TIDMVRE
RNS Number : 9450R
VR Education Holdings PLC
06 March 2019
For immediate release 6 March 2019
VR Education Holdings plc
('VR Education' or the 'Group')
Final Results
VR Education (AIM: VRE; Euronext Growth: 6VR), a leading virtual
reality ('VR') technology company focused on the education space,
today announces its maiden audited final results for the year ended
31 December 2018 (the 'Period').
Financial Highlights
-- Revenue up 15% to EUR716k (FY 2017: EUR624k)
-- EBITDA EUR1.5 million loss (FY 2017: loss of EUR0.5 million),
in line with management expectations
-- Result before tax of EUR4.9 million loss (FY 2017: loss of
EUR0.6 million), in line with management expectations, which
includes:
- A non-cash fair value loss arising on derivative financial
liabilities of EUR2.6 million([i])
- Extinguishment costs of EUR0.3 million([ii])
-- Net cash position at 31 December 2018 of EUR3.5 million
-- Loss per share for the period of EUR0.03 (2017: N/A)
(i) arising from the conversion of convertible debt and
preference shares to ordinary equity in Immersive VR Education
Limited ("IVRE") prior to the acquisition of IVRE by the Group.
(ii) comprising a non-cash element of EUR0.2 million arising
from share warrants issued to debt and preference shareholders in
IVRE on conversion and EUR0.1 million cash contributions made by
IVRE to debt and preference shareholders as part of the commercial
agreements entered into on conversion.
Operational Highlights
-- Placing to raise GBP6.0 million gross (GBP5.1 million net)
and admission to the AIM market of the London Stock Exchange and to
the Enterprise Securities Market (now called Euronext Growth), a
market regulated by Euronext Dublin, on 12 March 2018
-- Full commercial release of ENGAGE, including ENGAGE Education
and ENGAGE Enterprise, in December 2018 with first commercial and
educational customers signed up
-- Apollo 11 VR educational experience selected to be part of
the launch collection for Oculus Go, Oculus' all-in-one VR
headset
-- Apollo 11 HD version released on PC, Oculus Rift, HTC Vive, and Windows Mixed Reality
-- Launch of Titanic VR, the Group's highly anticipated
immersive gaming experience, in August 2018; now available to
purchase on PlayStation, PC, Oculus Rift, HTC Vive, and Windows
Mixed Reality
-- Completion of the "1943: Berlin Blitz" experience in
collaboration with the BBC - nominated for best Linear Virtual
Reality experience at the Venice Film Festival in September
2018
-- Team strengthened with the appointment of key strategic hires
including a new Chief Technology Officer
-- Loren Carpenter, one of the founders of Pixar Animation Studios, appointed as an adviser
Post Period End Highlights
-- Commercial launch of ENGAGE at the BETT conference in London
in January 2019 and GESS Dubai event in February 2019
-- "Raid on the Ruhr", a Dambusters experience, announced as the
Group's next showcase experience to be launched in H1 2019
Richard Cooper, Chairman of VR Education, said: "The successful
IPO and fundraise has been followed by a series of significant
product launches, and so, a year on from the listing, the Group has
both launched its ENGAGE platform in commercial form and has
broadened its retail experiences beyond Apollo 11 VR into Titanic
VR and 1943: Berlin Blitz. The Group is therefore well placed to
capitalise on these in 2019 and beyond."
David Whelan, CEO of VR Education, said: "The Group has
continued to make substantial operational progress since its
admission to AIM, in line with the strategy outlined at the time of
our IPO.
The first commercial version of ENGAGE was released on 13
December 2018 with significantly increased functionality. This
introduced the ability for users to record and publish their own
content, purchase Pro ENGAGE accounts to access enhanced editing
and publishing tools and also the ability to create avatars based
on 'selfie' images using our machine learning system, among other
major updates. These new features ensure that the ENGAGE virtual
reality platform stands above the competition, providing key
production tools to its users.
The full version of Titanic VR was released on the US and EU
PlayStation Network in November 2018, following release in August
2018 on the Oculus and Steam stores. This has been well received
and early sales figures are promising, with December 2018 being the
highest individual month of revenue the Group has ever
generated.
The Board would like to thank our new and existing shareholders
for their support and we look forward to capitalising on
significant market opportunities during the course of 2019 and
beyond."
Investor and Analyst Meeting
A meeting for analysts will be held at 11am today, 6 March 2019,
at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. A copy
of the Final Results presentation is available at the Company's
website: http://www.vreducationholdings.com
An audio webcast of the analysts meeting will be available after
12pm today:
http://webcasting.buchanan.uk.com/broadcast/5c65270ee6e1d92d38f4df4b
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
- Ends -
For further information, please contact:
VR Education Holdings plc Tel: +353 87 665 6708
David Whelan, CEO contact@vreducationholdings.com
Sandra Whelan, COO
Cairn Financial Advisers LLP (Nominated Tel: +44 (0) 20 7213 0880
Adviser)
James Caithie / Liam Murray / Richard
Nash
Stockdale Securities Limited (Joint Tel: +44 (0) 20 7601 6100
Broker)
Andy Crossley / Richard Johnson
Davy (Joint Broker & Euronext Growth Tel: +353 1 679 6363
Advisor)
Fergal Meegan / Ronan Veale / Barry
Murphy
Buchanan (UK Financial PR) Tel: +44 (0)20 7466 5000
Henry Harrison-Topham / Chris Lane VRE@buchanan.uk.com
/ Tilly Abraham
Fuller Marketing (Irish Corporate Tel: +353 87 981 3176
PR) ruth@fullermarketing.ie
Ruth Fuller / Sheila Kelleher
Notes to Editors
VR Education, together with its wholly owned subsidiary, is an
early stage VR software and technology group based in Waterford,
Ireland, dedicated to transforming the delivery methods of
education and corporate training by utilising VR technologies to
deliver fully immersive virtual learning experiences. The Group's
core focus is the development and commercialisation of its online
virtual social learning and presentation platform called ENGAGE,
which provides a platform for creating, sharing and delivering
proprietary and third-party VR content for educational and
corporate training purposes.
In addition to the ongoing development of the ENGAGE platform,
the Group has also built two downloadable showcase VR experiences,
being the award-winning Apollo 11 VR experience and the Titanic VR
experience.
On 12 March 2018, VR Education listed on the AIM market of the
London Stock Exchange and on Euronext Growth, a market regulated by
Euronext Dublin.
For further information, please visit
www.vreducationholdings.com.
Chief Executive's Review
2018 was an important year for VR Education and one in which it
successfully delivered on the operational milestones that were
clearly set out at the time of the Group's IPO. During the period
the Group was admitted to AIM and to the Enterprise Securities
Market (now called Euronext Growth), released various new showcase
experiences and also completed the full commercial release of
ENGAGE, its online virtual learning and corporate training
platform, with full payment capabilities. The Group has also
expanded the development and marketing team, completed projects
with the BBC and Oxford University and released Part 2 of Titanic
VR.
The Group continues to execute on its strategy of focusing on
the commercialisation of ENGAGE whilst launching further showcase
experiences to drive awareness, add content to the ENGAGE platform
and deliver incremental revenue.
VR Education has already started to raise brand awareness by
showcasing the ENGAGE platform and its capabilities at high profile
tradeshows and conferences around the world. The Group has recently
attended the BETT Conference in London in January 2019 and GESS
Dubai in February 2019, one of the largest educational events, held
annually in the UAE, and will be attending a number of major
education conferences in 2019.
ENGAGE
The Group successfully released the ENGAGE platform on 13
December 2018 via the Steam network and its own website
www.engagevr.io. ENGAGE now supports Oculus Rift, HTC Vive, HTC
Vive Pro, Windows Mixed Reality and standard PC display devices.
With the launch of ENGAGE the Group also released new content
provided by Oxford University and additional features such as
enhanced web-based media streaming, desktop streaming, selfie
avatar generations, Pro and Free licensing, cloud file sharing and
a full web-based management system for creating events, quizzes,
content and enhanced account management.
2019 is a pivotal year for ENGAGE with the majority of business
development and marketing focused on the platform.
Showcase experiences
In addition to developing ENGAGE, the Group creates showcase
experiences, not only to generate revenue but to also build up the
Group's VR asset base. These can be reused by external educators on
the ENGAGE platform, whilst also improving the Group's reputation
and attracting developer talent.
At the end of the Period, the Group had built two paid-for
downloadable showcase VR experiences, being the award-winning
Apollo 11 VR experience and the Titanic VR experience.
Apollo 11 VR continued to sell well during the year. As at 31
December 2018, Apollo 11 VR had been downloaded a total of 160,000
times. Titanic VR has been very well received since its full launch
in August 2018. As at 31 December 2018, Titanic VR had been
downloaded a total of 20,000 times with the majority of downloads
coming from its PlayStation version which was released towards the
end of November 2018.
Current trading and outlook
2019 is going to be a busy year for the Group with continued
focus on the promotion of ENGAGE and generation of sales on the
platform, together with the release of two new showcase
experiences. The first experience to be released in 2019 is titled
"Raid on the Ruhr" and is based on the Dambusters mission from
World War II, to be released in H1 2019. The second experience, a
larger space-related project, is scheduled for release in H2
2019.
In summary, 2018 has been a solid year for VR Education with the
team growing from 20 to 34 employees and the successful release of
three new products. The focus for 2019 is the ENGAGE platform and
with the release of second-generation VR hardware, such as the
Oculus Quest, VR Education is well positioned to remain the leader
of next generation educational content and tools.
I would like to thank our new and existing shareholders for
their support and the Group looks forward to capitalising on
significant market opportunities during the course of 2019 and
beyond.
David Whelan
Chief Executive Officer
6 March 2019
Financial Review
Revenue for the year was up 15% on the prior year from EUR624k
to EUR716k, driven by the continued success of the Apollo 11 VR
experience, the release of the full version of Titanic VR [for
Oxford University] and the completion of "1943: Berlin Blitz" for
the BBC.
EBITDA loss was EUR1.5 million compared to a loss of EUR0.5
million in the prior year, in line with management
expectations.
Loss before tax, after a non-cash convertible debt conversion
fair value loss of EUR2.6 million and associated conversion costs
of EUR0.3 million, was a loss of EUR4.9 million, in line with
management expectations, compared to a loss in the prior year of
EUR0.6 million.
Operating cashflows were a net outflow of EUR2.1 million for the
period. The current run-rate of staff costs and other ongoing costs
is approximately EUR250k per month.
The Group's cash position at 31 December 2018 was EUR3.5 million
with no debt.
Séamus Larrissey
Chief Financial Officer
6 March 2019
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2018
Note 2018 2017
Continuing Operations EUR EUR
Revenue 3 716,345 624,487
Cost of Sales 6 (239,701) (300,143)
-------------- ----------
Gross Profit 476,644 324,344
Administrative Expenses 6 (2,247,337) (876,858)
Other Income 5 - 60,333
-------------- ----------
Operating Loss (1,770,693) (492,181)
Fair value (loss)/gain arising on
derivative financial liabilities 11 (2,638,063) 125,764
Extinguishment Costs 9 (267,971) -
IPO Transaction Costs 10 (237,202) (202,940)
Finance Costs 11 (29,977) (54,342)
-------------- ----------
Loss before Income Tax (4,943,906) (623,699)
Income Tax Credit 12 - -
-------------- ----------
Total comprehensive loss for the
year (4,943,906) (623,699)
-------------- ----------
Earnings per Share (EPS)
Basic from continuing operations 13 (0.026) -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2018
Note 2018 2017
EUR EUR
Non-Current Assets
Property, Plant & Equipment 14 59,541 57,300
Intangible Assets 15 956,550 435,791
------------- ----------
1,016,091 493,091
Current Assets
Trade and other receivables 17 394,113 238,315
Cash and short term deposits 18 3,485,186 103,577
------------- ----------
3,879,299 341,892
------------- ----------
Total Assets 4,895,391 834,983
------------- ----------
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 19 193,136 -
Share premium 19 21,587,539 -
Other reserves 20 (11,314,729) 157,280
Retained earnings 21 (5,765,750) (821,844)
------------- ----------
Total Equity 4,700,196 (664,564)
------------- ----------
Non-Current Liabilities
Interest bearing loans and borrowings 24 - 907,180
Derivative financial liabilities 24 - 209,348
------------- ----------
- 1,116,528
------------- ----------
Current Liabilities
Trade and other payables 23 195,195 383,019
------------- ----------
195,195 383,019
------------- ----------
Total Liabilities 195,195 1,499,547
------------- ----------
Total Equity and Liabilities 4,895,391 834,983
------------- ----------
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2018
Note 2018 2017
EUR EUR
Non-Current Assets
Investment in subsidiaries 16 15,028,809 -
----------- -------
15,028,809 -
Current Assets
Trade and other receivables 17 5,136,849 18,750
Cash and short term deposits 18 753,090 6,250
----------- -------
5,889,939 25,000
----------- -------
Total Assets 20,918,748 25,000
----------- -------
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 19 193,136 -
Share premium 19 21,587,539 -
Other reserves 20 (212,363) -
Retained earnings 21 (687,587) -
----------- -------
Total Equity 20,880,725 -
----------- -------
Current Liabilities
Redeemable shares - 25,000
Trade and other payables 23 38,023 -
----------- -------
Total Liabilities 38,023 25,000
----------- -------
Total Equity and Liabilities 20,918,748 25,000
----------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2018
Share Share Other Retained Total
Capital Premium Reserves Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2017 - - 104,915 (198,145) (93,230)
---------- ---------- ---------- ---------- ----------
Total comprehensive
income
Loss for the year - - - (623,699) (623,699)
Total comprehensive
income - - - (623,699) (623,699)
---------- ---------- ---------- ---------- ----------
Transactions with owners
recognised directly in equity
Transfer to derivative
liabilities - - (104,915) - (104,915)
Transfer to other
reserves arising
from accounting treatment
of acquisition of
subsidiary - - 137,100 - 137,100
Share option expense - - 20,180 - 20,180
---------- ---------- ---------- ---------- ----------
Balance at 31 December
2017 - - 157,280 (821,844) (664,564)
---------- ---------- ---------- ---------- ----------
Share Share Other Reserves Retained Total
Capital Premium Earnings
EUR EUR EUR EUR EUR
Balance at 1 January
2018 - - 157,280 (821,844) (664,564)
--------- ----------- --------------- ------------ -------------
Total comprehensive
income
Loss for the year - - - (4,943,906) (4,943,906)
--------- ----------- --------------- ------------ -------------
Total comprehensive
income - - - (4,943,906) (4,943,906)
--------- ----------- --------------- ------------ -------------
Transactions with owners
recognised directly in equity
Issue of ordinary
shares 193,136 21,587,539 - - 21,780,675
Share Issue Costs - - (596,212) - (596,212)
Acquisition of a
subsidiary - - (11,263,644) - (11,243,464)
Share option expense - - 387,847 - 367,667
--------- ----------- --------------- ------------ -------------
Balance at 31 December
2018 193,136 21,587,539 (11,314,729) (5,765,750) 4,700,196
--------- ----------- --------------- ------------ -------------
COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2018
Share Share Other Retained Total
Capital Premium Reserves Earnings
EUR EUR EUR EUR EUR
Balance at 13 October - - - - -
2017
--------- --------- ---------- ---------- ------
Total comprehensive
income
Loss for the year - - - - -
--------- --------- ---------- ---------- ------
Balance at 31 December - - - - -
2017
--------- --------- ---------- ---------- ------
Share Share Other Retained Total
Capital Premium Reserves Earnings
EUR EUR EUR EUR EUR
Balance at 1 January - - - - -
2018
--------- ----------- ---------- ---------- -----------
Total comprehensive
income
Loss for the year - - - (687,587) (687,587)
--------- ----------- ---------- ---------- -----------
Total comprehensive
income (687,587) (687,587)
--------- ----------- ---------- ---------- -----------
Transactions with owners
recognised directly in equity
Issue of ordinary
shares 193,136 21,587,539 - - 21,780,675
Share Issue Costs - - (596,212) - (596,212)
Share option expense - - 383,849 - 383,849
--------- ----------- ---------- ---------- -----------
Balance at 31 December
2018 193,136 21,587,539 (212,363) (687,587) 20,880,725
--------- ----------- ---------- ---------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2018
Note 2018 2017
Continuing Operations EUR EUR
Loss before income tax (4,943,906) (623,699)
Adjustments to reconcile loss before
tax to net cash flows:
Depreciation of fixed assets 6 49,984 36,621
Amortisation of intangible assets 6 175,300 -
Fair value loss/(gain) arising on
derivative financial liabilities 11 2,638,063 (125,764)
Non-cash element of extinguishment 174,651 -
costs
Non-cash element of advisor warrants 112,381 -
Other non-cash items 1,944 -
Finance Costs 11 29,977 54,342
Share Option Expense 30,145 20,180
Movement in trade & other receivables (155,798) (201,710)
Movement in trade & other payables (187,824) 351,339
------------ ------------
(2,075,083) (488,691)
Bank interest & other charges paid (29,977) (264)
------------ ------------
Net Cash used in Operating Activities (2,105,060) (488,955)
------------ ------------
Cash Flows from Investing Activities
Purchases of property, plant & equipment 14 (52,225) (56,326)
Payments to develop Intangible Assets 15 (696,059) (370,514)
------------ ------------
Net cash used in investing activities (748,284) (426,840)
------------ ------------
Cash Flows from Financing Activities
Proceeds from issuance of ordinary
shares 6,234,953 12,000
Proceeds from issuance of preference
shares - 250,000
Proceeds from issuance of convertible
loans - 688,000
------------ ------------
Net cash generated from financing
activities 6,234,953 950,000
------------ ------------
Net increase in cash and cash equivalents 3,381,609 34,205
Cash and cash equivalents at beginning
of year 18 103,577 69,372
Cash and cash equivalents at end
of year 18 3,485,186 103,577
------------ ------------
The non-cash element of extinguishment costs and non-cash
element of advisor warrants reflect the fact that the group issued
warrants to loan note holders, cumulative redeemable preference
shareholders and advisors as part of the acquisition of Immersive
VR Education Limited and the subsequent IPO transaction.
COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2018
Note 2018 2017
Continuing Operations EUR EUR
Loss before income tax (687,587) -
Adjustments to reconcile loss before
tax to net cash flows:
Non-cash element of extinguishment 174,651 -
costs
Non-cash element of advisor warrants 112,381 -
Non-cash element of redemption of
redeemable shares (18,750) -
Finance Costs 276 -
Share Option Expense 17,518 -
Movement in trade & other receivables (5,118,099) -
Movement in trade & other payables 38,023 -
------------ ------
(5,481,587) -
Bank interest & other charges paid (276) -
------------ ------
Net Cash used in Operating Activities (5,481,863) -
------------ ------
Cash Flows from Investing Activities - -
Cash Flows from Financing Activities
Proceeds from issuance of redeemable
shares - 6,250
Redemption of redeemable shares (6,250) -
Proceeds from issuance of ordinary 6,234,953 -
shares
Net cash generated from financing
activities 6,228,703 6,250
------------ ------
Net increase in cash and cash equivalents 746,840 6,250
Cash and cash equivalents at beginning
of year 18 6,250 -
Cash and cash equivalents at end
of year 18 753,090 6,250
------------ ------
The non-cash element of extinguishment costs and non-cash
element of advisor warrants reflect the fact that the group issued
warrants to loan note holders, cumulative redeemable preference
shareholders and advisors as part of the acquisition of Immersive
VR Education Limited and the subsequent IPO transaction.
The non-cash element of redemption of redeemable shares relates
to the accounting treatment for the cancellation of unpaid
redeemable shares during the year.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
VR Education Holdings plc ("the Company") is publicly traded on
the Alternative Investment Market ("AIM") of the London Stock
Exchange and on the Enterprise Securities Market ("ESM"), 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 is the parent company of Immersive VR Education
Limited ("IVRE"). IVRE is incorporated and domiciled in the
Republic of Ireland with the same registered office as the Company.
On 12 March 2018 the Company acquired Immersive VR Education
Limited and contemporaneously listed on London's AIM market and
Dublin's ESM 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.
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.
Basis of Consolidation
The consolidated financial statements incorporate those of VR
Education Holdings plc and its subsidiary Immersive VR Education
Limited.
All financial statements are made up to 31 December 2018. 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.
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 Immersive VR Education Limited
The company was incorporated on 13 October 2017 and entered into
an agreement to acquire the entire issued share capital of
Immersive VR Education Limited on 12 March 2018. The acquisition
was effected by way of issue of shares. Due to the relative size of
the companies, Immersive VR Education'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 VR Education 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 the 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.
The comparative information presented for the Group is that of
Immersive VR Education Limited.
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.
Judgments
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 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.
Derivative financial instruments
The Group has assessed the fair value of the derivative
financial liabilities arising on the conversion feature of
convertible secured loan notes and the cumulative redeemable
preference shares. This calculation includes assumptions on the
expected period of exercise, risk free interest rate and share
price volatility. The Group have engaged third party valuations
experts to assist them in the selection of such assumptions.
Going Concern
The financial statements are presented on a going concern basis.
In forming this opinion, the Directors have considered all of 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
Investments 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.
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.
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 adopted IFRS
9 for the current year and applied it retrospectively for the
preceding financial year however no material adjustments were
identified between the requirements of IFRS 9 and the methods
applied by the Company in the application of IAS 39.
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:
Firstly the Group is primarily focused on developing 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.
Secondly, 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
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 are amortised over their
estimated useful lives based on the pattern of consumption of the
underlying economic benefits. 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.
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 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.
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.
Where the Group purchases its own equity share capital (treasury
shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted
from equity attributable to the Group's equity holders, until the
shares are cancelled or reissued. Where such shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the
Group's equity holders.
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 determination of whether an arrangement is (or contains) a
lease is based on the substance of the arrangement at the inception
of the lease. The arrangement is, or contains, a lease if
fulfilment of the arrangement is dependent on the use of a specific
asset (or assets) and the arrangement conveys a right to use the
asset (or assets), even if that asset is (or those assets are) not
explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease
or an operating lease. A lease that transfers substantially all the
risks and rewards incidental to ownership to the Group is
classified as a finance lease.
An operating lease is a lease other than a finance lease.
Operating lease payments are recognised as an operating expense in
the statement of comprehensive income in administrative expenses on
a straight-line basis over the lease term.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings, using the
effective interest method.
Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. To the extent
that there is no evidence that it is probable that some or all of
the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services, and amortised over the period of
the facility to which it relates.
Borrowings are classified as current liabilities, unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the end of the reporting
period.
Borrowing costs
General and specific borrowing costs directly attributable to
the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost
of those assets, until such time as the assets are substantially
ready for their intended use or sale.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation. All
other borrowing costs are recognised in the income statement within
finance costs in the period in which they are incurred.
Convertible Financial Instruments
Convertible financial instruments issued by the Group comprise
convertible loan notes and convertible redeemable Preference Shares
that can be converted to ordinary share capital at the option of
the holder. The number of shares to be issued may vary with changes
in their fair value.
The derivative component arising from the conversion option is
recognised at fair value. The debt component is recognised
initially as the difference between the fair value of the
convertible financial instrument as a whole and the fair value of
the derivative. Any directly attributable transaction costs are
allocated against the liability.
Subsequent to initial recognition, the debt component of the
convertible instrument is measured at amortised cost using the
effective interest rate method. The derivative component is
re-measured at fair value at each subsequent balance sheet
date.
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.
New standards, interpretations and amendments adopted by the
Company
On 1 January 2018 the company adopted IFRS 9 - Financial
Instruments. No other new standards were adopted in the year.
The Company has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
Application Date
of Standard (Periods
Commencing on or
Reference Title Summary after)
IFRS Leases Principles for the 1 January 2019
16 recognition, measurement,
presentation and
disclosure of leases
The adoption of these Standards and Interpretations is not
expected to have a material impact on the financial information of
the Company in the period of initial application when they come
into effect.
3. Segment Reporting
2018 2017
Revenue by Type EUR EUR
Showcase experience revenue 592,362 592,617
Other revenue 123,983 31,870
------- -------
Total Revenue 716,345 624,487
------- -------
4. Capital Management
For the purpose of the Company's capital management, capital
includes issued capital, convertible preference shares, share
premium and all other equity reserves. The primary objective of the
Group's capital management is to maximise the shareholder
value.
Group 2018 2017
EUR EUR
Interest bearing loans and borrowings - 907,180
Derivative financial liabilities - 209,348
Trade and other payables 195,194 383,019
Less: cash and short term deposits (3,485,186) (103,577)
----------- ---------
Net Debt (3,289,992) 1,395,970
----------- ---------
Equity 4,296,872 (664,564)
----------- ---------
Total Equity 4,296,872 (664,564)
----------- ---------
Capital and net debt 1,006,880 731,406
----------- ---------
5. Other Income
2018 2017
EUR EUR
Industry awards proceeds - 60,333
----- ------
6. a. Expenses by nature
2018 2017
EUR EUR
Depreciation charges 49,984 36,621
Amortisation expense 175,300 -
Operating Lease Payments 36,839 25,115
Foreign Exchange (Gain) / Loss (35,027) 7,725
Other Expenses 2,956,001 1,478,054
--------- ---------
3,183,097 1,547,515
--------- ---------
Wages and salaries capitalised (586,937) (313,501)
Other expenses capitalised (109,122) (57,013)
--------- ---------
Total cost of sales and administrative
expenses 2,487,038 1,177,001
--------- ---------
6. a. Expenses by nature (continued)
Disclosed as:
Cost of sales 239,701 300,143
Administrative expenses 2,247,337 876,858
--------- ---------
Total cost of sales and administrative
expenses 2,487,038 1,177,001
--------- ---------
b. Auditor Remuneration
Services provided by the Company's auditor
During the year, the Company obtained the following services
from the Company's auditor:
2018 2017
EUR EUR
Fees payable to the Company's auditor
for the audit of the financial statements
Tax 42,173 56,000
Other 11,688 -
40,776 -
-------- -------
7. Employees
Employee Benefit Expense 2018 2017
EUR EUR
Wages and salaries 1,380,687 731,186
Social security costs 136,910 62,887
Defined contribution pension costs 8,961 -
Share option expense 30,145 20,180
Capitalised employee costs (586,937) (313,501)
--------- ---------
Total Employee Benefit Expense 969,766 500,752
--------- ---------
Average Number of People Employed 2018 2017
Average number of people (including
executive Directors)
employed:
Operations 22 15
Administration 3 2
Marketing 2 -
--------- ---------
Total Average Headcount 27 17
--------- ---------
8. Directors remuneration
Below is the directors remuneration for the year ended 31
December 2018 and for the year ended 31 December 2017.
31 December 2018
-----------------------------------------
Pension Options Total
Group Directors' benefits issued
fees
EUR EUR EUR EUR
Executive Directors
David Whelan 114,181 2,017 - 116,198
Sandra Whelan 85,807 2,100 - 87,907
Séamus Larrissey
Non-executive Directors 86,500 2,833 4,779 94,112
Richard Cooper 96,077 - 13,917 109,994
Michael Boyce 37,143 - - 37,143
Tony Hanway 23,807 - - 23,807
443,515 6,950 18,696 469,191
------------ --------- ------- -------
31 December 2017
-----------------------------------------
Pension Options Total
Group Directors' benefits issued
fees
EUR EUR EUR EUR
Executive Directors
David Whelan 70,000 - - 70,000
Sandra Whelan 60,000 - - 60,000
Séamus Larrissey
Non-executive Directors 34,638 - 2,944 37,582
Richard Cooper - - - -
Michael Boyce - - - -
Tony Hanway - - - -
At 31 December 2018 164,638 - 2,944 167,582
------------ --------- ------- -------
The options issued are a non-cash amount and are accounted for
in line the treatment of the other share options issued to
employees under IFRS 2. Further notes on Share Based Payments are
included in Note 22.
During the year ended 31 December 2018, Richard Cooper received
a fee in relation to the IPO transaction of GBP50,000.
During the year ended 31 December 2018, Michael Boyce received a
fee in relation to consultancy services provided to the company,
separate to his role as a Non-Executive Director of GBP12,031.
9. Extinguishment Costs
2018 2017
EUR EUR
Legal and professional fees paid on
behalf of redeemable secured loan
note holders and cumulative redeemable 51,500 -
preference shares holders
Monitoring fee and interest paid post
conversion 41,820 -
Warrant Costs 174,651 -
-------- ----
Total Extinguishment Costs 267,971 -
-------- ----
As part of the reorganisation process which occurred prior to
the IPO all loan note holders and cumulative redeemable preference
share note holders converted their holdings into ordinary shares.
During this process the Group agreed to pay:
- all interest that would have accrued on these loan notes for
the 12 month period from the date of Admission had such loan notes
remained in issue.
- all monitoring fees that would have accrued for the 12 months
period from the date of Admission had such agreements not been
terminated.
The group also issued warrants to the loan note holders and
cumulative redeemable preference shareholders over such number of
new Ordinary Shares in the Company as is equal to 3 per cent. of
the issued Ordinary Shares at Admission, exercisable at a 50 per
cent. premium to the Issue Price expiring 36 months from
Admission.
10. IPO Transaction Costs
2018 2017
EUR EUR
Legal and professional fees 237,202 202,940
------- -------
Total IPO Transaction Costs 237,202 202,940
------- -------
Included in Other Reserves 596,212 -
------- -------
The transaction costs relate to the admission of the Group to
the AIM market of the London Stock Exchange and the ESM market of
the Irish Stock Exchange on 12 March 2018.
11. Finance Costs
2018 2017
EUR EUR
Interest expense:
- Notional interest on non-current
borrowings - 34,472
- Interest payable on convertible
loan notes 27,105 14,387
- Dividend on redeemable convertible
preference shares 1,356 5,219
- Bank charges 1,516 264
----------- -------
Total finance costs 29,977 54,342
----------- -------
Fair value (loss) / gain on derivative
financial liability (2,638,063) 125,764
----------- -------
The fair value loss on derivative financial liabilities arose in
2018 from the conversion of convertible debt and preference shares
to ordinary equity in Immersive VR Education Limited prior to its
acquisition by the Group.
12. Income Tax Expense
2018 2017
EUR EUR
Current tax: -
Current tax on loss for the year - -
---- ----
Total current tax - -
---- ----
Deferred tax (Note 25) - -
---- ----
Income Tax Expense - -
---- ----
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:
2018 2017
EUR EUR
Loss Before Tax (4,943,906) (623,699)
----------- ----------
Tax calculated at domestic tax rates
applicable to loss in
Ireland of 12.5% (617,988) (77,962)
Tax effects of:
- Depreciation in excess of capital
allowances 4,033 3,178
- Expenses not deductible for tax
purposes 406,488 29,572
- Tax losses for which no deferred
tax asset was recognised 207,467 45,212
----------- ----------
Total tax expense - -
----------- ----------
NOTES TO THE FINANCIAL STATEMENTS
13. Earnings per share (EPS)
2018 2017
Loss attributable to equity holders EUR EUR
of the Group:
Continuing Operations (4,943,906) (623,699)
----------- ---------
Weighted average number of shares
for Basic EPS 193,136,406 1
Basic loss per share from continuing
operations (0.026) -
----------- ---------
14. Property, Plant & Equipment
Fixtures,
Leasehold fittings Office
Group improvements and equipment Equipment Total
EUR EUR EUR EUR
Cost of Valuation
At 1 January 2017 - 3,548 45,505 49,053
Additions 15,601 2,062 38,663 56,326
-------------- -------------- ----------- -------
At 31 December 2017 15,601 5,610 84,168 105,379
-------------- -------------- ----------- -------
Additions 4,740 1,415 46,070 52,225
-------------- -------------- ----------- -------
At 31 December 2018 20,341 7,025 130,238 157,604
-------------- -------------- ----------- -------
Depreciation
At 1 January 2017 - 1,005 10,453 11,458
Charge (note 6) 3,284 1,122 32,215 36,621
----- ----- ------ ------
At 31 December 2017 3,284 2,127 42,668 48,079
----- ----- ------ ------
Charge (note 6) 4,607 1,405 43,972 49,984
----- ----- ------ ------
At 31 December 2018 7,891 3,532 86,640 98,063
----- ----- ------ ------
Net Book Amount
At 31 December 2017 12,317 3,483 41,500 57,300
At 31 December 2018 12,450 3,493 43,598 59,541
------ ----- ------ ------
Depreciation expense of EUR49,984 (2017: EUR36,621) has been
charged in 'Administrative Expenses'.
15. Intangible Assets
Software
in development
Group costs Total
EUR EUR
Cost of Valuation
At 1 January 2017 65,277 65,277
Additions 370,514 370,514
--------------- ---------
At 31 December 2017 435,791 435,791
--------------- ---------
Additions 696,059 696,059
--------------- ---------
At 31 December 2018 1,131,850 1,131,850
--------------- ---------
Amortisation
At 1 January 2017 - -
Charge - -
------- -------
At 31 December 2017 - -
------- -------
Charge 175,300 175,300
------- -------
At 31 December 2018 175,300 175,300
------- -------
Net Book Value
At 31 December 2017 435,791 435,791
At 31 December 2018 956,550 956,550
------- -------
The software being developed relates to the creation of three
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 a mobile version is expected in
H1 2019. Amortisation will commence once the mobile version is
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 and a Space Shuttle experience are currently in
development with expected release during 2019. They are currently
not being amortised.
Amortisation expense of EUR175,300 (2017: EURNil) has been
charged in 'Administrative Expenses'.
An impairment review was carried out at the balance sheet date.
No impairment arose.
16. Investments in Subsidiaries
Company EUR
At Incorporation - 13 October 2017 -
Additions -
----------
At 31 December 2017 -
----------
Additions 15,028,809
----------
At 31 December 2018 15,028,809
----------
Investments in subsidiaries are recorded at cost, which is the
fair value of the consideration paid.
On 12 March 2018 the Company has acquired all of the issued
capital of Immersive VR Education 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.
Country of Proportion
incorporation of equity shares
Name and residence Nature of business held by the
company
Immersive VR Education Virtual Reality
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.
17. Trade and Other Receivables
Group Company
2018 2017 2018 2017
EUR EUR EUR EUR
Trade receivables 180,129 105,450 - -
Less: provision for - - - -
impairment of receivables
------- ------- --------- ------
Trade receivables
- net 180,129 105,450 - -
Amounts due from related
parties - - 5,058,589 -
Prepayments 178,650 107,778 53,062 -
Other debtors 4,991 23,830 - 18,750
VAT 30,343 1,257 25,198 -
------- ------- --------- ------
394,113 238,315 5,136,849 18,750
------- ------- --------- ------
As at 31 December 2018, trade receivables of EUR180,129 (2017:
EUR105,450) were deemed fully recoverable. No bad debt provision
charge was incurred during 2018 (2017: EURNil).
17. Trade and Other Receivables (continued)
The carrying amounts of the Company's trade and other
receivables are denominated in the following currencies:
Group Company
2018 2017 2018 2017
EUR EUR EUR EUR
Euro - Neither past
due nor impaired 53,028 20,821 - -
Dollar - Neither past
due nor impaired 127,101 84,629 - -
------- ------- ---- ----
180,129 105,450 - -
------- ------- ---- ----
18. Cash and short-term deposits
Group Company
2018 2017 2018 2017
EUR EUR EUR EUR
Cash at bank and on
hand 3,485,186 103,577 753,090 6,250
--------- ------- ------- -----
3,485,186 103,577 753,090 6,250
--------- ------- ------- -----
19. Issued Share Capital and Premium
Number of Ordinary
shares shares Share premium Total
EUR EUR EUR
At 01 January 2017 - - - -
Ordinary Shares Issued 1 - - -
----------- -------- ------------- ----------
At 31 December 2017 1 - - -
----------- -------- ------------- ----------
Shares issued as consideration
for reverse merger 133,089,739 133,090 14,866,910 15,000,000
Ordinary Shares Issued 60,046,666 60,046 6,720,629 6,780,675
----------- -------- ------------- ----------
At 31 December 2018 193,136,406 193,136 21,587,539 21,780,675
----------- -------- ------------- ----------
On 12 March 2018 the Company acquired Immersive VR Education Ltd
for a purchase price of EUR15 million through the issue 133,089,739
new ordinary shares of EUR0.001 and became the legal parent of the
Group. On 12 March 2018 the Company listed on London's AIM market
and Dublin's ESM market. As part of the Admission process, the
Group raised GBP6 million (EUR6,772,773) before expenses, through
an oversubscribed placing of 60,000,000 new ordinary shares at a
placing price of GBP0.10 (EUR0.1127) per share.
20. Other Reserves
Group Company
EUR EUR
At 1 January 2017 104,915 -
Transfer to derivative liabilities (104,915) -
Transfer to other reserves arising
from accounting treatment of acquisition
of subsidiary 137,100 -
Share option expense 20,180 -
--------- -------
At 31 December 2017 157,280 -
--------- -------
At 1 January 2018 157,280 -
Share issue costs (596,212) (596,212)
Acquisition of a subsidiary (11,263,644) -
Share option expense 387,847 383,849
------------ ---------
At 31 December 2017 (11,314,729) (212,363)
------------ ---------
21. Retained Earnings
Group Company
EUR EUR
At 1 January 2017 (198,145) -
Loss for the year (623,699) -
--------- -------
At 31 December 2017 (821,844) -
--------- -------
At 1 January 2018 (821,844) -
Loss for the year (4,943,906) (687,587)
----------- ---------
At 31 December 2017 (5,765,750) (687,587)
----------- ---------
22. Share Based Payments
During the year ended 31 December 2018, VR Education Holdings
plc introduced a share-based payment scheme for employee
remuneration ("the 2018 Scheme") to replace the scheme previously
in operation within Immersive VR Education Limited ("the 2016
Scheme"). The 2018 Scheme and the 2016 schemes are classified
equity settled share based payment plans. Recipients under the
scheme are awarded options over ordinary shares of the Company.
On the 12 March 2018, the options under the 2016 Scheme were
cancelled as part of the Capital Restructure and Listing process
and replaced with options under the 2018 Scheme under the
equivalent terms and conditions as the 2016 scheme, and a stock
split which gave rise to the issue of 740 shares for every 1 share
held. The options granted under the 2016 Scheme had vesting periods
of up to 36 months. The replacement of the options did not give
rise to any additional income statement expense in 2018.
22. Share Based Payments (continued)
There were 311,108 employee options granted during 2018 at an
exercise price of EUR0.135 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.
Share-based payment expense with Director
On 12 March 2018, VR Education Holdings plc granted options to
purchase 1m ordinary shares to Richard Cooper, the Chairman of the
Company. The options vest if the market capitalisation of the
Company equals 2.5 times the market capitalisation on admission to
listing for a consecutive period of 30 days. Except in the event of
a change in control (see below) the options, which are exercisable
at a price of GBP0.0001, cannot be exercised for a period of two
years and expire on 12 March 2023. The market capitalisation
requirement is a "market condition" under IFRS 2 and the valuation
of the option, which amounted to EUR0.668, takes this market
condition into account.
In the event of a change in control, in the two years after
admission to listing, the options are exercisable at prices ranging
from GBP0.0001 to GBP0.10. The change in control scenarios gave
rise to option values of EUR0.018 - EUR0.112.
The movement in employee share options and weighted average
exercise prices are as follows for the reporting periods
presented:
2018 Scheme 2016 Scheme
2018 2018 2017
At 1 January - 4,208 -
Capital restructure
and Listing process 3,113,920 (4,208) -
Granted during period 1,311,108 - 4,208
At 31 December 4,425,028 - 4,208
Options outstanding
at 31 December
Number of shares 4,425,028 - 4,208
Weighted average remaining
contractual life 3.75 years 4.3 years
Weighted average exercise
price per share EUR0.028 EUR19.21
Range of exercise price EUR0.0001 - EUR0.135 EUR19.21
Exercisable at 31 December
Number of shares 1,997,556 893
Weighted average exercise
price per share EUR0.026 EUR19.21
No options were exercised during the period. The weighted
average exercise price of options granted during the period was
EUR0.032 (2017: EUR19.21). The expense recognised in respect of
employee share based payment expense and credited to the share
based payment reserve in equity was EUR30,144 (2017:
EUR20,180).
Advisor Warrants
As part of the listing process and as set out in the admission
document, the Company issued warrants over 5,018,328 shares at an
exercise price of GBP0.15, subject to expiry on various dates up to
12 March 2023. The warrants were valued under the Black Scholes
model. The expense recognised during the period was EUR162,871 of
which EUR112,381 was recognised in the income statement and
EUR50,490 in equity.
Investor Warrants
As part of the arrangements for the listing process and as set
out in the admission document, the Company issued warrants over
5,794,092 shares at an exercise price of GBP0.15, subject to expiry
on 12 March 2023. The warrants were valued under the Black Scholes
model. The expense of EUR174,651 was recognised in the income
statement during the period.
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 valuation.
Employee Director Advisor Investor
Number of options
/ warrants 311,108 1,000,000 5,018,328 5,794,092
Grant date 26 Apr 18 12 Mar 18 12 Mar 18 12 Mar 18
Vesting period 3 years 2 years - -
Share price at date GBP0.11 GBP0.10 GBP0.10 GBP0.10
of grant
Exercise price EUR0.135 GBP0.001-GBP0.10 GBP0.15 GBP0.15
Volatility 57% 54.4-59.2% 54.4-57.3% 57.3%
Option life 7 years 5 years 22 months 3 years
- 5 years
Dividend yield 0% 0% 0% 0%
Risk free investment
rate 0.14% 0.5-1.16% 0.8-1.16% 0.87%
Fair value per option
at grant date EUR0.058 EUR0.018-EUR0.112 EUR0.018-EUR0.030 EUR0.030
Weighted average remaining
contractual life in
years 6.3 4.2 2.7 2.2
23. Trade and Other Payables
Group Company
2018 2017 2018 2017
EUR EUR EUR EUR
Trade Payables 28,263 18,225 9,169 -
PAYE/PRSI 46,923 45,983 16,362 -
Redeemable shares - 25,000 - 25,000
Accrued Expenses 120,009 293,811 12,492 -
------- ------- ------ ------
195,195 383,019 38,023 25,000
------- ------- ------ ------
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
-- Accrued expenses are non-interest bearing are settled over varying terms throughout the year
24. Non-current Liabilities
Group Company
2018 2017 2018 2017
EUR EUR EUR EUR
Borrowings
Redeemable convertible
secured loan notes - 776,155 - -
Cumulative Convertible
Redeemable Preference
Shares - 131,025 - -
---- ------- ---- ----
Total Borrowings - 907,180 - -
---- ------- ---- ----
Derivative financial
liabilities on conversion
feature of
redeemable secured
loan notes and cumulative
redeemable
preference shares - 209,348 --
---------
Total Non-current
Liabilities -1,116,528 --
---------
24. Non-current Liabilities
Immediately prior to the acquisition of Immersive VR Education
Limited ("IVRE") by the Company on 12 March 2018 the existing
redeemable secured loan notes and cumulative redeemable preference
shares with IVRE were redeemed for Ordinary Equity of IVRE.
The 2016 Kernel Loan Agreement which resulted in Kernel holding
EUR240,000 in redeemable secured loan notes was redeemed at
EUR19.21 for 12,493 ordinary shares in IVRE. As part of the
acquisition of IVRE by the Company, Kernel were issued 9,244,820
ordinary shares in the Company, using a share swap ratio of 740 to
1.
The 2017 Kernel Loan Agreement which resulted in Kernel holding
EUR400,000 in redeemable secured loan notes was redeemed at
EUR83.916 for 4,767 ordinary shares in IVRE. As part of the
acquisition of IVRE by the Company, Kernel were issued 3,527,580
ordinary shares in the Company, using a share swap ratio of 740 to
1.
The 2017 Suir Valley Ventures Loan Agreement which resulted in
Suir Valley Ventures holding EUR288,000 in redeemable secured loan
notes was redeemed at EUR19.21 for 14,992 ordinary shares in IVRE.
As part of the acquisition of IVRE by the Company, Suir Valley
Ventures were issued 11,094,080 ordinary shares in the Company,
using a share swap ratio of 740 to 1.
The 2017 Enterprise Ireland Agreement which resulted in
Enterprise Ireland holding EUR250,000 in Cumulative Convertible
Redeemable Preference Shares was redeemed at EUR19.21 for 13,014
ordinary shares in IVRE. As part of the acquisition of IVRE by the
Company, Enterprise Ireland were issued 9,630,360 ordinary shares
in the Company, using a share swap ratio of 740 to 1.
Derivative financial
liabilities on conversion
feature of
redeemable secured Group Company
loan notes and cumulative
redeemable
preference shares
2018 2017 2018 2017
EUR EUR EUR EUR
Balance as at beginning
of period 209,348 - - -
Transfer from other
reserves 104,915 - -
Movement in current
period 2,638,063 104,433 - -
Redemption of loan
notes and preference
shares (2,847,411) - - -
------------- ------- ----- ----
Balance as at end
of period - 209,348 - -
------------- ------- ----- ----
25. 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 EUR410,683 (2017:
EUR79,597) in respect of losses and depreciation in excess of
capital allowances amounting to EUR3,285,467 (2016: EUR636,773)
that can be carried forward against future taxable income.
26. Related Parties
During the year the Directors received the following
emoluments:
Group Company
2018 2017 2018 2017
Directors EUR EUR EUR EUR
Aggregate emoluments 450,465 164,638 406,787 -
Share option expense 18,696 2,944 18,696 -
------- ------- ------- ----
469,161 167,582 425,483 -
------- ------- ------- ----
Included in the above is an amount of EUR96,077 (2017: EURNil)
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 2018 EURNil was outstanding.
27. Operating Leases
The Company leases a motor vehicle and office space under
non-cancellable operating lease agreements with lease terms between
three years and four years nine months.
The lease expenditure charged to the income statement during the
year is disclosed in Note 6.
Future minimum rentals payable under non-cancellable operating
leases as at 31 December are, as follows:
Group Company
2018 2017 2018 2017
Motor Vehicles EUR EUR EUR EUR
Within one year 6,570 6,570 - -
After one year but
not more than five
years 3,285 9,854 - -
----- ------ ---- ----
9,855 16,424 - -
----- ------ ---- ----
27. Operating Leases (continued)
Group Company
2018 2017 2018 2017
Land and buildings EUR EUR EUR EUR
Within one year 25,000 25,000 - -
After one year but
not more than five
years 53,125 78,125 - -
------ ------- ---- ----
78,125 103,125 - -
------ ------- ---- ----
28. Ultimate controlling party
The directors believe that there is no ultimate controlling
party as no one shareholder has control of the Company.
29. Subsequent Events
The Company has evaluated all events and transactions that
occurred after 31 December 2018 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.
- ENDS -
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 CKPDKFBKDNNK
(END) Dow Jones Newswires
March 06, 2019 02:00 ET (07:00 GMT)
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