TIDMMVR
RNS Number : 5525R
MelodyVR Group PLC
30 June 2020
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 June 2020
MelodyVR Group PLC
('MVR', the 'Group' or the 'Company')
Full Year Results
MelodyVR Group PLC (AIM: MVR), the leading creator of virtual
reality music ('VR') content and operator of the MelodyVR platform,
is pleased to announce its results for the year ended 31 December
2019.
Highlights
-- MelodyVR featured by Apple as "App of the Day" and by Google
as a winner of "Best Apps in 2019"
-- The official launch of an exclusive 5G partnership with
Telefonica's, O2 mobile network operator;
-- MelodyVR launched on the Oculus Quest
-- Partnered with Good Morning America for the first ever live
simultaneous TV and VR broadcast featuring Kane Brown and
Marshmello;
-- Launch of the MelodyVR platform service in 4 new additional
markets together with the first live festival broadcast of Wireless
festival in combination with Live Nation;
-- The launch of our iOS and Android mobile application,
broadening the reach of MelodyVR to billions of smart phones;
-- A strategic partnership with John Gore Organisation for the
capture of theatrical content and a subscription of GBP5m by way of
equity investment.
For further information please contact:
MelodyVR Group PLC
Anthony Matchett , Executive Chairman & CEO
www.melodyvr.group
Arden Partners plc: Nominated Adviser, Financial Adviser and
Corporate Broker Tel: +44 207 614 5900
Corporate Finance: Ciaran Walsh, Ruari McGirr
Corporate Broking: Simon Johnson
Chairman's Statement
It has now been more than 12 months since the broadcast of our
inaugural live stream event featuring Liam Payne formerly of One
Direction to 36 countries on both the MelodyVR platform and
Facebook 360. The viewing metrics achieved for that event,
particularly via Facebooks 360 social platform illustrated not only
significant consumer appetite for our platform content but also
mass engagement via a 2D screen. In July 2019, with a view to
harnessing engagement and extending the reach of our music content
library to the 1 billion plus smartphone devices around the world,
we launched our own mobile application allowing users access to our
platform content and the ability to experience truly immersive
content from their own mobile device. Our launch coincided with our
first partnership with Live Nation and the live stream to audiences
across 45 countries of Wireless Festival, a ground-breaking VR
first, which generated more than 250,000 individual views reaching
more than 1,000,000 fans via Facebook live and 13,000,000
impressions over the company's digital media channels. Over the
festival weekend, our newly launched app featured as one of the top
20 apps on the iOS App store as well as trending as the number 1
app on Google play marking a new phase in amplified awareness of
our music service.
Our objective has been to build awareness and foster engagement
at a pace far exceeding the adoption of dedicated VR devices. Our
partnership with Good Morning America ("GMA ") and the first ever
live simultaneous TV and VR broadcast featuring Marshmello and Kane
Brown from Central Park in New York reached viewing audiences in
all 50 US states and stimulated tens of thousands of installs of
our mobile app in the days leading up to the event.
Live coverage of the Good Morning America Nashville concerts
reinforced our partnership with GMA and provided an opportunity to
extend the reach of our content to new genres and extending reach
and extend consumer awareness of VR and our MelodyVR platform
content as a pre-curser to monetisation.
In October 2019, we announced our partnership with Telefonica's
O2 mobile network, in a move to showcase both the capabilities of
5G technology and the full extent of immersive content using a next
generation network. Our on-going flagship partnership with O2
signalled the first step in our core objective of scaling our
business via a subscription model and we continue to work on both
replicating these alliances with new strategic partners and
extending our existing relationships in new geographic
territories.
Recognition by Apple in November as an "App of the day" and our
nomination by Google as one of its "Best of 2019" celebrates the
consumer appeal of our offering and provides a testament to our
technological capabilities in delivering content direct to
consumer.
The release of content from internationally celebrated artists
including Panic! At the Disco, Luke Combs, Tyga, Lewis Capaldi and
Kelly Clarkson during 2019, have ensured that our platform content
reflects the necessary diversity to attract a board and rich user
base, and our exclusive sessions with L Devine, Hamzaa, Ashnikko
and J C Stewart have truly showcased the depth of unique engagement
that can be experienced via our platform as we push the boundaries
of intimate and personal artist- fan engagement.
Operationally we recognise that our key strategic partners
reside in the US and our new facility in Los Angeles will provide
us with the necessary operational hub from which to extend our US
presence. New warehouse and distribution facilities in the UK
provide us with the necessary platform from which to further open
the eyes of new users to the immersive world of MelodyVR via our
own VR viewer which we intend to offer both as part of stand-alone
initiatives and as part of a programme of support to our strategic
partners.
As we continue to build awareness, we have been careful to
contain our operational cost base. Overall staff numbers, including
third party contractors, have reduced in number since the last year
end, despite bolstering our management team with a number of
seasoned industry professional who will oversee the next phase of
our businesses development.
Our relationship with John Gore Organisation and the opportunity
to extend our offering to a new theatre vertical remains a priority
and during 2019 we were able to capture our first Broadway
production in VR. We intend to further our exposure to theatre
capture once we have progressed our navigation of the rights and
distribution framework of this new and exciting opportunity. The
partial exercise of the option by John Gore Organisation, and the
extension of that option for a further two years demonstrates the
valued and continuing support that we have from one of our key
strategic partners. This in combination with the successful
conclusion of a further equity raise in early 2020 provides us not
only with the necessary validation of our strategic objectives but
also the funding with which to deliver on our strategic
ambitions.
Significant events in 2019
-- In November and December 2019, MelodyVR is featured by Apple
as "App of the Day" and by Google as a winner of "Best Apps in
2019"
-- In October 2019, we launched our exclusive 5G partnership
with Telefonica's, O2 mobile network operator;
-- In August 2019, we launched on the Oculus Quest and partnered
with Good Morning America for the first ever live simultaneous TV
and VR broadcast featuring Kane Brown and Marshmello;
-- In July 2019, we launched our MelodyVR platform service in 4
new additional markets together with our first live festival
broadcast of Wireless festival in combination with Live Nation;
-- In June 2019, we announced the launch of our iOS and Android
mobile application together with a strategic partnership with John
Gore Organisation for the capture of theatrical content and a
subscription of GBP5m by way of equity investment.
Review of business and 2019 financial results
Since the launch of our mobile app in July 2019 our principle
focus has been to extend awareness of the MelodyVR platform and
consequent engagement with its platform content. Since that time,
we have generated more than 150,000 new installs of our app and
seen average engagement time grow to more than 28 minutes in a
single session.
The success of these initiatives provided a firm foundation for
the strategic partnership with O2, which in combination with a
global telecommunications provider for the first time saw MelodyVR
monetise its platform content via subscription and this flagship
partnership with O2 signals our intentions with regards to
subscription monetisation of our platform content. O2's 5G
subscribers now have access to our content beyond the confines of
their own homes and we anticipate that as the availability of 5G
handsets increase, those embracing MelodyVR as part of their
bundled offering will expand. The availability of unique live
events and paid ticketed offerings will further broaden awareness
and, as part of a bundled subscription, offer the music fan the
ultimate in artist - fan connection.
The Group reported revenues for the year totalling GBP0.2m
(2018: GBP1.2m) resulting from content sales, partnership licencing
deals and subscriber revenues from its partnership with O2 which
launched in October 2019. The gross loss of GBP1.6m (2018 :
GBP0.2m) has been calculated after the deduction of content
creation costs as well as amounts due to all rights holders. These
amounts include commissions and revenue share arrangements due to
app stores, record labels, artists, publishers, songwriters and
exclusive event / venue partners.
The operating loss before non-recurring and non-cash items for
the year amounted to GBP13.8m (2018: loss GBP10.1m) and excludes
GBP1.2m (2018: GBP0.1m) of Research and Development tax credits
associated with the development and launch of our mobile app and
the subsequent step up in content capture and broadcast activity
associated with events such as Wireless and the Good Morning
America Series.
After non-recurring and non-cash items, net financing charges
and taxation, the Group reported a loss of GBP15.0m (2018: loss
GBP11.3m) resulting in a loss per share of 1.1p (2018: loss
0.9p).
The Group continues to capitalise the capture and production of
music content on its balance sheet as intangible assets in addition
to the capitalisation of specific development activities such as
that of its mobile application. During the course of 2019, the
Group capitalised GBP1.72m (2018 : GBP1.82m) of intangible assets
on its balance sheet, consisting of GBP1.28m (2018: GBP0.67m) of
R&D development spend and GBP0.44m (2018 : GBP1.15m) of content
assets. These amounts will be amortised over their useful lives and
amortisation charges of GBP0.41m (2018 : GBP0.15m) and GBP0.59m
(2018 GBP0.18m) respectively were reflected during the year.
As at 31 December 2019 the Group had cash reserves of GBP6.8m
(2019: GBP19.3m), subsequently bolstered by the equity raise of
$12m (before costs) and $1m of option exercise subscription
proceeds received after the year end.
In March 2020, we raised a further $12 million (GBP10.3m) before
costs via the issuance of new shares to new US based investors.
This raise will ensure that we have sufficient resources to
continue to scale our business responsibly and positions us well in
this time of global uncertainty caused as a result of the COVID-19
pandemic.
The outbreak of the COVID-19 pandemic has provided us with an
unexpected circumstance to further showcase our VR capabilities and
the heightened experiences we can offer to music fans around the
world. In the absence of mass attended events, our purpose-built
studio in LA provides us with a unique forum for artists to engage
with their fans at a time bereft of traditional mass attended music
performances. We recognise the opportunity to spotlight our
offering and further extend our brand awareness with a rich new
stream of live performances from a broad spectrum of artists and
intend to use this time to build upon our library of content and
ensure a constant and exciting series of new platform releases
throughout the remainder of this year.
With support from all of the major labels, publishers and many
high profile artists who have recognised this as one of the few
credible opportunities that exist to engage with their fan base at
this time of restriction, our intention is to replicate the concept
not only in other key geographies but at new previously unexplored
and unconventional venues which, in the absence of audience
attendance would add further interest and depth to the
experience.
These initiatives have not only provided us with the opportunity
to extend reach and showcase our content platform at a time of
restricted choice but have also pivoted the manner in which we
capture content resulting in a streamlining of our operational
capture costs. The transition to an operating model of performance
capture and broadcast at a single location greatly reduces the
logistical challenges and cost of multi venue capture and we expect
to be able to report the impact of this with our half year
results.
Whilst there have been many positives associated with the
decision to pursue these new initiatives, the application of
resource required to stage these events has inevitably delayed the
trajectory for launching our consumer subscription service. Our
commitment to growing awareness as a platform for subsequent
monetisation of that engagement remains a priority, and in the near
term, our Live Series will provide new openings for branding and
partner advertising and the stage upon which to offer our first
live ticketing "paid for" event. The content created over the
course of the next few months of our Live Series will allow us to
further extend the breadth and depth of our content library and
allow for greater engagement at the time our subscription service
is launched.
The launch of our live series in 2020, initially in Los Angeles
will provide the first live performance hub to both enrich our
platform content and provide potentially weekly live content
broadcast to music fans around the world. The opportunity to
deliver exclusive performances in real time to audiences around the
world will afford new opportunities for product placement, session
branding and other ad supported initiatives.
Technology and development
The Group will continue to build awareness and engagement with
its content platform as a pre-cursor to launching its subscription
service. Our efforts to enrich our content library to extend
consumer appeal in addition to more frequent broadcasting of live
events from both our own purpose-built studios and established
event venues will provide the platform for monetisation of our user
base and the opportunity to forge new partnerships and extend our
reach to new user groups. In addition, we continue to pursue the
opportunity that live theatre affords, and the development of our
platform will incorporate access to this new creative vertical.
Product development expenses primarily comprise of costs
incurred for development of equipment related to the capture and
production of content together with resources expended on the
Group's existing platform and service offerings.
Again, I would like to take this opportunity to extend my
gratitude to our shareholders, customers and business partners for
their support, effort and insights over the course of this last
year - our continued progress would not have been attained without
the efforts of the management team and the unwavering commitment of
our staff.
Going forward, we will continue to pursue opportunities to keep
us at the forefront of providing ever more immersive experiences
and pursue our ambitions of creating long-term value for
stakeholders, and I look forward to reporting on our progress over
the course of the coming year.
Anthony Matchett
Executive Chairman
PRIMARY FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income For the year
ended 31 December 2019
2019 2018
GBP GBP
Continuing operations: 194,971 1,180,623
Revenue (1,832,042) (1,427,674)
Cost of sales ------------------ ------------------
(1,637,071) (247,051)
GROSS LOSS ------------------ ------------------
Administrative expenses (14,227,561) (11,260,086)
------------------ ------------------
OPERATING LOSS (15,864,632) (11,507,137)
Operating loss before non-recurring
and non-cash items (13,794,485) (10,142,438)
Depreciation (624,862) (388,833)
Amortisation (1,001,809) (329,073)
Share based payments (443,476) (646,793)
------------------ ------------------
OPERATING LOSS (15,864,632) (11,507,137)
------------------------------------------- --------------------- ---------------------
Finance income 106,891 42,929
Finance costs (14,229) -
Foreign exchange gain/(loss) (381,101) 73,253
------------------ ------------------
LOSS FOR THE YEAR BEFORE TAXATION (16,153,071) (11,390,955)
Taxation 1,184,287 121,016
------------------ ------------------
NET LOSS AND TOTAL COMPREHENSIVE
INCOME
FOR THE YEAR (14,968,784) (11,269,939)
========= =========
Attributable to:
Owners of the parent company (14,968,784) (11,270,952)
Non - controlling interest - 1,013
------------------ ------------------
LOSS PER SHARE - from continuing (1.1)p (0.9)p
operations - basic and diluted ========= =========
Consolidated Statement of Financial Position as at 31 December
2019
2019 2018
GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 813,728 933,992
Right-of-use assets 515,706 -
Financial assets 235,446 -
Goodwill 603,476 603,476
Other intangible assets 2,043,574 1,492,071
----------------------- -----------------------
TOTAL NON-CURRENT ASSETS 4,211,930 3,029,539
----------------------- -----------------------
CURRENT ASSETS
Inventories 371,877 -
Trade and other receivables 3,382,819 1,601,896
Cash and cash equivalents 6,795,341 19,327,948
----------------------- -----------------------
TOTAL CURRENT ASSETS 10,550,037 20,929,844
----------------------- -----------------------
TOTAL ASSETS 14,761,967 23,959,383
=========== ===========
CURRENT LIABILITIES
Trade and other payables (1,143,311) (1,933,437)
Lease liabilities (156,964) -
----------------------- -----------------------
(1,300,275) (1,933,437)
NON-CURRENT LIABILITIES
Lease liabilities (323,443) -
----------------------- -----------------------
NET ASSETS 13,138,249 22,025,946
=========== ===========
EQUITY
Share capital 14,944,850 13,690,204
Share premium reserve 40,531,229 36,258,164
Retained Earnings (35,242,590) (20,273,806)
Share option reserve 2,417,741 1,974,265
Merger relief reserve 486,611 486,611
Non-controlling interests (44,990) (44,990)
Currency Translation Reserve 47,941 (61,959)
Reverse takeover reserve (10,002,543) (10,002,543)
----------------------- -----------------------
TOTAL EQUITY 13,138,249 22,025,946
=========== ===========
Consolidated Statement of Changes in Equity For the year ended
31 December 2019
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
January 2018 12,184,391 18,308,854 486,611 1,327,472 (9,002,854) (10,002,543) (46,003) 10,194 13,266,122
Share issue 1,250,000 17,798,293 - - - - - - 19,048,293
Grant of share
options/warrants 255,813 151,017 - 646,793 - - - - 1,053,623
Loss for the year
and total
comprehensive
loss for the
year - - - - (11,270,952) - - - (11,270,952)
Non-controlling
interest - - - - - - 1,013 - 1,013
Currency
transaction
reserve - - - - - - - (72,153) (72,153)
Balance at 31
December 2018 13,690,204 36,258,164 486,611 1,974,265 (20,273,806) (10,002,543) (44,990) (61,959) 22,025,946
----------- ----------- -------- ---------- ------------- ------------- ---------------- ------------ -------------
Share issue 1,111,111 3,477,603 - - - - - - 4,588,714
Grant of share
options/warrants 143,535 795,462 - 443,476 - - - - 1,382,473
Loss for the year
and total
comprehensive
loss for the
year - - - - (14,968,784) - - - (14,968,784)
Non-controlling - - - - - - - - -
interest
Currency
transaction
reserve - - - - - - - 109,900 109,900
Balance at 31
December 2019 14,944,850 40,531,229 486,611 2,417,741 (35,242,590) (10,002,543) (44,990) 47,941 13,138,249
=========== =========== ======== ========== ============= ============= ================ ============ =============
Consolidated Statement of Cash Flows For the year ended 31
December 2019
2019 2018
GBP GBP
Operating activities
Loss from continuing operations before tax (16,153,071) (11,390,955)
Adjustments for:
Depreciation of tangible assets 610,128 388,833
Depreciation of right-of-use assets 14,734 -
Amortisation of intangible assets 1,001,809 329,073
Loss on disposal of intangible assets 169,596 -
Share based payment expense 443,476 646,793
Increase in inventories (371,877) -
Increase in trade and other receivables (596,636) (1,115,147)
(Decrease)/increase in trade and other payables (790,126) 1,118,317
--------------------- ---------------------
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (15,671,967) (10,023,086)
--------------------- ---------------------
Investing activities
Purchase of property, plant and equipment (489,864) (682,040)
Investment in intangible assets (1,722,908) (1,821,144)
Purchase of financial assets (235,446) -
--------------------- ---------------------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (2,448,218) (2,503,184)
Financing activities
Proceeds from issue of ordinary share capital 4,588,714 19,048,293
Proceeds from the exercise of warrants 938,997 406,831
--------------------- ---------------------
NET CASH GENERATED FROM FINANCING ACTIVITIES 5,527,711 19,455,124
--------------------- ---------------------
(Decrease)/increase in cash and cash equivalents (12,592,474) 6,928,854
Effect of changes in foreign exchange rates 59,867 (10,726)
Cash and cash equivalents brought forward 19,327,948 12,409,820
--------------------- ---------------------
CASH AND CASH EQUIVALENTS CARRIED FORWARD 6,795,341 19,327,948
=========== ===========
ABRIDGED NOTES TO THE PRIMARY FINANCIAL STATEMENTS
For the 12 months ended 31 December 2019
The financial statements of the Group for the 12 months ended 31
December 2019 and 2018 have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB) as adopted
by European Union.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2019
or 2018 as defined by sec on 435 of the Companies Act 2006 but is
derived from those accounts. Statutory accounts for 2018 have been
delivered to the Registrar of Companies, and those for 2019 will be
delivered in due course. The auditors have reported on those
accounts; their reports were (i) unqualified, and (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under sec on 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts.
Basis of Consolidation
Where the Group has the power, either directly or indirectly, to
govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the company and its subsidiaries ("the
Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore
eliminated in full.
Business Combinations
The Consolidated Financial Statements comprise the period for
the 12 months to 31 December 2019. Subsidiaries are entities
controlled by the Group. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date
on which control commences until the date on which control ceases.
Consolidated within these financial statements are results from
subsidiaries: MelodyVR Ltd (100% ownership), MelodyVR Inc (100%
ownership), MelodyVR Holdings Ltd (100% ownership) and Immersive
Construction Ltd (51% ownership).
Going Concern
The Financial Statements have been prepared on the going concern
basis. The Directors have prepared cash flow forecasts through to
June 2021, covering the 12 month period beyond the signing date of
these financial statements. This includes taking into account the
potential impact of COVID-19 to ensure that cashflow is positively
managed and the impact to the Group's operations is mitigated. As
there are sufficient existing resources to operate for the
foreseeable future the Board has concluded that the going concern
assumption is appropriate in preparing these financial
statements.
Statement of compliance
a) New standards, interpretations and amendments effective from
1 January 2019
New standards impacting the Group that will be adopted in the
annual financial statements for the year ended 31 December 2019,
and which have given rise to changes in the Group's accounting
policies are:
-- IFRS 16 "Leases"
IFRS 16 provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, together with
options to exclude leases where the lease term is 12 months or
less, or where the underlying asset is of low value. IFRS 16
substantially carries forward the lessor accounting in IAS 17, with
the distinction between operating leases and finance leases being
retained. The Group does not have significant leasing activities
acting as a lessor.
The Group adopted IFRS 16 using the modified retrospective
approach, with recognition of transitional adjustments on the date
of initial application (1 January 2019), without restatement of
comparative figures. The Group elected to apply the practical
expedient to not reassess whether a contract is, or contains, a
lease at the date of initial application. Contracts entered into
before the transition date that were not identified as leases under
IAS 17 and IFRIC 4 were not reassessed. The definition of a lease
under IFRS 16 was applied only to contracts entered into or changed
on or after 1 January 2019.
As a lessee, the Group previously classified leases as operating
or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of
ownership. Under IFRS 16, the Group recognises right-of-use assets
and lease liabilities for most leases. However, the Group has
elected not to recognise right-of-use assets and lease liabilities
for some leases of low value assets based on the value of the
underlying asset when new or for short-term leases with a lease
term of 12 months or less.
b) New standards, interpretations and amendments not yet
effective
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 2020. The Group believes these
standards will have no material impact on the financial
statements.
Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits 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 MelodyVR platform either directly or via third
party resellers. Revenue from content sales are recognised gross of
costs paid to third party licence and rights holders in line with
contracts, with the corresponding cost recognised as cost of
sales.
(b) Content licence revenue
Revenue from licence 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.
Capitalisation of 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.
1. LOSS FROM OPERATIONS
This has been arrived at after Group
charging:
2019 2018
GBP GBP
Depreciation of property, plant
and equipment 610,128 388,833
Depreciation of right-of-use 14,734 -
assets
Amortisation on internally
generated intangible assets 1,001,809 329,073
Loss on disposal of intangible 169,596 -
assets
=== ====== =========
2. AUDITORS REMUNERATION
Group
2019 2018
During the year the Group obtained GBP GBP
the following service from the Group's
auditors:
Fees payable to the Group's
auditors for the audit of the
Group's annual accounts 26,000 25,500
Fees payable to the Group's
auditors for other services:
Tax services 4,000 5,925
Other services - 5,550
------------------- -------------------
30,000 36,975
========= =========
3. DIRECTORS' AND EMPLOYEE REMUNERATION
Group
2019 2018
The amount paid to directors and employees, GBP GBP
is as follows:
Wages and salaries 5,157,779 4,669,734
Social security costs 631,586 553,006
Pension costs 114,874 73,975
Share based payment costs 443,476 507,446
------------------- -------------------
6,347,715 5,804,161
========= =========
The average number of employees for the year was as follows:
2019 2018
Group Company Group Company
No. No. No. No.
Directors 5 5 5 5
Senior - - 1 -
Management
Staff 73 - 48 -
------------------- ------------------- ------------------- -------------------
78 5 54 5
========= ========= ========= =========
Details for
directors'
remuneration
is as follows:
Current Total Total
salary 2019 2018
Director GBP GBP GBP
Anthony Matchett 275,000 372,545 442,500
Steven Hancock 220,000 270,910 305,667
Sebastian Theron (resigned: 15 January
2019) - 10,154 277,000
Simon Cole 120,000 96,667 35,416
Ian Hanson (resigned: 1 April 2020) - 40,000 31,250
Andy Botha 40,000 40,000 1,613
Sean Nicolson (resigned: 7 February
2018) - - 2,564
------------------- -------------------
830,276 1,096,010
========= =========
The remuneration committee approved the salary increases and
bonuses for executive directors during the year. Non-executive fees
were also increased in line with market rates.
4. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss
attributable to shareholders by the weighted average number of
ordinary shares in issue during the year. IAS 33 requires
presentation of diluted EPS when a company could be called upon to
issue shares that would decrease earnings per share, or increase
the loss per share. For a loss-making company with outstanding
share options and warrants, net loss per share would be decreased
by the exercise of options. Therefore the anti-dilutative potential
ordinary shares are disregarded in the calculation of diluted
EPS.
Reconciliation of the profit and weighted average number of
shares used in the calculation are set out below
2019 2018
GBP GBP
Loss attributable to equity holders of the Company:
Continuing and total operations (14,968,784) (11,270,952)
----------------------- -----------------------
No. of shares No. of shares
Weighted average number of
ordinary shares for basic
earnings 1,368,304,682 1,252,156,578
----------------------- -----------------------
Pence per Pence per
Share Share
Loss per share
Basic and diluted per share
Continuing and total operations (1.1p) (0.9p)
=========== ===========
5. INTANGIBLE FIXED ASSETS
Group Development Content assets Content assets
Goodwill costs - in production - released Total
Cost GBP GBP GBP GBP GBP
At 1
January
2018 603,476 - - - 603,476
Additions - 667,819 646,344 506,981 1,821,144
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 31
December
2018 603,476 667,819 646,344 506,981 2,424,620
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 1
January
2019 603,476 667,819 646,344 506,981 2,424,620
Additions - 1,282,545 101,999 338,364 1,722,908
Disposals - (69,871) (126,766) - (196,637)
Transfers - - (306,701) 306,701 -
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 31
December
2019 603,476 1,880,493 314,876 1,152,046 3,950,891
=========== =========== =========== =========== ===========
Accumulated Depreciation
At 1
January
2018 - - - - -
Charge for
the period - 149,279 - 179,794 329,073
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 31
December
2018 - 149,279 - 179,794 329,073
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 1
January
2019 - 149,279 - 179,794 329,073
Charge for
the period - 413,294 - 588,515 1,001,809
Eliminated
on
disposal - (27,041) - - (27,041)
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 31
December
2019 - 535,532 - 768,309 1,303,841
=========== =========== =========== =========== ===========
Net Book
Value
At 31
December
2019 603,476 1,344,961 314,876 383,737 2,647,050
=========== =========== =========== =========== ===========
At 31
December
2018 603,476 518,540 646,344 327,187 2,095,547
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
At 1
January
2018 603,476 - - - 603,476
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
Goodwill has been calculated as the fair value of the MelodyVR
Group PLC ordinary shares pre reverse takeover less the net asset
value of the Company at the time of take over. During the year the
recognition criteria for intangibles assets as per IAS38 were
satisfied for assets internally generated by the Company's
subsidiary entity, MelodyVR Ltd and have therefore been capitalised
and are presented above in line with the accounting policy in Note
2.
The parent entity does not have any items of intangible fixed
assets.
6. ISSUED SHARE CAPITAL
2019 2018
Number Nominal Number Nominal
of of
Shares Value Shares Value
Issued No. GBP No. GBP
and fully
paid
Ordinary
shares
of 1p
each 1,433,660,237 14,336,601 1,308,195,592 13,081,955
Deferred
shares
of 0.24p
each 150,520,616 361,249 150,520,616 361,249
Deferred
shares
of 0.95p
each 26,000,000 247,000 26,000,000 247,000
--------------------------- --------------------------- --------------------------- ---------------------------
1,610,180,853 14,944,850 1,484,716,208 13,690,204
============= ============= ============= =============
Movement Number Nominal Share
of
Shares Value premium
Issued and fully paid during the No. GBP GBP
year
Issue of new ordinary shares at
1.1p each 478,908 4,789 479
Issue of new ordinary shares at
1.85p each 8,877,585 88,776 75,459
Issue of new ordinary shares at
4.5p each 111,111,111 1,111,111 3,888,889
Issue of new ordinary shares at
15.4p each 4,997,041 49,970 719,524
Share issue costs - - (411,286)
--------------------------- --------------------------- ---------------------------
125,464,645 1,254,646 4,273,065
============= ============= =============
The deferred shares do not confer upon the holders right to any
dividends or the right to attend or vote at general meetings of the
Company.
7. SHARE OPTIONS AND WARRANTS
The Group operates share-based payment arrangements to
remunerate directors and key employees in the form of options and
warrants. Equity-settled share-based payments are measured at fair
value (excluding the effect of non-market based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company's
estimate of shares that will eventually vest and adjusted for the
effect of non-market based vesting conditions.
The fair value at grant date is independently determined using
the Black Scholes Model that takes into account the exercise price,
the term of the option, the share price at grant date and expected
price volatility of the underlying share, the expected dividend
yield, the risk free interest rate for the term of the option and
the correlations and volatilities of the peer group companies.
In determining the expected price volatility, the directors have
taken account of expectations regarding the current and future
circumstances in the virtual reality market, both from the
perspective of investment into content creation and hardware
manufacture, and from the perspective of consumer trends, to assess
the expected uptake of virtual reality as a mainstream outlet for
music and other media and entertainment genres.
DIRECTOR OPTIONS AND WARRANTS
The following table sets out the details of options and warrants
held by directors at 31 December 2019:
Director Warrants and options in Exercised during the year Warrants and options at 31 Exercise Expiry
parent at 1 January 2019 December 2019 price date
Simon
Cole 4,615,090 - 4,615,090 1.1p 16.05.2026
Anthony
Matchett 11,537,725 - 11,537,725 1.1p 16.05.2026
Steven
Hancock 11,684,783 (147,058) 11,537,725 1.1p 16.05.2026
Ian
Hanson 4,615,090 - 4,615,090 8.125p 17.07.2027
Andy
Botha 4,615,090 - 4,615,090 5.7p 20.12.2028
--------------------------- --------------------------- ---------------------------
37,067,778 (147,058) 36,920,720
============= ============= =============
No options or warrants issued to directors were have lapsed or
been forfeited during the year. This calculation takes into account
warrants and options awarded to directors in the performance of
their duties.
EQUITY SETTLED SHARE OPTION SCHEME
The Group operates an approved enterprise management incentive
scheme under which employees have been granted options to purchase
shares in MelodyVR Group PLC.
The following table sets out the details of share options held
at 31 December 2019:
2019 2018
Average exercise Number of options Average exercise Number of options
price per share price per share
option option
As at 1 January 5.7p 44,486,521 5.1p 28,609,707
Granted during the
year 13.9p 57,970,410 6.9p 17,526,814
Exercised during
the year 14.6p (5,475,949) - -
Forfeited during
the year 5.3p (6,019,727) 8.5p (1,650,000)
--------------------------- ---------------------------
As at 31 December 10.4p 90,961,255 5.7p 44,486,521
============= =============
Vested and
exercisable at 31
December 10.9p 77,894,348 5.2p 19,366,068
============= =============
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Weighted
average Share options Share options
exercise 31 December 31 December
Grant Date Expiry date price 2019 2018
13 October 2016 13 October 2026 1.1p 11,613,522 12,212,157
02 February
2017 02 February 2027 0.8p 3,750,000 3,750,000
17 July 2017 17 July 2027 8.1p 11,647,550 11,647,550
12 March 2018 12 March 2028 9.0p 6,361,724 7,661,724
7 December 2018 7 December 2020 - - 4,600,000
20 December
2018 20 December 2028 5.7p 4,615,090 4,615,090
31 December
2019 31 December 2021 15.3p 44,973,369 -
16 October 2019 16 October 2024 5.3p 8,000,000 -
--------------------------- ---------------------------
Total 90,961,255 44,486,521
============= =============
Weighted average remaining contractual
life of options outstanding at end
of period 4.15 years 8.79 years
Of the share options outstanding at 31 December 2019 9,230,180
(2018: 13,845,270) are held by directors of the Company.
MEASUREMENT OF FAIR VALUES
The model inputs for options granted during the year ended 31
December 2019 included:
Share options scheme Warrants
2019 2018 2019 2018
Fair value at grant date (weighted-average) 0.2p 4.6p n/a 1.8p
Share price at grant date (weighted-average) 5.07p 8.46p n/a 5.25p
Exercise price (weighted-average) 13.91p 6.87p n/a 5.5p
Expected volatility 40% 40% n/a 40%
Expected life (weighted average) 2.4 years 10 years n/a 5 years
Risk-free interest rate 0.50% 0.50% n/a 0.50%
Total expenses arising from share-based payment transactions
recognised in profit or loss during the year were as follows:
2019 2018
GBP GBP
Options and warrants issued to
directors 73,133 173,994
Options issued under employee share
scheme 226,343 333,452
Options issued to commercial and
other partners* 144,000 -
Warrants issued to commercial and
other partners - 139,347
--------------------------- ---------------------------
Total 443,476 646,793
============= =============
Share option reserve 2,417,741 1,974,265
============= =============
* Options issued to commercial and other partners includes
49,970,410 option shares granted under an option agreement to
subscribe for an equivalent of $10 million of new Ordinary Shares
at a price to be determined at the time of exercise which would
value the Company's issued equity share capital at approximately
GBP220 million.
8. POST BALANCE SHEET EVENTS
On 23 March 2020, the Company raised gross proceeds of $12m via
the placing of 275,410,966 ordinary shares at a price of 3.75 pence
per share.
On 1 April 2020, Ian Hanson resigned as a director of the
Company.
On 14 April 2020, Grant Dollens was appointed to the Board as
Non-executive Director.
On 11 May 2020, the Company resolved by Special Resolution to
change its name to MelodyVR Group PLC.
Other than the above, the Directors were not aware of any other
material events since the reporting date.
9. POSTING OF ANNUALL REPORT
The annual report for the year ended 31 December 2019, which
includes notes to the financial statements, will be available today
from the Company's website at www.melodyvr.group and also posted to
shareholders today.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR URRARRAUNOAR
(END) Dow Jones Newswires
June 30, 2020 07:05 ET (11:05 GMT)
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