TIDMMPM
RNS Number : 7431D
mporium Group PLC
28 June 2019
28 June 2019
Mporium Group plc
("Mporium", the "Company" or the "Group")
Full year Results
Mporium Group plc (AIM: MPM), the technology firm delivering
event-driven marketing, announces the release of its audited
financial statements for the period ending 31 December 2018 (the
"Period"). Extracts from these statements are enclosed below.
The results reflect the financial year prior to the
transformational transaction with Allay (UK) Limited which was
completed and announced in January 2019. Since then, the strategic
focus of the business has changed to focus on MporiumX, the
Company's performance-led moment marketing media division, as
announced since the end of the Period.
Mporium's Chief Executive, Nelius De Groot, said:
"This has been a challenging year for the Group, however the
recently announced restructuring of the business is well underway
and will be complete by the end of July. We remain encouraged by
the progress being achieved by MporiumX, particularly in the Sports
and Consumer Regulation sectors.
"By restructuring the Group, we are confident that Mporium will
move forward with a leaner business model that capitalises on the
opportunities within our target markets.
"Having had strong support from existing shareholders on the
back of the recent fundraise, the business will now be fully funded
to execute on its new strategy. We look forward to updating
shareholders in due course as the restructuring and the revised
business strategy takes effect."
Annual Report and Accounts and Notice of AGM
Mporium will today post to shareholders its Annual Report &
Accounts for the year ended 31 December 2018 and Notice of Annual
General Meeting ("AGM") and Form of Proxy to its shareholders. The
AGM will be held at the offices of Mporium, 106 New Bond Street,
London W1S 1DN on 24 July 2019 at 10:00 a.m. The Annual Report is
also available to download from the Group's website at
www.mporium.com.
Enquiries
Mporium: 020 3841 8411
Nelius De Groot, Chief Executive Officer
finnCap: 020 7220 0500
Henrik Persson / Kate Bannatyne (Corporate Finance)
Andrew Burdis (Corporate Broking)
Yellow Jersey PR: 020 3004 9512
Tim Thompson / Annabel Atkins / Felicity
Winkles
Notes to editors
About Mporium
Mporium is a technology company at the forefront of the
transformation in digital marketing. Mporium's proprietary
technology enables advertisers, to identify and leverage moments
when there are significant changes in the levels of consumer
engagement. MporiumX is the performance-led moment marketing media
trading division of Mporium Group.
Based in the UK, Mporium Group plc is quoted on AIM, the junior
market of the London Stock Exchange plc.
www.mporium.com
Strategic and Financial Report for the year ended 31 December
2018
Overview
Mporium Group plc (AIM:MPM), the technology firm delivering
event-driven marketing, that is listed on the London Stock
Exchange's AIM market, today announces results for the twelve
months to 31 December 2018.
Mporium operates in the growth sector of Digital Advertising and
its proprietary technology, IMPACT, enables advertisers, to
identify and leverage moments when there are significant changes in
the levels of consumer engagement. Throughout 2018, the development
of the IMPACT product was accelerated, delivering increased levels
of functional sophistication performance and analytics, resulting
in the signing of a number of high-profile commercial agreements
during the year.
The trend towards Mporium's engagement directly with brands
accelerated during 2018. In November 2018, this momentum resulted
in the launch of the performance-led MporiumX division. In the
subsequent months, MporiumX has signed important commercial
agreements in both the sports rights and consumer regulation
sectors. One of which was the transformational strategic
collaboration agreement with Allay (UK) Limited ("Allay") which was
announced in January 2019.
To support development and marketing of the IMPACT product, and
for general working capital purposes, the company successfully
conducted a fundraise of GBP2.3m through direct subscription with
the Company in November 2018. Further to this, the Company
undertook a fundraise through a direct subscription with the
Company of GBP1.9m in June 2019, the fundraise being subject to
approval at a General Meeting in July 2019.
IMPACT and MporiumX
Mporium's strategy is to implement its IMPACT technology as an
overlay to brands' digital advertising campaigns, without the need
for either technical integration or re-engineering of the
underlying campaigns. The Company believes that the implementation
of the technology is frictionless and provides a wide range of
benefits including improved performance, scale and automation.
The overall business strategy is driven by the scale and growth
of digital advertising, the disruptive effect of smartphones on
that market, and the opportunities afforded by the concentration of
digital media spend in just a few digital advertising venues:
particularly the Google, Facebook and Amazon platforms. The Global
Digital Media Market was USD $230 billion in 2017 and is expected
to reach USD $335 billion by 2020. This growth can be principally
attributed to the increase in mobile digital advertising, which was
$134 billion or 46% of digital spend in 2017. However, mobile
digital advertising is expected to grow to represent 74% of the
total by 2020, $247 billion.
The growth of digital advertising has been fuelled by the
unprecedented rate of smartphone adoption, with an estimated 80% of
the global adult population (circa 4 billion people) projected to
have a smartphone by 2020. A critical attribute of the adoption of
smartphones, is that consumers have the ability and desire to react
instantaneously to real-world events. This change in consumer
behaviour, dramatically increases the importance of the timing of
advertising: namely choosing the optimal moments for advertisers to
engage their audience.
Consumers are overwhelmed with the volume of advertising that
they are subjected to daily, making relevance and timing absolutely
key. Simply put, it is imperative that advertisers reach the right
audience (WHO), on the right channel (WHERE), with the right
message (WHAT), at the right time (WHEN).
Historically, advertisers have been extremely limited in the
timing of their advertising: the ability to reach audiences WHEN
the moment was right. Advertising could be pre-scheduled or managed
manually for major events, but it could not be modified in
real-time in response to the multitude of events that drive
changing levels of consumer interest. In the smartphone era where
consumers react to events instantaneously, Mporium's IMPACT
technology provides advertisers with the ability to monetise this
phenomenon.
IMPACT uses performance data to analyse anomalies in consumer
the levels of interest across brands and industry sectors: both the
increases and decreases. Using machine learning techniques, these
anomalies are then correlated to the real-world events that drove
the variation in consumer interest. This process creates the
data-driven decisions that define the appropriate actions that
IMPACT takes on advertising channels.
The product is based on proprietary technology with strongly
defendable Intellectual Property Rights, providing Mporium with a
compelling offering that is underpinned by an automated and
scalable technology platform.
Business Model
IMPACT's primary route to market was through digital media
agencies, a model that provided a leveraged salesforce and lowered
the cost of accessing global markets. Starting in 2017, IMPACT was
implemented directly on behalf of brands, a trend that accelerated
in 2018 and which was the catalyst for the performance-led MporiumX
division.
The agency model typically operates on the basis of a percentage
of spend under management, or a software license. The
direct-to-brand offering has several different characteristics,
with campaigns generally operating on a pay-for-performance basis,
rather than the traditional agency models.
The MporiumX division uses IMPACT to drive digital advertising
campaigns on behalf of brands and is currently operating across a
number of sectors, including sports rights and consumer
regulation.
Product Development
The Company made substantial investment in the IMPACT product
during 2018, which has delivered increased product capabilities,
flexibility and scalability.
The capabilities of the product have been significantly extended
to enable more data-driven decision capabilities. The platform has
also developed to increase the levels of flexibility and
scalability that it offers. IMPACT uses signals from multiple
sources (including TV, Electronic Program Guides, Sports, Social
and RSS feeds) to manage in real-time, the pricing, timing and
selection of creative for digital advertising campaigns on multiple
venues.
During 2018, IMPACT was integrated into Google Search Ads 360,
providing the capabilities to support display campaigns at scale,
capabilities that have already been used on behalf of one of the
UK's largest advertisers.
A key focus was the development of the data and analytics
capabilities. The analytics capabilities were expanded to include
aggregated sector insights, which provides insights across all
brands within a sector: enabling a better understanding of the
relative activity of a brand against their competitors. Signal
analytics reporting provide insights into interaction between
brands' on-line and off-line activity and generates recommendations
to enhance digital advertising performance via IMPACT.
The platform was also enhanced to deliver self-serve
capabilities for both reporting and for sports activation. These
capabilities are critical in providing scale to the overall
business and enabling brands and agencies to operate IMPACT with
minimal levels of support. As adoption of the product on a
self-serve basis increases, brands and agencies are taking
advantage of the automation as well as the performance capabilities
that the platform delivers.
IMPACT is channel agnostic and can be expanded to include
further channels as new markets are targeted, or new channels
attract additional advertising expenditure. The increased
scalability of the product has enabled the product to service a
greater number of clients and to operate at greater scale across
campaigns and geographies. In the case of Sports Signals alone,
this increased scalability enabled the product to operate in over
160 countries and territories.
Business Activity
IMPACT has gained significant market traction during 2018 with
the signing of a number of important commercial agreements and
organisational changes:
-- IMPACT's sports syncing technology agreements were signed
with three sports rights holders to drive advertising campaigns on
behalf of their streaming services. The technology was deployed
across a wide range of sports and competitions, including NFL, NBA,
Golf, Handball and more than 20 Football Cups and Leagues, within
more than 160 countries and territories.
-- Following the successful implementation of IMPACT with a
number of GroupM agencies, a commercial agreement was signed with
the wider group in January 2018. This agreement provides access to
the IMPACT technology across the GroupM agencies. The agreement has
subsequently been renewed and expanded.
-- Performics the performance marketing arm of Publicis Media,
signed an agreement for IMPACT to be commercially rolled out within
the campaigns of Samsung, one of the world's largest global
electronic companies. The technology was initially used as part of
the launch of Samsung's S9 phone and has been utilised in numerous
subsequent campaigns.
-- An agreement to provide IMPACT to one of the world's largest
and most prestigious performance marketing agencies. The agency
operates in more than 100 countries, providing services to over
5,000 clients and is one of the largest global communications
groups.
-- Post period end, Mporium announced a Strategic Collaboration
Agreement with Allay, a leading Claims Management Company in
January 2019. This transformational deal represents a strategic
partnership that provides Mporium and Allay with the potential to
drive significant profitability from the growth of the consumer
regulation sector.
The increased direct-to-brand opportunity for IMPACT resulted in
the creation of the MporiumX division and the appointment of Tom
Smith as Head of MporiumX on 30 November 2018. Tom has over 12
years' experience in digital media and is an acknowledged industry
leader. The division was created to use IMPACT to drive digital
advertising campaigns, primarily on a pay-per-performance basis. On
11 June 2019, Tom was appointed Managing Director, Mporium Group
plc, with wide-ranging responsibilities including the strategy and
execution for the business.
Corporate Activity
The substantial investment in IMPACT development, required the
Company to raise additional capital on one occasion during
2018.
In November 2018, the Company raised GBP2.2m net through a
direct subscription with the Company for 46,000,000 shares at 5p
per share. This funding round provided both existing and new
shareholders further opportunities to invest in Mporium's IMPACT
technology.
In January 2019, Mporium announced a Strategic Collaboration
Agreement with Allay, a leading Claims Management Company. This
transformational agreement represents a strategic partnership
enabling Mporium and Allay to drive significant profitability from
the growth of the consumer regulation sector. As part of the deal,
Mporium was appointed exclusive supplier of consumer lead
generation for Allay and Allay were granted 25% of the enlarged
Mporium share capital, rising to a maximum of 29.9% subject to
performance.
In June 2019, the Company conditionally raised GBP1.9m net by
way of subscription through a placing of 192,300,000 shares at 1
per share. Upon completion, the investors will also receive
192,300,000 warrants exercisable between 10 December 2019 and 10
December 2021 with a subscription price of 1.5 pence per warrant.
The subscription is conditional upon (amongst other things)
shareholder approval at a General Meeting on 2 July 2019.
Restructuring
In June 2019, the Group announced a major restructuring of the
business to refocus on the performance-led MporiumX division.
MporiumX will have a specific emphasis on the Sports and
Consumer Regulation sectors. In the Sports sector, Mporium-X will
extend its activities with sports rights holders and will expand
its focus to include the sports betting market. In the Consumer
Regulation sector, as the PPI deadline approaches Mporium-X and
Allay will collaborate on additional opportunities such as Packaged
Bank Accounts.
The restructuring of the Mporium business is already underway
and headcount reductions will be complete by mid-July and will
halve the salary costs of the entire Group.
In addition, a strategic review of FWM is also underway and the
Directors expect to decide on the future direction of the business
by the end of July.
Board Changes
On 28 February 2018, Staale Bjornstad, Non-Executive Director,
stepped down from the Board and Nicholas (Nick) Bertolotti was
appointed as a Non-Executive Director of the Company.
Nick has enviable experience to the Company, having spent over
25 years advising companies in the Technology, Media and Telecoms
("TMT") sector. From 2003 to 2016 he was a Managing Director in
Investment Banking at Credit Suisse, where he headed up the
European Media Equity Research team. Prior to joining Credit
Suisse, Nick worked at JPMorgan and Arthur Andersen (now
Deloitte).
On 10 June 2019, Barry Moat, Executive Chairman, resigned from
the Board. The Company announced its intention to appoint a new
Chairman as soon as practicable.
Results Overview
While the Company remains very optimistic for the current
financial year and is encouraged by the business activity seen and
the restructuring conducted since the end of the period, the Board
reports significant challenges for the business in the year to 31
December 2018.
As described above, the Company has made significant investment
in IMPACT to create a highly sophisticated product that has
resulted in the signing of a number of high-profile commercial
agreements that will benefit the Company in 2019. However, during
the year in question the Company has failed to achieve sufficient
revenues from the Agency division of the business, making the
business significantly unprofitable. Furthermore, the performance
of the Group's Fast Web Media (FWM) business has generated
significant losses since the beginning of 2018.
These factors resulted in the fundraise of June 2019, which was
accompanied by the announcement that the Company would undergo a
major restructuring to refocus the business on the performance-led
MporiumX division. The Mporium-X division and in particular the
Allay Strategic Collaboration Agreement are the catalyst for the
transformation in the level of revenue generated by Mporium during
2019.
The full year results include charges associated with the
continued development and evolution of the IMPACT product. These
activities are the principal driver behind the financial
performance of the Company during the year under review. Mporium's
overall revenues decreased to GBP0.911 million, down 53.9% on 2017.
In addition, due to the adoption of new accounting standards, the
Group and its auditors were in discussions to finalise the periods
for which booked revenues were to be recognised. After extensive
discussions with the auditors, the Group has agreed that GBP1.458
million of amounts on contracts should not be recognised in the
2018 results. The restated revenue for the 2018 Half Year results
is GBP560k (unaudited) rather than GBP1,160k (unaudited). The
reversal of this revenue recognition has no cash effect.
Pursuant to the factors mentioned above, Mporium's gross profit
also decreased to GBP0.840 million, down 53.9% on 2017, driven by
weaker performance from the FWM business.
Administrative expenses increased to GBP8,568 million, up 25.6%
on 2017, reflecting the Company's continuing investment in
developing the IMPACT product and the requirement for a total
impairment of goodwill of GBP1.445 million for the FWM business.
The Company reported a total loss before taxation of GBP7.731
million, an increase of 99.6% on 2017. The 2017 results benefited
from the release of a share swap lock-in agreement valued at
GBP1.131 million, when adjusted for this one-off benefit, the 2018
loss is 54.5% higher than in 2017.
The Group's FWM business had an exceptionally difficult year
with an operational loss of GBP952.4k, compared to an operational
profit of GBP207.7k in 2017. Recovery from the loss of FMW's single
largest client in early 2018 has proven difficult, a situation that
reflects the overall challenges that face smaller digital agencies.
The Group is undertaking a strategic review of FWM, to determine
the appropriate course of action with respect to the business.
Several new contracts with larger clients have been signed during
the last 18 months, but these contracts have not yet generated the
level of revenues required to make FWM profitable. Consequently, an
impairment of GBP1.445 million has been recognised in the
results.
As mentioned above, the Company has undertaken to restructure
the existing business which, in addition to the commercial
developments made by the Company this year, concludes that the
results commented on in this report are not reflective of the
business as it stands today. The Company are encouraged by the
progress made to date.
Outlook
The growth of digital advertising remains buoyant, representing
a global market of $355 billion by 2020. The vast majority of this
growth is being driven by mobile advertising, which will represent
74% of digital media advertising by 2020. The growth of the overall
digital market and that of mobile in particular, provide
significant impetus to Mporium's business proposition.
Consumers are simply overwhelmed with the volume of advertising
that they consume each and every day, bombarded with advertising
across a multitude of channels. To cut through this cacophony,
relevance and timing are key: advertisers need to reach the right
audience (WHO) on the right channel (WHERE) with the right message
(WHAT) at the right time (WHEN). While it may seem obvious that all
four dimensions are critical to efficient advertising, managing the
timing of digital campaigns requires scalable technology that
incorporates complex event management and operates in
real-time.
Advertising initially focussed on the question of the message
(WHAT) that should be delivered. The message has always been
fundamental to driving successful advertising campaigns, but
initially there were limited options in targeting audience and few
channels to advertise on. Digital media has enabled creative
messaging to be much more dynamic and varied, this dynamism is
achieved by adapting the context and relevance of creative.
As advertising developed, the options for targeting specific
audiences (WHO) increased dramatically. Over time, technologies and
techniques have evolved to enable increased sophistication in
managing target audiences: Data Management Platforms (DMP's),
persistent ID's, audience segmentation, qualitative and
quantitative studies, media owner panels and pen portraits.
As the number of advertising channels grew, the question of
WHERE to reach these target audiences became ever more important.
The advent of digital advertising created a multitude of new
channels, increasing the complexity of managing overall advertising
budgets, particularly in the absence of a universal measurement or
attribution model. This has resulted in vast resource being
expended on determining the mix of the right channels, media, brand
versus direct response, positioning, formats, durations, weights,
frequencies, and reach.
Most historical attempts to determine WHEN to reach an audience
on a specific channel have revolved around scheduling (e.g. when is
best to run a specific TV advert) or creating war-rooms to manage
major occasions such as The Super Bowl. However, the moments that
influence consumer interest are frequent and dynamic. They cannot
be managed on a scheduled basis, and are way beyond the
capabilities of a human team.
Responding to real-world events in real-time poses significant
technical challenges, but it exactly reflects how consumers behave.
The explosive adoption of smartphones has only increased the
responsive nature of consumer behaviour, a dynamic that is poorly
served by existing technologies. IMPACT enables advertisers to
reach their audience WHEN the moment is right and to avoid wasted
advertising spend in moments of lower consumer interest.
Given consumers are bombarded with messaging that is shouting
for their attention, creative that is relevant to that moment is
crucial to gaining their focus. IMPACT enables advertisers to
deliver the right message in the moment, ensuring that the WHAT
(content) is both appropriate and relevant.
As a result of the recently announced restructuring, the Group
will refocus on the performance-led MporiumX division, with
particular emphasis on the Sports and Consumer Regulation sectors.
The development of IMPACT in 2019 will be significantly curtailed
to reflect the reduced focus of the Group and to enable a reduction
in the overall cost base. The Group is currently undertaking a
strategic review of its legacy FWM business, to determine the
appropriate course of action.
The Board is confident that under Tom's leadership, the
restructured business will provide the Company with a solid
foundation for future growth to capitalise on the valuable market
opportunity.
KPI
The Key Performance Indicators for the Group will be redeveloped
as a result of the imminent restructuring of the Company. The
metrics will focus on the key performance measures that will drive
the MporiumX business model:
-- Number of clients
-- Average revenue per client
-- Number of concurrent clients using self-serve capabilities
-- Average operating margin per client
A detailed update relating to these metrics will be provided as
part of the 2019 results.
Events after the statement of financial position date
As described above, in January 2019, Mporium announced a
Strategic Collaboration Agreement with Allay, a leading Claims
Management Company. This transformational deal represents a
strategic partnership that provides Mporium and Allay with the
potential to drive significant profitability from the growth of the
consumer regulation sector. As part of the deal, Mporium was
appointed exclusive supplier of consumer lead generation for Allay
and Allay were granted 25% of the enlarged Mporium share capital,
rising to a maximum of 29.9% subject to performance.
The Allay Strategic Collaboration Agreement is the catalyst for
the transformation in the level of revenue generated by Mporium
during 2019. To date, invoices exceeding GBP18.0 million have been
fulfilled as a result of the relationship with Allay. As previously
announced, while it is taking longer than anticipated to achieve
gross margin aspirations, the recent restructuring provides greater
focus on this opportunity.
In April 2019, Mporium entered into a loan agreement for GBP1
million, repayable over a 12-month period.
In June 2019, the Group conditionally raised GBP1.9m net by way
of subscription through a placing of 192,300,000 shares at 1 per
share. Upon completion, the investors will also receive 192,300,000
warrants exercisable between 10 December 2019 and 10 December 2021
with a subscription price of 1.5 pence per warrant. The
subscription is conditional upon (amongst other things) shareholder
approval at a General Meeting on 2nd July 2019. If approved, the
share capital of the Group will increase to 1,037,482,052
shares.
In June 2019, the Group began a major restructuring of the
business to refocus on the performance-led MporiumX division. As
part of this restructuring, the Group is undertaking a strategic
review of FWM, to determine the appropriate course of action with
respect to the business.
On behalf of the Board
Nelius De Groot
Chief Executive Officer
27 June 2019
Consolidated financial statements Mporium Group plc
Consolidated statement of total comprehensive income for the
year ended 31 December 2018
Year ended Year ended
31 December 31 December
2018 2017
Notes GBP GBP
Continuing operations
Revenue 5 911,263 1,977,799
Cost of sales (71,653) (155,268)
------------ ------------
Gross profit 839,610 1,822,531
Administrative expenses 6 (8,568,180) (6,824,389)
Other operating income 8 0 1,131,234
------------ ------------
Operating loss (7,728,570) (3,870,624)
Financial income 9 1,851 1,097
Financial expense 10 (3,812) (2,907)
------------ ------------
Loss from continuing operations before
taxation (7,730,531) (3,872,434)
Taxation 11 693,015 702,380
------------ ------------
Total loss (7,037,516) (3,170,054)
Other Comprehensive Income
Revaluation of Investment 15 (164,245) (376,942)
------------ ------------
Total other Comprehensive Income (164,245) (376,942)
Total comprehensive losses attributable
to equity holders of the parent company (7,201,761) (3,546,996)
============ ============
Basic and diluted loss per share for
losses attributable to the owners of
the parent during the period 12 (0.01) (0.01)
Consolidated statement of financial position as at 31 December
2018
31 December 31 December
2018 2017
Notes GBP GBP
Non-current assets
Property, plant and equipment 13 190,101 395,385
Other intangible assets 14 1,963,587 3,686,385
Investments 15 0 347,063
------------ ------------
Total Non-current assets 2,153,688 4,428,833
Current assets
Trade and other receivables 17 1,044,224 3,142,832
Cash and cash equivalents 18 994,135 2,036,224
------------ ------------
Total Current Assets 2,038,359 5,179,056
Total assets 4,192,047 9,607,889
------------ ------------
Current liabilities
Trade and other payables 19 (553,260) (1,222,938)
------------ ------------
Total Current liabilities (553,260) (1,222,938)
Net assets 3,638,787 8,384,951
============ ============
Equity
Share capital 20 3,169,433 2,939,433
Share premium 20 25,179,124 23,208,365
Share option reserve 1,956,596 1,746,003
Merger Reserve 7,641,598 7,641,598
Retained earnings - deficit (34,307,964) (27,150,448)
Equity shareholders' funds 3,638,787 8,384,951
============ ============
Company statement of financial position as at 31 December
2018
31 December 31 December
2018 2017
Notes GBP GBP
Non-current assets
Intangible assets 14 69,443 262,366
Investment in subsidiaries 16 0 1,202,492
Investments 15 0 347,063
------------ ------------
Total Non-current assets 69,443 1,811,921
Current assets
Trade and other receivables 17 172,468 2,004,271
Cash and cash equivalents 18 904,396 1,586,773
------------ ------------
Total Current Assets 1,076,864 3,591,044
Total assets 1,146,307 5,402,965
------------ ------------
Current liabilities
Trade and other payables 19 (269,731) (867,219)
------------ ------------
Total Current liabilities (269,731) (867,219)
------------ ------------
Net assets 876,576 4,535,746
============ ============
Equity
Share capital 20 3,169,433 2,939,433
Share premium 20 25,179,125 23,208,365
Share option reserve 1,328,600 1,211,565
Other reserve (57,468) (57,468)
Retained earnings (28,743,114) (22,766,149)
------------ ------------
876,576 4,535,746
============ ============
Mporium Group plc ("the company") has taken advantage of the
exemption allowed under sections 408 of the Companies Act 2006 and
has not presented its own Statement of Comprehensive Income in the
financial statements. The company loss after tax for the period
ended 31(st) December 2018 is GBP5,812,719 (2017:
GBP5,165,260).
Consolidated statement of changes in equity for the year ended
31 December 2018
Retained Share Share Share Merger Total
earnings capital premium option reserve
reserve reserve
GBP GBP GBP GBP GBP GBP
31 December 2016 (23,863,266) 2,571,027 17,493,454 1,854,505 7,641,598 5,697,318
Transactions with
owners:
Share-based payments - - - 151,313 - 151,313
Transfer related
to lapsed share
options 259,815 - - (259,815) - -
Share issue cost - - (198,032) - - (198,032)
Share issues during
the period - 368,406 5,912,943 - - 6,281,349
Total transactions
with owners 259,815 368,406 5,714,911 (108,502) - 6,234,629
Total loss for the
year (3,170,054) - - - - (3,170,054)
Other comprehensive
income - revaluation
of investment (376,943) - - - - (376,943)
------------ --------- ---------- --------- --------- -----------
31 December 2017 (27,150,448) 2,939,433 23,208,365 1,746,003 7,641,598 8,384,951
------------ --------- ---------- --------- --------- -----------
Transactions with
owners:
Share-based payments - - - 254,838 - 254,838
Transfer related
to lapsed share
options 44,245 - - (44,245) - -
Share issue cost - - (99,241) - - (99,241)
Share issues during
the period - 230,000 2,070,000 - - 2,300,000
------------ --------- ---------- --------- --------- -----------
Total transactions
with owners 44,245 230,000 1,970,759 210,593 - 2,455,597
Total loss for the
year (7,037,516) - - - - (7,037,516)
Other comprehensive
income - revaluation
of investment (164,245) - - - - (164,245)
------------ --------- ---------- --------- --------- -----------
31 December 2018 (34,307,964) 3,169,433 25,179,124 1,956,596 7,641,598 3,638,787
------------ --------- ---------- --------- --------- -----------
Company statement of changes in equity for the period ended 31
December 2018
Retained Share Share Share Other Total
earnings Capital premium option reserve
reserve reserve
GBP GBP GBP GBP GBP GBP
31 December 2016 (17,281,634) 2,571,027 17,493,454 1,183,509 (57,468) 3,908,888
Transactions with
owners:
Transfer related
to lapsed
share options 57,687 - - (57,687) - -
Share-based payments - - - 85,743 - 85,743
Share issue cost - - (198,032) - - (198,032)
Share issues during
the year - 368,406 5,912,943 - - 6,281,349
------------ --------- ---------- --------- -------- -----------
Total transactions
with owners 57,687 368,406 5,714,911 28,056 - 6,169,060
Total loss for the
year (5,165,260) - - - - (5,165,260)
Other comprehensive
income - revaluation
of investment (376,942) - - - - (376,942)
31 December 2017 (22,766,149) 2,939,433 23,208,365 1,211,565 (57,468) 4,535,746
------------ --------- ---------- --------- -------- -----------
Transactions with
owners:
Transfer related
to lapsed
share options - - - - - -
Share-based payments - - - 117,035 - 117,035
Share issue cost - - (99,240) - - (99,240)
Share issues during
the year - 230,000 2,070,000 - - 2,300,000
------------ --------- ---------- --------- -------- -----------
Total transactions
with owners - 230,000 1,970,760 117,035 - 2,317,795
------------ --------- ---------- --------- -------- -----------
Total loss for the
year (5,812,719) - - - - (5,812,719)
Other comprehensive
income - revaluation
of investment (164,246) - - - - (164,246)
31 December 2018 (28,743,114) 3,169,433 25,179,125 1,328,600 (57,468) 876,576
------------ --------- ---------- --------- -------- -----------
Consolidated statement of cash flows for the year ended 31
December 2018
Year ended Year ended
31 December 31 December 2017
2018
GBP GBP
Operating activities
Loss from continuing operations
before taxation (7,730,531) (3,872,434)
Adjustments for:
Depreciation of property, plant
and equipment 236,104 197,524
Amortisation of intangible assets 1,223,333 959,670
Impairment of intangible assets 1,445,523 -
Share-based payment expense 254,838 151,312
Financial income (1,851) (1,097)
Financial expense 3,812 2,907
Cash outflow from operating activities
------------
before changes in working capital (4,568,772) (2,562,118)
------------ -----------------
Decrease in trade and other receivables 263,507 404,533
Decrease in trade and other payables (671,128) (60,367)
------------ -----------------
Change in working capital (407,621) 344,166
------------ -----------------
Income taxes recovered 751,486 679,497
------------ -----------------
Net cash used in operating activities (4,224,907) (1,538,455)
------------ -----------------
Investing activities
Interest received 1,851 1,097
Invested in intangible assets (946,058) (1,764,204)
Purchase of property, plant and
equipment (30,820) (246,973)
Sale proceeds 182,818 -
Net cash used in investing activities (792,209) (2,010,080)
------------ -----------------
Financing activities
Interest paid (3,812) (2,907)
Issue of share capital 4,078,080 4,503,269
Cost of Issue of share capital (99,241) (198,032)
Net cash from financing activities 3,975,027 4,302,330
------------ -----------------
Net decrease in cash and cash equivalents (1,042,089) 753,795
Cash and cash equivalents at start
of year 2,036,224 1,282,429
------------ -----------------
Cash and cash equivalents at end
of year 994,135 2,036,224
============ =================
Company statement of cash flows for the year ended 31 December
2018
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Operating activities
Loss before taxation (5,812,719) (5,165,260)
Adjustments for:
Amortisation of intangible assets 192,923 333,334
Impairment of investment in subsidiary 1,202,492 -
Share based-payment expense 117,035 85,743
Provision for intercompany receivable 3,295,894 4,560,114
Financial income (1,801) (1,060)
Financial expense 1,577 951
Cash flows from operating activities before changes in working capital (1,004,599) (186,178)
------------ ------------
Increase in trade and other receivables (3,232,797) (3,660,295)
Decrease (increase) in trade and other payables (606,862) 176,608
------------ ------------
Change in working capital (3,839,659) (3,481,687)
------------ ------------
Net cash used in operating activities (4,844,258) (3,667,865)
------------ ------------
Investing activities
Interest received 1,801 1,060
Sale proceeds 182,818 -
------------ ------------
Net Cash used in investing activities 184,619 1,060
------------ ------------
Financing activities
Interest paid (1,577) (951)
Issue of share capital 4,078,080 4,503,269
Cost of Issue capital (99,241) (198,032)
Net cash from financing activities 3,977,262 4,304,286
------------ ------------
Net (decrease) in cash and cash equivalents (682,377) 637,481
Cash and cash equivalents at start of period 1,586,773 949,292
------------ ------------
Cash and cash equivalents at end of period 904,396 1,586,773
------------ ------------
Notes to the consolidated and company financial statements
1 General information
Mporium Group plc (AIM:MPM) ("Mporium" or the "Company"), is a
public company incorporated in the UK and listed on the London
Stock Exchange's AIM market and acts as a holding company for
Mporium Limited and Fast Web Media Limited.
Mporium Group plc and its subsidiaries are a "mobile first"
technology company at the forefront of event-driven marketing.
2 Accounting policies
Statement of Compliance
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated. These financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the
European Union ('IFRS'). These financial statements have also been
prepared in accordance with the Companies Act 2006 as applicable to
companies reporting under IFRS.
Basis of preparation
The financial statements are prepared under the historical cost
convention and presented in Pounds Sterling, the Group's
presentational currency and the company's functional currency. The
accounting policies have been applied consistently by the Group to
all periods presented in these financial statements.
The preparation of financial statements in compliance with
adopted IFRSs requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed in Note 3.
The Group financial statements consolidate the financial
statements of the Company and its subsidiaries. The parent company
financial statements present information about the Company as a
separate entity and not about its group.
Basis of consolidation
The financial information consolidates the financial statements
of the Company and its subsidiary undertakings. The results of
subsidiaries acquired are consolidated for the period from the date
on which control passes. Control as defined under IFRS 10 is when
the Group obtains the power over the investee, exposure or rights
to variable returns from involvement in the investee and the
ability to use its power to affect the amount of the investee's
returns.
Business combinations are consolidated under the acquisition
method of accounting from the date on which the Group obtains
control. The cost of a business combination is measured at the fair
value of the consideration given, equity instruments issued and
liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date irrespective
of the extent of any non-controlling interest. The excess of the
fair value of consideration transferred over the fair value of the
Group's share of the identifiable net assets acquired is recorded
as goodwill. If the costs of the acquisition are less than the fair
value of the net assets acquired the difference is recognised
directly in the income statement.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated in
full. The accounting policies which follow set out the policies
applied in preparing the Group and company financial
information.
Going concern
The Group incurred a net loss before tax of GBP7,730,531 during
the year ended 31 December 2018. The Directors have prepared a cash
flow forecast for the going concern period. The cash flow forecast
assumes the fundraising announced on 14 June 2019 for GBP1.9m is
received and relies upon cost savings associated with the recently
announced restructuring of the Mporium business and the strategic
review of the FWM business. The restructuring of the Mporium
business is already underway and headcount reductions will have
completed by mid-July. The strategic review of FWM is also underway
and the Directors expect to decide on the future direction of the
business by the end of July.
The directors have a reasonable expectation that the fundraising
announcing on 14 June 2019 will be successful. Whilst it remains
subject to shareholder approval, current discussions with major
shareholders indicate support. On the basis of the current funding
round, restructuring and headcount reductions, the directors
consider that Mporium will have adequate resources to continue in
operational existence throughout the going concern period. Thus,
they have adopted the going concern basis of accounting in
preparing the annual financial statements.
The financial statements have been prepared assuming the Group
and Company will continue as a going concern. In assessing whether
the going concern assumption is appropriate, management has
considered the Group's and Company's existing working capital
position and the current raise of GBP1.9m gross. Under the going
concern assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. It is noted that
the 14 June 2019 fundraise is required to support the short term
working capital requirements of the Group to enable it to continue
as a going concern. In addition if the forecast cost savings and
revenue expectations cannot be achieved then additional funding may
be required. If this additional funding is not available then the
Group and Company would be unlikely to be able to continue as a
going concern. These circumstances indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's and Company's ability to continue as a going concern and
therefore may be unable to realise assets and discharge liabilities
in the normal course of business.
Changes in accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 December 2017, as
described in those financial statements. Two new accounting
standards IFRS 9 and IFRS 15 have been adopted during this period.
IFRS 15 has been adopted using a modified retrospective
("cumulative catch-up") approach under which changes having a
material effect on the consolidated statement of financial position
as at 1(st) January 2018 are presented together as a single
adjustment to the opening balance of retained earnings.
Accordingly, the Group is not required to present a third statement
of financial position as at that date. There was no adjustment to
the opening balance of retained earnings. The adoption of IFRS 15
and IFRS 9 did not result in any changes to the opening balance
sheet.
The Group has applied the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2018:
-- IFRS 9, 'Financial Instruments';
-- IFRS 15, 'Revenue from Contracts with Customers';
-- Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2;
-- Annual Improvements 2014-2016 cycle;
-- Transfers to Investment Property - Amendments to IAS 40; and;
-- Interpretation 22, 'Foreign Currency Transactions and Advance Consideration'.
Certain new standards, amendments to standards and
interpretations to existing standards have been published that are
not mandatory for the Group's accounting periods beginning after
1(st) January, or later periods, to which the Group has decided not
to adopt early when early adoption is available for those adopted
by the EU. These are:
-- IFRS 14 Regulatory Deferral Accounts (IASB effective 1
January 2016 - deferred until final standard released)
-- IFRS 16 Leases (IASB effective 1 January 2019)
-- IFRS 17 Insurance contracts (IASB effective date 1 January 2021)
-- IFRIC 22 Foreign currency transactions and advance
consideration (IASB effective date 1 January 2018 - not yet adopted
by the EU)
-- IFRIC 23 Uncertainty over income tax treatments (IASB effective date 1 January 2019)
-- Amendments to IFRS 4: Applying IFRS9 financial instruments
with IFRS 4 Insurance Contracts (IASB effective date 1 January 2018
- not yet endorsed)
-- Amendments to IAS 7: Disclosure Initiative (IASB effective
date 1 January 2017 - not yet endorsed)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for
Unrealised Losses (IASB effective date 1 January 2017 - not yet
endorsed)
-- Clarifications to IFRS 15: Revenue from Contracts with
Customers (IASB effective date 1 January 2018 - not yet
endorsed)
IFRS 16 was issued in January 2016. It will result in almost all
leases being recognised on the balance sheet by lessees, since the
distinction between operating and finance leases is removed. Under
the new standard, an asset (that is, the right to use the leased
item) and a financial liability to pay rentals are recognised. The
only exceptions are short-term and low-value leases. The Group's
assessment is that the new standard will have minimal impact on the
Group's financial statements and the Group will apply the standard
from its mandatory adoption date of 1 January 2019.
The Directors do not anticipate that the adoption of these
standards and interpretations will have a material impact on the
financial statements in the year of initial application. The
Directors do not consider application of any of the amendments made
to existing standards as a result of the 2011 - 2013 annual
improvements project, and IAS 1 and IAS 19, will have a material
effect on the financial statements of the Group.
Revenue
In accordance with IFRS 15, "Revenue from Contracts with
Customers", the Group has reviewed all contracts to ensure
compliance with the standard that the Group have implemented for
the first time in 2018.
Revenue comprises of services and software licences that are
provided to external customers (excluding VAT and other sales
taxes).
For Mporium, contracts may be performance-based, license-based
or calculated as a percentage of spend under management. In each
case, the transaction price is determined by commercial
considerations relating to scale, the duration of the activity, and
in the case of performance-based contracts the specific sector of
operation is a key determinant.
For FWM, contracts are either based on estimated effort or less
frequently are executed on a fixed-price basis. The transaction
price is determined using a rate card.
For both companies, the standard payment terms are 30 days, with
no significant contracts operating on a longer duration.
Consideration received from customers in respect of services is
only recorded as revenue to the extent that the Group has performed
its contractual obligations in respect of that consideration, and
therefore it is expected that economic benefits will flow to the
Group.
Much of the revenue for both companies is tied into paid media
advertising, providing a mechanism for recognising revenue when
performance obligations are satisfied. This methodology has been
used for both companies over a number of years and so has no impact
on previous years revenue, nor will it change how we are
recognising revenues currently.
Revenue from software licences for the use of the technology
product is recognised evenly over the period of the licence in
order to reflect the on-going obligations of the Group. These
revenues are recorded under licence, transaction and other
recurring revenue per note 5 of the accounts.
Revenue for retained work by FWM is recognised over the term of
the agreement and in the period that the services were delivered.
These service revenues are recorded under licence, transaction and
other fees to existing customers per note 5 of the accounts.
Revenue for project work by FWM is recognised over the term of
the agreement and in the period that the services were delivered.
These service revenues are recorded under upsold project fees to
existing customers per note 5 of the accounts.
Property, plant and equipment
Property, plant and equipment is stated at cost, or deemed cost
less accumulated depreciation, and any recognised impairment
loss.
Depreciation is charged so as to write off the cost or valuation
of assets less any residual value over their estimated useful lives
on the following bases:
Office equipment 33% straight line
Furniture and Fixtures 33% straight line
Computer Hardware 33% straight line
Computer Software 33% straight line
Intangible assets
Intangible assets, representing amounts paid to third parties
and internal resources for development of the Mporium SaaS
Platform, are stated at cost, or deemed cost less accumulated
amortisation, and any recognised impairment loss. A Software
licence between Cxense ASA and the Company has been recognised as
an intangible asset and has been fully amortised over the
three-year license. Further information on the accounting policy
for Research and development activities is provided below.
Amortisation is charged to write off the cost of an asset less
any residual value over their estimated useful lives and on the
following basis:
Development product 33% straight line
Intellectual property 33% straight line
Depreciation and amortisation charges will start when revenues
are derived from the asset and the respective charge included
within administrative expenses in the statement of comprehensive
Income.
Goodwill
The annual evaluation for impairment of goodwill is based on
valuation models that incorporate assumptions and internal
projections of expected future cash flows and operating plans. We
believe such assumptions are also comparable to those that would be
used by other marketplace participants. When certain events or
changes in operating conditions occur, an impairment assessment is
performed and an intangible asset may be adjusted to a determinable
life. Any impairment is recognised in the period in which it is
identified.
Investments
Investments held by the Company in its subsidiary undertakings
are stated at cost less provision for any impairment in value.
Financial assets and financial liabilities
The valuation of financial assets and liabilities is conducted
according to IFRS 9. These assets and liabilities are recognised at
amortised cost except for financial assets at fair value through
other comprehensive income. The Group's shareholding in Cxense was
previously classified as available for sale under IAS 39 and is
reclassified as financial assets carried at fair value through OCI
as a result of the adoption of IFRS 9 in this set of results.
Impairment of property, plant and equipment and intangible
assets
At each statement of financial position date, the Group reviews
the carrying amounts of its property, plant and equipment and
intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects the current market assessments
of the time value of money and the risks specific to the asset. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in the income
statement and is included in the administrative expense.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the income
statement.
Conversion of foreign currency
Monetary assets and liabilities in foreign currencies are
translated into sterling at rates of exchange ruling at the
statement of financial position date. Transactions in foreign
currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Non-monetary assets having
been translated are carried at their historical cost.
Exchange differences are recognised in the statement of total
comprehensive income for the year.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
In considering impairment of financial assets, the Group uses a
wide range of information when assessing credit risk and measuring
credit losses, including past events, current conditions,
reasonable and supportable forecasts that affect the expanded
collectability of future cash flows of the instrument.
The Group adopts a simplified approach in accounting for trade
and other receivables and records the loss allowance as lifetime
expected credit losses. These are the expected shortfalls in
contractual cash flows considering the potential for default at any
point during the life of the financial instrument. The Group uses
its historical experience, external indicators and forward-looking
information to calculate the expected credit losses.
Trade and other receivables
Trade and other receivables are initially measured at fair value
and subsequently carried at amortised cost less impairment. At the
end of each accounting period they are assessed for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand that is readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities. The accounting
policies adopted for specific financial liabilities and equity
instruments are set out below.
Trade payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
Equity instruments
Equity instruments issued by the Group are recorded at the
proceeds received, net of direct issue costs.
Commitments and contingencies
Commitments and contingent liabilities are disclosed in the
financial statements unless the possibility of an outflow of
resources embodying economic benefits is remote. A contingent asset
is not recognised in the financial statements but disclosed when an
inflow of economic benefits is probable.
Events after the statement of financial position date
Post year-end events that provide additional information about
the Group's position at the statement of financial position date
and adjusting events are reflected in the financial statements.
Post year-end events that are not adjusting events are disclosed in
the notes when material.
Research and development activities
Expenditure on research or on the research phase of an internal
project is recognised as an expense when incurred. The intangible
assets arising from the development phase of an internal project
are recognised if, and only if, the following conditions apply:
-- it is technically feasible to complete the asset for use by the Group;
-- the Group has the intention of completing the asset for either use or resale;
-- the Group has the ability to either use or sell the asset;
-- it is possible to estimate how the asset will generate income;
-- the Group has adequate financial, technical and other
resources to develop and use the asset; and
-- the expenditure incurred to develop the asset is measurable.
If no intangible asset can be recognised based on the above,
then development costs are recognised in profit and loss in the
period in which they are incurred.
Taxation
Current taxation
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and the tax laws used to
compute the amount are those that are enacted, or substantively
enacted, by the statement of financial position date.
Deferred taxation
Deferred tax is provided in full using the balance sheet
liability method for all taxable temporary timing differences
arising between the tax bases of assets and liabilities and their
carrying values for financial reporting purposes. Deferred tax is
measured using currently enacted or substantially enacted tax
rates. Deferred tax assets are recognised to the extent the
temporary difference will reverse in the foreseeable future and it
is probable that future taxable profit will be available against
which the asset can be utilised.
Leases
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except if another
systematic basis is more representative of the time pattern in
which economic benefits will flow to the Group.
Lease incentives and similar arrangements of incentives are
taken into account when calculating the straight-lined expense.
Share-based payments
The Group operates equity-settled share-based remuneration plans
for its employees. None of the Group's plans are cash-settled.
Where employees are rewarded using share-based payments, the fair
value of employees' services is determined indirectly by reference
to the fair value of the equity instruments granted.
This fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions (for example profitability
and sales growth targets and performance conditions).
All share-based remuneration is ultimately recognised as an
expense in profit or loss with a corresponding credit to
shareholders' equity. If vesting periods or other vesting
conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options
expected to vest.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates.
Any cumulative adjustment prior to vesting is recognised in the
current period. No adjustment is made to any expense recognised in
prior periods if share options ultimately exercised are different
to that estimated on vesting. Upon exercise of share options, the
proceeds received net of any directly attributable transaction
costs up to the nominal value of the shares issued are allocated to
share capital with any excess being recorded as share premium.
As part of the process surrounding the acquisition of Mporium
Limited by Mporium Group Plc, the holders of all outstanding
options under the Mporium Limited Share Scheme surrendered those
entitlements in exchange for the grant, by Mporium Group plc, of
Replacement Options that were on equivalent terms.
The profit and loss impact of share options issued by Mporium
Group plc is recognised in the company which receives the benefits
from those employees who hold the share options.
Shareholder's Equity
Equity comprises:
Share capital - the nominal value of ordinary shares is
classified as equity.
Share premium reserve - represents the excess over nominal value
of the fair value of consideration received for equity shares, net
of expenses of the share issue.
Share option reserve - represents equity settled share-based
employee remuneration.
Merger reserve - arising from the application of merger
accounting following the principles of FRS 6.
Retained earnings - includes all current and prior period
retained profits/(losses).
Employee benefits
The Group has agreed to make pension contributions to third
party insurance companies in respect of certain employees at rates
agreed with the individuals concerned. Such contributions are
accounted for as they fall due on a defined contribution basis.
3 Critical accounting judgements and key estimation of uncertainty
Accounting estimates and judgements
The preparation of financial statements in accordance with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise judgments in the process of
applying the Group's accounting policies. Estimates and judgements
are continually evaluated and are based on historical experience
and reasonable expectations of future events. Actual results may
differ from those estimates.
The accounting policies cover areas that are considered by the
Directors to require estimates and assumptions which have
significant risk of causing a material adjustment to the carrying
amounts of assets & liabilities within the next financial year.
The policies and the related notes to the financial statements are
found below:
Recoverability of receivables (note 17)
The recoverability of the receivables is determined by the
Group. Management monitors the circumstances relating to the
payments due from third parties, together with the recoverability
of the amounts due. Any indication of non-recoverability and change
in fair value is adjusted for accordingly. Management feel
comfortable with the current level of recoverability. Due to a
small number of current clients and the closeness of those
relationships, recoverability is deemed to be low risk, as the
number of clients increase and the direct relationship with these
clients potentially change management will assess the situation
again.
Impairment of Intangible assets and goodwill (note 14)
Intangible assets include the capitalised development costs of
the Mporium platform. These costs are assessed based on
management's view of the internal and external development costs
relating to time spent on projects that enhance the Mporium
platform, supported by internal time recording and considering the
requirements of IAS 38 'Intangible assets'. The development cost of
the product is amortised over the useful life of the asset. The
useful life is based on the management's estimate of the period
that the asset will generate revenue, which is reviewed annually
for continued appropriateness. The carrying value is tested for
impairment when there is an indication that the value of the assets
might be impaired. When carrying out impairment tests these would
be based upon future cash flow forecasts and these forecasts would
be based upon management judgment. Future events could cause the
assumptions to change; which could have an adverse effect on the
future results of the Group.
An impairment review of the investment in FWM was performed by
management through a discounted cash flow covering 5 years, growth
in revenues have been assumed to be between 10% and 20%, this was
used with a Weighted Average Cost of Capital (WACC) of 18%. For
prudence, a greater WACC was used than previously (2017 15%). It
was concluded that the total impairment of goodwill is
required.
Share-based payments (note 24)
Share options are measured at their fair value using the
Black-Scholes valuation model, which takes into account conditions
attached to the vesting and exercise of the equity instruments. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Going concern (note 2)
The directors have prepared and reviewed a business plan and
cash flow forecast. The forecast includes a fund raising and
contains certain assumptions about the level of future sales and
gross margin achievable. These assumptions are the Directors' best
estimate of the future development of the business.
Deferred taxation - potential asset in relation to tax losses
carried forward (note 11)
The recoverability of the tax losses carried forward to future
accounting periods is determined by the Group. Management monitors
the circumstances relating to the future profitability of the
Group, together with the anticipated utilisation of the amounts
carried forward. Any indication of non-recoverability and change in
fair value is adjusted for accordingly.
4 Financial instruments and treasury risk management
General objectives, policies and processes
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. All funding requirements
and financial risks are managed based on policies and procedures
adopted by the Board of directors. The Group does not use
derivative financial instruments such as forward currency
contracts, interest rate swaps or similar instruments.
The Group does not issue or use financial instruments of a
speculative nature.
Financial assets and liabilities are offset, and the net amount
reported in the Statement of financial position when there is an
enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis or to realise the asset and
settle the liability simultaneously.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade receivables;
-- Cash and cash equivalents;
-- Trade and other payables;
-- Financial assets and liabilities
Financial Assets
In considering impairment of financial assets, the Group uses a
wide range of information when assessing credit risk and measuring
credit losses, including past events, current conditions,
reasonable and supportable forecasts that affect the expanded
collectability of future cash flows of the instrument.
The Group adopts a simplified approach in accounting for trade
and other receivables and records the loss allowance as lifetime
expected credit losses. These are the expected shortfalls in
contractual cash flows considering the potential for default at any
point during the life of the financial instrument. The Group uses
its historical experience, external indicators and forward-looking
information to calculate the expected credit losses.
Trade and other receivables are initially measured at face value
and subsequently at amortised cost. Book values and expected cash
flows are reviewed by the Board and any impairment charged to the
consolidated statement of comprehensive income in the relevant
period.
Group Company
------------------------------
As at 31 As at 31 As at 3131 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Cash and cash equivalents 994,135 2,036,224 904,396 1,586,773
Trade receivables 81,212 292,671 - -
Fair value through
OCI - 347,063 - 347,063
-------------- -------------- -------------- --------------
1,075,347 2,675,958 904,396 1,933,836
============== ============== ============== ==============
Trade receivables principally comprise amounts outstanding for
services provided to customers. Average credit terms were 30 days
and average debtor days outstanding were 33 days during 2018 (2017:
34 days). An impairment review of outstanding trade receivables is
carried out at the period end and a specific amount provided
for.
Financial Liabilities
Trade, other payables, loans with Mporium Group plc are measured
at amortised cost.
Group Company
------------------------------
As at 31 As at 31 As at 31 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Current Liabilities
Trade payables 284,779 440,229 89,068 64,401
284,779 440,229 89,068 64,401
============== ============== ============== ==============
Trade payables principally comprise amounts outstanding for
trade purchases and ongoing costs. The Group targets the payments
of trade payables between 30 to 90 days of receipt of the
invoice.
Treasury risk management
The Group manages a variety of market risks, including the
effects of changes in foreign exchange rates, liquidity and
counterparty risks.
Credit risk
The Group's principal financial assets are cash, trade and other
receivables.
The credit risk on liquid funds is limited because the
counterparties are UK banks with high credit ratings assigned by
international credit rating agencies.
The Group currently operates with positive cash and cash
equivalents as a result of issuing share capital in anticipation of
future funding requirements. The Group's investment policy is
therefore one of achieving high returns with minimal risks.
The maximum exposure due to credit risk for the Group on trade
and other receivables during 2018 was GBP267,270 (2017:
GBP402,894). No collateral is held in respect of these amounts.
As at 31 As at 31
December 2018 December 2017
GBP GBP
Outstanding between one and two months 62,596 202,040
Outstanding between two and three months 15,615 47,939
Outstanding more than three months 3,001 42,692
Less: allowance for receivables - -
-------------- --------------
81,212 292,671
============== ==============
As at the year-end trade receivables of GBP3,001 were past due
but not impaired (2017: GBP42,692).
Currency risks
The Group's operations are located in the United Kingdom. The
Group's transactions are primarily denominated in sterling with
little exposure to foreign currency risks. Due to the limited risks
to the Group, forward exchange contracts are not considered
necessary and are not used. The Group does not operate foreign
currency bank accounts.
The translation risk on the Group's foreign exchange payables
and receivables is considered to be immaterial due to their
short-term nature.
Liquidity risk
Operational cash flow represents on going trading revenue and
costs, administrative costs and research and development
activities. The Group manages its liquidity requirements by the use
of both short-term and long-term cash flow forecasts. The Group's
policy to ensure facilities are available as required is to issue
equity share capital and loan notes in accordance with long-term
cash flow forecasts.
The financial market turbulence and associated illiquidity in
credit markets during the year has had no impact on the Group's
ability to meet its financing requirements.
The Group actively manages its working finance to ensure it has
sufficient funds for operations and planned research and
development activities.
The Group's main financial liabilities are trade and other
payables and borrowings. All amounts are due for payment in
accordance with agreed settlement terms with suppliers or statutory
deadlines.
Derivative financial instruments
The Group does not currently use derivative financial
instruments as hedging is not considered necessary. Should the
Group identify a requirement for the future use of such financial
instruments, a comprehensive set of policies and systems as
approved by the directors will be implemented.
In accordance with IFRS 9, "Financial instruments ", the Group
has reviewed all contracts for embedded derivatives that are
required to be separately accounted for if they do not meet
specific requirements set out in the standard.
Capital management
The Group's activities are of a type and stage of development
where the most suitable capital structure to continue as a going
concern is mainly financed by equities and loans. The directors
will reassess the future capital structure when projects under
development are sufficiently advanced. The Group considers its
capital to consist of share capital.
The Group's financial strategy is to utilise its resources and
current trading revenue streams to further appraise and test the
Group's research and development projects. Mporium Group plc keeps
investors informed of its progress with its projects through
regular announcements and raises additional equity finance at
appropriate times.
5 Operating segments
The Group's operations are centred on providing software as
service and supporting services. Revenues and results are reported
to the Chief Operating Decision Maker on this basis and management
therefore considers there to be one reporting segment covering the
Group.
A supplementary analysis of revenue is as follows:
Year ended 31 Year ended 31
December 2018 December 2017
GBP GBP
Product revenue 792,019 1,723,665
Agency project revenue 119,244 254,134
911,263 1,977,799
============== ==============
The geographical split of revenue is as follows:
Year ended 31 Year ended 31 December 2017
December 2018
GBP GBP
United Kingdom 864,376 1,084,434
Europe 46,887 893,365
911,263 1,977,799
============== ===========================
The largest single customer contributed 36% (2017:45%) of total
revenues. Revenues from four individual customers contributed 77%
of total Group revenues for the year.
6 Operating Loss
The operating loss is stated after charging the following
amounts:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Depreciation of property, plant and
equipment
- owned 236,104 197,524
Amortisation of intangible assets 1,223,333 959,670
Office rent and services charges 560,165 444,846
Bad debt 42,692 -
Staff cost 3,427,970 3,212,649
Administration costs 1,632,391 2,009,700
Impairment of goodwill 1,445,523 -
Administrative expense includes the following services obtained
from the Group's auditor, Grant Thornton UK LLP.
Year ended
Year ended 31 31
December 2018 December 2017
GBP GBP
Group Audit 65,920 49,250
-------------- --------------
Total Audit fees 65,920 49,250
Tax compliance work 6,300 12,755
Tax advisory - R&D tax credit advice 6,500 20,780
Tax advisory - tax advice on employment
taxes - 2,060
Tax advisory - tax advice on EIS - 5,150
iXBRL Mapping 2,500 -
7 Staff costs and numbers
Staff cost (including directors' emoluments) incurred in the
year were as follow:
Year ended 31 Year ended
December 2018 31 December
2017
GBP GBP
Wages and salaries 2,746,209 2,609,875
Social security costs 330,186 378,376
Pension contributions 96,737 73,086
Share-based payments 254,838 151,312
-------------- ------------
Net Staff Cost 3,427,970 3,212,649
-------------- ------------
Year ended 31 December 2018 Year ended 31 December 2017
Directors 3 4
Administration 5 5
Research and development 18 10
Operations 19 29
Customer services 3 -
Sales 7 7
--------------------------- ---------------------------
Total 55 55
=========================== ===========================
Directors' emoluments
The Directors and Executive Committee are the key management
personnel of the company. The remuneration for the periods was:
Salary Benefits Employers Total Post-employment Share-based Total Emoluments
/ Fees NI short- benefits-defined payments
term benefits pension contribution
GBP GBP GBP GBP GBP GBP GBP
2018 2018 2018 2018 2018 2018 2018
Executive Directors
B Moat(1) 270,000 62,534 39,892 372,426 5,690 - 378,116
N De Groot(2) 158,687 94,205 26,395 279,287 - 63,310 342,597
Non-executive
Directors
S Bjornstad(3) 3,750 - - 3,750 - - 3,750
Aiden Casey(6) 15,000 - 863 15,863 15,863
Nicholas
Bertolotti(4) - - - - - 23,188 23,188
Total emoluments 447,437 156,739 67,150 671,326 5,690 86,498 763,514
------- -------- --------- -------------- --------------------- ----------- ----------------
Salary Benefits Employers Total Post-employment Share-based Total Emoluments
/ NI short-term benefits-defined payments
Fees benefits pension contribution
GBP GBP GBP GBP GBP GBP GBP
2017 2017 2017 2017 2017 2017 2017
Executive Directors
B Moat(1) 250,000 70,500 24,518 345,018 1,897 - 346,915
N De Groot(2) 61,538 61,227 14,559 137,324 - 63,310 200,634
R Gordon 38,267 - 4,154 42,421 - - 42,421
Non-executive Directors
N Walder 25,692 - 2,419 28,111 - - 28,111
S Bjornstad(3) 15,000 - - 15,000 - - 15,000
Aiden Casey 15,000 - 938 15,938 15,938
Total emoluments 405,497 131,727 46,588 583,812 1,897 63,310 649,019
------- -------- --------- ----------- --------------------- ----------- ----------------
Notes
(1) Mr B Moat resigned as Chief Executive Officer and was
appointed Executive Chairman 8 August 2017, he resigned as
Executive Chairman 10 June 2019
(2) Mr N De Groot was appointed Chief Executive Officer 8 August
2017
(5) Mr S Bjornstad resigned as non-executive director 28
February 2018
(6) Mr N Bertolotti was appointed as non-executive director 28
February 2018
8 Other Operating Income
There was no Other Operating Income recognised in 2018. In
November 2017 Mporium received income of GBP1,131,234 from Cxense,
this was in relation to non-trading income associated with the
removal of a lock-in agreement.
9 Financial income
Year ended 31 December 2018 Year ended 31 December2017
GBP GBP
Interest receivable 1,851 1,097
---------------------------------- ---------------------------------
1,851 1,097
================================== =================================
10 Financial expense
Year ended 31 December 2018 Year ended 31 December 2017
GBP GBP
Interest payable 3,812 2,907
---------------------------------- ----------------------------------
3,812 2,907
================================== ==================================
11 Taxation
Year ended 31 Year ended 31
December 2018 December 2017
GBP GBP
Research & development tax credits (693,015) (702,380)
Total tax credit in income statement (693,015) (702,380)
============== ==============
Reconciliation of the tax credit
The tax credit for the year is lower (2017: lower) than the tax
credit on ordinary activities at the standard rate of corporation
tax in the UK (2018: 19% and 2017: 19.25%) for the reasons set out
in the following reconciliation.
Year ended 31 December 2018 Year ended 31 December 2017
GBP GBP
Loss on ordinary activities before taxation (7,730,531) (3,872,434)
Loss on ordinary activities multiplied by standard rate
of corporation tax in the UK of 19% (2017: 19.25%) (1,468,801) (745,444)
Expenses not allowed for tax purposes 587,413 (232,486)
Deferred tax not recognised (186,370) -
Losses surrendered for R&D credit 854,844 968,800
R & D enhancement (483,173) (547,583)
Losses unrelieved in period - deferred tax not provided 696,088 622,435
Amounts relating to current year R&D credit 643,908 636,658
Amounts relating to prior years R&D credit 49,106 -
Tax credit 693,015 702,380
=========================== ===========================
As at 31 December 2018 Mporium Group plc has trading tax losses
available to be carried forward totalling GBP27,380,013 (2017:
GBP20,342,497). Given the current position of the Group it is
considered that there is not sufficient certainty over the
utilisation of tax losses carried forward in order to recognise a
deferred tax asset in the financial statements.
12 Loss per share
Diluted loss per share is calculated after showing the effect of
outstanding options in issue. As the effect of the options would be
to reduce the loss per share there is no requirement to disclose a
diluted loss per share.
Calculation of loss per share is based on the following loss and
numbers of shares:
Year ended 31 December 2018 Year ended 31 December 2017
GBP GBP
Loss for the year (7,201,761) (3,546,996)
Weighted average ordinary shares in issue during the year 695,648,483 489,348,567
Loss per share (0.01) (0.01)
In January 2019, the Group announced a Strategic Collaboration
Agreement with Allay, whereby Allay were granted 25% of the
enlarged share capital of the Group, rising to a maximum of 29.9%
subject to performance. The effect of the grant of 25% of the
enlarged share capital was to increase the share capital by
211,295,513 shares to 845,182,052.
In June 2019, the Group conditionally raised GBP1.9m net by way
of subscription through a placing of 192,300,000 shares at 1 per
share. Upon completion, the investors will also receive 192,300,000
warrants exercisable between 10 December 2019 and 10 December 2021
with a subscription price of 1.5 pence per warrant. The
subscription is conditional upon (amongst other things) shareholder
approval at a General Meeting on 2nd July 2019. If approved, the
share capital of the Group will increase to 1,037,482,052
shares.
If the subscription is confirmed, as a result of the Allay deal
and the subscription, the loss per share will change from
GBP(0.0080) as of end of year 2018, to GBP(0.0054) once the
additional shares have been admitted.
13 Property, plant and equipment
Group
Office Furniture and Fixtures Computer Hardware Computer Software Total
Equipment
GBP GBP GBP GBP GBP
Cost
1 January 2017 38,586 386,761 101,656 21,945 548,948
Additions 56,610 158,040 32,258 65 246,973
---------- ---------------------- ----------------- ----------------- ---------
1 January 2018 95,196 544,801 133,914 22,010 795,921
Additions - 4,587 26,233 - 30,820
31 December 2018 95,196 549,388 160,147 22,010 826,741
---------- ---------------------- ----------------- ----------------- ---------
Depreciation
1 January 2017 7,488 140,640 42,537 12,347 203,012
Charge for the year 25,736 137,458 27,069 7,261 197,524
---------- ---------------------- ----------------- ----------------- ---------
1 January 2018 33,224 278,098 69,606 19,608 400,536
Charge for the year 30,933 163,072 39,697 2,402 236,104
---------- ---------------------- ----------------- ----------------- ---------
31 December 2018 64,157 441,170 109,303 22,010 636,640
---------- ---------------------- ----------------- ----------------- ---------
Carrying amount
31 December 2018 31,039 108,218 50,844 - 190,101
========== ====================== ================= ================= =========
31 December 2017 61,972 266,703 64,308 2,402 395,385
========== ====================== ================= ================= =========
14 Intangible assets
Group
Development Goodwill Other Total intangible
product intangibles assets
GBP GBP GBP GBP
Cost less impairment
1 January 2017 1,129,487 1,445,523 760,000 3,335,010
Additions 1,764,205 - - 1,764,205
1 January 2018 2,893,692 1,445,523 760,000 5,099,215
Additions 946,058 - - 946,058
31 December 2018 3,839,750 1,445,523 760,000 6,045,273
---------------- --------------------- ------------ ----------------
Amortisation
1 January 2017 62,749 - 390,411 453,160
Charge for the year 709,670 - 250,000 959,670
---------------- --------------------- ------------ ----------------
1 January 2018 772,419 - 640,411 1,412,830
Charge for the year 1,113,744 - 109,589 1,223,333
Impairment - 1,445,523 - 1,445,523
---------------- --------------------- ------------ ----------------
31 December 2018 1,886,163 1,445,523 750,000 4,081,686
---------------- --------------------- ------------ ----------------
Carrying amount
31 December 2018 1,953,587 - 10,000 1,963,587
================ ===================== ============ ================
31 December 2017 2,121,273 1,445,523 119,589 3,686,385
================ ===================== ============ ================
Internal Intangibles
During 2018, the product IMPACT has been further developed with
functionality and scalability at the forefront, primarily through
an in-house development team. The use of outsource partners and
consultants was dramatically reduced during the year. Under the
guidance of a new CTO starting in October 2018, Mporium has
continued with an agile methodology approach to the development of
the new IMPACT product. This approach, which relies heavily on
market and customer feedback, enables us to refine the product and
react quickly to customer demand.
Goodwill
The goodwill has been allocated to the Fast Web Media Cash
Generating Unit.
FWM has attempted to re-align its business to compliment the
Group's vision of the digital marketing agency of the future but
struggled following the loss of its most significant client. The
business has actively managed costs including headcount while
trying to rebuild the FWM client-base and have won some notable
contracts over the past months.
The Group is undertaking a strategic review of FWM, to determine
the appropriate course of action with respect to the business.
An impairment review of the investment in FWM was performed
through a discounted cash flow covering the next 5 years with a
terminal growth rate to perpetuity. The Cash Flow included a
discounted terminal value to reflect the value of ongoing
operations of the business. This was calculated using a 2.0% growth
rate in line with GDP at the time. Revenue growth has been included
at a rate of between 10% to 20% over the 5 year period. A Weighted
Average Cost of Capital (WACC) of 18% was used and it was concluded
that a GBP1,445k impairment was required to the goodwill.
Other Intangibles
The license of Cxense software is now fully amortised, it was
amortised over the 3-year license period.
Company
Intellectual Other Intangible Assets Total Intangible Assets
Property
GBP GBP GBP
Cost
1 January 2017 250,000 750,000 1,000,000
1 January 2018 250,000 750,000 1,000,000
31 December 2018 250,000 750,000 1,000,000
-------------- ----------------------- -----------------------
Amortisation
1 January 2017 13,889 390,411 404,300
Charge for the year 83,334 250,000 333,334
-------------- ----------------------- -----------------------
1 January 2018 97,223 640,411 737,634
Charge for the year 83,334 109,589 192,923
-------------- ----------------------- -----------------------
31 December 2018 180,557 750,000 930,557
-------------- ----------------------- -----------------------
Carrying amount
31 December 2018 69,443 - 69,443
============== ======================= =======================
31 December 2017 152,777 109,589 262,366
============== ======================= =======================
15 Investments
On 8 June 2015, the Company entered into a share swap agreement
with Cxense ASA, the Norwegian specialists in data management and
personalized online experiences, to license Cxense's
technology.
The equity securities and debentures are denominated in NOK and
are publicly traded in Norway. During 2018, the Company disposed of
their entire holding of Cxense securities and debentures via a
number of transactions on the open market. Net of commission, the
Company received proceeds of GBP242.5k from the disposal.
Dates Number of NOK Price FX NOK/GBP Fair Value
Shares
GBP
31 December 2017 53,113 59.00 9.03 347,063
Revaluation 53,113 (164,245)
Disposal (53,113) - - (182,818)
31 December 2018 - - - -
16 Investments in subsidiaries
FWM InTELEgentsia Total
GBP GBP GBP
Cost
1 January 2017 1,202,492 249,999 1,452,491
Impairment - (249,999) (249,999)
------------------ -------------------- ------------------
31 December 2017 1,202,492 - 1,202,492
------------------ -------------------- ------------------
Impairment (1,202,492) - (1,202,492)
------------------ -------------------- ------------------
31 December 2018 - - -
------------------ -------------------- ------------------
An impairment of FWM was provided for in 2018 GBP1.202 million
(2017: GBPNil see note 14). An impairment review of the investment
in FWM was performed through a discounted cash flow covering the
next 5 years with a terminal growth rate to perpetuity. The Cash
Flow included a discounted terminal value to reflect the value of
ongoing operations of the business. This was calculated using a
2.0% growth rate in line with GDP at the time. Revenue growth has
been included at a rate of between 5% to 20% over the 5 year
period. A Weighted Average Cost of Capital (WACC) of 18% was used
and it was concluded that a GBP1,202k impairment was required to
the investment.
The principal subsidiaries of the Company, all of which have
been included in the consolidated financial information, are as
follows:
Subsidiary Status Nature of Country of incorporation Percentage of
business equity capital
and voting rights
Mporium Limited Active m-commerce England & Wales 100%
Fast Web Media Limited Active m-commerce England & Wales 100%
InTELEgentsia Dormant m-commerce England & Wales 100%
17 Trade and other receivables
Group Company
As at 31 As at 31 As at 31 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Trade receivables 81,212 292,671 - -
Accrued Income 44,151 1,867,681 - 1,778,080
Prepayments 173,014 176,729 82,828 136,551
VAT recoverable - - - -
R&D Tax credits 643,908 702,380 - -
Intercompany - - - -
Other receivables 101,939 103,371 89,640 89,640
---------------- ---------------- --------------- ----------------
1,044,224 3,142,832 172,468 2,004,271
================ ================ =============== ================
Within 2017 Accrued Income is GBP1,778,080 for funds received
post year end in relation to the December 2017 Share Issue
totalling GBP3,200,000. Trade receivables have been reviewed for
impairment at the statement of financial position date and no
impairment (2017: GBPNil) has been recognised in these
accounts.
Due to an uncertainty of when Mporium Ltd would be able to
settle the intercompany loan owed to Mporium Group PLC a cumulative
impairment of GBP19,911,142 (2017: GBP16,927,394) was made in the
Company accounts. Due to an uncertainty of when Fast Web Media Ltd
would be able to settle the intercompany loan owed to Mporium Group
Plc an impairment of GBP1,143,206 (2017: GBP831,061) was made in
the company accounts.
Aged analysis of Trade receivables As at 31 As at 31 December 2017
December 2018
GBP GBP
Outstanding between one and two months 62,596 202,040
Outstanding between two and three months 15,615 47,939
Outstanding more than three months 3,001 42,692
Less: allowance for receivables - -
--------------------- -----------------------------
81,212 292,671
===================== =============================
18 Cash and cash equivalents
Group Company
As at 31 As at 31 As at 31 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Bank balances 994,135 2,036,224 904,396 1,586,773
---------------- -------------- ---------------- ----------------
994,135 2,036,224 904,396 1,586,773
================ ============== ================ ================
Cash and cash equivalents comprise balances on bank accounts,
cash in transit and cash floats held in the business. Finance
charges are accounted for on an accruals basis and charged to the
statement of comprehensive income when payable.
Cash and cash equivalents are held in Pounds Sterling and placed
on deposit in UK banks.
19 Trade and other payables
Group Company
As at 31 As at 31 As at 31 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Due within one year
Trade payables 284,779 440,229 89,068 64,401
Taxation and social security cost 97,017 79,072 103,259 159,155
Provision for PAYE & NI shortfall - 231,687 - 231,687
Accruals and Deferred income 150,468 452,889 71,404 411,976
Other payables 20,996 19,061 - -
-------------- -------------- -------------- --------------
Trade and other payable due within one year 553,260 1,222,938 269,731 867,219
-------------- -------------- -------------- --------------
Aged analysis of trade payable
As at 31 As at 31
December 2018 December 2017
GBP GBP
Outstanding between one and two months 146,114 300,137
Outstanding between two and three months 45,096 93,701
Outstanding more than three months 93,569 46,391
--------------- ---------------
284,779 440,229
=============== ===============
20 Share capital
Ordinary shares of GBP0.005 carry the right to 1 vote per share
at general meetings of the Company and the rights to share in any
distribution of profits or returns of capital and to share in any
residual assets available for distribution in the event of a
winding up. The shares are denominated in Pounds Sterling and
translated at the historic rate.
The table below shows the movements in share capital for the
year:
Number issued and Share capital (GBP) Share premium (GBP)
fully paid shares
2018 2017 2018 2017 2018 2017
Balance at the beginning
of year 587,886,539 514,205,406 2,939,433 2,571,027 23,208,365 17,493,454
Issue of new shares 46,000,000 73,681,133 230,000 368,406 2,070,000 5,912,943
Cost of share issue - - - - (99,241) (198,032)
-------------- -------------- ------------- ------------- ------------- -------------
Balance at the end of year 633,886,539 587,886,539 3,169,433 2,939,433 25,179,124 23,208,365
============== ============== ============= ============= ============= =============
On 14 November 2018, the Company placed 46,000,000 ordinary
shares of 0.05p at 5p per share raising GBP2.2 million net of
expenses.
21 Financial commitments
The Group leases all its properties. The terms of property
leases vary between properties, although they all tend to be
tenant-repairing with periodic rent reviews and break clauses.
The total future minimum lease payments which exclude services
are due as follows:
Group Company
As at 31 As at 31 As at 31 As at 31
December 2018 December 2017 December 2018 December 2017
GBP GBP GBP GBP
Not later than one
year 251,503 303,418 156,824 161,400
Later than one year
and not later than
five years 474,693 785,078 - 310,385
726,196 1,088,496 156,824 471,785
============== ============== ============== ==============
22 Events after the Reporting Period
In January 2019, Mporium announced a Strategic Collaboration
Agreement with Allay, a leading Claims Management Company. This
transformational deal represents a strategic partnership that
provides Mporium and Allay with the potential to drive significant
profitability from the growth of the consumer regulation
sector.
As part of the deal, Mporium was appointed exclusive supplier of
consumer lead generation for Allay and Allay were granted 25% of
the enlarged Mporium share capital, rising to a maximum of 29.9%
subject to performance.
In April 2019, Mporium entered into a loan agreement for GBP1
million, repayable over a 12-month period.
In June 2019, the Group conditionally raised GBP1.9m net by way
of subscription through a placing of 192,300,000 shares at 1 per
share. Upon completion, the investors will also receive 192,300,000
warrants exercisable between 10 December 2019 and 10 December 2021
with a subscription price of 1.5 pence per warrant. The
subscription is conditional upon (amongst other things) shareholder
approval at a General Meeting on 2nd July 2019. If approved, the
share capital of the Group will increase to 1,037,482,052
shares.
In June 2019, the Group undertook a major restructuring of the
business to refocus the business on the performance-led MporiumX
division. As part of this restructuring, the Group is undertaking a
strategic review of FWM, to determine the appropriate course of
action with respect to the business.
23 Related party transactions
The Group's key management personnel are its directors and
Executive Committee members. Compensation paid to the Group's Board
and members of the Executive Committee is disclosed in note 7.
Included within trade debtors is an amount of GBP19,911,14
(2017: GBP16,927,394) due from Mporium Limited, a fully owned
subsidiary. During the year the balance with this subsidiary
increased by GBP2,983,748 (2017: GBP3,719,680). These amounts have
been fully provided for.
Included within trade debtors is an amount of GBP1,143,206
(2017: GBP831,061) due from Fast Web Limited, a fully owned
subsidiary. During the year the balance with this subsidiary
increased by GBP312,145 (2017: GBP78,465). These amounts have been
fully provided for.
There were related party transactions during the period of:
The net amount outstanding between Mporium and Cxense ASA at the
end of the year is GBP8,317 (2017: GBP31,596), with GBP51,009
payable and GBP42,692 receivable. The transactions in 2018 relate
to charges for consulting services that were provided to Mporium by
Cxense. The receivable was associated with the use by Cxense of
Mporium office space. Cxense are no longer considered to be a
related party and the receivable amount has been fully provided for
at year end.
24 Share-based payments
The first share option scheme was adopted by the then parent
company, Mporium Limited, on 17 October 2008. Further schemes were
adopted by the Group on 24 April 2013, 27 February 2014, 22 May
2014 and 8 June 2015. The schemes were established to attract and
retain the best available personnel for positions of
responsibility, to provide additional incentive to employees,
officers or consultants of the Company and to promote the success
of the Company's business.
As part of the process surrounding the acquisition of Mporium
Limited by Mporium Group Plc, the holders of all outstanding
options under the Mporium Limited Share Scheme surrendered their
entitlements in exchange for the grant, by Mporium Group plc, of
Replacement Options that were on equivalent terms. All share
options are valued on the same basis as before.
The share option schemes are administered by the directors of
Mporium Group Plc.
Share options are issued as part of a long-term incentive scheme
("LTIS") or in lieu of salary or bonus due. LTIS options typically
vest 3 years from the date of issue, however, some options issued
under the 2015 Share Option Scheme vest in equal amounts on the
1st, 2nd and 3rd anniversaries of the issue date. Vesting is
contingent upon the option-holder being an employee of the company
at the vesting date. All options have a maximum term of 10 years. A
summary of options, movements and average prices are shown in the
table below.
2018 2017
No. Weighted average Weighted No. Weighted average Weighted average
of exercise average Of exercise price share price
shares price share shares
price
Outstanding at the
year end 95,445,276 GBP0.044 - 67,111,676 GBP0.033 -
Granted during the
period 30,400,000 GBP0.070 - 4,500,000 GBP0.074 -
Surrendered during
the period 1,800,000 GBP0.072 - 18,262,017 GBP0.081 -
Exercised during the
period 0 GBP0.000 GBP0.000 14,800 GBP0.005 GBP0.105
Lapsed during the
period 266,400 GBP0.005 - 72,871 GBP0.566 -
Exercisable at the
year end 61,761,944 GBP0.030 - 59,445,010 GBP0.028 -
The Group recognised total expenses of GBP226,608 related to
equity-settled, share-based payment transactions during 2018 (2017:
GBP151,312).
Details of the number of options outstanding at the beginning of
the year, movements in the year and outstanding at the end of the
year together with their exercise dates and prices are shown in the
table below.
Date of Number Issued Surrendered Number Exercisable Exercisable Exercise
grant of in / of from to price
options year exercised options per option
during
the year
01/01/2018 31/12/2018
22/10/2008 170,000 - (70,000) 100,000 22/10/2011 24/11/2026 GBP0.0050
05/05/2011 119,980 - 119,980 30/06/2011 05/05/2021 GBP0.0050
05/05/2011 39,130 - 39,130 22/10/2011 05/05/2021 GBP0.0050
05/05/2011 51,780 - 51,780 31/12/2013 05/05/2021 GBP0.0050
05/05/2011 20,758 - 20,758 31/12/2013 05/05/2021 GBP0.5250
05/05/2011 239,980 - 239,980 01/09/2016 31/08/2019 GBP0.0050
01/08/2011 120,000 - 120,000 01/08/2011 01/08/2021 GBP0.0050
01/08/2011 60,000 - 60,000 30/06/2014 01/08/2021 GBP0.0050
01/08/2011 79,340 - 79,340 01/09/2016 31/08/2019 GBP0.0050
18/10/2013 26,060 - 26,060 18/10/2013 18/10/2023 GBP0.0050
18/10/2013 182,840 - 182,840 31/12/2014 18/10/2023 GBP0.5250
18/10/2013 21,360 - 21,360 31/12/2015 18/10/2023 GBP0.5250
19/06/2014 11,271 - 11,271 30/06/2015 19/06/2024 GBP0.7000
19/06/2014 60,000 - 60,000 01/09/2016 19/06/2024 GBP0.5250
19/06/2014 100,000 - 100,000 01/09/2016 19/06/2024 GBP0.0050
19/06/2014 19,229 - 19,229 31/12/2016 19/06/2024 GBP0.7000
31/10/2014 98,200 - (98,200) 0 01/11/2015 31/10/2018 GBP0.0050
31/10/2014 98,200 - (98,200) 0 01/11/2016 31/10/2018 GBP0.0050
08/06/2015 42,571,960 - 42,571,960 08/06/2015 08/06/2025 GBP0.0200
08/06/2015 4,257,196 - 4,257,196 08/06/2016 08/06/2025 GBP0.0375
08/06/2015 4,257,196 - 4,257,196 08/06/2017 08/06/2025 GBP0.0375
08/06/2015 4,257,196 - 4,257,196 08/06/2018 08/06/2025 GBP0.0375
30/09/2015 1,000,000 - 1,000,000 03/05/2016 08/06/2025 GBP0.0500
07/10/2016 1,583,334 - 1,583,334 07/10/2017 07/10/2027 GBP0.0738
07/10/2016 1,583,334 - 1,583,334 07/10/2018 07/10/2027 GBP0.0738
07/10/2016 1,583,332 - 1,583,332 07/10/2019 07/10/2027 GBP0.0738
21/12/2017 1,500,000 - (500,000) 1,000,000 21/12/2018 21/12/2027 GBP0.0738
21/12/2017 1,500,000 - (500,000) 1,000,000 21/12/2019 21/12/2027 GBP0.0738
21/12/2017 1,500,000 - (500,000) 1,000,000 21/12/2020 21/12/2027 GBP0.0738
23/02/2018 4,333,330 (100,000) 4,233,330 23/02/2019 23/02/2028 GBP0.0800
23/02/2018 4,333,332 (100,000) 4,233,332 23/02/2020 23/02/2028 GBP0.0800
23/02/2018 4,333,338 (100,000) 4,233,338 23/02/2021 23/02/2028 GBP0.0800
21/05/2018 2,066,664 2,066,664 21/05/2019 21/05/2028 GBP0.0675
21/05/2018 2,066,664 2,066,664 21/05/2020 21/05/2028 GBP0.0675
21/05/2018 2,066,672 2,066,672 21/05/2021 21/05/2028 GBP0.0675
30/05/2018 1,666,666 1,666,666 23/02/2019 30/05/2028 GBP0.0700
30/05/2018 1,666,667 1,666,667 23/02/2020 30/05/2028 GBP0.0700
30/05/2018 1,666,667 1,666,667 23/02/2021 30/05/2028 GBP0.0700
22/10/2018 1,500,000 1,500,000 22/10/2019 22/10/2028 GBP0.0498
22/10/2018 1,500,000 1,500,000 22/10/2020 22/10/2028 GBP0.0498
22/10/2018 1,500,000 1,500,000 22/10/2021 22/10/2028 GBP0.0498
22/10/2018 333,333 333,333 22/10/2019 22/10/2028 GBP0.0498
22/10/2018 333,333 333,333 22/10/2020 22/10/2028 GBP0.0498
22/10/2018 333,334 333,334 22/10/2021 22/10/2028 GBP0.0498
22/10/2018 133,333 133,333 22/10/2019 22/10/2028 GBP0.0498
22/10/2018 133,333 133,333 22/10/2020 22/10/2028 GBP0.0498
22/10/2018 133,334 133,334 22/10/2021 22/10/2028 GBP0.0498
22/10/2018 100,000 100,000 22/10/2019 22/10/2028 GBP0.0498
22/10/2018 100,000 100,000 22/10/2020 22/10/2028 GBP0.0498
22/10/2018 100,000 100,000 22/10/2021 22/10/2028 GBP0.0498
67,111,676 30,400,000 (2,066,400) 95,445,276
========== ========== =========== ==========
The options outstanding at the end of the year have a weighted
average remaining contractual life of 7.5 years. The expected life
used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
The weighted average fair value of an option granted during the
year was GBP0.014. The fair value of the options was calculated
using the Black-Scholes option pricing model. The inputs into the
model were as follows:
Date of issue Weighted average Weighted average Expected Expected life Risk free rate Expected
share price exercise price volatility dividend yield
18/10/2013 0.9870 0.5250 19.00% 10 years 2.82% -
18/10/2013 0.9870 0.5250 19.00% 10 years 2.82% -
19/06/2014 0.2200 0.7000 15.09% 10 years 2.82% -
19/06/2014 0.2200 0.5250 15.09% 10 years 2.82% -
19/06/2014 0.2200 0.0050 15.09% 10 years 2.82% -
19/06/2014 0.2200 0.7000 15.09% 10 years 2.82% -
31/10/2014 0.0625 0.0050 111.50% 10 years 0.47% -
31/10/2014 0.0625 0.0050 111.50% 10 years 0.78% -
08/06/2015 0.0375 0.0200 134.00% 10 years 0.46% -
08/06/2015 0.0375 0.0375 134.00% 10 years 0.46% -
08/06/2015 0.0375 0.0375 134.00% 10 years 0.60% -
08/06/2015 0.0375 0.0375 134.00% 10 years 0.90% -
30/09/2015 0.0450 0.0500 139.70% 10 years 0.39% -
26/04/2016 0.0838 0.0838 94.9% 10 years 0.37% -
26/04/2016 0.0838 0.0838 122.1% 10 years 0.68% -
26/04/2016 0.0838 0.0838 113.5% 10 years 0.95% -
26/09/2016 0.0713 0.0713 45.9% 10 years 0.00% -
26/09/2016 0.0713 0.0713 32.0% 10 years 0.00% -
26/09/2016 0.0713 0.0713 51.4% 10 years 0.37% -
26/09/2016 0.0713 0.0713 52.4% 10 years 0.39% -
26/09/2016 0.0713 0.0713 77.7% 10 years 0.55% -
26/09/2016 0.0713 0.0713 77.8% 10 years 0.68% -
26/09/2016 0.0713 0.0713 106.1% 10 years 0.70% -
26/09/2016 0.0713 0.0713 108.6% 10 years 0.84% -
26/09/2016 0.0713 0.0713 105.5% 10 years 0.95% -
07/10/2016 0.0738 0.0738 42.0% 10 years 0.37% -
07/10/2016 0.0738 0.0738 76.6% 10 years 0.95% -
07/10/2016 0.0738 0.0738 104.7% 10 years 0.95% -
21/12/2017 0.0700 0.0738 28.2% 10 years 0.36% -
21/12/2017 0.0700 0.0738 33.1% 10 years 0.46% -
21/12/2017 0.0700 0.0738 61.5% 10 years 0.56% -
23/02/2018 0.0800 0.0800 32.4% 10 years 0.58% -
23/02/2018 0.0800 0.0800 34.6% 10 years 0.73% -
23/02/2018 0.0800 0.0800 61.1% 10 years 0.86% -
21/05/2018 0.0675 0.0675 32.3% 10 years 0.63% -
21/05/2018 0.0675 0.0675 35.3% 10 years 0.76% -
21/05/2018 0.0675 0.0675 45.9% 10 years 0.88% -
30/05/2018 0.0700 0.0700 32.5% 10 years 0.46% -
30/05/2018 0.0700 0.0700 35.4% 10 years 0.56% -
30/05/2018 0.0700 0.0700 45.9% 10 years 0.67% -
22/10/2018 0.0498 0.0498 40.5% 10 years 0.70% -
22/10/2018 0.0498 0.0498 35.8% 10 years 0.77% -
22/10/2018 0.0498 0.0498 37.6% 10 years 0.86% -
22/10/2018 0.0498 0.0498 40.5% 10 years 0.70% -
22/10/2018 0.0498 0.0498 35.8% 10 years 0.77% -
22/10/2018 0.0498 0.0498 37.6% 10 years 0.86% -
22/10/2018 0.0498 0.0498 40.5% 10 years 0.70% -
22/10/2018 0.0498 0.0498 35.8% 10 years 0.77% -
22/10/2018 0.0498 0.0498 37.6% 10 years 0.86% -
22/10/2018 0.0498 0.0498 40.5% 10 years 0.70% -
22/10/2018 0.0498 0.0498 35.8% 10 years 0.77% -
22/10/2018 0.0498 0.0498 37.6% 10 years 0.86% -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FRMTTMBTTTJL
(END) Dow Jones Newswires
June 28, 2019 02:01 ET (06:01 GMT)
Mporium (LSE:MPM)
Graphique Historique de l'Action
De Jan 2025 à Fév 2025
Mporium (LSE:MPM)
Graphique Historique de l'Action
De Fév 2024 à Fév 2025
