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Live Company Group - Final Results

RNS Number : 7173Q
Live Company Group PLC
23 June 2020
 

23 June 2020

 

LIVE COMPANY GROUP PLC

("LVCG", the "Company" or the "Group")

 

2019 Full Year Audited Results

 

Live Company Group PLC (AIM: LVCG) is pleased to announce its audited results for the year ended 31 December 2019, extracts from which are set out below - will be made available on the Company's web-site www.livecompanygroup.com shortly.

 

In light of the UK Government's current restrictions and guidelines in respect of the COVID-19 pandemic, the Company in finalising appropriate arrangements for its 2020 Annual General Meeting details of which will be announced in due course.

 

Chairman's Review

 

 

The year ended 31 December 2019, has, once again, been a transformational one for the Group, which saw us deliver on our strategy of expanding the BRICKLIVE Zoo programme globally, creating further relationships with world renowned Intellectual Property (IP) partners, extending our BRICKLIVE shows into additional geographic areas and further developing our BRICKLIVE touring assets.

 

In early 2020, the world was shaken by the aggressive spread of the COVID-19 virus, which in addition to the many lives lost, created an unprecedented period of volatility and uncertainty in the global markets. The Group will issue a full operational statement at the half year.

 

As previously announced, a series of cost reduction measures have been put in place by your Board, including the furloughing of staff, redundancies and a decrease in management salaries and the Non-executive Directors foregoing their Q2 and Q3 fees.

 

I would like to thank all the team for their extensive support during these challenging times and our thoughts go out to all those affected by the COVID-19 pandemic.

 

BRICKLIVE Zoo

 

In 2019, we continued to build on the BRICKLIVE Zoo programme that was established in 2018, exhibiting themed tours in zoos, safari parks, aquariums and venue attractions. We have seen great interest and enthusiasm for the Zoo tours, as they bring repeat customers back to attractions, thus increasing revenue for our clients as well as bringing footfall in quieter months.

 

By the end of 2019, we had secured 12 contracts with zoos from the UK to the US including Marwell Zoo (UK), Burger Zoo (Holland), Boston Zoo (US) and Granby Zoo in Canada. Our programme included exhibiting BRICKLIVE Ocean at Edinburgh Zoo, The Great Brick Safari at Twycross Zoo (UK), BRICKLIVE Big Cats at Chester Zoo and BRICKLIVE Animal Kingdom at Brookfield Zoo USA.

 

We see the BRICKLIVE Zoo programme as a key source of recurring revenue (many clients book for more than one year), which has long lead in times (from initial booking to the event taking place) which means we have good visibility of revenue. Going forward we aim to further increase our geographical presence and asset utilisation in this sector of our business.

 

Post balance sheet, BRICKLIVE Zoo Animal Paradise is open at JB Zoo in Michigan, BRICKLIVE Ocean is being installed in July at Bristol Zoo and BRICKLIVE Supersized is installed at Marwell Zoo, the latter both awaiting final approval to open to the public.

 

 

 

BRICKLIVE IP

 

In Q2 of 2019, we established our BRICKLIVE IP division to enable us to partner with world renowned IP brands. The BRICKLIVE IP division is working with two of the largest entertainment brands in the world, Nickelodeon (part of Viacom CBS Inc) and Entertainment One (part of Hasbro Incorporation), along with Penguin Ventures, part of one of the world's largest literary publishing houses, Penguin Random House and most recently, The Copyrights Group.

 

During 2019, and post balance sheet in early 2020, we successfully secured multi-year partnerships with four IP partners as well as securing children's pre-school entertainment brands including Paw Patrol, Nick Jr, Peppa Pig, Peter Rabbit, Paddington Bear. In addition, we secured an agreement to produce a themed tour of The Snowman and the Snowdog with Snowman Enterprises Limited (part of Penguin Random House group).

 

Our ability to establish partnerships with multi-billion-pound companies such as Nickelodeon, proves our business strategy in our IP division is successful - big brands want to work with us.

 

BRICKLIVE Shows and Touring

 

In 2019, we continued to see growth in BRICKLIVE shows and touring and by August 2019, we had contracted 60 BRICKLIVE shows and events across the world for 2019. This rose to 71 events by the end of the year. We established partnerships in Germany with AWC AG, Palexo SA in Switzerland, Exhibition Hub SPRL in Belgium, SMG Europe Holdings (who promoted the first BRICKLIVE Show in Aberdeen in September 2019), HADRAN 2006 in Israel and Make Merry Company Inc in Japan. Other global partnerships include: AWC Asia (South Korea), Imagine Exhibitions in North America and Toulouse Evènments SA in France.

 

In March 2019, following our agreement with AWC, the first BRICKLIVE show was held in Germany  while in April 2019, we saw our first Bricklive show in Mexico with our partner for Latin America EXIM ENT. In May 2019, we announced that we would manage and operate the Group's flagship UK BRICKLIVE show in 2019 at the NEC. This event took place at the end of October and showcased BRICKLIVE Force and BRICKLIVE Outerspace. In December 2019, the second BRICKLIVE Christmas Show took place in Monaco, where we featured BRICKLIVE Ocean and BRICKLIVE Force.

 

Whilst the COVID-19 pandemic has meant that many of the 2020 tours have been postponed, we have seen significant inbound enquiry from Business Improvement Districts (BIDs) for the second half of 2020 and expect additional enquiries as BIDs look to increase footfall and support local business recovery.

 

The Group also signed a multi-year agreement with Licencing Management International Limited (LMI), to act as agent in respect of identifying partners for the licencing and merchandising of BRICKLIVE branded merchandise and products sold at the shows, tours and events.

 

Corporate

 

In February 2019, we raised £2.0m via a placing and subscription to facilitate the expansion of the BRICKLIVE Zoo programme, enabling new tours to be built and exhibited and to provide working capital for the group. As a result of the investment, we secured new contracts with zoos in the UK, Europe and Canada. As Chairman, I was delighted to invest approximately £250,000 in this fundraise.

 

In August 2019, we announced Andy Smith had stepped down from the Board and would become Deputy Chairman of BRICKLIVE Group. Andy will step down from this role shortly too and continue as an adviser to the Group. As of 1 October 2019, Mark Freebairn was appointed as Non-executive Director to the Board. Mark has a wealth of city-based experience and is currently a Partner and Head of the Financial Management Practice of Odgers Berndtson. Post balance sheet closing we appointed Richard Collett as Financial Director and Sarah Dees as COO.

 

It is proposed that Richard will, in due course, take over as Chief Financial Officer from Bryan Lawrie. Bryan is continuing as the Group's Chief Financial Officer, including remaining on the Board, in order to ensure a seamless handover of the finance function to Richard.

 

In December 2019, the existing loan facility from Riverfort Global Opportunities PCC Limited (formerly Cuart Investments PCC Limited) ("Riverfort") was supplemented by an additional loan facility of £1m, of which £300,000 was drawn down in December 2019. Alongside that additional facility, the Company entered into an Equity Share Agreement with Riverfort, the proceeds of which would support the repayment of the loan. Post balance sheet, the Company has made arrangements to extend the repayment of the loan facilities provided by the Investors and, as a result of the market disruption caused by COVID-19, the parties agreed to suspend the ESA. Further details are set out in Note 34.

 

Further financing of £250,000 was sourced via the UK Government's backed Coronavirus Business Interruption Scheme from National Westminster Bank Plc and, to show my continued support and belief in the Group and its strategy, I also provided a £500,000 secured personal loan to the Group, in April 2020 as detailed in Note 36.

 

Emerging stronger

 

We face a challenging year ahead post COVID-19, though as governments rally around the world to ensure the global economy gets back on its feet, we have a unique opportunity to provide edutainment to our customers to assist in getting people back out to visit the high streets, shopping centres, zoos and tourist attractions.

 

I very much believe that our team is up for the challenge as we remain committed to delivering shareholder value. We continue with our build programme and are seeking to further develop our consumer sets business, as well as other products for home use, which has seen significant demand during recent times.  However, given this period of unprecedented uncertainty, we have withdrawn our previous financial and operational guidance for both 2020 and 2021. At the time of issuing the Annual Report and Accounts, there are unprecedented societal and market conditions as a result of the COVID-19 pandemic, which increases the risk that there could be a delay in the implementation of the Group's strategy, which could impact the Company's liquidity. The Directors continue to explore ways to mitigate the impact, including assessing the measures announced by the UK Chancellor to support businesses during the COVID-19 outbreak.

 

I was also pleased to announce that Trudy Norris-Grey agreed to become Non-executive Deputy Chairperson, having joined the Company, as a Non-executive Director, in November 2018. Trudy brings a broad range of experience to the Company, having held senior leadership positions at Microsoft, Oracle, Sun Microsystems and BT.

 

I would like to thank the team for all their efforts and for their ongoing support and energy especially during the lockdown period.

 

Finally, I would personally like to thank all of our shareholders and those who have supported me, and our Group, its Board and employees, over the last year.

 

David Ciclitira

Chairman

 

 

Results and Dividends

 

The Group made a loss after taxation of £2,185,000 (2018: £2,610,000). The Directors do not recommend the payment of a dividend. The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issuance on 22 June 2020.

 

 

 

Enquiries:

 

Live Company Group Plc                                                                Tel: 020 7225 2000

Sarah Ullman, Chief Operating Officer

 

Beaumont Cornish (Nominated Adviser)                                     Tel: 020 7628 3396

Roland Cornish/Rosalind Hill Abrahams

 

Shard Capital Partners LLP (Broker)                                             Tel: 020 7186 9952

Damon Heath

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

 

LIVE COMPANY GROUP

Live Company Group plc ("LVCG", the "Company" or the "Group") is a live events and entertainment Company, founded by David Ciclitira in December 2017.  The Company was admitted to trading on AIM in December 2017, following the reverse acquisition of Brick Live Group and Parallel Live Group by LVCG.

 

The Group is a network of partner-driven fan-based shows using BRICKLIVE created content worldwide.  The Company owns the rights to BRICKLIVE - an interactive experience built around the creative ethos of the world's most popular construction toy bricks.  BRICKLIVE, which is fast becoming a leading children's education and entertainment brand, actively encourages all to learn, build and play, and provides inspirational events and shows where like-minded fans can push the boundaries of their creativity.  Bright Bricks is the Group's production centre for building brick based models.  The Group is an independent producer of BRICKLIVE and is not associated with the LEGO Group.

 

Website: www.livecompanygroup.com

 

 

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF LIVE COMPANY GROUP PLC

 

Opinion

We have audited the financial statements of Live Company Group Plc (the 'parent Company' and its subsidiaries (the 'Group')) for the year ended 31 December 2019, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

In our opinion:

·        the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2019 and of the Group's loss for the year then ended;

·        the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

·        the parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

·        the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the audit of financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

·        the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

·        the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

 

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

Audit area and description

Audit approach

Carrying value of Goodwill and related cost of investment

 

The consolidated financial statements include goodwill of £4.307m in respect of the acquisition of Parallel Live Group (£1.271m), acquisition of the remaining shares in Brick Live Far East (£2.950m) and the acquisition of Bright Bricks (£0.086m).

We re-performed the calculations of the cost of investment and goodwill arising on the acquisition of Bright Bricks.

 

We assessed the Directors' assertion that no impairment was required in respect of goodwill arising on the acquisitions by reference to trading performance and cash and profit forecasts of the acquired entities.

 

We critically assessed and challenged the assumptions made by the Directors in their preparation of the cash flow and profit forecasts including an assessment against current year trading to date.

Assessment of the accounting treatment of options and warrants issued

 

The company issued share options during the year under a Share Option Plan adopted in April 2019 and also issued warrants in the year in connection with an equity fund raise.

We re-performed the Black-Scholes option pricing model calculation of the share option and warrants charge prepared by the Directors under IFRS 2.

 

We critically assessed and challenged the variables used by the Directors in their Black-Scholes calculation.

 

We critically assessed the Directors' assertion that the warrants issued as part of the equity fund raise were issued to equity holders in their capacity as equity holders and were therefore outside the scope of the requirements of IFRS 2.

Equity Share Agreement

 

The company entered into a subscription agreement and an Equity Share Agreement (ESA) in the year.

We re-performed the Directors' calculations used in the ESA model.

 

We critically assessed and challenged the inputs used by the Directors in their ESA model.

 

We critically assessed whether there is an embedded feature in the host contract which should be accounted for as a derivative as required by IFRS 9.

Going concern

Although the group had net current assets at 31 December 2019, the group's activities have been significantly impacted subsequent to the year end by the COVID-19 pandemic and the measures taken to contain it. The group has incurred a further significant loss in the period to the date of approval of the financial statements and has limited cash funds currently available. These factors indicate the existence of uncertainties at the date of signing the consolidated financial statements as to whether the group can continue to operate as a going concern.

 

The Directors have prepared cash flow forecasts for the period to 31 December 2024.

 

We have critically assessed and challenged the assumptions included in these cash flow forecasts.

 

We have assessed the Directors' ability to raise further funds either by way of debt finance or equity fundraise or by the provision of additional support to the group.

 

We have critically assessed the disclosures included in note 1.1 to the consolidated financial statements.

 

Our application of materiality

The scope and focus of our audit was influenced by our assessment and application of materiality. We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and evaluate the effect of misstatements both individually and on the financial statements as a whole.

 

We considered revenue to be the main focus for readers of the financial statements, and this influenced our judgement of materiality. Based on our professional judgement we determined materiality for the Group to be £47,500 based on a percentage of revenue.

 

We agreed to report to the Audit Committee all audit differences in excess of the threshold that we had calculated as clearly trivial to the financial statements, and any other differences that, in our view, warranted reporting on qualitative grounds. We also reported disclosure matters that we identified when assessing the overall presentation of the financial statements.

 

An overview of the scope of our audit

Our audit of the Group and parent Company financial statements was scoped by obtaining an understanding of the Group and parent Company and their environment, including Group wide controls, and assessing the risks of material misstatement at the Group and parent Company level. The whole of the Group is audited by one audit team, led by the Senior Statutory Auditor. Our approach in respect of key audit matters is set out in the table in the Key Audit Matters section.

 

The audit is performed centrally and comprises all of the companies within the Group, significant components of which were visited by the audit team.

 

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·        the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the parent Company financial statements; and

·        the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

·        adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

·        the parent Company financial statements are not in agreement with the accounting records and returns; or

·        certain disclosures of directors' remuneration specified by law are not made; or

·        we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the Directors' Responsibilities Statement set out on page 40, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the Directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

·        Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

·        Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Group's internal control.

·        Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

·        Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the parent Company to cease to continue as a going concern.

·        Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

·        Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

 

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the Company's members those matters which we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the Company and Company's members as a body, for our work, for this report, or for the opinions we have formed.

 

 

Matthew Banton (Senior Statutory Auditor)

for and on behalf of Moore Kingston Smith LLP, Statutory Auditor

Devonshire House

60 Goswell Road

London EC1M 7AD

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2019

 

 

 

 

 

Year to 31 December

 

 

2019

2018

 

Note

£'000

£'000

Continuing operations

 

 

 

Revenue

4

5,451

4,920

Cost of sales

 

(2,360)

(2,662)

Gross profit

 

3,091

2,258

 

 

 

 

Administrative expenses

 

 

 

Foreign exchange

 

(40)

41

Depreciation and amortisation of non-financial assets

 

(78)

(24)

Other administrative expenses

 

(3,584)

(3,038)

Total administrative expenses

 

(3,702)

(3,021)

 

 

 

 

Share of result of associate

19

86

-

 

 

 

 

Operating loss before exceptional items

6

(525)

(763)

 

 

 

 

Exceptional items

7

(1,112)

(1,339)

Operating loss after exceptional items

 

(1,637)

(2,102)

 

 

 

 

Finance costs

11

(207)

(8)

Loss for the year before tax

 

(1,844)

(2,110)

 

 

 

 

Taxation

12

(341)

-

 

 

 

 

Loss for the year from continuing operations

 

(2,185)

(2,110)

 

 

 

 

Discontinued operations

 

 

 

Loss for the year from discontinued operations

5

-

(500)

 

 

 

 

Loss for the year

 

(2,185)

(2,610)

 

 

 

 

Other comprehensive income

 

-

-

 

 

 

 

Total comprehensive income for the year attributable to the equity holders of the parent Company

 

(2,185)

(2,610)

 

 

 

 

Loss per share

 

 

 

-basic and diluted

13

(3.1)p

(4.7)p

 

 

 

 

 

 

STATEMENTS OF FINANCIAL POSITION as at 31 December 2019

 

 

 

 

Note

Consolidated

Company

 

 

2019

2018

2019

2018

 

 

£'000

£'000

£'000

£'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

14

4,152

3,551

-

-

Intangible assets

16

76

50

-

-

Right of use assets

15

292

-

-

-

Trade and other receivables

21

2,000

-

2,000

-

Investments

17

-

-

17,450

17,450

Goodwill

18

4,307

4,307

-

-

Investments in associates and joint ventures

19

86

-

-

-

Total non-current assets

 

10,913

7,908

19,450

17,450

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

20

6,252

6,491

-

-

Trade and other receivables

21

808

692

2,521

2,510

Cash and cash equivalents

22

98

120

119

2

Total current assets

 

7,158

7,303

2,640

2,512

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Borrowings

23

532

1,000

532

1,000

Trade and other payables

24

1,617

2,612

357

1,663

Lease liabilities

26

79

-

-

-

Accruals and deferred income

24

947

849

292

-

Total current liabilities

 

3,175

4,461

1,181

2,663

 

 

 

 

 

 

Net current assets / (liabilities)

 

3,983

2,842

1,459

(151)

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Deferred tax

27

550

123

-

-

Borrowings

23

463

-

463

-

Lease liabilities

26

224

-

-

-

Total non-current liabilities

 

1,237

123

463

-

 

 

 

 

 

 

Net assets

 

13,659

10,627

20,446

17,299

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

28

4,878

4,754

4,878

4,754

Share premium

29

23,480

18,470

23,480

18,470

Other reserves

 

(23,697)

(23,697)

557

557

Merger reserve

 

14,067

14,067

14,067

14,067

Capital redemption reserve

 

5,034

5,034

5,034

5,034

Share option reserve

31

218

-

218

-

Retained earnings

 

(10,321)

(8,001)

(27,788)

(25,583)

Equity attributable to equity holders of the parent

 

13,659

10,627

20,446

17,299

 

 

 

 

As permitted by section 408 of the Companies Act 2006 the parent company's profit and loss account has not been included in these financial statements. The parent company loss for the year, amounted to £2,205,000 (2018: £1,447,000 loss).

 

The financial statements were approved and authorised for issue by the Board of Directors on 22 June 2020 and were signed on its behalf by:

 

 

David Ciclitira

Chairman

 

STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2019

 

 

 

Ordinary Share Capital

Share Premium

Reverse acquisition reserve

Forex and other reserves

Merger reserve

Capital Redemption

reserve

Share option reserve

Retained Earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Consolidated

 

 

 

 

 

 

 

 

 

As at 31 December 2018

4,754

18,470

(24,268)

571

14,067

5,034

-

(8,001)

10,627

Loss for the year

-

-

-

-

-

-

-

(2,185)

(2,185)

Changes in fair value from bricks used in product sales

-

-

-

-

-

-

-

(135)

(135)

Options issued in year

-

-

-

-

-

-

167

-

167

Warrants issued in year

-

-

-

-

-

-

51

-

51

Shares issued for cash

31

1,999

-

-

-

-

-

-

2,030

Debt to share conversion

26

1,181

-

-

-

-

-

-

1,207

Equity share arrangement

67

1,933

-

-

-

-

-

-

2,000

Share issue costs

-

(103)

-

-

-

-

-

-

(103)

At 31 December 2019

4,878

23,480

(24,268)

571

14,067

5,034

218

(10,321)

13,659

 

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

As at 31 December 2018

4,754

18,470

-

557

14,067

5,034

-

(25,583)

17,299

Loss for the year

-

-

-

-

-

-

-

(2,205)

(2,205)

Options issued in year

-

-

-

-

-

-

167

-

167

Warrants issued in year

-

-

-

-

-

-

51

-

51

Shares issued for cash

31

1,999

-

-

-

-

-

-

2,030

Debt to share conversion

26

1,181

-

-

-

-

-

-

1,207

Equity share arrangement

67

1,933

-

-

-

-

-

-

2,000

Share issue costs

-

(103)

-

-

-

-

-

-

(103)

At 31 December 2019

4,878

23,480

-

557

14,067

5,034

218

(27,788)

20,446

 

 

Ordinary Share Capital

Share Premium

Reverse acquisition reserve

Forex and other reserves

Merger reserve

Capital Redemption

reserve

Retained Earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Consolidated

 

 

 

 

 

 

 

 

As at 31 December 2017

4,566

13,695

(24,268)

557

8,651

5,034

(5,391)

2,844

Loss for the year

-

-

-

14

-

-

(2,610)

(2,596)

Shares issued for cash

101

4,848

-

-

-

-

-

4,949

Shares issued as consideration for acquisitions

85

-

-

-

5,416

-

-

5,501

Debt to share conversion

2

153

-

-

-

-

-

155

Share issue costs

-

(226)

-

-

-

-

-

(226)

At 31 December 2018

4,754

18,470

(24,268)

571

14,067

5,034

(8,001)

10,627

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

As at 31 December 2017

4,566

13,695

-

557

8,651

5,034

(24,136)

8,367

Loss for the year

-

-

-

-

-

-

(1,447)

(1,447)

Shares issued for cash

101

4,848

-

-

-

-

-

4,949

Shares issued as consideration for acquisitions

85

-

-

-

5,416

-

-

5,501

Debt to share conversion

2

153

-

-

-

-

-

155

Share issue costs

-

(226)

-

-

-

-

-

(226)

At 31 December 2018

4,754

18,470

-

557

14,067

5,034

(25,583)

17,299

 

 

STATEMENTS OF CASH FLOWS for the year ended 31 December 2019

 

 

 

Consolidated

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Operating loss

(525)

(1,263)

(2,027)

(1,018)

Share of result of associate

(86)

-

-

-

Depreciation

647

365

-

-

Amortisation of intangibles - trademarks

7

5

-

-

Depreciation of right of use assets

16

-

-

-

Impairment provision

-

1

-

-

Corporation tax paid

(134)

-

-

-

Decrease / (increase) in inventories

239

(74)

-

-

(Increase) / decrease in receivables

(116)

1,074

(10)

(2,290)

(Decrease) / increase in payables

(589)

(3,438)

322

(1,089)

Increase in provisions

-

30

-

-

Cash used in operations

(541)

(3,300)

(1,715)

(4,397)

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

Acquisition of trademarks

(33)

(55)

-

-

Acquisition of subsidiary

-

(2,167)

-

(2,167)

Acquisition of property, plant and equipment

(1,265)

(988)

-

-

Disposal of property, plant and equipment

17

-

-

-

Cash acquired on acquisition of subsidiary

-

43

-

-

Net cash used in investing activities

(1,281)

(3,167)

-

(2,167)

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Issue of equity

2,030

4,950

2,030

4,950

Repayment of lease liabilities

(5)

-

-

-

Proceeds from borrowings

300

1,000

300

1,000

Loans repaid

(305)

-

(305)

-

Interest paid

(117)

(8)

(90)

-

Share issue costs

(103)

(226)

(103)

(226)

Net cash generated from financing activities

1,800

5,716

1,832

5,724

 

 

 

 

 

Net cash (outflow) / inflow

(22)

(751)

117

(840)

 

 

 

 

 

Cash and cash equivalents at beginning of the year

120

871

2

842

Net (decrease) / increase in cash and cash equivalents

(22)

(751)

117

(840)

Cash and cash equivalents at end of the year

98

120

119

2

 

The recognition of a right to use asset and liability of £308,000 are significant non-cash transactions in the year, arising on the adoption of IFRS 16 Leases. The share option and warrant charge of £218,000 is also a significant non-cash transaction in the year.

 

NOTES FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 31 December 2019

 

 

 

1.       Basis of preparation

These financial statements have been prepared on the historical cost basis as modified by use of the fair-value basis where required and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS as at 31 December 2019.

 

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements which are disclosed in Note 3 to these consolidated financial statements.

 

1.1     Going concern

These financial statements have been prepared on a going concern basis. The Consolidated Statement of Comprehensive Income shows a loss of £2,185,000 for the year ended 31 December 2019 (2018: £2,610,000 loss). In assessing going concern the Directors have considered the Group's cash flows, solvency and liquidity positions.

 

The Directors have prepared trading and cash flow forecasts for the Group up to and including the year ending 31 December 2024. The forecasts incorporate a number of trading assumptions, including income from existing contracts, and contracts which are in the process of being negotiated. The forecasts show that the Group has sufficient cash to meet its liabilities as they fall due for a period of at least 12 months from the date of signing of these consolidated financial statements.

 

The Directors believe these forecasts to be realistic and they have considered the impact of the COVID-19 pandemic, and the measures taken to contain it, on the Group when preparing the cash flow forecasts referred to above. However, because the situation regarding the COVID-19 outbreak and related containment measures is constantly evolving, there can be no certainty in respect of these cash flows, as tours and shows may continue to be delayed or cancelled in the geographical locations in which the Group operates.  However, in the event that further funding is required the Directors will consider their options, for instance further debt finance or an equity fund raise. The Directors consider that both options are viable options for the Group at the date of signing these consolidated financial statements.

 

Additionally, David Ciclitira has confirmed his willingness to provide sufficient support to the Group to enable it to meet its liabilities as they fall due in the event any necessary additional finance cannot be obtained. This confirmation of support is not considered to be a Related Party Transaction; but were any such support to be triggered, the terms agreed with the Company would then be assessed under AIM Rule 13 as a potential Related Party Transaction and considered as appropriate by the Independent Directors at that time in consultation with the Nominated Adviser.

 

Consequently, the Directors have prepared these consolidated financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.

 

1.2     Adoption of standards effective in 2019

The following new and revised Standards and Interpretations have been issued and are effective for the current financial period of the Company.

 

IFRS 16 Leases took effect from 1 January 2019 and has been adopted for the year ended 31 December 2019. The Company has chosen to use the modified retrospective approach, recognising transitional adjustments on the date of initial application (i.e. 1 January 2019) without restatement of the comparative figures. Leases which the Group were party to were previously classified as operating leases or finance leases based on its assessment of whether the lease transferred substantially all the risks and rewards of ownership to the lessee. Under IFRS 16 the Company now recognises right of use assets and lease liabilities for leases other than those for low value assets or for short term leases of 12 months or less.

 

1.3     IFRS in issue but not applied in the current financial statements

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Company in preparing these financial statements as they are not as yet effective and, in some cases, had not yet been adopted by the EU. The Company intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.

 

·    IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

·    IFRS 3 Business Combinations (Amendment - Definition of Business) IAS 28 (amendments) 'Investments in Associates and Joint Ventures'

·    Revised Conceptual Framework for Financial Reporting

 

The directors do not expect that the adoption the Standards listed above will have a material impact on the Company in future periods.

 

A number of IFRS and IFRIC Interpretations are also currently in issue which are not relevant for the Company's activities and which have not therefore been adopted in preparing these financial statements.

 

Other new and amended Standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Company as they are either not relevant to the Company's activities or require accounting which is consistent with the Company's current accounting policies.

 

2.       Accounting policies

 

2.1.    Basis of consolidation

The consolidated financial statements incorporate:

·       the results of LVCG, Brick Live Group Limited ("Brick Live Group"), Parallel Live Group Limited ("Parallel Live Group") and Bright Bricks Limited ("Bright Bricks Group") for the year ended 31 December 2019.

·       the assets and liabilities of LVCG, Brick Live Group, Parallel Live Group, Bright Bricks Group and their subsidiary companies at 31 December 2019.

·       the comparatives include the results of the Bright Bricks Group for the period from acquisition to 31 December 2018.

 

Business combinations

The information contained in this note sets out how the Group typically accounts for Business Combinations, which is effectively using the purchase method explained in IFRS3, "Business Combinations".

 

Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies of the subsidiary and therefore exercises control. The existence and effect of both current voting rights and potential voting rights that are currently exercisable or convertible are considered when assessing whether control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains the relevant level of control and are de-consolidated from the date at which control ceases.

 

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

The cost of an acquisition is measured as an aggregate of the consideration transferred, measured at the acquisition date fair-value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group measures the non-controlling interest in the acquiree at the proportionate share of the acquiree's identifiable net assets. Subsequent changes in the proportion of the non-controlling interests, which do not result in de-recognition of the subsidiary, are accounted for in equity. Costs incurred in connection with acquisitions are recognised as exceptional costs in the income statement, as incurred.

 

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.

 

If the business combination is achieved in stages, the acquisition date fair-value of the Group's previously held equity interest in the acquiree is re-measured to fair-value at the acquisition date through profit or loss. Goodwill is initially measured at cost being the excess of the consideration transferred over the Group's share of net identifiable assets acquired and liabilities assumed.

 

If this consideration is lower than the fair-value of net assets of the subsidiary acquired, the difference is recognised in profit or loss.

 

After initial recognition, goodwill is measured at cost less any recognised impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to either the acquired business or to each of the Group's cash generating units that are expected to benefit from the combination irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

 

Where goodwill forms a part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in these circumstances is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit until retained.

 

Brick Live Group

In 2017 the reverse acquisition of LVCG by the Brick Live Group resulted in goodwill arising of £4,581,000. This goodwill was fully impaired in the year ended 31 December 2017.

 

Parallel Live Group

In December 2017, the Group acquired Parallel Live Group, resulting in goodwill arising of £1,271,000. This goodwill was subject to a formal impairment review by the Directors who concluded that no impairment was required.

 

Brick Live Far East Limited ("BLFE")

In December 2017, the Company became the 100% owner of BLFE. Goodwill of £2,950,000 arose on the acquisition. BLFE is a company registered in Hong Kong which owns a 49% stake in the Brick Live Group's China associate company, Brick Live Centre Education Development (Beijing) Company Limited. This goodwill was subject to a formal impairment review by the Directors who concluded that no impairment was required.

 

Bright Bricks Group

In October 2018, the Group acquired Bright Bricks Group, resulting in goodwill arising of £86,000. This goodwill was subject to a formal impairment review by the Directors who concluded that no impairment was required.

 

Subsequent to the balance sheet date, the Directors have undertaken a formal impairment review which concludes that impairments will be required as detailed in Note 36.

 

Intercompany balances

All intercompany balances are eliminated on consolidation.

 

Subsidiary companies audit exemption

The company's active subsidiaries Bright Bricks Limited, Bright Bricks Consumer Limited, Brick Live Group Limited, Brick Live International Limited, Bricklive Touring Ltd and Parallel Live Group Limited are exempt from the requirements of the Companies Act 2006 relating to the audit of their individual accounts by virtue of section 479A of the Companies Act 2006.

 

2.2.    Trademarks

Trademarks are registered in each of the geographical territories for the BRICKLIVE brand.

 

Trademarks are amortised on a straight line basis over their estimated useful lives, which is on average 10 years.

 

2.3.    Investment in associates and joint ventures

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control over those policies. The Group uses the equity method of accounting for its associate.

 

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The Group uses the equity method of accounting for its joint ventures.

 

2.4.    Property, plant and equipment

All property, plant and equipment assets are stated at cost less accumulated depreciation. Content is capitalised in the periods in which they are purchased or completed and valued at the lower of cost and net realisable value.

 

Depreciation is provided on Content over eight years on a straight-line basis to reflect their useful life. Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

 

Depreciation on other fixtures, fittings and office equipment is provided at 20% on a straight-line basis. Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

 

2.5.    Leases

Following adoption of IFRS 16, a right to use asset, being the present value of the operating lease payments over the remaining life of the lease, has been recognised within non-current assets. The right to use assets and corresponding lease liability have been calculated using a discount rate of 9% which the Directors consider to be appropriate, based on the Group's current borrowing structure. The depreciation of the assets and interest charge are recognised in the Statement of Comprehensive Income in the year and the buildings maturity analysis of lease liabilities at 31 December 2019 is detailed in Note 26.

 

2.6.    Impairment of assets

The carrying amounts of the Group's assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

 

The Directors have carried out a formal impairment review on all material assets at 31 December 2019.

 

2.7.    Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using a weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. The majority of inventories are measured at fair value following the acquisition of Bright Bricks Group as detailed in Note 20.

 

2.8.    Financial instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

 

Financial assets

The Group classifies its financial assets as either financial assets measured at amortised cost, fair value through profit and loss or fair value through Other Comprehensive Income (OCI).

 

Financial assets at fair value through OCI consist of equity investments in other companies or limited partnerships where the Group does not exercise either control or significant influence.

 

Financial assets at fair value through OCI are shown at fair value at each reporting date with changes in fair value being shown in OCI. In cases where the Group can reliably estimate fair value, fair value will be determined in reference to practical completion of each development project.

 

All assets for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

•     Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

•     Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

•     Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument.

 

2.9.    Share based payments

The Company issues equity settled share-based payment transactions to certain employees and service providers. Equity settled share-based payment transactions are measured at the fair value at the date of grant. The calculation of fair value at the date of grant requires the use of management's best estimate of volatility, risk free rate and expected time to exercise the options.

 

2.10.  Trade and other receivables

Trade and other receivables are stated at their amortised cost. Trade receivables are reduced by appropriate allowances for estimated irrecoverable amounts.

 

A loss allowance is recognised on initial recognition of financial assets held at amortised cost, based on expected credit losses, and is re-measured annually with changes appearing in profit or loss. Where there has been a significant increase in credit risk of the financial instrument since initial recognition, the loss allowance is measured based on lifetime expected losses. In all other cases, the loss allowance is measured based on 12-month expected losses. For assets with a maturity of 12 months or less, including trade receivables, the 12-month expected loss allowance is equal to the lifetime expected loss allowance.

 

2.11.  Cash and cash equivalents

Cash equivalents comprise short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

 

2.12.  Trade and other payables

Trade and other payables are stated at their amortised cost.

 

2.13.  Interest-bearing borrowings (other than compound financial instruments)

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

 

2.14.  Revenue recognition

Revenue is the value of goods and services provided by the Group to customers, net of VAT and discounts. Revenue includes licence fees, revenue from the sale of products, rental fees, sale of content (brick-based statues), brick lease fees and ticket sales from self-promoted events.

 

Revenue from contracts is recognised in accordance with IFRS 15 as follows:

i.    Identify the contract with the customer;

ii.    Identify separate performance obligations in the contract;

iii.   Determine the transaction price;

iv.  Allocate the transaction price to separate performance obligations; and

v.   Recognise revenue when the entity satisfies a performance obligation.

Revenue recognised as above is measured on the following basis:

i.    Annual licence fees - on a straight-line basis in accordance with the terms of the agreement, unless it is non-refundable in which case fees are recognised on the contractual invoice date;

ii.    Event licence fees and revenue shares - in accordance with the terms of the agreement;

iii.   Content fees - on delivery of the specific content to the client in accordance with the terms of the agreement;

iv.  Tour and show rental fees - in accordance with the terms of the agreement;

v.   Brick lease fees - on a straight-line basis in accordance with the terms of the agreement;

vi.  Ticket sales from self-promoted events - on the date of the event; and

vii.  Sales of products - in accordance with contract.

 

2.15.  Deferred taxation

Deferred tax is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the Statement of Financial Position.

 

The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

 

The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with investments in subsidiaries, as it is not considered probable that the temporary differences will reverse in the foreseeable future.

 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amounts of the deferred tax assets are reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered.

 

2.16.  Segmental reporting

The Group has two operating segments, namely: tours, events, shows, licences and content rental fees; and product and content sales. In identifying these operating segments, management generally follows the Group's service lines representing its main products and services (see Note 4).

 

For management purposes, the Group uses the same measurement policies as those used in its consolidated financial statements, except for certain items not included in determining the operating profit of the operating segments, such as exceptional costs.

 

In addition, corporate assets and expenses which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Group's headquarters.

 

2.17.  Foreign currencies

Monetary assets and liabilities expressed in foreign currencies are translated at the rates of exchange ruling at the reporting date. Transactions in foreign currencies are translated at the rate ruling at the date of the transaction. Differences on exchange arising on translation of subsidiaries are charged directly to other comprehensive income. All other exchange differences have been charged to the profit or loss in the period under review.

 

2.18.  Exceptional items

Exceptional items are those costs incurred by the Group which are considered by the Directors to be material in size and are unusual and infrequent in occurrence which require separate disclosure within the financial statements. See Note 7 for details of exceptional items ensuing in the year.

 

3.       Accounting estimates and judgements

The preparation of these consolidated financial statements in accordance with generally accepted accounting practice, being International Financial Reporting Standards as adopted by the European Union, requires the Directors to make estimates and judgements that affect the reported amount of assets, liabilities, income and expenditure and the disclosures made in these consolidated financial statements. Such estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events.

 

The significant judgements made by management in applying the Group's accounting policies as set out above, and the key sources of estimation which management consider may have a significant risk of causing a material adjustment to the reported amounts in the year, were:

 

Impairment of investments and goodwill

The Directors have carried out impairment reviews of the Company's £8,500,000 investment in Bright Bricks, £5,000,000 investment in Brick Live Group, £1,000,000 investment in Parallel Live and £2,950,000 investment in BLFE. The Directors determined no impairment of the investments or related goodwill is required at 31 December 2019. The Directors carried out a further formal review following the outbreak of COVID-19 and determined that an impairment provision will be required in the Interim Report to 30 June 2020.

 

Depreciation

Depreciation rates have been set to accurately reflect the reduction in value of property, plant and equipment assets over their economic life, less their expected residual value. This requires judgement by the Directors, who have set the depreciation rates as detailed in Note 2.4 to these financial statements based on their knowledge of the industry and typically how long each asset type retains its value.

 

Revenue recognition

Revenue from contracts is recognised in accordance with IFRS 15. This requires judgement as revenue transactions are subject to a variety of contract terms, albeit under the general guidelines of the accounting policies for revenue recognition as explained in Note 2.14 to these consolidated financial statements.

 

Share option and warrants

The Black-Scholes model is used to calculate the appropriate charge of the share options and warrants. The use of this model to calculate the charge involves a number of estimates and judgements to establish the appropriate inputs to be entered into the model, covering areas such as the use of an appropriate interest rate and dividend rate, exercise restrictions and behavioural considerations. A significant element of judgements is therefore involved in the calculation of the charge.

 

 

4.       Segment reporting

As described in Note 2.16 to these consolidated financial statements, the Directors consider that the Group's internal financial reporting is organised along product and service lines and therefore segmental information has been presented about the Group's business segments. The segmental analysis of the Group's business is derived from its principal activities, as set out below.

 

Reportable segments

The reportable segment results for the year ended 31 December 2019 are as follows:

 

 

Product and content sales

Tours, events, licenses and content rental fees

Unallocated

Continuing total

Discontinued operations

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenues

974

4,477

-

5,451

-

5,451

Cost of sales

421

1,939

-

2,360

-

2,360

Administrative expenses

413

1,898

1,391

3,702

-

3,702

Share of associate

-

-

(86)

(86)

-

(86)

Finance costs

-

-

207

207

-

207

Exceptional items

-

-

1,112

1,112

-

1,112

Taxation

-

-

341

341

-

341

 

 

 

 

 

 

 

Segment (loss)/profit for the year

140

640

(2,965)

(2,185)

-

(2,185)

 

 

The reportable segment results for the year ended 31 December 2018 were as follows:

 

 

Product and content sales

Tours, events, shows, licences and content rental fees

Unallocated

Continuing

Total

Discontinued

operations

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

1,575

3,345

-

4,920

431

5,351

Cost of sales

1,345

1,317

-

2,662

931

3,593

Administrative expenses

379

1,643

999

3,021

-

3,021

Finance costs

-

-

8

8

-

8

Exceptional items

-

631

708

1,339

-

1,339

Segment (loss)/profit for the year

(149)

(246)

(1,715)

(2,110)

(500)

(2,610)

 

Administrative expenses are apportioned to each trading segment in proportion to the revenue earned.

 

In 2018, the segment analysis for product and content sales were derived from activities carried out by Bright Bricks Group which was acquired in October 2018. The activities of this entity have been absorbed into the principal trading entity, Brick Live International Limited. Consequently, there is no separate asset and liability classification of product and content sales from 2019 onwards.

 

Segment assets consist primarily of property, plant and equipment, intangible assets, investments, goodwill, trade and other receivables and cash and cash equivalents.

 

Unallocated assets comprise deferred taxation, financial assets held at fair value through profit or loss, and derivatives. Segment liabilities comprise operating liabilities; liabilities such as deferred taxation are not allocated to individual business segments.

 

Segment assets and liabilities as at 31 December 2019 are as follows:

 

 

Product and content sales

Tours, events, shows, licences and content rental fees

Unallocated

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Assets

-

11,549

6,522

18,071

 

 

 

 

 

Liabilities

-

2,867

1,545

4,412

 

 

Segment assets and liabilities as at 31 December 2018 were as follows:

 

 

Product and content sales

Tours, events, shows, licences and content rental fees

Unallocated

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Assets

464

10,391

4,356

15,211

 

 

 

 

 

Liabilities

1,057

781

2,746

4,584

 

Geographical information

The Group's business segments operated in four principal geographical areas in the year, although they are managed on a worldwide basis from the Group's head office in the United Kingdom.

 

A geographical analysis of the Group's continuing revenue and non-current assets is given below. Revenue is allocated based on the location of the customer; non-current assets are allocated based on the physical location of the asset.

 

 

2019

2018

 

£'000

£'000

Revenue

 

 

United Kingdom

2,923

637

Europe

930

1,064

USA*

406

-

South America

46

107

Asia

1,111

3,112

Middle East

35

 -

 

5,451

4,920

 

 

 

*2018 USA revenue excludes £431,000 relating to discontinued operations

 

 

2019

2018

 

£'000

£'000

Non-current assets

 

 

United Kingdom

4,661

2,819

Europe

986

-

USA

467

535

Asia

407

247

Unallocated

4,393

4,307

 

10,914

7,908

 

Major customers

Included within revenue arising from product sales and licence fees are revenues of approximately £532,000 (2018: £1,746,000) which arose from sales to the Group's largest customer. No single customer in 2019 accounted for more than 10% of revenue.

 

 

5.       Discontinued operations

In February 2018, Parallel Live Group promoted its first LEGO® LIVE event in New York, despite receiving positive reviews, it reported a financial loss. The operation was treated as discontinued as the Group is no longer promoting or operating LEGO® LIVE events.

 

 

2019

2018

 

£'000

£'000

 

 

 

Revenue

-

431

Expenses

-

(931)

Attributable tax

-

-

Loss attributable to discontinued operations

-

(500)

 

6.       Operating loss before exceptional items

 

2019

2018

 

£'000

£'000

This is stated after charging/(crediting)

 

 

Content depreciation (included within cost of sales)

589

353

Other depreciation and amortisation (included within administrative expenses)

65

17

Depreciation on right of use assets

16

-

Net foreign exchange losses/(gains)

40

(41)

 

7.       Exceptional items

The exceptional items consist of the following:

 

2019

2018

 

£'000

£'000

Impairment of associate and intangible assets

-

111

Transactional and reorganisational costs

612

1,033

Share option and warrant charge

218

-

Exceptional bad debt provision

282

631

Trade and other payables written back

-

(436)

 

1,112

1,339

 

2019 Exceptional items

 

Transactional and reorganisational costs

Transaction costs relate to the remainder of the strategic acquisition and reorganisation costs of Bright Bricks Group and the various fundraises completed during the year.

 

Share option and warrant charge

The Group uses the Black-Scholes model to value its share option and warrants. Certain judgement is required in terms of selecting the risk-free interest rate and standard deviation rate used. The charge for the current year is £218,000 which may increase or decrease with changes to these rates.

 

 

Exceptional bad debt provision

A three-year contract is in place with Brick Live Centre Education Development (Beijing) Company Limited for a minimum of 20 shows. Due to the uncertainty of recovering this balance, the Directors have provided in full against these receivable license fee balances.

 

2018 Exceptional items

 

Impairment of associate and intangible assets

BLFE invested £110,837 in Brick Live Centre Education Development (Beijing) Company Limited and as that associate company incurred losses during the year ended 31 December 2018, the Directors determined that the investment should be fully impaired at 31 December 2018.

 

The rights to promote European Tour golf events were acquired by the Company in September 2006 and were included in the Statement of Financial Position as intangible assets in the consolidated financial statements for the year ended 31 December 2018 at a value of £1,000. These assets were intended to be amortised over their expected life of 20 years. However, the remaining assets were impaired to a net book value of £nil as of 31 December 2018 to reflect the fact that the ongoing business of the Group is not expected to generate revenues from these rights in the foreseeable future.

 

Transactional and reorganisational costs

Transaction costs relate to the strategic acquisition and reorganisation costs of Bright Bricks Group and the various fundraises completed during the year ended 31 December 2018.

 

Exceptional bad debt provision

A contract was in place for a minimum contribution from a single European licence partner (the "ELP") during the year that covered the whole of Europe. However, the ELP was unable to provide the intended number of shows during 2019 and as a result, the licence has since been cancelled, with the amounts accrued under the ELP agreement being treated as a bad debt and which have therefore been written off as an exceptional item.

 

However, the cancellation of the licence has enabled the Group to enter into new agreements with different partners within Europe, that would have been prohibited under the contract with the ELP, which has already allowed the Group to partner with the best placed partners in a number of European geographies, and will also allow it to seek further European partners going forward.

 

Trade and other payables write back

An agreement was entered into in October 2018 between the Company and James Golf Limited ("JGL"), a company wholly owned by David Ciclitira, pursuant to which JGL agreed to indemnify the Company against all costs and claims or liabilities arising from or directly related to several of the Company's creditor balances, releasing the Group from liabilities of, in aggregate, £436,000. As a result, this amount was written back in the year ended 31 December 2018.

 

 

8.       Auditor's remuneration

 

2019

2018

 

£'000

£'000

Fees payable to the auditor, Moore Kingston Smith LLP, for the audit of the annual accounts of the Group and the Company

87

70

Taxation compliance

8

10

 

95

80

 

9.       Employees

 

2019

2018

Group

No.

No.

The average number of employees (including Directors not under employment contracts) during the year was:

 

 

Administration

22

12

Production

40

12

Sales

4

2

 

66

26

 

 

2019

2018

 

£'000

£'000

The aggregate payroll costs including Directors not under employment contracts) were:

 

 

Wages, salaries and fees

2,566

1,369

Social security costs

177

102

Pension costs

31

15

 

2,774

1,486

 

Bright Bricks Group was acquired in October 2018, therefore comparative figures above relate to the average number of persons employed by the Group (including Directors) during the year.

 

10.     Remuneration of Directors and key management personnel

 

In the opinion of the Board, only the Directors of the Company and the other members of the Executive Team, as detailed in the Corporate Governance Report, are regarded as key management personnel. The remuneration of key management personnel during 2019 was, in aggregate, £1,857,000 (2018: £899,000).

 

Directors' remuneration and fees, including Non-Executive Directors, during the year were as follows:

 

 

2019

2018

 

£'000

£'000

David Ciclitira

451

503

Andrew Smith (resigned 2 September 2019)

74

115

Bryan Lawrie (appointed 17 October 2018)

144

36

Serenella Ciclitira

20

17

Ranjit Murugason

125

195

Simon Bennett (resigned 31 August 2018)

-

26

Trudy Norris-Grey (appointed 1 November 2018)

20

3

Simon Horgan (appointed 1 November 2018)

20

3

Mark Freebairn (appointed 1 October 2019)

5

-

 

859

898

 

 

David Ciclitira

2019

2018

 

£'000

£'000

UK Chairman's fees

25

25

International consultancy fees

250

250

Additional contracted work during the year

176

128

Bonus in respect of working with international investors to successfully complete the AIM readmission in addition to the work done to acquire Bright Bricks

-

100

 

451

503

 

Ranjit Murugason

Remuneration for Ranjit Murugason was satisfied by the issue of new Ordinary shares as detailed in Note 28.

 

 

2019

2018

 

£'000

£'000

Non-Executive fees

30

20

Fees in connection with the acquisition of Bright Bricks and closure of Singapore subsidiaries

-

125

Fees in connection with fundraise in February 2019

45

-

Bright Bricks integration and Singapore company closure fees

50

50

 

125

195

 

The £100,000 fees in connection with the Bright Bricks Group integration and Singapore company closure fees were settled by the issue of 153,846 Ordinary shares on 2 April 2019 as detailed in Note 28.

 

Andrew Smith

 

2019

2018

 

£'000

£'000

As Chief Strategic Officer

38

11

As Executive Chairman of Bright Bricks Group

36

17

As Managing Director of Brick Live International Limited

 -

87

 

74

115

 

Andrew Smith received a further £32,000 for the remainder of the year after his resignation.

 

Bryan Lawrie

The fees payable to Bryan Lawrie were paid to CFO Partners Limited.

 

All the Directors are covered by Group's Directors' liability insurance policy.

 

Further information on related party transactions are set out in Note 33.

 

11.     Finance costs

 

2019

2018

 

£'000

£'000

Loan interest

185

8

Interest expense on lease liabilities

7

-

Other

15

-

 

207

8

 

Included in loan interest charges are £90,000 of unpaid interest premium costs arising on the renegotiation of loans in 2019.

 

12.     Taxation

 

2019

2018

Current tax

£'000

£'000

UK Corporation tax in respect of current year:

 

 

Current taxation

-

-

Adjustments in respect of prior years

(86)

-

Total tax (credit) charge for the year

(86)

-

 

 

 

Deferred taxation

 

 

Original and reversal of timing differences

427

-

Adjustments in respect of prior years

-

-

Effect of change in tax laws

-

-

Total deferred taxation charge

427

-

 

 

 

Tax charge on loss on ordinary activities

341

-

 

 

2019

2018

 

£'000

£'000

Loss on ordinary activities before tax

(1,844)

(2,610)

Loss on ordinary activities at the standard rate of corporation tax of 19% (2018: 19%)

(350)

(496)

Effect of:

 

 

Tax losses carried forward

350

496

Total tax charge for the year

-

-

 

13.     Earnings per share

The basic earnings per share is calculated by dividing the (loss)/profit attributable to equity shareholders by the weighted average number of shares in issue during the year. In calculating the diluted earnings per share, any outstanding share options, warrants and convertible loans are taken into account where the impact of these is dilutive.

 

 

2019

2018

 

£'000

£'000

Loss for the year after tax

(2,185)

(2,610)

Loss for the year on continuing operations

(2,185)

(2,110)

Loss for the year on discontinuing operations

-

(500)

 

 

 

Weighted average number of shares in issue

70,171,496

55,560,444

 

 

 

Basic and diluted earnings per share on total operations*

(3.1p)

(4.7p)

Basic and diluted earnings per share on continuing operations*

(3.1p)

(3.8p)

Basic and diluted earnings per share on discontinued operations*

 -

(0.9p)

 

* Diluted earnings per share in both 2019 and 2018 are the same as basic earnings per share, as there are no dilutive options in issue during these years.

 

 

14.     Property, plant and equipment

 

Group

Content

Other

Total

 

2019

2018

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

 

Cost at start of year

3,801

912

152

8

3,953

920

Additions for year

1,239

983

26

5

1,265

988

Acquisition of subsidiary

-

2,529

-

139

-

2,668

Reclassification of bricks to inventories

-

(623)

-

-

-

(623)

Disposals

(24)

-

-

-

(24)

-

Cost at end of year

5,016

3,801

178

152

5,194

3,953

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

Cumulative depreciation at start of year

389

121

13

1

402

122

Charge for year

589

353

58

12

647

365

Cumulative depreciation on brick inventories reclassification

-

(85)

-

-

-

(85)

Eliminated on disposal

(7)

-

-

-

(7)

-

Cumulative depreciation at end of year

971

389

71

13

1,042

402

 

 

 

 

 

 

 

Net book value at end of year

4,045

3,412

107

139

4,152

3,551

 

 

 

 

 

 

 

Net book value at start of year

3,412

791

139

7

3,551

798

 

The Company had no property, plant and equipment assets in either 2019 or 2018.

 

15.     Right of use Assets

 

Buildings

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

Cost at start of year

-

-

-

-

Additions for year

308

-

-

-

Cost at end of year

308

-

-

-

 

 

 

 

 

Depreciation

 

 

 

 

Cumulative depreciation at start of year

-

-

-

-

Charge for year

16

-

-

-

Cumulative depreciation at end of year

16

-

-

-

 

 

 

 

 

Net book value at end of year

292

-

-

-

 

 

 

 

 

Net book value at start of year

-

-

-

-

 

 

16.     Intangible assets

 

Trademarks

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

Cost at start of year

55

-

-

-

Additions for year

33

55

-

-

Cost at end of year

88

55

-

-

 

 

 

 

 

Amortisation

 

 

 

 

Cumulative amortisation at start of year

5

-

-

-

Charge for year

7

5

-

-

Cumulative amortisation at end of year

12

5

-

-

 

 

 

 

 

Net book value at end of year

76

50

-

-

 

 

 

 

 

Net book value at start of year

50

-

-

-

 

Trademarks

Trademarks are obtained for each show in each jurisdiction around the world. Trademarks are amortised over their estimated useful lives, which is on average 10 years.

 

Tournament rights

Tournament rights are the rights to promote European Tour golf events acquired in September 2006. These intangible assets are carried at cost less amortisation. Amortisation was initially calculated to write off the assets over their expected useful life of 20 years however, the Directors undertook an impairment review regarding the value of the Tournament rights in 2018 which resulted in a write down to £nil to reflect the fact that the ongoing business of the Group is not expected to generate revenues from these rights in the foreseeable future.

 

17.     Investments

 

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

Cost at start of year

-

-

17,450

8,950

Additions in the year

-

-

 -

8,500

Cost at end of year

-

-

17,450

17,450

 

 

 

 

 

Impairment

 

 

 

 

At start of year

-

-

-

-

Impairment in the year

-

-

-

-

At end of year

-

-

-

-

 

 

 

 

 

Net book value at end of year

-

-

17,450

17,450

 

 

 

 

 

Net book value at start of year

-

-

17,450

8,950

 

The carrying value of investments are in respect of Brick Live Group £5,000,000 (2018: £5,000,000), Parallel Live Group £1,000,000 (2018: £1,000,000), Brick Live Far East Limited £2,950,000 (2018: £2,950,000) and Bright Bricks Group £8,500,000 (2018: £8,500,000).

 

18.     Goodwill

 

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

Cost at start of year

8,888

8,802

-

-

Additions in the year

-

86

-

-

Cost at end of year

8,888

8,888

-

-

 

 

 

 

 

Impairment

 

 

 

 

At start and end of year

4,581

4,581

-

-

 

 

 

 

 

Net book value at end of year

4,307

4,307

-

-

 

 

 

 

 

Net book value at start of year

4,307

4,221

-

-

 

In 2018, the £86,000 of goodwill was created on the acquisition of Bright Bricks Group as detailed in Note 30.

 

The net book value of £4,307,000 (2018: £4,307,000) relates to £2,950,000 (2018: £2,950,000) for the acquisition by LVCG of BLFE, £1,271,000 (2018: £1,271,000) for the acquisition of Parallel Live Group and £86,000 (2018: £86,000) for the acquisition of Bright Bricks Group. A formal impairment review has been carried out on these carrying values and the Directors have determined that no impairment was required. Goodwill arising on the reverse acquisition of LVCG by Brick Live Group of £4,581,000 was fully impaired in the year ended 31 December 2017.

 

Parallel Live Group

The recoverable amount of the Parallel Live Group ("PLG") division as a cash-generating unit is determined based on a discounted cash flow calculation which uses cash flow projections based on financial budgets approved by the Directors covering a five-year period, and a discount rate of 9% (2018:5% per annum).

 

At the balance sheet date, the Group expects growth rate to be high in the next five years and then a steady growth rate of 10% is estimated by the Directors of the Company based on their expectations of market development. Should there be no activity in PLG, that would reduce the headroom in the cash-generating unit to nil and would result in an impairment charge.

 

Following the year end and the outbreak of COVID-19, the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced. This has the impact of reducing the value of the goodwill after the balance sheet date by £375,000.

 

Bright Bricks Group

The recoverable amount of the Bright Bricks Group goodwill is a separate but integral part of the Brick Live Group, enabling it to both produce and sell brick-based content. The production of Content is projected to continue for the foreseeable future.

 

Should there be no production in Bright Bricks Group, that would reduce the new Content available and would result in an impairment charge.

 

Following the year end and the outbreak of COVID-19, the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced. This has the impact of reducing the value of the goodwill after the balance sheet date by £86,000.

 

Brick Live Far East Limited

The recoverable amount of the Brick Live Far East Limited ("BLFE") investment as a cash generating unit is determined based on a discounted cash flow calculation for activities in China covering a five-year period, and a discount rate of 9% per annum (2018:9% per annum).

 

At the balance sheet date, the Group expects growth rate to be high in the next five years and then a steady growth rate of 10% is estimated by the Directors of the Company based on their expectations of market development. Should there be no activity in China, that would reduce the headroom in the cash-generating unit to nil and would result in an impairment charge.

 

Following the year end and the outbreak of COVID-19, the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced. This has the impact of reducing the value of the goodwill after the balance sheet date by £2,950,000.

 

19.     Investments in Associates and Joint Ventures

 

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

Cost at start of year

111

111

-

-

Additions in the year

86

-

-

-

Cost at end of year

197

111

-

-

 

 

 

 

 

Impairment

 

 

 

 

At start of year

111

-

-

-

Impairment in the year

-

111

-

-

At end of year

111

111

-

-

 

 

 

 

 

Net book value at end of year

86

-

-

-

 

 

 

 

 

Net book value at start of year

-

-

-

-

 

In July 2017, BLFE entered into a long-term agreement with Fortune Access, to create a limited liability foreign enterprise company in China called BRICKLIVE China. BLFE agreed to invest 980,000 RMB (approximately £111,000) for a 49% shareholding in BRICKLIVE China.

 

Based on the performance in the year ended 31 December 2018 the investment in the associate was impaired by £111,000.

 

At 31 December 2019, the share of the Associate's net profits amounted to £86,000 which was added to the carrying value of the investment. At that date, no impairment was considered necessary but following the post balance sheet COVID-19 outbreak, the Directors completed a further impairment review and concluded that the value will be fully impaired as set out in Note 36.

 

 

 

The results of the Associate in the year are:

2019

2018

 

£'000

£'000

 

 

 

Revenue

1,819

1,229

Profit / (loss) before tax

220

(5)

Taxation

(17)

(1)

Profit / (loss) after tax

203

(6)

Other comprehensive income

-

-

Total comprehensive income

203

(6)

 

 

 

Current assets

573

267

Non-current assets

1,317

1,438

Current liabilities

(1,549)

(1,567)

Non-current liabilities

-

-

 

341

138

 

Parallel Three Six Zero Inc

In September 2018, Parallel Live Group signed a joint venture agreement with US-based company Three Six Zero, forming the new company Parallel Three Six Zero Inc. It has been granted exclusive rights by Parallel Live Group to promote BRICKLIVE events in North America and Canada with Brick Live International Limited as its content provider.

 

Trading in the Joint Venture commenced in January 2019. The Group accounts for the Joint Venture under the equity method of accounting.

 

The results of the Joint Venture in the year are:

 

 

 

2019

2018

 

£'000

£'000

 

 

 

Revenue

113

-

Loss before tax

(26)

-

Taxation

-

-

Loss after tax

(26)

-

Other comprehensive income

-

-

Total comprehensive income

(26)

-

 

 

 

Current assets

-

-

Non-current assets

-

-

Current liabilities

(26)

-

Non-current liabilities

-

-

 

(26)

-

 

BRICKLIVE (South Africa) Limited

In November 2019, Brick Live International Limited signed an agreement with WORLDSPORT (PTY) Limited ("WSL"), a company incorporated in South Africa, to create BRICKLIVE (South Africa) Limited to be owned 50.1% by BLI and 49.9% by WSL. Trading is yet to commence.

 

20.     Inventories

 

Group

Company

 

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Inventories of bricks

6,100

6,491

-

-

Work in progress

152

-

-

-

 

6,252

6,491

-

-

           

 

Included in inventories is £5,323,000 (2018: £5,838,000) of stock acquired on acquisition of Bright Bricks Group and included at fair value.

 

21.     Trade and other receivables - current assets

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Trade receivables

455

512

-

-

Amounts owed by subsidiaries

-

-

2,512

2,500

Other receivables

265

77

9

-

Prepayments and accrued income

88

103

-

10

 

808

692

2,521

2,510

 

Trade and other receivables - non current assets

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Other receivables

2,000

-

2,000

-

 

2,000

-

2,000

-

 

Included in non current assets in other receivables is the Equity Share Agreement (ESA) debtor as set out in Note 34.

 

At 31 December 2019, apart from the ESA, all amounts included under trade and other receivables are due within one year. The Group has not recognised an allowance against trade receivables as there has not been a significant change in credit quality.

 

Amounts owed by subsidiaries are considered interest free and repayable on demand.

 

22.     Cash and cash equivalents

 

Group

Company

 

2019

2018

2019

2018

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Cash at bank

98

120

119

2

 

             

 

 

 

23.     Borrowings

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Loan due within one year

532

1,000

532

1,000

Loan due after one year

463

-

463

-

 

995

1,000

995

1,000

 

The loan balance comprises the original loan facility of £695,000 and a new loan drawn down in December 2019 of £300,000.

 

The Company has agreed with Riverfort to extend the maturity date of the original loan facility from December 2019 to June 2021. The new loan is repayable in monthly payments commencing in August 2020 and ending in December 2020.

 

Both loans carry interest which is charged at a flat rate of 9% per annum on the amount advanced. Interest and fees will be repayable in monthly instalments in line with the capital repayments.

 

The loans are secured over the assets of the Group. The security created is subordinated to any security granted by a bank or financial institution. The Company's subsidiary, Brick Live International Limited, has guaranteed the Company's obligations under the loan.

 

24.     Trade and other payables

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Trade payables

720

1,134

198

514

Amounts owed to subsidiaries

-

-

66

40

Other payables

210

1,171

83

965

Other taxation and social security

687

307

10

-

Accruals and deferred income

947

849

291

144

 

2,564

3,461

648

1,663

 

Amounts owed to subsidiaries are unsecured, interest free and repayable on demand.

 

25.     Financial risks

 

The Group and Company operations expose them to a number of financial risks. The Directors aim to protect the Group and Company against the potential adverse effects of these financial risks.

 

Financial assets

Financial assets include cash and trade and other receivables, excluding prepayments.

 

These amounts, where appropriate, have been shown separately on the face of the Statement of Financial Position. Funds not immediately required for the Group and Company's operations are invested in bank deposits. It is the Directors' opinion that the carrying values of cash, trade receivables and investments approximate to their fair values.

 

 

Financial liabilities

Financial liabilities include current and non-current borrowings and trade and other payables (excluding taxation and social security and deferred income).

 

All amounts are carried at amortised cost. These amounts have been disclosed in the notes to the financial statements. It is the Directors' opinion that the carrying values of financial liabilities approximate to their fair-value.

 

Liquidity risk

The Group and Company's surplus liquid resources are maintained on short-term interest-bearing deposits. The Group and Company plans to continue to meet operating and other loan commitments as they fall due. Liquidity risk is managed through cash flow forecasts and regular planning.

 

Set out below are liquidity risk comparative tables as at 31 December 2019 and 31 December 2018.

 

Remaining contractual maturities year ended 31 December 2019

 

Group

Within

3 months

> 3 months

< 1 year

> one year

< 5 years

Total carrying amount

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Bank loans and borrowings

-

532

463

995

Trade and other payables

930

-

-

930

Lease liabilities

20

59

223

302

 

950

591

686

2,227

 

Company

Within

3 months

> 3 months

< 1 year

> one year

< 5 years

Total carrying amount

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Bank loans and borrowings

-

532

463

995

Trade and other payables

347

-

-

347

 

347

532

463

1,342

 

 

Remaining contractual maturities year ended 31 December 2018

 

Group

Within

3 months

> 3 months

< 1 year

> one year

< 5 years

Total carrying amount

 

 

£'000

£'000

£'000

£'000

 

Bank loans and borrowings

-

1,000

-

1,000

 

Trade and other payables

1,687

833

-

2,520

 

 

1,687

1,833

-

3,520

 

 

Company

Within

3 months

> 3 months

< 1 year

> one year

< 5 years

Total carrying amount

 

£'000

£'000

£'000

£'000

Bank loans and borrowings

-

1,000

-

1,000

Trade and other payables

825

833

-

1,658

 

825

1,833

-

2,658

 

The trade and other payables above exclude taxation and accruals and deferred income.

 

Credit risk

Financial assets past due but not impaired as at 31 December 2019:

 

 

Not impaired and not past due

Not impaired but past due

by the following amounts

 

 

>30 days

>60 days

>90 days

>120 days

 

£'000

£'000

£'000

£'000

£'000

Group: Trade and other receivables

2,721

-

-

-

-

Company: Trade and other receivables

4,521

-

-

-

-

 

Financial assets past due but not impaired as at 31 December 2018:

 

 

Not impaired and not past due

Not impaired but past due

by the following amounts

 

 

>30 days

>60 days

>90 days

>120 days

 

£'000

£'000

£'000

£'000

£'000

Group: Trade and other receivables

589

-

-

-

-

Company: Trade and other receivables

-

-

-

-

-

 

The trade and other receivables above exclude prepayments and accrued income.

 

Group trade and other receivables excluding prepayments and accrued income as at 31 December 2019 were £2,721,000 (2018: £589,000), all of which are not impaired. All remaining trade and other receivables as at 31 December 2019 are collected and/or collectable and are considered of low credit risk. All bank deposits are maintained in the United Kingdom and are low credit risk.

 

Market risk

a.   Interest rate risk

The Group had two loans provided by Riverfort at the year end (2018: one). The interest rate is fixed and the loans are repayable within two years. This risk is therefore considered to be insignificant.

 

b.   Foreign currency risk

Although the Company is based in the United Kingdom, a significant part of the Group's and Company's operations are overseas, and the operating or functional currency of a large part of the global business is in US Dollars or Euros. As a result, the Group's sterling accounts can be affected by movements in the US Dollar/Sterling and the Euro/Sterling exchange rates.

 

The foreign assets and liabilities of the Group and Company are closely matched as at 31 December 2019. The table below sets out the carrying amounts of assets and liabilities for the Group in their presentational currency (i.e. Sterling) and a total impact for each 10% fluctuation in exchange rates. Based on the carrying amounts of foreign assets and liabilities as at 31 December 2019, for each 10% fluctuation in exchange rates, net assets are expected to be impacted by £6,000 (2018: £30,000)

 

Year ended 31 December 2019

 

 

Carrying amount (sterling equivalent)

Forex Risk

 

£

$

Total

(-10%)

10%

 

'000

'000

'000

£'000

£'000

£'000

Financial assets

 

 

 

 

 

 

Cash

74

1

23

98

2

(2)

Trade and other receivables

2,559

62

186

2,807

25

(25)

 

2,633

63

209

2,905

27

(27)

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

Borrowings

995

-

-

995

-

-

Trade payables

512

164

44

720

(21)

21

Other payables

210

-

-

210

-

-

Lease liabilities

303

-

-

303

-

-

Other taxation and social security

687

-

-

687

-

-

Accruals and deferred income

947

-

-

947

-

-

 

3,654

164

44

3,862

(21)

21

 

 

 

 

 

 

 

Net Impact

 

 

 

 

6

(6)

 

 

Year ended 31 December 2018

 

 

 

 

Forex Risk

Carrying amount (sterling equivalent)

£

$

Total

(-10%)

10%

 

'000

'000

'000

£'000

£'000

£'000

Financial assets

 

 

 

 

 

 

Cash

61

36

23

120

6

(6)

Trade and other receivables

229

260

23

512

28

(28)

 

290

296

46

632

34

(34)

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

Borrowings

1,000

-

-

1,000

-

-

Trade payables

826

267

41

1,134

(31)

31

Other payables

1,132

-

-

1,132

-

-

Other taxation and social security

346

-

-

346

-

-

Accruals and deferred income

521

328

-

849

(33)

33

 

3,825

595

41

4,461

(64)

64

 

 

 

 

 

 

 

Net Impact

 

 

 

 

30

(30)

 

 

26.     Lease liabilities

 

 

Group

Company

 

2019

2018

2019

2018

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Current

79

-

-

-

Non-current

224

-

-

-

 

303

-

-

-

 

Following adoption of IFRS 16, a right to use asset, being the present value of the operating lease payments over the remaining life of the lease, has been recognised. The right to use assets and corresponding lease liability have been calculated using a discount rate of 9%. The depreciation of the assets and interest charge are recognised in the Statement of Comprehensive Income in the year and the buildings maturity analysis of lease commitments at 31 December 2019 is detailed below.

 

Lease payments relate to leases of property. The Group does not have an option to purchase the leased property at the expiry of the lease period.

 

Payments recognised as an expense

2019

2018

 

£'000

£'000

Minimum lease payments

-

37

Lease depreciation

16

-

Interest

7

-

 

Non-cancellable lease commitments

2019

2018

 

£'000

£'000

Not later than 1 year

80

83

Later than 1 year and not later than 5 years

298

90

Later than 5 years

-

-

 

378

173

 

 

27.     Deferred tax

 

 

2019

2018

 

£'000

£'000

At start of year

123

123

Charged to profit or loss

427

-

At end of year

550

123

 

Due to the availability of UK tax losses, subject to agreement with the HMRC, there is an estimated deferred tax asset of £2,382,000 (2018: £1,948,000). This is not recognised due to the uncertainty of the timing of future taxable profits against which these losses could be utilised.

 

 

28.     Share capital

 

The issued share capital is set out in the table below:

 

 
2019
2018
 
No. of shares
£'000
No. of shares
£'000
Issued and fully paid
 
 
 
 
Ordinary shares of 1p
79,500,419
795
67,094,595
671
Deferred shares of 51.8p
2,047,523
1,061
2,047,523
1,060
Deferred Ordinary shares of 0.5p
199,831,545
999
199,831,545
999
Deferred B shares of £19.60
103,260
2,024
103,260
2,024
Total
 

4,879

 

4,754

 

The changes in the year to 1p Ordinary shares, relating to the various capital transactions during the year were as follows:

Share Capital
2018
 
No. of shares
£'000
No. of shares
£'000
Ordinary shares of 1p
 
 
 
 
At start of year
 67,094,595
671
48,207,793
482
Share placing January 2018
-
-
4,571,425
46
Share placing April 2018
-
-
1,000,000
10
Consideration for acquisition of Bright Bricks
-
-
8,461,536
85
Share placing October 2018
-
-
4,615,381
46
Settlement of Ranjit Murugason outstanding fees
-
-
192,307
2
Settlement of consultant fees
-
-
46,153
-
Share placing February 2019
 2,084,616
21
-
-
Settlement of Ranjit Murugason outstanding fees
 69,230
1
-
-
Share subscription May 2019
 1,038,457
10
-
-
Settlement of Ranjit Murugason outstanding fees
 153,846
2
-
-
Share subscription August 2019
 46,152
-
-
-
Share placing November 2019
 2,346,856
23
-
-
Share subscription (ESA) December 2019
 6,666,667
67
-
-
At end of year
 79,500,419
795
67,094,595
671

 

The number of additional shares authorised for issue is 25,947,917 (2018: 26,996,800).

 

Deferred shares

The Company has 2,047,523 Deferred shares of 51.8p each and 199,831,545 Deferred Ordinary shares of 0.5p each (together the "Deferred shares") in issue. The Company also has 103,260 Deferred B shares in issue.

 

The Deferred shares have the following rights and restrictions. They shall:

a.   Not entitle their holders to receive any dividend or other distribution;

b.   Not entitle their holders to receive notice of or to attend, speak or vote at any General Meeting of the Company by virtue of or in respect of their holding of such Deferred shares and;

c.   Entitle their holders on a return of assets on a winding-up of the Company or otherwise only to the repayment of the capital paid up on such Deferred shares and only after repayment of the capital paid up on each Ordinary share in the capital of the Company and the payment of a further £100,000 on each such Ordinary share.

 

The holders of the Deferred shares shall not be entitled to any further participation in the assets or profits of the Company. Notwithstanding any other provision of these Articles and unless specifically required by the provisions of the Act, the Company shall not be required to issue any certificates in respect of the Deferred shares. The Company shall have irrevocable authority at any time:

a.   to appoint a person on behalf of any holder of Deferred shares to enter into an agreement to transfer, and to execute a transfer of, the Deferred shares, for no consideration, to such person (whether or not an officer of the Company) as the Directors may determine as the custodian thereof;

b.   to purchase all the Deferred shares then in issue in consideration of an aggregate payment of one penny for all of such shares then redeemed and upon giving 28 days' prior notice to the holders of Deferred shares as to be redeemed fixing a time and place for redemption; and

c.   in the event of any transfer, purchase or redemption to retain any share certificate relating to such shares. If any Deferred shares are purchased or redeemed as aforesaid, the relevant amount of authorised but unissued share capital arising may be redesignated by the Directors as Ordinary share capital.

 

Neither the passing by the Company of any special resolution for the cancellation of the Deferred shares for no consideration by means of a reduction of capital requiring the confirmation of the Court nor the obtaining by the Company nor the making by the Court of any Order confirming any such 103 reduction of capital nor the becoming effective of any such Order shall constitute a variation, modification or abrogation of the rights attaching to the Deferred shares and accordingly the Deferred shares may at any time be cancelled for no consideration by means of a reduction of capital effected in accordance with the Act without sanction or consent on the part of the holders of the Deferred shares.

 

29.    Share premium

 
2019
2018
 
£'000
£'000
At start of year
18,470
13,695
Premium arising on issue of equity shares
3,932
4,848
Debt to share conversion
1,181
153
Share issue costs
(103)
(226)
At end of year
23,480
18,470

 

 

30.     Acquisitions

 

The Company made no acquisitions in 2019.

 

The Company purchased the whole of the issued share capital of Bright Bricks Holdings Limited in October 2018, the asset values of which were as follows:

 

 
Book value of assets acquired
Fair value adjustments
Fair Value of assets acquired
 
£'000
£'000
£'000
 
 
 
 
Tangible assets
1,488
1,180
2,668
Stock of bricks
882
4,997
5,879
Cash and cash equivalents
43
-
43
Other assets and liabilities
(176)
-
(176)
Goodwill
-
-
86
Total consideration
2,237
6,177
8,500
 
 
 
 
Satisfied by:
 
 
 
Cash
 
 
2,167
Deferred consideration
 
 
833
Equity instruments (8,461,536 Ordinary shares of parent Company)
 
 
5,500
 
 
 
8,500

 

31.     Share option reserve

 

 
2019
2018
 
£'000
£'000
At start of year
-
-
Share option charge
167
-
Warrant charge
51
-
At end of year
218
-

 

The Group adopted a share option scheme on 2 April 2019 for certain directors and senior management. Options are generally exercisable at a price equal to the market price of the Plc shares on the day immediately prior to the date of the grant. Options are forfeited if the employee leaves the Group before the options vest.

 

The Share Option Plan provides for the grant of both tax-approved Enterprise Management Incentives (EMI) Options and unapproved options.

 

Options issued in April 2019

The Group issued 3,086,346 options to certain Directors and senior management. The options are exercisable at a price of £0.65 per share and will become exercisable on the third anniversary of their grant. They can be exercised at any time from this date to the day before the tenth anniversary of their grant and are not subject to a performance condition.

 

The inputs into the share option pricing model for the options granted in April 2019 are as follows:

 

Weighted average exercise price
£0.65
Expected volatility
63%
Expected life
3 years
Risk free interest rate
1.6%
Expected dividends
0%

 

  

The volatility of the Company's share price on the date of grant was calculated as the average of annualised standard deviations of daily continuously compounded returns on the stock of closely comparable companies.

 

The charge for the year ended 31 December 2019 for the options issued in April 2019 totals £166,663 (2018: £nil).

 

Details of the share options outstanding during the year are as follows. There are no share options exercisable at the balance sheet date.

 

 

2019

2018

 

Number

Weighted average exercise price (p)

Number

Weighted average exercise price (p)

Outstanding at the beginning of the year

-

-

-

-

Granted during the year

3,086,346

65

-

-

Forfeited during the year

-

-

-

-

Exercised during the year

-

-

-

-

Outstanding at the end of the year

3,086,346

65

-

-

 

Warrants

Share warrants were issued during the year. They have a weighted average exercise price of 74.66p (2018: 81.25p)

 

 

31 December 2019

Exercise price (p)

31 December 2018

Exercise price (p)

Share warrants

Number

 

Number

 

Investor (exercisable up to 17 October 2022)

356,923

38.79p*

356,923

81.25p

Investor (exercisable up to 16 December 2023)

232,018

38.79p

-             

-

Adviser (exercisable up to 25 February 2021)

50,000

80.00p

-               

-

 

*On 16 December 2019, the existing Investor warrants were repriced to 38.79p and exercise period extended from 3 years to 4 years from date of issue.

 

3,903,840 warrants were issued to investors as part of an equity raise and are therefore outside the scope of IFRS 2 and consequently there is no share-based payment charge in respect of these warrants.

 

 

The inputs into the warrant pricing model for the warrants issued are as follows:

 

 
October 2018
February 2019
December 2019
Weighted average exercise price
£0.3879
£0.8000
£0.3879
Expected volatility
75.53%
67.51%
67.51%
Expected life
4 years
3 years
3 years
Risk free interest rate
2.05%
2.1%
2.1%
Expected dividends
0%
0%
0%

 

The charge for the year ended 31 December 2019 for the warrants in issue totals £51,122 (2018: £nil).

 

32.     Capital management

 

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders. The Group had net assets of £13.7m at 31 December 2019 (2018: £10.6m). The Group's capital management strategy is to retain sufficient working capital for day to day operating requirements and to ensure sufficient funding is available to meet commitments as they fall due and to support growth. There are no externally imposed capital requirements.

 

 

2019

2018

 

£'000

£'000

Loan facility

(995)

(1,000)

Total Debt

(995)

(1,000)

Cash

98

120

Net (debt)/funds

(897)

(880)

 

In order to maintain or adjust the capital structure the Group may issue new shares or sell assets to reduce debt.

 

33.     Related party transactions

 

Details of the Directors' remuneration and consultancy fees are disclosed in Note 10 and share options granted to Directors are disclosed in the Directors Report.

 

David Ciclitira

David Ciclitira injected funds into the Company during the year as follows:

 

 
2019
2018
 
£'000
£'000
Purchase of 400,000 Ordinary shares of 1p each
260
-
Purchase of Venturi Formula E Car*
25
-
Short term loans to Company
-
344
 
285
344

 

*It was agreed that David Ciclitira would pay for the brick and steel costs associated with the Formula E car plus a 5% mark up. The car was built when there was available capacity in the production programme so ensuring the build did not affect the production of other tours or models. The total cost of the car including the sunk costs for labour and share of overheads amounted to £66,000.

 

As announced on 17 June 2019, David Ciclitira purchased another 20,000 Ordinary shares of 1p each on the open market. 13,000 were purchased at 53.5p per share and 7,000 at 53.9p per share.

 

As set out in Note 36, on 15 April 2020, David Ciclitira provided a loan to the Company of £500,000.

 

David Ciclitira received payments during the year as set out below:

 

 
2019
2018
 
£'000
£'000
Business expenses and healthcare costs
26
23
Rental arrangements (London and Italy) ceased 30 September 2019 (ref: RNS 30 September 2019)
33
55
Finance arrangement fee (ref: 2018 Accounts)
-
20
Repayment of short-term loans made by David Ciclitira to LVCG interest free (ref: 2018 Accounts)
126
218
Settlement of James Golf creditors (ref: Admission Document)
123
-
 
 
 
 
308
316

 

Hyun Seok (Reon) Kim

As announced in August 2019, a contract was entered into with BRICKLIVE Korea, a company wholly owned by Mr Kim. Under the Agreement, the Group will provide one of the Group's popular touring assets each year to BRICKLIVE Korea to be exhibited in South Korea, with the first touring show being Mythical Beasts which will be exhibited until the end of August 2020. In respect of each tour, the Group will receive an upfront fee of US$300,000 per annum.

 

Simon Horgan

As part of the acquisition of Bright Bricks Group in October 2018, Simon Horgan received cash consideration of £833,333 and equity consideration of 3,076,922 Ordinary 1p shares in the Company. A further £166,667 of deferred consideration was due in October 2019. As announced on 25 November 2019, the deferred consideration was converted into 387,788 Ordinary shares of 1p. Furthermore, on 25 November 2019, non-executive director fees of £30,000 was converted into 53,030 Ordinary shares of 1p.

 

 

Unpaid balances due to related parties at 31 December
2019
2018
 
£'000
£'000
David Ciclitira
7
-
Serenella Ciclitira
-
43
Ranjit Murugason
30
50
Bryan Lawrie
12
9
Trudy Norris-Grey
18
3
Mark Freebairn
5
-
Simon Horgan
-
170
 
72
275

 

 

34.     Equity Share Arrangement

 

As announced on 16 December 2019, the Company entered into a subscription agreement with YA II PN, Ltd. ("YA II") and Riverfort Global Opportunities PCC Limited (the Investors) whereby the Investors agreed to make an equity investment of £2m, before expenses ,through the subscription for, and issue of 6,666,667 new Ordinary shares of 1 pence each in the capital of the Company at a price of 30p per share. Under an equity sharing agreement also entered into by the Company with the Investors (the "ESA"), an amount equal to the gross proceeds of the Subscription following its completion, will then be returned by the Company to the Investors (the "ESA Payment"), with the Company to receive back the ESA Payment, subject to certain pricing adjustments on a pro rata monthly basis.

 

Under the terms of the ESA, the Company will set off any amounts owed by the relevant Investor to the Company towards repayment of any amount of principal, or interest or other amount owed by the Company to the Investor.

 

The ESA provides for a monthly payment made by the Investors to the Company, being the Subscription Amount divided by 12 (the "Monthly Settlement"). The Monthly Settlement may be adjusted downwards each month depending on the Company's share price performance with reference to the average of the ten lowest daily volume weighed average price ("VWAP") of the Ordinary shares during the relevant month (the "Market Price") against a benchmark price of 34.2 pence (the "Benchmark Price"), being equal to 114% of the Subscription Price. The Monthly Settlement will principally be used to repay the Company's borrowings.

 

The Monthly Settlement is then calculated as follows:

 

·    If the Market Price is equal to the Benchmark Price, the Investors shall pay the Company the Monthly Settlements

·    If the Market Price is above the Benchmark Price, the Investor shall pay the Company an increased amount based on the following calculation:

 

Monthly Settlement + (555,556 Ordinary Shares x (Market Price - Benchmark Price) x Applicable Percentage))

 

The "Applicable Percentage" is 60% whilst the Company has only drawn down £300,000 under the New Facility. In the event further funds are drawn down under the New Facility, the Applicable Percentage will be 50%.

 

If the Market Price is below the Benchmark Price, the Investor will pay the Company a reduced amount based on the following calculation:

 

Monthly Settlement - (555,556 Ordinary Shares x (Benchmark Price - Market Price))

The final Monthly Settlement will be calculated based on 555,551 Ordinary Shares.

 

Under the terms of the ESA, the Investors will not sell more than 20% of the volume traded in the Company Shares in any particular month, however this may increase to 25% of the volume traded if trading liquidity is low and it does not allow for full monthly exit.

 

In addition, the Company may, at its sole discretion, elect to either buy back and/or procure the sale of the Subscription Shares held by the Investors at any given time, subject to certain pricing/discount limitations.

 

On 15 April 2020, the Company and the Investors have agreed, as a result of the recent market disruption caused by COVID-19 to suspend the ESA and any payment obligations of the Investors to the Company pursuant to the ESA with effect from 25 March 2020.

 

Recommencement of the ESA and the associated payment obligations will occur when both the Company and Investors agree to restart monthly settlements. Going forward, the Investors will be able to decrease the amount of the monthly settlement and thereby increase the term of the ESA by one month at their discretion.

 

At 31 December 2019, the amount owed to the Company was £2m.

 

The Directors have carried out an impairment review of this debtor and considered that no impairment is required.

 

35.     Subsidiaries

 

At 31 December 2019, the Company had the following (direct and indirect) subsidiaries:

 

Held directly
Company number
Place of incorporation
% owned
Principal activities
Brick Live Group Limited
10151705
UK
100%
Holding Company
BrickLive Touring Ltd
11253539
UK
100%
Formerly touring events in Asia but now dormant
Parallel Live Group Limited
09932658
UK
100%
Holding Company US activities
Bright Bricks 2020 Limited
12333294
UK
100%
Dormant
Championship (Singapore) Pte Limited
201427355K
Singapore
95%
Dormant
Parallel Media Group Asia
201131009R
Singapore
100%
Dormant
Held indirectly
 
 
 
 
Brick Live International Limited
10257756
UK
100%
Sales of products, licensed events and zoos
Brick Live Far East Limited
10308158
UK
100%
Dormant
Brick Live Hong Kong Limited
2460469
Hong Kong
100%
Dormant and subsequently dissolved in 2020
Brick Live Far East Limited
2460460
Hong Kong
100%
Owner of Associate investment in China
Parallel Live (NY) LLC
6339763
USA
100%
Formerly self-promoted events in USA but now dormant
Bright Bricks Limited
07227540
UK
100%
Specialist production company
Bright Bricks Consumer Limited
10653625
UK
100%
Dormant

 

 

The following 100% owned subsidiaries incorporated in the UK were dissolved in the year:

 

Held directly
Bright Bricks (Worldwide) Limited
Bright Bricks Holdings Limited
 
Held indirectly
Brick Live Education Limited
Parallel Live (NY) Limited
Bright Bricks Events Limited
Bright Bricks Parties Ltd
Warriorbots Limited

 

Brick Live Hong Kong Limited was dissolved in early 2020.

 

36.     Post balance sheet events

 

Loan from David Ciclitira

 

To show his support for the Company during these unprecedented times, on 15 April 2020, David Ciclitira, provided a secured term loan of £500,000 to Brick Live International Limited, the Company's wholly owned subsidiary.  The Loan has been made on standard commercial terms. The Loan is repayable, in full, in a final bullet payment on 15 March 2021 and will incur interest at a rate of 16.2% per annum, payable monthly in advance.  In the event of a default event occurring, a further 2% will be charged on top of the annual interest rate.  Under the terms of the Loan, the Company will pay David Ciclitira an arrangement fee of £25,000 and his legal expenses in respect of the Loan of up to £25,000 plus VAT.

 

The Loan is secured on the assets of Brick Live International Limited and this security is subordinated to the security granted by Brick Live International Limited in favour of the Riverfort  loan facilities made available to the Company as detailed in the announcement of 16 December 2019 and in Note 23.

 

EIS status

 

On 14 January 2020, the Company received confirmation from HM Revenue & Customs that certain of the Ordinary Shares issued pursuant to the placing in February 2019 were eligible for EIS tax reliefs.

 

On 2 April 2020, the Company received Advanced EIS Assurance confirmation from HM Revenue & Customs. The Company can qualify for future EIS investment, provided the activities are unchanged, new funds are only used for the same new market, and the group is still within all the various size limits for EIS. Any change to group structure, the activities, an acquisition etc can affect the ability to meet the EIS conditions in the future.

 

 

Non-Executive Director Fees

 

On 17 January 2020, the Company issued Ordinary shares of 1p in settlement of certain Non-Executive Director fees as follows:

 

 
No. of shares
Share price
£'000
Ranjit Murugason
100,000
30p
30
Mark Freebairn
16,667
30p
5
 
 
 
35

 

Extension of existing loan facility

 

On 28 February 2020, the Company agreed with Riverfort to extend the maturity date of the original facility from December 2019 to June 2021. The principal, interest and fees will be repayable in nine equal monthly instalments with the first payment being made in October 2020 and the final payment to be made in June 2021.

 

Equity Sharing Agreement

 

On 28 February 2020, the Company and the Investor agreed to amend the terms of the ESA, such that the Subscription Amount as detailed in Note 34, will now be received over a period of 36 months commencing in March 2020, as opposed to over a period of 12 months.

 

On 15 April 2020, the Company and the Investors further agreed, as a result of the recent market disruption caused by COVID-19 to suspend the ESA and any payment obligations of the Investors to the Company pursuant to the ESA with effect from 25 March 2020.

 

Recommencement of the ESA and the associated payment obligations will occur when both the Company and Investors agree to restart monthly settlements. Going forward, the Investors will be able to decrease the amount of the monthly settlement and thereby increase the term of the ESA by one month at their discretion.

 

The Monthly Settlement will continue to be calculated on the same basis as set out above, though as set out below, the number of Ordinary Shares used in the calculation has been reduced:

 

If the Market Price is equal to the Benchmark Price, the Investors shall pay the Company the Monthly Settlements.

 

If the Market Price is above the Benchmark Price, the Investors shall pay the Company an increased amount based on the following calculation:

·    Monthly Settlement + (185,187 Ordinary Shares x (Market Price - Benchmark Price) x Applicable Percentage))

 

If the Market Price is below the Benchmark Price, the Investors will pay the Company a reduced amount based on the following calculation:

·    Monthly Settlement - (185,187 Ordinary Shares x (Benchmark Price - Market Price))

The final Monthly Settlement will be calculated based on 185,122 Ordinary Shares.

 

 

COVID-19

 

In accordance with IAS 10 'Events after the Reporting Period' the COVID-19 pandemic, and in particular the various measures taken to contain it, do not provide additional evidence about conditions that existed at 31 December 2019. Accordingly, COVID-19 is considered to be a non-adjusting event and the Directors have not made any adjustments to these consolidated financial statements arising from COVID-19.

 

However, post year end, the Directors have further considered the carrying value of goodwill and investments and have determined the following adjustments will be required in 2020:

 

Reduction of asset value

Group

Company

 

£'000

£'000

Brick Live Far East

3,036

3,036

Parallel Live Group

375

104

Bright Bricks Group

86

8,423

 

3,497

11,563

Net assets 31 December 2019

13,659

20,446

Net assets COVID-19 adjusted

10,162

8,883

 

Note to the Announcement

 

In accordance with section 435 of the Companies Act 2006, the directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2019 or 2018, but is derived from these financial statements. The financial statements for the year ended 31 December 2018 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 December 2019 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

 


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 [email protected] or visit www.rns.com.
 
END
 
 
FR UURKRRKUNUAR

Quick facts: Live Company Group PLC

Price: 9

Market: AIM
Market Cap: £7.91 m
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Live Company chairman says business is now returning with first zoo in US...

Live Company Group PLC's (LON:LVCG) David Ciclitira tells Proactive London's Andrew Scott they had its first zoo reopen last week in Michigan which enjoyed record numbers on the first day and he adds that they've already got their models in several other zoos in anticipation of doors reopening....

on 15/6/20