REG - Engage XR Holdings - Final Results
15/04/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240415:nRSO5161Ka&default-theme=true
RNS Number : 5161K Engage XR Holdings PLC 15 April 2024
15 April 2024
ENGAGE XR Holdings Plc
("ENGAGE XR", the "Company", or the "Group")
Final Results
ENGAGE XR Holdings Plc (AIM: EXR), a leading spatial computing and metaverse
technology company, is pleased to announce its audited results for the 12
months ended 31 December 2023.
Financial Highlights:
● Total revenue for the Group was €3.7 million (2022: €3.9 million)
● ENGAGE platform revenue remained constant at €3.3 million (2022: €3.3
million)
● ENGAGE continued to take market share within the growing North American market
with 60% of total ENGAGE revenue being generated in North America (2022: 35%)
● Gross profit increased by 5% to €3.3 million (2022: €3.2 million) from an
improved gross profit margin of 90% (2022: 82%)
● EBITDA loss was reduced to €4.0 million (2022: loss of €5.8 million)
● The Group's cash position on 31 December 2023 was €7.9 million (2022: €2.2
million) with no debt
● Successful fundraise of €10.5 million (€9.9 million net of expenses) in
February 2023
Operational Highlights:
● ENGAGE revenue from Education customers has grown in the period to €1.1
million from €0.8 million, including a 5,400 user K-12 education license
deal signed with a US state and the year also saw a growth in revenues from
two other existing educational clients, Optima Domi Academy and Victory XR.
● ENGAGE total licensed Education and Enterprise users grew to approximately
15,000 users at the period end (2022: 10,000 users)
Post period end Highlights:
● In the last nine months, ENGAGE has seen four of its largest contracts close,
all within the education and training arena, from a mixture of new and
existing customers
● This included the signing of the Group's first ever seven-figure deal early in
2024 with a large Middle East-based company in the education, training, and
development sector
● Record revenue quarter in Q1 2024 of just over €2m contracted revenue booked
in. Over 70% of this revenue is professional education
● Announced the launch of "School of AI" which an immersive learning
environment, in which students can speak to notable figures of history,
powered by conversational and generative AI. Full rollout planned in Q2,
creating new revenue opportunities
David Whelan, CEO of ENGAGE XR, said: "2023 was a year in which the Company
successfully strengthened its balance sheet but was also a year that saw many
ups and downs. We are now focused on the aspects of the business that have a
long-term future, namely the education and training sectors within both the
education and enterprise markets.
2023 saw a number of enterprise customers deciding not to renew contracts or
renewing at lower levels and revenue for remote events and collaboration also
decreased, as many tech companies mandated employees to return to the office.
In contrast, 2023 also saw good growth in our education, training, and
development client base. In the last nine months, we signed four of the
largest contracts, within the Company's history, including the signature of
the Group's first seven-figure deal in early 2024 with a large Middle East
based company, all in the education, training, and development sector. We
recently announced our School of AI initiative which is a new product offering
for schools and universities to be released in Q2.
2024 has started strongly, with Q1 being our biggest ever revenue quarter and
we are therefore looking forward to continuing this momentum in the current
financial year. We continue to strengthen our relationships with our partners
and are very focused on our work with strong platform partners such as Meta
and Lenovo on growing the market away from single pay entertainment purchases.
Both of these partners are highly focused on recurring revenue generators with
education, training and development sectors, which is key to our strategy.
Led by our Chairman, Richard Cooper, we are well advanced in making additional
appointments to our non-executive board members with a specific focus on both
technology and the US west coast knowledge and networks.
Having taken steps to reduce our cost base, and strengthen our balance sheet
through a successful fundraise, we believe ENGAGE is in prime position to
become the largest provider of such spatial computing services globally,
combined with a growing client base."
Investor Communications
CEO David Whelan and CFO Séamus Larrissey will provide a live presentation
relating to the results via Investor Meet Company on 15 April 2024, 09:00 BST.
The presentation is open to all existing and potential shareholders. Questions
can be at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet ENGAGE
XR HOLDINGS PLC via:
https://www.investormeetcompany.com/engage-xr-holdings-plc/register-investor
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investormeetcompany.com%2Fengage-xr-holdings-plc%2Fregister-investor&data=05%7C02%7CRobin.Tozer%40secnewgate.co.uk%7C312b41fe98b04eb4ea6d08dc4e5f32da%7Cc060be4783c04d048b1741c760ed0f7d%7C0%7C0%7C638471418014206475%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=DZ0eYiAo3YU%2BIleKzJnpFwUG929nhEV7sF0NsG%2BCF7E%3D&reserved=0)
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.
- Ends -
For further information, please contact:
ENGAGE XR Holdings Plc Tel: +353 87 665 6708
David Whelan, CEO info@engagexr.co
Séamus Larrissey, CFO
Sandra Whelan, COO
Cavendish Capital Markets Limited (Nominated Adviser & Joint Broker) Tel: +44 (0) 20 7220 0500
Marc Milmo/ Seamus Fricker (Corporate finance)
Sunila de Silva / Harriet Ward (ECM)
Shard Capital Partners LLP (Joint Broker) Tel: +44 (0) 20 7186 9952
Damon Heath / Erik Woolgar
SEC Newgate (Financial Communications) Tel: +44 (0)7540 106366
Robin Tozer / Tom Carnegie / Naz Zandi engage@secnewgate.co.uk
About ENGAGE XR
ENGAGE XR Holdings plc (AIM: EXR) is an extended reality (XR) technology
company focused on becoming a leading global provider of virtual
communications solutions through its new fully featured corporate metaverse,
ENGAGE Link. A demonstration of ENGAGE Link is
https://youtu.be/2OHtimtFY3M?si=Ng0-mwgUpTgU4wtl
(https://youtu.be/2OHtimtFY3M?si=Ng0-mwgUpTgU4wtl)
The Company also has a proprietary software platform, ENGAGE. ENGAGE provides
users with a platform for creating, sharing, and delivering VR content for
education, training, and online events through its three solutions: Virtual
Campus, Virtual Office, and Virtual Events.
For further information, please visit: www.engagexrholdings.com (LinkedIn:
@Engage XR Holdings plc Twitter: @engage_xr)
.
CHAIRMAN'S STATEMENT
Our aim is to become a leading global provider of virtual communications
solutions through our proprietary software platform, ENGAGE. However, it has
been a challenging year with an uncertain macro-economic backdrop which
manifested itself most acutely in the legacy of the "tech crash" in Autumn
2022 and continued to impact us throughout 2023.
Revenue decreased by 5% to €3.7 million (2022: €3.9 million). A longer
sales decision-making cycle in our customer base, due to economic
uncertainties, together with some enterprise customers not renewing their
contracts or renewing at lower levels meant we were disappointed not to
deliver the revenue growth we were targeting. Gross profit however increased
by 5% as the Company improved gross profit margin to 90% (2022: 82%). Staff
and contractor costs fell to €6.2 million, down from €7.0 million in 2022,
a 11% reduction, which was the result of an aggressive cost-cutting program.
The Company has seen increased interest from the education and training
sectors. The Board continue to see meaningful opportunities to increase
metaverse use within these sectors. The Board believes that the specific areas
the Company is targeting, such as remote education, and the way in which
organisations interact with staff, suppliers and customers will be transformed
by the Metaverse. As a result, the Board remains focused on selling to and
servicing universities and other education establishments whilst continuing
its sales push to global enterprise customers.
We were delighted with the response to the ground-breaking concert hosted in
ENGAGE early in 2023 by the renowned international musician, Norman Cook, aka
Fatboy Slim. The concert demonstrated the versatility and capabilities of VR
and how it enables corporations to creatives to build their own worlds within
ENGAGE that can be used for entertainment, business engagements and so much
more.
In February 2023, we successfully completed a €10.5m equity raise (before
expenses) to bolster the Group's balance sheet and to help us deliver on our
ambitious growth plans. At 31 December 2023, we had funds of €7.9 million
and earned €0.2m of interest during the year.
I would like to thank Praveen Gupta for his service as a director from 6 July
2020 to 8 December 2023 when he retired from HTC, a leading shareholder and
customer. Following his departure, we are looking to strengthen the Board and
have been searching for candidates who can bring additional contacts, networks
and technology experience to the Group. This process is well advanced, and we
will be making an announcement soon.
We have seen a strong start to 2024 and therefore the management team and the
Board are looking forward to the future with optimism. I would like to thank
everyone at ENGAGE XR in delivering great progress in what has been a
challenging environment. Furthermore, I want to thank our shareholders for
their continued support.
Richard Cooper
Non-Executive Chairman
15 April 2024
CHIEF EXECUTIVE'S REVIEW
Overview
2023 has been a year of clarity for the ENGAGE team in understanding our value
proposition and revenue opportunities in a post lockdown world. Although
ENGAGE revenue was impacted by delays in contracts being signed towards the
year end, enterprise customers either not renewing contracts or renewing at
lower levels and a decrease in revenues for one off remote events and
collaboration, we have grown our education, training, and development client
base to partially replace these revenue streams.
In the last nine months, we have signed four of the largest contracts, within
the Company's history, including the signature of the Group's first
seven-figure deal in early 2024 with a large Middle East based company, all in
the education, training, and development sector.
Reorganisation
In early Q1 2023, management took the difficult decision to ensure the
Company's cost base was reduced and as a result the executive and management
teams undertook a companywide reshuffle. This reshuffle ensured growing areas
of the business were staffed appropriately and spending was controlled in less
active areas of the Group. This reshuffle resulted in significant savings with
the reduction of contractor fees and a focus on greater operating efficiencies
being delivered across the Company.
Capital Raise
In Q1 2023, the Company also successfully raised a total of €10.5 million in
additional funding to capitalise on growing 2022 subscription figures and our
newly formed partnership with Lenovo. This additional funding should see the
ENGAGE group reach profitability in late 2025.
Reduction in Enterprise revenues
Two major themes throughout 2023 were the mandates for workers to return to
the office and layoffs within the global tech sector. Many tech workers hired
during lockdowns lived far from the office and used services such as ENGAGE
daily for group meetings and collaboration. Many of these employees left their
jobs as they could not work in the office, and coupled with extensive
redundancies, saw ENGAGE Enterprise revenue, incorporating events and
collaboration, fall by almost 34%. Whilst this was very disappointing, we are
confident that the worst is over, and that we expect to see lower levels of
churn and higher net revenue retention levels from our Enterprise client base.
Growth in Education and training
ENGAGE version 1.0 was officially launched on 18 December 2018, with an
initial focus on education and training. In the period since its launch,
whilst winning clients in the education and training space such as Stanford
University, Commonwealth of Kentucky and Pearsons, the Company saw greater
engagement from Enterprise customers who were seeking alternatives to
video-based communication options and also in one off events. A strong example
of these one off events was the popular Fatboy Slim immersive concert held in
March 2023. The concert was designed to showcase what the ENGAGE platform has
to offer in the events arena and received high praise and coverage globally.
However, during 2023, the ENGAGE platform started to grow significantly in
areas it was originally designed for within the education, training and
development sectors. This saw a revenue increase of 41% in this sector
partially helping to mitigate the enterprise losses from non-renewals
experienced throughout 2023. The result being that, although headline ENGAGE
revenue was marginally down year on year, the customer profile within the
Company changed from enterprise-led to education and training-led revenue with
a smaller but faster revenue-generating client base. This has provided
management with greater clarity on the ENGAGE platforms value proposition
which is on employee onboarding services, professional training and
development, university education and K12 education services 1 (#_ftn1) .
Many of our smaller education clients grew their license numbers with us
throughout 2023 and we also saw American-based banking and insurance companies
use our platform to train employees using immersive technologies.
One of the bigger deals seen during 2023 was the largest ever single
deployment of immersive technologies within education with 5,000 headsets
purchased by the State of Kentucky education board along with ENGAGE licenses
to use on those devices. This was a collaboration between Meta and the ENGAGE
team and something we intend to replicate.
Positive Direction
Even with the turmoil and challenges that have been faced throughout 2023 the
revenue metrics are clear. We continue to focus on growing renewing clients
and sectors that have quantifiable ROI, be that with better test results for
students within education or cost savings achieved within the training and
development sectors for enterprise clients using the ENGAGE platform.
We are seeing this education and training base grow and mature quickly, and
this is resulting in the Company successfully starting to win larger deals in
this space. What is most encouraging is that many of the deals we are closing
in the later part of 2023 are from existing clients growing their presence on
the platform. This trend is continuing in 2024.
Confidence on Medium Term Prospects
2024 has started strongly with just over €2m contracted revenue booked in
Q1. Over 70% of this revenue is professional education and the Board is
hopeful that we should see a further expansion of revenues from these clients
over the next 12 to 18 months.
We are still working closely with Lenovo on our partnership and are exploring
opportunities with potential customers together. However we do not expect
revenue to be generated from this relationship until near the end of 2024 or
into 2025.
In March 2024, we announced our School of AI initiative which is a new product
offering for schools and universities to be released in Q2. With the growth of
our education sector clients, it is obvious to us that this should be a key
focus point for the team going forward. Remote collaboration and events are
still available, however, AI aided immersive education is where we are making
strides.
Our development plan is to release AI features for the K12 market as a test
bed before deploying them within the enterprise sector in H2 of 2024. Almost
half of queries coming into our website are interested in our AI-aided
education and experiences, and we are taking onboard these requests before
publishing our findings and tools.
We are currently working with a small selection of enterprise clients on
AI-enhanced training for bank and hospitality workers in the USA and the
Middle East. We will be providing a broader rollout to the rest of our
enterprise clients in the second half of 2024.
Summary
2023 has been a transformative year with many ups and downs. The year has
brought a sharp focus to the team and allowed us to focus on the important
aspects of the business that have a long-term future. We expect many of our
competitors who only provided collaboration services in the past to fail this
year making us a much bigger player in a small but fast-growing space.
New hardware players are investing heavily in this space with Apple having
recently released its Vision Pro device, and Samsung, Google and Sony all
expected to join the immersive technology sector later this year.
We are looking forward to the second half of the year as we work with strong
platform partners such as Meta and Lenovo on growing the market away from
single pay entertainment purchases. Both partners are highly focused on
recurring revenue generators with education, training and development is key
this strategy.
We believe ENGAGE is in prime position to become the largest provider of such
services globally, given our past performance and current growing client base.
David Whelan
Chief Executive Officer
15 April 2024
CHIEF FINANCIAL OFFICER'S REVIEW
Revenue was down 5% from €3.9 million in 2022 to €3.7 million, driven by a
delay in closing some significant contracts in the final quarter of the year
which subsequently closed in early 2024. ENGAGE platform revenue remained
constant year on year at €3.3 million.
ENGAGE revenue from education customers has grown in the period to €1.1
million from €0.8 million. This was bolstered by a 5,400 user K-12 education
license deal signed with a US state and the year also saw the growth of two
other educational clients, Optima Domi Academy and Victory XR.
ENGAGE revenue from Professional Services also grew in the period to €1.1
million from €1.0 million driven by increased custom development work
performed by the ENGAGE Studio team for both Enterprise and Education
customers but offset by a reduction in one off VR events supported by the
ENGAGE Event team whilst ENGAGE Revenue from Enterprise customers declined
from €1.5 million to €1.0 million.
ENGAGE revenue continued to grow within the North American market with 60% of
total ENGAGE revenue being generated in North America (2022: 35%). This is in
line with our focus within the group to grow the sales team within North
America.
ENGAGE total licensed Education and Enterprise users grew to approximately
15,000 users at the period end (2022: 10,000 users)
EBITDA loss was €4.0 million compared to a loss of €5.8 million in the
prior year and loss before tax was €4.1 million compared to a loss in the
prior year of €6.0 million. This reduced EBITDA loss is primarily driven by
reduced headcount in the year, and strong cost control across the Group.
Operating cashflows were a net outflow of €4.5 million for the period. The
current run-rate of staff costs and other ongoing costs is approximately
€0.3 million per month.
At the balance sheet date, trade and other receivables were €1.2 million,
ahead of trade and other payables at €0.6 million. Trade receivables
represented an average of 59 debtor days (2022: 52 days).
The Group's cash position on 31 December 2023 was €7.9 million (2022: €2.2
million) with no debt. The cash balance was significantly improved during 2023
by a successful €10.5 million (€9.9 million net of expenses) fundraise.
Séamus Larrissey
Chief Financial Officer
15 April 2024
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2023
Note 2023 2022
Continuing Operations € €
Revenue 3 3,690,697 3,868,574
Cost of Sales 5 (379,640) (709,018)
Gross Profit 3,311,057 3,159,556
Administrative Expenses 5 (7,551,774) (9,133,860)
Operating Loss (4,240,717) (5,974,304)
Finance Income 9 193,605 -
Finance Costs 8 (6,966) (30,581)
Loss before Income Tax (4,054,078) (6,004,885)
Income Tax credit 10 - -
Loss for the financial year (4,054,078) (6,004,885)
Other comprehensive income - -
Total comprehensive loss for the year attributable to owners of the parent (4,054,078) (6,004,885)
Earnings per Share (EPS) attributable to owners of the parent
Basic earnings per share 11 (0.008) (0.021)
Diluted earnings per share 11 (0.008) (0.019)
.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2023
Note 2023 2022
€ €
Non-Current Assets
Property, Plant & Equipment 12 123,728 96,085
Intangible Assets 13 - 39,492
123,728 135,577
Current Assets
Trade and other receivables 15 1,195,333 1,365,982
Cash and short-term deposits 16 7,911,079 2,209,169
9,106,412 3,575,151
Total Assets 9,230,140 3,710,728
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 17 524,826 290,451
Share premium 17 43,910,062 33,503,300
Other reserves 18 (12,292,523) (11,752,741)
Retained earnings 19 (23,614,730) (19,560,652)
Total Equity 8,527,635 2,480,358
Non-Current Liabilities
Lease liabilities 21 34,540 -
Current Liabilities
Trade and other payables 22 615,237 1,222,488
Lease liabilities 21 52,728 7,882
667,965 1,230,370
Total Liabilities 702,505 1,230,370
Total Equity and Liabilities 9,230,140 3,710,728
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2023
Note 2023 2022
€ €
Non-Current Assets
Investment in subsidiaries 14 12,366,593 18,765,102
12,366,593 18,765,102
Current Assets
Trade and other receivables 15 25,424 3,492
Cash and short-term deposits 16 5,791,641 486,170
5,817,065 489,662
Total Assets 18,183,658 19,254,764
Equity and Liabilities
Equity Attributable to Shareholders
Issued share capital 17 524,826 290,451
Share premium 17 43,910,062 33,503,300
Other reserves 18 (1,246,172) (691,272)
Retained earnings 19 (25,081,249) (14,001,259)
Total Equity 18,107,467 19,101,220
Current Liabilities
Trade and other payables 22 76,191 153,544
Total Liabilities 76,191 153,544
Total Equity and Liabilities 18,183,658 19,254,764
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2023
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2022 290,451 33,503,300 (11,775,474) (13,555,767) 8,462,510
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (6,004,885) (6,004,885)
Total comprehensive income 290,451 33,503,300 (11,775,474) (19,560,652) 2,457,625
Transactions with owners
recognised directly in equity
Share option expense - - 22,733 - 22,733
Balance at 31 December 2022 290,451 33,503,300 (11,752,741) (19,560,652) 2,480,358
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2023 290,451 33,503,300 (11,752,741) (19,560,652) 2,480,358
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (4,054,078) (4,054,078)
Total comprehensive income 290,451 33,503,300 (11,752,741) (23,614,730) (1,573,720)
Transactions with owners
recognised directly in equity
New Shares Issued 234,375 10,406,762 - - 10,641,137
Share Issue Costs - - (601,362) - (601,362)
Share option expense - - 61,580 - 61,580
Balance at 31 December 2023 524,826 43,910,062 (12,292,523) (23,614,730) 8,527,635
COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2023
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2022 290,451 33,503,300 (694,055) (1,223,374) 31,876,322
Total comprehensive income
Other comprehensive income - - - - - -
Loss for the year - - - (12,777,885) (12,777,885)
Total comprehensive income 290,451 33,503,300 (694,055) (14,001,259) 19,098,437
Transactions with owners
recognised directly in equity
Share option expense - - 2,783 - 2,783
Balance at 31 December 2022 290,451 33,503,300 (691,272) (14,001,259) 19,101,220
Share Share Other Reserves Retained Total
Capital Premium Earnings
€ € € € €
Balance at 1 January 2023 290,451 33,503,300 (691,272) (14,001,259) 19,101,220
Total comprehensive income
Other comprehensive income - - - - -
Loss for the year - - - (11,079,990) (11,079,990)
Total comprehensive income 290,451 33,503,300 (691,272) (25,081,249) 8,021,230
Transactions with owners
recognised directly in equity
New Shares Issued 234,375 10,406,762 - - 10,641,137
Share Issue Costs - - (601,362) - (601,362)
Share option expense - - 46,462 - 46,462
Balance at 31 December 2023 524,826 43,910,062 (1,246,172) (25,081,249) 18,107,467
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2023
Note 2023 2022
Continuing Operations € €
Loss before income tax (4,054,078) (6,004,885)
Adjustments to reconcile loss before tax to net cash flows:
Depreciation of fixed assets 5 106,179 80,448
Amortisation of intangible assets 5 39,492 386,962
Finance Costs 8 6,966 30,581
Finance Income 9 (193,605) -
Share Option Expense 61,579 22,733
Movement in trade & other receivables 170,649 (720,092)
Movement in trade & other payables (607,251) 740,912
(4,470,069) (5,463,341)
Bank interest received 193,605 -
Bank interest & other charges paid (6,966) (30,581)
Net Cash used in Operating Activities (4,283,430) (5,493,922)
Cash Flows from Investing Activities
Purchases of property, plant & equipment 12 (17,465) (74,458)
Net cash used in investing activities (17,465) (74,458)
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares 10,039,775 -
Payment of lease liabilities (36,970) (12,511)
Net cash generated from / (used in) financing activities 10,002,805 (12,511)
Net increase / (decrease) in cash and cash equivalents 5,701,910 (5,580,891)
Cash and cash equivalents at beginning of year 16 2,209,169 7,790,060
Cash and cash equivalents at end of year 16 7,911,079 2,209,169
COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2023
Note 2023 2022
Continuing Operations € €
Loss before income tax (11,079,990) (12,777,885)
Adjustments to reconcile loss before tax to net cash flows:
Finance Costs 792 559
Finance Income (192,971) -
Share Option Expense 46,463 2,783
Impairment of Investment in Subsidiaries 10,157,911 11,602,935
Movement in trade & other receivables (21,932) (2,457)
Movement in trade & other payables (77,354) 75,025
(1,167,081) (1,099,040)
Bank interest received 193,605 -
Bank interest & other charges paid (792) (559)
Net cash used in Operating Activities (974,902) (1,099,599)
Cash Flows from Investing Activities
Capital contribution (3,759,402) 109,025
Net cash (used) / generated in investing activities (3,759,402) 109,025
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares 10,039,775 -
Net cash generated from financing activities 10,039,775 -
Net increase / (decrease) in cash and cash equivalents 5,305,471 (990,574)
Cash and cash equivalents at beginning of year 16 486,170 1,476,744
Cash and cash equivalents at end of year 16 5,791,641 486,170
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
ENGAGE XR Holdings plc ("the Company") is publicly traded on the Alternative
Investment Market ("AIM") of the London Stock Exchange. The Company is
incorporated and domiciled in the Republic of Ireland. The registered office
is Unit 9, Cleaboy Business Park, Old Kilmeaden Road, Waterford and the
registered number is 613330. The company was previously known as VR Education
Holdings plc.
The Company is the parent company of ENGAGE XR Limited, previously known as
Immersive VR Education Limited. ENGAGE XR Limited is incorporated and
domiciled in the Republic of Ireland with the same registered office as the
Company.
The Company is also the parent company of ENGAGE XR LLC. ENGAGE XR LLC is
incorporated and domiciled in USA with a registered office of 251 Little Falls
Drive, Wilmington, Delaware, 19808-1674, USA.
The Group is principally engaged in the development of the educational Virtual
Reality platform ENGAGE. The Company also develops and sells Virtual Reality
experiences for the education market.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of the Financial
Statements are set out below. These policies have been consistently applied
to all the years presented, unless otherwise stated. The consolidated
Financial Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union issued
by the International Accounting Standards Board ("IASB") including related
interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC").
Basis of Consolidation
The consolidated financial statements incorporate those of ENGAGE XR Holdings
plc and its subsidiaries ENGAGE XR Limited and ENGAGE XR LLC.
All financial statements are made up to 31 December 2023. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the date on which
control ceases. Control is achieved when the group is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The Group re-assess whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the elements
of control.
Business Combination
Acquisition of ENGAGE XR Limited
The Company entered into an agreement to acquire the entire issued share
capital of ENGAGE XR Limited on 12 March 2018. The acquisition was effected by
way of issue of shares. Due to the relative size of the companies, ENGAGE XR's
shareholders became the majority shareholders in the enlarged capital of the
Company. The transaction fell outside of IFRS 3 ("Business Combinations") and
as such has been treated as a group reconstruction.
Therefore, although the Group reconstruction did not become unconditional
until 12 March 2018, these consolidated financial statements are presented as
if the Group structure has always been in place, including the activity from
incorporation of the Group's subsidiaries.
Furthermore, as ENGAGE XR Holdings plc was incorporated on 13 October 2017,
while the enlarged group began trading on 12 March 2018, the Statement of
Comprehensive Income and consolidated Statement of Changes in Equity and
consolidated Cash Flow Statements are presented as though the Group was in
existence for the whole year. On this basis, the Directors have decided that
it is appropriate to reflect the combination using merger accounting
principles as the transaction falls outside the scope of IFRS 3 and as such
has been treated as a Group reconstruction. No fair value adjustments have
been made as a result of the combination.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future
periods.
Judgements
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the financial statements:
Capitalised development costs
In applying the requirements of IAS 38 Intangible Assets, the Group assessed
various development projects against the criteria required for capitalisation.
Certain projects that did not meet the criteria regarding the ability to
determine whether those projects would generate sufficient future economic
benefits were expensed. The judgements reflect the early stage of the VR/AR
market and will change over time.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising that are
beyond the control of the Group. Such changes are reflected in the assumptions
when they occur.
Capitalised development costs impairment review
The Group's impairment review undertaken to assess the carrying value of
capitalised development costs includes certain assumptions on future revenues
and costs associated with the underlying technology. Those cashflows are
discounted at an appropriate discount rate. These estimates and assumptions
are reviewed on an on-going basis. Changes in accounting estimates may be
necessary if there are changes in the circumstances on which the estimate was
based or as a result of new information or more experience. Such changes are
recognised in the period in which the estimate is revised.
Going Concern
The financial statements are presented on a going concern basis. In forming
this opinion, the Directors have considered all the information available to
them. This includes management prepared forecasts, due consideration of the
ability to raise funds on the open market in respect of the listing on the
Alternative Investment Market on the London Stock Exchange and the timing as
to when such funds will be received.
These financial statements do not include adjustments relating to the
recoverability and classification of recorded asset amounts nor to the amounts
and classification of liabilities that might be necessary should the group not
continue as a going concern. Thus, the Directors continue to adopt the going
concern basis of accounting in preparing the financial statements.
Foreign Currency Translation
(a) Functional and Presentation Currency
Items included in the Financial Statements of the Group are measured using the
currency of the primary economic environment in which the entity operates
("functional currency").
The Financial Statements are presented in euro (€), which is the Group's
functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses that
relate to borrowings and cash and cash equivalents are presented in the income
statement within 'finance income or costs'. All other foreign exchange gains
and losses are presented in the income statement within Administrative
Expenses.
Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current/non-current classification. An asset is current when
it is:
· Expected to be realised or intended to be sold or consumed in the
normal operating cycle
· Held primarily for the purpose of trading
· Expected to be realised within twelve months after the reporting
period; or
· Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period
All other assets are classified as non-current.
A liability is current when:
· It is expected to be settled in the normal operating cycle
· It is held primarily for the purpose of trading
· It is due to be settled within twelve months after the reporting
period Or
· There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period
The Group classifies all other liabilities as non-current.
Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
Fair value measurement
The Group measures financial instruments such as derivatives at fair value at
each balance sheet date. The Company has applied IFRS 9 for all periods
presented.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous market
for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or
receivable, and represents amounts receivable for goods and services supplied,
stated net of discounts, returns and Value-Added Taxes (VAT).
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the
entity, and specific criteria have been met for each of the Group's
activities, as described below. The Group bases its estimates on historical
results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Where the Group makes sales relating to a future financial period, these are
deferred and recognised under 'deferred revenue' on the Statement of Financial
Position. The Group currently has two revenue streams:
ENGAGE Revenue
The Group is primarily focused on developing a proprietary VR platform which
is sold through licences and professional services revenue. This is considered
"ENGAGE Revenue" for reporting purposes. Revenue is recognised when the
license is delivered to the customer, or when all performance obligations have
been achieved.
Showcase Experiences
The Group also develops proprietary educational VR content which is sold
through licences. This is considered "Showcase Experience Revenue" for
reporting purposes. Revenue is recognised when the license key is delivered to
the customer, or when all performance obligations have been achieved.
Revenue is received net of commission from the platforms where the Group
licenses their content. The gross amount of revenue is recognised in revenue
with the corresponding commission portion recognised in cost of sales.
Other Revenue
The Group develops educational VR content on behalf of customers based on
specific customer requirements. This is considered "Other Revenue" for
reporting purposes. Such revenue is recognised on a percentage completion
basis unless there are significant performance obligations that would require
deferral until such obligations are delivered. Stage of completion is measured
by reference to labour hours incurred to date as a percentage of total
estimated labour hours for each contract. When the contract outcome cannot be
measured reliably, revenue is recognised only to the extent that the expenses
incurred are eligible to be recovered. This is generally during the early
stages of development where the specifications need to pass through the
customer's approval as part of the development.
The disaggregation of revenue, required under IFRS 15, has been prepared on
the basis of the two revenue streams outlined above and is included in Note 3.
Government Grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the expected useful life of the
related asset.
Property, Plant and Equipment
All property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include transfers
from equity of any gains/losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to
allocate their cost less residual value over their estimated useful lives, as
follows:
Office equipment - 3 - 5 years
Furniture, fittings and equipment - 5 years
Leasehold improvements - over the life of the leased asset
Property, Plant and Equipment (continued)
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight line basis.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period. Gains and losses on
disposals are determined by comparing the proceeds with the carrying amount,
and are recognised in the income statement.
Intangible Assets
Research costs are expensed as they are incurred. Development costs that are
directly attributable to the design and testing of identifiable and unique
commercial software controlled by the Group are recognised as intangible
assets when the following criteria are met:
· it is technically feasible to complete the software product so that
it will be available for use and sale;
· management intends to complete the software product and use or sell
it;
· there is an ability to use or sell the software product;
· it can be demonstrated how the software product will generate future
economic benefits;
· adequate technical, financial and other resources to complete the
development and use or sell the software product are available; and
· the expenditure attributable to the software product during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include the software development employee costs and subcontracted
development costs.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over
their estimated useful lives, which do not exceed 3 years and commences after
the development is complete and the asset is available for use. Intangible
assets in relation to Showcase Experiences are amortised over their estimated
useful lives based on the pattern of consumption of the underlying economic
benefits. The ENGAGE platform is amortised on a straight line basis over 3
years. Amortisation is included in Administrative Expenses.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication
that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or CGU's fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from
other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount.
The Group bases its impairment calculation on detailed budgets and forecast
calculations, which are prepared separately for each of the Group's CGUs to
which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. A long-term growth rate
is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the statement of
profit or loss in expense categories consistent with the function of the
impaired asset.
For assets, an assessment is made at each reporting date to determine whether
there is an indication that previously recognised impairment losses no longer
exist or have decreased. If such indication exists, the Group estimates the
asset's or CGU's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable amount
since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior
years.
Trade Receivables
Trade receivables are amounts due from customers for licenses sold or services
performed in the ordinary course of business. If collection is expected in one
year or less (or in the normal operating cycle of the business if longer),
they are classified as current assets. If not they are presented as
non-current assets.
Trade receivables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. The Group holds the trade receivables with the objective of
collecting the contractual cash flows.
The Group provides for known bad debts and other accounts over a certain age
in line with Group policy. The realisation of the asset may differ from the
provision estimated by management.
Cash and Cash Equivalents
In the Statement of Cash Flows, cash and cash equivalents comprise cash in
hand and short-term deposits. Bank overdrafts are shown within borrowings in
current liabilities on the Statement of Financial Position.
Capital Contributions
A capital contribution represents irrevocable, non-repayable amounts
contributed from connected parties. Capital contributions are accounted for as
a contribution when they are approved, through the profit and loss account
reserve.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Where the
issuance of the new shares or options occurs in a subsequent period from when
the incremental costs are incurred these costs are prepaid until the issuance
takes place.
Share Based Payments
The Group has an equity settled employee incentive plan. The cost of equity
settled transactions with employees is measured by reference to the fair value
at the date at which they are granted and is recognised as an expense over the
vesting period, which ends on the date on which the relevant employees become
fully entitled to the award. Fair value is determined using an appropriate
pricing model. In valuing equity-settled transactions, no account is taken of
any vesting conditions, other than conditions linked to the price of the
shares of the Group. No expense is recognised for awards that do not
ultimately vest.
At each reporting date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired and
management's best estimate of the achievement or otherwise of non-market
conditions number of equity instruments that will ultimately vest. The
movement in cumulative expense since the previous reporting date is recognised
in the profit and loss within administration expenses, with a corresponding
entry in the balance sheet in share options reserve.
Where the terms of an equity-settled award are modified or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative. Where an
equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any cost not yet recognised in the Statement of
Comprehensive Income for the award is expensed immediately.
Trade Payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not,
they are presented as non-current liabilities. Trade payables are recognised
initially at fair value, and subsequently measured at amortised cost using the
effective interest method.
Leases
The Group leases office premises and motor vehicles under rental contracts for
fixed periods but may contain extension options. Lease terms are negotiated on
an individual basis and contain different terms and conditions. The lease
agreements entered into by the Group do not impose any covenants other than
the security interests in the leased assets that are held by the lessor.
From 1 January 2019 leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for
use by the Group. Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
· Fixed payments less any lease incentives receivable;
· Variable lease payments that are based on an index or a rate;
· The exercise price of a purchase option if the Group is reasonably
certain to exercise that option; and
· Payments of penalties for terminating the lease.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined the lessee's incremental
borrowing rate is used. Lease payments are allocated between principal and
finance cost. The finance charge is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining
balance of the liability.
Payments associated with short-term leases (12 months or less) and leases of
low-value assets are recognised on a straight-line basis as an expense in
profit or loss.
Current and Deferred Income Tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised directly in equity. In this case the tax is also recognised
directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Financial Statements. However, the deferred tax is not
accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the time of the
transaction, affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted, or
substantially enacted, by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised, or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised. Deferred income tax assets and
liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred
income tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
Research and development tax credit
The Group undertakes certain research and development activities that qualify
for the receipt of a research and development (R&D) tax credit from the
Irish tax authorities. Such grants are recognised as a credit against related
costs on a cash receipts basis.
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial Assets
Initial Recognition and Measurement
In accordance with IFRS9, 'Financial Instruments' the Group has classified its
financial assets as 'Financial assets at amortised cost'. The Group determines
the classification of its financial assets at initial recognition. All
financial assets are recognised initially at fair value plus, in the case of
assets not at fair value through the Statement of Comprehensive Income,
transaction costs that are attributable to the acquisition of the financial
asset and expected credit losses based on historical collection experience of
similar assets.
Subsequent Measurement
The subsequent measurement of financial assets depends on their classification
as described below:
Financial Assets Carried at Amortised Cost
This category applies to trade and other receivables due from customers in the
normal course of business. All amounts which are not interest bearing are
stated at their recoverable amount, being invoice value less provision for any
expected credit losses. These assets are held at amortised cost. The group
classifies its financial assets as at amortised cost only if both of the
following criteria are met:
I. the asset is held within a business model with the objective of
collecting the contractual cash flows; and
II. the contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal outstanding.
Financial assets at amortised cost comprise current trade and other
receivables due from customers in the normal course of business and cash and
cash equivalents. The Group does not hold any material financial assets at
fair value through other comprehensive income or at fair value through the
Statement of Comprehensive Income. The Group does not hold any derivatives and
does not undertake any hedging activities.
Trade receivables are initially recognised at their transaction price. The
group does not expect to have any contracts where the period between the
transfer of the promised goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the group does not adjust any of
the transaction prices for the time value of money. Other financial assets are
recognised initially at fair value plus transaction costs that are directly
attributable to the acquisition of the financial asset. Trade and other
receivables are subsequently measured at amortised cost less provision for
expected credit losses.
Impairment of Financial Assets
The Group assesses on a forward looking basis the expected credit losses
associated with its financial assets measured at amortised cost. The Group
applies the simplified approach to providing for expected credit losses
prescribed by IFRS 9, which permits the use of the lifetime expected loss
provision for all trade receivables. To measure the expected credit losses,
trade receivables have been grouped based on shared credit risk
characteristics and the days past due. For other financial assets at amortised
cost, the Group determines whether there has been a significant increase in
credit risk since initial recognition. The Group recognises twelve month
expected credit losses if there has not been a significant increase in credit
risk and lifetime expected credit losses if there has been a significant
increase in credit risk.
Expected credit losses incorporate forward looking information, take into
account the time value of money when there is a significant financing
component and are based on days past due; the external credit ratings of its
customers; and significant changes in the expected performance and behaviour
of the borrower.
Financial assets are written off when there is no reasonable expectation of
recovery. Where receivables have been written off, the Group continues to
engage in enforcement activity to attempt to recover the receivable due. Where
recoveries are made, these are recognised in the Statement of Comprehensive
Income.
Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognised initially at fair value net of
directly attributable transaction costs.
The Group's financial liabilities include trade and other payables.
After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest rate
method (EIR). Gains and losses are recognised in the Statement of
Comprehensive Income when the liabilities are derecognised as well as through
the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance costs in the Statement of Comprehensive
Income. This category generally applies to interest-bearing loans and
borrowings.
Derecognition of Financial Assets and Liabilities
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is derecognised when: (1) The rights
to receive cash flows from the asset have expired, or (2) The Group has
transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a
third party under a 'pass-through' arrangement, and either (a) the Group has
transferred substantially all the risks and rewards of the asset, or (b) the
Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the assets.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the Statement of Comprehensive
Income.
New Standards, amendments, and interpretations not adopted by the group
The group did not adopt any new standards, amendments or interpretations in
year as they did not have a material impact on the financial statements.
New standards, amendments, and interpretations issued but not effective for
the period ended 31 December 2023, and not early adopted
A number of new standards and amendments to standards and interpretations are
effective for annual periods beginning on or after 1 January 2023 and have not
been applied in preparing these financial statements:
o Amendments to IAS 1
o Amendments to IAS 8
o Amendments to IAS 12
o Amendments to IFRS 17
None of these is expected to have a significant effect on the financial
statements of the Group or Parent Company.
3. Segment Reporting
2023 2022
Revenue by Type € €
ENGAGE revenue
Education License Revenue 1,165,294 823,648
Enterprise License Revenue 1,007,204 1,527,700
Professional Services Revenue 1,133,483 981,870
Total ENGAGE Revenue 3,305,981 3,333,218
Showcase Experience Revenue 324,924 373,979
Other Revenue 59,792 161,377
Total Revenue 3,690,697 3,868,574
Education License Revenue is comprised of license revenue derived from
customers with an education focus.
Enterprise License Revenue is comprised of licence revenue derived from
customers with an enterprise focus.
Professional Services Revenue includes revenue from custom development work
performed by the ENGAGE Studio team and also revenue generated from one off VR
events.
Showcase Experience Revenue includes revenue from the sale of our showcase
experiences including Apollo 11 VR, Titanic VR and Shuttle Commander on the
Oculus, Steam and PlayStation Stores.
Other Revenue includes revenue from VR installations within museums.
4. Capital Management
For the purpose of the Company's capital management, capital includes issued
capital, share premium and all other equity reserves. The primary objective of
the Group's capital management is to maximise the shareholder value.
Group 2023 2022
€ €
Lease liabilities (87,268) (7,882)
Trade and other payables (615,237) (1,222,488)
Less: cash and short-term deposits 7,911,079 2,209,169
Net Funds 7,208,574 978,799
Equity 8,527,635 2,480,358
Total Equity 8,527,635 2,480,358
Capital and net funds 15,736,209 3,459,157
5. a. Expenses by nature
2023 2022
€ €
Depreciation charges 106,179 80,448
Amortisation expense 39,492 386,962
Operating Lease Payments 26,848 38,833
Foreign Exchange Loss / (Gain) 103,229 (2,785)
Staff Costs 5,272,155 5,729,751
Contractor Costs 1,250,703 1,772,886
Research & Development Tax Credit Received (435,954) (267,039)
Other Expenses 1,568,762 2,103,822
Total cost of sales and administrative expenses 7,931,414 9,842,878
Disclosed as:
Cost of sales 379,640 709,018
Administrative expenses 7,551,774 9,133,860
Total cost of sales and administrative expenses 7,931,414 9,842,878
b. Auditor Remuneration
Services provided by the Company's auditor
During the year, the Company obtained the following services from the
Company's auditor:
2023 2022
€ €
Fees payable to the Company's auditor for the audit of the financial
statements
51,000 46,600
6. Employees
Employee Benefit Expense 2023 2022
€ €
Wages and salaries 4,690,144 5,118,777
Social security costs 458,064 528,015
Defined contribution pension costs 62,368 60,226
Share option expense 61,579 22,733
Total Employee Benefit Expense 5,272,155 5,729,751
Average Number of People Employed 2023 2022
Average number of people (including executive Directors)
employed:
Operations 53 69
Administration 4 4
Sales, Marketing and Customer Support 10 12
Total Average Headcount 67 85
7. Directors remuneration
Below is the Directors' remuneration for the Year Ended 31 December 2023 and
for the year ended 31 December 2022
31 December 2023
Salaries and fees Pension benefits Options / Warrants issued Total
Group
€ € € €
Executive Directors
David Whelan 235,875 6,445 20,686 263,006
Sandra Whelan 183,792 5,870 20,686 210,348
Séamus Larrissey 157,750 6,380 5,092 169,222
Non-executive Directors
Richard Cooper 90,981 - - 90,981
Praveen Gupta - - - -
Kenny Jacobs 29,688 - - 29,688
698,085 18,695 46,464 763,245
31 December 2022
Salaries and fees Pension benefits Options / Warrants issued Total
Group
€ € € €
Executive Directors
David Whelan 292,125 5,930 - 298,055
Sandra Whelan 234,208 5,870 - 240,078
Séamus Larrissey 200,250 7,188 - 207,438
Non-executive Directors
Richard Cooper 85,671 - 2,783 88,454
Praveen Gupta - - - -
Kenny Jacobs 27,313 - - 27,313
839,567 18,988 2,783 861,338
The options issued are a non-cash amount and are accounted for in line with
the treatment of the other share options issued to employees under IFRS 2.
Further notes on Share Based Payments are included in Note 20.
8. Finance Costs
2023 2022
€ €
Interest expense:
- Lease interest 4,305 1,099
- Bank charges 2,661 29,482
Total finance costs 6,966 30,581
9. Finance Income
2023 2022
€ €
Bank Interest Received 193,605 -
Total finance income 193,605 -
10. Income Tax
2023 2022
€ €
Current tax:
Current tax on loss for the year - -
Total current tax - -
Deferred tax (Note 23) - -
Income Tax - -
The tax assessed for the year differs from that calculated using the standard
rate of corporation tax in Ireland (12.5%). The differences are explained
below:
2023 2022
€ €
Loss Before Tax (4,054,078) (6,004,885)
Tax calculated at domestic tax rates applicable to loss in
Ireland of 12.5% (506,760) (750,611)
Tax effects of:
- Depreciation in excess of capital allowances 7,166 4,110
- Expenses not deductible for tax purposes (52,917) 18,113
- Tax losses for which no deferred tax asset was recognised 552,511 728,388
Total tax - -
11. Earnings per share (EPS)
2023 2022
Loss attributable to equity holders of the Group: € €
Continuing Operations (4,054,078) (6,004,885)
484,149,493 290,451,146
Weighted average number of shares for Basic EPS
Effects of dilution from share options and warrants 19,404,283 23,741,560
Weighted average number of ordinary shares adjusted for the effect of dilution 503,553,776 314,192,706
Basic loss per share from continuing operations (0.008) (0.021)
Diluted loss per share from continuing operations (0.008) (0.019)
12. Property, Plant & Equipment
Fixtures,
Leasehold fittings and equipment Office Right of use
Group improvements Equipment assets Total
€ € € € €
Cost of Valuation
At 1 January 2022 20,341 7,025 294,582 156,031 477,979
Additions - - 74,458 - 74,458
At 31 December 2022 20,341 7,025 369,040 156,031 552,437
Additions - - 17,465 116,357 133,822
Disposals - - - (145,702) (145,702)
At 31 December 2023 20,341 7,025 386,505 126,686 540,557
Depreciation
At 1 January 2022 20,341 6,756 213,168 135,639 375,904
Charge (note 5) - 269 67,670 12,509 80,448
At 31 December 2022 20,341 7,025 280,838 148,148 456,352
Charge (note 5) - - 69,207 36,972 106,179
Disposals - - - (145,702) (145,702)
At 31 December 2023 20,341 7,025 350,045 39,418 416,829
Net Book Amount
At 31 December 2022 - - 88,202 7,883 96,085
At 31 December 2023 - - 36,460 87,268 123,728
Depreciation expense of €106,179 (2022: €80,448) has been charged in
'Administrative Expenses'.
Right of use asset relates to properties and vehicles
held under lease.
13. Intangible Assets
Software in development costs
Group Total
€ €
Cost
At 31 December 2022 and 31 December 2023 2,136,231 2,136,231
Amortisation
At 1 January 2022 1,709,777 1,709,777
Charge 386,962 386,962
At 31 December 2022 2,096,739 2,096,739
Charge 39,492 39,492
At 31 December 2023 2,136,231 2,136,231
Net Book Value
At 31 December 2022 39,492 39,492
At 31 December 2023 - -
The software being developed relates to the creation of virtual reality
experiences and an online virtual learning and corporate training platform.
ENGAGE is an online virtual learning and corporate training platform currently
in development by the Company. A desktop version was released in December 2018
and the mobile version was released in December 2019. Amortisation commenced
when the mobile version launched.
Titanic VR which is available for sale across all major VR capable platforms
since November 2018 has commenced being amortised in the period. Raid on the
Ruhr launched during 2019 and amortisation commenced during the period. Space
Shuttle launched during 2020 and amortisation commenced during the period.
Amortisation expense of €39,492 (2022: €386,962) has been charged in
'Administrative Expenses'.
An impairment review was carried out at the balance sheet date. No impairment
arose.
14. Investments in Subsidiaries
Company €
At 1 January 2022 30,477,062
Additions 100,000
Repayment of Capital contributions (209,025)
Impairment Adjustment (11,602,935)
At 31 December 2022 18,765,102
Capital contributions 3,759,402
Impairment Adjustment (10,157,911)
At 31 December 2023 12,366,593
Investments in subsidiaries are recorded at cost, which is the fair value of
the consideration paid.
On 12 March 2018, the Company acquired all of the issued capital of ENGAGE XR
Limited for a consideration of €15,000,000 which was settled by issuing
133,089,739 Ordinary Shares in the Company. The Company incurred expenses
totalling €28,809 as part of the transaction.
On 31 December 2021 the Company resolved to enter into a capital contribution
agreement with ENGAGE XR Limited to facilitate the funding of the wholly owned
subsidiary. An amount of €3,759,402 was forwarded during 2021 (2022:
€209,025 repaid) to ENGAGE XR Limited to the Company during 2023. A
repayment arises if ENGAGE XR Limited holds excess funds in a particular
currency that is required by ENGAGE XR Holdings PLC to meet its liabilities as
they fall due.
On 14 July 2022 the Company acquired all of the issued share capital of ENGAGE
XR LLC for a consideration of $100,000.
The Board have recognised an impairment adjustment of €10,157,911 (2022:
€11,602,935) in the current year to reflect the market capitalisation of the
group at 31 December 2023.
Country of incorporation and residence Proportion of equity shares held by the company
Name Nature of business
Virtual Reality Technology
ENGAGE XR Limited Ireland 100%
Virtual Reality Technology
ENGAGE XR LLC USA 100%
This subsidiary undertakings are included in the consolidation. The proportion
of the voting rights in the subsidiary undertakings held directly by the
Parent Company does not differ from the proportion of ordinary shares held.
15. Trade and Other Receivables
Current Group Company
2023 2022 2023 2022
€ € € €
Trade receivables 591,665 552,836 - -
Less: provision for impairment of receivables - - - -
Trade receivables - net 591,665 552,836 - -
Prepayments 156,820 325,413 24,603 2,258
Accrued income 432,029 446,102 - -
Other debtors 3,100 3,100 - -
VAT 11,719 38,531 821 1,234
1,195,333 1,365,982 25,424 3,492
As at 31 December 2023, trade receivables of €591,665 (2022: €552,836)
were fully performing and deemed fully recoverable. No bad debt provision
charge was incurred during 2023 (2022: €Nil).
The Group assesses exposure to credit risk arising from outstanding
receivables on an annual basis. The maximum exposure to credit risk at the
reporting date is the carrying value of each of the receivables above. The
Group does not consider the credit risk of any receivable has increased post
recognition.
The Group does not expect any losses from outstanding receivables in the
current year.
The carrying amounts of the Company's trade and other receivables are
denominated in the following currencies:
Group Company
2023 2022 2023 2022
€ € € €
Euro - Neither past due nor impaired 186,075 335,635 - -
Dollar - Neither past due nor impaired 405,590 217,201 - -
591,665 552,836 - -
16. Cash and short-term deposits
Group Company
2023 2022 2023 2022
€ € € €
Cash at bank and on hand 7,911,079 2,209,169 5,791,641 486,170
7,911,079 2,209,169 5,791,641 486,170
17. Issued Share Capital and Premium
Number of shares Ordinary shares Share premium Total
€ € €
At 1 January 2022 and At 31 December 2022 290,451,146 290,451 33,503,300 33,793,751
Ordinary Shares Issued 234,375,000 234,375 10,406,762 10,641,137
At 31 December 2023 524,826,146 524,826 43,910,062 44,434,888
As at 31 December 2023 the number of shares authorised for issue were
524,826,146 (2022: 290,451,146). The par value of the shares authorised for
issue were €0.001 each (2022: €0.001 each).
On 6 March 2023 following a successful placing, an amount of €10.6 million
was raised by the Group and 234,375,000 ordinary shares were issued at an
issue price of €0.0454 per share (GBP £0.04 per share). Net proceeds
after expenses were €10.0 million.
18. Other Reserves
Group Company
€ €
At 1 January 2022 (11,775,474) (694,055)
Share option expense 22,733 2,783
At 31 December 2022 (11,752,741) (691,272)
At 1 January 2023 (11,752,741) (691,272)
Share issue costs (601,362) (601,362)
Share option expense 61,580 46,462
At 31 December 2023 (12,292,523) (1,246,172)
19. Retained Earnings
Group Company
€ €
At 1 January 2022 (13,555,767) (1,223,374)
Loss for the year (6,004,885) (12,777,885)
At 31 December 2022 (19,560,652) (14,001,259)
At 1 January 2023 (19,560,652) (14,001,259)
Loss for the year (4,054,078) (11,079,990)
At 31 December 2023 (23,614,730) (25,081,249)
Capital contributions represent irrevocable, non-repayable amounts contributed
from connected parties.
20. Share Based Payments
Following the successful completion of the equity placing earlier this year,
the Remuneration Committee evaluated appropriate solutions to put in place
suitable longer-term incentives aimed at aligning the interests of employees
and shareholders. The option grant also assists with the retention and
motivation of key employees of the Company as the Company looks to deliver
against the strategic opportunity outlined at the time of the placing. The
Options will provide the potential for rewards only if shareholders benefit
from sustained growth in shareholder value over the coming years.
New Scheme
Under this new option grant there were 38,493,393 employee options granted
during 2023 at an exercise price of €0.046 per share. The Options were
granted at a price of GBP£0.04 each (€0.046) and cannot be exercised for at
least three years from the date of grant (other than on a change of control).
The Options have performance criteria linked to the future share price
performance of the Company with:
- One third of the Options being capable of exercise if the five day
volume-weighted average price preceding the date of such exercise was 12 pence
or higher; and
- One third of the Options being capable of exercise if the five day
volume-weighted average price preceding the date of such exercise was 16 pence
or higher; and
- One third of the Options being capable of exercise if the five day
volume-weighted average price preceding the date of such exercise was 20 pence
or higher.
The Options will vest in full on a change of control provided a minimum price
threshold of 10 pence per share is met. Options expire at the end of a period
of 7 years from the Grant Date or on the date on which the option holder
ceases to be an employee.
The movement in employee share options under the new option grant and weighted
average exercise prices are as follows for the reporting periods presented:
2023 2022
At 1 January - -
Granted during period 38,493,393 -
Exercised during period - -
Forfeited during period - -
At 31 December 38,493,393 -
Options outstanding at 31 December
Number of shares 38,493,393 -
Weighted average remaining contractual life 6.59 -
Weighted average exercise price per share €0.046 -
Range of exercise price €0.046 -
Exercisable at 31 December
Number of shares - -
Weighted average exercise price per share - -
The Company has measured the fair value of the services received as
consideration for equity instruments of the Company, indirectly by reference
to the fair value of the equity instruments. The table below sets out the
options and warrants that were issued during the period and the principal
assumptions used in the Monte Carlo valuation model.
Employee
Number of options 38,493,393
Grant date 3 August
Vesting period 3 years
Share price at date of grant €0.037
Exercise price €0.046
Option life 7 years
Dividend yield 0%
Staff Retention Rate 90%
Risk free investment rate 4.47%
Fair value per option at grant date €0.0235
Weighted average remaining contractual life in years 6.59
The expected life is based on historical data and current expectations and is
not necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumptions that the historical volatility over a
period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome.
Old Scheme
No new options were granted in 2023 under the old scheme (2022: 285,714).
The existing options from the old scheme vest subject to continued service by
the employee over a period of 3 years. Options expire at the end of a period
of 7 years from the Grant Date or on the date on which the option holder
ceases to be an employee.
The Company has measured the fair value of the services received as
consideration for equity instruments of the Company, indirectly by reference
to the fair value of the equity instruments using the Black Scholes valuation
model.
The movement in employee share options and weighted average exercise prices
are as follows for the reporting periods presented:
2023 2022
At 1 January 4,404,127 4,118,413
Granted during period - 285,714
Exercised during period - -
Forfeited during period (819,047) -
At 31 December 3,585,080 4,404,127
Options outstanding at 31 December
Number of shares 3,585,080 4,404,127
Weighted average remaining contractual life 1.63 1.30
Weighted average exercise price per share €0.022 €0.047
Range of exercise price €0.0001 - €0.135 €0.0001 - €0.20
Exercisable at 31 December
Number of shares 3,585,080 2,718,413
Weighted average exercise price per share €0.022 €0.031
The total expense recognised in respect of all employee share-based payments
and credited to the share-based payment reserve in equity was €61,579 (2022:
€22,733).
21. Leases
Amounts recognised in the Statement Of Financial Position
The Statement Of Financial Position shows the following amounts relating to
leases:
Group Company
Right of Use Assets 2023 2022 2023 2022
€ € € €
Buildings 62,741 - - -
Vehicles 24,527 7,883 - -
87,268 7,883 - -
Group Company
Lease Liabilities 2023 2022 2023 2022
€ € € €
Current 52,728 7,882 - -
Non-current 34,540 - - -
87,268 20,393 - -
Amounts recognised in the Consolidated Statement Of Total Comprehensive Income
The Consolidated Statement Of Total Comprehensive Income shows the following
amounts relating to leases:
Depreciation charge of right-of-use assets 2023 2022
€ €
Buildings 20,914 1,813
Vehicles 16,058 10,696
36,972 12,509
Interest expense (included in finance cost) 4,305 1,099
22. Trade and Other Payables
Group Company
2023 2022 2023 2022
€ € € €
Trade Payables 113,622 323,684 5,107 6,362
Amounts Due to Related Parties - - - 100,000
PAYE/PRSI 133,622 225,179 25,850 11,508
VAT - - - -
Deferred Income 115,902 259,111 - -
Accrued Expenses 252,091 414,514 45,234 35,674
615,237 1,222,488 76,191 153,544
Terms and conditions of the above financial
liabilities:
· Trade payables are non-interest bearing and are normally settled on
30-day terms
· Amounts Due to Related Parties are non-interest bearing and are
settled over varying terms throughout the year
· PAYE/PRSI payables are non-interest bearing and are normally settled
on 30-day terms
· VAT payables are non-interest bearing and are normally settled on
60-day terms
· Deferred income is non-interest bearing and are settled over varying
terms throughout the year
· Accrued expenses are non-interest bearing are settled over varying
terms throughout the year
23. Deferred Tax
Deferred income tax assets are recognised for tax loss carry-forwards to the
extent that the realisation of the related tax benefit through future taxable
profits is probable. The Company did not recognise deferred income tax assets
of €2,647,206 (2022: €2,087,214) in respect of losses and depreciation in
excess of capital allowances amounting to €21,177,648 (2022: €16,697,710)
that can be carried forward against future taxable income.
24. Related Parties
During the year the Directors received the following emoluments:
Group Company
2023 2022 2023 2022
Directors € € € €
Aggregate emoluments 716,781 839,567 716,781 839,567
Share option expense 46,463 2,783 46,463 2,783
763,244 842,350 763,244 842,350
Included in the above is an amount of €90,981 (2022: €85,671) paid to
Luclem Estates and Advisory Limited, a company in which Richard Cooper, a
director of the Company, is also a director. These fees relate to Richard
Cooper's consultancy services to the Company. As at 31 December 2023 €Nil
was outstanding.
25. Capital Management
The capital of the company is managed as part of the capital of the group as a
whole. Full details are contained in note 4 to the consolidated financial
statements.
26. Events after the reporting date
The Company has evaluated all events and transactions that occurred after 31
December 2023 up to the date of signing of the financial statements.
No material subsequent events have occurred that would require adjustment to
or disclosure in the financial statements.
27. Contingent Liabilities
The company has indicated that it will guarantee the liabilities (as defined
in Section 397 of the
Companies Act 2014) of €626,013 (2022: €1,176,828) its Irish subsidiary,
ENGAGE XR Limited for the Year Ended 31 December 2023.
28. Ultimate controlling party
The Directors believe that there is no ultimate controlling party as no one
shareholder has control of the Company.
1 (#_ftnref1) K-12 refers to publicly supported primary and secondary
education in the United States running from kindergarten to 12(th) grade
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UUONRSSUSAARRecent news on ENGAGE XR Holdings
See all newsREG - Engage XR Holdings Canaccord Gen Grp - Holding(s) in Company
AnnouncementREG - Engage XR Holdings - Holding(s) in Company
AnnouncementREG - Engage XR Holdings - Result of AGM
AnnouncementREG - Engage XR Holdings - Notice of AGM & Posting of Annual Report
AnnouncementREG - Engage XR Holdings - Board and Committee Changes
Announcement