TIDMNAPS

RNS Number : 4382N

Napster Group PLC

30 September 2021

The information contained within this announcement is deemed by the Company to constitute

inside   information 

stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via

the Regulatory Information Service, this inside information is now considered to be in the public domain.

For Immediate Release 30 September 2021

Napster Group PLC (formerly Melody VR Group PLC)

('NAPS' or the 'Company')

Half-yearly Results

Napster Group PLC (AIM: NAPS), a leading music company and operator of the MelodyVR and Napster platforms , is pleased to announce its Half-yearly Results for the period 29 December 2020 to 30 June 2021.

Financial Highlights

   --       Revenues of GBP32.9m for the half year, up from GBP0.2m on H1 2020; 
   --       Adjusted Operating Loss of GBP8.1m (H1 2020 Loss GBP9.4m); 
   --       Annualised integration savings of $5.7m secured during H1 2021; 
   --       Monthly global streams increased by 18% on H1 2020; 

-- On 8 February 2021, the Company secured GBP6.48m investment from Nice & Green S.A, a Swiss investment firm and a further GBP1.6m via open offer on the PrimaryBid.com platform. In April 2021, Nice and Green's investment increased to GBP8.0m;

Commercial Highlights

-- On 2 February 2021, the Company announced the extension of its platform services agreement with SONOS to 14 new territories;

-- On 5 February 2021, the Company launched its exclusive 5G music partnership with Singtel, Asia's leading communications technology company;

   --       On 8 March 2021, the Company changed its name to Napster Group PLC; 

-- On 13 March 2021, the Company appointed Emmy Lovell, ex Executive President of WEA Europe as Chief Strategy Officer;

-- On 14 April 2021, the Company entered in to an exclusive 12-month partnership with NOS, one of Portugal's largest mobile operators;

-- On 10 June 2021, the Company announced the expansion of its partnership with SONOS Radio HD into five new territories;

- Ends -

Napster Group PLC

Anthony Matchett , CEO email@napster.group

finnCap Limited: Nominated Adviser and Broker

Corporate Finance: Marc Milmo, James Thompson, Milesh Hindocha Tel:44 (0) 20 7614 5900

ECM: Tim Redfern, Sunila de Silva

Equitory (Investor Relations) napster@equitory.com

Clara Melia, Geoff Callow

Chief Executive's Statement

I am pleased to report our results for the period 29 December 2020 to 30 June 2021 (the "Period") which for the first time reflect the activities of the enlarged group, incorporating the activities of the Napster business which was acquired on 28 December 2020.

Our vision for the enlarged group is to create the music platform of the future, serving music fans all over the world with the broadest range of music content, available in multiple formats and across multiple connected devices. Our ability to offer high-definition music streaming, curated radio and playlisting, short form video series, long-form video such as documentaries and films, as well as exclusive immersive audio-visual experiences and live events will provide for a content focused acquisition strategy with an owned and operated proprietary technology platform enabling a new era in music content consumption.

The development of our new platform has been one of the key areas of focus for the Company since the acquisition of the Napster business. This focus is well illustrated by the fact that as we move in to Q4, nearly 65% of our staff are involved in the development of our new platform with its enhanced offering, and we anticipate this resource to continue to expand until launch in early 2022. The funding initiatives secured at the start of the year have allowed us to further strengthen our balance sheet and supplement our development efforts. Both Davis Capital and Nice & Green, two material sources of finance and two of our most significant shareholders have shown invaluable support and belief in our vision for the future of music.

During the period we have also made some key hires, notable amongst these being Emmy Lovell, a seasoned music industry executive leader who joins us from Warner Music Group as Chief Strategy Officer, having developed digital promotions for artists including Kylie Minogue and The Chemical Brothers, as well as leading campaigns for the major artists including Gorillaz , Deadmau5, Danger Mouse and Tinie Tempah. In addition, Mark Kortekaas, a veteran of more than 30 years in digital media having formerly served as CTO of Univision and prior to that General Manager for the BBC's Online Technology Group joins us as Chief Technology Officer. Mark leads the technical creation of our new service, which will provide us with the ability to monetise our extensive content via multiple tiered subscription packages, live ticketed events and, in time, traditional merchandising sales. We believe the combination of our platform technology, unique immersive content, curation and monetisation will provide for unrivalled appeal and herald a new era of growth.

We have continued to refine our launch and content strategy with a significant program of market research and testing which underpin our assumptions and aspirations for 2022 and beyond. As we approach Q4, we have now completed the rebranding of our business which features throughout the user journey within our new music platform. In preparation for launch we have been able to share our vision of the future with many of our strategic partners who for the first time have been able to see visuals and "mockups" of the new combined App in advance of our beta launch. We expect the App to be available for preview by our partners next month.

The 5G roll out across the globe provides the opportunity for mobile operators to showcase their high-speed technology and for us to work with key strategic partners that have significant consumer followings. To date we have engaged with more than 20 mobile operators across 5 continents, as we seek to lay solid foundations for the Company so as to maximise potential consumer engagement at the time of our forthcoming launch. These partnerships will accelerate awareness and provide a catalyst for consumer growth.

As a business with annual revenues approaching $100m and a loyal subscriber base spread across 33 territories, the new music service that we are developing seeks to attract new users whilst preserving the existing subscriber base. Over the course of the first half of the current financial year, we have seen our monthly global streams increase by 18% per user and with an average customer lifetime exceeding 5 years, the preservation of our existing user base is important to us.

Despite this progress, our shareholders have experienced erosion in the value of their holding. We are committed to delivering long term shareholder value and to securing a valuation more appropriate to the scale of our operations, our revenues and the opportunity that stands before us. Our major stakeholders which include rightsholders, investors, artists, consumers and a growing employee base are now predominantly concentrated in the US. As a largely US centric business, we now believe that the interests of our shareholders would be better served by securing a listing in the US and accessing a valuation more aligned to the metrics which have been attributed to some of our music competitors and peers. We are therefore in the process of exploring the possible options available to the Board to deliver a listing in the US. Shareholders will be kept informed of any developments in this regard.

Principal Risks and Uncertainties

The success of our business is dependent upon the launch of our new music platform and its appeal to both consumers and partners throughout the various territories in which we operate. Our new platform will provide access to a broad range of music content including our immersive VR and 2D 360 content library and access to live ticketed events. This aspect will differentiate our service from all other music streaming services and the resumption of mass attended events and artist performances is essential if we are to generate new and exciting content for our platform. For the optimum user experience access to the full suite of platform content will require an uninterrupted high-speed internet connection through which to upload our content. For this we are dependent on the continued roll out of by the mobile operators of 5G technology, where increased bandwidth will facilitate heightened engagement for the billions of smartphone users on the move. Our proven ability to monetise our live and immersive content as demonstrated at the end of last year with Liam Gallagher in combination with our core streaming platform will provide for a peerless service to excite both music fans and shareholders alike.

Results

The results for the Group reflect the performance of the enlarged Napster Group for the period 29 December 2020 to 30 June 2021, and as such incorporate the consolidated activities of the Napster business for the first time.

During the Period the Group reported revenues of GBP32.9m, increasing from GBP0.2m in the period to 30 June 2020. After cost of sales comprising payments to rights holders and content capture and creation costs, the Group reported a gross profit of GBP8.3m (2020 : loss of GBP(1.1)m).

Adjusted Operating Loss before non-recurring and non-cash items totaled GBP(8.1)m compared with the previous year's first half result of GBP(9.4m).

Cost control is a key operational focus particularly during this pre-launch period when development resourcing is at its height. Integration of all business functions is now complete with the integration process delivering annualized saving of approximately $5.7m, primarily from a reduction in our work force in areas where functions overlapped. An efficient process of cash collection has been key in managing our working capital requirements and we are pleased to report a debtor day figure of 52 days (2020 : 66 days)

Cash on hand at the end of June 2021 totaled GBP9.7m (2020 : GBP2.6m). On 20 December 2020, the Company announced that it had entered into a US$25 million secured loan facility arrangement with Davis Capital Partners LLC an investment company and significant shareholder owned by Lanse Davis, one of the Company's non-executive Directors. At the half year US$15 million of the loan had been drawn down.

In addition, on February 2021, the Company entered in to an GBP8.0m convertible loan note facility with Nice & Green S.A a Swiss Investment firm, all of which had been advanced by the end of the half year.

At 30 June 2021, the Group's net assets totaled GBP18.6m (2020 : GBP12.2.m).

Outlook

With the technical development of our music platform at an advanced stage and discussions with key strategic partners progressing to a stage of commercial substance, we are confident that our technology will provide us with the ability to scale and that the launch of our new music service will set new standards for content and the way in which it is delivered. As set out above, we are committed to delivering shareholder value and believe that securing a US listing will enable the Group to secure an appropriate valuation that is consistent with our industry peers. With new 5G mobile networks providing the conduit for content delivery, we will be able to provide an unrivalled mobile experience for music fans around the world. We have a committed and capable leadership team supported by staff drawn from all corners of the music and digital industry. I would like to thank all of our team for their commitment, energy and vision and I look forward to the second half of the year and the planned launch of our new platform with great anticipation.

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR NAPSTER GROUP PLC

for the period 29 December 2020 to 30 June 2021

 
                            Notes        Unaudited     Unaudited        Audited 
                                       29 December    six months        year to 
                                           2020 to            to    28 December 
                                      30 June 2021       30 June           2020 
                                                            2020 
                                          GBP            GBP           GBP 
 Revenue                                32,907,681       189,932        987,726 
 Cost of Sales                        (24,562,085)   (1,283,116)    (5,562,891) 
                                    --------------  ------------  ------------- 
 Gross Profit/(Loss)                     8,345,596   (1,093,184)    (4,575,165) 
 Administrative expenses              (22,127,504)   (9,391,361)   (21,451,129) 
                                    --------------  ------------  ------------- 
 
 
 OPERATING LOSS                          (13,781,908)   (10,484,545)   (26,026,294) 
--------------------------------------  -------------  -------------  ------------- 
 Operating loss before non-recurring 
  and non-cash items                      (8,116,668)    (9,353,223)   (23,618,216) 
 Transaction fees                         (1,285,000)              -              - 
 Depreciation, Amortisation and 
  Impairment                              (3,656,641)    (1,002,638)    (2,272,386) 
 Gain on disposal of non-current                5,369              -              - 
  assets 
 Share based payments                       (728,968)      (128,684)      (135,622) 
                                        -------------  -------------  ------------- 
 OPERATING LOSS                          (13,781,908)   (10,484,545)   (26,026,294) 
--------------------------------------  -------------  -------------  ------------- 
 
 
 Finance income                                  725,984         21,204         29,597 
 Finance costs                               (1,102,520)       (15,726)       (67,990) 
 Foreign exchange loss                       (1,326,578)      (262,333)      (749,808) 
                                           -------------  -------------  ------------- 
 LOSS FOR THE PERIOD BEFORE TAXATION        (15,485,022)   (10,741,400)   (26,814,495) 
 Taxation                                        805,399              -      4,377,298 
 
 NET LOSS AND TOTAL COMPREHENSIVE 
  INCOME FOR THE PERIOD                     (14,679,623)   (10,741,400)   (22,437,197) 
                                           =============  =============  ============= 
 Attributable to: 
  Owners of the Company                     (14,679,623)   (10,741,400)   (22,437,197) 
 
 
 Loss per share 
 Basic and Diluted from Continuing 
  Operations                            3        (0.56)p        (0.68)p         (1.3p) 
 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR NAPSTER GROUP PLC

for the period 29 December 2020 to 30 June 2021 (unaudited)

 
                       Share        Share      Merger      Share       Retained       Reverse      Non-Controlling    Currency     Total Equity 
                      capital      premium     Relief     Option        Losses        Takeover        Interest       Translation 
                                               Reserve    Reserve                     Reserve                          Reserve 
                        GBP          GBP         GBP        GBP          GBP            GBP              GBP             GBP           GBP 
 
 Balance at 1 July 
  2020               17,806,119   47,599,443   486,611   2,546,427   (45,983,990)   (10,002,543)          (44,990)     (169,123)     12,237,954 
 
 Share issue          3,243,085    7,622,259         -           -              -              -                 -             -     10,865,344 
 Grant of share 
  options/warrants      177,505       30,975         -       6,936              -              -                 -             -        215,416 
 Loss for the year            -            -         -           -   (11,695,797)              -                 -             -   (11,695,797) 
 Other 
 comprehensive 
 income: 
 Currency 
  transaction 
  reserve                     -            -         -           -              -              -                 -       447,155        447,155 
 
 Balance at 28 
  December 2020      21,226,709   55,252,677   486,611   2,553,363   (57,679,787)   (10,002,543)          (44,990)       278,032     12,070,072 
                    -----------  -----------  --------  ----------  -------------  -------------  ----------------  ------------  ------------- 
 
 Share issue          6,990,995   12,131,399         -           -              -              -                 -             -     19,122,394 
 Grant of share 
  options/warrants            -            -         -     728,968              -              -                 -             -        728,968 
 Loss for the year            -            -         -           -   (14,679,623)              -                 -             -   (14,679,623) 
 Other 
 comprehensive 
 income: 
 Currency 
  transaction 
  reserve                     -            -         -           -              -              -                 -     1,335,747      1,335,747 
 Balance at 30 
  June 2021          28,217,704   67,384,076   486,611   3,282,331   (72,359,410)   (10,002,543)          (44,990)     1,613,779     18,577,558 
                    ===========  ===========  ========  ==========  =============  =============  ================  ============  ============= 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSISITON FOR NAPSTER GROUP PLC

as at 30 June 2021

 
                              Notes            Unaudited      Unaudited        Audited 
                                                   As at          As at          As at 
                                            30 June 2021        30 June    28 December 
                                                                   2020           2020 
                                                GBP            GBP            GBP 
 ASSETS 
 NON CURRENT ASSETS 
 Property, plant 
  and equipment                        4       1,743,577      1,082,766      1,019,662 
 Right of Use Assets                   5       1,623,203        620,369      1,498,740 
 Financial Assets                                      -        258,107        243,809 
 Goodwill                              6      13,049,140              -        603,476 
 Intangible assets                     6      34,404,932      3,800,128        811,737 
                                          --------------  -------------  ------------- 
 TOTAL NON-CURRENT 
  ASSETS                                      50,820,852      5,761,371      4,177,424 
                                          --------------  -------------  ------------- 
 
 CURRENT ASSETS 
 Inventories                                           -        368,025              - 
 Trade and other 
  receivables                                 18,086,900      5,101,554     16,359,041 
 Cash and cash equivalents                     9,699,987      5,320,925      2,622,526 
                                          --------------  -------------  ------------- 
 TOTAL CURRENT ASSETS                         27,786,887     10,790,504     18,157,991 
                                          --------------  -------------  ------------- 
 
 TOTAL AS890SETS                              78,607,739     16,551,874     23,158,991 
                                          ==============  =============  ============= 
 
 CURRENT LIABILITIES 
 Trade and other 
  payables                                  (42,967,207)    (3,682,997)    (5,156,790) 
 Borrowings                            8    (15,221,986)              -    (4,317,451) 
 Lease liabilities                             (712,650)      (368,928)      (644,018) 
                                          --------------  -------------  ------------- 
 TOTAL CURRENT LIABILITIES                  (58,901,843)    (4,051,925)   (10,118,259) 
 
 NON-CURRENT LIABILIITES 
 Lease liabilities                           (1,128,338)      (261,995)      (970,660) 
 
 NET ASSETS                                   18,557,558     12,237,954     12,070,072 
                                          ==============  =============  ============= 
 
 EQUITY 
 Share capital                         9      28,217,704     17,806,119     21,226,709 
 Share Premium Reserve                        67,384,076     47,599,443     55,252,677 
 Retained Losses                            (72,359,410)   (45,983,990)   (57,679,787) 
 Share Option Reserve                          3,282,331      2,546,427      2,553,363 
 Merger Relief Reserve                           486,611        486,611        486,611 
 Non-controlling 
  Interests                                     (44,990)       (44,990)       (44,990) 
 Currency Translation 
  Reserve                                      1,613,779      (169,123)        278,032 
 Reverse Takeover 
  Reserve                                   (10,002,543)   (10,002,543)   (10,002,543) 
 
 TOTAL EQUITY                                 18,557,558     12,237,954     12,070,072 
                                          ==============  =============  ============= 
 

CONSOLIDATED CASH FLOW STATEMENT FOR NAPSTER GROUP PLC

for the period 29 December 2020 to 30 June 2021

 
                                            Unaudited      Unaudited        Audited 
                                          29 December     six months        Year to 
                                              2020 to             to    28 December 
                                         30 June 2021        30 June           2020 
                                                                2020 
                                             GBP            GBP            GBP 
 Loss for the period before 
  taxation                               (15,485,022)   (10,741,400)   (26,814,495) 
 
 Adjustments for: 
 R&D taxation credits                               -              -      1,747,190 
 Depreciation of tangible assets              388,749        359,411        889,549 
 Amortisation of intangible 
  assets                                    2,783,968        522,036        996,046 
 Depreciation of right-of-use 
  assets                                      483,926        121,192        386,791 
 (Gain)/loss on disposal of 
  intangible assets                           (5,369)              -        356,905 
 Share based payment expense                  728,968        128,684        135,622 
 Other non-cash movements                   1,469,873              -              - 
 Decrease in inventories                            -          3,851        371,877 
 Decrease/(increase) in trade 
  and other receivables                    11,541,483    (1,718,735)   (10,346,114) 
 (Decrease)/increase in trade 
  and other payables                     (15,223,439)      2,539,686      4,013,479 
                                       --------------  -------------  ------------- 
 Net cash outflow from operating 
  activities                             (13,316,863)    (8,785,275)   (28,263,150) 
                                       --------------  -------------  ------------- 
 
 Investing activities: 
 Purchase of property, plant 
  and equipment                             (949,551)      (628,449)    (1,216,595) 
 Proceeds on sale of property,                103,144              -              - 
  plant and equipment 
 Investment in intangible assets                    -    (1,675,114)              - 
 Acquisition of a subsidiary              (1,938,867)              -              - 
  net of cash acquired 
 
 Net cash generated used in 
  investing activities                    (2,785,274)    (2,303,563)    (1,216,595) 
                                       --------------  -------------  ------------- 
 
 Financing activities: 
 Proceeds from share issues 
  net costs                                 6,682,394      9,795,964     20,794,827 
 Proceeds from the exercise 
  of warrants                                       -        133,519        208,480 
 Repayment of lease liabilities             (365,762)              -              - 
 Prepayment of borrowings                 (3,781,330)              -              - 
 Proceeds from borrowings                  18,732,183              -      4,317,451 
                                       --------------  -------------  ------------- 
 Net cash generated from financing 
  activities                               21,267,485      9,929,483     25,320,758 
                                       --------------  -------------  ------------- 
 
 Increase/(decrease) in cash 
  and cash equivalents                      5,165,348    (1,159,355)    (4,158,987) 
 Effect of changes in foreign 
  exchange                                  1,912,113      (315,061)       (13,828) 
 
 Cash and cash equivalents brought 
  forward                                   2,622,526      6,795,341      6,795,341 
 
 Cash and cash equivalents carried 
  forward                                   9,699,987      5,320,295      2,622,526 
                                       ==============  =============  ============= 
 

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR NAPSTER GROUP PLC

for the period 29 December 2020 to 30 June 2021

   1.      Basis of preparation of interim financial information 

The consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed by

the   European   Union ("IFRS") and expected to be effective for the year ended 31 December 2021. 

The consolidated interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 28 December 2020, prepared in accordance with IFRS, have been filed with the Registrar of Companies. The Auditors' Report on these accounts was unqualified, did not include any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not contain any statements under section 498 of the Companies Act 2006.

The consolidated interim financial statements are for the period 29 December 2020 to 30 June 2021.

The consolidated interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the group's annual financial statements for the year ended 28 December 2020, which were prepared in accordance with IFRS.

Going Concern

The executive management has prepared detailed cash flow forecasts for the Board . The Directors believe that the launch of the Group's new music platform will provide a catalyst for both subscription and revenue growth, but that over the course of the short to medium term prior to launch, it will place reliance on a number of its strategic stakeholders including rights holders and its principal lender Davis Capital to ensure that there is sufficient liquidity to meet its liabilities as and when they fall due.

Whilst such support cannot be guaranteed, the Directors are confident that the discussions to date provide sufficient confidence in securing the continued support from Davis Capital and ultimately securing its listing the US in combination with a further equity fundraising.

In the event of a delay to the timetable, the Directors are confident that cost savings could be implemented, or alternative financing sought to accommodate such a delay.

If ultimately the Directors are not able to secure the requisite support from its key stakeholders and fail to secure additional equity funding doubt would be cast as to the Group's ability to continue as a going concern. However, having regard to their assessment of the potential sources of finance and the existing working capital position, the Directors are of the opinion that the Group has the ability to secure the resources required to enable it to undertake its planned activities for the next twelve months.

Revenue Recognition

Revenue is recognised to the extent that it is probable that economic benefit will flow to the group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received in the ordinary course of the group's activities, excluding discounts, rebates, value added tax and other sales taxes.

   (a)   Content sales 

Content revenue is recognised in the period the content is purchased from the platform either directly or via third party resellers. Revenue from content sales are recognised gross of costs paid to third party license and right holders in line with contracts, with the corresponding cost recognised as cost of sales.

   (b)   Content license revenue 

Revenue from license contracts for the use of artist/label content is recognised over the period to which the contract relates.

   (c)   Interest income 

Interest income is recognised using the effective interest method.

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR NAPSTER GROUP PLC

for the period 29 December 2020 to 30 June 2021

Intangible assets - Development and content creation costs

The group recognises both internal development costs as well as VR content creation costs as intangible assets only when the following criteria are met: the technical feasibility of completing the intangible asset exists, there is an intent to complete and an ability to use or sell the intangible asset, the intangible asset will generate probable future economic benefits, there are adequate resources available to complete the development and to use or sell the intangible asset, and there is the ability to reliably measure the expenditure attributable to the intangible asset during its development.

Intangible assets with finite lives are amortised on a straight-line basis over their estimated useful lives and are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation of intangible assets is recognised in the consolidated statement of comprehensive income/costs in the expense category consistent with the function of the intangible assets.

Amortisation rates applicable to development costs is 33% straight line.

Amortisation rates applicable to content assets released during the period is as follows:

   --      Year 1: 80% 
   --      Year 2: 15% 
   --      Year 3: 5% 

Content assets in production are not amortised as these assets are still in development and not in the condition necessary to be capable of operating in the manner intended by management. At the point the asset is in operational condition it is reclassified to Content Assets - released and is amortised in line with the above amortisation policy.

   2.      Statement of compliance 

The financial statements comply with IFRS.

The Group currently adopts all relevant accounting standards that have been endorsed by the

EU.        There   are 

various standards that are expected to be endorsed in 2021. The Group believes these

standards   will have   no material 

impact on the financial statements.

 
 3. Loss Per Share 
 
 Loss attributable to equity holders         Unaudited       Unaudited         Audited 
  of the Company                          30 June 2021         30 June         Year to 
                                                                  2020     28 December 
                                                                                  2020 
                                              GBP             GBP             GBP 
 Continuing and total operations          (14,679,623)    (10,741,400)    (22,437,197) 
 
                                          No of shares    No of Shares    No of shares 
 Weighted average number of ordinary 
  shares in issue for basic and 
  fully diluted earnings                 2,599,276,563   1,590,872,778   1,770,398,225 
 
                                             Price per       Price per       Price per 
                                                 Share           Share           Share 
 
 Loss per share                                (0.56)p         (0.68)p          (1.3p) 
 Basic and diluted:                            (0.56)p         (0.68)p          (1.3p) 
 
 
 
 4. Tangible fixed assets 
                          Audio-Visual     Fixtures     Computer      Leasehold      Motor       Total 
                          Prod Equipment       &        Equipment    Improvements    Vehicle 
                                            Fittings 
                               GBP            GBP         GBP            GBP          GBP         GBP 
 Cost 
 As at 28 December 
  2020                           674,256     252,203      208,583         547,028     13,190   1,695,260 
 Additions                        30,612      78,663      602,783          50,443    187,051     949,552 
 Business combination                  -      17,213      394,593         360,786          -     772,592 
 Disposal                              -     (7,998)            -       (124,013)          -   (132,011) 
 Foreign exchange                      -         292      (7,114)         (8,611)          -    (15,434) 
 As at 30 June 
  2021                           704,868     340,372    1,198,845         825,633    200,241   3,269,959 
                        ================  ==========  ===========  ==============  =========  ========== 
 
 Depreciation 
 As at 28 December 
  2020                           424,180      59,033       95,018          95,169      2,198     675,598 
 Charge for the 
  period                          80,731      70,075       79,731         156,013      2,198     388,749 
 Business combination                  -      10,694      157,144         335,788          -     503,626 
 Disposal                              -     (7,998)            -        (26,238)          -    (34,236) 
 Foreign exchange                      -       (211)        3,000           4,567          -       7,355 
                        ----------------  ----------  -----------  --------------  ---------  ---------- 
 As at 30 June 
  2021                           504,911     132,015      328,893         556,166      4,397   1,526,382 
                        ================  ==========  ===========  ==============  =========  ========== 
 
 Net Book Value 
 As at 28 December 
  2020                           250,076     193,170      113,565         451,859     10,992   1,019,662 
                        ----------------  ----------  -----------  --------------  ---------  ---------- 
 As at 30 June 
  2021                           199,956     200,357      869,952         269,468    195,844   1,743,577 
                        ================  ==========  ===========  ==============  =========  ========== 
 
 
 
   5. Right of use assets 
                                 Land & Buildings      Total 
 Cost                                  GBP              GBP 
 As at 28 December 2020                 1,900,265     1,900,265 
 Additions                                763,664       763,664 
 Business combination                   1,379,785     1,379,785 
 Disposal                             (1,878,223)   (1,878,223) 
 Foreign exchange                        (22,009)      (22,009) 
                                -----------------  ------------ 
 As at 30 June 2021                     2,143,482     2,143,482 
                                =================  ============ 
 
 Depreciation 
 As at 28 December 2020                   401,525       401,525 
 Charge for the period                    483,926       483,926 
 Business combination                   1,200,107     1,200,107 
 Disposal                             (1,544,004)   (1,544,004) 
 Foreign exchange                        (21,275)      (21,275) 
                                -----------------  ------------ 
 As at 30 June 2020                       520,279       520,279 
                                =================  ============ 
 
 Net Book Value 
 As at 28 December 2020                 1,498,740     1,498,740 
                                -----------------  ------------ 
 As at 30 June 2021                     1,623,203     1,623,203 
                                =================  ============ 
 
 
 
 6. Intangible assets 
 
                  Goodwill     Development       Customer         Trade         Content         Total 
                                   and          relationship       name           - in           Cost 
                                technology                                     production 
                    GBP            GBP              GBP            GBP            GBP            GBP 
 As at 28 
  December 
  2020              603,476       1,880,493                -             -       1,231,131     3,715,100 
 
 Additions        3,169,599               -                -             -               -     3,169,599 
 Business 
  combination     9,708,069         836,415       15,847,861    19,787,815               -    46,180,160 
 Foreign 
  exchange                -        (12,085)        (228,962)     (285,884)               -     (526,931) 
 
 As at 30 
  June 2021      13,481,114       2,704,823       15,618,899    19,501,931       1,231,131    52,537,898 
                ===========   =============   ==============   ===========   =============   =========== 
 
 Amortisation 
 
 As at 28 
  December 
  2020                    -       1,162,327                -             -       1,137,560     2,299,887 
 
 Charge for 
  the period        432,004         508,488          778,216       971,689          93,571     2,783,968 
 
 
 As at 30 
  June 2021         432,004       1,670,815          778,216       971,689       1,231,131     5,083,855 
                ===========   =============   ==============   ===========   =============   =========== 
 
 Net Book 
  Value 
 
 As at 28 
  December 
  2020              603,476         718,166                -       718,166          93,571     1,415,213 
                -----------   -------------   --------------   -----------   -------------   ----------- 
 As at 30 
  June 2021      13,049,140       1,034,008       14,840,683    18,530,242               -    47,454,073 
                ===========   =============   ==============   ===========   =============   =========== 
 
 

7. Business combination

On 29 December 2020 the Group acquired 100% of the issued capital of Rhapsody International Inc, which trades as Napster, for $25.3m (GBP GBP18.2m).

Napster, the original music industry disruptor, and a global music streaming service has over 1.1m paying subscribers and 5m total users. Over the coming year, we intend to leverage the existing Napster userbase, partners and underlying technologies developed by the Company as part of the foundation to build a next-generation music platform. At present, music content consumption is extremely fragmented for fans, with audio, video and live-events spanning multiple-platforms with a consequent need for multiple subscriptions. Our ambition over the coming months, with the support of our existing partners, is to build a cross-platform, hybrid music service, delivering audio recordings including the latest albums, video content incorporating music videos and documentaries, as well as renowned live-events, all via a single platform. The aim is to provide rightsholders and artists with fair compensation for their works in conjunction with a new suite of tools for both artists and rightsholders to deliver better engagement from their content and enable cross-promotion between their multiple content outputs.

The fair value of the assets acquired and liabilities assumed were as follows:

 
                                    Book value       Adjustment        Fair value 
                                       $000             $000              $000 
 Intangible assets                        15,731            48,877           64,608 
 Property, plant and 
  equipment                                  367                 -              367 
 Current assets                           30,514             (273)           30,241 
 Current liabilities                    (72,273)             1,048         (71,225) 
 Non-current liabilities                (38,477)            35,463          (3,014) 
 Total net (liabilities)/assets         (64,138)            85,115           20,977 
                                  ==============  ================  =============== 
                                                   Goodwill                   4,320 
                                                                             25,297 
                                                                    =============== 
 
 The consideration for the acquisition and the goodwill arising 
  on acquisition are as follows: 
                                                                               $000 
                                   Purchase consideration: 
                                   Cash                                      15,000 
                                   Fair value of shares issued               10,297 
                                                                    --------------- 
                                                                             25,297 
                                                                    =============== 
 

241,403,508 ordinary shares were issued at 3.56 pence per share to the vendors as part of the consideration for the acquisition as noted above. The fair value of the 241,403,508 ordinary shares issued as part of the consideration was determined on the basis of a Black-Scholes option pricing model.

8. Borrowings

 
                         Unaudited   Unaudited             Audited 
                             As at       As at               As at 
                      30 June 2021     30 June    28 December 2020 
                                          2020 
                          GBP           GBP             GBP 
 Current              (15,221,986)           -         (4,317,451) 
 Non-current                     -           -                   - 
 
 Total borrowings     (15,221,986)           -         (4,317,451) 
                    ==============  ==========  ================== 
 

8. Borrowings (continued)

US$25 million loan facility

In December 2020, the Company announced that it had secured a US$25 million secured loan facility arrangement (the "Facility") with Davis Capital Partners LLC. The Facility attracts interest at a rate of 10 per cent per annum on drawn down funds, together with an arrangement fee of 2% payable on each draw. Interest is paid quarterly on the principal amount outstanding and can be paid in either cash or equity at the Company's option. The latest date for repayment is 20 months from the commencement of the Facility, however it may be repaid earlier at the Company's election. Any amounts repaid will not be available for subsequent drawdown. The Facility is secured against the assets of the Group and contains events of default which are customary in nature for this type of loan facility. As at 30 June 2021, US$15 million had been drawn down under the Facility and US$10.0 million of the Facility remained undrawn.

GBPGBP8 million Convertible Loan Note facility

In February 2021, the Company announced that it had secured an investment of GBPGBP6.48 million by way of unsecured, interest free Convertible Loan Notes (the "CLN") from Swiss Investment firm Nice & Green S.A. (the "Investor"). In April 2021, this investment was increased to GBP 8.0 million. Under the terms of the CLN, the loan notes are convertible into Ordinary Shares at the Investors request and will have a conversion price calculated with reference to 93 per cent. of the lowest daily VWAP during the 6 trading days immediately preceding the date of notice of conversion. The Company has the option to redeem the Loan Notes at its absolute discretion in cash at a 3 per cent premium to their nominal value.

In addition, the Investor will receive a commitment fee equal to 5 per cent of the principal amount of each tranche of CLN subscribed for. The CLN agreement contains customary representations and warranties for a financing arrangement of this nature. As at 30 June 2021, GBP GBP8.0 million of the CLN had been advanced. Of this GBP3.84m had been converted to equity.

 
 9 . Share Capital 
 
                                     30(th) June     30(th) June 
                                            2021            2020 
                                     (unaudited)     (unaudited) 
                                      Number          Number 
 Ordinary shares of 1.1 
  pence each                         506,735,267     499,725,635 
 Ordinary shares of 1.16 
  pence each                         231,750,344     231,750,344 
 Ordinary shares of 1.2 
  pence each                           4,615,090       4,615,090 
 Ordinary shares of 1.4 
  pence each                          41,024,988      41,024,988 
 Ordinary shares of 1.7 
  pence each                         205,232,810     205,232,810 
 Ordinary shares of 1.767            130,164,120               - 
  pence each 
 Ordinary shares of 1.85 
  pence each                          33,419,076      33,419,076 
 Ordinary shares of 2.06              63,310,069               - 
  pence each 
 Ordinary shares of 2.77               9,747,292               - 
  pence each 
 Ordinary shares of 3.3               48,458,130               - 
  pence each 
 Ordinary shares of 3.5              335,024,248               - 
  pence each 
 Ordinary shares of 3.56             241,403,508               - 
  pence each 
 Ordinary shares of 3.75 
  pence each                         481,427,404     275,419,966 
 Ordinary shares of 4.5 
  pence each                         111,111,111     111,111,111 
 Ordinary shares of 8 
  pence each                         187,500,000     187,500,000 
 Ordinary shares of 9                     25,050               - 
  pence each 
 Ordinary shares of 15.399 
  pence each                           4,997,041       4,997,041 
 Ordinary shares of 16 
  pence each                         125,000,000     125,000,000 
 Deferred shares of 0.24 
  pence each                         150,520,616     150,520,616 
 Deferred shares of 0.95 
  pence each                              26,000          26,000 
 
 Total                             2,937,466,164   1,896,307,667 
 
 

Further copies of this document are available both at the registered office of the Company. The statement

will also be available to download on the Company's website: https://napster.group/

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