TIDM7DIG
RNS Number : 4646N
7digital Group PLC
30 September 2021
Certain information contained within this Announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in
the United Kingdom. Upon publication of this Announcement, this
information is now considered to be in the public domain.
30 September 2021
7digital Group plc
("7digital", "the Company" or "the Group")
Interim Results
7digital (AIM: 7DIG), the global leader in B2B end-to-end
digital music solutions, announces its interim results for the six
months ended 30 June 2021.
Financial Highlights(1)
-- Revenues increased by 6% to GBP3.3m (H1 2020: GBP3.1m)
-- Gross margin of 62.6% (H1 2020: 65.9%)
-- Adjusted(2) administrative expenses reduced by 6% to GBP3.1m
-- Adjusted(2) EBITDA loss reduced to GBP1.0m (H1 2020: loss of GBP1.1m)
-- Operating loss of GBP1.9m (H1 2020: loss of GBP1.0m)
-- Fully diluted loss per share of GBP0.07 (H1 2020: GBP0.04 loss)
-- Cash and cash equivalents at 30 June 2021 of GBP0.5m (31
December 2020: GBP2.8m; 30 June 2020: GBP0.2m) and GBP0.2m at 29
September 2021
(1) The H1 2020 accounts have been restated (see note 1 to the
financial statements)
(2) Adjusted to exclude other adjusting items, amortisation,
foreign exchange, depreciation and share-based payments (see note 6
to the financial statements)
Operational Highlights
-- Long-term contracts with seven new licensing customers during
the period, and a further two post period, as the Company continued
its strategic expansion in its key growth markets of fitness and
wellness, social media and artist monetisation
o Multi-year contracts with fitness companies Barry's, Volava,
FORME and others
o Signed contract with Kuaishou, a leading content community and
social platform based in China
o eMusic Live partnered with further artists, agencies and
venues to provide new monetisation opportunities for the music
industry
-- Platform has now hosted 71 performances in total, including
livestream and hybrid events from major artists such as Alfie Boe,
Tina Arena and Crowded House in the period
-- Became the first and only music livestream platform to offer
artist non-fungible tokens (NFTs) alongside ticketed events running
on the platform
-- Signed a multi-year renewal with a global technology company
across multiple territories - a major validation for the scale and
reach of 7digital's platform
-- Four contract extensions or renewals signed during the period and seven post period
Outlook
-- 7digital entered the second half of 2021 with a strong
pipeline across its core segments as well as a number of
prospective contracts in the new segments of gaming and
connected-car entertainment
-- Company has been working actively with its partners to
facilitate the process for prospective customers to secure
licensing agreements with music labels
-- In some instances, the process has been more protracted than
anticipated, accordingly, some contracts the Company had expected
to sign in the second half of 2021 are now anticipated to complete
in the first half of 2022
-- As a result of the above, the Company currently expects its
revenue for the full year to be slightly below expectations, with
certain H2 2021 forecast revenues now moving into 2022, and that it
will not achieve EBITDA positivity for the full 12 months
-- The Board is confident that some of the prospective
contracts, which represent significant revenue, will be signed in
the near-term and that the others in the pipeline will follow in
due course. It expects to regain EBITDA positivity for Q4 2021 and
is very confident of delivering EBITDA positivity for full year
2022 with significant revenue growth
-- The Company is in advanced discussions over a banking
facility, which are expected to conclude shortly, and also
continues to have the unwavering support of its major
shareholders
Paul Langworthy, CEO of 7digital, said: "Our market-leading
position and strategic focus on core sectors has enabled us to grow
the number of customers licensing our technology as well as the
scale and reach of our music platform. 7digital has entered the
second half of 2021 with a strong pipeline across fitness and
wellness and social media as well as a number of prospective
contracts in the new segments of gaming and connected-car
entertainment. We are currently in advanced negotiations with
multiple new customers representing significant revenue. However,
the pace of closing deals is dependent on our clients completing
their licensing deals with labels and in some instances we have
found this is taking longer than we had hoped.
"In the second half, we plan to accelerate our stated strategic
vision to align ourselves, through innovation, with the interests
of the artists as well as consumers of their music. Alongside
consolidating our leading position in our core segments of fitness
and wellness and social media, our aim is for 7digital to become a
leading platform providing artist services beyond traditional
streaming such as creating direct-to-fan opportunities including
NFTs, livestreaming and merchandising on a global scale. As a
result, we remain very confident in the outlook for the business in
the medium- to long-term and the opportunities ahead."
Enquiries
7digital c/o +44 20 7618 9100
Paul Langworthy
Arden Partners (Nominated Adviser
and Broker)
Richard Johnson +44 20 7614 5900
Luther Pendragon (Financial PR) +44 20 7618 9100
Harry Chathli, Joe Quinlan 7digitalIR@luther.co.uk
About 7digital
7digital is the global leader in B2B end-to-end digital music
solutions, providing a scalable cloud-based platform that enables
companies and brands to connect to its global music catalogue and
rights management system to launch and manage unique and engaging
music experiences. Operating worldwide in over 80 markets and
integrated with more than 300,000 labels and publishers, 7digital's
platform automates the complex and time-consuming processes of
music management, making it easier to access and use music in
streaming services, social media, home fitness, gaming, retail and
more. With best-in-class infrastructure, deep industry expertise
and intelligence tools, 7digital empowers their clients to
innovate, grow and serve tomorrow's music consumer. For more
information, visit http://www.7digital.com/ .
Operational Review
7digital made strong operational progress in the first half of
the year and continued to grow revenues from its high-margin music
technology offering. By focusing on strategic growth markets -
fitness and wellness, social media and artist monetisation -
7digital has increased the number of customers with licensed access
to its leading B2B music platform, signing seven new deals during
the period and a further two post period. Many of these new
customers were signed on long-term contracts, while the Company
also maintained its high retention rate and secured multiple
contract renewals or extensions during the period. The eMusic Live
virtual concert and artist monetisation platform that 7digital
launched last year in collaboration with its eMusic sister company
has continued to grow, entering partnerships with further artists,
agencies and venues as the music industry increasingly seeks new
engagement and monetisation opportunities. In addition, 7digital
has enhanced its music as a service platform by establishing
integrations with several providers that enable the Company to
enhance its service offering to customers.
The Company has also been actively working with its partners to
facilitate the licensing process for customers. 7digital's
music-as-a-service platform provides customers with access to
pre-approved music in its global catalogue based on the licensing
agreements held by those customers with music labels. By seeking
opportunities to streamline this process, the Company can enhance
its offering to customers and reduce the sales cycle for securing
its own contracts.
Fitness and Wellness
7digital's solution for fitness brands enables them to
seamlessly incorporate music into their offering and is designed to
make it easy for them to maximise the benefits of music. Based on
the Company's music-as-a-service platform, it provides features
such as end-to-end global rights and reconciliation management,
access to the Company's global catalogue and an easy-to-use
playlisting tool. The Company believes that it has established a
dominant position in this global market.
The Company has converted multiple sales leads into long-term
contracts - adding several fitness companies to its customer base.
During the period, this included signing 24-month contracts with
premium home fitness innovator FORME and another new customer in
the home fitness sector serving the US market. Post period, the
Company secured a contract with Barry's, the global fitness brand,
which is using 7digital's instructor playlisting tool in the US and
Canada to access a fully cleared catalogue of music to power
Barry's X, a new digital product offering a fully integrated,
many-to-many camera-on experience. In addition, the Company signed
a contract post period with Volava, a European interactive fitness
platform that is using 7digital's solution for its bike-based
online fitness offering in Spain and, soon, other locations such as
Germany.
The Company expanded its offer into the wider health and
wellness market post period with the signing of 24-month contracts
with MedRhythms, a US-headquartered digital therapeutics company
that uses sensors, music and software to measure and improve
walking, and a second company that is creating a music-based health
application for people with dementia. Both customers will use
7digital's music-as-a-service platform to access the Company's
licensed catalogue and playlisting tool to design their interactive
and therapeutic experiences.
Social Media
7digital is helping to shape how fans discover, share and create
music by powering rights-cleared music on social media platforms.
During the period, the Company signed a contract, with an expected
two-year term, with Kuaishou, a leading content community and
social platform based in China. This contract bolstered the
Company's position as one of the largest providers of licensed
music to global social media giants and tech-driven consumer
brands.
Artist Monetisation
7digital continues to drive new sources of growth in the music
industry through its eMusic Live venture. This advanced live
streaming platform enables artists, venues and brands to host live
concerts while providing range of commercial and fan engagement
tools, offering new ways to monetise performances and engage with
global audiences. eMusic Live has now hosted 71 events ion the
platform. During the period this included performances by
multiple-award winning artist Tina Arena in Australia and Ivri
Lider in Israel who became among the first artists globally to host
live-digital hybrid events where fans can stream a concert in real
time. Also during the period, eMusic Live hosted Crowded House and
was the exclusive livestream platform for Alfie Boe & Friends:
Live at the Savoy , which was performed to audiences worldwide. In
addition to music performances, the livestream made use of a range
of commercial and engagement tools available through eMusic Live,
such as exclusive merchandise, fan live chat and VIP experiences
including a meet-and-greet with Alfie Boe.
Additionally, eMusic Live became the first livestream service to
offer artist NFTs (non-fungible tokens) alongside ticketed events
running on the platform. This allows fans to own authentic digital
merchandise while substantially increasing artists' monetisation
ability. The Company is very excited about how this market is going
to develop.
Other Key Contracts
Outside these target verticals, the Company secured and renewed
contracts with multiple customers. This includes a 36-month
contract with new customer Viihdeväylä Oy, a Finnish company that
provides background music and playlisting curation to restaurants,
and renewals with existing customers such as media company Global
Radio, owner of the largest commercial radio company in Europe, and
an extension with a fast-growing B2B music streaming service.
Post period, 7digital signed an extended contract continuing
into 2023 with its global technology company customer. This is a
highly significant deal and represents a major validation of the
scale and reach of 7digital's platform.
New Integrations and Partnerships
7digital has continued to enhance its platform and increase its
offer to global brands through establishing pre-built integrations
that enable customers to easily access complementary services from
other providers.
The Company has established new integrations and partnerships
with:
-- Super Hi-Fi, an audio technology company using AI-based
technologies to deliver next-generation music listening
experiences. The integration of Super Hi-Fi's audio stitching and
automated content curation technology allows customers to add a
critical layer of differentiation and customised listening features
to their music services when they access their music catalogue via
7digital's platform.
-- Muzooka, the world's largest verified artist asset database,
so that content delivered via 7digital's music-as-a-service
platform is pre-mapped with Muzooka's pre-approved database of
artist images, links, and other media assets.
-- ACRCloud to produce a solution around User Generated Content
("UGC") monitoring. The partnership pairs 7digital's catalogue with
ACRCloud's leading fingerprint database of over 100 million tracks
to create a simpler, more accurate and cost-effective process for
companies wishing to monitor and report on UGC.
Financial Review
Revenue for the first half of 2021 increased by 6% to GBP3.3m
compared with GBP3.1m for the first half of the prior year,
reflecting growth in licensing and content revenue. Licensing
revenue continued to be the largest contributor to Company revenue,
accounting for 52% (H1 2020: 53%), with 32% provided by Content (H1
2020: 34%) and 16% by Creative (H1 2020: 13%).
Gross margin for the first half of 2021 was 62.6% (H1 2020:
65.9%), reflecting the slightly higher cost of sales associated
with securing some of the Company's major contracts. Gross profit
for the period was GBP2.0m (H1 2020: GBP2.0m), with the increase in
revenue being offset by the reduction in gross margin.
The Company continued to streamline its operations, with
adjusted administrative expenses being reduced by 6% to GBP3.1m (H1
2020: GBP3.3m) as a result of cost efficiencies. The Company also
continued to focus on credit management, achieving a reduction in
debtor days to 33 (H1 2020: 52).
On an unadjusted basis (see note 6 for details on adjustments),
administrative expenses were GBP3.9m (H1 2020: GBP3.1m), with the
difference primarily reflecting:
-- GBP0.3m related to the issue of share options pursuant to the
Company's 2014 Employee Share Plan;
-- GBP0.1m related to exceptional legal and corporate restructuring costs;
-- GBP0.1m related to the impairment of a historic debt;
-- the prior period benefitting from GBP0.5m exceptional gains
from the disposal of a right-of-use asset relating to a former
property lease and a release relating to a business disposal;
and
-- the net amount being partly offset by a GBP0.2m reduction in underlying costs in H1 2021.
Operating loss was GBP1.8m (H1 2020: GBP1.0m loss), reflecting
the higher administrative expenses, and loss before tax was GBP1.9m
(H1 2020: GBP1.0m loss).
Adjusted EBITDA loss was reduced to GBP1.0m (H1 2020: GBP1.1m
loss). On an unadjusted basis, EBITDA loss was GBP1.5m (H1 2020:
GBP0.9m loss).
Loss per share was 0.07 pence (H1 2020: 0.04 pence loss).
The Company had cash and cash equivalents of GBP0.5m as at 30
June 2021 (31 December 2020: GBP2.8m; 30 June 2020: GBP0.2m) and
GBP0.2m as at 29 September 2021. The Company is in advanced
discussions over a banking facility, which are expected to conclude
shortly. The Company also continues to have the unwavering support
of its major shareholders.
At the period end, the Directors determined there were
adjustments required to restate the H1 2020 results as disclosed in
'Correction to prior period' in note 1 to the financial statements.
The adjustments related to derivative liability and other
reserves.
Outlook
7digital entered the second half of 2021 with a strong pipeline
across its core segments of fitness and wellness and social media
as well as a number of prospective contracts in the new segments of
gaming and connected-car entertainment. As noted above, t he
Company is actively working with its partners to facilitate the
licensing process for customers. In some instances, the process for
customers to secure licensing has been more protracted than
anticipated, resulting in customers delaying the timing for the
signing of contracts with 7digital until the licensing is in place.
As a result, some of the contracts the Company had expected to sign
in the second half of 2021 are anticipated to complete in the first
half of 2022. Consequently, the Company currently expects its
revenue for the full year to be slightly below market expectations
and that it will not achieve EBITDA positivity for the full 12
months .
The Board is confident that some of the prospective contracts,
which represent significant revenue, will be signed in the
near-term and that the others in the pipeline will follow in due
course. In addition, the Company has continued to secure contract
extensions and renewals in the second half of the year from its
existing client base, reflecting the value that customers place on
the Company's music platform. In the second half to date, the
Company has secured seven renewals compared with four for the first
six months of the year as well as winning two new customers. As a
result, the Board expects to regain EBITDA positivity for Q4 2021
and remains very confident that the Company will both deliver
significant revenue growth and be EBITDA positive for the full year
2022.
The music industry continues to be transformed by the emergence
of new digital platforms and formats, which are redefining how
consumers engage with music and creating new sources of growth.
This is evident across fitness and social media - two markets in
which 7digital has established a position as the go-to provider for
music services. It is also a key driver for the Company's eMusic
Live venture, through which artists can distribute, promote and
monetise their music beyond traditional streaming with
direct-to-fan opportunities such as NFTs, livestreaming and
merchandise . This provides a compelling platform for 7digital to
become the leading provider of artist services globally.
As a result, and with the continued commitment of the Company's
largest shareholders, the Board remains very confident in the
outlook for the business in the medium- to long-term and the
opportunities ahead.
CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE
INCOME
Six months ended 30 June 2021 (unaudited)
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31
June 2021 (restated) Dec 2020
Notes GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2 3,270 3,097 6,513
Cost of sales (1,222) (1,057) (1,881)
Gross profit 2,048 2,040 4,632
Other Income 3 - 134 644
Administrative expenses (3,895) (3,124) (7,415)
Adjusted operating loss 6 (1,320) (808) (1,396)
- Share based payments 19 (359) (88) (99)
- Foreign exchange (62) (54) (179)
- Other adjusting items 4 (106) - (465)
--------------------------------------- ------ ------------ ------------ -----------
Operating loss 5 (1,847) (950) (2,139)
Finance income and costs 8 (62) (54) (136)
------------ ------------ -----------
Loss before income tax (1,909) (1,004) (2,275)
Taxation on continuing operations - 59 1
------------ ------------ -----------
Loss from continuing activities (1,909) (945) (2,274)
Profit from discontinued operations - - 987
-----------
Loss for the year attributable
to owners of the parent company (1,909) (945) (1,287)
============ ============ ===========
Loss per share (pence)
Basic and diluted - loss from
continuing operations 9 (0.07) (0.04) (0.09)
Basic and diluted - loss attributable
to ordinary equity holders 9 (0.07) (0.04) (0.05)
============ ============ ===========
Consolidated Statement of
Comprehensive Income
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31
June 2021 (restated) Dec 2020
Notes GBP'000 GBP'000 GBP'000
Loss for the year (1,909) (945) (1,287)
Items that may be reclassified
subsequently to profit or
loss:
Exchange differences on translation
of foreign operations (17) (83) (149)
------------ -----------
Other comprehensive loss (1,926) (1,028) (1,436)
Total comprehensive loss attributable
to owners of the parent company (1,926) (1,028) (1,436)
============ ============ ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021 (unaudited)
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2021 2020 (restated) 2020
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 10 415 - 287
Property, plant and equipment 11 88 85 97
Right-of-use assets 12 1,026 - 1,184
1,529 85 1,568
---------- ----------------- ---------
Current assets
Trade and other receivables 13 986 1,215 1,347
Contract assets 148 78 86
Cash and cash equivalents 513 183 2,839
1,647 1,476 4,272
---------- ----------------- ---------
Total assets 3,176 1,561 5,840
---------- ----------------- ---------
Current liabilities
Trade and other payables 14 (3,982) (7,792) (5,754)
Loans and borrowings 15 - (333) -
Derivative liability (46) (61) (71)
Contract liabilities (238) (256) (164)
Lease liability 12 (510) - (670)
Provisions for liabilities
and charges 16 (737) (630) (858)
(5,513) (9,072) (7,517)
---------- ----------------- ---------
Net current liabilities (3,866) (7,596) (3,245)
---------- ----------------- ---------
Non-current liabilities
Other payables 14 - (536) -
Loans and borrowings 15 (1,000) - (250)
Contract liabilities (140) - (8)
Lease liability 12 (752) - (660)
Provisions for liabilities
and charges 16 (42) - (109)
(1,934) (536) (1,027)
---------- ----------------- ---------
Total liabilities (7,447) (9,608) (8,544)
---------- ----------------- ---------
Net liabilities (4,271) (8,047) (2,704)
========== ================= =========
Equity
Share capital 17 14,844 14,817 14,844
Share premium account 17,705 12,043 17,705
Other reserves (3,557) (2,901) (3,899)
Retained earnings (33,263) (32,006) (31,354)
Total deficit (4,271) (8,047) (2,704)
========== ================= =========
CONSOLIDATED CASHFLOW STATEMENT
Six months ended 30 June 2021 (unaudited)
Unaudited Unaudited
six months six months Audited
ended ended full year
30 June 30 June to 31
2021 2020 Dec 2020
Notes GBP'000 GBP'000 GBP'000
Loss for the period (1,909) (945) (1,287)
Adjustments for:
Taxation - - (1)
Finance Cost 8 62 20 136
Profit on sale of fixed assets - (378) (378)
Profit on disposal of subsidiary
undertaking - - (987)
Foreign exchange 62 54 179
Amortisation of intangible assets 10 57 2 30
Amortisation of right-of-use asset 12 203 69 291
Depreciation of fixed assets 11 28 21 52
Share based payments 359 88 99
Increase in provisions 16 (188) (138) 199
Decrease in accruals and deferred
income (99) 332 (937)
Decrease in trade and other receivables 299 593 453
Decrease in trade and other payables (1,537) 225 (116)
------------ ------------ -----------
Cash flows used in operating activities (2,663) (57) (2,267)
Taxation - - 1
Interest expense paid (34) (3) (91)
Net cash used in operating activities (2,697) (60) (2,357)
Investing activities
Purchase of property, plant and
equipment, and intangible assets (204) (57) (415)
Proceeds from sale of intangible - - -
and tangible fixed assets
------------ ------------ -----------
Net cash generated/(used) in investing
activities (204) (57) (415)
------------ ------------ -----------
Financing activities
Proceeds from issuance of share
capital (net) - - 5,689
Net proceeds from bank loans 15 750 333 250
Principal paid on lease liabilities 12 (96) (45) (149)
-----------
Net cash generated from financing
activities 654 288 5,790
------------ ------------ -----------
Net decrease in cash and cash equivalents (2,247) 171 3,018
Cash and cash equivalents at beginning
of period 2,839 149 149
Effect of foreign exchange rate
changes (79) (137) (328)
Cash and cash equivalents at end
of period 513 183 2,839
============ ============ ===========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2021 (unaudited)
Share Share Other Retained Total
capital premium reserves earnings
Notes account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2020 14,817 12,043 (2,845) (31,061) (7,046)
Prior year adjustment 1 - - (61) - (61)
Loss for the year - - - (945) (945)
Other comprehensive loss
for the period - - (83) - (83)
Share based payments - - 88 - 88
--------- --------- ---------- ---------- --------
At 30 June 2020 - reported 14,817 12,043 (2,901) (32,006) (8,047)
Prior year adjustment - - - 35 35
Loss for the year - - - (342) (342)
Disposal of subsidiary
undertaking - - (959) 959 -
Other comprehensive loss
for the period - - (66) - (66)
Shares issued (net of
costs) 27 5,662 - - 5,689
Share based payments - - 1 - 1
Share warrants - - 26 - 26
At 31 December 2020 -
reported 14,844 17,705 (3,899) (31,354) (2,704)
Loss for the year - - - (1,909) (1,909)
Other comprehensive loss
for the period - - (17) - (17)
Share based payments - - 359 - 359
At 31 December 2020 14,844 17,705 (3,557) (33,263) (4,271)
========= ========= ========== ========== ========
NOTES TO THE FINANCIAL STATEMENTS
Six months ended 30 June 2021 (unaudited)
1. Presentation of financial information and accounting policies
Basis of preparation
The condensed consolidated financial statements are for the six
months to 30 June 2021.
The information for the six months ended 30 June 2021 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The information for the year ending 31 December
2020 is taken from the Annual Reports and Financial Statements 2020
of 7digital Group plc.
The combined financial information has been prepared in
accordance with 7digital Group plc accounting policies. 7digital
Group plc accounting policies are in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and as issued by the International Accounting Standards
Board, and are set out in the 7digital Group plc Annual Reports and
Financial Statements 2020.
Going concern
The Directors, having made appropriate enquiries, consider it is
appropriate to adopt the going concern basis in preparing the
condensed consolidated interim financial statements for the period
ended 30 June 2021, which presumes that the Group will be able to
meet its obligations as they fall due for the foreseeable future, a
period of not less than twelve months from the date of this
report.
In reaching their going concern conclusion, the Directors have
considered various factors and mitigating actions, including (i)
management detailed cash flow forecasts, that are reviewed by the
Board on a regular basis (ii) Group cash positions as at 30 June
2021 and 29 September 2021 (iii) the advanced Group discussions
over a banking facility, which are expected to conclude shortly;
and (iv) confirmation of financial support from the Group's two
major shareholders to allow the Group to manage its working capital
and to support growth needs as and when they fall due. The
Directors are satisfied that the two major shareholders have
demonstrated their intention and means to provide this funding as
and when this is required. This has been represented to the
Directors in a letter of support, at the time of the publication of
the Group's Annual Report and Financial Statements 2020, from the
two major shareholders in the Group confirming their financial
support for 12 months from the date of signing the annual financial
statements 2020, being from 30 June 2020.
The Directors are also confident that the Group will achieve its
forecast revenue for 2022, and that it will generate a positive
EBITDA for the fourth quarter of 2021 and for the full year of
2022.
Revenue
The Group comprises of mainly three types of revenues
1. Licencing fees (also known as B2B sales)
I. Setup Fees
II. Monthly development and support fees
III. Usage fees
2. Content ("download") revenues (also know as B2C sales)
3. Creative revenues
Each type of revenue is detailed below
Revenue comprises of:
I. Licensing revenues
7digital defines licensing revenues as fees earned both for
access to the Group's platform and for development work on that
platform in order to adapt functions to customer needs. The Board
considers that the provision of Technology Licensing Services
comprises three separately identifiable components:
The description of the licence fees compromise three
categories;
I. Set-up fees : Set up fees which grant initial access to the
platform, allow use of our catalogue and associated metadata and
mark the start of work to define a client's exact requirements and
create the detailed specifications of a service. Recognition of
set-up fees is detailed below.
II. Monthly development and support fees which cover the costs
of developer and customer support time. These are usually fixed and
are paid monthly once a service has been specified in detail; they
are calculated at commercial rates based on the number of developer
or support days required. Recognition of these fees is detailed
below.
III. Usage fees which cover certain variable costs like
bandwidth which can be re-charged to clients with an administrative
margin are recognised at point in time based on usage.
II. Content ("download") revenues
Content revenues are recognised at the value of services
supplied and on delivery of the content. The Group manages several
content stores, and the income is recognised in the month it
relates to. Majority of the revenue converts directly to cash; any
accrued revenue converts to trade receivables within 30 days.
III. Creative revenues
Creative revenues relate to the sale of programmes and other
content. 7digital also undertakes bespoke radio programming for its
customers. As the programmes are being created the associated
revenue is recognised when the programme is delivered and accepted
by the client. These mainly include the production of weekly radio
programmes, as well as the one-off production of episodes.
In case of one-off productions which required the Group to
provide progress reports to its customers and where the Group has
no alternative use of the program produced, the Group recognises
revenue over the period i.e., based on percentage of completion,
for the rest of the regular programs and contents, where the Group
does not own the IP, the Group measures the revenue based on
delivery of the content i.e., at a point in time.
Contracts with multiple performance obligations
Many of the Group's contracts include a variety of performance
obligations, including Licencing revenue (set-up fees, monthly
revenue for using 7digital's API licence platform and usage fees),
however these may not be distinct in nature. Under IFRS 15, the
Group evaluates the segregation of the agreed goods or services
based on whether they are 'distinct', if both the customer benefits
from them either on its own or together with other readily
available resources, and it is 'separately identifiable' within the
contract.
To determine whether to recognise revenue, the Group follows a
5-step process:
- Identifying the contract with customers
- Identifying the performance obligations
- Determining the transaction price
- Allocating the transaction price to the performance obligations
- Recognising revenue when/ as performance obligations are satisfied.
Performance Obligations and timing of revenue recognition
Revenue generated from B2B customer contracts often identify
separate goods/services, with these generally being the access of
the API license platform, and the associated monthly licence
maintenance fees and content usage fees.
The list of obligations as per the contract that are deemed to
be one performance obligation in case of licencing revenue are
(B2B):
- The licenses provide access to the 7D platform
- The development and support fees which cover the costs of developer and customer support time
- Usage fees which cover certain variable costs like bandwidth and content.
A key consideration is whether licencing fees give the customer
the right to use the API Licence as it exists when the licence is
granted, or access to API which will, amongst other considerations,
be significantly updated during the API licence period.
The Group grants the customer a limited, revocable,
non-exclusive and non-transferable licence in the Territory during
the Term, to use the 7digital API and the content to enable the
provision of the Music Service to the End Users via
Application.
Set-up fees represent an obligation under the contract, which is
not a distinct performance obligation, as the customer is not able
to access the platform without them. These are therefore spread
over the period of the contract agreed initially with the
customers.
Monthly licence maintenance fees indicate service contracts that
provide ongoing support over a period of time. Revenue is
recognised over the term of the contract on a straight-line
basis.
In the case of Creative Revenue, the sole performance obligation
is to deliver the content specified as per contract, whether this
be the delivery of regular content throughout the year (e.g., a
radio series), or the production of a longer, one-off episode.
The only obligation for the Group is to deliver the content
production agreed in the contract. Control and risks are passed to
the customer on delivery of the episode produced, news bulletins
etc. The right to the IP varies from project to project. If the
customer suggests a specific programme idea to tender, they will
then own the underlying rights of the recordings and the IPR is
exclusive to customer; 7digital's only performance obligation would
be to produce the content.
In the case of one-off productions for an identifiable customer
contract where 7digital is required to update the client on the
progress of work completed, the Group applies an output method to
determine the stage of completion and amount of revenue to
recognize.
Payment terms vary depending on the specific product or service
purchased. With licence fees, the set-up fees element is invoiced
and paid upfront, while monthly maintenance revenues and usage fees
are normally invoiced on a monthly basis. In the case of download
sales, the cost is paid immediately by the customer upon download
of the music/songs content from the 7digital platform. In the case
of creative revenues, the payment terms are generally 50% on
signing with the balance on delivery. All contracts are subject to
these standard payment terms, to the extent that the parties
involved expressly agree in writing that the conflicting terms of
any agreement shall take precedence.
In the case of fixed-price contracts, the customer pays the
fixed amount based on a monthly schedule. If the services rendered
by the Group exceed the payment, a contract asset (Accrued Income)
is recognised; if the payments exceed the services rendered, a
contract liability (Deferred Revenue) is recognised.
Determine transaction price and allocating to each performance
obligation
The transaction price for licencing fees (set-up fees and
monthly licence fee) is fixed as per contract and is explicitly
noted in the contract. In the case of usage fees, the per gigabyte
fee is determined and agreed in the contract. In the case of
creative revenue, the transaction fees for radio services and
one-off series are determined by taking into account the length of
the production (this may vary for commercials, radio programs, tv
shows, series, etc.). Any variations in transaction price are
agreed and charged additionally depending on the obligations to be
performed. None of the five factors (i.e., variable consideration,
constraining estimates of variable consideration, the existence of
a significant financing component in the contract, non-cash
consideration, and consideration payable to a customer identified)
are particularly relevant to 7digital's customer contracts. The
transaction price included in 7digital's contracts is generally
easily identifiable and is for cash consideration.
Other adjusting items
Other adjusting items are those items the Group considers to be
non-recurring or material in nature that should be brought to the
readers' attention in understanding the Group's financial
statements. Other adjusting items consist of one-off acquisition
costs, costs related to non-recurring legal and statutory events,
restructuring costs and other items which are not expected to
re-occur in future years.
Foreign currency
For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed
in Pounds Sterling, which is the functional currency of the
Company, and the presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items
and on the retranslation of monetary items, are included in profit
and loss for the year.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average monthly rate
of exchange ruling at the date of the transaction, unless exchange
rates fluctuate significantly during that month, in which case the
exchange rates at the date of transactions are used.
Intangible assets
Externally acquired intangible assets are initially recognised
at cost and subsequently amortised on a straight-line basis over
their useful economic lives. Intangible assets are recognised on
business combinations if they are separable from the acquired
entity or give rise to contractual/legal rights. The amounts
ascribed to such intangibles are arrived at by using appropriate
valuation techniques.
Intangible assets (Bespoke Applications) arising from the
internal development phase of projects is recognised if, and only
if, all of the following have been demonstrated:
- The technical feasibility of completing the intangible asset
so that it will be available for use or sale
- The intention to complete the intangible asset and use or sell it
- The ability to use or sell the intangible asset
- How the intangible asset will generate probable future economic benefits
- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
- The ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally generated intangible asset can be
recognised, development expenditure is charged to profit or loss in
the period in which it is incurred.
Internally generated intangible assets are amortised over their
useful economic lives on a straight-line basis, over 3 years.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchased price, cost includes directly
attributable costs and the estimated present value of any future
unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Depreciation is provision on all items of property, plant and
equipment, so as to write off their carrying value over their
expected useful economic lives. It is provided at the following
rates:
Property - 20% per annum straight line
Computer equipment - 33.33% per annum straight line
Fixtures and fittings - 33.33% per annum straight line
Impairment of tangible and other intangible assets
Impairment tests on goodwill and other intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount
(i.e., the higher of value in use and fair value less costs to
sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are
separately identifiable cash flows; its cash generating units
('CGUs'). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.
Impairment charges are included in profit or loss, except to the
extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is
not reversed.
Share-based payments
The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is
measured by use of an appropriate valuation model. The
Black-Scholes option pricing model has been used to value the share
options plans.
Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
- Leases of low value assets; and
- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease.
On initial recognition, the carrying value of the lease
liability also includes:
- amounts expected to be payable under any residual value guarantee;
- the exercise price of any purchase option granted in favour of
the group if it is reasonably certain to assess that option;
and
- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
- lease payments made at or before commencement of the lease;
- initial direct costs incurred; and
- the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease.
Critical accounting judgements and key areas of estimation
uncertainty
In the application of the Group accounting policies, which are
described above, the directors are required to make judgements,
estimates and assumptions about the carrying amount of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period which the estimate is revised if the revisions affect
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Content cost of sales
As stated in the 7digital Group plc Annual Reports and Financial
Statements 2020 , the content cost of sales is based on the usage
reports derived from download sales and which are distributed to
the labels on a monthly basis and publishers on a quarterly basis.
These usage reports assist management in calculating content cost
of sales and content accruals. Management considers the usage
reports to be the most effective method of determining the true
cost of content.
Creative revenue
Management considers the detailed criteria for the recognition
of creative revenue as set out in the Group's accounting policy, in
particular whether the Group determines the appropriate
apportionment of revenue to the correct accounting period and
subsequent amount accrued or deferred at the year end.
Impairment of accounts receivables
The management and directors have made certain estimates and
judgements in the application of IFRS 9 when measuring expected
credit losses and the assessment of expected credit loss provisions
required for accounts receivable balances.
Capitalisation of internally developed software
Distinguishing the research and development phases of a new
customised software project and determining whether the recognition
requirements for the capitalisation of development costs are met,
requires judgement. After capitalisation, management monitors
whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be
impaired.
Correction to prior period
Derivative Liability and Other Reserves
The directors identified the mis-analysis of GBP61k that was
included in equity as shares to be issued (included in other
reserves) but, given the non fixed element, should have been
disclosed as derivative liabilty.
Research and Development tax credits
In prior years the research and development tax credit, claimed
through SME scheme, was deemed material and for consistency
remained in other income. The Directors have made the decision to
reanalyse the research and development tax credit of GBP59k at 30
June 2020 from other income to taxation as the Directors no longer
deemed it a material balance.
2. Revenue
2.1 Business segments
For management purposes, the Group is organised into three
continuing operating divisions - Licensing, Content and Creative.
The principal activity of Licensing is the creation of software
solutions for managing and delivering digital content. The
principal activity of the Content division is the sales of digital
music direct to consumers. The principal activity of Creative is
the production of audio and video programming for broadcasters.
These divisions comprise the Group's operating segments for the
purposes of reporting to the Group's chief operating decision
maker, the Chief Executive Officer.
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31 Dec
June 2021 (restated) 2020
GBP'000 GBP'000 GBP'000
Revenue
Licensing 1,713 1,626 3,355
Content 1,033 1,063 2,085
Creative 524 408 1,073
Total 3,270 3,097 6,513
Gross profit
Licensing 1,580 1,577 3,151
Content 156 201 828
Creative 312 262 653
Total 2,048 2,040 4,632
Operating profit attributable
to revenue streams
Licensing 1,503 1,699 3,228
Content 151 193 812
Creative 309 259 645
Total 1,963 2,151 4,685
Other income (unattributable) - - 509
Amortisation of right to use
of asset (203) (69) (291)
Corporate expenses (3,607) (3,032) (7,042)
Financing income & costs (62) (54) (136)
Taxation - 59 1
Discontinued operations - - 987
------------ ------------ -----------
Loss for the year (1,909) (945) (1,287)
============ ============ ===========
2.2 Geographical information
Revenue
------------ ------------ -----------
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Continuing operations
United Kingdom 922 1,049 1,970
United States of America 1,026 1,008 2,196
Europe 1,011 805 1,647
Rest of World 311 235 700
3,270 3,097 6,513
============ ============ ===========
2.3 On-going operations
Unaudited
Unaudited six months
six months ended
ended 30 June
30 June 2020
2021 (restated) Var Var
GBP'000 GBP'000 GBP'000 %
Revenue
Licensing 1,713 1,626 87 5%
Content 1,033 1,063 (30) -3%
Creative 524 408 116 28%
------------ ------------ -------- ------
Total 3,270 3,097 173 6%
Gross profit
Licensing 1,580 1,577 3 0%
Content 156 201 (45) -22%
Creative 312 262 50 19%
------------ ------------ -------- ------
Total 2,048 2,040 8 0%
Gross profit %
Licensing 92% 97% -5%
Content 15% 19% -4%
Creative 60% 64% -4%
------------ ------------ -------- ------
Total 63% 66% -3%
Other Income - 134 (134) -100%
Corporate expenses (3,080) (3,268) 188 -6%
------------ ------------
Adjusted EBITDA (1,032) (1,094) 62 -6%
============ ============ ======== ======
3. Other income
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31 Dec
June 2021 (restated) 2020
GBP'000 GBP'000 GBP'000
Settlement income relating to
customers contracts - 134 135
Profit on sale of right-of-use
asset - - 378
Furlough monies received from
HMRC - - 131
-------------- ------------ -----------
- 134 644
============== ============ ===========
4. Other adjusting items
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Exceptional legal fees (43) - (297)
Corporate restructuring provision (63) - (145)
Provisions relating to closure
of Denmark business - - 262
Legal provision - - (285)
(106) - (465)
============ ============ ===========
5. Operating loss
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Net foreign exchange loss 62 54 179
Amortisation of intangible assets 57 2 30
Amortisation of right to use
asset 203 69 291
Depreciation of property, plant
& equipment 28 21 52
Profit on sale of right-of-use
asset - (378) (378)
Share-based payment expense (see
note 19) 359 88 99
------------ ------------ -----------
6. Reconciliation of non-IFRS financial KPIs
This note reconciles the adjusted operating loss to the adjusted
EBITDA loss. This note reconciles these key performance indicators
to individual lines in the financial statements. In the Directors'
view it is important to consider the underlying performance of the
business during the year. Therefore, the directors have used
certain alternative performance measures (AMPs) which are not IFRS
compliant metrics. The main effect has been that the APMs exclude
other adjusting items, amortisation, foreign exchange, depreciation
and share based payments to reflect the underlying cash utilisation
for the performance of the business. The APMs are consistent with
those established within the prior year annual report and their
derivation is set out in the table below.
Reconciliation of adjusted operating
loss and adjusted EBITDA loss:
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31 Dec
June 2021 (restated) 2020
GBP'000 GBP'000 GBP'000
Statutory operating loss (1,847) (950) (2,139)
Other adjusting items 106 - 465
Foreign exchange 62 54 179
Share-based payment expense (see
note 19) 359 88 99
------------ ------------ -----------
Adjusted operating loss - per
statutory (1,320) (808) (1,396)
Profit on sale of right-of-use
asset - (378) (378)
Depreciation and amortisation 288 92 373
Adjusted EBITDA loss (1,032) (1,094) (1,401)
============ ============ ===========
Reconciliation of administrative
expenses and adjusted administrative
expenses:
Unaudited
Unaudited six months Audited
six months ended 30 full year
ended 30 June 2020 to 31 Dec
June 2021 (restated) 2020
GBP'000 GBP'000 GBP'000
Administrative expenses (3,895) (3,124) (7,415)
Other adjusting items 106 - 465
Foreign exchange 62 54 179
Share-based payment expense (see
note 19) 359 88 99
Profit on sale of right-of-use
asset - (378) (378)
Depreciation and amortisation 288 92 373
Adjusted administrative expenses (3,080) (3,268) (6,677)
============ ============ ===========
7. Staff costs
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
No. No. No.
Number of production, R&D, and
sales staff 43 51 48
Number of management and administrative
staff 14 16 10
57 67 58
============ ============ ===========
GBP'000 GBP'000 GBP'000
Wages and salaries 1,683 1,731 3673
Redundancy payments 63 - 132
Social security costs 197 206 417
Other pension costs 55 57 119
Share-based payments 359 88 99
2,357 2,082 4,440
============ ============ ===========
8. Finance income and charges
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Shareholders' interest payable - (25) -
Interest expenses on leased
liability (28) (17) (45)
Other charges similar to interest (34) (12) (91)
Finance costs (62) (54) (136)
============ ============ ===========
9. Earnings per share
Unaudited Unaudited Audited
six months six months full year
ended 30 ended 30 to 31 Dec
June 2021 June 2020 2020
Basic and Diluted EPS
Loss attributable to shareholders
- continuing operations: (GBP'000) (1,909) (945) (2,274)
Loss attributable to shareholders
- discontinued operations: (GBP'000) - - 987
Weighted average number of shares
(Nos) 2,722,085,961 2,455,419,294 2,542,122,391
Per share amount - continuing
operations (pence) (0.07) (0.04) (0.09)
Per share amount - loss attributable
to ordinary equity holders (pence) (0.07) (0.04) (0.05)
-------------- -------------- --------------
10. Intangible assets
Bespoke
applications
GBP'000
Cost
At 1 January 2020 3,205
Additions -
At 30 June 2020 3,205
Additions 317
At 31 December 2020 3,522
Additions 185
--------------
At 30 June 2021 3,707
==============
Amortisation
At 1 January 2020 3,205
Charge for the year -
At 30 June 2020 3,205
Charge for the year 30
At 31 December 2020 3,235
Charge for the year 57
--------------
At 30 June 2021 3,292
==============
Net book value
At 30 June 2021 415
==============
At 30 June 2020 -
==============
At 31 December 2020 287
==============
Additions relate to internally developed software relating to
the 7digital platform. Amortisation charges are included within the
administrative expenses within the Income Statement. The useful
life of each group of intangible assets varies according to the
underlying length of benefit expected to be received.
11. Tangible assets
Computer
equipment
& capitalised
software
GBP'000
Cost
At 1 January 2020 1,534
Additions 57
At 30 June 2020 1,591
Additions 41
Disposals (1,396)
At 31 December 2020 236
Additions 19
---------------
At 30 June 2021 255
===============
Amortisation
At 1 January 2020 1,483
Charge for the year 23
At 30 June 2020 1,506
Charge for the year 29
Disposals (1,396)
At 31 December 2020 139
Charge for the year 28
---------------
At 30 June 2021 167
===============
Net book value
At 30 June 2021 88
===============
At 30 June 2020 85
===============
At 31 December 2020 97
===============
12. Leases
The Group leased a property that originally ran until April
2023. In February 2020, on agreement with the landlord, the lease
was terminated, and the Group vacated the premises. At 29 February
2020, a profit on sale of GBP378k was recorded in relation to this
lease, being the difference between the net book value and lease
liability on that date.
On 1 July 2020, the Group entered into a new lease that runs
until August 2023. In 2021, this lease has subsequently been
renegotiated to end in November 2023 with a change in the rent
payable profile.
Right-of-use assets Land and
buildings
GBP'000
At 1 January 2020 1,321
Disposal (1,252)
Amortisation (69)
-----------
At 30 June 2020 -
Addition 1,406
Amortisation (222)
-----------
At 31 December 2020 1,184
Addition 44
Amortisation (202)
-----------
At 30 June 2021 1,026
===========
Lease liability Land and
buildings
GBP'000
At 1 January 2020 1,658
Disposal (1,630)
Interest expense 17
Lease payments (45)
-----------
At 30 June 2020 -
Addition 1,406
Interest expense 28
Lease payments (104)
-----------
At 31 December 2020 1,330
Interest expense 28
Lease payments (96)
-----------
At 30 June 2021 1,262
===========
Analysed:
Current 510
Non-current 752
-----------
Total 1,262
===========
13. Trade and other receivables
Unaudited
Unaudited 30 June Audited
30 June 2020 31 Dec
2021 (restated) 2020
GBP'000 GBP'000 GBP'000
Trade receivable for the sale of goods 1,569 1,796 1,890
Less: Provision for impairment of trade
receivables (972) (914) (897)
Net trade receivables 597 882 993
Other debtors 283 192 163
R&D credits receivable - 138 79
Total financial assets at amortised
cost (excluding cash & cash equivalents) 880 1,212 1,235
Prepayments 106 3 112
Total trade and other receivables 986 1,215 1,347
Less: non-current portion - other debtors (80) (15) (80)
---------- ------------ --------
Current portion 906 1,200 1,267
========== ============ ========
14. Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2021 2020 (restated) 2020
GBP'000 GBP'000 GBP'000
Current Liabilities
Trade payables 1,102 2,918 2,499
Other taxes and social security 1,324 1,250 1,369
Other payables 20 616 45
Accrued costs 1,536 3,008 1,841
---------- ----------------- --------
3,982 7,792 5,754
========== ================= ========
Non-Current Liabilities
Other payables - 536 -
---------- ----------------- --------
- 536 -
========== ================= ========
15. Loans and borrowings
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2021 2020 (restated) 2020
GBP'000 GBP'000 GBP'000
Bank loans repayable within one
year - 333 -
========== ================= ========
Bank loans repayable over one
year 1,000 - 250
========== ================= ========
On 28 September 2020, the Group secured a GBP1m revolving loan
facility with Investec for a period of 36 months guaranteed by two
of the Directors. The arrangement allows a maximum of 4 draw downs
in any 12 month period of no less than GBP250k per draw down. An
arrangement fee of GBP30k was agreed, of which GBP4k was payable at
the time of the first draw down and GBP26k payable in 1,382,488
warrants. Interest , payable quarterly, is calculated at 6% above
Investec bank rate on the drawn portion of the facilty and 2% on
the undrawn portion.
On 30 June 2021, all of the GBP1m facilty was drawn down. GBP11k
of interest relating to the quarter ended June 2021 is included in
accrued costs.
16. Provisions
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2021 2020 (restated) 2020
GBP'000 GBP'000 GBP'000
Current
Provision for closure of business 180 288 245
Legal provision 372 228 513
Other provisions 227 114 209
---------- ----------------- --------
779 630 967
========== ================= ========
Of which is: current 737 630 858
========== ================= ========
Of which is: non-current 42 - 109
========== ================= ========
During the period to 30 June 2021, GBP65k was paid relating to
the closure of the French entity, GBP141k of the legal provision
was utilised by the processing of associated legal fees and other
provisions increased due to the share options granted in May
2021.
17. Share capital
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2021 2020 (restated) 2020
No. of No. of No. of
shares shares shares
Allotted, called up and fully
paid:
Ordinary shares of 0.01p each 2,722,085,961 2,455,419,294 2,722,085,961
Deferred shares of 0.99p each 419,622,489 419,622,489 419,622,489
Deferred shares of GBP0.09 each 115,751,517 115,751,517 115,751,517
============== ================= ==============
GBP'000 GBP'000 GBP'000
Allotted, called up and fully
paid 14,844 14,817 14,844
============== ================= ==============
18. Related party transactions
During the six month period, the Group invoiced and recognised
GBP56k (31 December 2019: $183k) of revenue to eMusic (a subsidiary
of TriPlay Inc.), a group which Tamir Koch is a director. At 30
June 2021, the Group was owed GBP132k (31 December 2019: GBP327k)
by TriPlay Inc.
During the six month period, the Group paid GBP8.2k (31 December
2019: GBP8.2k) to MIDiA Research for music market research
services, a company of which Mark Foster is a director. At 30 June
2021, the Group owed GBPnil (31 December 2020: GBPnil).
During the period, the Group paid fees of GBP78k (31 December
2019: GBP189k) to MJ Advisory which is Michael Juskiewicz's
personal service company based in the US.
Transactions between the Parent Company and its subsidiaries,
which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
19. Share-based payments
On 27 May 2021, the Group granted 65,477,778 share options to
all staff which were valued at GBP818k. The fair value of the share
options has been calculated using the Black-Scholes model at the
grant date. The key inputs into the Black-Scholes model are
detailed below:
2021 Options
Share price at date
of grant 1.13p
Exercise price 0.00p
Volatility 100%
Option life 10 yrs.
Risk-free interest rate 0.5%
As at June 2021, GBP330k of the GBP359k shared based payment
cost related to the above options granted in May 2021.
20. Post balance sheet event
There are no post balance sheet events.
21. Contingent liabilities
The Group does not have any contingent liabilities.
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END
IR SEDEFUEFSEEU
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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