NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

 

1   GENERAL INFORMATION

 

Let's Explore Group plc is a public limited company incorporated and domiciled in the United Kingdom. The address of the registered office is Cumberland Court, 80 Mount Street, Nottingham, England, NG1 6HH. The Group is listed on AIM.

 

The principal activities of the Group during the year were: (i) the provision of virtual reality (VR) experiences to partner sites and via its own ImmotionVR sites; (ii) the sale of the Let's Explore virtual and augmented reality consumer product; and (iii) the sale of UV sanitisation equipment.  Activities (i) and (iii) are treated as discontinued operations in these financial statements.

 

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 2.

 

2   ACCOUNTING POLICIES

 

Principal accounting policies

The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

 

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the United Kingdom ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs. The financial statements are presented to the nearest round thousand (£'000) except when otherwise indicated.

 

Basis of Consolidation

The Group comprises a holding company and a number of subsidiaries and all of these have been included in the consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business Combinations.

 

Going concern

At the time of approving the financial statements, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.  The going concern basis of accounting has therefore been adopted in preparing the financial statements.  

In reaching this conclusion, the Directors have considered the financial position of the Group following receipt of the sale proceeds from the LBE business, together with its forecasts and projections for the next 12 months, taking into account reasonably possible changes in trading performance and capital expenditure requirements.

 

The financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

 

Business combinations and goodwill

Acquisitions of subsidiaries and business are accounted for using the acquisition method. The assets and liabilities and contingent liabilities of the subsidiaries are measured at their fair value at the date of acquisition. Any excess of acquisition over fair values of the identifiable net assets acquired is recognised as goodwill. Goodwill arising on consolidation is recognised as an asset and reviewed for impairment twice annually. Any impairment is recognised immediately in profit or loss accounts and is not subsequently reversed. Acquisition related costs are recognised in the income statement as incurred.

 

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

 

Location Based Entertainment

Partner revenue is recognised on the date which the sale to the customer takes place. The Group acts as the principal in the transaction and therefore recognises the revenue charged to the end user in full with the concession partners' shares deducted as a cost of sale.

 

Home Based Entertainment

For sales to consumers, revenue is recognised on sales of the Let's Explore and Vodiac products in the period in which the corresponding order is placed and paid for.  For sales to resellers, revenue is recognised in the period in which delivery to the reseller takes place.

 

  Uvisan and other hardware sales

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

 

·    the Group has transferred the significant risks and rewards of ownership to the buyer;

·    the Group retains neither continuing managerial involvement to the degree usually associated with     ownership nor effective control over the goods sold;

·    the amount of revenue can be reliably measured;

·    it is probable that the Group will receive the consideration due under the transaction; and

·    the costs incurred or to be incurred in respect of the transaction can be reliably measured.

 

Content

Content licensing revenue is recognised on the date on which the related sale of that content by the licensee takes place where agreements do not provide for new or updated content to be supplied.  Where the Group is committed under licensing agreements to producing new content, or material updates, revenue is recognised over the period of the agreement. No element of financing is deemed present as the sales are made with standard credit terms of 30 days which is consistent with market practice. The Group does not expect to have any contracts where the period between the transfer of the promised services or goods 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.

 

Leases

The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. In the latter cases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

 

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability comprise fixed lease payments (including in-substance fixed payments), less any lease incentives.

 

The lease liability is included in liabilities in the Statement of Financial Position.

 

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the payments made.

 

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

 

The right-of-use assets are included in the property, plant and equipment in the Statement of Financial Position.

 

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment losses where applicable.

 

Foreign currency

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pound sterling, which is the functional currency of the Group, and the presentational currency for the consolidated financial statements.

 

In preparing the financial statements of the individual companies, transactions in currencies other than the Group company's functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At the reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of the gain or loss is also recognised directly in equity.

 

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income and expense in the period of the disposal of the operation. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates.

 

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life.

 

The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.

 

The method of depreciation for each class of depreciable asset is:

 

Leasehold property                                      - Over term of lease

Fixtures, fittings and equipment                   - Between 3 and 7 years on a straight-line basis

IFRS 16 right of use assets                          - Over term of lease

 

Intangible assets

Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference between the fair value of the consideration payable and the fair value of the net assets that have been acquired. The residual element of goodwill is not being amortised but is subject to twice-annual impairment review.

Internally-generated intangible assets

An internally-generated intangible asset arising from the Group's development activities is capitalised and held as an intangible asset in the statement of financial position when the costs relate to a clearly defined project; the costs are separately identifiable; the outcome of such a project has been assessed with reasonable certainty as to its technical feasibility and its ultimate commercial viability; the aggregate of the defined costs plus all future expected costs in bringing the product to market is exceeded by the future expected sales revenue; and adequate resources are expected to exist to enable the project to be completed. Internally generated intangible assets are amortised over their estimated useful lives, being between 3 and 7 years from completion of development. Other development expenditure is recognised as an expense in the income statement in the period in which it is incurred.

 

Impairment of assets

Impairment tests on goodwill are undertaken twice-annually. The recoverable value of goodwill is estimated on the basis of value in use, defined as the present value of the cash generating units with which the goodwill is associated. When value in use is less than the book value, an impairment is recorded and is irreversible.

 

Other non-financial assets are subject to impairment tests whenever circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its estimated recoverable value (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable value of an individual asset, the impairment test is carried out on the asset's cash-generating unit. The carrying value of property, plant and equipment is assessed in order to determine if there is an indication of impairment. Any impairment is charged to the statement of comprehensive income. Impairment charges are included under administrative expenses within the consolidated statement of comprehensive income. 

 

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

 

Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument.

 

The Group recognises lifetime expected credit losses for trade receivables and amounts due on contracts with customers when appropriate. The expected credit losses on these financial assets are estimated based on the Group's historical credit loss experience, adjusted for facts that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecasted conditions at the reporting date, including time value of money where appropriate. Lifetime expected credit losses are losses which will result from all possible default events over the expected life of a financial instrument.

 

Contract assets

Contract assets are recognised when the Group has satisfied a performance obligation but cannot recognise a receivable until other obligations are satisfied. Contract assets represent a right to payment that is conditional on further performance while receivables represent an unconditional right to payment.

 

Contract liabilities

Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to contract performance obligations not being completed. They are classified as current liabilities if the contract performance obligations are due to be completed 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. Contract liabilities are recognised initially at fair value and subsequently at amortised cost.

 

Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value, and subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in profit or loss.

 

Cash and cash equivalents

Cash and cash equivalents are recognised as financial assets. They comprise cash held by the Group and short-term bank deposits with an original maturity date of three months or less.

 

Trade payables

Trade payables are initially recognised as financial liabilities measured at fair value, and subsequent to          initial recognition are measured at amortised cost.

Bank borrowings

Interest bearing bank loans, overdrafts and other loans are recognised as financial liabilities and recorded at fair value, net of direct issue costs. Finance costs are accounted for on an amortised cost basis in the income statement using the effective interest rate.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deduction of all its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight-line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

Where share options are cancelled due to employees leaving the Group's employment before they have vested, cumulative share based payment expenses recognised in respect of those employees are reversed through the statement of comprehensive income.

 

Where share options are replaced the fair value of the replaced options at the date of grant continues to be recognised through the statement of comprehensive income in addition to a charge equating to the incremental value of the new options granted.

 

Fair value is calculated either using the Monte-Carlo model or Black-Scholes model.

Pensions

The pension schemes operated by the Group are defined contribution schemes. The pension cost charge represents the contributions payable by the Group.

Taxation and deferred taxation

Corporation tax payable is provided on taxable profits at prevailing rates.

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

 

·      the initial recognition of goodwill; and

·      the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the asset can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

 

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

·      the same taxable Group company; or

·      different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Government grants

The Group recognises government grants when it has reasonable assurance that it will comply with the relevant conditions and the grant will be received.

 

Grants related to income are recognised in the profit and loss account in line with the recognition of the expenses that the grants are intended to compensate. Such grants are presented as income and are not deducted from the related expenditure.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Directors, who are responsible for allocating resources and assessing performance of the operating segments.

 

A business segment is a group of assets and operations, engaged in providing products or services that are subject to risks and returns that are different from those of other operating segments.

 

A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. The Executive Directors assess the performance of the operating segments based on the measures of revenue, adjusted EBITDA, profit before taxation and profit after taxation. Central overheads are not allocated to business segments.

Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

 

The criteria for held for sale classification is regarded as met only when the sale is highly probable, the asset or disposal group is available for immediate sale in its present condition and the sale is expected to complete within one year from the date of the classification.

 

Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.

 

The Location Based Entertainment (LBE) and Uvisan divisions have been classified as discontinued operations in the consolidated statement of comprehensive income and the prior period comparatives have been restated for consistency.

 

Administrative expenses which the Group will continue to incur following the sale of the disposal groups are included within continuing operations and costs which will cease on disposal are included in discontinued operations.

 

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss.

 

Details of discontinued operations are shown in note 5.  All other notes to the financial statements include amounts for continuing operations only, unless otherwise stated.

 

3   CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

 

In the application of the Group's accounting policies, which are described in note 2, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on experience and other factors considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The following are the critical judgments and estimations that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

 

Critical accounting judgments

Discontinued operations

The Directors assessed and concluded that the sale of the Location Based Entertainment (LBE) and Uvisan businesses were highly probable to take place within 12 months of the reporting date.  Therefore, the results of both divisions have been included within discontinued operations in accordance with IFRS 5.

Revenue recognition

Location Based Entertainment revenue is accounted for on the basis that the Group acts as the principal in the transactions between partners and customers. Gross sales of services by partners to end customers are reported to the Group regularly and are included within the Group's turnover without any deductions.

 

For sales to consumers, revenue from the sale of Let's Explore and Vodiac products is recognised on receipt of payment, which is a condition for an order to be accepted. The price paid by the consumer excluding sales taxes is recognised as revenue.  At each accounting date provision is made for refunds to be made for orders received and paid for, prior to the accounting date. This provision is based on past experience of the level of refund applications received.

 

For sales to resellers, revenue from the sale of Let's Explore and Vodiac products is recognised in the period in which delivery to the reseller takes place. The price paid by the reseller is recognised as revenue.

 

The revenue for the sale of Uvisan products and other hardware is recognised once the benefits and control of these items are no longer with the Group and are instead with the customer. Management exercise judgment to consider when the risks have been transferred to the customer.  For both sales direct to customers and via resellers, the income received by the Group is recognised as revenue.

Recoverability criteria for capitalisation of development expenditure

The Group recognises costs incurred on development projects as an intangible asset which satisfies the requirements of IAS 38. The calculation of the costs incurred includes the percentage of time spent by certain employees on the development project. The decision whether to capitalise and how to determine the period of economic benefit of a development project requires an assessment of the commercial viability of the project and the prospect of selling the project to new or existing customers. An assessment is made as to the future economic benefits of the project and whether an impairment is needed.

Impairment of goodwill

Impairment of the valuation of the goodwill relating to the acquisition of subsidiaries is considered twice annually for indicators of impairment to ensure that the asset is not overstated within the financial statements. The twice annual impairment assessment in respect of goodwill requires estimates of the value in use (or fair value less costs to sell) of subsidiaries to which goodwill has been allocated. As a result, estimates of future cash flows are required, together with an appropriate discount factor for the purpose of determining the present value of those cash flows.

 

Critical accounting estimates

Amortisation of intangible assets

The periods of amortisation adopted to write down capitalised intangible assets and capitalised staff costs requires judgments to be made in respect of estimating the useful lives of the intangible assets to determine an appropriate amortisation rate. Capitalised development costs are being amortised on a straight-line basis over the period when economic benefits are expected to be received, which has been estimated at 3 years.

Depreciation

The useful economic lives of tangible fixed assets are based on management's judgment and experience. When management identifies that actual useful economic lives differ materially from the estimates used to calculate deprecation, that charge is added retrospectively. Due to the significance of tangible fixed assets to the Group, variances between actual and estimated useful economic lives could impact on the operating results both positively and negatively.

Share based payments expense

Non-market performance and service conditions are included in the assumptions about the number of options that are expected to vest. At the end of each reporting period the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to the original estimates, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to equity. This requires a judgment as to how many options will meet the future vesting criteria as well as the judgments required in estimating the fair value of the options. Where options are cancelled, followed by the grant of new options at or close to the time of the cancellations, a key judgment, based on the reasons for the cancellations and the new issues, is made as to the extent to which the new options granted are modifications of, or replacements for, the cancelled options, or new options.

IFRS 16 discount rates

The Group estimates an appropriate discount rate based on an incremental rate of borrowing for the calculation of the IFRS 16 right-of-use assets. This requires judgment as to an appropriate discount rate.

 

 

 

 

 

4     SEGMENTAL INFORMATION

 

A segmental analysis of revenue and expenditure for the year ended 31 December 2022 is below. 

 

	HBE	HO	Total Continuing Operations	Discontinued Operations	Total
	£'000	£'000	£'000	£'000	£'000
Revenue	796	-	796	10,781	11,577
Cost of sales	(865)	-	(865)	(5,696)	(6,561)
Administrative expenses*	(143)	(1,370)	(1,513)	(2,167)	(3,680)
Other operating income	-	-	-	39	39
Adjusted EBITDA**	(212)	(1,370)	(1,582)	2,957	1,375
Depreciation	-	(1)	(1)	(1,035)	(1,036)
Amortisation	(158)	(10)	(168)	(433)	(601)
Impairment: intangible assets	-	-	-	(78)	(78)
Impairment: assets held for sale	-	-	-	(97)	(97)
Profit on disposal	-	-	-	19	19
One-off costs	-	(33)	(33)	(12)	(45)
Share based payments	-	(133)	(133)	-	(133)
Finance costs	-	(11)	(11)	(25)	(36)
Finance income	-	-	-	1	1
Taxation	-	-	-	(30)	(30)
	-----------	-------------	----------	------------	------------
(Loss) / profit for the year	(370)	(1,558)	(1,928)	1,267	(661)
	======	======	======	======	======

 

HBE = Home Based Entertainment

HO = Head Office 

 

*Administrative expenses exclude depreciation, amortisation, impairment, profit on disposal, one-off costs and income and share based payments.

 

**Adjusted EBITDA is a non-GAAP metric.

 

 

 

A segmental analysis of revenue and expenditure for the year ended 31 December 2021 is below:

 

	HBE	HO	Total Continuing Operations	Discontinued Operations	Total
	£'000	£'000	£'000	£'000	£'000
Revenue	2,526	-	2,526	6,865	9,391
Cost of sales	(2,427)	-	(2,427)	(3,768)	(6,195)
Administrative expenses*	(212)	(979)	(1,191)	(1,629)	(2,820)
Other operating income	3	5	8	524	532
Adjusted EBITDA**	(110)	(974)	(1,084)	1,992	908
Depreciation	-	-	-	(1,470)	(1,470)
Amortisation	-	(4)	(4)	(637)	(641)
Impairment	-	-	-	(82)	(82)
Profit on disposal	-	-	-	18	18
One-off costs	-	-	-	(51)	(51)
Share based payments	-	(676)	(676)	-	(676)
Finance costs	-	(3)	(3)	(41)	(44)
Finance income	-	-	-	1	1
Taxation	-	-	-	38	38
	----------	------------	--------------	---------------	----------
Loss for the year	(110)	(1,657)	(1,767)	(232)	(1,999)
	=======	=======	=======	=======	=======

 

HBE = Home Based Entertainment

HO = Head Office 

 

*Administrative expenses exclude depreciation, amortisation, impairment, loss on disposal, restructuring costs and share based payments

 

**Adjusted EBITDA is a non-GAAP metric.

 

 

 

The table below splits revenue, assets and capital expenditure by location:

 

		External revenue by location of customer
		2022 £'000	2021 £'000
Continuing operations
USA & Canada		400	1,645
United Kingdom		396	387
Australia		-	443
Other		-	51
		----------	------------
		796	2,526
		=====	======
		Total assets by location		Net tangible capital expenditure by location
		2022	2021	2022		2021
		£'000	£'000	£'000		£'000
United Kingdom		1,062	5,542	3		75
USA & Canada		61	1,969	-		340
Middle East		-	27	-		-
Rest of Europe		-	10	-		7
Australia		-	10	-		3
China		-	3	-		-
Assets held for sale		6,433	-	1,794		-
		------------	------------	-------------		------------
		7,556	7,561	1,797		425
		======	======	======		======

 

5       DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

 

The Location Based Entertainment (LBE) and Uvisan businesses and net assets were in the process of being sold as at 31 December 2022. Both sales were subsequently completed after the reporting date.  Both divisions are deemed to be discontinued operations as they represent separate major lines of business. The results for these businesses have been excluded from the continuing results of the Group for the period ended 31 December 2022. The results for the period ended 31 December 2021 have been restated to exclude the results of these businesses from the continuing operations of the Group in those periods. 

 

Summary income statement

 

The results for LBE and Uvisan included in the income statement as discontinued operations are as follows:

 

	LBE	Uvisan	Total 2022	Restated Total 2021
Discontinued operations	£'000	£'000	£'000	£'000
Revenue	10,241	540	10,781	6,865
Cost of sales	(5,453)	(244)	(5,697)	(3,768)
Other operating income	39	-	39	524
Administrative expenses	(3,482)	(320)	(3,802)	(3,851)
	----------------	----------------	---------------	---------------
Operating profit/(loss)	1,345	(24)	1,321	(230)
Finance costs	(25)	-	(25)	(41)
Finance income	1	-	1	1
	----------------	----------------	-------------	----------------
Profit/(loss) before taxation	1,321	(24)	1,297	(270)
Taxation	(26)	(4)	(30)	38
	----------------	----------------	-------------	----------------
Profit/(loss) from discontinued operations	1,295	(28)	1,267	(232)
	----------------	----------------	-------------	----------------
Adjusted EBITDA	2,851	106	2,957	1,990
Depreciation	(1,028)	(7)	(1,035)	(1,469)
Amortisation	(407)	(26)	(433)	(637)
Impairment of intangible assets	(78)	-	(78)	(83)
Impairment of assets held for sale	-	(97)	(97)	-
Profit on disposal of fixed assets	19	-	19	18
One-off costs	(12)	-	(12)	(51)
	----------------	----------------	-------------	----------------
Operating profit/(loss)	1,345	(24)	1,321	(232)
	----------------	----------------	-------------	----------------

 

LBE - Location Based Entertainment

Uvisan - Sale of UV-C disinfection cabinets

 

The figures included in discontinued operations do not include any allocation of head office costs, details of which can be found in note 4.

 

 

Summary cash flow statement

 

The net cash flows for LBE and Uvisan included in the cash flow statement are as follows:

 

	LBE	Uvisan	Total 2022	Restated Total 2021
Discontinued operations	£'000	£'000	£'000	£'000
Net cash generated from operating activities	3,155	61	3,216	1,008
Net cash used in investing activities	(2,003)	(67)	(2,070)	(805)
Net cash used in financing activities	(105)	-	(105)	(319)
	----------------	----------------	-------------	----------------
Net cash flows generated/(used in) discontinued operations	1,047	(6)	1,041	(116)
	----------------	----------------	-------------	----------------

Net assets held for sale

 

The major classes of assets and liabilities classified as held for sale as at 31 December 2022 were as follows:

 

	LBE	Uvisan	Total
Discontinued operations	£'000	£'000	£'000
Assets
Property, plant and equipment	1,996	23	2,019
Goodwill on consolidation	2,438	-	2,438
Other intangible assets	466	32	498
Cash and cash equivalents	187	91	278
Other assets	1,013	213	1,226
Impairment of assets held for sale	-	(97)	(97)
	------------	------------	------------
Assets held for sale	6,100	262	6,362
	------------	------------	------------
Liabilities
Liabilities directly associated with assets held for sale	(1,136)	(162)	(1,298)
	------------	------------	-----------
Net assets held for sale	4,964	100	5,064
	------------	------------	-----------

 

Other assets comprise inventories, receivables, prepayments and accrued income. Liabilities comprise payables, accruals, deferred income and tax liabilities.

 

 

6	EARNINGS PER SHARE
		2022	2021
		£'000	£'000
	Profit/(loss) after taxation
	Continuing operations	(1,928)	(1,767)
	Discontinued operations	1,267	(232)
		--------------	-------------
	Loss after taxation from all operations	(661)	(1,999)
	Basic weighted average number of shares	415,538,083	414,140,823
	Diluted weighted average number of shares	473,775,097	472,053,826
		============	============
	Continuing and discontinued operations	£0.01	£0.01
	Basic loss per share	(0.16)	(0.48)
	Diluted loss per share	(0.16)	(0.48)
		=======	========
	Continuing operations	£0.01	£0.01
	Basic loss per share	(0.46)	(0.43)
	Diluted loss per share	(0.46)	(0.43)
		========	========
	Discontinued operations	£0.01	£0.01
	Basic earnings/(loss) per share	0.30	(0.05)
	Diluted earnings/(loss) per share	0.30	(0.05)
		========	========

 

Earnings/(loss) per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share or increase the loss per share. Per IAS 33 the diluted EPS cannot show an improvement on the basic EPS. As that would be the result in this case the potential ordinary shares have been disregarded in the calculation of diluted EPS

 

 

 

7	PROPERTY, PLANT AND EQUIPMENT
		Leasehold Property	Fixtures, Fittings & Equipment	Right-of-Use Asset	Total
	Cost	£'000	£'000	£'000	£'000
	At 1 January 2021	380	4,092	806	5,278
	Additions	3	422	-	425
	Disposals	(4)	(1,836)	(169)	(2,009)
	Foreign exchange	-	21	5	26
		-----------	------------	--------------	------------
	At 31 December 2021	379	2,699	642	3,720
		-----------	------------	--------------	------------
	At 1 January 2022	379	2,699	642	3,720
	Additions	71	1,498	228	1,797
	Disposals	(154)	(86)	(659)	(899)
	Foreign exchange Redesignated as held for sale	- (296)	230 (4,338)	42 (253)	272 (4,887)
		-----------	--------------	-------------	------------
	At 31 December 2022	-	3	-	3
		------------	---------------	-------------	------------
	Accumulated depreciation
	At 1 January 2021	226	2,292	500	3,018
	Depreciation on owned assets	92	1,202	-	1,294
	Depreciation on financed assets	-	-	176	176
	Disposals	(3)	(1,817)	(166)	(1,986)
	Foreign exchange	-	24	6	30
		-----------	---------------	--------------	------------
	At 31 December 2021	315	1,701	516	2,532
		-----------	---------------	---------------	------------
	At 1 January 2022	315	1,701	516	2,532
	Depreciation on owned assets	64	816	-	880
	Depreciation on financed assets	-	-	156	156
	Disposals	(153)	(84)	(659)	(896)
	Foreign exchange	-	149	47	196
	Redesignated as held for sale	(226)	(2,582)	(60)	(2,868)
		-------------	--------------	--------------	------------
	At 31 December 2022	-	-	-	-
		-------------	--------------	--------------	------------
	Net Book Value
	At 31 December 2022	-	3	-	3
		=======	=======	=======	======
	At 31 December 2021	64	998	126	1,188
		=======	====-==	=======	======
	At 31 December 2020	154	1,800	306	2,260
		=======	=======	=======	======

 

 

8	INTANGIBLE ASSETS		Goodwill			Other
		Development	Arising on			Intangible
		Costs	Consolidation			Assets			Total
		£'000	£'000			£'000			£'000
	Cost
	At 1 January 2021	2,171	2,438			545			5,154
	Transfers Additions Disposals	(4)   384     (6)	-    -    -			6  20 (2)			2    404     (8)
	Impairment	(81)	-			(1)			(82)
	Foreign exchange	3	-			-			3
		-------------	-------------			------------			---------------
	At 31 December 2021	2,467	2,438			568			5,473
		-------------	------------			------------			---------------
	At 1 January 2022	2,467	2,438			568			5,473
	Additions	493	-			17			510
	Disposals	-	-			(66)			(66)
	Foreign exchange	57	-			-			57
	Redesignated as held for resale	(2,563)	(2,438)			(490)			(5,491)
		-------------	-------------			-------------			---------------
	At 31 December 2022	454	-			29			483
		-------------	-------------			-------------			---------------
	Accumulated amortisation
	At 1 January 2021	1,002	-		527			1,529
	Amortisation Transfers Disposals	624 (2) (6)	-        -        -		17 3   (1)			641  1    (7)
	Impairment	-	-		(1)			(1)
	Foreign exchange	5	-		-			5
		------------	-------------		------------			--------------
	At 31 December 2021	1,623	-		545			2,168
		------------	--------------		-------------			---------------
	At 1 January 2022	1,623	-		545			2,168
	Amortisation	582	-		19			601
	Disposals	-	-		(66)			(66)
	Impairment	78	-		-			78
	Foreign exchange	42	-		-			42
	Redesignated as held for resale	(2,070)	-		(484)			(2,554)
		------------	-------------		------------			---------------
	At 31 December 2022	255	-		14			269
		------------	--------------		--------------			---------------
	Net Book Value
	At 31 December 2022	199	-		15			214
		======	=======		======			=======
	At 31 December 2021	844	2,438		23			3,305
		======	=======		======			=======
	At 31 December 2020	1,169	2,438		18			3,625
		======	========		======			=======

 

 

 

 

Other intangible assets comprise website development and trademark costs.

 

Amortisation is charged on development costs and other intangible assets over periods ranging between 3 and 7 years.  Development costs have between two and three years' remaining average useful lives.

Goodwill and impairment

The Group is obliged to test goodwill annually for impairment, or more frequently if there are indications that goodwill and indefinite life intangibles might be impaired, due to the goodwill deemed to have an indefinite useful life. In order to perform this test, management is required to compare the carrying value of the relevant cash generating unit ("CGU") including the goodwill with its recoverable amount. The recoverable amount of the CGU is determined from a value in use calculation. It is considered that any reasonably possible changes in the key assumptions would not result in an impairment of the present carrying value of the goodwill.

 

Immotion Studios Limited, C.2K Entertainment Inc. and Immotion Limited were acquired and continue to operate in relation to the Location Based Entertainment segment.  The Location Based Entertainment segment has been assessed as a single CGU when conducting impairment reviews.

 

Location Based Entertainment

The recoverable amount of the Location Based Entertainment segment has been assessed in light of the sale of the division in February 2023. The sale proceeds received by the Company were substantially greater than the value of the businesses assets and goodwill and as a result no impairment charge has been recognised. Further details on the sale of the Location Based Entertainment business are included in note 10.

 

 

 

9	SHARE CAPITAL	2022	2021
		£'000	£'000
	Called up share capital
	Allotted, called up and fully paid
	415,538,083 Ordinary shares of 0.040108663 pence each	166	166
	(2021: 415,538,083 ordinary shares)
		======	======

 

                          No shares were issued in the year ended 31 December 2022.

 

 

 

 

10	POST BALANCE SHEET EVENTS

 

On 2 February 2023, the Company announced that it has completed the sale of Uvisan Limited for cash consideration of £100,000.

 

On 8 February 2023, the Company announced that it had issued 632,563 new ordinary shares pursuant to the exercise of share options under the Company's share option scheme.

 

On 1 March 2023, the Company announced the completion of the sale of the Location Based Entertainment (LBE) virtual reality division, comprising Immotion Studios Limited, Immotion VR Limited and C.2K Entertainment Inc., to LBE BidCo, Inc. for $25,119,739.  The sale proceeds were comprised of cash paid at completion of $23,869,739 and a loan note of $1,250,000 repayable 12 months following completion, subject to any price adjustments under the terms of the sale and purchase agreement.

 

On 1 March 2023, the Company also announced its intention to return circa £12.5m of the LBE sale proceeds to shareholders via a tender offer.  The tender offer has required shareholder and Court approvals and is expected to be completed in June 2023.

 

On 1 March 2023, the Company also announced that Rodney Findley had resigned as a director of the Company and that Daniel Wortley was appointed as a director of the Company.

 

On 2 March 2023, the Company announced that it had changed its name to Let's Explore Group PLC from its previous name of Immotion Group PLC.