1.         Basis of preparation

 

These financial statements have been prepared on the historical cost basis as modified by use of the fair-value basis where required and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS as at 31 December 2020.

 

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

 

1.1       Going concern

These financial statements have been prepared on a going concern basis. The Consolidated Statement of Comprehensive Income shows a loss of £8,233,000 for the year ended 31 December 2020 (2019: £2,185,000 loss). In assessing going concern the Directors have considered the Group's cash flows, solvency and liquidity positions.

 

Based on the Group's balance sheet and a review of its forecast future operating budgets and forecasts, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve months from the date of signing of these consolidated financial statements. This review of future operating budgets and forecasts included certain reasonable downside scenarios and confirmed that even in the case of such downside scenarios the Group could continue to operate and comply with all covenants in our banking facilities. Accordingly, the Directors have adopted the going concern basis in preparing the Annual Report and consolidated financial statements.

 

The Directors have assessed the viability of the Group over a five-year period, taking account of the Group's current position and prospects, its strategic plan and the principal risks and how these are managed. Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over this period.

 

In making this assessment, the Directors have considered the resilience of the Group in severe but plausible scenarios, taking into account the principal risks and uncertainties facing the Group and the effectiveness of any mitigating actions. The Directors' assessment considered the potential impacts of these scenarios, both individually and in combination, on the Group's business model, future performance, solvency and liquidity over the period. Sensitivity analysis was also used to stress test the Group's strategic plan and to confirm that sufficient headroom would remain available under the Group's credit facilities. The Directors consider that under each of these scenarios, the mitigating actions would be effective and sufficient to ensure the continued viability of the Group. The Directors believe that five years is an appropriate period for this assessment, reflecting the average length of the Group's contract base; key markets; and the nature of its businesses and products.

 

Trading has remained extremely difficult thus far in 2021 with COVID-19 restrictions limiting the number and size of events and as a result the Group has continued to make losses in the current trading period. However restrictions are now easing and there are positive signs of business returning.

                                                        

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

 

1.2       Adoption of standards effective in 2020

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

 

·    Definition of Material - amendments to IAS 1 and IAS 9;

·    Definition of a Business- amendments to IFRS3;

·    Interest Rate Benchmark Reform - amendments to IFRS9, IAS39 and IFRS 7; and

·    Revised Conceptual Framework for Financial Reporting.

 

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

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

 

·    IFRS 17 Insurance Contracts;

·    Amendments to IAS 1 - Classification of Liabilities as Current or Non-current;

·    Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before intended use;

·    Amendments to IFRS 3 - Reference to the Conceptual Framework;

·    Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract;

·    Annual Improvements to IFRS Standards 2018-2020;

·    Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an investor and its associate or joint venture; and

·    Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 & IAS 39 - Interest Rate Benchmark Reform - Phase 2.

 

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

 

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

 

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

 

2.         Accounting policies

 

2.1.     Basis of consolidation

The consolidated financial statements incorporate:

·       the results of LVCG, Brick Live Group Limited ("Brick Live Group"), Parallel Live Group Limited ("Parallel Live Group"), Bright Bricks Limited ("Bright Bricks Group"), Live Company Sports and Entertainment Limited ("LCSE") and E Movement Holdings Ltd ("EMHL") for the year ended 31 December 2020.

·       the assets and liabilities of LVCG, Brick Live Group, Parallel Live Group, Bright Bricks Group, LCSE, EMHL and their subsidiary companies at 31 December 2020.

 

Business combinations

The information contained in this note sets out how the Group typically accounts for Business Combinations, which is effectively using the purchase method explained in IFRS 3, "Business Combinations".

 

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

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

 

The amendments to IFRS 3, "Business Combinations" have clarified the definition of a business and have permitted a simplified assessment of whether an acquired set of activities and assets is a group of assets rather than a business. The Group has assessed the acquisitions detailed in Note 29 on the basis of this amendment.

 

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

 

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

 

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

 

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

 

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

 

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

 

Formal impairment reviews were completed at 30 June 2020 and 31 December 2020 given the indicators of impairment existing at both dates.

 

 

Brick Live Group

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

 

Bright Bricks Group

In October 2018, the Group acquired Bright Bricks Group, resulting in goodwill arising of £86,000.

 

Following the outbreak of COVID-19 the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced with reduced cash flows expected for 2021, this has the impact of reducing the value of the goodwill to £nil at 31 December 2020.

 

Parallel Live Group

In December 2017, the Group acquired Parallel Live Group, resulting in goodwill arising of £1,271,000.

 

Following the outbreak of COVID-19 the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced with reduced cash flows expected for 2021,  this has the impact of reducing the value of the goodwill by £375,000 at 31 December 2020.

 

Brick Live Far East Limited ("BLFE")

In December 2017, the Company became the 100% owner of BLFE. Goodwill of £2,950,000 arose on the acquisition. BLFE is a company registered in Hong Kong which owns a 49% stake in the Brick Live Group's China associate company, Brick Live Centre Education Development (Beijing) Company Limited.

 

Following the outbreak of COVID-19 the Directors are uncertain of future cashflows and an updated discounted cash flow calculation has been produced with reduced cash flows expected for 2021,  this has the impact of reducing the value of the goodwill to £nil at 31 December 2020.

 

Live Company Sports and Entertainment ("LCSE")

In December 2020 the Group established its new LCSE division, through an all share acquisition of Live Company Sports and Entertainment Limited, including its 50% interest in K-Pop Europa Limited; the novation of a number of contracts from World Sport South Africa (Pty) Limited and the acquisition of the entire issued capital of E Movement Holdings Ltd.

 

The substance of these transactions is the acquisition of a series of contracts rather than a business combination as defined in IFRS 3, "Business Combinations". The transactions have therefore been accounted for as additions to intangible fixed assets of £1,450,000 with no goodwill arising.

 

Intercompany balances

All intercompany balances are eliminated on consolidation.

 

Subsidiary companies audit exemption

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

 

2.2.     Intangible fixed assets

Trademarks are registered in each of the geographical territories for the BRICKLIVE brand. Trademarks are amortised on a straight line basis over their estimated useful lives, which is on average 10 years.

 

Acquired contracts are amortised over the period of the rights acquired, where contracts are renewable and are likely to be renewed for a further period such further period, but no subsequent periods, is considered to be part of the period of the rights acquired.

 

2.3.     Investment in associates and joint ventures

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

 

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

 

2.4.     Property, plant and equipment

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

 

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

 

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

 

2.5.     Leases

Following adoption of IFRS 16, "Leases" a right of use asset, being the present value of the operating lease payments over the remaining life of the lease, has been recognised within non-current assets. The right to use assets and corresponding lease liability have been calculated using a discount rate of 9% which the Directors consider to be appropriate, based on the Group's current borrowing structure. The depreciation of the assets and interest charge are recognised in the Statement of Comprehensive Income in the year and the buildings maturity analysis of lease liabilities at 31 December 2020 is detailed in Note 25.

 

2.6.     Impairment of assets

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

 

2.7.     Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using a weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. The majority of inventories are measured at fair value following the acquisition of Bright Bricks Group in October 2018 as detailed in Note 19.

 

2.8.     Financial instruments

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

 

 

 

Financial assets

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

 

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

 

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

 

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

 

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

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

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

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

 

2.9.     Share based payments

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

 

Equity settled share based payment transactions with service providers are measured at the fair value of the goods or services received, except where the fair value cannot be reliably estimated, in which case they are measured at the fair value of the equity instrument granted, measured at the date the entity obtains the goods or the counterparty renders the service.

 

2.10.   Trade and other receivables

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

 

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

 

2.11.   Cash and cash equivalents

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

 

2.12.   Trade and other payables

Trade and other payables are stated at their amortised cost.

 

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

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

 

2.14.   Revenue recognition

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

 

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

i.      Identify the contract with the customer;

ii.     Identify separate performance obligations in the contract;

iii.    Determine the transaction price;

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

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

Revenue recognised as above is measured on the following basis:

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

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

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

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

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

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

vii.  Sales of products - in accordance with contract.

 

2.15.   Deferred taxation

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

 

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

 

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

 

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

 

2.16.   Segmental reporting

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

 

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

 

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

 

2.17.   Foreign currencies

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

 

2.18.   Exceptional items

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

 

2.19.   Government grants and assistance

Government grants and assistance are recognised in the related expense line in the consolidated statement of comprehensive income on a systematic basis over the period in which the entity recognises the expense, for which the grant is intended to compensate.

 

Therefore, grants in recognition  of specific expenses are recognised in the related expense line in the same period.

 

3.         Accounting estimates and judgements

 

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

 

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

 

Impairment of investments and goodwill

The Directors have carried out impairment reviews of the Group's goodwill, investments and the share of net assets of associates as detailed in Notes 16, 17 and 18.

 

Depreciation and amortisation

Depreciation and amortisation rates have been set to accurately reflect the reduction in value of property, plant and equipment assets over their economic life, less their expected residual value. This requires judgement by the Directors, who have set the depreciation rates as detailed in Notes 2.2 and 2.4 to these consolidated financial statements based on their knowledge of the industry and typically how long each asset type retains its value.

 

Revenue recognition with customers

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

 

Share option and warrants

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

 

Contingent consideration

Contingent consideration recorded as a financial liability at fair value. The amount of contingent consideration to be paid is based on the occurrence of future events, such as the achievement of certain development, regulatory and sales milestones. Accordingly, the estimate of fair value contains uncertainties as it involves judgment about the likelihood and timing of achieving these milestones as well as the discount rate used. Changes in fair value of the contingent consideration obligation result from changes to the assumptions used to estimate the probability of success for each milestone, the anticipated timing of achieving the milestones and the discount period and rate to be applied.

 

4.         Segment reporting

 

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

 

Reportable segments

The reportable segment results for the year ended 31 December 2020 are as follows:

 

	Product and content sales	Tours, events, licenses and content rental fees	Unallocated	Total
	£'000	£'000	£'000	£'000
Revenue	497	1,360	-	1,857
Cost of sales	684	1,872	-	2,556
Administrative expenses	561	1,535	1,117	3,213
Finance costs	-	-	110	110
Exceptional items	-	-	4,355	4,355
Taxation	-	-	(144)	(144)
Segment loss the year	(748)	(2,047)	(5,438)	(8,233)

 

 

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

 

	Product and content sales		Tours, events, licenses and content rental fees		Unallocated		Total
	£'000		£'000		£'000		£'000
Revenue	974		4,477		-		5,451
Cost of sales	421		1,939		-		2,360
Administrative expenses	413		1,898		1,391		3,702
Share of associate	-		-		(86)		(86)
Finance costs	-				207		207
Exceptional items	-		-		1,112		1,112
Taxation					341		341
Segment profit/(loss) for the year	140		640		(2,965)		(2,185)

 

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

 

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

 

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

 

Segment assets and liabilities as at 31 December 2020 are as follows:

 

	Product and content sales	Tours, events, shows, licences and content rental fees	Unallocated	Total
	£'000	£'000	£'000	£'000
Assets	-	10,868	1,322	12,190
Liabilities	-	5,776	645	6,421

 

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

 

	Product and content sales	Tours, events, shows, licences and content rental fees	Unallocated	Total
	£'000	£'000	£'000	£'000
Assets	-	11,549	6,522	18,071
Liabilities	-	2,867	1,545	4,412

 

Geographical information

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

 

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

 

	2020	2019
	£'000	£'000
Revenue
United Kingdom	1,013	2,923
Europe	49	930
USA	265	406
South America	-	46
Asia	434	1,111
Middle East	96	35
	1,857	5,451

 

	2020	2019
	£'000	£'000
Non-current assets
United Kingdom	4,445	4,661
Europe	-	986
USA	394	467
South America	31	-
Asia	711	407
Middle East	310	-
Unallocated	896	4,392
	6,787	10,913

 

Major customers

Included within Tours, events, licenses and content rental fees are revenues of £225,000 (2019: £532,000) which arose from sales to the Groups largest customer. No single customer in 2020 or 2019 accounted for more than 10% of revenue.

 

5.         Operating loss before exceptional items

	2020	2019
	£'000	£'000
This is stated after charging:
Content depreciation (included within cost of sales)	705	589
Loss on disposal of content assets (included within cost of sales)	192	17
Other depreciation and amortisation (included within administrative expenses)	57	63
Depreciation on right of use assets	61	16
Net foreign exchange losses	17	40

 

6.         Exceptional items

 

The exceptional items consist of the following:

	2020	2019
	£'000	£'000
Share options and warrants charge	278	218
Transactional and reorganisational costs	2,676	612
Impairment of associate and intangible assets	1,401	-
Exceptional bad debt	-	282
	4,355	1,112

 

2020 Exceptional items

 

Share option and warrant charge

The Group uses the Black-Scholes model to value its share option and warrants. Certain judgement is required in terms of selecting the risk-free interest rate and standard deviation rate used. The charge for the current year is £278,000 which may increase or decrease with changes to these rates.

 

Transactional and reorganisational costs

Transactional costs relate to various debt and equity raises completed during the year as detailed in Note 22 as well as costs associated with terminating the ESA as detailed in Note 33.

 

Impairment of associate and intangible assets

The Directors have considered the carrying value of goodwill, investments and the share of net assets of associates in light of the impact of COVID-19, together with the effects of the measures taken to contain it in the markets in which the Group operates and have determined the impairment, as detailed in Notes 16, 17 and 18 is required.

 

Included in the Consolidated Statement of Financial Position at 31 December 2019 was £86,700 being the Groups share of the net assets of Brick Live Centre Education Development (Beijing) Company Limited a company incorporated in China in which the Group indirectly holds a 49% interest through its 100% holding in Brick Live Far East Limited. Due to the impact of COVID-19 on the recoverability of this balance, the Directors have provided in full against this amount.

 

2019 Exceptional items

 

Share option and warrant charge

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

 

Transactional and reorganisational costs

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

 

Exceptional bad debt provision

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

 

7.         Auditor's remuneration

 

	2020	2019
	£'000	£'000
Fees payable to the auditor, Moore Kingston Smith LLP, for the audit of the annual accounts of the Group and the Company	76	87
Taxation compliance	8	8
	84	95

 

8.         Employees

	2020	2019
Group	No.	No.
The average number of employees (including Directors not under employment contracts) during the year was:
Administration	5	22
Production	44	40
Sales	3	4
	52	66

 

 

	2020	2019
	£'000	£'000
The aggregate payroll costs including Directors not under employment contracts) were:
Wages, salaries and fees	1,825	2,566
Social security costs	133	177
Pension costs	22	31
	1,980	2,774

 

9.         Remuneration of Directors and key management personnel

 

In the opinion of the Board, only the Directors of the Company and the other members of the Executive Team, as detailed in the Corporate Governance Report, are regarded as key management personnel. The remuneration of key management personnel during 2020 was, in aggregate, £508,000 (2019: £859,000).

 

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

 

	2020	2019
	£'000	£'000
David Ciclitira	330	451
Andy Smith (resigned 2 September 2019)	-	74
Bryan Lawrie	76	144
Serenella Ciclitira*	10	20
Ranjit Murugason*	20	125
Trudy Norris-Grey (resigned 14 February 2021)	52	20
Simon Horgan (resigned 17 February 2021)*	10	20
Mark Freebairn (resigned 14 February 2021)*	10	5
	508	859

*The Non-Executive Directors waived their fees for Q2 and Q3.

 

 

David Ciclitira	2020	2019
	£'000	£'000
UK Chairman's fees	25	25
International consultancy fees	250	250
Additional contracted work during the year	55	176
	330	451

 

 

David Ciclitira invoiced a further £178,000 (2019; £nil) for further additional contracted work during the year which was subsequently paid but then waived by credit note. This balance is included in the unpaid balances due to related parties at 31 December 2020 as detailed in Note 32. Post year end this was subsequently offset against the outstanding loan balance due to David Ciclitira detailed in Note

 

22. Ranjit Murugason

	2020	2019
	£'000	£'000
Non-Executive fees	20	30
Fees in connection with fundraise in February 2019	-	45
Bright Bricks integration and Singapore company closure fees	-	50
	20	125

 

The remuneration for Ranjit Murugason in the prior year was satisfied by the issue of new Ordinary shares as detailed in Note 27.

 

 

 

Andrew Smith

	2020	2019
	£'000	£'000
As Chief Strategic Officer	-	38
As Executive Chairman of Bright Bricks Group	-	36
	-	74

 

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

 

Bryan Lawrie

	2020	2019
	£'000	£'000
Fees as Chief Financial Officer	71	144
Non-Executive fees	5	-
	76	144

 

Fees paid to Bryan Lawrie as Chief Financial Officer were paid to CFO Partners Limited.

 

Further information on related party transactions are set out in Note 32.

 

10.       Finance costs

 

	2020	2019
	£'000	£'000
Loan interest	59	185
Interest expense on lease liabilities	24	7
Other	27	15
	110	207

 

11.       Taxation

	2020	2019
Current tax	£'000	£'000
UK Corporation tax in respect of current year:
Current taxation	-	-
Adjustments in respect of prior years	(238)	(86)
Total tax (credit) charge for the year	(238)	(86)
Deferred taxation
Original and reversal of timing differences	28	427
Effect of change in tax rates	66	-
Total deferred taxation charge	94	427
Tax charge on loss on ordinary activities	(144)	341

 

	2020	2019
	£'000	£'000
Loss on ordinary activities before tax	(8,388)	(1,844)
Loss on ordinary activities at the standard rate of corporation tax of 19% (2019: 19%)	(1,594)	(350)
Effect of disallowable expenditure	932	-
Tax losses carried forward	662	350
Total tax charge for the year	-	-

 

12.       Earnings per share

 

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

 

	2020	2019
Loss for the year after tax (£'000)	(8,233)	(2,185)
Weighted average number of shares in issue	83,678,936	70,171,496
Basic and diluted earnings per share *	(9.8p)	(3.1p)

 

* Diluted earnings per share in both 2020 and 2019 are the same as basic earnings per share, as there are no dilutive options in issue during these years.

 

 

13.       Property, plant and equipment

 

Group	Content		Other		Total
	2020	2019	2020	2019	2020	2019
	£'000	£'000	£'000	£'000	£'000	£'000
Cost
Cost at start of year	5,015	3,801	176	152	5,191	3,953
Additions for year	921	1,239	14	24	935	1,263
Disposals	(380)	(25)	(15)	-	(395)	(25)
Cost at end of year	5,556	5,015	175	176	5,731	5,191
Depreciation
Cumulative depreciation at start of year	970	389	69	13	1,039	402
Charge for year	705	589	46	56	751	645
Eliminated on disposal	(188)	(8)	(15)	-	(203)	(8)
Cumulative depreciation at end of year	1,487	970	100	69	1,587	1,039
Net book value at end of year	4,069	4,045	75	107	4,144	4,152
Net book value at start of year	4,045	3,412	107	139	4,152	3,551

 

The Company had no property, plant and equipment assets in either 2020 or 2019.

 

14.       Right of use Assets

 

Buildings	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cost
Cost at start of year	308	-	-	-
Additions for year	-	308	-	-
Cost at end of year	308	308	-	-
Depreciation
Cumulative depreciation at start of year	16	-	-	-
Charge for year	61	16	-	-
Cumulative depreciation at end of year	77	16	-	-
Net book value at end of year	231	292	-	-
Net book value at start of year	292	-	-	-

 

 

15.       Intangible assets

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cost
Cost at start of year	88	55	-	-
Additions for year	1,451	33	1,450	-
Cost at end of year	1,539	88	1,450	-
Amortisation
Cumulative amortisation at start of year	12	5	-	-
Charge for year	11	7	-	-
Cumulative amortisation at end of year	23	12	-	-
Net book value at end of year	1,516	76	1,450	-
Net book value at start of year	76	50	-	-

 

Trademarks

Trademarks are obtained for each show in each jurisdiction around the world. Trademarks are amortised over their estimated useful lives, which is on average 10 years. The carrying value of trademarks at 31 December 2020 is £66,000 (2019; £76,000).

 

LCSE

In December 2020 the Company acquired the entire issued share capital of Live Company Sports and Entertainment Limited together with its wholly owned subsidiary Live Company Sports and Entertainment (Pty) Limited and 50% interest in K-Pop Europa Limited for £650,000 and purchased certain contracts from World Sport South Africa (Pty) Limited for £500,000 to create a new Sports and Entertainment division (RNS Number : 3562H 03 December 2020).

 

In December 2020 the Company acquired the entire issued share capital of E Movement Holdings Ltd for £300,000 (RNS Number : 3562H 03 December 2020).

 

The substance of these transactions is the acquisition of a series of contracts rather than a business combination as defined in IFRS 3 "Business Combinations". The transactions have therefore been accounted for as additions to intangible fixed assets of £1,450,000. The acquired contracts are amortised over the period of the rights acquired, where contracts are renewable and are likely to be renewed for a further period such further period, but no subsequent periods, is considered to be part of the period of the rights acquired.

 

Tournament rights

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

 

 

16.       Investments

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cost
Cost at start of the year	-	-	17,450	17,450
Additions for the year	-	-	-	-
Cost at end of year	-	-	17,450	17,450
Impairment
At start of the year	-	-	-	-
Impairment in the year	-	-	11,425	-
Cumulative impairment at end of year	-	-	11,425	-
Net book value at end of the year	-	-	6,025	17,450
Net book value at start of year	-	-	17,450	17,450

 

 

In light of the impact of COVID-19, together with the effects of the measures taken to contain it in the markets in which the Group operates, the Directors considered the carrying value of investments at 30 June 2020 (as detailed in Note 3 to the results for the six months ended 30 June 2020) and again at 31 December 2020.

 

As a cash generating unit the carrying value was assessed based on a discounted cashflow over five years at the Groups current cost of capital, considered by the Directors to be 9%,  and it was determined the impairment, as described in the table below, was required.

 

	At start of year	Additions	Impairment	At end of year
	£'000	£'000	£'000	£'000
Brick Live Far East Limited	2,950	-	(2,950)	-
Brick Live Group (incorporating Bright Bricks Limited)	13,500	-	(8,475)	5,025
Parallel Live Group	1,000	-	-	1,000
	17,450	-	(11,425)	6,025

 

17.       Goodwill

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cost at start and end of year	8,888	8,888	-	-
Impairment
At start of the year	4,581	4,581	-	-
Impairment in the year	3,411	-	-	-
Cumulative impairment at end of year	7,992	4,581	-	-
Net book value at end of year	896	4,307	-	-
Net book value at start of year	4,307	4,307	-	-

 

 

As detailed in Note 3 to the results for the six months ended 30 June 2020 the Directors considered the carrying value of goodwill in light of the impact of COVID-19, together with the effects of the measures taken to contain it in the markets in which the Group operates.

 

As a cash generating unit the carrying value was assessed based on a discounted cashflow over five years at the Groups current cost of capital, considered by the Directors to be 9%,  and it was determined the impairment, as described in the table below, was required.

 

The Directors further considered the carrying value of goodwill at 31 December 2020 and determined no further impairment was required.

 

 

	At start of year	Additions	Impairment	At end of year
	£'000	£'000	£'000	£'000
Brick Live Far East Limited	2,950	-	(2,950)	-
Brick Live Group (incorporating Bright Bricks Limited)	86	-	(86)	-
Parallel Live Group	1,271	-	(375)	896
	4,307	-	(3,411)	896

 

18.       Investments in Associates and Joint Ventures

 

	Group			Company
	2020	2019	2020		2019
	£'000	£'000	£'000		£'000
Cost
Cost at start of year	197	111	-		-
Additions in the year	-	86	-		-
Cost at end of year	197	197	-		-
Impairment
At start of year	111	111	-		-
Impairment in the year	86	-	-		-
At end of year	197	111	-		-
Net book value at end of year	-	86	-		-
Net book value at start of year	86	-	-		-

 

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

 

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

 

At 31 December 2019, the share of the associate's net profits amounted to £86,000 which was added to the carrying value of the investment. As detailed in Note 3 to the results for the six months ended 30 June 2020 the Directors considered the carrying value of the share of net assets in light of the impact of COVID-19, together with the effects of the measures taken to contain it, in the markets in which the Group operates, and determined this should be impaired to £nil.

 

The Directors further considered the carrying value of the investment at 31 December 2020 and determined no further adjustment to the carrying value was required.

 

The results of the Associate in the year are:	2020	2019
	£'000	£'000
Revenue	128	1,819
(Loss)/profit before tax	(500)	220
Taxation	-	(17)
(Loss)/profit after tax	(500)	203
Current assets	287	573
Non-current assets	693	1,317
Current liabilities	(912)	(1,549)
Non-current liabilities	-	-
	68	341

 

Parallel Three Six Zero Inc

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

 

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

 

The results of the Joint Venture in the year are:
	2020	2019
	£'000	£'000
Revenue	-	113
Loss before tax	(1)	(26)
Taxation	-	-
Loss after tax	(1)	(26)
Current assets	-	-
Non-current assets	-	-
Current liabilities	(27)	(26)
Non-current liabilities	-	-
	(27)	(26)

 

BRICKLIVE (South Africa) Limited

In November 2019, Brick Live International Limited signed an agreement with World Sport South Africa (Pty) Limited, a company incorporated in South Africa, to create BRICKLIVE (South Africa) Limited to be owned 50.1% by BLI and 49.9% by WSSA.

 

Following the acquisition of Live Company Sports and Entertainment and purchase of certain contracts from WSSA in December 2020 (RNS Number : 3562H 03 December 2020) this agreement was terminated without trading ever commencing.

 

19.       Inventories

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Inventories of bricks	4,633	6,100	-	-
Work in progress	198	152	-	-
	4,831	6,252	-	-

 

 

Included in inventories is £3,983,000 (2019: £5,323,000) of stock acquired on acquisition of Bright Bricks Group and included at fair value at that date.

 

Included in inventories is £1,500,000 (2019: £nil) subject to a sale and HP Agreement entered into with Close Leasing Limited, (see Note 22).

 

20.       Trade and other receivables - current assets

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Trade receivables	123	455	-	-
Amounts owed by subsidiaries	-	-	1,226	2,512
Other receivables	64	265	78	9
Prepayments and accrued income	217	88	156	-
	404	808	1,460	2,521

 

Trade and other receivables - non current assets

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Other receivables	-	2,000	-	2,000
	-	2,000	-	2,000

 

Included in non current assets in other receivables is a £nil (2019: £2,000,000) Equity Share Agreement (ESA) debtor as set out in Note 33.

 

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

 

21.       Cash and cash equivalents

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Cash at bank	168	98	191	119

 

22.       Borrowings

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Loan due within one year	615	532	167	532
Loan due after one year	1,430	463	83	463
	2,045	995	250	995

 

In April 2020 the Group entered into a £250,000 CBILS loan agreement with NatWest Bank Plc (RNS Number : 4000L 30 April 2020), which remained outstanding at the balance sheet date; and a £500,000 loan agreement with David Ciclitira (RNS Number : 6990J 15 April 2020), £205,000 of which was converted into equity in June 2020 (RNS Number : 1520R 26 June 2020) leaving £295,000 outstanding at the balance sheet date. After the balance sheet date the loan was partly repaid by the offset of the credit note detailed in Note 9 and the conversion of £30,000 to equity at 5p per share as detailed in Note 36 leaving a balance of £90,823 outstanding. The loan from David Ciclitira bears interest at 16.2% and is secured by a second fixed and floating charge over the Groups assets with priority given to the security held by Close Leasing Limited as detailed below.

 

In August 2020 (RNS Number : 2514W 17 August 2020) the Group entered into an agreement with Close Leasing Limited whereby stock totalling £1,500,000 included under Inventories in the Statement of Financial Position in these consolidated financial statements was sold to Close Leasing Limited and purchased back under the terms of a Hire Purchase Facility (HP Agreement) provided in conjunction with the CBILS.

 

The substance of the transaction meant that no performance obligation arose and control of the stock did not pass to Close Leasing Limited thus in accordance with IFRS 15, "Revenue from Contracts with Customers" no revenue was recognised on the transaction and thus in accordance with IFRS 16, "Leases" no right of use asset was created. The obligation under the HP Agreement is thus included in borrowings in accordance with IFRS 9, "Financial Instruments".

 

The HP Agreement was for a term of five years at an effective interest rate of 5.14% secured against the £1.500.000 of stock subject to the agreement and a fixed and floating charge over the Groups other assets.

 

The proceeds from the facility were used to repay the outstanding YA II and RiverFort borrowing in full (2020: £nil; 2019: £995,000) and to terminate the ESA described in Note 33.

 

 

23.       Trade and other payables

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Trade payables	574	720	112	198
Amounts owed to subsidiaries	-	-	66	66
Other payables	866	210	835	83
Other taxation and social security	924	687	24	10
Accruals and deferred income	1,120	947	343	291
	3,484	2,564	1,380	648

 

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

 

Other payables include £800,000 (2019: £nil) of deferred consideration as detailed in Note 29.

 

24.       Financial risks

 

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

 

Financial assets

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

 

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

 

Financial liabilities

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

 

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

 

Liquidity risk

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

 

Set out below are liquidity risk comparative tables as at 31 December 2020 and 31 December 2019.

 

Remaining contractual maturities year ended 31 December 2020
Group	Within 3 months	> 3 months < 1 year		> one year < 5 years		Total carrying amount
	£'000	£'000		£'000		£'000
Bank loans and borrowings	8	607		1,430		2,045
Trade and other payables*	1,440	-		-		1,440
Lease liabilities	15	45		188		248
	1,463	652		1,618		3,733
Company	Within 3 months		> 3 months < 1 year		> one year < 5 years		Total carrying amount
	£'000		£'000		£'000		£'000
Bank loans and borrowings	-		167		83		250
Trade and other payables*	1,013		-		-		1,013
	1,013		167		83		1,263
Remaining contractual maturities year ended 31 December 2019
Group	Within 3 months		> 3 months < 1 year		> one year < 5 years		Total carrying amount
	£'000		£'000		£'000		£'000
Bank loans and borrowings	-		532		463		995
Trade and other payables	930		-		-		930
Leases	20		59		223		302
	950		591		686		2,227

 

Company	Within 3 months	> 3 months < 1 year	> one year < 5 years	Total carrying amount
	£'000	£'000	£'000	£'000
Bank loans and borrowings	-	532	463	995
Trade and other payables	347	-	-	347
	347	532	463	1,342

 

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

 

Credit risk

Financial assets past due but not impaired as at 31 December 2020:

 

	Not impaired and not past due	Not impaired but past due by the following amounts
		>30 days	>60 days	>90 days	>120 days
	£'000	£'000	£'000	£'000	£'000
Group: Trade and other receivables	113	25	-	-	49
Company: Trade and other receivables	1,304	-	-	-	-

 

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

 

	Not impaired and not past due	Not impaired but past due by the following amounts
		>30 days	>60 days	>90 days	>120 days
	£'000	£'000	£'000	£'000	£'000
Group: Trade and other receivables	2,720	-	-	-	-
Company: Trade and other receivables	4,521	-	-	-	-

 

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

 

Group trade and other receivables excluding prepayments and accrued income as at 31 December 2020 were £187,000 (2019: £2,720,000), all of which are not impaired. All remaining trade and other receivables as at 31 December 2020 are collected and/or collectable and are considered of low credit risk. All bank deposits are maintained in the United Kingdom and are low credit risk.

 

Market risk

a.    Interest rate risk

The Group had two outstanding loans (one with NatWest Bank PLC and one with David Ciclitira) and the HP Agreement with Close Leasing Limited at the year end (2019: two with Riverfort). The interest rates in respect of the HP Agreement and loan from David Ciclitira are fixed and in respect of the loan from NatWest Bank PLC is calculated in relation to bank Base Rate, there are no early redemption penalties associated with the NatWest Bank PLC loan and the risk is therefore considered to be insignificant.

 

b.    Foreign currency risk

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

 

The foreign assets and liabilities of the Group and Company are closely matched as at 31 December 2020. The table below sets out the carrying amounts of assets and liabilities for the Group in their presentational currency (i.e. Sterling) and a total impact for each 10% fluctuation in exchange rates. Based on the carrying amounts of foreign assets and liabilities as at 31 December 2020, for each 10% fluctuation in exchange rates, net assets are expected to be impacted by £16,000 (2019: £6,000)

 

Year ended 31 December 2020
Carrying amount (sterling equivalent)						Forex Risk
	£	$	€	Total	(-10%)		10%
	'000	'000	'000	£'000	£'000		£'000
Financial assets
Cash	164	3	1	168	-		-
Trade and other receivables	331	27	45	404	7		(7)
	495	30	46	572	7		(7)
Financial liabilities
Borrowings	2,045	-	-	2,045	-		-
Trade payables	349	67	158	574	23		(23)
Other payables	866	-	-	866	-		-
Lease liabilities	248	-	-	248	-		-
Other taxation and social security	924	-	-	924	-		-
Accruals and deferred income	1,120	-	-	1,120	-		-
	5,552	67	158	5,777	23		(23)
Net Impact					16		(16)

 

Year ended 31 December 2019
Carrying amount (sterling equivalent)						Forex Risk
	£	$	€	Total	(-10%)		10%
	'000	'000	'000	£'000	£'000		£'000
Financial assets
Cash	74	1	23	98	2		(2)
Trade and other receivables	2,559	62	186	2,807	25		(25)
	2,633	63	209	2,905	27		(27)
Financial liabilities
Borrowings	995	-	-	995	-		-
Trade payables	512	164	44	720	(21)		21
Other payables	210	-	-	210	-		-
Lease liabilities	303	-	-	303	-		-
Other taxation and social security	687	-	-	687	-		-
Accruals and deferred income	947	-	-	947	-		-
	3,654	164	44	3,862	(21)		21
Net Impact					6		(6)

 

25.       Lease liabilities

 

	Group		Company
	2020	2019	2020	2019
	£'000	£'000	£'000	£'000
Current	60	79	-	-
Non-current	188	224	-	-
	248	303	-	-

 

In 2019, a right of use asset, being the present value of the operating lease payments over the remaining life of the lease, was recognised. The right of use assets and corresponding lease liability have been calculated using a discount rate of 9%. The depreciation of the assets and interest charge are recognised in the Statement of Comprehensive Income in the year and the buildings maturity analysis of lease commitments at 31 December 2020 is detailed below.

 

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

 

Payments recognised as an expense	2020	2019
	£'000	£'000
Minimum lease payments	-	-
Lease depreciation	62	16
Interest	24	7

 

Non-cancellable lease commitments	2020	2019
	£'000	£'000
Not later than 1 year	79	80
Later than 1 year and not later than 5 years	219	298
Later than 5 years	-	-
	298	378

 

 

26.       Deferred tax

 

	2020	2019
	£'000	£'000
At start of year	550	123
Charged to profit or loss	94	427
At end of year	644	550

 

Due to the availability of UK tax losses, subject to agreement with the HMRC, there is an estimated deferred tax asset of £2,648,000 (2019: £2,382,000). This is not recognised due to the uncertainty of the timing of future taxable profits against which these losses could be utilised.

 

27.       Share capital

 

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

 

	2020		2019
	No. of shares	£'000	No. of shares	£'000
Issued and fully paid
Ordinary shares of 1p	108,138,544	1,081	79,500,419	794
Deferred shares of 51.8p	2,047,523	1,061	2,047,523	1,061
Deferred Ordinary shares of 0.5p	199,831,545	999	199,831,545	999
Deferred B shares of £19.60	103,260	2,024	103,260	2,024
Total		5,165		4,878

 

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

 

	2020
Ordinary shares of 1p	No. of shares	£'000
At start of year	79,500,419	794
Settlement of director fees (RNS Number : 1029A 17 January 2020)	116,667	1
Settlement of advisor fees (RNS Number : 6990J 15 April 2020)	233,333	2
Settlement of salary and contractor fees (RNS Number : 9396L 05 May 2020)	1,196,866	12
Share Placing (RNS Number : 1520R 26 June 2020)	4,000,000	40
Loan conversion (RNS Number : 1520R 26 June 2020)	2,050,000	21
Settlement of salary and contractor fees (RNS Number : 5485T 21 July 2020)	835,182	8
Settlement of salary and contractor fees (RNS Number : 9339Z 24 September 2020)	1,396,077	14
Share placing and subscription (RNS Number : 3562H 03 December 2020)	18,810,000	189
At end of year	108,138,544	1,081

 

	2019
Ordinary shares of 1p	No. of shares	£'000
At start of year	67,094,595	671
Share placing (RNS Number : 5610P 11 February 2019)	2,084,616	21
Settlement of Ranjit Murugason fees (RNS Number : 5610P 11 February 2019)	69,230	1
Settlement of Ranjit Murugason  fees (RNS Number : 8050U 02 April 2019)	153,846	2
Share subscription (RNS Number : 6771A 31 May 2019)	1,038,457	10
Share subscription (RNS Number : 1083K 23 August 2019)	46,152	-
Share placing (RNS Number : 4454U 25 November 2019)	2,346,856	23
Share subscription (ESA) December 2019 (RNS Number : 9028W 16 December 2019)	6,666,667	66
	79,500,419	794

 

The number of additional shares authorised for issue is 30,104,523 (2019: 25,947,917), on 21 May 2021 the members of the Company in general meeting authorised the issue of up to 55,000,900 additional shares of which 36,000,000 have been issued (RNS Number : 4906Z 21 May 2021).

 

Deferred shares

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

 

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

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

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

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

 

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

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

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

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

 

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

 

28.       Share premium

 

	2020	2019
	£'000	£'000
At start of year	23,480	18,470
Premium arising on issue of equity shares	840	3,932
Shares issued on acquisition of subsidiary and novation of contracts	135	-
Debt to share conversion	633	1,181
Share issue costs	(84)	(103)
At end of year	25,004	23,480

 

29.       Acquisitions

 

In December 2020 the Company acquired the entire issued share capital of Live Company Sports and Entertainment Limited together with its wholly owned subsidiary Live Company Sports and Entertainment (Pty) Limited and 50% interest in K-Pop Europa Limited for £650,000 and purchased certain contracts from World Sport South Africa (Pty) Limited for £500,000 to create a new Sports and Entertainment division (RNS Number : 3562H 03 December 2020). Live Company Sports and Entertainment Limited was 100% owned by David Ciclitira prior to the acquisition.

 

In December 2020 the Company acquired the entire issued share capital of E Movement Holdings Ltd for £300,000 (RNS Number : 3562H 03 December 2020). E Movement Holdings Ltd was 33.34% owned by David Ciclitira prior to the acquisition.

 

These transactions have been treated as the acquisition of contracts as detailed in Note 2.1.

 

Acquisitions			Purchase price
			£'000
Live Company Sports and Entertainment Limited			650
Live Company Sports and Entertainment Pty Limited			-
K-Pop Europa Limited (JV)			-
Novation of contracts			500
E Movement Holdings Ltd			300
			1,450
Satisfied by:
Cash			50
Deferred consideration			800
Equity instruments (6,000,000 Ordinary shares of parent Company)			600
			1,450

 

The 600,000 Ordinary shares of the parent Company issued in consideration of the acquisition of LCSE and the novation of contracts are included in the share placing and subscription announced in December 2020 as detailed in Note 27.

 

The Company made no acquisitions in 2019.

 

 

30.       Share option reserve

 

	2020	2019
	£'000	£'000
At start of year	218	-
Share option charge	222	167
Warrant charge	56	51
At end of year	496	218

 

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

 

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

 

No options were issued in 2020 (2019: 3,086,346 at an average exercise price of 65p).

 

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

follows:

Weighted average exercise price                   65p

Expected volatility                                            63%

Expected life                                                      3 years

Risk free interest rate                                       1.6%

Expected dividends                                             0.00

 

 

The charge for the year ended 31 December 2020 for the options issued in April 2019 totals £222,200 (2019: £166,700).

 

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

 

	2020				2019
	Number		Weighted average exercise price (p)		Number	Weighted average exercise price (p)
Outstanding at the beginning of the year	3,086,346	65		-		-
Granted during the year	-	-		3,086,346		65
Forfeited during the year	-	-		-		-
Exercised during the year	-	-		-		-
Outstanding at the end of the year	3,086,346	65		3,086,346		65

 

Warrants

75,000 (2019: 282,018) warrants were issued during the year at a weighted average exercise price of 15p** (2019: 74.66p).

 

	31 December 2020		31 December 2019
Share warrants	Number	Exercise price (p)	Number	Exercise price (p)
Investor (exercisable up to 17 October 2022)	356,923	38.79p	356,923	38.79p
Investor (exercisable up to 16 December 2023)	232,018	38.79p	232,018	38.79p
Adviser (exercisable up to 25 February 2021)	50,000	80.00p*	50,000	80.00p
Adviser (exercisable up to 25 June 2022)	75,000	15.00p**

 

*In June 2020 it was proposed to reprice these to 15p (RNS Number : 1520R 26 June 2020).

 

**In December 2020 it was proposed to reprice these to 10p (RNS Number : 3562H 03 December 2020).

 

The inputs into the warrant pricing model for the warrants issued in the year are:

Weighted average exercise price                   15p

Expected volatility                                            79%

Expected life                                                      2 years

Risk free interest rate                                      1.1%

Expected dividends                                          0.00

 

The charge for the year ended 31 December 2020 for the warrants in issue totals £55,500 (2019: £51,100).

 

A further 16,810,000 (2019: 3,903,840) warrants were issued to investors as part of an equity raise and are therefore outside the scope of IFRS 2 "Share-based payment" and consequently there is no share-based payment charge in respect of these warrants.

 

31.       Capital management

 

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders. The Group had net assets of £5.8m at 31 December 2020 (2019: £13.7m). The Group's capital management strategy is to retain sufficient working capital for day to day operating requirements and to ensure sufficient funding is available to meet commitments as they fall due and to support growth. There are no externally imposed capital requirements.

 

	2020	2019
	£'000	£'000
Loan facility	(2,045)	(995)
Total debt	(2,045)	(995)
Cash	168	98
Net debt	(1,877)	(897)

 

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

 

32.       Related party transactions

 

Details of the Directors' remuneration and consultancy fees are disclosed in Note 9.

 

David Ciclitira

 

David Ciclitira injected funds into the Company during the year as follows:	2020	2019
	£'000	£'000
Fees settled in shares (RNS Number : 9396L 05 May 2020)	28	-
Loan conversion (RNS Number : 1520R 26 June 2020)	205	-
Acquisition of LCSE settled in shares (RNS Number : 3562H 03 December 2020)	450	-
Purchase of 400,000 Ordinary shares of 1p each	-	260
Purchase of Venturi Formula E Car	-	25
	683	285
Loan advanced
Loan facility (RNS Number : 6990J 15 April 2020).	500	-
Total funds injected	1,183	285

 

David Ciclitira received payments during the year as set out below:	2020	2019
	£'000	£'000
Business expenses and healthcare costs.	13	26
Rental arrangements (London and Italy) (RNS Number : 0451O 30 September 2019).	-	33
Fee in relation to the settlement of James Golf creditors (Admission Document)	-	123
Rental arrangements for use of Venturi Formula E Car as described in Note 33 to the annual report for the year ended 31 December 2019.	17	-
Fees and interest in relation to the provision of loan facility detailed in Note 22.	101	-
Fees in relation to providing personal guarantee (RNS Number : 2514W 17 August 2020)	28	-
Consideration for the purchase of 100% of the issued share capital of LCSE (RNS Number : 3562H 03 December 2020)*	450	-
Consideration for the purchase of 33% of the issued share capital of E Movement Holdings Ltd (RNS Number : 3562H 03 December 2020)**	-	-
Fee in relation to the assumption of historic liabilities (RNS Number : 6990J 15 April 2020)	29	-
	638	182
Loan repaid
Loan conversion (RNS Number : 1520R 26 June 2020)	205	-
Repayment of short-term loans as described in Note 31 to the annual report for the year ended 31 December 2018	-	126
	205	126
Total payments received	843	308

 

*£450,000 of the total consideration for the purchase of Live Company Sports and Entertainment Limited was settled by the issue of 4,500,000 Ordinary shares in the parent Company, the balance of £200,000 has been deferred and will be settled by the issue of a further 2,000,000 shares based on certain criteria.

 

**The total consideration of £100,000 for the purchase of David Ciclitira's 33.34% holding in E Movement Holdings Ltd has been deferred and will be settled in cash based on certain criteria.

 

Unpaid balances due to related parties at 31 December	2020	2019
	£'000	£'000
David Ciclitira*	318	7
Serenella Ciclitira	8	-
Ranjit Murugason	20	30
Bryan Lawrie	11	12
Trudy Norris-Grey	(15)	18
Mark Freebairn	10	5
Simon Horgan	10	-
	362	72

 

*Includes total deferred consideration of £300,000 in relation to the acquisition of David Ciclitira's interest in LCSE and E Movement Holdings Ltd, and the outstanding loan balance of £295,000 as detailed in Note 22 and the credit note as detailed in Note 9.

 

33.       Equity Share Arrangement

 

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

 

In August 2020 (RNS Number : 2514W 17 August 2020) the Group entered into a £1,500,000 CBILS borrowing agreement with Close Leasing Limited, the proceeds from the facility were used to repay the outstanding YA II and RiverFort borrowing and to terminate the ESA agreement.

 

In addition to an early termination fee of £143,000 payable by the Group, Live Company Group EBT Limited purchased 5,726,480 shares previously held by YA II and RiverFort (representing 6.51%. of the Company's issued share capital at the time) into trust, at a cost of £57,000.

 

These payments together with the Group's expected share of the ESA Payment (£2,000,000 at the time of the agreement and included in non-current receivables in the Groups unaudited consolidated statement of financial position at 30 June 2020) which following the termination will no longer be receivable will be considered part of the consideration for the share purchase at a group level and is included in the Group retained earnings in the Consolidated Statement of Financial Position.

 

34.       Subsidiaries

 

At 31 December 2020, the Company had the following (direct and indirect) subsidiaries:

 

Held directly	Company number	Place of incorporation	% owned	Principal activities
Brick Live Group Limited	10151705	UK	100%	Holding Company
Brick Live Touring Limited	11253539	UK	100%	Dormant
Parallel Live Group Limited	09932658	UK	100%	Holding Company US activities
Bright Bricks 2020 Limited	12333294	UK	100%	Dormant
Championship (Singapore) Pte Limited	201427355K	Singapore	95%	Dormant
Live Company Sports and Entertainment Limited	12328268	UK	100%	Holding Company
E Movement Holdings Ltd	12502990	UK	100%	Holding Company
Held indirectly
Brick Live International Limited	10257756	UK	100%	Sales of products, licensed events and zoos
Brick Live Far East Limited	10308158	UK	100%	Dormant and being dissolved
Brick Live Far East Limited	2460460	Hong Kong	100%	Owner of Associate investment in China
Parallel Live (NY) LLC	6339763	USA	100%	Dormant
Bright Bricks Limited	07227540	UK	100%	Specialist production company
Bright Bricks Consumer Limited	10653625	UK	100%	Dormant and dissolved on 16 March 2021
E Movement Holdings (Pty) Limited	2021/354354/07	South Africa	100%	Formula E events
Live Company Sports and Entertainment (Pty) Limited	2020/765082/07	South Africa	100%	Sports and entertainment events

The following subsidiaries were dissolved in the year:

 

Held directly	Company number		Place of incorporation	% owned	Principal activities
Held indirectly
Brick Live Hong Kong Limited		2460469	Hong Kong	100%	Dissolved
Parallel Media Group Asia	201131009R		Singapore	100%	Dissolved

 

The registered office of the subsidiaries incorporated is England and Wales is 3 Park Court Pyrford Road, West Byfleet, Surrey, KT14 6SD.

 

The registered office of the overseas subsidiaries are as follows:-

 

Championship (Singapore) Pte Limited, 62 Neil Road, Singapore (088833).

 

Brick Live Far East Limited, RM 1307A 13/F, Two Harbourfront, 22 Tak Fung Street, Hughom, Hong Kong.

 

E Movement Holdings (Pty) Limited, 9 Viscount Crescent, Baronetcy Estate, Plattekloof, Western Cape, 7500, South Africa.

 

Live Company Sports and Entertainment (Pty) Limited, Noland House, River Park, Mowbray, Western Cape, South Africa.

 

35.       Post balance sheet events

 

START Art

As announced on 4 May 2021 (RNS Number : 3348X 04 May 2021) the Company has acquired a non controlling minority interest of 16.3% in Start Art Global Limited ('START Art'), an online art and digital art sales and news platform, for £1,000,000 funded from the proceeds of a £1,500,000 share placing completed on 24 May 2021. Prior to the transaction 100% of the issued share capital of START Art was owned by David Ciclitira and Ranjit Murugason.

 

Loan from David Ciclitira

As announced on 1 June 2021 (RNS Number : 4199A 01 June 2021) the terms of the loan advanced by David Ciclitira to Brick Live International Limited on 15 April 2020 have been varied to extend the term of the loan and convert an additional £30,000 to equity at 5p per share. Following the conversion, and the offset of a further £178,000 against the credit note detailed in Note 9, a balance of £90,823 remained outstanding.

 

Warrant repricing

As announced on 28 June 2020 (RNS Number : 1520R 26 June 2020)  in accordance with the terms of the warrant instrument and following the passing of special  resolution 4 at the general meeting held 29 January 2021 and special resolution 5 at the general meeting held 21 May 2021:

•     3,953,840 warrants with an exercise price of 80p were repriced at an exercise price of 15p; and,

•     4,075,000 warrants with an exercise price of 15p were repriced at an exercise price of 10p.

 

Note to the announcement

 

In accordance with section 435 of the Companies Act 2006, the directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2020 or 2019 but is derived from these financial statements. The financial statements for the year ended 31 December 2019 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 December 2020 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.