunities, no costs were spent on these areas. The only
non-core items for 2021 relate to approximately $0.3 million in
respect of termination payments, paid in September 2021, and a $0.2
million gain in respect of the Payment Protection Programme (PPP)
loan that was forgiven in May 2021.
Capital
The Board is mindful that it needs to apply its finances
prudently to position the Group to succeed through building both a
leading technology stack and sales and marketing function. At 31
December 2021, the Group had $2.1m in cash, following completion of
the spending of EIS/VCT monies raised by the Group at the time of
its admission to AIM. This cash needed to be used by 30 September
2021 and has been successfully deployed to develop CreatorSuite and
JetStream to the point that each is a marketable product.
KPIs
As identified in the Group's previous annual report, the Board
considered certain KPIs for the Group. As the Group evolves, it is
expected that the KPIs for the business will evolve also and the
Company expects to update these at the time of its interim report.
KPIs were identified in the last annual report and the Board has
started looking at additional KPIs against which it monitors the
Group's progress. These KPIs are as follows:
(i) Technology Product Releases - During 2021, the Group
released two new products. These were (i) CreatorSuite, which
enables customers to drive increased views and increased customer
conversions and (ii) Dialog-To-Clip, a plug-in generating
efficiencies for video editing in Adobe (R) Premiere Pro (R) with
AI driven in-video search. CreatorSuite was enhanced twice during
2021 with the release of moment creation direct from transcripts
and the release of playlists. Behind these products, the Group
continued to develop its AI-backbone, JetStream, a unique ensemble
of video analysis technologies.
(ii) Vertical Market Customers - At year end 2021, the Group had
signed contracts in vertical markets with 4 customers. Since year
end, the number of customers who had signed contracts with the
Group had increased to 12.
(iii) Strategic Customers - At year end 2021, the Group had
signed contracts with one strategic customer to provide Managed
Video Optimisation Services. Since the year end, one further
strategic customer has been added. The Group has built a strong
sales pipeline
(iv) E-Commerce Customers - At year end 2021, the Group had two
e-commerce led customers. Since the year end, the Group has added
two further customers in the e-commerce sector
(v) Corporate Development - Since year end, the Group has
entered into a strategic partnership with Kinetiq to focus on media
monitoring to help brands to understand their Return on Investment
from marketing
(vi) MCN Creator Channels - At year-end 2021, the MCN had
approximately 10,000 creator channels, of which approximately 1,200
were monetized. This is a reduction from the approximately 11,000
channels as at 31 December 2020, as the Group has focused on adding
higher profit generating channels with strategic upsales
opportunities.
(vii) MCN Audience - At year-end 2021, the MCN had approximately
12.0 billion views, down 36.0 per cent (2020: 18.7 billion).
(viii) MCN Average RPM - At year-end 2021, the MCN had an
average RPM of $1.24, a 28.7 per cent. gain from 2020 (2020:
$0.97).
(ix) Adjusted EBITDA - EBITDA adjusted for share-based payments
and non-core items was a loss of $1.47 million, in line with market
expectations for 2021 (2020: loss of $2.12 million).
(x) Non-Core Costs - During the year to 31 December 2021, there
was a net non-core costs of $0.1 million (2020: nil), as outlined
above.
(xi) Net Cash - At the end of 2021, the Group had $2.1 million
in both gross and net cash. None of this money relates to the
EIS/VCT funds raised at time of admission to AIM and is therefore
available for use by the Group in an unrestricted fashion.
Principal Risks and Uncertainties
The Group's objectives, policies and processes for measuring and
managing risk are described in note 17. The principal risks and
uncertainties to which the Group is exposed include:
Technological advances within the industry
The technology industry as a whole evolves rapidly with new
entrants and ideas continuously changing the market. There is a
risk that competitors react to opportunities faster, rendering the
Group's technology uncompetitive which could have a material
adverse impact on the prospects of the Group.
YouTube / Google changes
The Group's revenues have predominantly been sourced from
YouTube advertising revenue. Should YouTube alter its terms of
business for creators and MCNs, this could have a significant
impact on the operations of the Group's MCN business
Data Protection and General Data Protection Regulation
("GDPR")
Data protection, driven in Europe by GDPR, is becoming
increasingly relevant in the handling of consumer data. Any
failures to follow relevant data protection rules could result in
significant monetary penalties.
Money-laundering and Anti-Corruption Regulations
As the Group has to make payments to its network of creators, it
is responsible for ensuring that all payments made to creators
comply with all money-laundering and anticorruption regulations of
the jurisdictions in which it operates. Historically, the Group has
outsourced payments or made them through recognised payment wallet
providers, however as the Group may be required to make direct
transfers to creators, the Group monitors the increased risks
associated with these direct payments.
Foreign exchange risk
The Group has employees and contractors based overseas paid in
foreign currencies and may enter into contracts priced in foreign
currencies. It is therefore exposed to adverse exchange rate
movements which could cause its costs to increase (relative to its
reporting currency) resulting in reduced profitability for the
Group.
Credit Risk
The Group's credit risk is primarily attributable to its cash
and cash equivalents and trade receivables. The credit risk on
other classes of financial assets is considered insignificant.
Liquidity Risk
The Group manages its liquidity risk primarily through the
monitoring of forecasts and actual cash flows.
Organisational Risk
As a small Group, there is a reliance on a high proportion of
key staff; the loss of any of these staff may be detrimental to the
Group.
Customer Risk
The Group has begun to sell its products to customers, who
started implementing CreatorSuite and JetStream related products in
2021 and increasingly in 2022. The Company is subject to such
customers continuing to use the Group's products and also its
ability to win new customers as projected using these initial
customers as reference customers. The Board is particularly aware
of this risk should the economy undergo a recession and therefore
customers reduce their expenditure on new products.
Advertising Revenue Risk
The Group has historically been dependent on revenue from its
YouTube MCN to generate profitability and changes to the either
market conditions or regulations and the terms of advertising on
YouTube could affect the Group's ability to generate revenues and
profits. This has been felt most recently by the impact of the
Russia-Ukraine war, following which all views from Russia have been
demonetized, which represented approximately 25% of the Group's MCN
revenue in 2021. The impact of the war has also affected
advertising against videos discussing this topic.
Covid-19 Risk
COVID-19 could impact on the Group's ability to generate
advertising income due to lower customer spending as well as reduce
customers' desire to spend money on the new technologies produced
by the Group given increased budgetary constraints.
Market and Geopolitical Volatility
The Group monitors general market conditions for their impact on
sales cycles and capital markets. In the current economic
environment, rapidly changing inflation indicators and interest
rates affect corporate spending on technology. In the current
geopolitical environment, as noted above, the Group is monitoring
the current crisis in the Ukraine and Russia to forecast its impact
on audiences and its MCN.
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most
likely promote the success of the Group for the benefit of its
stakeholders. A discussion of s172 is presented in the Statement on
Corporate Governance. The Strategic Report incorporates actions
taken by the Group to ensure compliance with s172.
By order of the Board
Adrian Hargrave
Chief Financial Officer
Directors' Report
The Directors present their report on the affairs of SEEEN plc
(the "Company") and its subsidiaries, referred to as the Group,
together with the audited Financial Statements and Independent
Auditors' report for the year ended 31 December 2021.
Principal Activities
The Group is a global media and technology platform whose
mission is to leverage its AI and machine learning technology to
more efficiently momentize video and to license such capabilities
to brands, creators and publishers to enable discovery, sharing and
e-commerce.
Results
The financial performance for the year for each of the Group and
the Company, including the Group's Statement of Comprehensive
Income and each of the Group's and the Company's financial position
at the end of the year, is shown in the Financial Statements.
Future Developments
The Company has chosen in accordance with section 414C(11) of
the Companies Act 2006 to include the disclosure of likely future
developments in each of the Chairman's Report and the Interim
Co-CEOs' Report.
Going Concern
At the time of approving the financial statements, the Directors
have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future. In reaching this conclusion the Directors have
considered the financial position of the Group, taking into
consideration the recent fundraising, together with its forecasts
and projections until the end of 2022 that take into account
reasonably possible changes in trading performance including those
that ongoing effects of Coronavirus may cause. The going concern
basis of accounting has therefore been adopted in preparing the
financial statements.
Dividends
The Directors do not recommend the payment of a dividend (31
December 2020: nil).
Share Price
On 31 December 2021, the closing market price of SEEEN plc
ordinary shares was 25.0 pence. The highest and lowest prices of
these shares during the year to 31 December 2020 were 50.5 pence
and 25.0 pence respectively.
Capital Structure
Details of the authorised and issued share capital are shown in
Note 15. No person has any special rights of control over the
Company's share capital and all issued shares are fully paid.
Treasury Operations & Financial Instruments
The Group operates a centralised treasury function which is
responsible for managing liquidity, interest and foreign currency
risks associated with the Group's activities.
The Group's principal financial instrument is cash, the main
purpose of which is to fund the Group's operations.
The Group has various other financial assets and liabilities
such as trade receivables and trade payables naturally arising
through from its operations.
The Group's exposure and approach to capital and financial risk,
and approach to managing these is set out in note 17 to the
consolidated financial statements.
Subsequent Events
On 23 February 2022, the Group announced a strategic partnership
with Kinetiq, Inc., a leading media intelligence platform that
enables global customers to measure the effectiveness of their
paid, earned and owned media, across thousands of broadcast, CTV
and social channels around the world. The companies provide
"end-to-end" solutions for brands, networks and publishers to
better manage and measure audience experiences, as companies look
to migrate video content from traditional forms of media such as
broadcast and cable to social and CTV media platforms.
On 16 March 2022, the Group announced changes to its Board of
Directors. Todd Carter resigned as CEO and member of the Board to
continue in a role overseeing customer success and product
strategy. Akiko Mikumo and David Anton were each appointed as
interim co-CEOs. Charles Burdick was proposed as an Independent
Non-Executive Director and was subsequently appointed on 26 May
2022. Kevin Kohn, CEO of Kinetiq, Inc, (see above) was also
appointed as a Board Observer. At the same time, the Group also
announced that all of views from its MCN business in Russia had
ceased generating advertising revenue. During 2021, approximately
25% of the Group's revenue was generated from views within Russia.
This is expected to lead to a decrease in MCN income for 2022,
however, as these channels had very low margins given distribution
agreements made prior to the Group's admission to AIM, the impact
on profitability is negligible.
Directors
The Directors who served the Company during the year and up to
the date of this report were as follows:
Executive Directors
Todd Carter (resigned 16 March 2022)
Scott Schlichter (resigned 4 August 2021)
Adrian Hargrave
Non-Executive Directors
Patrick DeSouza
Akiko Mikumo (became Executive Director 16 March 2022)
David Anton (became Executive Director 16 March 2022)
Mike Kelly (Resigned 9 April 2021)
Charles Burdick (appointed 26 May 2022)
Directors' Indemnity
The Company's Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors and
officers of the Company in respect of liabilities they may incur in
the discharge of their duties or in the exercise of their powers,
including any liabilities relating to the defence of any
proceedings brought against them which relate to anything done or
omitted, or alleged to have been done or omitted, by them as
officers or employees of the Company. Appropriate directors' and
officers' liability insurance cover is in place in respect of all
the Directors.
Directors' Conflicts of Interest
In the event that a Director becomes aware that they, or their
connected parties, have an interest in an existing or proposed
transaction involving the Group, they will notify the Board in
writing or at the next Board meeting.
Political Donations
The Group did not make any political donations during the six
months to 31 December 2021 (31 December 2020: GBPNil).
Directors' emoluments
12 months to 31 December 2021 Salary,
Fees & Bonus Benefits Total
-------------------------------
$ $ $
------------------------------- -------------- --------- --------
Executive Directors
T Carter 159,458 24,878 184,336
A Hargrave 104,589 17,723 122,312
S Schlichter* 263,187 27,957 291,144
Non-Executive Directors
P DeSouza** 12,500 - 12,500
A Mikumo** 12,500 - 12,500
D Anton** 12,500 - 12,500
M Kelly** 12,500 - 12,500
597,234 70,558 667,792
------------------------------- -------------- --------- --------
* Includes $146,520.55 paid as a one-off payment upon
termination of contract.
** All of the Non-Executive Directors agreed to waive their cash
compensation in exchange for options at a premium to the prevailing
share price in March 2021. Details of these options are in the
table below
12 months to 31 December 2020 Salary,
Fees & Bonus Benefits Total
-------------------------------
$ $ $
------------------------------- -------------- --------- --------
Executive Directors
T Carter 200,000 26,534 226,534
S Schlichter 200,000 30,073 230,073
Non-Executive Directors
P DeSouza 50,000 - 50,000
A Mikumo 50,000 - 50,000
M Kelly 50,000 - 50,000
D Anton 50,000 - 50,000
600,000 56,607 656,607
------------------------------- -------------- --------- --------
Directors' interests
The Directors who held office at 31 December 2021 and subsequent
to year end had the following direct interest in the ordinary
shares of the Company at 31 December 2021 and at the date of this
report:
Number of shares % held at
at 31 December 31 December Number of shares % held at
2021 2021 at 29 June 2022 29 June 2022
P DeSouza 5,426,165 10.9% 5,426,165 10.9%
T Carter 2,813,309 5.6% 1,958,309 3.9%
A Hargrave - - 125,000 0.3%
---------------- --------------- ------------- ----------------- --------------
In addition to the above, the following directors have options
over the following shares
Name Options Exercise Exercise Period
Price
----------------- -------- --------- ------------------------
Adrian Hargrave 273,749 45p 31/09/2020 - 31/09/2029
Adrian Hargrave 50,000 60p 04/03/2022 - 04/03/2031
Adrian Hargrave 250,000 65p 04/03/2022 - 04/03/2031
Patrick DeSouza 600,000 60p 04/03/2022 - 04/03/2031
Akiko Mikumo 152,083 45p 31/09/2020 - 31/09/2029
Akiko Mikumo 600,000 60p 04/03/2022 - 04/03/2031
David Anton 152,083 45p 31/09/2020 - 31/09/2029
David Anton 200,000 60p 04/03/2022 - 04/03/2031
Charles Burdick 200,000 30p 26/05/2023 - 26/05/2033
Substantial Shareholders
As well as the Directors' interests reported above, the
following interests of 3.0% and above as at the date of this report
were as follows:
Number of shares % held
------------------------------- ---------------- ------
Gresham House Asset Management
Limited 6,666,666 13.3%
Scott Schlichter 5,870,406 11.8%
Canaccord Genuity Group Inc. 4,752,777 9.5%
Water Intelligence plc 3,855,033 7.7%
Taro Koki 3,601,436 7.2%
Sumitomo Corporation 2,314,815 4.6%
Rathbone Investment Management
Limited 1,665,696 3.3%
------------------------------- ---------------- ------
Employees
The Group has established employment policies which are
compliant with current legislation and codes of practice. The Group
is an equal opportunities employer.
Independent Auditors
Crowe U.K. LLP has expressed their willingness to continue in
office. In accordance with section 489 of the Companies Act 2006,
resolutions for their re-appointment and to authorise the Directors
to determine the Independent Auditors' remuneration will be
proposed at the forthcoming Annual General Meeting.
Statement of disclosure to the Independent Auditor
Each of the persons who are directors at the time when this
Directors' report is approved has confirmed that:
-- so far as that director is aware, there is no relevant audit
information of which the Company and the Group's auditor is
unaware; and
-- that director has taken all the steps that ought to have been
taken as a director in order to be aware of any relevant audit
information and to establish that the Company and the Group's
auditor is aware of that information.
By order of the Board
Adrian Hargrave
Chief Financial Officer
Corporate Governance
As a Board, we believe that practising good Corporate Governance
is essential for building a successful and sustainable business in
the long-term interests of all stakeholders. SEEEN's shares are
listed on AIM, a market operated by the London Stock Exchange.
SEEEN has adopted the QCA Corporate Governance Code. The Company
has adopted a share dealing code for the Board and employees of the
Company which is in conformity with the requirements of Rule 21 of
the AIM Rules for Companies. The Company takes steps to ensure
compliance by the Board and applicable employees with the terms of
such code.
The following sections outline the structures, processes and
procedures by which the Board ensures that high standards of
corporate governance are maintained throughout the Group.
Further details can be found on our website at seeen.com.
Takeovers and Mergers
The Company is subject to The City Code on Takeovers and
Mergers.
Board
The Board, chaired by Dr. Patrick DeSouza, comprises three
executive and two non-executive directors and it oversees and
implements the Company's corporate governance programme. As
Chairman, Dr. DeSouza is responsible for the Company's approach to
corporate governance and the application of the principles of the
QCA Code. Charles Burdick is the Company's independent director.
The Board is supported by four committees: Audit, Remuneration,
Nominations and Strategy. The Audit and Remuneration Committees are
the principal committees for Corporate Governance.
Each Board member commits sufficient time to fulfill their
duties and obligations to the Board and the Company. They are
required to attend at least 4 Board meetings annually and join
Board calls that take place between formal meetings and offer
availability for consultation when needed.
Board papers are sent out to all directors in advance of each
Board meeting including management accounts and accompanying
reports from those responsible.
Meetings held during the year to 31 December 2021 and the
attendance of directors is summarised below.
Board meetings Audit committee Remuneration committee
Possible (attended) Possible (attended) Possible (attended)
------------------ -------------------- -------------------- -----------------------
Todd Carter 6/6
Adrian Hargrave 4/4
Scott Schlichter 4/4
Patrick DeSouza 6/6 2/2
Akiko Mikumo 6/6 2/2 1/1
Mike Kelly 2/2 1/1 1/1
David Anton 6/6 2/2 1/1
------------------ -------------------- -------------------- -----------------------
Board Committees
Board Committees
The Board has established an Audit Committee, Remuneration
Committee, Nominations Committee and Strategy Committee with
delegated duties and responsibilities.
(a) Audit Committee
The Audit Committee has the primary responsibility for
monitoring the quality of internal control, ensuring that the
financial performance of the Company is properly measured and
reported on and for reviewing reports from the Company's auditors.
The Audit Committee will meet at least twice a year at appropriate
times in the reporting and audit cycle and otherwise when required.
The Audit Committee will also meet with the Company's auditors at
least once a year.
The Audit Committee is chaired by Charles Burdick and comprises
of himself and Patrick DeSouza.
(b) Remuneration Committee
The Remuneration Committee is responsible for the review and
recommendation of the scale and structure of remuneration for
executive directors and other designated senior management, taking
into account all factors which it deems necessary. The Remuneration
Committee considers all aspects of the executive directors'
remuneration including pensions, benefits and share option awards.
No director will be involved in any decision as to his or her own
remuneration. The Remuneration Committee will meet at least twice a
year and otherwise when required. In exercising this role, the
Directors shall have regard to the recommendations put forward in
the QCA Corporate Governance Code and, where appropriate, the QCA
Remuneration Committee Guide and associated guidance.
The Remuneration Committee is chaired by Patrick DeSouza and
comprises himself and Charles Burdick.
(c) Nominations and Strategy Committee
Given the size of the Group, it is considered appropriate that
all members of the Board sit on the Nominations and Strategy
Committees. As such, whenever matters arise that would be
appropriate for such committees, these will be considered at Board
meetings.
(d) Advisory Panel and Board Observers
The Company has an Advisory Panel, comprised of Charlie Collier,
Thomas Glocer and Chris Welty. The purpose of the Advisory Panel is
to enable the Directors to draw upon the skills of these industry
experts as well as supporting SEEEN in accessing growth
opportunities via the network of contacts of each member of the
Advisory Panel. The Advisory Panel meets on an ad-hoc basis and is
available for consultations with Directors as required.
In addition, the Company has two Board Observers, Taketo Kokubo
of Sumitomo Corporation and Kevin Kohn, the CEO of Kinetiq, Inc.
with whom the Company signed a strategic partnership in March 2022.
Both of these individuals and invited to Board meetings on an ad
hoc basis.
(d) Advisory Panel and Board Observers
The Company has an Advisory Panel, comprised of Charlie Collier,
Thomas Glocer and Chris Welty. The purpose of the Advisory Panel is
to enable the Directors to draw upon the skills of these industry
experts as well as supporting SEEEN in accessing growth
opportunities via the network of contacts of each member of the
Advisory Panel. The Advisory Panel meets on an ad-hoc basis and is
available for consultations with Directors as required.
In addition, the Company has two Board Observers, Taketo Kokubo
of Sumitomo Corporation and Kevin Kohn, the CEO of Kinetiq, Inc.
with whom the Company signed a strategic partnership in March 2022.
Both of these individuals and invited to Board meetings on an ad
hoc basis.
Board Experience
All members of the board bring complementary skill sets to the
Board. One director is female and five are male. The board believes
that its blend of relevant experience, skills and personal
qualities and capabilities is sufficient to enable it to
successfully execute its strategy. In addition, the Board receives
regular updates from, amongst others, its nominated adviser, legal
counsel and company secretary in relation to key rule changes and
corporate governance requirements, as well as regular liaison with
audit firms both in the UK and the US in respect of key disclosure
and accounting requirements for the group, especially as accounting
standards evolve. In addition, each new director appointment is
required to receive AIM rule training from the Company's nominated
adviser at the time of their appointment.
Patrick J. DeSouza, Chairman
Term of office: Appointed 30 September 2019.
Since 2010 Dr. DeSouza has been the Executive Chairman of Water
Intelligence plc, a rapidly growing AIM quoted business focusing on
technology transformation of the water industry. He has 25 years of
operating and financial advisory leadership experience with both
public and private companies in media and technology and asset
management industries. Over the last 15 years, Dr. DeSouza has also
invested in and incubated technology companies centered at Yale
University. Dr. DeSouza has served at the White House on the
National Security Council. He is a graduate of Columbia College,
Yale Law School and Stanford Graduate School. He is a member of the
Council on Foreign Relations.
Akiko Mikumo, Interim Co-CEO
Term of office: Appointed 30 September 2019.
Akiko is a retired senior partner at Weil Gotshal and Manges
LLP, one of the world's leading law firms. She has over 35 years of
mergers and acquisitions, securities and governance experience. Her
clients have included some of the leading media and technology
companies and investment firms. She served as a member of the
firm's Management Committee for over 12 years. Ms. Mikumo was
previously a director of Cambridge Science Corporation, a biotech
investment company in Cambridge, Massachusetts. Ms. Mikumo is a
member of the Advisory Board of University of California, Berkeley
and is chair of the Nominating Committee. Recently, she served as a
fellow at Harvard's Advanced Leadership Initiative. She is a
graduate of University of California, Berkeley and New York
University School of Law.
David Anton, Interim Co-CEO
Term of office: Appointed 30 September 2019.
David is Chief Executive Officer of Anton & Partners, a
leading advertising, branding, and marketing communication company
with a 20-year track record of creating impact for some of the
world's most notable brands in fashion, lifestyle, financial and
automotive sectors. David is a serial entrepreneur and has founded
various successful companies. He is an investor in and advisor to
Village Roadshow Productions, leading movie production company.
David has advised, co-founded and invested in multiple companies
such as Tori Burch, Roqu Media International, Village Roadshow and
Spotify among others.
Charles Burdick, Independent Non-Executive Director
Term of office: Appointed 16 May 2022.
Charles has a significant track record as an executive in media
and telecommunications, with roles including CFO and CEO of
Telewest plc, a FTSE 100 cable TV and media company; CEO of HIT
Entertainment plc, the children's IPR company previously listed on
AIM; and Chairman and CEO of Comverse Technology, a NASDAQ-quoted
technology business.
Adrian Hargrave, Chief Financial Officer
Term of office: Appointed 4 March 2021.
Adrian has been Chief Financial Officer of SEEEN plc since its
admission to AIM on 30 September 2019. Previously, he has been
Corporate Development Director at Water Intelligence plc. Prior to
this, he worked as a corporate financier and Qualified Executive
with AIM companies for the last 15 years.
The Company Secretary is responsible for ensuring that Board
procedures are followed and that all applicable rules and
regulations are complied with. Adrian Hargrave, the CFO, currently
performs the role of Company Secretary, providing an advisory role
to the Board. The Company Secretary is supported and guided in this
role by the Company's legal advisors.
The Directors have access to the Company's CFO/Company
Secretary, NOMAD, lawyers and auditors as and when required and are
able to obtain advice from other external bodies when
necessary.
Board Performance and Effectiveness
The performance and effectiveness of the Board, its committees
and individual Directors is reviewed by the Chairman and the Board
on an ongoing basis. Training is available should a Director
request it, or if the Chairman feels it is necessary. The
performance of the Board is measured by the Chairman with reference
to the Company's achievement of its strategic goals.
Risk Management
The Directors recognise their responsibility for the Group's
system of internal control and have established systems to ensure
that an appropriate and reasonable level of oversight and control
is provided. The Group's systems of internal control are designed
to help the Group meet its business objectives by appropriately
managing, rather than eliminating, the risks to those objectives.
The controls can only provide reasonable, not absolute, assurance
against material misstatement or loss.
The Chief Financial Officer manages a risk register for the
Group that identifies key risks in the areas of corporate strategy,
financial, clients, staff, environmental and the investment
community. The Audit Committee is provided with a copy of the
register. The register is reviewed periodically and is updated as
and when necessary.
Within the scope of the annual audit, specific financial risks
are also evaluated in detail, including in relation to foreign
currency, interest rates, debt covenants, taxation and
liquidity.
The annual budget is reviewed and approved by the Board.
Financial results, with comparisons to budget and latest forecasts
are reported on a monthly basis to the Board together with a report
on operational achievements, objectives and issues encountered.
Significant variances from plan are discussed at Board meetings and
actions set in place to address them.
Approval levels for authorisation of expenditure are at set
levels throughout the management structure with any expenditure in
excess of pre-defined levels requiring approval from the
Non-Executive Chairman and the Chief Financial Officer.
Measures continue to be taken to review and embed internal
controls and risk management procedures into the business processes
of the organisation and to deal with areas of improvement which
come to the management's and the Board's attention. We expect the
internal controls for the business to change as the business
expands both geographically and in terms of product
development.
The Company's auditors are encouraged to raise comments on
internal control in their management letter following their audit,
and the points raised and actions arising are monitored through to
completion by the Audit Committee.
Corporate Culture
The Group aims to operate ethically and be socially responsible
in its actions. Importantly, the Board recognises that the Group's
employees are its most important asset.
The Group is committed to achieving equal opportunities and to
complying with relevant anti-discrimination legislation. It is
established Group policy to offer employees and job applicants the
opportunity to benefit from fair employment, without regard to
their sex, sexual orientation, marital status, race, religion or
belief, age or disability. Employees are encouraged to train and
develop their careers.
The Group has continued its policy of informing all employees of
matters of concern to them as employees, both in their immediate
work situation and in the wider context of the Group's
well-being.
In addition, all directors and senior employees are required to
abide by the Group's share dealing code, which was updated at the
time of admission to AIM.
Audit Committee Annual Review
The role of the Audit Committee is to monitor the quality of
internal controls and check that the financial performance of the
Group is properly assessed and reported on. It receives and reviews
reports from the Chief Financial Officer, other members of
management and external auditors relating to the interim and annual
accounts and the accounting and internal control systems in use
throughout the Group. The members of the Audit Committee are
Charles Burdick (Chairman) and Patrick DeSouza.
The Interim Co-CEOs and Chief Financial Officer are invited to
attend parts of meetings. The external auditors attend meetings to
discuss the conclusions of their work and meet with the members of
the Committee. The Committee is able to call for information from
management and consults with the external auditors directly as
required.
The objectivity and independence of the external auditors is
safeguarded by reviewing the auditors' formal declarations,
monitoring relationships between key audit staff and the Company
and tracking the level of non-audit fees payable to the
auditors.
The Audit Committee met twice in 2021 to review the annual
accounts and the interim accounts. The Committee will review with
the independent auditor its judgements as to the acceptability of
the Company's accounting principles.
In addition, the Committee monitors the auditor firm's
independence from Company management and the Company.
Remuneration Committee Annual Review
The Remuneration Committee met once in 2021. The Committee
currently comprises Patrick DeSouza and Charles Burdick, with
Patrick DeSouza as Chairman. Prior to the appointment as Interim
Co-CEOS, Akiko Mikumo and David Anton had formed part of the
Remuneration Committee. The Remuneration Committee is responsible
for reviewing the performance of Executive Directors and
determining the remuneration and basis of service agreement. The
Remuneration Committee also determines the payment of any bonuses
to Executive Directors and the grant of options. No Director plays
a part in any discussion regarding his or her own remuneration.
Relations with Shareholders
The Company is available to hold meetings with its shareholders
to discuss objectives and to keep them updated on the Company's
strategy, Board membership and management.
The board also welcome shareholders' enquiries, which may be
sent via the Company's website seeen.com .
Corporate Governance Statement s172 of the Companies Act
Each director must act in a way that, in good faith, would most
likely promote the success of the Group for the benefit of its
stakeholders. The board of directors consider, both individually
and together, that they have acted in the way they consider, in
good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole (having regard to
the stakeholders and matters indicated in S172) in the decisions
taken during the year ended 31 December 2021. Following is an
overview of how the Board performed its duties during 2021.
Shareholders
The Chairman, Chief Executive Officer and Chief Financial
Officer, members of the Board and senior executives on the
management team have regular contact with major shareholders. The
Board receives regular updates on the views of shareholders which
are taken into account when the Board makes its decisions. In
particular, the Company met with its largest shareholders to report
on progress at the time of publication of its annual audited
results and its interim unaudited results. The Company received
feedback during that process, as well as subsequent meetings and
calls alongside trading updates issued by the Group.
Employees
The Group encourages an environment of openness and debate and
welcomes all feedback from within.
The Board communicates with senior management and employees. The
Group also operates regular internal Company-wide meetings via
video conference calls, which staff can access as required and is a
source of both discussion and sharing information relevant to
employees. Details of the Group's performance are shared with all
employees at appropriate times using these methods.
The Group expects a high standard from its staff and provides
training to achieve this. Where possible, as new roles in the
organisation arise, the Group aims to promote from within.
Customers and Partners
The Group has a different set of customers and partners for its
various products and services. YouTube is the Group's primary
customer for its MCN, as it receives videos from the Group and its
channel partners against which it generates advertising revenue. In
addition, the Group has direct customer relationships for both
technology products and its Managed Video Optimisation Services
where customers pay a monthly fee to the Group, which is often
structured as a fixed component and a variable fee for performance.
All customers and channel partners are treated with professionalism
and the Group aims to work with all such stakeholders in developing
its product roadmap further.
Community
The Group is aware that the dissemination of video carries with
it social responsibility to the broader community. Board and
management are committed to the highest levels of professionalism
in the aggregation and dissemination of video content and to ensure
compliance with relevant data compliance regulations.
Statement of Directors' Responsibilities
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with the Companies Act
2006 and for being satisfied that the Financial Statements give a
true and fair view. The Directors are also responsible for
preparing the Financial Statements in accordance with International
Financial Reporting Standards ("IFRSs").
Company law requires the Directors to prepare Financial
Statements for each financial period which give a true and fair
view of the state of affairs of the Company and the Group and of
the profit or loss of the Company and the Group for that period. In
preparing those Financial Statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements; and
-- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the Financial Statements. The Directors
are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions, disclose
with reasonable accuracy at any time the financial position of the
Company and the Group, and to enable them to ensure that the
Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and
Financial Statements are made available on a website. Financial
Statements are published on the Group's website ( seeen.com ) in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements, which may
vary from legislation in other jurisdictions. The maintenance and
integrity of the Group's website is the responsibility of the
Directors - the work carried out by the auditors does not involve
the consideration of these matters and, accordingly, and the
auditors accept no responsibly for any changes that may have
occurred in the accounts since they were initially presented on the
website. The Directors' responsibility also extends to the ongoing
integrity of the Financial Statements contained therein.
Independent Auditors' report to the members of SEEEN plc
Opinion
We have audited the financial statements of SEEEN plc (the
"Parent Company") and its subsidiaries (the "Group") for the period
ended 31 December 2021, which comprise:
-- the Group statement of comprehensive income for the year ended 31 December 2021;
-- the Group and parent company statements of financial position as at 31 December 2021;
-- the Group and parent company statements of changes in equity for the year then ended;
-- the Group and parent company statements of cash flows for the year then ended; and
-- the notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006 and, as
regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
December 2021 and of the Group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006;
-- the parent company financial statements have been properly
prepared in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors assessment of the group and parent
company's ability to continue to adopt the going concern basis of
accounting included:
-- Reviewing management's financial projections for the Group
and parent company for a period of more than 12 months from the
date of approval of the financial statements.
-- Checking the numerical accuracy of management's financial projections.
-- Challenging management on the assumptions underlying those
projections and sensitised them to reduce anticipated net cash
inflows from future trading activities.
-- Considering potential downside scenarios and the resultant impact on available funds.
-- Obtained the latest financial results post year end 31
December 2021 to review how the group and parent company are
trending toward achieving the forecast.
-- Performed sensitivity analysis on key inputs of the forecast
by calculating the impact of various scenarios and considering the
impact on the group and parent company's ability to continue as a
going concern in the event of not meeting the forecast.
-- Assessing the completeness and accuracy of the matters
described in the going concern disclosure within the significant
accounting policies as set out in Note 2.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group or parent company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
$150,000 (2020: $165,000), based on 4.8% of loss before tax per
draft figures obtained from pre-year end management accounts. As
the Group is a trading group, we determined that the use of a
trading-based metric was the most appropriate to use for
determining materiality.
Materiality for the parent Company financial statements as a
whole was set at $112,500 based on 0.6% of total assets per draft
figures from pre-year end management accounts.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Performance materiality was set at 70% of materiality for the
financial statements as a whole, which equates to $105,000 (2020:
$123,000) for the Group and $78,750 for the parent company. We
applied this percentage in our determination of performance
materiality because we did not identify any factors indicating an
elevated level of risk.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Directors to report to it all identified
errors in excess of $5,600 (2020: $8,250). Errors below that
threshold would also be reported to it if, in our opinion as
auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
SEEEN Plc is located in London, United Kingdom. Our audit was
conducted remotely. The operations of its subsidiaries, Tagasuris
Inc., GT Channel Inc., and EAI Inc. are in the United States. We
conducted specific audit procedures in relation to these entities
which were undertaken by component auditors, Marcum LLP. All group
companies were within the scope of audit testing.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters. We set out below, together with going concern included
above in the Conclusions Relating to Going Concern section, those
matters we considered to be key audit matters.
This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit addressed
the key audit matter
=================================== ==============================================
Carrying value of goodwill We evaluated, in comparison to the
and other intangible assets requirements set out in IAS 36, management's
The carrying value of assessment (using discounted cash
goodwill and other intangible flow models) as to whether goodwill
assets at 31 December and/or other intangible assets were
2021 was $15.0 million impaired. We challenged, reviewed
(2020: $15.1 million). and considered by reference to external
The Group's intangible evidence, management's impairment
assets comprise of goodwill and fair value models as appropriate
arising on acquisition and their key estimates, including
of subsidiaries, customer the discount rate. We reviewed the
relationships and technology appropriateness and consistency of
developments. the process for making such estimates.
When assessing the carrying We obtained management's discounted
value of goodwill and cash flow models supporting the intangible
intangible assets, management asset valuation. We challenged the
makes judgements regarding key assumptions into the model, including
the appropriate cash generating the forecast revenue and gross margin,
unit, strategy, future discount rates and growth rates.
trading and profitability We compared cash flow forecasts used
and the assumptions underlying in the impairment review to historical
these. We considered the performance, and challenged where
risk that goodwill and/or forecasts indicated performance that
other intangible assets deviated significantly from historical
were impaired. performance, in the absence of significant
The key judgements are changes in the business or market
in relation to revenue environment.
growth and customer acquisitions. Discount rates and terminal growth
Changes in these factors rates were benchmarked to externally
could result in an impairment derived data and our knowledge of
to the carrying value sector performance, to evaluate the
of the goodwill and intangible reasonableness of these assumptions.
assets. 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 We considered with management
- Parent Company whether any further indications
The carrying value of investments of impairment existed. This includes
in subsidiaries in the parent considering the existence of
company financial statements any indication of discontinued
at 31 December 2021 was $12.2 operating activities, management's
million (2020: $15.2 million), future plans for the business,
as well as an intercompany the ability of the business to
balance of $2.8 million (2020: achieve its business plan, together
$2.9m million), after an impairment with the carrying value of the
in the current year of $5.1 group's intangible assets and
million. The valuation of the market capitalisation of
these investments and the the Group.
recovery of the intercompany
balance are almost entirely In assessing whether any further
dependent on the successful impairment may be required, because
execution of the business the value of the investment in
plan. Changes in the carrying subsidiaries is highly related
value of the groups intangible to the recoverability of the
assets, or a failure to execute goodwill and intangible assets
the business plan would likely our work was substantially that
result in a further impairment as set out in the KAM above.
to the carrying value of the
investments in and loans to
subsidiaries.
===================================== =======================================
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our
audit
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the
parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and the procedures in
place for ensuring compliance. Based on our understanding of the
Group and industry, discussions with management and the Board of
Directors we identified financial reporting standards and Companies
Act 2006 as having a direct effect on the amounts and disclosures
in the financial statements. Our work included direct enquiry of
management, reviewing Board and relevant committee minutes and
inspection of correspondence.
As part of our audit planning process we assessed the different
areas of the financial statements, including disclosures, for the
risk of material misstatement. This included considering the risk
of fraud where direct enquiries were made of management and those
charged with governance concerning both whether they had any
knowledge of actual or suspected fraud and their assessment of the
susceptibility of fraud. We considered the risk was greater in
areas involving significant management estimate or judgement. Based
on this assessment we designed audit procedures to focus on key
areas of estimate or judgement, this included specific testing of
journal transactions, both at the year end and throughout the
year.
Other laws and regulations where non-compliance may have a
material effect on the Group's operations are Data Protection and
GDPR.
Our audit procedures included:
- enquiry of management about the Group's policies, procedures
and related controls regarding compliance with laws and regulations
and if there are any known instances of non-compliance;
- examining supporting documents for all material balances, transactions and disclosures;
- review of minutes of meetings of the Board of Directors;
- enquiry of management about litigations and claims;
- evaluation of the selection and application of accounting
policies related to subjective measurements and complex
transactions, in particular those items included in the Key Audit
Matters;
- analytical procedures to identify any unusual or unexpected relationships;
- testing the appropriateness of journal entries recorded in the
general ledger and other adjustments made in the preparation of the
financial statements; and
- review of accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the financial
statements may not be detected, even though the audit is properly
planned and performed in accordance with the ISAs (UK). We are not
responsible for preventing non-compliance and cannot be expected to
detect non-compliance with all laws and regulations.
The potential effects of inherent limitations are particularly
significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organized
schemes designed to conceal it, including deliberate failure to
record transactions, collusion or intentional misrepresentations
being made to us.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
John Glasby (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 31 December
2021 2020
------------------------------------------ ------ ----------------- ----------------
Notes $ $
------------------------------------------ ------ ----------------- ----------------
Audited Audited
Revenue 8,537,729 10,135,053
Cost of sales (7,633,917) (9,040,727)
------------------------------------------- ------ ----------------- ----------------
Gross profit 903,812 1,094,326
Administrative expenses
- Share-based payments 5 (349,925) (618,192)
- Amortisation of intangibles 9 (1,605,924) (1,214,564)
- Other administrative costs 3 (2,461,951) (3,215,463)
------------------------------------------- ------ ----------------- ----------------
Total administrative expenses (4,417,800) (5,048,219)
------------------------------------------- ------ ----------------- ----------------
Operating Loss (3,513,988) (3,953,893)
Finance expense 6 (3,835) (6,562)
------------------------------------------- ------ ----------------- ----------------
Loss before tax (3,517,823) (3,960,455)
Taxation 7 323,510 340,740
------------------------------------------- ------ ----------------- ----------------
Loss after tax (3,194,313) (3,619,715)
Other Comprehensive Income
Items that will not be reclassified
to profit and loss
Exchange differences arising
on translation of foreign operations (33,880) (317,805)
------------------------------------------- ------ ----------------- ----------------
Total comprehensive loss for
the year (3,228,193) (3,943,876)
------------------------------------------- ------ ----------------- ----------------
Loss per share attributable Cents Cents
to equity holders of Parent
------------------------------------------ ------ ----------------- ----------------
Basic 8 (6.39) (7.25)
Diluted 8 (6.39) (7.25)
------------------------------------------- ------ ----------------- ----------------
The results reflected above relate to continuing activities.
Consolidated Statement of Financial Position
31 December 31 December
2021 2020
Notes $ $
----------------------------------------- ------ ------------ -------------
ASSETS
Non-current assets
Goodwill and indefinite life intangible
assets 9 9,762,158 9,762,158
Other intangible assets, net 9 5,255,018 5,320,876
Trade and other receivables 1,800 1,800
----------------------------------------- ------ ------------ -------------
15,018,976 15,084,834
----------------------------------------- ------ ------------ -------------
Current assets
Trade and other receivables 11 751,524 1,790,074
Cash and cash equivalents 12 2,086,249 5,336,502
----------------------------------------- ------
2,837,773 7,126,576
----------------------------------------- ------ ------------ -------------
TOTAL ASSETS 17,856,749 22,211,410
----------------------------------------- ------ ------------ -------------
EQUITY AND LIABILITIES
Equity attributable to holders of
the parent
Share capital 15 7,400,732 7,400,732
Share premium 15 7,677,993 7,677,993
Merger relief reserve 8,989,501 8,989,501
Share based payment reserve 1,124,768 774,842
Foreign exchange reserve 165,855 199,735
Retained earnings (9,324,869) (6,130,556)
----------------------------------------- ------ ------------ -------------
Total Shareholders' Equity 16,033,980 18,912,247
----------------------------------------- ------ ------------ -------------
Non-current liabilities
Deferred tax liability 14 569,710 893,220
----------------------------------------- ------ ------------ -------------
569,710 893,220
----------------------------------------- ------ ------------ -------------
Current liabilities
Trade and other payables 13 1,253,059 2,207,943
Borrowing 20 - 198,000
----------------------------------------- ------ -------------
Total Current Liabilities 1,253,059 2,405,943
----------------------------------------- ------ ------------ -------------
TOTAL EQUITY AND LIABILITIES 17,856,749 22,211,410
----------------------------------------- ------ ------------ -------------
The financial statements of SEEEN plc, company number 10621059,
were approved by the board of Directors and authorised for issue on
the 29 June 2022. They were signed on its behalf by:
Adrian Hargrave
Chief Financial Officer
Company Statement of Financial Position
Notes
31 December 31 December
2021 2020
$ $
ASSETS
Non-current assets
Investment in Subsidiaries 10 12,192,026 15,166,851
12,192,026 15,166,851
-------------------------------- ------ -------------- --------------
Current assets
Trade and other receivables 11 2,825,149 2,969,903
Cash and cash equivalents 12 1,301,405 4,399,957
4,126,554 7,369,860
-------------------------------- ------ -------------- --------------
TOTAL ASSETS 16,318,580 22,536,711
-------------------------------- ------ -------------- --------------
EQUITY AND LIABILITIES
Equity attributable to holders
of the parent
Share capital 15 7,400,732 7,400,732
Share premium 15 7,677,993 7,677,993
Merger reserve 8,989,501 8,989,501
Share based payment reserve 1,124,768 774,842
Foreign exchange reserve 118,779 427,684
Retained earnings (9,197,895) (3,073,206)
-------------------------------- ------ -------------- --------------
Total Shareholders' Equity 16,113,878 22,197,546
-------------------------------- ------ -------------- --------------
Current liabilities
Trade and other payables 13 204,702 339,165
Total Liabilities 204,702 339,165
-------------------------------- ------ -------------- --------------
TOTAL EQUITY AND LIABILITIES 16,318,580 22,536,711
-------------------------------- ------ -------------- --------------
The loss for the financial year in the financial statements of
the parent Company, which related entirely to Plc costs, was
$6,124,689 and $1,320,263 for the 12 months ended 31 December 2021
and 2020, respectively.
The financial statements of SEEEN plc, company number 10621059,
were approved by the board of Directors and authorised for issue on
the 29 June 2022. They were signed on its behalf by:
Adrian Hargrave
Chief Financial Officer
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2021 $ 2020 $
--------------------------------------------------- ------------ ------------
Cash flows from operating activities
Loss before tax (3,517,823) (3,947,618)
Adjustments for non-cash/non-operating items:
Amortisation of intangible assets 1,605,924 1,214,564
Gain on extinguishment of debt (198,000)
Share based payments 349,926 618,192
Interest paid 3,833 6,562
Operating cash flows before movements in
working capital (1,756,140) (2,108,300)
--------------------------------------------------- ------------ ------------
Decrease/(Increase) in trade and other receivables 1,038,554 24,179
(Decrease)/Increase in trade and other payables (954,885) (223,865)
--------------------------------------------------- ------------ ------------
83,669 (199,686)
--------------------------------------------------- ------------ ------------
Cash used by operations (1,672,471) (2,307,986)
--------------------------------------------------- ------------ ------------
Income taxes paid - -
Net cash used by operating activities (1,672,471) (2,307,986)
Cash flows from investing activities
Purchase of intangible assets (1,540,066) (1,977,211)
Cash on acquisition - -
--------------------------------------------------- ------------ ------------
Net cash used in investing activities (1,540,066) (1,927,211)
--------------------------------------------------- ------------ ------------
Cash flows from financing activities
Proceed from loan - 198,000
Interest income/(paid) (3,833) (6,562)
Net cash (used by)/generated from financing
activities (3,833) 191,438
--------------------------------------------------- ------------ ------------
Net increase/(decrease) in cash and cash
equivalents (3,216,370) (4,043,759)
--------------------------------------------------- ------------ ------------
Effect of exchange rates on cash (33,882) (380,644)
--------------------------------------------------- ------------ ------------
Cash and cash equivalents at the beginning
of year 5,336,502 9,760,905
--------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of year 2,086,250 5,336,502
--------------------------------------------------- ------------ ------------
There have been no changes in liabilities arising from financing
activities, other than the forgiveness of the PPP loan in May 2021
as noted in Note 20 to these accounts, which has not been
recognised in this statement of cash flows.
Company Statement of Cash Flows
Year ended Year ended
31 December 31 December
2021 $ 2020 $
-------------------------------------------- ------------- -------------
Cash flows from operating activities
Loss before tax (6,124,689) (1,320,263)
Adjustments for non-cash/non-operating
items:
Share based payment expense 349,926 618,192
Change in carrying value of investment 5,075,122 -
in subsidiaries
Operating cash flows before movements
in working capital (699,641) (702,071)
-------------------------------------------- ------------- -------------
Decrease (Increase) in trade and other - -
receivables
(Decrease) Increase in trade and other
payables (134,460) (428,319)
-------------------------------------------- ------------- -------------
Cash used by operations (834,101) (1,130,390)
-------------------------------------------- ------------- -------------
Income taxes - -
-------------------------------------------- ------------- -------------
Net cash used by operating activities (834,101) (1,130,390)
-------------------------------------------- ------------- -------------
Cash flows from investing activities - -
-------------------------------------------- ------------- -------------
Loans to subsidiaries (2,326,770) (2,182,016)
-------------------------------------------- ------------- -------------
Net cash used in investing activities (2,326,770) (2,182,016)
-------------------------------------------- ------------- -------------
(Decrease)/Increase in cash and cash
equivalents (3,160,871) (3,312,406)
-------------------------------------------- ------------- -------------
Effect of exchange rates on cash 62,319 (126,287)
-------------------------------------------- ------------- -------------
Cash and cash equivalents at the beginning
of period 4,399,957 7,838,650
-------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 1,301,405 4,399,957
-------------------------------------------- ------------- -------------
There have been no changes in liabilities arising from financing
activities.
Notes to the Financial Statements
1 General information
The Group is a global media and technology platform whose
mission is to leverage its AI and machine learning technology to
more efficiently momentize video and to license such capabilities
to brands, creators and publishers to enable discovery, sharing and
e-commerce. The Company is a public limited company domiciled in
the United Kingdom and incorporated under registered number
10621059 in England and Wales. The Company's registered office is
27-28 Eastcastle Street, London W1W 8DH.
The Company is listed on AIM, a market operated by the London
Stock Exchange. These Financial Statements were authorised for
issue by the Board of Directors on 29 June 2022.
2 Significant accounting policies
Basis of preparation
These Financial Statements of the Group and Company are prepared
on a going concern basis, under the historical cost convention
except for certain financial instruments which are carried at fair
value as specified within the individual accounting policies.
These financial statements consolidate those of the Company and
its subsidiaries (together referred to as the "Group"). The Parent
Company financial statements present information about the Company
as a separate entity.
Both the Company and consolidated financial statements have been
prepared and approved by the Directors in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 ("Adopted IFRSs"). On
publishing the Company financial statements here together with the
consolidated financial statements, the Company is taking advantage
of the exemption in s408 of the Companies Act 2006 not to present
its individual income statement and statement of comprehensive
income and related notes.
The accounting policies set out below have been applied
consistently to all periods presented in these financial
statements.
The Financial Statements are presented in US Dollars ($),
rounded to the nearest dollar.
Going concern
The financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet its
liabilities as they fall due for the foreseeable future. The Group
is dependent for its working capital requirements on cash generated
from operations and its cash holdings. The cash holdings of the
Group at 31 December 2021 and 31 December 2020 were $2.1 million
and $5.3 million, respectively.
Given the stage of development of the Group's products, the
Directors have implemented a reduction in development spend,
partially offset by an increase in sales and marketing. The
Directors have prepared detailed cash flow projections which are
based on their current expectations of trading prospects, as well
as scenarios where (i) sales fail to materialize as expected and
(ii) potential further impacts of COVID-19 pandemic and advertising
impacts caused by the Ukraine-Russia conflict on trading. Under all
these scenarios, the Group has sufficient cash resources for at
least on year from the date of these accounts, although the Board
has plans to reduce cash burn by approximately 50 per cent. from
current levels should product sales fail to materialize, which
provides the Group with sufficient cash resources for an extended
period. Accordingly, the Directors have concluded that it is
appropriate to continue to adopt the going concern basis in
preparing these financial statements.
Basis of consolidation
The accompanying consolidated financial statements of SEEEN plc
include its wholly owned subsidiaries: GT Channel, Inc., Tagasauris
Inc., and SEEEN, Inc.
The Consolidated Statement of Comprehensive Income includes the
results of all subsidiary undertakings for the period from the date
on which control passes. Control is achieved where the Company (or
one of its subsidiary undertakings) obtains the power to govern the
financial and operating policies of an investee entity so as to
derive benefits from its activities.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Company. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, and liabilities incurred or assumed at
the date of exchange. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The
excess of the cost of acquisition over the fair value of the
Company's share of the identifiable net assets acquired is recorded
as goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is
recognized directly in the income statement.
All Inter-company transactions and balances and unrealized gains
or losses on transactions between Group companies are eliminated in
full.
Revenue recognition
Under IFRS 15, revenue is recognized when a customer obtains
control of a good or a service and thus has the ability to direct
the use of and obtain the benefits from the good or service.
Nature of MCN
SEEEN owns 100% of GT Channel, Inc, which operates a
multichannel network ("MCN"). The MCN aggregates content supplied
by creators. The MCN then provides such content to YouTube, who is
the customer. YouTube then directs the use of such content to gain
the benefit of digital ad revenue from brands. YouTube takes
forty-five per cent. of the gross amount of digital ad revenue and
then pays the MCN. The Group recognises the payment received from
YouTube as revenue, being the net amount after the deduction of
forty-five per cent. of the gross advertising revenue. YouTube
provides the MCN with daily reports on its receipt of revenue from
brands against the MCN's content. Revenue to the MCN is recognized
upon receipt of such reports from YouTube.
The MCN pays the creators who have supplied videos to the MCN
and these payments are recognized as Cost of Sales in the Group's
statement of comprehensive income .
Property, plant and equipment
All property, plant and equipment is stated at cost less
accumulated depreciation.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets as follows:
Equipment and displays: 5 to 7 years
Motor vehicles: 5 years
Leasehold improvements: 7 years or lease term, whichever is shorter
The asset's residual values and economic lives are reviewed, and
adjusted if appropriate, at each reporting date. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount. Assets that are no longer of economic use to
the business are retired.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within other
(losses) or gains in the income statement.
Goodwill
Goodwill represents the excess of the fair value of the
consideration over the fair values of the identifiable net assets
acquired.
Goodwill arising on acquisitions is not subject to amortisation
but is subject to annual impairment testing. Any impairment is
amortisation immediately in the Consolidated Statement of
Comprehensive Income and not subsequently reversed.
Other intangible assets
Intangible assets are recorded as separately identifiable assets
and amortised at historical cost less any accumulated amortisation.
These assets are amortised over their definite useful economic
lives on the straight-line method.
Amortisation is computed using the straight-line method over the
definite estimated useful lives of the assets as follows:
Years
Customer lists 4
Product development 4
Any amortisation is included within total administrative
expenses in the statement of comprehensive income.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment
of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective
basis.
The asset's residual values and economic lives are reviewed, and
adjusted if appropriate, at each reporting date. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are reocgnised within other
(losses) or gains in the Statement of Comprehensive Income.
Research and development
Research expenditure is recognised as an expense when incurred.
Costs incurred on development projects (relating to the design and
testing of new or improved products) are recognised as intangible
assets when the following criteria are fulfilled.
-- It is technically feasible to complete the intangible asset
so that it will be available for use or resale;
-- Management intends to complete the intangible asset and use or sell it;
-- There is an ability to use or sell the intangible;
-- It can be demonstrated how the intangible asset will generate
possible future economic benefits;
-- Adequate technical, financial and other resource to complete
the development and to use or sell the intangible asset are
available; and
-- The expenditure attributable to the intangible asset during
its development can be reliably measured.
Other development expenditures that do not meet these criteria
are recognised as an expense in the period incurred. Development
costs previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are
recorded as intangible assets and are amortised from the point at
which they are ready for use on a straight-line basis over the
asset's estimated useful life.
Segment reporting
A business segment is a group of assets and operations engaged
in providing products or services that is subject to risks and
returns that are different from those of other business segments.
During the year to 31 December 2021, the majority of revenue for
the Group was generated from its MCN operation. As the Group's
revenue mix evolves, the Directors expect to split out revenue by
type in the Accounts.
Impairment reviews
Assets that are subject to amortisation and depreciation are
reviewed for impairment when events or changes in circumstances
indicate that the carrying amount may not be fully recoverable.
Assets that are not subject to amortisation and depreciation are
reviewed on an annual basis at each year end (including goodwill)
and, if there is any indication that an asset may be impaired, its
recoverable amount is estimated. The recoverable amount is the
higher of its net selling price and its value in use. Any
impairment loss arising from the review is charged to the Statement
of Comprehensive Income whenever the carrying amount of the asset
exceeds its recoverable amount.
Share based payments
The Group has made share-based payments to certain Directors,
employees and advisers by way of issue of share options. The fair
value of these payments is calculated either using the Black
Scholes option pricing model or by reference to the fair value of
any fees or remuneration settled by way of granting of options. The
expense is amortisation on a straight-line basis over the period
from the date of award to the first date of exercise, based on the
best estimate of the number of shares that will eventually
vest.
Taxation
Income tax expense represents the sum of the current tax and
deferred tax charge for the year.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible.
The Group's and Company's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by
the year end.
Deferred tax
Deferred income taxes are provided in full, using the liability
method, for all temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
Financial Statements. Deferred income taxes are determined using
tax rates that have been enacted or substantially enacted and are
expected to apply when the related deferred income tax asset is
amortisation or the related deferred income tax liability is
settled.
The principal temporary differences arise from depreciation or
amortisation charged on assets and tax losses carried forward.
Deferred tax assets relating to the carry forward of unused tax
losses and are recognised to the extent that it is probable that
future taxable profit will be available against which the unused
tax losses can be utilised. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent
that it is probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held
at call with banks, and other short term highly liquid investments
with original maturities of three months or less.
Foreign currencies
(i) Functional and presentational currency
Items included in the Financial Statements are measured using
the currency of the primary economic environment in which each
entity operates ("the functional currency") which is considered by
the Directors to be Pounds Sterling (GBP) for the Parent Company
and US Dollars ($) for SEEN, Inc, GTChannel, Inc and Tagasauris,
Inc. The Financial Statements have been presented in US Dollars
which represents the dominant economic environment in which the
Group operates. The effective exchange rate at 31 December 2021 was
GBP1 = US$1.3757 (31 December 2020 was GBP1 = US$1.3627). The
average exchange rate for the year to 31 December 2021 was GBP1 =
US$1.3520 (31 December 2020 was GBP1 = US$1.2837).
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the statement of
comprehensive income.
(ii) Group Companies
The results and financial position of all the Group entities
that have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
(a) assets and liabilities for each statement of financial
position presented are translated at closing rate at the date of
the statement;
(b) the income and expenses are translated at average exchange
rates for period where there is no significant fluctuation in
rates, otherwise a more precise rate at a transaction date is used;
and
(c) all resulting exchange differences are recognised in other
comprehensive income and accumulated in the foreign exchange
reserve.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Loans and receivables
Trade receivables, loans, and other receivables held with the
objective to collect the contractual cash flows are classified as
subsequently measured at amortised cost. These are initially
measured at fair value plus transaction costs. At each period end,
there is an assessment of the expected credit loss in accordance
with IFRS 9; with any increase or reduction in the credit loss
provision charged or released to other selling and administrative
expenses in the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The expected
cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual
terms.
The Group also recognises lifetime ECLs for trade receivables
and contract assets. The ECLs on these financial assets are
estimated using a provision matrix based on the Group's historical
credit loss experience, adjusted for factors that are specific to
the debtors, general economic conditions and an assessment of both
the current as well as the forecast conditions at the reporting
date, including time value of money where appropriate.
For all other financial instruments, the Group recognises
lifetime ECL when there has been a significant increase in credit
risk since initial recognition. However, if the credit risk on the
financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12 -- month ECL.
Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs and are
subsequently measured at amortised cost using the effective
interest method.
Equity instruments
An equity instrument is any instrument with a residual interest
in the assets of the Company after deducting all of its
liabilities. Equity instruments (ordinary shares) are recorded at
the proceeds received, net of direct issue costs.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with
International Financial Reporting Standards requires the use of
judgements together with accounting estimates and assumptions that
affect the reported amounts of assets and liabilities and the
reported amounts of income and expenses during the reporting
period. Although these judgements and estimates are based on
management's best knowledge of current events and actions, the
resulting accounting treatment estimates will, by definition,
seldom equal the related actual results.
The following are the critical judgements and estimations that
the Directors have made in the process of applying the Company's
accounting policies and that have the most significant effect on
the amounts reocgnised in the financial statements.
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the
acquisition of subsidiaries is considered annually for indicators
of impairment to ensure that the asset is not overstated within the
financial statements. The annual impairment assessment in respect
of goodwill requires estimates of the value in use (or fair value
less costs to sell) of subsidiaries to which goodwill has been
allocated. This requires the Directors to estimate the future cash
flows and an appropriate discount factor, in order that the net
present value of those cash flows can be determined. Discounted
cash flow forecasts give due consideration to the impact of
COVID-19 on the future cash flows, and are stress tested under a
range of scenarios. Further details are provided in note 9 to the
financial statements.
Impairment of investment in subsidiaries
Impairment of the valuation of the investment in subsidiaries
relating to the acquisition of subsidiaries and subsequent funding
of such subsidiaries is considered annually for indicators of
impairment to ensure that the asset is not overstated within the
financial statements. The annual impairment assessment in respect
of such investment requires estimates of the value in use (or fair
value less costs to sell) of subsidiaries to which investment has
been allocated. This requires the Directors to estimate the future
cash flows and an appropriate discount factor, in order that the
net present value of those cash flows can be determined. Discounted
cash flow forecasts give due consideration to the impact of
COVID-19 on the future cash flows, and are stress tested under a
range of scenarios. Further details are provided in note 10 to the
financial statements.
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised
intangible assets requires judgements to be made in respect of
estimating the useful lives of the intangible assets to determine
an appropriate
amortisation rate. Technology and website development costs are
being amortised on a straight-line basis over the period during
which the economic benefits are expected to be received, which has
been estimated at 4 years.
3 Expenses by nature
The Group's operating profit has been arrived at after
charging:
Year ended Year ended
31 December 31 December
2021 2020
Note $ $
--------------------- ------ ------------ ------------
Employee costs 724,457 1,151,339
Severance costs 291,144 -
Consulting services 128,490 368,261
Agency fees 614,053 650,802
Rent 11,145 19,592
Professional fees 233,600 319,447
Listing fees 14,372 9,845
Other 444,690 696,177
Year ended Year ended
31 December 31 December
2021 2020
$ $
------------------------------------- ------------ ------------
Auditors remuneration
Fees payable to the Group's auditor
for audit of Parent Company and
Consolidated Financial Statements 37,856 37,227
Fees payable to the Group's auditor
for non-audit services 4,056 53,902
------------------------------------- ------------ ------------
The Group auditors are not the auditors of the US subsidiary
companies. The fees paid to the auditor of the US subsidiary
companies were $40,000 (31 December 2020: $36,000) for the audit of
these companies with no payments for other services.
4 Employees and Executive Directors
The Executive Directors are considered to be the key management
of the business.
` Year ended Year ended
31 December 31 December
2021 2020
$ $
Staff costs for all employees, including
Executive Directors consist of:
Wages and Salaries 1,015,601 1,151,339
Share Based Payments Expense 349,925 618,192
1,365,526 1,721,138
------------------------------------------ ------------ ------------
Information regarding Executive Directors emoluments are as
follows:
Year ended 31 December 6 months ended
2021 31 December
2020
$ $
---------------------------------------- ---------------------- --------------
Short-Term employee benefits
Directors' fees, salaries and benefits 547,234 600,000
Social Security Costs 70,558 56,607
617,792 150,000
---------------------------------------- ---------------------- --------------
The highest paid Executive Director received emoluments of
$291,144, including termination payment (31 December 2020:
$230,073).
The average number of employees (including Directors) in the
Group during the year was:
Year ended 6 months ended
31 December 31 December
2021 2020
Directors (executive and non-executive) 5 5
Management 2 3
Other 3 4
10 11
---------------------------------------- ----------- --------------
Note: The Group also uses five full time consultants on its
proprietary technology products and other third party contractors
whose workload is varied each month for software engineering and
product development. These costs are represented in Consulting
Services in Note 3 above.
5 Share options
The Company grants share options at its discretion to Directors,
management and advisors. These are accounted for as equity settled
options. Should the options remain unexercised after a period of
ten years from the date of grant the options will expire unless an
extension is agreed to by the board. Options are exercisable at a
price equal to an exercise price determined by the board.
Details for the share options and warrants granted, exercised,
lapsed and outstanding at the year-end are as follows:
Weighted average
exercise price
(GBp)
Number of share
options 2021 2021
--------------------------- -------------------------------- ------------------------
Outstanding at beginning
of year 4,996,887 45.0
Granted during the year 3,400,000 62.9
Forfeited/lapsed during - -
the year
Exercised during the year - -
--------------------------- -------------------------------- ------------------------
Outstanding at end of
the year 8,396,887 52.2
--------------------------- -------------------------------- ------------------------
Exercisable at end of
the year 4,996,887 45.0
--------------------------- -------------------------------- ------------------------
During the year the Company issued options to existing directors
and staff in exchange for reducing their cash compensation, as well
as issuing employee incentivization grants for retention purposes.
The Group has also issued options in 2022 as outlined in Note 21
below.
Fair value of share options
During the year, the Group granted 3,400,000 Share Options to
certain Employees and Consultants with exercise prices ranging from
60 pence to 65 pence ($0.84 to $0.91) with graduated three year
vesting and subject to continued employment (or involvement in the
case of consultant) by the Company.
The fair value of options granted during 2021 has been
calculated using the Black Scholes model which has given rise to a
fair value per share of 9.1p to 14.3p. This is based on a risk-free
rate of 0.84% and volatility of 53.0% and that the options will be
exercised on the first date of the exercise period.
The Black Scholes calculations for the options granted during
the year resulted in an annual charge of $130,729 which has been
expensed in 2021.
The weighted average remaining contractual life of the share
options as at 31 December 2021 was 8.35 years.
Options arrangements that exist over the Company's shares at
year end are detailed below:
31 December 31 December Date of Exercise Exercise period
Grant 2021 2020 Grant price From To
----------------------- ----------- ----------- --------- -------- -----------------------------
AIM Admission Grant
Options 4,996,887 4,996,887 30/9/2019 45p 30/9/2020 30/9/2029
2021 Director Fee
Options 1,450,000 - 4/3/2021 60p 4/3/3024 4/3/2031
2021 Incentive Options 1,300,000 - 4/3/2021 65p 4/3/3024 4/3/2031
2021 Incentive Options 650,000 - 13/5/2021 65p 13/5/3024 13/5/2031
Total 8,396,887 4,996,887
----------------------- ----------- ----------- --------- -------- -------------- -------------
All share options are equity settled on exercise.
Further options have been granted since 31 December 2021 and
information on these can be found in Note 21 (Subsequent Events) to
these Accounts.
6 Finance expense
Year ended Year ended
31 December 31 December
2021 2020
$ $
Interest expense 3,833 6,562
----------------------- -------------- --------------
7 Taxation
The major components of income tax expense for the periods
ending 31 December 2021 and December 2020 are as follows:
Year ended Year
31 December 31 December
2021 2020
Group $ $
---------------------------------- ------------ ------------
Current tax: - -
Current tax (benefit) on profits - -
in the year
Prior year over provision - -
Total Tax charge (benefit) 0 -
---------------------------------- ------------ ------------
Deferred tax current year (323,510) (340,740)
Deferred - -
Total Tax charge (benefit) (323,510) (340,740)
---------------------------------- ------------ ------------
The tax on the Company's loss before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits and losses as follows:
The tax on the Company's loss before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits and losses as follows:
Year ended Year ended
31 December 31 December
2021 2020
$ $
-------------------------------------- ------------ ------------
Total loss on ordinary activities
before tax (3,517,822) (3,947,618)
Loss on ordinary activities at
the standard rate of corporation
tax in the US of 21% (30 June
2020: 21%) (738,743) (829,000)
Non-deductible expenses
eductible expenses 51,557 118,989
State taxes net of federal benefit (223,583) (227,980)
Other tax adjustments, reliefs 186 -
and transfers
Adjustment in respect of prior
year (648) (144)
Deferred tax not recognised /
valuation allowance 587,721 585,022
Changes in rates - 15,069
Total Tax charge (323,510) (338,044)
-------------------------------------- ------------ ------------
At the balance sheet date, the Group had unused tax losses (as
reported on the Group's tax returns) of $11,787,927 available for
offset against future profits. $1,776,191 represents unrecognized
deferred tax assets thereon. The deferred tax asset has not been
recognized due to uncertainty over timing of utilization.
8 Earnings per share
The loss per share has been calculated using the profit for the
year and the weighted average number of ordinary shares outstanding
during the year, as follows:
Year ended Year ended
31 December 31 December
2021 2020
-------------------------------------------- ------------ ---------------
Loss for the year attributable to equity
holders of the Parent ($) (3,194,313) (3,619,715)
Weighted average number of ordinary shares 49,957,876 49,957,876
-------------------------------------------- ------------ ---------------
Diluted weighted average number of ordinary
shares 49,957,876 49,957,876
-------------------------------------------- ------------ ---------------
Loss per share (cents) (6.39) (7.25)
-------------------------------------------- ------------ ---------------
Diluted loss per share (cents) (6.39) (7.25)
-------------------------------------------- ------------ ---------------
9 Intangible assets
Group Goodwill Arising Other Intangible Development
on Consolidation Assets Costs Totals
----------------
$ $ $ $
---------------- ------------------------------- ----------------- ------------ ------------
Cost
At 31 December
2019 9,762,158 4,463,432 94,794 14,320,384
Additions - - 1,977,213 1,977,213
Amortisation - (1,190,249) (24,315) (1,214,564)
---------------- ------------------------------- ----------------- ------------ ------------
At 31 December
2020 9,762,158 3,273,183 2,047,692 15,083,033
---------------- ------------------------------- ----------------- ------------ ------------
Additions - - 1,540,066 1,540,066
---------------- ------------------------------- ----------------- ------------ ------------
Amortisation - (1,190,249) (415,675) (1,605,924)
---------------- ------------------------------- ----------------- ------------ ------------
At 31 December
2021 9,762,158 2,082,934 3,172,083 15,017,175
---------------- ------------------------------- ----------------- ------------ ------------
The cost of other intangible assets comprises customer lists and
technology development acquired at the date of acquisition. The
other intangible assets are being amortised over a period of 4
years. Amortisation is charged to administrative costs in the
Statement of Comprehensive Income.
Goodwill and Impairment
The carrying value of goodwill in respect of each acquisition
was as follows:
31 December
31 December 2021 2020
----------------------- ----------------- ------------
GTChannel, Inc 3,165,023 3,165,023
Tagasauris, Inc 3,643,678 3,643,678
Entertainment AI, Inc 2,953,457 2,953,457
----------------------- ----------------- ------------
Total 9,672,158 9,672,158
----------------------- ----------------- ------------
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired. In order to perform this test, management is required to
compare the carrying value of the relevant cash generating unit
("CGU") including the goodwill with its recoverable amount. The
recoverable amount of the CGU is determined from a value in use
calculation. Management has assessed that there is one CGU
encompassing all of the Group's subsidiaries. This is based on the
Group's business plan as stated in its admission document, as well
as considering how the Group is managed and directed. The
subsidiary entities offer a combination of cross-supplied
technology and services that will enable the Group to create a
Multi Platform Network. This synergistically leverages the Group's
technology, current customer base and wider business plan and
strategic partners. These features are each supplied by the
different acquisitions made in the period and as such, the
Directors consider provisionally that it is most appropriate that
the CGU consist of all three subsidiaries.
The recoverable amount of the CGU has been determined from a
review of the current and anticipated performance of this unit
through to the end of 2024. In preparing this projection, a
discount rate of 10% has been used based on the weighted average
cost of capital and a perpetual growth rate of 2% has been assumed,
justified by the longer term prospects for the online and digital
video industry. The discount rate was based on the Company's cost
of capital as estimated by management. Management has also made
assumptions around the growth / customer acquisition in relation to
its products it has launched in 2021 and 2022. This includes adding
new, profitable channel partners to its MCN, selling its media
monitoring services through 3(rd) parties and increasing its
CreatorSuite client base. If management assumptions were to reduce
by 50%, i.e. if the Group was only able to obtain half of the
expected customer numbers across categories, this would reduce the
carrying value of the goodwill by $2 million. No other reasonable
change in the other assumptions made by management would presently
result in an impairment.
10 Investment in subsidiary undertakings
Loan to group
Cost of investment undertaking Total
Company $ $ $
--------------------- ------------------- -------------- ------------
Cost
At 31 December 2020 12,984,835 2,182,106 15,166,851
Additions - 2,100,207 2,100,207
At 31 December 2021 12,984,835 4,282,313 17,267,058
--------------------- ------------------- -------------- ------------
Impairment
At 31 December 2020 - - -
At 31 December 2021 (5,075,122) - (5,075,122)
--------------------- ------------------- -------------- ------------
Carrying amount
At 31 December 2020 12,984,835 2,182,106 15,166,851
At 31 December 2021 7,909,713 4,282,313 12,192,026
--------------------- ------------------- -------------- ------------
The Directors annually assess the carrying value of the
investment in the subsidiaries and in their opinion an impairment
provision of $5,075,122 is required to bring the value of
investments into line with the net assets of the Group as a whole.
In addition to the above, the Company also recognises loans to
group undertakings totalling $2,825,149 in current assets on the
Company balance sheet.
The subsidiary undertakings during the year were as follows:
Interest
Country held
Registered office address of incorporation %
199 Whitney Avenue, New
Haven, Connecticut 06511
GTChannel, Inc. U.S. US 100%
199 Whitney Avenue, New
Haven, Connecticut 06511
Tagasauris, Inc. U.S. US 100%
199 Whitney Avenue, New
Entertainment AI, Haven, Connecticut 06511
Inc. U.S. US 100%
------------------- ----------------------------- ------------------- ---------
All subsidiaries are owned directly by the Parent Company.
11 Trade and other receivables
Group Company
----------------------------------------------- ----------------------------
31 December 31 December 31 December 31 December
2021 2020 2021 2020
$ $ $ $
Trade and other receivables 751,524 1,790,074 - -
---------------------------------- ------------- ------------- --------------------- -------------------
Intercompany receivables - - 2,825,149 2,969,903
---------------------------------- ------------- ------------- --------------------- -------------------
In determining the recoverability of accounts receivable, the
Company considers any changes in the credit quality of the accounts
receivable from the date credit was initially granted up to the
reporting date. The accounts receivable that are neither past due
nor impaired relate to customers that the Company has assessed to
be creditworthy based on the credit evaluation process performed by
management which considers both customers' overall credit profile
and its payment history with the Company. Any loss allowance is
determined in accordance with IFRS 9.
12 Cash and cash equivalents
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
$ $ $ $
Cash at bank and in hand 2,086,249 5,336,502 1,301,405 4,399,957
------------------------------ ------------ -------------- -------------- --------------
13 Trade and other payables
Group Company
---------------------------- ----------------------------
Year Ended Year Ended Year Ended Year Ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
$ $ $ $
----------------------------- ------------- ------------- ------------- -------------
Trade payables 471,983 521,044 68,418 164,173
Accruals and other payables 781,076 1,686,899 136,284 174,991
----------------------------- ------------- ------------- ------------- -------------
1,253,059 2,207,943 204,702 339,164
----------------------------- ------------- ------------- ------------- -------------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs and are payable
within 3 months.
14 Deferred Tax
Total
$
--------------------------------------------- ----------
Balance as at 1 January 2021 (893,220)
Deferred tax on acquisition of subsidiaries -
Deferred tax charge for the year 323,510
Balance At 31 December 2021 (569,710)
--------------------------------------------- ----------
The deferred tax provision comprises:
31 December
31 December 2021 2020
$ $
--------------------------- ------------------ -------------
Deferred tax liability
arising from acquisition
of intangible assets 569,710 893,220
--------------------------- ------------------ -------------
Total 569,710 893,220
--------------------------- ------------------ -------------
At the balance sheet date, the Group had unused tax losses (as
reported on the Group's tax returns) of $11,787,927 available for
offset against future profits. $1,776,191 represents unrecognized
deferred tax assets thereon. The deferred tax asset has not been
recognized due to uncertainty over timing of utilization.
15 Share capital
The issued share capital in the year was as follows:
Group & Company
Ordinary
Shares of Shares held Total Number
12 pence each in treasury
Number Number
At 31 December 2020 49,957,876 - 49,957,876
At 31 December 2021 49,957,876 - 49,957,876
--------------------- --------------- ------------- ---------------
Group & Company
Share capital Share premium
$ $
At 31 December 2020 7,400,732 7,677,903
At 31 December 2021 7,400,732 7,677,903
--------------------- -------------- --------------
During the year to 31 December 2021, the Company issued no new
shares.
16 Financial instruments
Financial instruments
As at the dates presented, the Group has classified its
financial instruments as follows:
Loans and Other Financial
Receivables Liabilities Fair Value
at Amortized at Amortized through Profit
Cost Cost or Loss Total
At 31 December 2021 $ $ $ $
------------------------------- -------------- ---------------- ---------------- ----------
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 - - - -
Loans and Other Financial
Receivables Liabilities Fair Value
at Amortized at Amortized through Profit
Cost Cost or Loss Total
At 31 December 2020 $ $ $ $
------------------------------- -------------- ---------------- ---------------- ----------
Financial Assets
Cash 5,336,502 - - 5,336,502
Trade and Other Receivables 1,790,075 - - 1,790,075
Financial Liabilities
Trade and Other Payables - 2,207,943 - 2,207,943
Borrowings - Current - 198,000 - -
Credit risk management
The Company is exposed to credit risk associated with its
accounts receivable. Credit risk is minimized substantially by
ensuring the credit worthiness of the entities with which it
carries on business. Most of the Group's revenues are derived from
its MCN business. The key counterparty for this business is
YouTube. The performance obligations arise at the time that MCN
videos generate advertising or other income on YouTube. YouTube
makes a monthly payment to the Group, approximately 20 days in
arrears. In the periods to 31 December 2021 and 31 December 31
2020, the Company did not experience any significant instance of
non-payment from its customers and expects this to continue to be
the case, thus a provision has not been made for potentially
uncollectable amounts.
The Company's accounts receivable aging as follows:
31 December
31 December 2021 2020
------------------------ ----------------- ------------
Current 751,524 1,789,834
31-60 days - -
61-90 days - -
>90 days - 240
------------------------ ----------------- ------------
751,524 1,790,074
Allowance for doubtful
accounts - -
Total 751,524 1,790,074
------------------------ ----------------- ------------
Interest rate risk management
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market rates. The Company's exposure to interest rate
risk is based on short-term fixed interest rates. At 31 December
2021, the Company's exposure to interest rate risk was determined
to be nominal.
Capital risk management
In managing its capital, the Group's primary objective is to
maintain a sufficient funding base to enable working capital,
research and development commitments and strategic investment needs
to be met and therefore to safeguard the Group's ability to
continue as a going concern in order to provide returns to
shareholders and benefits to other stakeholders. In making
decisions to adjust its capital structure to achieve these aims,
including through new share issues, the Group considers not only
its short-term position but also its long term operational and
strategic objectives.
The capital structure of the Group currently consists of equity
comprising issued capital, reserves and retained earnings. The
Group is not subject to any externally imposed capital
requirements. The Group monitors this expenditure and is on track
to spend the required funds by such date.
Foreign currency risk management
Foreign exchange transaction risk arises when individual Group
operations enter into transactions denominated in a currency other
than the dominant economic currency of the Group. The principal
risk arises from the Group's holding company and payments made in
relation to the holding company's activities in the United
Kingdom.
The carrying amount of the Group's foreign currency denominated
monetary assets and monetary liabilities were:
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
$ $ $ $
------------- -------------- -------------- -------------- --------------
Assets
Sterling 1,059,409 1,766,102 1,059,409 1,766,102
------------- -------------- -------------- -------------- --------------
Liabilities
Sterling 370,082 284,890 370,082 284,890
------------- -------------- -------------- -------------- --------------
As shown above, at 31 December 2021 the Group had Sterling
denominated monetary net assets of $689,327 (31 December 2020:
$1,481,212). If Sterling weakens by 10% against the US dollar, this
would decrease net assets by $68,933 (31 December 2020: $148,121)
with a corresponding impact on reported losses. Changes in exchange
rate movements resulted in a loss from exchange differences on a
translation of foreign exchange of $132,420 in the year to 31
December 2021 (year to 31 December 2020: loss of $350,241),
resulting primarily from the holding of cash in sterling.
Liquidity risk management
Ultimate responsibility for liquidity management rests with
management. The Group's policy is to ensure that it will have
sufficient cash to allow it to meet its liabilities when they
become due and so cash holdings may be high during certain periods
throughout the period. The Group currently has no bank borrowing or
overdraft facilities, following the forgiveness of the PPP loan
received in May 2021. All liabilities are current and expected to
be settled within 3 months.
The Group's policy in respect of cash and cash equivalents is to
limit its exposure by reducing cash holding in the operating units
and investing amounts that are not immediately required in funds
that have low risk and are placed with a reputable bank.
18 Contingent liabilities
The Directors are not aware of any material contingent
liabilities.
19 Related party transactions
The Directors are not aware of any related party
transactions.
20 Borrowing
On April 30, 2020, the Company received a loan, from the bank,
in the amount of $198,000 under the Paycheck Protection Program
(PPP) established by the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act), and is administered by the U.S. Small
Business Administration (SBA). Under the terms of the CARES Act,
the PPP loan recipients can apply for and be granted forgiveness
for all or a portion of the loan granted under the PPP, at which
time the Company will recognize the forgiven amount as income. Such
forgiveness will be determined, subject to limitations, based on
the use of loan proceeds for: payroll costs and mortgage interest,
rent or utility costs and the maintenance of employee and
compensation levels. The Company used the twenty-four-week
forgiveness period and applied for forgiveness of the PPP loan in
accordance with the terms of the PPP. On 5 May 2021, the Company's
PPP loan was forgiven.
21 Subsequent events
On 23 February 2022, the Group announced a strategic partnership
with Kinetiq, Inc., a leading media intelligence platform that
enables global customers to measure the effectiveness of their
paid, earned and owned media, across thousands of broadcast, CTV
and social channels around the world. The companies provide
"end-to-end" solutions for brands, networks and publishers to
better manage and measure audience experiences, as companies look
to migrate video content from traditional forms of media such as
broadcast and cable to social and CTV media platforms.
On 16 March 2022, the Group announced changes to its Board of
Directors. Todd Carter resigned as CEO and member of the Board to
continue in a role overseeing customer success and product
strategy. Akiko Mikumo and David Anton were each appointed as
interim co-CEOs. Charles Burdick was proposed as an Independent
Non-Executive Director and was subsequently appointed on 26 May
2022, at which time he was granted an option over 200,000 ordinary
shares of 12 pence each ("Ordinary Shares") at an exercise price of
30 pence per Ordinary Share. Kevin Kohn, CEO of Kinetiq, Inc, (see
above) was also appointed as a Board Observer. At the same time,
the Group also announced that all of views from its MCN business in
Russia had ceased generating advertising revenue. During 2021,
approximately 25% of the Group's revenue was generated from views
within Russia This is expected to lead to a decrease in MCN income
for 2022, however, as these channels had very low margins given
distribution agreements made prior to the Group's admission to AIM,
the impact on profitability is negligible.
22 Control
The Company is under the control of its shareholders and not any
one party. The shareholdings of the directors and entities in which
they are related are as outlined within the Director's Report.
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END
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(END) Dow Jones Newswires
June 30, 2022 02:00 ET (06:00 GMT)
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