TIDMAPPS
RNS Number : 1509M
appScatter Group PLC
12 September 2019
12 September 2019
appScatter Group plc
("appScatter", the "Company" and together with its subsidiaries
the "Group")
Unaudited interim results for six months ended 30 June 2019
appScatter Group plc (AIM: APPS), the intelligent app management
platform, is pleased to report its unaudited interim results for
the six months ended 30 June 2019.
Highlights
-- Revenue for the period of GBP710,926 for the six months ended
June 2019 compared to GBP951,345 for the twelve months to December
2018.
-- The reported revenue for the first six months of 2018
included accrued revenue of GBP576,573 of which only GBP38,000 was
ultimately recognised in the full year accounts the adjusted
revenue figure for the first six months of 2018 would have been
GBP365,596.
-- Operating cash outflow from operations of GBP1,311,023
compared to GBP2,050,966 for the first six months of 2018.
-- Continued integration of the Priori Data and Abilott businesses acquired during 2018.
Post-period highlights
-- Partnership with Bango plc, through this partnership
appScatter will offer Bango Marketplace to its app customer base
with appScatter developers benefitting from an exclusive offer on
high value audiences of users.
-- Partnership with Interarrows Inc. a Tokyo based on-demand
internet consulting service, to expand the Priori Data brand into
the Asian market.
-- Admission document for the reverse acquisition of Airpush Inc
("Airpush"). expected to be posted in due course.
-- Entered into a EUR5 million loan facility with Harbert European Speciality Lending.
Philip Marcella, appScatter CEO, commented:
"The kes focus areas for the period under review has been the
continued integration of Priori Date and Abilott, as well as the
process of the reverse acquisition of AirPush. Post period end, we
are delighted to have been able to announce additional commerical
agreements with Bango and Interarrows, illustrating the strength of
the appScatter offering and dedication of the leadership team we
have in place.
"The integration process has taken longer than expected and with
the focus of the management directed at the proposed aquisition of
Airpush, short term revenue growth has been affected. We are
encouraged however, that once the integration processes have been
completed for Priori, Abilott and AirPush, we will return to
stronger levels of revenue growth."
For enquiries, please contact:
appScatter Group plc Tel: +44 (0)20 8004 7212
Philip Marcella, Chief Executive Officer www.appscatter.com
finnCap Limited Tel: +44 (0)20 7220 0500
Nominated Adviser and Broker www.finncap.com
Jonny Franklin-Adams / Hannah Boros/ Edward Whiley
Corporate Broking- Alice Lane
IFC Advisory Tel: +44 (0) 20 3934 6630
Financial PR and IR https://www.investor-focus.co.uk/
Graham Herring / Heather Armstrong / Florence Chandler
About appScatter Group plc
appScatter is a scalable B2B SaaS platform that allows paying
users to distribute their apps to, and manage their apps on,
multiple app stores. Additionally, the centralised platform enables
app developers and publishers to manage and track performance of
their own and competing apps across all of the app stores on the
platform.
*****
Chairman's statement
Introduction
The release of our interim results for the six months ended 30
June 2019, comes soon after the delayed release of the results for
the year ended 31 December 2018. We are in the latter stages of due
diligence with regard to the proposed acquisition of Airpush ) (the
"Proposed Acquisition") which will be considered by shareholders at
a General Meeting to be convened.
Suspension in the trading of the Company's shares
Under the AIM Rules the Company's shares were suspended from
trading on 9 April 2019, the day of the announcement of the
Proposed Acquisition. We are working to publish an Admission
Document on the combined Group and once published we would expect a
resumption in the trading of the Company's shares on AIM.
Financial performance
The decisions to hold back the commercial launch of the
appScatter platform has inevitably resulted in a financial
performance for the six months ended 30 June 2019 lower than
originally expected.
The revenue for the first six months of 2018 included accrued
revenue of GBP576,573. This related to work carried out for
corporate customers where invoicing was anticipated to occur after
the reporting date. Only GBP38,000 of this work had been invoiced
as at 31 December 2018 and given timing uncertainties under when
the balance will be invoiced the accrued revenue was not recognised
for the twelve months to 31 December 2019. On a consistent basis
the comparable revenue figure for the first six months of 2018
would be GBP365,596.
The loss for the six months to June 2019 includes GBP2.1m which
relates to the amortisation of intangible assets; the majority of
which were acquired in the Priori Data acquisition.
A summary of the adjusted results is shown in the table
below.
6 months to 6 months to 12 months to
31 December
30 June 2019 30 June 2018 2018
GBP GBP GBP
Revenue (adjusted) 710,926 365,596 951,345
Cost of sales (excluding
amortisation) (449,539) (107,506) (304,069)
Gross margin 261,387 258,090 647,276
Administrative expenses (3,271,672) (3,781,317) (8,489,455)
EBITDA (3,010,285) (3,523,227) (7,842,179)
============= ============= =============
Events during the period under review
The first six months of 2019 were devoted to integrating the
acquisitions of Priori Data and Abilott, both made in 2018,
together with the preparations for the Proposed Acquisition, which
under the AIM Rules, because of its size relative to the size of
appScatter, constitutes a reverse takeover.
Priori Data
Work to integrate Priori Data and appScatter is now
complete.
The Board is pleased with the way Priori Data is trading and
looks forward to a significant pick up in business following
completion of the Proposed Acquisition.
Abilott
As announced at the time of its acquisition, Abilott has long
been the security partner of choice for the appScatter business and
as such needed less integration.
Airpush
As announced on 9 September 2019, we are working towards
completing the acquisition of 100 per cent of Airpush.
Airpush, is a technology company specialising in app
monetisation which was founded in 2011 and is registered in
Delaware, USA. It has 102 employees and consultants located across
the US, China and Europe. It operates in four principal business
areas: app monetisation using artificial intelligence, data sales,
security and e-commerce. Airpush is a well-established business
with contracts with multiple OEMs using it's over the air
technology, reaching 250 million mobile devices, increasing by 500K
new devices each month.
Both appScatter and Airpush share the same vision to provide an
end-to-end SaaS platform for the management and monetisation of
mobile apps that meets the needs of app owners, developers and
publishers.
If completed, the Proposed Acquisition will expand the Company's
product suite by adding AI-powered targeted revenue generating
services on mobile platforms; e-commerce revenue share
partnerships; and an improved security portfolio with detection and
monetisation of pirated installs. The acquisition will provide the
enlarged Group the opportunity to sell its wider product suite to
its combined 1.3 million registered developers and publishers,
whilst increasing revenue and profit margins.
The Proposed Acquisition will also enable the Group to improve
the quality and range of data currently utilised. New data sources
will include app data from 250 million devices, complementing the
current 11 million apps tracked daily and audience data from 3.4
billion devices.
Airpush employees are based globally, adding greater capacity,
more scale and a wider geographical reach to the Company's existing
teams. The combination of the two businesses offers significant
operational efficiencies in IT hosting, software development and
marketing.
The Proposed Acquisition will be funded by the issue of further
new Ordinary Shares in appScatter, subject to approval by
shareholders of appScatter in a general meeting of the Company.
Further details of the Airpush business will be set out in
detail in the forthcoming Admission Document.
Platform development
The marketing of the appScatter platform took a back seat during
the period under review, with the platform being enhanced to work
with the Priori Data systems.
The development work to fully integrate Priori Data with the
appScatter platform has been completed. We are now further
enhancing the capabilities of the platform to accommodate the
Airpush systems, in anticipation of shareholders approving the
Proposed Acquisition at the forthcoming General Meeting.
We do not intend to fully relaunch the further enhanced platform
until the integration and development work regarding the Airpush
business is complete.
Post Period End
Bango
On 2 July 2019, the Board was pleased to announce that it has
signed an agreement with Bango PLC, the mobile commerce company, to
grow in-app revenues for appScatter's customers through Bango
Marketplace.
The Bango Marketplace provides app developers with a unique way
of targeting the small percentage of users that are proven to make
in-app purchases, which generates the majority of revenues for app
developers. App developers who have used these audiences for user
acquisition campaigns have more than doubled in-app revenues.
Through this partnership, appScatter will offer Bango
Marketplace to its app developer customer base, with appScatter
developers benefitting from an exclusive offer on high value
audiences of pay-proven users.
Japanese base
Similarly, on 8 July 2019, the Board was pleased to announce
that it has signed a Joint Venture ("JV") Agreement with
interarrows Inc., ("interarrows"), the Tokyo based on-demand
internet consulting service, to help expand its Priori Data brand
into the Asian market.
Interarrows offers innovative, on-demand internet consulting
services to their clients through its tracking and assessment of
technology trends throughout the global IT industry. The firm has a
number of significant clients that include Salesforce, Indeed and
Yahoo Japan.
The JV will initially base the Priori Data offering and platform
in Japan. Both parties recognise the importance of the Japanese app
market, one of the largest in the world, estimated to be worth
US$13.7 billion in 2017, becoming the third largest, behind China
and the US, with forecasts for it to grow to US$20.9 billion by
2022.
Funding
The lower than anticipated income from trading as we pursue the
completion of the Proposed Acquisition which has taken longer than
anticipated has created the need for additional funding for working
capital purposes.
In 2019 to date, and further to the announcement on the 9 April
2019, GBP1.6 million has been raised in new equity at an average
price of 26.8p per share.
On 11 September 2019, the Company entered into a EUR5 million
loan facility via Harbert under which EUR750,000 has to date been
drawn.
This facility has been put in place principally to assist with
the funding of the Company's immediate working capital requirements
and some of the costs associated with the Proposed Acquisition.
In anticipation of investor interest and the funds provided
under the Harbert facility the Directors continue to adopt the
going concern approach to the presentation of the Company's
financial results. However, in the event of a significant delay or
that sufficient funding from new investors were not available
before the date set for the publication of the Admission Document,
then the Company would need to make alternative financial
arrangements for the continued use of the going concern approach to
remain valid.
Future plans
The Company's immediate objective is the completion of the
Proposed Acquisition and the commercial launch of the enhanced
appScatter platform.
Outlook
The need for an end-to-end SaaS platform for the management and
monetisation of mobile apps that meets the needs of app owners,
developers and publishers is as great as it ever was and the
combination with Airpush together with the required funding is
intended to allow the Enlarged Group to meet this demand.
Clive Carver
Non-executive Chairman
11 September 2019
Consolidated income statement
For the six months ended 30 June 2019
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 Jun 2019 30 Jun 2018 31 Dec 2018
Revenue 710,926 904,169 951,345
Cost of sales - amortisation (2,108,951) (432,628) (2,286,286)
Cost of sales - other (449,539) (107,506) (304,069)
------------ ------------ -------------
Gross (loss) / profit (1,847,564) 364,035 (1,639,010)
Administrative expenses (3,235,414) (3,753,359) (8,484,156)
------------ ------------ -------------
Operating loss (5,082,978) (3,389,324) (10,123,166)
Exceptional items - transaction
costs - - (882,445)
Finance income - 82 118
Finance costs (36,258) (28,040) (5,417)
------------ ------------ -------------
Loss before taxation (5,119,236) (3,417,282) (11,010,910)
Taxation - - 520,395
------------ ------------ -------------
Loss for the period (5,119,236) (3,417,282) (10,490,515)
Other comprehensive income
Exchange gains / (losses) arising
on the translation of foreign subsidiaries (12,800) (9,615) 26,661
------------ ------------ -------------
Total comprehensive loss for the
period attributable to the owners
- continuing and total operations (5,132,036) (3,426,897) (10,463,854)
Loss per share - basic & diluted (0.06) (0.05) (0.25)
Consolidated Statement of Financial Position
At 30 June 2019
Unaudited Unaudited Audited
Note 30 Jun 2019 30 Jun 2018 31 Dec 2018
Non-current assets
Intangible assets 3 9,226,260 1,942,115 10,822,443
Goodwill 2,105,179 - 2,105,179
------------- ------------- -------------
Total non-current assets 11,331,439 1,942,115 12,927,622
Current assets
Trade & other receivables 4 1,301,213 5,358,444 1,397,645
Cash & cash equivalents - 2,626,229 83,402
------------- ------------- -------------
Total current assets 1,301,213 7,984,673 1,481,047
Total assets 12,632,652 9,926,788 14,408,669
------------- ------------- -------------
Share capital 4,550,808 3,378,523 4,550,808
Share premium 11,832,991 8,951,166 11,832,991
Share option reserve 1,318,298 793,590 1,068,222
Merger reserve 26,693,792 18,494,869 26,693,792
Reverse acquisition reserve (4,422,859) (4,422,859) (4,422,859)
Foreign exchange reserve (64,966) (69,212) (52,166)
Retained earnings (32,780,219) (20,587,750) (27,660,983)
------------- ------------- -------------
Total equity 7,127,845 6,538,327 12,009,805
Current liabilities
Trade & other payables 5 5,025,978 3,388,460 2,217,579
Bank overdraft 19,321 - -
Loans & borrowings - current 348,907 - 61,800
------------- ------------- -------------
Total current liabilities 5,394,206 3,388,460 2,279,379
Non-current liabilities
Loans & borrowings - non-current 110,601 - 119,485
------------- ------------- -------------
Total non-current liabilities 110,601 - 119,485
Total liabilities 5,504,807 3,388,460 2,398,864
Total equity & liabilities 12,632,652 9,926,787 14,408,669
------------- ------------- -------------
Consolidated Statement of Changes in Equity
At 30 June 2019
Share Share Share Merger Reverse Foreign Retained Total
Capital Premium Option Reserve acquisition exchange earnings
Reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2018 3,158,907 6,672,740 528,876 18,494,869 (4,422,859) (78,827) (17,170,468) 7,183,238
Loss for the
period - - - - - - (3,417,282) (3,417,282)
Other
comprehensive
income
FX Gains /
(Losses) - - - - - 9,615 - 9,615
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
Total
comprehensive
loss - - - - - 9,615 (3,417,282) (3,407,667)
Issue of share
capital for
cash 219,616 2,855,008 - - - - - 3,074,624
Expenses
associated
with
Placing - (576,582) - - - - - (576,582)
Share options
issued - - 264,715 - - - - 264,715
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
At 30 June 2018 3,378,523 8,951,166 793,591 18,494,869 (4,422,859) (69,212) (20,587,750) 6,538,328
Loss for the
period - - - - - - (7,073,233) (7,073,233)
Other
comprehensive
income
FX Gains /
(Losses) - - - - - 17,046 - 17,046
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
Total
comprehensive
loss - - - - - 17,046 (7,073,233) (7,056,187)
Issue of share
capital for
cash 256,550 3,335,154 - - - - - 3,591,704
Expenses
associated
with
Placing - (453,329) - - - - - (453,329)
Acquisition of
Priori Data
GmbH 832,402 - - 7,957,256 - - - 8,789,658
Acquisition of
Abilott 83,333 - - 241,667 - - - 325,000
Share options
issued - - 274,631 - - - - 274,631
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
At 31 December
2018 4,550,808 11,832,991 1,068,222 26,693,792 (4,422,859) (52,166) (27,660,983) 12,009,805
Loss for the
period - - - - - - (5,119,236) (5,119,236)
Other
comprehensive
income
FX Gains /
(Losses) - - - - - (12,800) - (12,800)
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
Total
comprehensive
loss - - - - - (12,800) (5,119,236) (5,132,036)
Share options
issued - - 250,076 - - - - 250,076
---------------- ---------- ----------- ---------- ----------- ------------ --------- ------------- ------------
At 30 June 2019 4,550,808 11,832,991 1,318,298 26,693,792 (4,422,859) (64,966) (32,780,219) 7,127,845
Consolidated Statement of Cash flows
For the six months ended 30 June 2019
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 Jun 2019 30 Jun 2018 31 Dec 2018
Cash flows from operating activities
Operating loss before taxation (5,119,236) (3,417,282) (11,010,910)
Adjustments for:
Finance costs 36,258 28,040 5,417
Finance income - - (118)
Amortisation 2,108,951 432,628 2,282,286
Share based payments charge 250,076 264,714 539,346
Tax Credit - - 600,395
Exchange differences (13,493) 10,536 9,983
------------ ------------ -------------
Operating loss before working capital
changes (2,737,444) (2,681,364) (7,573,601)
Changes in working capital
Decrease / (increase) in trade
& other receivables 96,432 (293,601) 2,121,902
(Decrease) in trade & other payables 1,329,989 923,999 (731,645)
------------ ------------ -------------
Net cash used in operations (1,311,023) (2,050,966) (6,183,344)
Investing activities
Capitalised R&D Costs - (931,315) (1,037,350)
Interest received - - 118
Funds placed on deposit for the
Priori transaction - (1,829,774) -
Acquisition of business (net of
cash) - - (2,108,137)
------------ ------------ -------------
Net cash flows used in investing
activities - (2,761,089) (3,145,369)
Financing activities
Finance costs (36,258) - (5,411)
Borrowings 278,223 - -
Cash received on shares to be issued 1,478,410 1,159,134 -
Issue of ordinary shares (net of
expenses) - 2,498,042 5,636,417
------------ ------------ -------------
Net cash flows from financing activities 1,720,375 3,657,176 5,631,006
Net change in cash and cash equivalents (102,723) (1,154,879) (3,697,707)
Cash and cash equivalents at the
beginning of the period 83,402 3,781,109 3,781,109
------------ ------------ -------------
Cash and cash equivalents at the
end of the period (19,321) 2,626,230 83,402
------------ ------------ -------------
Notes to the consolidated interim financial statements
1. Accounting policies
1.1. Reporting entity
appScatter Group plc is a public limited company incorporated
and domiciled in England and Wales and quoted on AIM. The
registered office of the Company is Salisbury House, London Wall,
London, England, EC2M 5PS. The registered company number is
10706264.
The Directors of appScatter Group plc are responsible for the
financial information.
1.2. Basis of preparation
The principal accounting policies applied in the preparation of
the financial information are set out below. These policies have
been consistently applied to all periods presented, unless
otherwise stated below.
The financial information has been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRSs), as
adopted by the European Union. The interim financial statements for
the six months ended 30 June 2019 and 30 June 2018 and for the
twelve months ended 31 December 2018 do not constitute statutory
accounts for the purposes of Section 434 of the Companies Act 2006.
The Annual Report and Financial Statements for the year ended 31
December 2018 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for the year ended 31 December 2018 was qualified and
did not contain a statement under sections 498(2) or 498(3) of the
Companies Act 2006. The 30 June 2019 statements were approved by
the Board of Directors on 11 September 2019. The interim financial
statements has not been audited or reviewed by auditors pursuant to
the Financial Reporting Council guidance on Review of Interim
Financial Information. The interim financial information has been
prepared using the accounting policies which will be applied in the
Group's statutory financial statements for the year ended 31
December 2019 and were applied in the Group's statutory financial
statements for the year ended 31 December 2018.
The presentation currency of the financial information is Pound
Sterling (GBP) rounded to the nearest pound. The Company, and
appScatter Limited's functional currency is Pound Sterling (GBP).
The functional currency for the Company's US registered
subsidiaries are US$ and the functional currency of Priori Data
GmbH is Euro.
1.3. Composition of the Group
appScatter Group PLC was incorporated on 3 April 2017. The
Company acquired the share capital of the trading entity,
appScatter Limited, on 21 August 2017.
The Company's subsidiaries are:
- appScatter Limited registered in England and Wales with the registration number 09786498
- appScatter LLC registered in Delaware with the federal ID number 46-3445738
- DSH Labs LLC registered in Delaware with the federal ID number 46- 3918193
- Priori Data GmbH German limited liability company
(Gesellschaft mit beschränkter Haftung, GmbH) incorporated in
Berlin under no. HRB 150508 B
- Abilott Limited registered in England and Wales with the registration number 6203799
1.4. Going concern
The consolidated entity has incurred a loss after tax of
GBP5,119,236 for the period (2018: GBP3,417,282) and had a net cash
outflow from operations of GBP1,311,023 (2018: GBP2,050,966).
The Financial Statements of the Group are prepared on a going
concern basis. The loss and cash outflow have been incurred as the
Group is currently in a growth phase as it develops its platform
and launches its initial customer propositions. Further detail on
the trading prospects of the Group are included in the Chairman's
Statement above.
Under the Company's forecasts, based on the Group as currently
constituted, the funds raised do not provide sufficient funding for
at least the next twelve months based on anticipated outgoings and
the receipt of revenues from production. In the event of the
completed Proposed Acquisition of Airpush the Directors expect the
combined Group would on the basis of forecast prepared have
sufficient funding for at least the next twelve months, based on
anticipated outgoings and revenues. In the event the proposed
reverse takeover with Airpush does not complete, or completes later
than currently expected, the Group as currently constituted, would
require additional funding. The extent of the additional funding
required could to some extent be mitigated by management action to
reduce costs, but this alone would not bridge any funding gap.
While there is no guarantee that future funding will be
available, based on the response from potential investors already
seen and the support of the Harbert Facility the Directors continue
believe that such funding, if required, would be obtained through
debt or equity to enable the company to trade and meet its
liabilities as they fall due for at least twelve months from the
date of approval of the financial statements and consequently the
financial statements have been prepared on a going concern basis
and do not include the adjustments that would result if the Group
was unable to continue as a going concern.
1.5. Basis of consolidation
The consolidated financial statements include the results of the
Company and its subsidiaries ("the Group") as if they formed a
single entity for the full period or, in the case of acquisitions,
from the date control is transferred to the Group. The Company
controls an entity when the Company has the power, either directly
or indirectly, to govern the financial and operating policies of
another entity or business so as to obtain benefits from its
activities. The entity which it controls is classified as a
subsidiary. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
1.6. Business combinations
Acquisition of Priori Data GmbH by appScatter Group plc
On 3 July 2018 appScatter Group plc completed the purchase of
Priori Data GmbH ("Priori") for a reported consideration of GBP13.5
million, satisfied by the issue of up to 16,667,157 new appScatter
shares at an agreed issue price of 70p. 16,290,325 shares were
issued on completion on 3 July 2019. The balance of up to 376,832
shares was due once completion accounts confirmed the net assets at
the date of completion. Following the preparation of the completion
accounts a total of 357,698 shares were issued on 30 August 2019.
The market price per share on the completion date was 53.15 pence
and the market price on the date the retention shares were issued
was 36.5 pence making the fair value of the shares issued GBP8.8
million. In addition, there was a payment of approximately GBP1.8
million in cash consideration. The total fair value of the
consideration was GBP10.6 million. The acquisition of Priori was
approved by appScatter shareholders in July 2018.
On acquisition, the assets, liabilities and contingent
liabilities of subsidiaries are measured at their fair values at
the date of acquisition. Any excess of cost of acquisition over net
fair values of the identifiable assets, liabilities and contingent
liabilities acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the net fair values of the
identifiable assets, liabilities and contingent liabilities
acquired (i.e. discount on acquisition) is credited to profit and
loss in the period of acquisition.
The fair value of the acquired business comprised the platform
which the Company had developed, and the 775 billion historic data
records which Priori held. On acquisition we assigned a value of
GBP4 million to the platform based on the estimated cost to rebuild
the platform and the balance was assigned to the data. This implies
a cost per thousand records of less than GBP0.01 which is prudent
in relation to industry standards.
Acquisition of Abilott Limited by appScatter Group plc
On 17 December 2018 appScatter Group plc acquired 100% of the
issued share capital of Abilott Limited. Further detail on the
acquisition is included in the Strategic Report and CEO Statement.
Initial consideration was GBP0.825 million, consisting of GBP0.5
million in cash (of which GBP0.2m was on completion and GBP0.3m was
deferred) and GBP0.325 million in shares by way of the issue of
1,666,666 new ordinary shares at an effective issue price of 19.5
pence. Directors loans not repayable of GBP245,000 were deducted
from the net asset value on acquisition.
For several years Abilott was our security partner of choice. In
particular, Abilott had been working closely with appScatter for
the previous two years providing security and regulatory compliance
for the Group and supporting appScatter threat analysis products
for appScatter customers.
The maximum consideration is GBP1.85 million, comprising
GBP0.825 million of initial consideration and GBP1 million deferred
consideration.
Initial consideration consisted of:
-- GBP200,000 cash consideration on completion
-- GBP300,000 deferred cash consideration due post completion,
-- 1,666,667 shares at an agreed issue price of 30 pence valuing
the shares at GBP500,000, the market price of appScatter shares on
the date of completion was 19.5pence making the fair value of the
share element GBP325,000.
A further GBP1 million payable by the award of up to a maximum
of 3,333,333 deferred consideration shares. The deferred
consideration is dependent on Abilott achieving revenue criteria in
connection with sales to certain customers for the year ending 31
December 2019 and the corresponding shares would not be issued
until January 2020. Based on trading to date we do not expect that
the deferred consideration shares will be payable.
On acquisition, the assets, liabilities and contingent
liabilities of subsidiaries are measured at their fair values at
the date of acquisition. Any excess of cost of acquisition over net
fair values of the identifiable assets, liabilities and contingent
liabilities acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the net fair values of the
identifiable assets, liabilities and contingent liabilities
acquired (i.e. discount on acquisition) is credited to profit and
loss in the period of acquisition.
Acquisition of appScatter LLC by appScatter Limited
On 18 May 2016 appScatter Merger Sub LLC, a subsidiary of
appScatter Limited was merged with and into appScatter LLC, with
the latter company continuing as the surviving entity. The entire
issued share capital of appScatter LLC was for acquired for a
consideration of GBP12,659,030 and this was satisfied by the issue
of 9,967,740 shares in appScatter Limited.
The board have treated the acquisition as a reverse takeover,
after identifying appScatter LLC (the accounting acquirer or
"appScatter") as the acquirer under IFRS 3 'Business Combinations'.
In addition, this transaction cannot be considered a business
combination, as appScatter Limited did not meet the definition of a
business, under IFRS 3 'Business Combinations'. Based on available
guidance, the difference on consolidation arising on such
transactions should be treated as a share-based payment transaction
and therefore accounted for under IFRS 2 'Share-based payment'. Any
difference between the consideration transferred, which is the fair
value of the shares deemed to have been issued by appScatter and
the fair value of appScatter Limited's identifiable net assets
represents service received by the accounting acquirer. This deemed
cost on reverse takeover is expensed to profit or loss.
The fair value of the consideration transferred is calculated
using the number of appScatter's shares that would have been issued
to the owners of appScatter Limited on the acquisition date to give
them an equivalent ownership interest in appScatter as it has in
the combined company at the share price of the Company at the
acquisition date. The fair value of each share of the Company is
deemed to have been issued by appScatter is based on the fair value
of the share price of appScatter Limited at the time of the
acquisition, which was the market price third party investors were
subscribing for new shares at shortly before the transaction.
Although the consolidated financial information has been issued
in the name of the Company, the legal parent, it represents in
substance continuation of the financial information of appScatter
LLC and DSH LLC, its subsidiary ("appScatter subgroup").
The assets and liabilities of appScatter subgroup are recognised
and measured in the Group financial statements at the
pre-combination carrying amounts and not re-stated at fair
value.
Acquisition of appScatter Limited by appScatter Group plc On 21
August 2017 appScatter Limited was acquired by appScatter Group
PLC. The entire issued share capital of appScatter Limited was
acquired for a consideration of GBP32,065,792 and this was
satisfied by the issue of 49,331,988 shares in appScatter Group PLC
in a share for share exchange.
The board have treated the acquisition as a group reconstruction
under FRS 102. IFRS does not contain requirements for accounting
for common control transactions and an accounting policy for
accounting for the transaction therefore needs to be formulated
based on other available guidance. Management has chosen to use
FRS102 as a reference. appScatter Group PLC was incorporated a
short time before the combination with an identical ownership
structure to appScatter Limited with the sole purpose of completing
the acquisition of appScatter Limited to facilitate the initial
public offering and listing on AIM.
Group reconstructions can be accounted for using merger
accounting where the use of merger accounting is not prohibited by
law, where the ultimate equity holders remain the same and no
non-controlling interest is altered by the transaction. The
combination of appScatter Group plc and appScatter Limited meets
all three of these criteria.
The carrying values of assets and liabilities are not adjusted
to fair value and the difference between the nominal value of the
shares issued and the nominal value of the shares received has been
transferred to the merger reserve and is shown in the statement of
changes in equity.
The results and cash ows of all the combining entities have been
brought into the nancial statements of the combined entity from the
beginning of the nancial year in which the combination occurred,
adjusted so as to achieve uniformity of accounting policies. The
comparative information did not need to be restated as appScatter
Group plc was incorporated during 2017 and thus figures reported in
the Admission document represent the Group in 2016.
1.7. Foreign Currency
The functional currency for the Company's US registered
subsidiaries is US$ and the functional currency of Priori Data GmbH
is Euro.
(i) Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the
dates of the transactions.
(ii) Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the
reporting period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
income statement.
(iii) Share capital, share premium and brought forward earnings
are translated using the exchange rates prevailing at the dates of
the transactions.
1.8. Consolidation of foreign entities
On consolidation, results of the foreign entities are translated
from the local functional currency to Pound Sterling using average
exchange rates during the period. All asset and liabilities are
translated from the local functional currency to Pound Sterling
using the reporting period end exchange rates. These exchange
differences arising from the translation of the net investment in
foreign entities are recognised in other comprehensive income and
accumulated in a separate component of equity.
Post transition exchange differences are recycled to profit or
loss as a reclassification adjustment upon disposal of the foreign
operation.
1.9. Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Group's activities. Revenue is shown net of Value
Added Tax, returns, rebates and discounts and after eliminating
sales within the Group.
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 when specific criteria have been met
for each of the Group's activities as described below. The Group
sells licences to use its software products either on a rental
basis for a fixed period of time. Revenue from licenses sold on a
rental or subscription basis is recognised over the period for
which the Group has obligations under the contract. The Group also
carries out non-recurring work under contracts or statements of
work.
Revenue from contracts is recognised in accordance with IFRS 15
as follows:
a) Identify the contract or statement of works with the customer
b) Identify the performance obligations
c) Determine the transaction price
d) Allocate the transaction price to performance obligations
e) Recognise revenue when an entity satisfies a performance obligation
The above criteria have been applied from the year ended 31
December 2018.
Annual contracts for services are recognised on a monthly basis.
Where advanced payments are made, these amounts are transferred to
deferred revenue and recognised over the length of the contract.
Contracts for non-recurring services are invoiced and recognised
when the performance obligations in a contract or statement of work
have been completed. This has not impacted the way in which revenue
has been accounted for and the comparatives have not changed.
1.10. Intangible assets
Acquired IP
The externally acquired developed technologies which are the
distribution platform for mobile applications are initially
recognised at cost. This asset will be amortised over its useful
life when it is being sold or used. Subsequent to initial
recognition, this intangible asset is reported at cost less
accumulated amortisation and accumulated impairment losses. The
carrying values are tested for impairment when there is an
indication that the value of the assets might be impaired during
the period. The amortisation period and amortisation method with a
finite useful life are reviewed annually at year end. The assets
are being amortised over three reporting years. During the prior
period the Company acquired the assets of Priori Data GmbH and has
recorded a fair value in the accounts for its platform and its
accumulated data records.
Developed IP
Research expenditure is recognised in income statement in the
period in which it is incurred. Internal development expenditure is
capitalised only if it meets the recognition criteria of IAS 38
'Intangible Assets'. Where the criteria are not met, the
expenditure is expensed to income statement. GBP1.0m has met
recognition criteria and been capitalised in 2019 (2018: GBP0.9m).
This expenditure is being amortised over an expected useful
economic life of three years.
Acquired Data
The accumulated data records in Priori Data GmbH were assigned a
fair value of GBP6.6m on completion of the transaction in July
2018. The accumulated data records have a long-term value as they
are used to create extrapolations. The useful economic life of the
data has been assessed at five years.
Impairment
The assessment of the future economic benefits generated by the
above intangible asset involves a significant degree of judgement
based on management estimation of future potential revenue and
profit and the useful life of the assets. Reviews are performed
regularly to ensure the recoverability of this intangible
asset.
2. Loss per share
6 months 6 months 12 months
to to to
31 December
30 June 2019 30 June 2018 2018
Loss for the year and earnings used
in basic & diluted EPS (5,119,236) (3,417,282) (10,490,515)
Weighted average number of shares 91,016,157 63,251,347 42,740,711
Loss per share GBP (0.06) (0.05) (0.25)
Weighted number of fully diluted
shares 96,251,976 67,083,429 47,176,943
Loss per share GBP (0.06) (0.05) (0.25)
3. Intangible assets
Acquired Developed Acquired
IP IP data Total
Cost GBP GBP GBP GBP
At 1 January 2018 891,373 1,282,178 - 2,173,551
Additions - 926,433 - 926,433
Exchange adjustment (567) - - (567)
---------- ---------- ---------- -----------
At 30 June 2018 890,806 2,208,611 - 3,099,417
Additions 4,020,000 110,917 6,581,662 10,712,579
Exchange adjustment 34,137 - - 34,137
---------- ---------- ---------- -----------
At 31 December 2018 4,944,943 2,319,528 6,581,662 13,846,133
Additions - 512,075 - 512,075
Exchange adjustment 3,367 - - 3,367
---------- ---------- ---------- -----------
At 30 June 2019 4,948,310 2,831,603 6,581,662 14,361,575
Amortisation GBP GBP GBP GBP
At 1 January 2018 301,810 427,392 - 729,202
Charge for the period 147,601 285,027 - 432,628
Exchange adjustment (4,528) - - (4,528)
---------- ---------- ---------- -----------
At 30 June 2018 444,883 712,419 - 1,157,302
Charge for the period 825,015 366,476 658,166 1,849,657
Exchange adjustment 16,731 - - 16,731
---------- ---------- ---------- -----------
At 31 December 2018 1,286,629 1,078,895 658,166 3,023,690
Charge for the period 1,073,185 377,600 658,166 2,108,951
Exchange adjustment 2,674 - - 2,674
---------- ---------- ---------- -----------
At 30 June 2019 2,362,488 1,456,495 1,316,332 5,135,315
Carrying value
At 30 June 2019 2,585,822 1,375,108 5,265,330 9,226,260
At 31 December 2018 3,658,314 1,240,633 5,923,496 10,822,443
At 30 June 2018 445,923 1,496,192 - 1,942,115
4. Trade & other receivables
30 Jun 2019 30 Jun 2018 31 Dec 2018
Trade receivables 538,063 1,157,902 631,615
Prepayments 80,172 169,437 110,290
Other receivables 499,618 1,097,045 519,617
Accrued income 16,415 576,573 -
Shares issued for prepaid services - 454,209 -
Amount placed on escrow for acquisition - 1,829,774 -
Loans due from related parties 166,945 73,504 136,123
------------ ------------ ------------
1,301,213 5,358,444 1,397,645
5. Trade & other payables
30 Jun 2019 30 Jun 2018 31 Dec 2018
Trade payables 2,097,881 1,967,637 1,233,183
Amounts received on shares to be
issued 1,478,410 1,159,134 -
Social security & other taxes 377,960 68,227 272,817
Accruals & deferred income 596,598 90,437 391,496
Other payables 475,129 103,025 320,083
------------ ------------ ------------
5,025,978 3,388,460 2,217,579
6. Events after the reporting date
On 2 July 2019 the Company announced that it had entered into a
partnership with Bango plc, through this partnership appScatter
will offer Bango Marketplace to its app customer base with
appScatter developers benefitting from an exclusive offer on high
value audiences of users.
On 8 July 2019 the Company announced that it had entered into a
partnership with Interarrows Inc. a Tokyo based on-demand internet
consulting service, to expand the Priori Data brand into the Asian
market.
On 12 September 2019 the Company announced that it had entered
into a EUR5 million loan facility with Harbert European Speciality
Lending to be used for the completion of the proposed acquisition
of Airpush Inc as announced on 9 April 2019 and to assist with the
funding of the day to day running of the business. The facility
will be drawn in tranches, the first advance of EUR750,000 will be
drawn in the coming days. The second advance of EUR750,000 is
expected to be drawn following shareholder approval of the proposed
transaction of Airpush Inc. Two subsequent advances of EUR1 million
each and up to three further advances of at least EUR500,000 shall
be available until 31 August 2020. The Company will pay an interest
rate of 11 per cent. per annum of the funds drawn down at any one
time. The first and second advances will be repaid in thirty-six
equal monthly instalments commencing three months after the first
draw down. Subsequent and further advances will be repaid in thirty
equal instalments. Under the terms of the facility the Company will
issue warrants to Harbert on draw down of the first advance equal
to GBP208,333 plus 5.3% of the second and any subsequent advances
actually drawn under the loan agreement to a maximum aggregate
amount of GBP208,333. The strike price for the warrants will be the
lower of the price that the Company's shares traded at immediately
prior to suspension (being 17.25 pence) and the average price per
share for the five business days following re-admission.
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
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(END) Dow Jones Newswires
September 12, 2019 07:05 ET (11:05 GMT)
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