TIDMEXR
RNS Number : 9283D
Engage XR Holdings PLC
08 March 2022
8 March 2022
ENGAGE XR Holdings Plc
("ENGAGE XR" or the "Group")
Final Results
ENGAGE XR Holdings Plc, a virtual reality ('VR') technology
company , is pleased to announce its results for the year ended 31
December 2021.
ENGAGE XR's aim is to become the world's largest crossed reality
('XR') communications, training and virtual events platform
provider, through the commercialisation of ENGAGE, its proprietary
online virtual communications platform.
Financial Highlights:
-- Group revenue increased by 68% on the prior year to EUR2.4 million (FY20: EUR1.4 million)
-- ENGAGE revenue up 200% to EUR1.8 million (FY20: EUR0.6 million)
-- Cash position on 31 December 2021 was EUR7.8 million with no
debt. Cash balance was significantly strengthened by a successful
EUR9.0 million (EUR8.5 million net of expenses) fundraise
-- Gross margin increased by 7% to 79% (FY20: 72%)
Operational Highlights:
-- Increase in demand for ENGAGE services, which now has over 139 commercial customers
-- ENGAGE was awarded ISO27001 certification, an internationally
recognised information management security standard. The Group
expects this to be a major help in accelerating the adoption of its
new metaverse offering by corporate users
-- The Group signed significant contracts during 2021, including:
o A contract with 3M to use the ENGAGE platform to build its own
MetaWorld "3M Home". This exploratory VR pilot project demonstrated
the Group's growing appeal to enterprise clients in the metaverse
space
o An initial six-figure dollar contract (to August 2023) with
Optima Domi LLC ("Optima Domi"), an innovative classical curriculum
development company, to service the first VR-based Florida charter
school
o A six-figure euro contract with a Korean enterprise customer
in December 2021
-- Strengthened Board with the appointment of Kenny Jacobs,
former Chief Marketing Officer at Ryanair. Since the period end, in
March 2022, the Group has appointed a US-based Director of
Marketing and a Chief Revenue Officer who will help to further
international expansion with a particular focus on the US
-- Expansion of strategic partnership with HTC with ENGAGE (sold
as VIVE Sessions in China) included in the software bundle of HTC's
new headset, the VIVE Focus 3 XR and rolled out on new HP ProBook
laptops sold inside China
-- In June 2021, the Group announced it was building its
enterprise-focused Metaverse offering, with the launch expected in
the second half of 2022
Medium-Term Outlook:
-- The Group is on track to deliver its ambitious medium-term financial objectives:
o Annual ENGAGE revenue growth in excess of 100% until EUR10
million target achieved by 2025
o Gross margin to reach a level in excess of 80% once ENGAGE
revenue is between EUR5 million and EUR10 million annually
o 10% average month on month increase to reach 100,000 monthly
users, reflecting a target of 500 active customers
o Customer Retention Rate of at least 80%
o Growth in average annual contract value to EUR20,000+,
reflecting the targeted Enterprise and Institutional client base
and ENGAGE value proposition
David Whelan, CEO, ENGAGE XR, said: "2021 was a pivotal year of
growth for our business with an impressive revenue increase of 68%
thanks to the growth in demand for ENGAGE. During the year, we
continued to expand ENGAGE's client list of blue-chip companies,
and the platform reached a record 139 commercial customers.
"We believe that one area that makes ENGAGE stand out compared
to its competition is data security. Therefore, we are very proud
to have become the only multi-user VR platform to have ISO 27001
certification in 2021.
"The really exciting growth opportunity for our business is
providing Metaverse services, via ENGAGE, to major enterprise
clients. Our Metaverse plans for ENGAGE are very different to
Meta's Horizons, Microsoft's AltSpace or Roblox. We are well
positioned to become the enterprise solution for companies seeking
to enter the Metaverse to host meetings, events, product launches,
and conduct training. We are already capturing this opportunity
through our work with 3M, who is using our platform to build its
own 'Metaworld'. We look forward to fully launching our metaverse
offering in the second half of this year.
"At ENGAGE XR we are expanding fast, and I expect 2022 to far
eclipse the achievements of previous years."
Investor Presentation
CEO David Whelan and CFO Seamus Larrissey will provide a live
presentation relating to the results via the Investor Meet Company
platform on 8 March 2022 at 10:30am UK time.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am UK time the day before
the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Engage XR Holdings Plc via:
https://www.investormeetcompany.com/engage-xr-holdings-plc/register-investor
For further information, please contact:
ENGAGE XR Holdings Plc Tel: +353 87 665 6708
David Whelan, CEO info@engagexr.co
Séamus Larrissey, CFO
Sandra Whelan, COO
finnCap Ltd (Nominated Adviser Tel: +44 (0) 20 7220
& Joint Broker) 0500
Marc Milmo/ Seamus Fricker/James
Balicki
Shard Capital Partners LLP (Joint Tel: +44 (0) 20 7186
Broker) 9952
Damon Heath / Erik Woolgar
Davy (Joint Broker & Euronext Tel: +353 1 679 6363
Growth Advisor)
Barry Murphy / Lauren O'Sullivan
/ Oisin Morgan
SEC Newgate (Financial PR) Tel: +44 (0)7540 106
Robin Tozer / Isabelle Smurfit 366
engage@secnewgate.co.uk
The Directors of the Company take responsibility for this
announcement. This announcement contains inside information for the
purposes of the UK Market Abuse Regulation.
CHIEF EXECUTIVE'S REVIEW
Overview
2021 has been a busy year with many changes to our organisation.
One of the biggest changes was the rebranding of the Group to
ENGAGE XR from VR Education Holdings Plc as we moved away from
building one-off education-based products to a much broader
immersive platform under the brand, ENGAGE.
Although these education-based products were profitable, the
real growth opportunity is providing Metaverse services via ENGAGE
to major enterprise clients. During the year, we have added great
names to our client list, including BMW, 3M, Abbott, Unilever, and
Facebook (now META) to name just a few. We also work with globally
recognised international accountancy and professional services
firms, and each month, we have seen our client base grow.
ENGAGE
We have seen a marked increase in demand for ENGAGE services,
with more than 60% of our revenue coming through enterprise
clients. To better target enterprise clients, we have completely
rebranded our website (www.engagevr.io) to showcase our offer to
them. Furthermore, our marketing and business development teams
have been refocused on this area. To support them, we have hired a
Director of Revenue, Richard Allin, and a new Head of Marketing,
Kyle Horner, who will start before the end of March 2022.
For enterprise customers, security is paramount. One area we
believe that makes ENGAGE stand out compared to its competition is
its data security and hosting abilities. For enterprise clients to
adopt metaverse services, they require extensive security clearance
to know exactly how their data is handled and where it is stored.
In October 2021, ENGAGE was granted ISO 27001 certification and as
of today, ENGAGE is the only multi-user VR platform to have ISO
27001 certification. This certification makes it much easier for
blue-chip companies to work with us, and move their employees and
clients away from traditional video-based communications into the
immersive spatial environments ENGAGE provides.
Expansion
In mid-2021, we closed a placing of EUR8.5 million (net of
expenses) to help scale the business due to increased client
demand. Our team has grown to serve our expanding client base, with
many new hires in our after-sales and virtual event support teams.
Our newly appointed Director of Revenue will have a sizable budget
to build our sales, lead generation and client onboarding teams.
The primary focus will be the US, and secondly, Asia.
To support our sales efforts in the US, we have engaged 5W
Public Relations ("5WPR"), one of the larger US PR companies. With
guidance from our new Non-Executive Director, Kenny Jacobs (former
Chief Marketing Officer of Ryanair), and a new US-based Director of
Marketing, 5WPR will be tasked with making ENGAGE a widely
recognised brand name in the US before the year-end. The 5WPR
contract starts in March 2022, and we expect to see significant
growth in our brand awareness in the following months.
The Metaverse
With Facebook changing its name to Meta, and Mark Zuckerberg
outlining his Metaverse vision, there has been increased interest
in what we have been building. In terms of the Metaverse, our plans
for ENGAGE are very different to Meta's Horizons, Microsoft's
AltSpace or Roblox. All of these platforms are focused on massive
user growth, with the majority being aimed at a young demographic
to socialise and play games. Therefore, entertainment companies
will engage with these platforms to increase brand awareness.
However, enterprise clients seeking a metaverse solution to enable
real business dealings and host professional virtual events will
choose ENGAGE.
History tends to repeat itself. The technological awakening we
see in relation to the Metaverse is following a similar path to
what we saw with the emergence of the internet in the late 1990s.
Then, AOL tried to dominate the internet as a single platform for
everything and failed. Companies and individuals wanted more
control, security, and freedom to build what they needed with no
constraints. They ended up building out services on platforms such
as .java, .net and other web technologies, which were then
self-hosted. We believe that the same trend will happen with the
Metaverse.
In the end, the Metaverse is simply an evolution of the
internet. Our current 2D web screens will evolve into full 3D
virtual worlds. Virtual interaction will become as personal and as
social as the physical world. We believe ENGAGE is well-positioned
as the enterprise solution for companies in a variety of industries
seeking to enter the Metaverse to host meetings, events, product
launches, and conduct training content.
Outlook
2021 was a pivotal year for the Group with strong client and
revenue growth. In the past six months, we have put in the
foundations for future growth and expect 2022 to far eclipse the
achievements of previous years. As a business we continue to see an
increase in client numbers, and the interest in and awareness of
ENGAGE continue to grow. With a strong balance sheet and excellent
opportunities before us, we look forward to 2022 with
confidence.
David Whelan
Chief Executive Officer
7 March 2022
CHIEF FINANCIAL OFFICER'S REVIEW
I am pleased to report that revenue for the year was up 68% on
the prior year from EUR1.4 million to EUR2.4 million, driven by a
significant increase in demand for the ENGAGE platform. ENGAGE
revenue was up 200% on the prior year from EUR0.6 million to EUR1.8
million.
EBITDA loss was EUR2.8 million compared to a loss of EUR2.1
million in the prior year and loss before tax was EUR3.1 million
compared to a loss in the prior year of EUR2.7 million. This
increased EBITDA loss is primarily driven by increased headcount in
the year.
Operating cashflows were a net outflow of EUR2.6 million for the
period. The current run-rate of staff costs and other ongoing costs
is approximately EUR0.25m per month.
At the balance sheet date, trade and other receivables were
EUR646k, ahead of trade and other payables at EUR482k. Trade
receivables represented an average of 58 debtor days (2020: 42
days). This increase is driven by some large invoices near the year
end.
The Group's cash position on 31 December 2021 was EUR7.8 million
with no debt. The cash balance was significantly strengthened
during the year by a successful EUR9.0 million (EUR8.5 million net
of expenses) fundraise.
Séamus Larrissey
Chief Financial Officer
7 March 2022
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations EUR EUR
Revenue 3 2,386,313 1,416,567
Cost of Sales 5 (492,396) (403,622)
------------ ------------
Gross Profit 1,893,917 1,012,945
Administrative Expenses 5 (5,007,421) (3,734,071)
Operating Loss (3,113,504) (2,721,126)
Finance Costs 8 (16,767) (7,316)
------------ ------------
Loss before Income Tax (3,130,271) (2,728,442)
Income Tax credit 9 - -
------------ ------------
Loss for the financial year (3,130,271) (2,728,442)
Other comprehensive income - -
------------ ------------
Total comprehensive loss for the
year attributable to owners of the
parent (3,130,271) (2,728,442)
------------ ------------
Earnings per Share (EPS) attributable
to owners of the parent
Basic earnings per share 10 (0.011) (0.011)
Diluted earnings per share 10 (0.010) (0.011)
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2021
Note 2021 2020
EUR EUR
Non-Current Assets
Property, Plant & Equipment 11 102,075 83,834
Intangible Assets 12 426,454 964,126
------------- -------------
528,529 1,047,960
Current Assets
Trade and other receivables 14 645,890 358,277
Cash and short-term deposits 15 7,790,060 2,032,717
------------- -------------
8,435,950 2,390,994
------------- -------------
Total Assets 8,964,479 3,438,954
------------- -------------
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 16 290,451 241,751
Share premium 16 33,503,300 24,547,516
Other reserves 17 (11,775,474) (11,337,058)
Retained earnings 18 (13,555,767) (10,429,815)
------------- -------------
Total Equity 8,462,510 3,022,394
------------- -------------
Non-Current Liabilities
Lease liabilities 20 7,883 20,392
------------- -------------
Current Liabilities
Trade and other payables 21 481,576 357,421
Lease liabilities 20 12,510 38,747
------------- -------------
494,086 396,168
------------- -------------
Total Liabilities 501,969 416,560
------------- -------------
Total Equity and Liabilities 8,964,479 3,438,954
------------- -------------
The accompanying notes form an integral part of these financial
statements.
On behalf of the board
Sandra Whelan Séamus Larrissey
Director Director
7 March 2022 7 March 2022
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2021
Note 2021 2020
EUR EUR
Non-Current Assets
Investment in subsidiaries 13 30,477,062 15,028,809
Other receivables 14 - 8,184,821
------------ -----------
30,477,062 23,213,630
------------ -----------
Current Assets
Trade and other receivables 14 1,035 20,041
Cash and short-term deposits 15 1,476,744 578,420
------------ -----------
1,477,779 598,461
------------ -----------
Total Assets 31,954,841 23,812,091
------------ -----------
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 16 290,451 241,751
Share premium 16 33,503,300 24,547,516
Other reserves 17 (694,055) (247,188)
Retained earnings 18 (1,223,374) (791,234)
------------ -----------
Total Equity 31,876,322 23,750,845
------------ -----------
Current Liabilities
Trade and other payables 20 78,519 61,246
------------ -----------
Total Liabilities 78,519 61,246
------------ -----------
Total Equity and Liabilities 31,954,841 23,812,091
------------ -----------
The accompanying notes form an integral part of these financial
statements.
On behalf of the board
Sandra Whelan Séamus Larrissey
Director Director
7 March 2022 7 March 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share Share Other Reserves Retained Total
Capital Premium Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2020 193,136 21,587,539 (11,287,395) (7,705,536) 2,787,744
--------- ----------- --------------- ------------- ------------
Total comprehensive
income
Other comprehensive - - - - -
income
Loss for the year - - - (2,728,442) (2,728,442)
--------- ----------- --------------- ------------- ------------
Total comprehensive
income - - - (2,728,442) (2,728,442)
--------- ----------- --------------- ------------- ------------
Transactions with owners
recognised directly in equity
New shares issued 48,615 2,959,977 - - 3,008,592
Share issue costs - - (70,720) - (70,720)
Share option expense - - 21,057 4,163 25,220
--------- ----------- --------------- ------------- ------------
Balance at 31 December
2020 241,751 24,547,516 (11,337,058) (10,429,815) 3,022,394
--------- ----------- --------------- ------------- ------------
Share Share Other Reserves Retained Total
Capital Premium Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2021 241,751 24,547,516 (11,337,058) (10,429,815) 3,022,394
--------- ----------- --------------- ------------- ------------
Total comprehensive
income
Other comprehensive - - - - -
income
Loss for the year - - - (3,130,271) (3,130,271)
--------- ----------- --------------- ------------- ------------
Total comprehensive
income 241,751 24,547,516 (11,337,058) (13,560,086) (107,877)
--------- ----------- --------------- ------------- ------------
Transactions with owners
recognised directly in equity
New shares issued 48,700 8,955,784 - - 9,004,484
Share issue costs - - (538,060) - (538,060)
Share option expense - - 99,644 4,319 103,963
--------- ----------- --------------- ------------- ------------
Balance at 31 December
2021 290,451 33,503,300 (11,775,474) (13,555,767) 8,462,510
--------- ----------- --------------- ------------- ------------
The accompanying notes form an integral part of these financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share Share Other Retained Total
Capital Premium Reserves Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2020 193,136 21,587,539 (194,087) (1,173,957) 20,412,631
--------- ----------- ---------- ------------ -----------
Total comprehensive
income
Other comprehensive - - - - -
income
Profit for the year - - - 382,723 382,723
--------- ----------- ---------- ------------ -----------
Total comprehensive
income - - - 382,723 382,723
--------- ----------- ---------- ------------ -----------
Transactions with owners
recognised directly in equity
New shares issued 48,615 2,959,977 - - 3,008,592
Share issue costs - - (70,720) - (70,720)
Share option expense - - 17,619 - 17,619
--------- ----------- ---------- ------------ -----------
Balance at 31 December
2020 241,751 24,547,516 (247,188) (791,234) 23,750,845
--------- ----------- ---------- ------------ -----------
Share Share Other Retained Total
Capital Premium Reserves Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2021 241,751 24,547,516 (247,188) (791,234) 23,750,845
--------- ----------- ---------- ------------ -------------
Total comprehensive
income
Other comprehensive income - - - - -
Loss for the year - - - (432,140) (432,140)
--------- ----------- ---------- ------------ -------------
Total comprehensive
income 241,751 24,547,516 (247,188) (1,223,374) 23,318,705
--------- ----------- ---------- ------------ -------------
Transactions with owners recognised
directly in equity
New shares issued 48,700 8,955,784 - - 9,004,484
Share issue costs - - (538,060) - (538,060)
Share option expense - - 91,193 - 91,193
--------- ----------- ---------- ------------ -------------
Balance at 31 December
2021 290,451 33,503,300 (694,055) (1,223,374) 31,876,322
--------- ----------- ---------- ------------ -------------
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations EUR EUR
Loss before income tax (3,130,271) (2,728,442)
Adjustments to reconcile loss before
tax to net cash flows:
Depreciation of fixed assets 5 97,458 70,747
Amortisation of intangible assets 5 537,672 583,829
Finance Costs 8 16,767 7,316
Share Option Expense 103,963 25,222
Movement in trade & other receivables (287,613) (153,373)
Movement in trade & other payables 124,155 164,528
------------ ------------
(2,537,869) (2,030,173)
Bank interest & other charges paid (16,767) (7,316)
------------ ------------
Net Cash used in Operating Activities (2,554,636) (2,037,489)
------------ ------------
Cash Flows from Investing Activities
Purchases of property, plant & equipment 11 (115,699) (12,852)
Payments to develop Intangible Assets 12 - (114,222)
------------ ------------
Net cash used in investing activities (115,699) (127,074)
------------ ------------
Cash Flows from Financing Activities
Proceeds from issuance of ordinary
shares 8,466,424 2,937,872
Payment of lease liabilities (38,746) (33,444)
------------ ------------
Net cash generated from financing
activities 8,427,678 2,904,428
------------ ------------
Net increase in cash and cash equivalents 5,757,343 739,865
Cash and cash equivalents at beginning
of year 15 2,032,717 1,292,852
Cash and cash equivalents at end
of year 15 7,790,060 2,032,717
------------ ------------
The accompanying notes form an integral part of these financial
statements.
COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Note 2021 2020
Continuing Operations EUR EUR
(Loss)/profit before income tax (432,140) 382,723
Adjustments to reconcile loss before
tax to net cash flows:
Finance Costs 629 521
Share Option Expense 91,193 17,619
Movement in trade & other receivables 8,203,827 (2,851,429)
Movement in trade & other payables 17,273 (74,776)
------------- ------------
(304,039) (2,525,342)
Bank interest & other charges paid (629) (521)
------------- ------------
Net Cash used in Operating Activities (304,668) (2,525,863)
------------- ------------
Cash Flows from Investing Activities
Capital contribution 12 (15,448,253) -
------------- ------------
Net cash used in investing activities (15,448,253) -
------------- ------------
Cash Flows from Financing Activities
Proceeds from issuance of ordinary
shares 8,466,424 2,937,872
------------- ------------
Net cash generated from financing
activities 8,466,424 2,937,872
------------- ------------
Net increase in cash and cash equivalents 898,324 412,009
Cash and cash equivalents at beginning
of year 15 578,420 166,411
Cash and cash equivalents at end
of year 15 1,476,744 578,420
------------- ------------
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
ENGAGE XR Holdings plc ("the Company") is publicly traded on the
Alternative Investment Market ("AIM") of the London Stock Exchange
and on the Euronext Growth Market ("Euronext Growth"), a market
regulated by Euronext Dublin. The Company is incorporated and
domiciled in the Republic of Ireland. The registered office is Unit
9, Cleaboy Business Park, Old Kilmeaden Road, Waterford and the
registered number is 613330. The company was previously known as VR
Education Holdings plc.
The Company is the parent company of ENGAGE XR Limited,
previously known as Immersive VR Education Limited. ENGAGE XR
Limited is incorporated and domiciled in the Republic of Ireland
with the same registered office as the Company. On 12 March 2018
the Company acquired ENGAGE XR Limited and contemporaneously listed
on London's AIM market and Dublin's Euronext Growth market. As part
of the Admission process, the Group raised GBP6 million before
expenses, through an oversubscribed placing of 60,000,000 new
ordinary shares at a placing price of 10p each. On 12 June 2020 HTC
Corporation invested EUR3.0 million in the Group and were issued
48,284,102 ordinary shares at an issue price of EUR0.062 per share.
Net proceeds after expenses were EUR2.94 million.
The Group is principally engaged in the development of the
educational Virtual Reality platform ENGAGE. The Company also
develops and sells Virtual Reality experiences for the education
market.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
the Financial Statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated. The consolidated Financial Statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union issued by the
International Accounting Standards Board ("IASB") including related
interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC").
Basis of Consolidation
The consolidated financial statements incorporate those of
ENGAGE XR Holdings plc and its subsidiary ENGAGE XR Limited.
All financial statements are made up to 31 December 2021. Where
necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with
those used by other members of the group.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred.
Subsidiaries are fully consolidated from the date on which
control is transferred to the group. They are deconsolidated from
the date on which control ceases. Control is achieved when the
group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee.
The Group re-assess whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the elements of control.
Business Combination
Acquisition of ENGAGE XR Limited
The Company entered into an agreement to acquire the entire
issued share capital of ENGAGE XR Limited on 12 March 2018. The
acquisition was effected by way of issue of shares. Due to the
relative size of the companies, ENGAGE XR's shareholders became the
majority shareholders in the enlarged capital of the Company. The
transaction fell outside of IFRS 3 ("Business Combinations") and as
such has been treated as a group reconstruction.
Therefore, although the Group reconstruction did not become
unconditional until 12 March 2018, these consolidated financial
statements are presented as if the Group structure has always been
in place, including the activity from incorporation of the Group's
subsidiaries.
Furthermore, as ENGAGE XR Holdings plc was incorporated on 13
October 2017, while the enlarged group began trading on 12 March
2018, the Statement of Comprehensive Income and consolidated
Statement of Changes in Equity and consolidated Cash Flow
Statements are presented as though the Group was in existence for
the whole year. On this basis, the Directors have decided that it
is appropriate to reflect the combination using merger accounting
principles as the transaction falls outside the scope of IFRS 3 and
as such has been treated as a Group reconstruction. No fair value
adjustments have been made as a result of the combination.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future
periods.
Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial
statements:
Capitalised development costs
In applying the requirements of IAS 38 Intangible Assets, the
Group assessed various development projects against the criteria
required for capitalisation. Certain projects that did not meet the
criteria regarding the ability to determine whether those projects
would generate sufficient future economic benefits were expensed.
The judgements reflect the early stage of the VR/AR market and will
change over time.
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising that are beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Capitalised development costs impairment review
The Group's impairment review undertaken to assess the carrying
value of capitalised development costs includes certain assumptions
on future revenues and costs associated with the underlying
technology. Those cashflows are discounted at an appropriate
discount rate. These estimates and assumptions are reviewed on an
on-going basis. Changes in accounting estimates may be necessary if
there are changes in the circumstances on which the estimate was
based or as a result of new information or more experience. Such
changes are recognised in the period in which the estimate is
revised.
Going Concern
The financial statements are presented on a going concern basis.
In forming this opinion, the Directors have considered all the
information available to them. This includes management prepared
forecasts, due consideration of the ability to raise funds on the
open market in respect of the dual listing on the Alternative
Investment Market on the London Stock Exchange and on the
Enterprise Securities Market, a market regulated by Euronext Dublin
and the timing as to when such funds will be received. Based on
their consideration of these matters the Directors believe the
Group and Company to be a going concern.
In response to the significant impact that the coronavirus
pandemic is having on the global economy, the Group has reviewed
the potential impact upon on its business and revenue generation.
The Directors anticipate experience sales will be relatively
unaffected both during and immediately after the lockdown period,
however there is scope to adjust levels of expenditure in the
longer term, if required.
These financial statements do not include adjustments relating
to the recoverability and classification of recorded asset amounts
nor to the amounts and classification of liabilities that might be
necessary should the group not continue as a going concern. Thus,
the Directors continue to adopt the going concern basis of
accounting in preparing the financial statements.
Foreign Currency Translation
(a) Functional and Presentation Currency
Items included in the Financial Statements of the Group are
measured using the currency of the primary economic environment in
which the entity operates ("functional currency").
The Financial Statements are presented in euro (EUR), which is
the Group's functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when deferred in
other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses
that relate to borrowings and cash and cash equivalents are
presented in the income statement within 'finance income or costs'.
All other foreign exchange gains and losses are presented in the
income statement within Administrative Expenses.
Current versus non-current classification
The Group presents assets and liabilities in the statement of
financial position based on current/non-current classification. An
asset is current when it is:
-- Expected to be realised or intended to be sold or consumed in the normal operating cycle
-- Held primarily for the purpose of trading
-- Expected to be realised within twelve months after the reporting period; or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets are classified as non-current.
A liability is current when:
-- It is expected to be settled in the normal operating cycle
-- It is held primarily for the purpose of trading
-- It is due to be settled within twelve months after the reporting period Or
-- There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period
The Group classifies all other liabilities as non-current.
Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
Fair value measurement
The Group measures financial instruments such as derivatives at
fair value at each balance sheet date. The Company has applied IFRS
9 for all periods presented.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- In the principal market for the asset or liability; or
-- In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be accessible
by the Group. The fair value of an asset or a liability is measured
using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants
act in their economic best interest.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for goods
and services supplied, stated net of discounts, returns and
Value-Added Taxes (VAT).
Under IFRS 15, Revenue from Contracts with Customers, five key
points to recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the
contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity, and specific criteria have been met for
each of the Group's activities, as described below. The Group bases
its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each
arrangement.
Where the Group makes sales relating to a future financial
period, these are deferred and recognised under 'deferred revenue'
on the Statement of Financial Position. The Group currently has two
revenue streams:
ENGAGE Revenue
The Group is primarily focused on developing a proprietary VR
platform which is sold through licences and professional services
revenue. This is considered "ENGAGE Revenue" for reporting
purposes. Revenue is recognised when the license is delivered to
the customer, or when all performance obligations have been
achieved.
Showcase Experiences
The Group also develops proprietary educational VR content which
is sold through licences. This is considered "Showcase Experience
Revenue" for reporting purposes. Revenue is recognised when the
license key is delivered to the customer, or when all performance
obligations have been achieved.
Revenue is received net of commission from the platforms where
the Group licenses their content. The gross amount of revenue is
recognised in revenue with the corresponding commission portion
recognised in cost of sales.
Other Revenue
The Group develops educational VR content on behalf of customers
based on specific customer requirements. This is considered "Other
Revenue" for reporting purposes. Such revenue is recognised on a
percentage completion basis unless there are significant
performance obligations that would require deferral until such
obligations are delivered. Stage of completion is measured by
reference to labour hours incurred to date as a percentage of total
estimated labour hours for each contract. When the contract outcome
cannot be measured reliably, revenue is recognised only to the
extent that the expenses incurred are eligible to be recovered.
This is generally during the early stages of development where the
specifications need to pass through the customer's approval as part
of the development.
The disaggregation of revenue, required under IFRS 15, has been
prepared on the basis of the two revenue streams outlined above and
is included in Note 3.
Government Grants
Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis over
the periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an asset, it is
recognised as income in equal amounts over the expected useful life
of the related asset.
Property, Plant and Equipment
All property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Cost may
also include transfers from equity of any gains/losses on
qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are
incurred.
Depreciation on assets is calculated using the straight-line
method to allocate their cost less residual value over their
estimated useful lives, as follows:
Office equipment - 3 - 5 years
Furniture, fittings and equipment - 5 years
Leasehold improvements - over the life of the leased asset
Property, Plant and Equipment (continued)
Right-of-use assets are depreciated over the shorter of the
asset's useful life and the lease term on a straight line
basis.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. Gains
and losses on disposals are determined by comparing the proceeds
with the carrying amount, and are recognised in the income
statement.
Intangible Assets
Research costs are expensed as they are incurred. Development
costs that are directly attributable to the design and testing of
identifiable and unique commercial software controlled by the Group
are recognised as intangible assets when the following criteria are
met:
-- it is technically feasible to complete the software product
so that it will be available for use and sale;
-- management intends to complete the software product and use or sell it;
-- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate future economic benefits;
-- adequate technical, financial and other resources to complete
the development and use or sell the software product are available;
and
-- the expenditure attributable to the software product during
its development can be reliably measured.
Directly attributable costs that are capitalised as part of the
software product include the software development employee costs
and subcontracted development costs.
Other development expenditure that does not meet these criteria
is recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period.
Computer software development costs recognised as assets are
amortised over their estimated useful lives, which do not exceed 3
years and commences after the development is complete and the asset
is available for use. Intangible assets in relation to Showcase
Experiences are amortised over their estimated useful lives based
on the pattern of consumption of the underlying economic benefits.
The ENGAGE platform is amortised on a straight line basis over 3
years. Amortisation is included in Administrative Expenses.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or CGU's fair value
less costs of disposal and its value in use. The recoverable amount
is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
Impairment of non-financial assets (continued)
The Group bases its impairment calculation on detailed budgets
and forecast calculations, which are prepared separately for each
of the Group's CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally cover a period of
five years. A long-term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the
statement of profit or loss in expense categories consistent with
the function of the impaired asset.
For assets, an assessment is made at each reporting date to
determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset's or CGU's
recoverable amount.
A previously recognised impairment loss is reversed only if
there has been a change in the assumptions used to determine the
asset's recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years.
Trade Receivables
Trade receivables are amounts due from customers for licenses
sold or services performed in the ordinary course of business. If
collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as
current assets. If not they are presented as non-current
assets.
Trade receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. The Group holds the
trade receivables with the objective of collecting the contractual
cash flows.
The Group provides for known bad debts and other accounts over a
certain age in line with Group policy. The realisation of the asset
may differ from the provision estimated by management.
Cash and Cash Equivalents
In the Statement of Cash Flows, cash and cash equivalents
comprise cash in hand and short-term deposits. Bank overdrafts are
shown within borrowings in current liabilities on the Statement of
Financial Position.
Capital Contributions
A capital contribution represents irrevocable, non-repayable
amounts contributed from connected parties. Capital contributions
are accounted for as a contribution when they are approved, through
the profit and loss account reserve.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Where the issuance of the new shares or options
occurs in a subsequent period from when the incremental costs are
incurred these costs are prepaid until the issuance takes
place.
Share Based Payments
The Group has an equity settled employee incentive plan. The
cost of equity settled transactions with employees is measured by
reference to the fair value at the date at which they are granted
and is recognised as an expense over the vesting period, which ends
on the date on which the relevant employees become fully entitled
to the award. Fair value is determined using an appropriate pricing
model. In valuing equity-settled transactions, no account is taken
of any vesting conditions, other than conditions linked to the
price of the shares of the Group. No expense is recognised for
awards that do not ultimately vest.
At each reporting date before vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or
otherwise of non-market conditions number of equity instruments
that will ultimately vest. The movement in cumulative expense since
the previous reporting date is recognised in the profit and loss
within administration expenses, with a corresponding entry in the
balance sheet in share options reserve.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative. Where an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any cost not
yet recognised in the Statement of Comprehensive Income for the
award is expensed immediately.
Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value, and subsequently measured at amortised
cost using the effective interest method.
Leases
The Group leases office premises and motor vehicles under rental
contracts for fixed periods but may contain extension options.
Lease terms are negotiated on an individual basis and contain
different terms and conditions. The lease agreements entered into
by the Group do not impose any covenants other than the security
interests in the leased assets that are held by the lessor.
From 1 January 2019 leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Assets and liabilities
arising from a lease are initially measured on a present value
basis. Lease liabilities include the net present value of the
following lease payments:
-- Fixed payments less any lease incentives receivable;
-- Variable lease payments that are based on an index or a rate;
-- The exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
-- Payments of penalties for terminating the lease.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined
the lessee's incremental borrowing rate is used. Lease payments are
allocated between principal and finance cost. The finance charge is
charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the
liability.
Payments associated with short-term leases (12 months or less)
and leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss.
Current and Deferred Income Tax
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised directly in equity. In
this case the tax is also recognised directly in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Group operates and
generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the Financial
Statements. However, the deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction other than a business combination that, at the time of
the transaction, affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws)
that have been enacted, or substantially enacted, by the end of the
reporting period and are expected to apply when the related
deferred income tax asset is realised, or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred
income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities, and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Research and development tax credit
The Group undertakes certain research and development activities
that qualify for the receipt of a research and development
(R&D) tax credit from the Irish tax authorities. Such grants
are recognised as a credit against related costs on a cash receipts
basis.
Financial Instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial Assets
Initial Recognition and Measurement
In accordance with IFRS9, 'Financial Instruments' the Group has
classified its financial assets as 'Financial assets at amortised
cost'. The Group determines the classification of its financial
assets at initial recognition. All financial assets are recognised
initially at fair value plus, in the case of assets not at fair
value through the Statement of Comprehensive Income, transaction
costs that are attributable to the acquisition of the financial
asset and expected credit losses based on historical collection
experience of similar assets.
Subsequent Measurement
The subsequent measurement of financial assets depends on their
classification as described below:
Financial Assets Carried at Amortised Cost
This category applies to trade and other receivables due from
customers in the normal course of business. All amounts which are
not interest bearing are stated at their recoverable amount, being
invoice value less provision for any expected credit losses. These
assets are held at amortised cost. The group classifies its
financial assets as at amortised cost only if both of the following
criteria are met:
I. the asset is held within a business model with the objective
of collecting the contractual cash flows; and
II. the contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal outstanding.
Financial assets at amortised cost comprise current trade and
other receivables due from customers in the normal course of
business and cash and cash equivalents. The Group does not hold any
material financial assets at fair value through other comprehensive
income or at fair value through the Statement of Comprehensive
Income. The Group does not hold any derivatives and does not
undertake any hedging activities.
Trade receivables are initially recognised at their transaction
price. The group does not expect to have any contracts where the
period between the transfer of the promised goods or services to
the customer and payment by the customer exceeds one year. As a
consequence, the group does not adjust any of the transaction
prices for the time value of money. Other financial assets are
recognised initially at fair value plus transaction costs that are
directly attributable to the acquisition of the financial asset.
Trade and other receivables are subsequently measured at amortised
cost less provision for expected credit losses.
Impairment of Financial Assets
The Group assesses on a forward looking basis the expected
credit losses associated with its financial assets measured at
amortised cost. The Group applies the simplified approach to
providing for expected credit losses prescribed by IFRS 9, which
permits the use of the lifetime expected loss provision for all
trade receivables. To measure the expected credit losses, trade
receivables have been grouped based on shared credit risk
characteristics and the days past due. For other financial assets
at amortised cost, the Group determines whether there has been a
significant increase in credit risk since initial recognition. The
Group recognises twelve month expected credit losses if there has
not been a significant increase in credit risk and lifetime
expected credit losses if there has been a significant increase in
credit risk.
Expected credit losses incorporate forward looking information,
take into account the time value of money when there is a
significant financing component and are based on days past due; the
external credit ratings of its customers; and significant changes
in the expected performance and behaviour of the borrower.
Financial assets are written off when there is no reasonable
expectation of recovery. Where receivables have been written off,
the Group continues to engage in enforcement activity to attempt to
recover the receivable due. Where recoveries are made, these are
recognised in the Statement of Comprehensive Income.
Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognised initially at fair value
net of directly attributable transaction costs.
The Group's financial liabilities include trade and other
payables.
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest rate method (EIR). Gains and losses are recognised in the
Statement of Comprehensive Income when the liabilities are
derecognised as well as through the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in finance costs
in the Statement of Comprehensive Income. This category generally
applies to interest-bearing loans and borrowings.
Derecognition of Financial Assets and Liabilities
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised when: (1) The rights to receive cash flows from the
asset have expired, or (2) The Group has transferred its rights to
receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a
third party under a 'pass-through' arrangement, and either (a) the
Group has transferred substantially all the risks and rewards of
the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the assets.
Derecognition of Financial Assets and Liabilities
(continued)
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the Statement of
Comprehensive Income.
New standards, interpretations and amendments adopted by the
Group and Company
The Group and Company have applied the following standards and
amendments for the first time from 1 January 2021:
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
- Classification of Liabilities as Current or Non-current - Amendments to IAS 1
- Definition of Accounting Estimates - Amendments to IAS 8
There has been no material impact on the financial statements as
a result of the adoption of the new and amended standards.
There are no new and revised IFRSs that have been issued but are
not yet effective that the Directors believe are expected to have a
material impact on the Group and Company.
3. Segment Reporting
2021 2020
Revenue by Type EUR EUR
ENGAGE revenue 1,791,416 599,362
Showcase experience revenue 469,467 750,235
Other revenue 125,430 66,970
--------- ---------
Total Revenue 2,386,313 1,416,567
--------- ---------
4. Capital Management
For the purpose of the Company's capital management, capital
includes issued capital, share premium and all other equity
reserves. The primary objective of the Group's capital management
is to maximise the shareholder value.
Group 2021 2020
EUR EUR
Lease liabilities (20,393) (59,139)
Trade and other payables (481,576) (357,421)
Less: cash and short-term deposits 7,790,060 2,032,717
---------- ---------
Net Funds 7,288,091 1,616,157
---------- ---------
Equity 8,462,510 3,022,394
---------- ---------
Total Equity 8,462,510 3,022,394
---------- ---------
Capital and net funds 15,750,601 4,638,551
---------- ---------
5. a. Expenses by nature
2021 2020
EUR EUR
Depreciation charges 97,458 70,747
Amortisation expense 537,672 583,829
Operating Lease Payments 8,514 11,275
Foreign Exchange (Gain) / Loss (85,789) 24,412
Staff Costs 3,356,152 2,371,432
Other Expenses 1,585,810 1,190,225
--------- ---------
5,499,817 4,251,915
--------- ---------
Wages and salaries capitalised - (115,138)
Other expenses capitalised - 916
--------- ---------
Total cost of sales and administrative
expenses 5,499,817 4,137,693
--------- ---------
Disclosed as:
Cost of sales 492,396 403,622
Administrative expenses 5,007,421 3,734,071
--------- ---------
Total cost of sales and administrative
expenses 5,499,817 4,137,693
--------- ---------
b. Auditor Remuneration
Services provided by the Company's auditor
During the year, the Company obtained the following services
from the Company's auditor:
2021 2020
EUR EUR
Fees payable to the Company's auditor
for the audit of the financial statements 46,600 44,444
-------- --------
6. Employees
Employee Benefit Expense 2021 2020
EUR EUR
Wages and salaries 2,906,329 2,111,980
Social security costs 314,091 214,326
Defined contribution pension costs 31,769 19,904
Share option expense 103,963 25,222
Capitalised employee costs - (115,138)
--------- ---------
Total Employee Benefit Expense 3,356,152 2,256,294
--------- ---------
Average Number of People Employed 2021 2020
Average number of people (including
executive Directors)
employed:
Operations 44 34
Administration 3 3
Marketing 2 2
--------- ---------
Total Average Headcount 49 39
--------- ---------
7. Directors' remuneration
Below is the Directors' remuneration for the year ended 31
December 2021 and for the year ended 31 December 2020
31 December 2021
-------------------------------------------
Salaries Pension Options Total
Group and fees benefits / Warrants
issued
EUR EUR EUR EUR
Executive Directors
David Whelan 176,917 4,824 - 181,741
Sandra Whelan 144,417 5,002 - 149,419
Séamus Larrissey
Non-executive Directors 128,167 6,333 - 134,500
Richard Cooper 85,552 - 16,700 102,252
Praveen Gupta - - - -
Kenny Jacobs 3,033 - - 3,033
Frank Poore - - 74,493 74,493
Harry Kloor 23,228 - - 23,228
Tony Hanway 27,000 - - 27,000
588,314 16,159 91,193 695,666
--------- --------- ----------- --------
31 December 2020
------------------------------------------
Salaries Pension Options Total
Group and fees benefits / Warrants
issued
EUR EUR EUR EUR
Executive Directors
David Whelan 146,255 3,437 - 149,692
Sandra Whelan 110,115 3,675 - 113,790
Séamus Larrissey
Non-executive Directors 110,635 4,875 919 116,429
Richard Cooper 68,295 - 16,700 84,995
Michael Boyce 18,071 - - 18,071
Tony Hanway 31,715 - - 31,715
Praveen Gupta - - - -
Harry Kloor 8,974 - - 8,974
494,060 11,987 17,619 523,666
--------- --------- ----------- -------
The options issued are a non-cash amount and are accounted for
in line with the treatment of the other share options issued to
employees under IFRS 2. Further notes on Share Based Payments are
included in Note 19.
8. Finance Costs
2021 2020
EUR EUR
Interest expense:
- Lease interest 2,863 3,445
- Bank charges 13,904 3,871
------ -----
Total finance costs 16,767 7,316
------ -----
9. Income Tax
2021 2020
EUR EUR
Current tax:
Current tax on loss for the year - -
---- ----
Total current tax - -
---- ----
Deferred tax (Note 21) - -
---- ----
Income Tax - -
---- ----
The tax assessed for the year differs from that calculated using
the standard rate of corporation tax in Ireland (12.5%). The
differences are explained below:
2021 2020
EUR EUR
Loss Before Tax (3,130,271) (2,728,442)
----------- -----------
Tax calculated at domestic tax rates
applicable to loss in
Ireland of 12.5% (391,284) (341,055)
Tax effects of:
- Depreciation in excess of capital
allowances 7,400 5,868
- Expenses not deductible for tax
purposes 39,780 66,642
- Tax losses for which no deferred
tax asset was recognised 344,104 268,545
----------- -----------
Total tax - -
----------- -----------
10. Earnings per share (EPS)
2021 2020
Loss attributable to equity EUR EUR
holders of the Group:
Continuing Operations (3,130,271) (2,728,442)
----------- -----------
Weighted average number of shares
for Basic EPS 290,451,146 241,750,955
Effects of dilution from share options
and warrants 23,455,846 13,954,862
----------- -----------
Weighted average number of ordinary
shares adjusted for the effect of
dilution 313,906,992 255,705,817
----------- -----------
Basic loss per share from continuing
operations (0.011) (0.011)
Diluted loss per share from continuing
operations (0.010) (0.011)
----------- -----------
11. Property, Plant & Equipment
Fixtures,
Leasehold fittings Office Right of
Group improvements and equipment Equipment use Total
assets
EUR EUR EUR EUR EUR
Cost of Valuation
At 1 January
2020 20,341 7,025 166,031 145,702 339,099
Additions - - 12,852 25,799 38,651
Disposals - - - (15,470) (15,470)
-------------- -------------- ----------- ---------- --------
At 31 December
2020 20,341 7,025 178,883 156,031 362,280
-------------- -------------- ----------- ---------- --------
Additions - - 115,699 - 115,699
-------------- -------------- ----------- ---------- --------
At 31 December
2021 20,341 7,025 294,582 156,031 477,979
-------------- -------------- ----------- ---------- --------
Depreciation
At 1 January
2020 12,498 4,937 126,815 78,919 223,169
Charge (note
5) 4,607 1,125 31,572 33,443 70,747
Disposals - - - (15,470) (15,470)
------- ------ -------- -------- --------
At 31 December
2020 17,105 6,062 158,387 96,892 278,446
------- ------ -------- -------- --------
Charge (note
5) 3,236 694 54,781 38,747 97,458
------- ------ -------- -------- --------
At 31 December
2021 20,341 6,756 213,168 135,639 375,904
------- ------ -------- -------- --------
Net Book Amount
At 31 December
2020 3,236 963 20,496 59,139 83,834
----- ---- ------- ------- --------
At 31 December
2021 - 269 81,414 20,392 102,075
----- ---- ------- ------- --------
Depreciation expense of EUR97,458 (2020: EUR70,747) has been
charged in 'Administrative Expenses'.
Right of use asset relates to properties and vehicles held under
lease
12. Intangible Assets
Software
in development
Group costs Total
EUR EUR
Cost
At 1 January 2020 2,022,009 2,022,009
Additions 114,222 114,222
--------------- ---------
At 31 December 2020 2,136,231 2,136,231
--------------- ---------
Additions - -
--------------- ---------
At 31 December 2021 2,136,231 2,136,231
--------------- ---------
Amortisation
At 1 January 2020 588,276 588,276
Charge 583,829 583,829
--------- ---------
At 31 December 2020 1,172,105 1,172,105
--------- ---------
Charge 537,672 537,672
--------- ---------
At 31 December 2021 1,709,777 1,709,777
--------- ---------
Net Book Value
At 31 December 2020 964,126 964,126
------- -------
At 31 December 2021 426,454 426,454
------- -------
The software being developed relates to the creation of virtual
reality experiences and an online virtual learning and corporate
training platform.
ENGAGE is an online virtual learning and corporate training
platform currently in development by the Company. A desktop version
was released in December 2018 and the mobile version was released
in December 2019. Amortisation commenced when the mobile version
launched.
Titanic VR which is available for sale across all major VR
capable platforms since November 2018 has commenced being amortised
in the period. Raid on the Ruhr launched during 2019 and
amortisation commenced during the period. Space Shuttle launched
during 2020 and amortisation commenced during the period.
Amortisation expense of EUR537,672 (2020: EUR583,829) has been
charged in 'Administrative Expenses'.
An impairment review was carried out at the balance sheet date.
No impairment arose.
13. Investments in Subsidiaries
Company EUR
At 1 January 2020 15,028,809
Additions -
----------
At 31 December 2020 15,028,809
----------
Capital contributions 15,448,253
----------
At 31 December 2021 30,477,062
----------
Investments in subsidiaries are recorded at cost, which is the
fair value of the consideration paid.
On 12 March 2018, the Company acquired all of the issued capital
of ENGAGE XR Limited for a consideration of EUR15,000,000 which was
settled by issuing 133,089,739 Ordinary Shares in the Company. The
Company incurred expenses totalling EUR28,809 as part of the
transaction.
On 31 December 2021 the Company resolved to enter into a capital
contribution agreement with ENGAGE XR Limited to facilitate the
funding of the wholly owned subsidiary. An amount of EUR7,263,432
was forwarded during 2021 and EUR8,184,821 was converted from the
termination of the intercompany loan agreement in force since 1
January 2020.
Country of Proportion
incorporation of equity shares
Name and residence Nature of business held by the
company
Virtual Reality
ENGAGE XR Limited Ireland Technology 100%
This subsidiary undertaking is included in the consolidation.
The proportion of the voting rights in the subsidiary undertaking
held directly by the Parent Company does not differ from the
proportion of ordinary shares held.
14. Trade and Other Receivables
Non-Current Group Company
2021 2020 2021 2020
EUR EUR EUR EUR
Amounts due from related
parties - - - 8,184,821
- - - 8,184,821
---- ---- ---- ---------
Amounts due from related parties relates to an intercompany loan
agreement entered into on 1 January 2020 between the parent company
and the subsidiary undertaking. The interest rate on this agreement
is 14% per annum and the loan is due for repayment no later than
the date falling 10 years from the date of the agreement. At 31
December 2021 the company resolved to terminate the intercompany
loan agreement and waive the interest charged for 2021. A capital
contribution agreement was put in place effective from 31 December
2021 to replace the intercompany loan agreement.
Current Group Company
2021 2020 2021 2020
EUR EUR EUR EUR
Trade receivables 381,568 163,355 - -
Less: provision for - - - -
impairment of receivables
------- ------- ----- ------
Trade receivables
- net 381,568 163,355 - -
Prepayments 110,640 68,708 768 19,994
Accrued income 139,512 123,114
Other debtors 3,100 3,100 - -
VAT 11,070 - 267 47
------- ------- ----- ------
645,890 358,277 1,035 20,041
------- ------- ----- ------
As at 31 December 2021, trade receivables of EUR381,568 (2020:
EUR163,355) were fully performing and deemed fully recoverable. No
bad debt provision charge was incurred during 2021 (2020:
EURNil).
The Group assesses exposure to credit risk arising from
outstanding receivables on an annual basis. The maximum exposure to
credit risk at the reporting date is the carrying value of each of
the receivables above. The Group does not consider the credit risk
of any receivable has increased post recognition.
The Group does not expect any losses from outstanding
receivables in the current year.
The carrying amounts of the Company's trade and other
receivables are denominated in the following currencies:
Group Company
2021 2020 2021 2020
EUR EUR EUR EUR
Euro - Neither past
due nor impaired 330,287 90,801 - -
Dollar - Neither past
due nor impaired 51,282 72,554 - -
------- ------- ---- ----
381,568 163,355 - -
------- ------- ---- ----
15. Cash and short-term deposits
Group Company
2021 2020 2021 2020
EUR EUR EUR EUR
Cash at bank and on
hand 7,790,060 2,032,717 1,476,744 578,420
--------- --------- --------- -------
7,790,060 2,032,717 1,476,744 578,420
--------- --------- --------- -------
16. Issued Share Capital and Premium
Number of Ordinary
shares shares Share premium Total
EUR EUR EUR
At 1 January 2020 193,136,406 193,136 21,587,539 21,780,675
Ordinary Shares Issued 48,284,102 48,285 2,951,715 3,000,000
Exercise of Share
Options 330,447 330 8,262 8,592
----------- -------- ------------- ----------
At 31 December 2020 241,750,955 241,751 24,547,516 24,789,267
----------- -------- ------------- ----------
At 1 January 2021 241,750,955 241,751 24,547,516 24,789,267
Ordinary Shares Issued 48,350,191 48,350 8,947,034 8,995,384
Exercise of Share
Options 350,000 350 8,750 9,100
----------- ------- ---------- ----------
At 31 December 2021 290,451,146 290,451 33,503,300 33,793,751
----------- ------- ---------- ----------
As at 31 December 2021 the number of shares authorised for issue
were 290,451,146 (2020: 241,750,955). The par value of the shares
authorised for issue were EUR0.001 each (2020: EUR0.001 each).
On 22 June 2021 following a successful placing, an amount of
EUR9.0 million was raised by the Group and 48,350,191 ordinary
shares were issued at an issue price of EUR0.186 per share. Net
proceeds after expenses were EUR8.46 million.
On 5 November 2021, as a result of the exercise of share
options, 350,000 ordinary shares in the Company at an exercise
price of EUR0.026 per share providing the Company with gross
proceeds of EUR9,100.
17. Other Reserves
Group Company
EUR EUR
At 1 January 2020 (11,287,395) (194,087)
Share issue costs (70,720) (70,720)
Share option expense 21,057 17,619
------------ ---------
At 31 December 2020 (11,337,058) (247,188)
------------ ---------
At 1 January 2021 (11,337,058) (247,188)
Share issue costs (538,060) (538,060)
Share option expense 99,644 91,193
------------ ---------
At 31 December 2021 (11,775,474) (694,055)
------------ ---------
18. Retained Earnings
Group Company
EUR EUR
At 1 January 2020 (7,705,536) (1,173,957)
Loss/(profit) for the year (2,728,442) 382,723
Share option expense - transfer on
exercise 4,163 -
------------ -----------
At 31 December 2020 (10,429,815) 791,234
------------ -----------
At 1 January 2021 (10,429,815) 791,234
(Loss)/profit for the year (3,130,271) 432,140
Share option expense - transfer on
exercise 4,319 -
------------ ---------
At 31 December 2021 (13,555,767) 1,223,374
------------ ---------
Capital contributions represent irrevocable, non-repayable
amounts contributed from connected parties.
19. Share Based Payments
There were 200,000 (2020: 200,000) employee options granted
during 2021 at an exercise price of EUR0.20 (2020: EUR0.10) per
share and these vest subject to continued service by the employee
over a period of 3 years. Options expire at the end of a period of
7 years from the Grant Date or on the date on which the option
holder ceases to be an employee.
The movement in employee share options and weighted average
exercise prices are as follows for the reporting periods
presented:
2021 2020
At 1 January 4,298,042 4,465,526
Granted during period 200,000 200,000
Exercised during period (350,000) (330,447)
Forfeited during period (29,629) (37,037)
----------- ------------
At 31 December 4,118,413 4,298,042
----------- ------------
Options outstanding at 31 December
Number of shares 4,118,413 4,298,042
Weighted average remaining contractual 1.37 years 2.05 years
life
Weighted average exercise price
per share EUR0.038 EUR0.031
Range of exercise price EUR0.0001 EUR0.0001
- EUR0.20 - EUR0.135
Exercisable at 31 December
Number of shares 2,585,324 2,783,473
Weighted average exercise price
per share EUR0.032 EUR0.026
350,000 options (2020: 330,447) options were exercised during
the period at a price of EUR0.026 per share. The weighted average
exercise price of options granted during the period was EUR0.20
(2020: EUR0.10). The expense recognised in respect of employee
share-based payment expense and credited to the share-based payment
reserve in equity was EUR25,151 (2020: EUR21,057).
The Company has measured the fair value of the services received
as consideration for equity instruments of the Company, indirectly
by reference to the fair value of the equity instruments. The table
below sets out the options and warrants that were issued during the
period and the principal assumptions used in the Black Scholes
valuation model.
Employee Employee
Number of options 100,000 100,000
Grant date 7 July 7 July
Vesting period 3 years 3 years
Share price at date of grant GBP0.175 GBP0.175
Exercise price EUR0.20 EUR0.20
Volatility 57% 57%
Option life 7 years 7 years
Dividend yield 0% 0%
Risk free investment rate 0.14% 0.14%
Fair value per option at grant date EUR0.0989 EUR0.0989
Weighted average remaining contractual
life in years 6.52 6.52
The expected life is based on historical data and current
expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumptions
that the historical volatility over a period similar to the life of
the options is indicative of future trends, which may not
necessarily be the actual outcome.
On 1 October 2021, 17,406,069 share warrants were granted to
Frank Poore upon his appointment as a non-executive Director, at an
exercise price of EUR0.174 (GBP GBP0.15) per share. The warrants
expire at the end of a period of 5 years from the grant date or on
the date the employee leaves. The vesting conditions in relation to
these options are set out in the table below.
Tranche 1 Tranche 2 Tranche 3
Grant Date 1 October 2021 1 October 2021 1 October 2021
--------------- --------------- ---------------
Number of Warrants 5,802,023 5,802,023 5,802,023
--------------- --------------- ---------------
Vesting Criteria By end 29 July By end 29 July By end 29 July
2023 2024 2025
--------------- --------------- ---------------
Exercise Price GBP GBP0.15 GBP GBP0.15 GBP GBP0.15
--------------- --------------- ---------------
Trigger Price GBP GBP0.30 GBP GBP0.60 GBP GBP0.90
--------------- --------------- ---------------
Volatility 43% 43% 43%
--------------- --------------- ---------------
Risk Free Rate
of Return 0.62% 0.62% 0.62%
--------------- --------------- ---------------
Dividend Yield 0% 0% 0%
--------------- --------------- ---------------
Option Life 5 Years 5 Years 5 Years
--------------- --------------- ---------------
Fair Value EUR0.063 EUR0.031 EUR0.023
--------------- --------------- ---------------
Expense EUR365,070 EUR178,441 EUR134,452
--------------- --------------- ---------------
The cumulative expense of EUR677,963 is recognised in line with
the vesting conditions and on a straight line basis. An amount of
EUR74,493 is included in administration expenses.
20. Leases
Amounts recognised in the Statement Of Financial Position
The Statement Of Financial Position shows the following amounts
relating to leases:
Group Company
Right of Use Assets 2021 2020 2021 2020
EUR EUR EUR EUR
Buildings 1,813 23,571 - -
Vehicles 18,579 35,568 - -
------ ------ ---- ----
20,392 59,139 - -
------ ------ ---- ----
Group Company
Lease Liabilities 2021 2020 2021 2020
EUR EUR EUR EUR
Current 12,510 38,747 - -
Non-current 7,883 20,392 - -
------ ------ ---- ----
20,393 59,139 - -
------ ------ ---- ----
Amounts recognised in the Consolidated Statement Of Total
Comprehensive Income
The Consolidated Statement Of Total Comprehensive Income shows
the following amounts relating to leases:
Depreciation charge of right-of-use 2021 2020
assets
EUR EUR
Buildings 21,758 21,758
Vehicles 16,989 11,685
------ ------
38,747 33,443
------ ------
Interest expense (included in finance
cost) 2,863 3,445
----- -----
21. Trade and Other Payables
Group Company
2021 2020 2021 2020
EUR EUR EUR EUR
Trade Payables 23,763 24,156 3,653 9,022
PAYE/PRSI 129,972 70,106 25,914 18,150
VAT - 2,004 - -
Deferred Income 108,901 80,000 - -
Accrued Expenses 218,940 181,155 48,952 34,074
------- ------- ------ ------
481,576 357,421 78,519 61,246
------- ------- ------ ------
Terms and conditions of the above financial liabilities:
-- Trade payables are non-interest bearing and are normally settled on 30-day terms
-- PAYE/PRSI payables are non-interest bearing and are normally settled on 30-day terms
-- VAT payables are non-interest bearing and are normally settled on 60-day terms
-- Deferred income is non-interest bearing and are settled over
varying terms throughout the year
-- Accrued expenses are non-interest bearing are settled over varying terms throughout the year
22. Deferred Tax
Deferred income tax assets are recognised for tax loss
carry-forwards to the extent that the realisation of the related
tax benefit through future taxable profits is probable. The Company
did not recognise deferred income tax assets of EUR1,313,216 (2020:
EUR899,370) in respect of losses and depreciation in excess of
capital allowances amounting to EUR10,505,731 (2019: EUR7,194,960)
that can be carried forward against future taxable income.
23. Related Parties
During the year the Directors received the following
emoluments:
Group Company
2021 2020 2020 2019
Directors EUR EUR EUR EUR
Aggregate emoluments 588,313 494,059 588,313 494,059
Share option expense 91,193 17,619 91,193 17,619
------- ------- ------- -------
679,506 511,678 679,506 511,678
------- ------- ------- -------
Included in the above is an amount of EUR85,552 (2020:
EUR68,295) paid to Luclem Estates and Advisory Limited, a company
in which Richard Cooper, a director of the Company, is also a
director. These fees relate to Richard Cooper's consultancy
services to the Company. As at 31 December 2021 EURNil was
outstanding.
24. Capital Management
The capital of the company is managed as part of the capital of
the group as a whole. Full details, are contained in note 4 to the
consolidated financial statements.
25. Events after the reporting date
The Company has evaluated all events and transactions that
occurred after 31 December 2021 up to the date of signing of the
financial statements.
No material subsequent events have occurred that would require
adjustment to or disclosure in the financial statements.
26. Contingent Liabilities
The company has indicated that it will guarantee the liabilities
(as defined in Section 397 of the
Companies Act 2014) of EUR17,496,026 (2020: EUR8,540,183) its
Irish subsidiary, ENGAGE XR Limited for the year ended 31 December
2021.
27. Ultimate controlling party
The Directors believe that there is no ultimate controlling
party as no one shareholder has control of the Company.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Group's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Group's control, are difficult to predict,
and could cause actual results to differ materially from those
expressed or forecasted in the forward-looking statements.
The Group cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Group only as of the date
of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the
statements are made. The Group will not undertake any obligation to
release publicly any revisions or updates to these forward-looking
statements to reflect events, circumstances, or unanticipated
events occurring after the date of this announcement except as
required by law or by any appropriate regulatory authority.
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END
FR UBOBRUNUORAR
(END) Dow Jones Newswires
March 08, 2022 02:01 ET (07:01 GMT)
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