2019
Audioboom Group plc
Annual Report & Financial Statements
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Audioboom Group plc
Overview
Audioboom Group plc (“Audioboom”) is a global leader in podcasting – producing, distributing and
monetising premium audio content to millions of listeners around the world. Audioboom operates
internationally, with operations and global partnerships across North America, Europe, Asia and
Australia.
Audioboom provides technology and advertising services for a premium network of 250 top tier
podcasts, with key partners including ‘Casefile True Crime’ (US), ‘The Morning Toast’ (US), ‘And That’s
Why We Drink’ (US), ‘No Such Thing As A Fish’ (UK), ‘Starburns Audio’ (US), ‘The Cycling Podcast’ (UK)
and ‘The Totally Football Show’ (UK).
The Audioboom Originals Network is a slate of content produced by Audioboom including ‘The 45th’,
‘Covert’, ’It’s Happening with Snooki & Joey’, ‘Mafia’, ‘Dead Man Talking’ and ‘Blank Check’.
The platform allows content to be distributed via Apple Podcasts, Spotify, BookMyShow, Deezer,
Google Podcasts, iHeartRadio, RadioPublic, Saavn, Stitcher, Facebook and Twitter as well as a partner’s
own websites and mobile apps.
For more information, visit audioboom.com.
Contents
Strategic Report
Chairman’s Statement
Chief Executive Officer’s Review
Principal Risks and Uncertainties
Governance
Board of Directors
Directors’ Report
Corporate Governance Report
Remuneration Committee Report
Audit Committee Report
03
04
09
12
14
18
23
27
Financial Statements
Independent Auditor’s Report
Consolidated Statement of Comprehensive
Income
33
Consolidated Statement of Financial Position 34
Consolidated Cash Flow Statement
35
Consolidated Statement of Changes in Equity 36
37
Notes
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Audioboom Group plc
Directors, Advisers and Officers
Company registration number:
85292
Registered office:
Directors:
Company secretary:
Nominated adviser and broker:
Solicitors:
Registrar:
Auditor:
PO Box 264
Forum 4
Grenville Street
St Helier
Jersey JE4 8TQ
Michael Tobin OBE (Non-executive Chairman)
Stuart Last (Chief Executive Officer)
Brad Clarke (Chief Financial Officer)
Roger Maddock (Non-executive Director)
Steven Smith (Non-executive Director)
AST Secretaries Limited
Allenby Capital Limited
5 St Helen’s Place
London EC3A 6AB
Fladgate LLP
16 Great Queen Street
London WC2B 5DG
Link Registrars (Jersey) Limited
12 Castle Street
St Helier
Jersey JE2 3RT
Haysmacintyre LLP
10 Queen Street Place
London EC4R 1AG
Annual Report & Financial Statements 2019
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Audioboom Group plc
Highlights
For the year ended 31 December 2019
Financial highlights1
• Revenue increased 91% to US$22.3 million (2018: US$11.7 million for 13 months)
• Adjusted EBITDA2 loss reduced 38% to US$2.9 million (2018: loss of US$4.7 million)3
• Group cash as at 31 December 2019 of US$2.0 million (31 December 2018: US$1.6 million)
• Successfully raised a total of £4.3 million4 from a placing and subscriptions to secure leading podcasting talent and shows,
and to develop co-production and AON opportunities
• New content funding facility with SPV Investments Limited (“SPV”), a special purpose vehicle owned by Michael Tobin, the
Company’s Chairman and Candy Ventures sarl, the Company’s largest shareholder, providing up to US$4 million of minimum
guarantees to certain leading content partners of the Company
1)
2)
The financial period ended 31 December 2018 was a 13 month period (1 December 2017 – 31 December 2018)
Earnings before interest, tax, depreciation, amortisation, share based payments and material one-off items (including corporate restructuring costs)
3) Audioboom has adopted the modified retrospective approach to the implementation of IFRS 16: Leases. There is deemed to be no impact on reserves brought
forward. Lease rental costs included within administrative expenditure in the Group’s last reported annual financial statements are excluded from the 2018
comparative adjusted EBITDA to ensure consistency of presentation
4) Before expenses
KPIs
• Key performance indicators (‘KPIs’) all delivered significant growth:
– Brand advertiser count of 280 as at 31 December 2019, up 75% on 31 December 2018 (160)
– Global revenue per 1,000 downloads (eCPM) for December 2019 increased 16% to US$29.60 (December 2018:
US$25.49)
– Total available premium advertising impressions for the 12 months to 31 December 2019 up 59% to 1,644 million
(2018: 1,035 million for 13 months to 31 December 2018)
Post-year end highlights
• Expansion of the Audioboom Originals Network with the launch of For All Moms, Life’s Little Mysteries, Here’s The Sitch
and Noise Cancelling
• Co-production partnership established with Future Publishing, to create and launch three original content podcasts in 2020
focused on technology, science and video games
• Renewed partnership with a Tier 1 podcast partner, utilising the provision by SPV of a financial guarantee on the Company’s
contractual commitments – this partnership is expected to deliver material revenue for the Company during 2020 and
beyond
• Entered into new distribution partnerships with Pandora (81 million active monthly users) and Amazon Music (65 million
active monthly users), and expanded existing distribution partnership with Saavn
• Moved to the IAB V2 certified measurement standard to provide greater transparency to our advertising sales partners
• Entered into a two-year US$4 million secured loan facility arrangement with SPV, providing sufficient headroom to fund
the Company through to forecast sustainable positive cash generation on a monthly basis
• Retained Raine Advisors Limited as financial adviser in relation to examining strategic options for the Company, and
subsequently established a formal sale process pursuant to the Takeover Code
• Strong start to 2020, with bookings for the first quarter ahead of management expectations
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Audioboom Group plc
STRATEGIC REPORT
Chairman’s Statement
I am pleased to present this Chairman’s Statement in respect
of my first full year in the position.
Following a challenging 2018, it is particularly satisfying to
reflect upon Audioboom’s impressive performance in 2019,
with material growth in all KPIs, a near doubling of revenues,
substantially reduced EBITDA loss, and market expectations
exceeded for the first time in the Company’s history. It is
testament to the efforts of the management team and all staff
that growth in the year outpaced that of the wider podcasting
industry (which itself continues to expand materially), leading
to increased market share and cementing its position as one
of the world’s largest independent podcast companies.
As you will be aware, the Board appointed Raine Advisors
Limited as its financial adviser to examine strategic options
for the Company and subsequently the Board established a
formal sale process pursuant to the UK Takeover Code. A
number of interested parties are actively engaged in the
process, but it is possible that Covid-19 could impact the
planned timeline. At this point, potential buyer interest in the
Company suggests the process will stay the course, but we
will continue to evaluate the impact of Covid-19 over the
coming weeks. Notwithstanding the formal sales process, the
Company remains focussed on its core business strategy and
the Q1 2020 results to date indicate that these efforts
continue to transform into excellent financial performance.
More generally on the impact of Covid-19, it is clearly far too
early to make any firm predictions as to its impact on the
Group, but Stuart provides some early reflections in his report.
Given the inevitable challenges ahead as the world continues
to react to events, I would like to take this opportunity to
thank the entire Audioboom team for their continuing
professionalism and commitment and also to thank our
shareholders and partners for their loyalty and vision in
supporting Audioboom as it continues to grow.
Michael Tobin OBE
Chairman
27 March 2020
In his CEO Review, Stuart Last provides detail around the
Company’s strategy and focus, component parts of the
business, operational and financial performance, the strong
start to 2020 and the outlook for the remainder of the year
in the light of global events.
The Board was pleased to appoint Stuart as CEO following a
brief interim period last year. Stuart’s key role in the growth
of the US business over recent years made him the obvious
choice for the role and the Board has been impressed with
his performance, ably supported by Brad Clarke as CFO.
We were pleased to secure £4.3 million in growth funding
early last year, and I was pleased, personally, to be able to
support the Company, along with Candy Ventures sarl (our
largest shareholder) and via SPV Investments Limited, through
the provision of a US$4 million guarantee facility last year and
a US$4 million loan facility earlier this year. The funding and
facilities have enabled, and will continue to allow, the
Company to acquire and retain high revenue producing,
established podcasts and talent, and to develop the Group’s
higher margin Audioboom Originals Network, all of which will
further drive performance. The loan facility is expected to
provide sufficient headroom to fund Audioboom through to
sustainable positive cash flow generation on a monthly basis.
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Audioboom Group plc
STRATEGIC REPORT
Chief Executive Officer’s Review
Introduction
I am very pleased to provide my first CEO report since taking
on the role in September 2019. In my previous position as
Audioboom’s Chief Operating Officer, I established our US
operations, led our global growth strategy, launched the
Audioboom Originals Network, and created our Sonic
Influencer Marketing arm. I am proud to now see the results
of that work, with the Company exceeding market
expectations in 2019 for the first time in its history.
Audioboom is a global leader in podcasting – producing,
monetising and distributing premium audio content to millions
of listeners around the world. As our growth in 2019
considerably outpaced that of the wider industry, we
enhanced our position as one of the biggest independent
podcast companies in the world.
2019 was the year we put content at the heart of the business
and shifted to a focus on quality and creativity over sheer
scale. Audioboom became a fully-fledged media operation,
positioned to create maximum value from the fast-growing
podcast industry.
During the year we restructured the Company, removed
regional teams and managers, and created a structure in which
global sales, production and business development units are
aligned in strategic focus under the leadership of our highest
performing managers.
The outcome was an outstanding set of results that saw
revenue almost double and our EBITDA loss significantly
reduced.
Momentum has continued into 2020, with our KPIs
continuing to show strong growth and bookings exceeding
management expectations for the first quarter. However, the
Covid-19 virus may impact the business in the coming
months. We are still working to understand how much
disruption Covid-19 will bring to the podcast industry, but my
expectation is for softer sales than expected during the
second quarter as advertisers and brands grow more cautious
in their approach to the medium, albeit certain sectors may
maintain or increase their advertising at this time. It is
reasonable to expect that production and consumption of on-
demand content, including podcasts, will increase globally
the pandemic, providing
increased audience
during
connection and sales inventory as we go further into 2020.
The Chairman has addressed the latest position in respect of
the formal sales process in his statement.
Strategy
Audioboom is a media, content and talent company working
at the professional end of the podcast industry. We identify
three clear areas of growth - each focused on premium
content and a premium advertising sales model:
1. Content Acquisition. Audioboom develops commercial
partnerships with existing independent podcast talent and
content networks, where we provide a full slate of
including exclusive advertising
professional services,
representation in our core US and UK markets. Opportunity
for accelerated content acquisition comes via the Company’s
strong working relationships with the major Hollywood talent
agencies, including UTA, WME and CAA. Content acquisition
of high-quality Tier One podcasts delivers fast revenue growth
for the Company, through the sale of high-value, high-
engagement host endorsement advertising.
2. Content Creation. Through co-production partnerships and
original content development from our in-house production
teams, the Audioboom Originals Network increases the
volume of our premium advertising inventory. Audience
consumption and sales-trend data from our wider business
informs our show development strategy, with insights into key
growth genres and strong sales verticals. Content creation
requires up-front investment through content production
costs, facilities, and audience acquisition spend, but creates
strong revenue growth at a higher gross margin, as well as
further revenue potential through IP opportunities, including
television adaptation, touring and merchandise sales.
3. Content Access. The Sonic Influencer Marketing platform
enables brands to connect with audiences across the entire
professional-level podcasting landscape. The platform utilises
top-tier talent both within the Audioboom network and at all
major podcast networks globally, to deliver premium host
endorsement advertising campaigns to engaged audiences on
behalf of their clients. Sonic Influencer Marketing provides
fast revenue growth to the Group, albeit with a lower gross
margin than Content Acquisition and Content Creation.
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Audioboom Group plc
STRATEGIC REPORT
We continue to operate our technology platform which
supports Tier Two podcasters and generates revenues
through paid podcaster subscriptions and lower-value
automated advertising networks. These are considered
passive revenue streams by the Company and, as such, we
commit a lower level of resource to support their growth.
Overview of the market
2019 was a year of growth and a year of consolidation across
the podcast industry, with the US – Audioboom’s major
market – continuing to lead the charge.
The Interactive Advertising Bureau’s Podcast Revenue Study
projected the US market size to reach c. US$680 million in
2019 – up 42% on the previous year. It is worth noting that
Audioboom’s 2018-2019 growth was more than double that
of the wider industry, as we increased market share
significantly.
Key trends driving the growth of the market are highlighted
in the 2020 Edison Infinite Dial survey in which it was
reported that 104 million Americans listen to podcasts each
month – an increase of 16% on the previous year.
2019 saw an increase in M&A activity within podcasting, as
the industry began to consolidate around key pillars of
content production, podcast technology and monetisation
services. Notable transactions include:
• Spotify’s acquisitions of Gimlet Media, Parcast and Anchor
• Entercom’s acquisitions of Cadence 13 and Pineapple
Street Media
• Rogers Media’s acquisition of Pacific Content
• E.W. Scripps’ acquisitions of Triton Digital and Omny
Media
In 2020 we have already seen further M&A activity, with
Spotify acquiring The Ringer network in February.
Operational review
I am pleased to report a strong year of monetisation and
operational progress across all areas of the business.
KPIs
Our three Key Performance Indicators are drivers of growth
in our most important income stream – premium advertising
sales:
• Brand advertiser count of 280 as at 31 December 2019,
up 75% on 31 December 2018 (160)
• Global revenue per 1,000 downloads (eCPM) for
December 2019 increased 16% to US$29.60 (December
2018: US$25.49)
• Total available premium advertising impressions for the
12 months to 31 December 2019 up 59% to 1,644 million
(2018: 1,035 million for 13 months to 31 December 2018)
Content Acquisition – Partnerships
Audioboom saw significant growth in the size of its premium
sales network through the acquisition of new content, and the
renewal of major content partnerships. Our ability to create
competitive financial packages for Tier One podcast partners,
followed up with consistent over-performance against the
minimum guarantee obligation from our premium advertising
sales unit, enhanced our standing as a leading provider of
monetisation services in the space.
Access to the SPV content funding facility (see further under
“Financial review” below) enabled certain leading independent
podcasters and talent agencies to enter into long-term
commercial contracts with Audioboom, by providing
assurances that the Company would meet its contractual
financial obligations as to minimum guarantees.
In the US, we entered into key new partnerships or renewed
contracts with The Morning Toast, True Crime Obsessed,
Astonishing Legends, Morbid, Waveform and Chatty Broads.
In the UK, we renewed our partnerships with No Such Thing
As A Fish, The Totally Football Show and F1: Beyond The Grid.
We now have more than 200 shows in our premium sales
network, allowing advertisers to connect with audiences at
massive scale through high-quality content and podcasting’s
leading creative talent. The fill rate of available advertising
inventory on our top 10 podcasts was greater than 83%
across 2019.
Annual Report & Financial Statements 2019
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Audioboom Group plc
STRATEGIC REPORT
Chief Executive Officer’s Review
(continued)
Content Creation – Audioboom Originals Network
During 2019, we continued our commitment to original
content creation, expanding the Audioboom Originals
Network to 19 shows. Revenue from the network increased
to US$0.7 million, growing significantly from 2018
(US$0.3 million). The network was listened to more than
25 million times and created more than 100 million available
advertising impressions during the year.
New shows launched in 2019 included What Makes A Killer,
A Life Lived and Never Thought I’d Say This – a co-production
with Main Event Media. Mafia, Covert and Inbox all returned
for new seasons, while The 45th, It’s Happening and Blank
Check continued to deliver weekly episodes.
We received critical acclaim for our original productions in
2019. Dead Man Talking received the Silver Award for Best
True Crime podcast at the UK Podcast Awards, while Blank
Check was nominated as one of Time Magazine’s top three
podcasts of the year.
To support growth in the Audioboom Originals Network, the
Company expanded its production facilities in New York City,
opening two new studios and a green-room space. Our
enhanced facilities will support the creation of more than
40 shows.
We intend for our production arm to grow strongly in 2020,
as we invest further in talent, facilities and audience
acquisition. The higher gross margin of our original content
should contribute significantly to our bottom line, and the
impact of our shows will further shift the industry and podcast
audience perception of the Company to that of a creative
media brand.
Content Access – Sonic Influencer Marketing
2019 was the first full year of operations for Sonic Influencer
Marketing, our platform that enables brands to buy
advertising inventory within any globally available podcast.
More than 30 brands utilised the service, with the platform
generating US$5.2 million in revenue (2018: US$0.8 million)
– an outstanding first full year of business. Key clients include
Article, Drink Works, Instacart and Hawthorne.
To support the development of Sonic Influencer Marketing we
increased headcount in the team to five and opened a
dedicated office space in Austin, Texas.
So far in 2020 six new brands have used the platform as we
continue to increase our client-base. We expect further strong
growth from Sonic Influencer Marketing across the year and
for it to contribute significantly to the Group’s overall
revenues.
SONR News Limited (“SONR”)
As previously reported, the majority of SONR staff left the
Company in 2018 as Audioboom focussed its efforts on
revenue generating initiatives. During 2019 it became clear
that the opportunities previously being explored to exploit
SONR’s NLP and AI technology would not generate a viable,
sustainable business. Therefore, the decision was taken to
close the business and focus all resources on Audioboom’s
monetisable core strategy.
Key commercial and strategic partnerships
Voxnest
In September 2019, Audioboom announced a partnership
with Voxnest, to provide technology and advertising services.
In the first phase of the partnership, Voxnest provided us with
a professional-level advertising toolset that enables dynamic
advertising injection on the entire roster of podcasts. For our
premium network of shows it gives the option for host
endorsements to be delivered at scale, targeted to location,
or delivered against a show’s archive – creating a second sales
window in order to optimise revenue. For our wider group of
podcast partners it will connect to ad networks and
programmatic exchanges to maximise advertising fill.
Subsequently the partnership has enabled Audioboom to
utilise the Interactive Advertising Bureau’s V2 Podcast
Measurement standard, via Voxnest’s certified data platform.
Audioboom’s premium advertising sales model now utilises
IAB V2 certified numbers to provide accurate and transparent
pricing to the advertising community.
Nielsen
In September 2019, we also announced a partnership with
Nielsen to utilise their Podcast Listener Buying Power Service.
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Audioboom Group plc
STRATEGIC REPORT
The toolset provides insights into audience profiles and
consumer buying habits that help Audioboom improve the
way we sell advertising. We are able to create stronger
connections between brands and audiences, driving more
value to both the advertisers and the talent we work with.
business, it does impact the overall Group gross margin. The
year-on-year decline in gross margin is mainly due to the
increasing gross revenue contribution of Sonic Influencer
Marketing, which accounted for 23% of total top line revenue
in 2019 (13 months to 31 December 2018: 7%).
Distribution partnerships
Post period end, the Group entered into new distribution
partnerships with Pandora (81 million active monthly users)
and Amazon Music (65 million active monthly users), and
expanded its existing distribution partnership with Saavn.
Financial review
In 2019, the Company continued to both recognise record
revenue growth quarter on quarter and significantly
outperformed the overall podcast advertising market. This was
achieved having laid strong operational and financial
foundations in 2018, allowing our sales and creative staff to
work with our content and advertising partners to continue
to drive the business, and wider industry, forward.
Revenue growth accelerated in our core revenue segment;
premium host endorsement advertising for our podcast
partners. This core segment was assisted by excellent growth
in Sonic Influencer Marketing in its first full year of trading,
and material growth in a key area of focus for the business,
the Audioboom Originals Network.
Revenue increased by 91% to US$22.3 million for 2019 from
US$11.7 million (13 months to 31 December 2018). In 2019,
90% of Group revenue was generated in the United States,
which is the largest and most developed market for
podcasting, up from 83% in 2018 due to the continued
growth in that territory as well as the first full year of trading
at Sonic Influencer Marketing.
The Company continued to control overheads and we
restructured the business to align staff globally and to ensure
that every employee contributes to the growth of the
business. We continue to monitor the cost base closely and
align it to the Company’s operational demands and this will
continue into 2020 as we increase focus on the Audioboom
Originals Network.
The Company's overall trading for the period, as measured by
adjusted EBITDA (earnings before interest, tax, depreciation,
amortisation, share based payments and before exceptional
items) recorded an improvement to a loss of US$2.9 million
from US$4.7 million (13 months to 31 December 2018).
The total comprehensive loss for the year recorded an
improvement to a comprehensive loss of US$7.1 million from
US$8.5 million (13 months to 31 December 2018). The cash
outflow from operating activities fell to US$5.2 million for the
12 month period (13 months to 31 December 2018:
US$7.3 million), a 29% reduction.
The improvements in the working capital cycle can now
clearly be seen in improvements in debtor collection days and
average payable days. The implementation of the bespoke
podcast advertising booking system in 2018, continued
improved cash collection and sustained revenue growth has
led to a 10% reduction in debtor days from 94 days in 2018
to 86 days in 2019. Average payable days also reduced from
98 days in 2018 to 72 days in 2019.
Gross margin decreased to 22% in 2019 (13 months to
31 December 2018: 27%). Audioboom has a mix of revenue
streams, contributing different gross margins. Direct revenue,
where advertising is placed on third party podcasts via the
Audioboom sales teams, yielded 24% gross margin in 2019.
Audioboom Originals Network contributed 45% gross margin
in 2019, and the higher associated gross margin means this is
a key area of focus going forward for the Company. Sonic
Influencer Marketing typically contributes between 12% and
15% gross margin and therefore despite the growth of this
During the period, the Company raised a total of £4.3 million
(before expenses) from the issue of ordinary shares in order
to attract and retain leading third party podcast talent and to
continue to invest in the growth of the Company. Net cash at
the period end was US$2.0 million (31 December 2018:
US$1.6 million).
On 17 June 2019, the Company agreed a new content
funding facility with SPV pursuant to which SPV provides
minimum revenue guarantees to certain leading content
Annual Report & Financial Statements 2019
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Audioboom Group plc
STRATEGIC REPORT
Chief Executive Officer’s Review
(continued)
partners of the Company. Audioboom pays SPV 8% of the net
advertising revenue (after paying the content partner its share)
received by Audioboom, in relation to those podcasts. To date,
two leading podcasts have been retained via the SPV
guarantee facility, in June 2019 and January 2020.
This year we will continue to position Audioboom as a high-
quality programme-maker within the US. We will invest
significantly in content production through our Audioboom
Originals Network, ensuring that we are developing creative
concepts and strong stories, and we are working with high
profile talent that can increase our audience engagement.
Already in 2020, we have launched four new AON shows –
For All Moms, Life’s Little Mysteries, Noise Cancelling and
Here’s The Sitch. Revenue-wise the network is expected to
deliver substantial growth versus 2019. As more of our AON
shows are fully developed by our growing in-house team, we
can implement greater controls on production budgets,
leading to improved gross margins.
Our AON development slate is oversubscribed for the year,
and I’m really excited about some of the new shows we will
launch including; Dark Air, Huddled Masses and Truth Vs
Hollywood.
All of this comes against an uncertain backdrop of Covid-19,
which may disrupt the advertising market and our immediate
growth plans. We will provide any update we can in this
respect in our Q1 trading update in April. However, with our
improved cash position (as supported by the availability of the
recently agreed loan facility), focus on content production and
market-leading advertising sales operation, we are well placed
to continue our expansion as the leading independent
podcast company.
Stuart Last
Chief Executive Officer
27 March 2020
On 21 June 2019, the Company consolidated every 100
existing ordinary shares of no par value into one new ordinary
share of no par value.
The financial results shown above illustrate that the drive to
increase revenues whilst maintaining strong cost management
is working and should deliver significant shareholder value as
the Company continues its journey towards positive cash-flow.
Loan facility
On 7 February 2020, the Company announced that it had
entered into a US$4 million secured loan facility arrangement
(the "Facility") with SPV. Historically, the growth of Audioboom
has been financed by the issue of equity with consequential
dilution to the Company's shareholders, and the Board
believes that the expectation of potential equity issues has
had a negative impact on the Company's share price. The
Facility should provide sufficient funding through to forecast
sustainable positive cash generation on a monthly basis. To
date, no funds have been drawn down.
Outlook
I am pleased with the strong start we have made in 2020, with
bookings for the first quarter ahead of management
expectations.
We have continued to sign great new podcasts into our
premium sales network, renew some of our biggest publisher
partnerships, and sign new clients to Sonic Influencer
Marketing.
As mentioned above, our Chairman and largest shareholder
have recognised our outstanding performance and are
supporting the growth of the business with the Facility. This
will allow us to execute our growth strategy across 2020 and
should provide sufficient funding to take us through to
forecast sustainable positive cash generation on a monthly
basis.
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Audioboom Group plc
STRATEGIC REPORT
Principal Risks and Uncertainties
The Board and management regularly review and monitor the key risks involved in running and operating the business. The future
success of the Group is dependent on the Board’s ability to implement its strategy. The model for the future development of the
Group is reliant on its ability to achieve and maintain a critical mass of quality content providers and its ability to derive advertising
revenue from agencies and users of advertising who want to access the audience for Audioboom’s services. The table below sets
out a number of the material risks together with relevant mitigating factors:
Risk
Description
Mitigation
Liquidity risk
Retention/
attraction of
key staff
Continued growth
in content
partners
Whilst the Group’s underlying financial
performance continues to improve, until the Group
reaches a sustained positive cash generative
position, the funding of its operations and
overheads, together with future growth and
expansion, all place demand on the Group’s overall
cash resources. The Group’s cash position remains
subject to the availability of funding.
Post period end, COVID-19 may have an impact on
operating cash flow, however, the impact of this is
currently unclear.
Management monitors the Group’s financial
performance closely with a strong focus on cash
control.
Post period end, the Company has secured US$4
million of loan funding from the Company’s Chairman
and its largest shareholder which it is expected should
fund the Group through to forecast sustainable
positive cash generation on a monthly basis.
The Directors are satisfied that the loan facility
provides sufficient funding to mitigate the liquidity
risk posed by the impact of COVID-19. Cash flow
modelling, sensitivity testing and business
contingency planning have all been completed to
make this assessment, and will be kept under review.
The Group is highly dependent on key members of
the management team. Their services cannot be
guaranteed and the loss of their services may have
a material adverse effect on the Group’s
performance. There can be no assurance that the
Group will be able to attract and retain all personnel
necessary for the future development and
operation of the business.
The Board will continue to ensure that the
management team are appropriately incentivised
and that there is scope to appropriately incentivise
new key personnel where required. Audioboom
operates a share option scheme which enables
employees to become defacto owners of the
business and to benefit from continued growth in
the Company.
Success of the Group’s strategy relies heavily on the
on-going process of securing global third party
quality content partners to the platform.
Professionalisation of the industry means that an
increasing amount of podcast content is now being
created by major broadcasters, radio groups and
media companies – thus reducing the number of
successful new independent entrants in the space.
There are also an increasing number of competitor
networks offering advertising sales services – all
vying to create exclusive partnerships with the top
independent shows. There can be no assurance
that the Group will maintain its success in this area.
As the industry professionalises, an increasing amount
of new business with top tier podcasts comes via
talent agencies and management companies.
Audioboom invests time and resource to develop and
maintain strong working relationships with these
groups to ensure we remain part of inbound
opportunity. Top tier podcasts may require minimum
guarantees against annual revenue potential and
recoupable advance signing on fees, in addition to
promotional and development budgets. These
incentives are appropriately modelled to ensure that
only profitable partners are offered such terms.
Audioboom is increasingly investing in its “owned
and operated” content division, where podcasts are
developed and produced by its in-house production
team. This allows the Company to control
production schedules and negates the risk of losing
independent podcasts to other networks.
Annual Report & Financial Statements 2019
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Audioboom Group plc
STRATEGIC REPORT
Principal Risks and Uncertainties
(continued)
Risk
Description
Mitigation
Ability to
monetise the
advertising
opportunity
Technology
IT infrastructure
Success of the Group’s strategy relies heavily on its
ability to monetise advertising opportunities. The
ability to generate advertising revenue from social
and digital media sites is now well established as
major companies operating in this space have built
up revenues from advertisers who value access to
the user groups that are regular visitors to these
sites. There can be no assurance that the Group will
be successful in continuing to build these revenues
if it is exposed to greater competition or suffers
lower growth in listens on the platform as well as
other factors.
The impact of COVID 19 may adversely affect the
global economy which may hinder global
advertising growth.
Technologies used by the Group may have a shorter
commercial life than anticipated due to the
invention or development of more successful
technology or applications by competitors who may
have greater financial, marketing, operational and
technological resources than the Group.
Audioboom’s platform is hosted externally by
Voxnest and Amazon. The Group cannot guarantee
that there will not be any disruption in the
availability or performance of the platform, or the
terms on which it is made available, which could
have a material adverse effect on the Group and its
business and prospects.
On-going growth in quality content providers, which
in turn attracts greater numbers of listens, which in
turn attracts brands wanting to advertise on
podcasts. The Group has proven that the
monetisation of podcasts is a viable advertising
opportunity and it works with a growing number of
advertising agencies and direct with brands in the
UK and the US to continue to build revenues.
It should be noted that advertisers affected by
COVID 19 may be replaced by advertisers who are
less affected by the potential macro-economic
changes.
The Group strives to continually innovate in terms
of its technology, products and services and also
recognises opportunities to utilise third party
technology solutions when it does not have the
financial or staffing resource to innovate itself.
The Voxnest and Amazon cloud infrastructure and
distributed content system ensures that many
multiple copies of the entire Group’s web
architecture and growing content library are
distributed across multiple nodes of the content
distribution network. This ensures that if one node
were to fail, then the Group’s architecture and
content could still be accessed by users via other
nodes in the network.
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Audioboom Group plc
STRATEGIC REPORT
Risk
Content
Competitive
conflict
Description
Mitigation
Audioboom provides a platform for third party
content. Some of the content may be unsuitable,
illegal or defamatory and as such there is a risk that
claims may be made against the Group. Audioboom
is a provider rather than a publisher and as such
should not be liable for content. If, however,
Audioboom is held to have published the offending
content, that could have a material adverse effect
on the Group.
Sonic Influencer Marketing operates on the buy-
side of the advertising divide. As such there are
some conflicts with Audioboom which operates on
the sell-side. Podcast networks that are competitors
with Audioboom may take issue with sharing data
or creating partnerships with Sonic Influencer
Marketing for fear of data being shared internally or
helping a rival grow. This may impact Sonic
Influencer Marketing’s ability to grow.
‘Safeharbour’ regulations should mitigate the risk in
the case of Audioboom acting as provider and not
publisher. In cases where Audioboom may have
greater involvement in the publishing of content,
Audioboom will take reasonable steps around
editorial control of content. Audioboom’s terms and
conditions also give it unlimited rights to remove
content, remove content channels and block users
to ensure that it is able to maintain a controlled
environment for consumers to access appropriate
content.
The Group has developed a separate Customer
Relationship Management system for Sonic
Influencer Marketing so that no key data is shared
across the two businesses. Only a small, controlled
number of staff are able to access both sets of data.
The Strategic Report was approved by the Board of Directors on 27 March 2020 and was signed on its behalf by:
Stuart Last - Chief Executive Officer
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Audioboom Group plc
GOVERNANCE
Board of Directors
Background
and experience
Michael Tobin OBE
Non-executive Chairman
Stuart Last
Chief Executive Officer
Brad Clarke
Chief Financial Officer
Michael is a serial technology
entrepreneur and philanthropist.
As the former ‘maverick’ Chief
Executive Officer of Telecity
Group PLC (now Equinix Inc.),
the FTSE 250 data centre
operator, he grew the company
from a market capitalisation of
£6 million to £1.6 billion at the
time of his departure. After
stepping down from his role at
Telecity Group PLC in 2014,
Michael turned his attention to
supporting entrepreneurs,
businesses and leaders in the
digital and technology space. He
received The Order of the British
Empire from Her Majesty the
Queen for Services to the Digital
Economy in 2014.
Before joining Audioboom, Stuart
ran podcast operations at
Voxnest in New York City. He
previously held executive
positions at the BBC in London,
controlling digital strategy for
BBC Radio 2, the UK’s biggest
radio station and overseeing the
development of key brands at
BBC Radio 1, including the
world-renowned Live Lounge.
Stuart joined Audioboom in
2014 and, as Chief Operating
Officer, he launched the
business in the U.S., leading all
strategy, business development,
sales and marketing operations.
Brad is a chartered accountant,
having qualified with Grant
Thornton in 2009 and he has
extensive experience of working in
finance in the media industry,
having previously worked at fellow
AIM listed company Brave Bison
Group plc, where he was Group
Finance Director. Brad previously
worked for News UK for over five
years progressing through roles in
Internal Audit, Group Reporting
and latterly being the Financial
Controller of the Handpicked
Collection.
Date of
appointment
Michael joined the Board and
became Chairman in September
2018.
Stuart was appointed CEO in
September 2019 and joined the
Board in December of that year.
Brad joined Audioboom in March
2018 and was appointed to the
Board in September 2018.
External
appointments
Michael serves on multiple
technology company boards
across four continents, including
as Chairman of AIM listed BigBlu
Broadband plc.
None
None
None
None
Executive – non-independent
Executive – non-independent
Committee
memberships
Independence
Michael serves on the Audit
Committee and chairs the
Remuneration Committee.
Due to the Company having
granted warrants to Michael at
the time of his appointment, he
is not automatically considered
to be an independent Director.
Therefore the Board has
reviewed his status and
considered whether this award
of warrants might be considered
to impact upon his
independence. Following this
review, and having considered all
relevant circumstances, the
Board consider that Michael
continues to exercise
independence as a Director.
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Audioboom Group plc
GOVERNANCE
Background
and experience
Roger Maddock
Non-executive Director
Steven Smith
Non-executive Director
Roger has worked in the finance
industry in Jersey since 1981,
specialising in fund
administration. He was a partner
in a local chartered accountancy
practice and a director of Worthy
Trust Company Limited until it
was sold to Allied Irish Banks (CI)
Limited in 1999 where he was a
director of that bank’s trust and
fund administration companies
until 2001. He was the Managing
Director of Equitilink
International Management
Limited and a director of several
of the underlying funds of the
group.
Steven qualified as a chartered
accountant at BDO and
subsequently as a chartered tax
adviser whilst at KPMG. He has
held a number of senior financial
positions at large public and
private businesses. Steven has
been a close adviser to the
Candy Brothers for 15 years and
currently runs Candy Ventures
sarl, Nick Candy’s private
investment fund based in
Luxembourg.
Date of
appointment
Roger joined the Board on the
Company’s incorporation
(originally as The Off-Plan Fund
Limited) in April 2003.
Steven joined the Board in
August 2016.
External
appointments
Roger holds a number of
directorships of private
investment companies.
Steven holds a number of
directorships, including Candy
Ventures sarl, a significant
shareholder in the Company.
Committee
memberships
Independence
Roger chairs the Audit
Committee and serves on the
Remuneration Committee.
Steven serves on the Audit
Committee and the
Remuneration Committee.
Due to his directorship of, and
shareholding in, Candy Ventures
sarl, Steven is not considered to
be an independent Director.
Due to his length of tenure, Roger
is not automatically considered to
be an independent Director.
Therefore, the Board has
reviewed his status and
considered the fact that the
strategy and shareholders of
Audioboom are materially
different following its 2014
reverse acquisition and that Roger
is sufficiently removed from the
day-to-day operations of the
Company to retain a critical and
independent view. Following this
review, the Board consider Roger
to continue to exercise
independence as a Director.
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Audioboom Group plc
GOVERNANCE
Directors’ Report
The Directors present their report together with the audited financial statements for the year ended 31 December 2019.
Strategic Report
Details of the Group’s strategy and business model during the year and the information that fulfils the requirements of the
strategic report can be found in the Strategic Report on pages 3 to 11. An indication of likely future developments in the
business of the Group, and details of research and development activities are included in the Strategic Report, which are
deemed to form part of this report by reference.
Corporate Governance Report
The Corporate Governance Report set out on pages 18 to 21 forms part of this report.
Results and dividends
The consolidated statement of comprehensive income for the year is set out on page 33. No dividend has been declared or is
proposed for the year.
Directors and their interests
The Directors who served during the year are set out below, together with their beneficial interests in the ordinary shares of
the Company. Biographical details are included on pages 12 and 13.
31 December 2019 31 December 20181
Ordinary Ordinary
shares of Share shares of
no par value options no par value
Share
options
Brad Clarke – 185,000 –
65,000
Stuart Last (appointed 20 December 2019) 4,172 250,000 n/a
n/a
Roger Maddock 338,4612 – 220,000
–
Rob Proctor (resigned 30 September 2019) n/a n/a 20,661 245,0383
Steven Smith4 4,764 – 4,764
–
Michael Tobin 185,476 –5 59,082
–5
(1) restated to reflect the share consolidation effected in June 2019
(2) includes an indirect interest in 40,000 shares held by The Preston Trust, a trust established for the benefit of the family of Roger Maddock
(3) includes share options that were held by persons connected with Rob Proctor
(4) Steven Smith is a director and 10% shareholder of Candy Ventures sarl, which held 3,582,602 ordinary shares in the Company as at 31 December 2019. In
addition, Nick Candy, a director and 90% shareholder of Candy Ventures sarl, is the holder of 70,000 ordinary shares and 120,000 warrants to subscribe for
ordinary shares. In addition, at the year end, Candy Ventures sarl held 12,500 warrants to subscribe for ordinary shares in connection with the provision of
guarantees by SPV Investments Limited (see note 17 to the financial statements)
(5) Michael Tobin holds 300,000 warrants to subscribe for ordinary shares which were granted on his appointment to the Board. In addition, at the year end,
Michael Tobin was interested in 12,500 warrants to subscribe for ordinary shares in connection with the provision of guarantees by SPV Investments Limited (see
note 17 to the financial statements)
Further details in respect of the share options and warrants held by Directors are set out in the Remuneration Committee
Report on pages 23 to 26.
Substantial shareholdings
At the date of this report, the Company was aware of the following interests in 3% or more of its issued voting share capital:
Shareholder % holding
Nick Candy1 26.8%
Herald Investment Management Limited 6.6%
Slovar Limited (controlled by Kingsley Duffy) 3.5%
(1) including holdings via Candy Ventures sarl, of which Nick Candy is a 90% shareholder
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Audioboom Group plc
GOVERNANCE
Employee involvement
Our employees are one of our most important stakeholder groups. The Group’s policy is to encourage involvement at all levels,
as it believes this is essential for the success of the business. Through a recently introduced annual survey, employees are
encouraged to present their views and suggestions in respect of the Group’s performance and policies. The Board also seeks
to deepen employee engagement through the extensive reach of its share option scheme to all levels of staff.
Financial risk management objectives and policies
The Group’s financial instruments comprise cash, liquid resources and various items, such as trade receivables and trade
payables that arise directly from its operations. The main risks arising from the Group’s financial instruments are currency risk,
interest rate risk, credit risk and liquidity risk. The Directors review the policies for managing each of these risks on an on-going
basis and they are summarised in note 19 to the financial statements. These policies have remained unchanged from previous
periods.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient
funds to continue in operational existence for the foreseeable future. Following the recently announced US$4 million loan
facility arrangement with SPV Investments Limited (see note 20 to the financial statements), the Board’s forecasts for the
Group, including due consideration of the continued operating losses, projected increase in revenues and decreasing cash-burn
of the Group (and taking account of reasonably possible changes in trading performance and also changes outside of expected
trading performance), indicate that the Group will have sufficient cash available to continue in operational existence for the
next 12 months from the date of approval of the financial statements and beyond. No additional funding is considered to be
required and, based on the Board’s forecasts, the Group considers that it will not require additional funding for the foreseeable
future for the purposes of meeting its liabilities as and when they fall due. The Board believes that the Group is well placed to
manage its business risks, and longer term strategic objectives, successfully.
In forming this assessment the Directors have considered the possible impact that the global outbreak of COVID-19 may have
on the Group. The Directors acknowledge that it is challenging to predict the full impact this may have on the Group.
Notwithstanding, management has carried out sensitivity analyses of the Group’s cash flow models to quantify the impact of
a range of possible outcomes, including lower than anticipated revenues, and the mitigations that the Group has available to
it, including a reduction in overhead costs, active working capital management and the availability of finance from SPV
Investments Limited. Accordingly, the Directors are satisfied that the Group will continue to be able to meet its ongoing liabilities
as and when they fall due in reasonably foreseeable circumstances.
Therefore the Directors consider the going concern basis appropriate.
Change of control
There are no material contracts which enable the counterparties to alter or terminate those arrangements in the event of a
change of control of the Company.
The Group does not have any agreement with a Director or officer that would provide compensation for loss of office or
employment resulting from a takeover, except that provisions of the Group’s share plans and warrant instruments may cause
options and awards granted under such plans or instruments to vest on a takeover or other change of control.
Directors’ indemnity and insurance
Pursuant to the Company’s articles of association, the Company has granted an indemnity to its Directors and officers under
which the Company will indemnify them, subject to the relevant article, against all costs, charges, losses and liabilities incurred
by them in the performance of their duties. The Company has also arranged directors’ and officers’ liability insurance.
Annual Report & Financial Statements 2019
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Audioboom Group plc
GOVERNANCE
Directors’ Report
(continued)
Directors’ responsibility statement
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group financial statements for each financial period.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing the Group
financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with applicable IFRS as adopted by the EU; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure
that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in Jersey governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement as to disclosure of information to the auditor
The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they
have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit
information and to establish that it has been communicated to the auditor.
Auditor
Haysmacintyre LLP offer themselves for reappointment as auditors in accordance with Article 113 of the Companies (Jersey)
Law 1991.
Forward looking statements
These reports and financial statements contain certain forward looking statements which are subject to assumptions, risks and
uncertainties; actual future results may differ materially from those expressed in or implied in such statements. Many of these
assumptions, risks and uncertainties relate to factors that are beyond the Group’s ability to control or estimate precisely. The
forward looking statements reflect the knowledge and information available at the date of preparation of this report, and will
not be updated during the year. These forward-looking statements include all matters that are not historical facts. They appear
in a number of places throughout these reports and financial statements and include statements regarding the current
intentions, beliefs or expectations of the Directors or the Group concerning, among other things, the results of operations,
financial condition, prospects, growth and strategy of the Group, and the sector in which it operates. In particular, the statements
regarding the Group’s strategy and other future events or prospects are forward-looking statements. Nothing in this Annual
Report should be construed as a profit forecast.
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Audioboom Group plc
GOVERNANCE
Annual General Meeting
All registered holders of ordinary shares are entitled to attend the annual general meeting of the Company. They are also
entitled to speak at general meetings of the Company, to appoint one or more proxies or, if they are corporations, corporate
representatives, and to exercise voting rights.
ON BEHALF OF THE BOARD
Stuart Last
Chief Executive Officer
27 March 2020
Company registration no: 85292 (Jersey)
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Audioboom Group plc
GOVERNANCE
Corporate Governance Report
Responsibility for good governance lies with the Board. This Corporate Governance Report details the corporate governance
arrangements which the Company currently has in place and the steps being taken to further develop good governance within
the Company and the Group.
Compliance statement
The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies
Alliance Corporate Governance Code (the ‘QCA Code’) in line with the London Stock Exchange’s changes to the AIM Rules
requiring all AIM-quoted companies to adopt and comply with a recognised corporate governance code. The underlying
principle of the QCA Code is that ‘the purpose of good corporate governance is to ensure that the company is managed in an
efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term’.
The Company’s full statement of compliance with the QCA Code is available on the Company’s website,
www.audioboomplc.com, including a table describing in broad terms how the Company addresses the key governance principles
defined in the QCA Code.
The Board intends to review annually how its corporate governance arrangements comply with the provisions of the QCA
Code and in which respects it might further develop its existing arrangements and processes to the extent it believes that
these will support its medium to long term success.
Key governance related matters during the period
During 2019, the following key governance matters were addressed (as described in more detail elsewhere in the Annual
Report):
• Resignation of Chief Executive Officer
• Identification and appointment of new Chief Executive Officer
• Executive management remuneration review
• Introduction of Board self-evaluation process
• Review of system of internal and financial controls and reporting
• Methods of, and processes for, shareholder engagement
Role of the Board and management
The Board’s primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the Board is
responsible for the overall management and corporate governance of the consolidated entity including its strategic direction,
establishing goals for management and monitoring the achievement of these goals. Further details on the Company’s business
model and strategy are contained within the Strategic Report on pages 3 to 11.
From time to time, the Board may delegate or entrust to any Director holding executive office (including the CEO) such of its
powers, authorities and discretions for such time and on such terms as it thinks fit. The Board has adopted a ‘delegation of
Board authority’ which establishes those matters which it is considered appropriate remain within the overall control of the
Board (or its committees) and those which are delegated to the CEO (or onwards as appropriate). In addition to overall Group
strategy, the Board approves the annual budget and retains control over corporate activity (mergers, acquisitions, joint ventures,
material disposals and investments) and material contract and financing decisions (over and above set value/credit-risk limits).
Post year end, the delegation of Board authority was reviewed and updated.
Management’s role is to implement the strategic plan established by the Board and to work within the corporate governance
and internal control parameters established by the Board.
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Audioboom Group plc
GOVERNANCE
Role of Chairman and Chief Executive Officer
There is a clear division of responsibilities between the running of the Board and the executive responsible for the Group’s
business.
The Chairman is responsible for leadership of the Board, ensuring its effectiveness and setting the agenda for Board meetings.
Once strategic objectives have been agreed by the Board, it is the Chief Executive Officer’s responsibility to ensure they are
delivered upon and consistently to be accountable to the Board. The day to day operations of the Group are managed by the
Chief Executive Officer and his management team.
Board processes
The full Board meets monthly and at any other time as may be necessary to address any specific significant matters that may
arise.
The agenda for Board meetings is prepared in conjunction with the Chairman. Submissions are circulated in advance and for
regular Board meetings will include operational and financial updates together with papers relating to specific agenda items.
Management prepare finance reports ahead of each regular Board meeting which allow the Board to assess the Company’s
activities and review its performance. In addition to the Executive Directors, other members of management may be involved
in Board discussions as appropriate, and Directors have other opportunities for contact with a wider group of employees.
To assist in the execution of its responsibilities, the Board has established an Audit Committee and a Remuneration Committee
(which can also sit as a Nominations Committee where required) and a framework for the management of the consolidated
entity including a system of internal control.
Risk management and internal control
The Board is ultimately responsible for the Company’s system of internal control and for reviewing its effectiveness. This
includes financial, operational and compliance controls and risk management systems. There is an on-going process carried
out by executive management, the Board and the Audit Committee for identifying, evaluating and managing the principal risks
faced by the Company. The Board has reviewed the effectiveness of the system of internal control during the year. The systems
have been in place for the period under review and up to the date of approval of the annual report and accounts.
During the year the financial controls and processes established during 2018 have continued to evolve and improve. Those
controls deemed to be key are as follows: formal monthly financial close process; delivering monthly key financial data to the
Board; formalised payment run process reviewed and approved by the Financial Director and Chief Financial Officer leading
to reduction in the average credit period for trade purchases; structured debtor collection process leading to reduction in the
average credit period on sales of goods and services; detailed budgeting and forecasting process; and continued development
of the Audioboom advertising booking system.
A summary of the current principal risks and uncertainties is set out in the section of that name in the Strategic Report on
pages 9 to 11. Risks facing the Group will continue to be evaluated at each Board and Audit Committee meeting. Internal
control systems are designed to meet the Company’s particular needs and the risks to which it is exposed. Accordingly, the
internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance against misstatement and loss.
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Audioboom Group plc
GOVERNANCE
Corporate Governance Report
(continued)
Composition of the Board
The Board currently comprises five Directors. Further detail on the Directors and independence of the Board are included on
pages 12 and 13 of this Annual Report. The number and/or composition may be changed where it is felt that additional expertise
is required in specific areas, or when an outstanding candidate is identified.
The composition of the Board is determined using the following principles:
• a majority of the Board should be non-executive Directors,
• the role of Chairman is to be filled by a non-executive Director,
• the Board should have enough Directors to serve on various committees of the Board without overburdening the Directors
or making it difficult for them to fully discharge their responsibilities,
• Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and
thereafter Directors are subject to retirement by rotation and re-election every three years.
The Company Secretary is a Jersey based professional services company in order to conform with Jersey requirements. The
Board has therefore appointed a corporate and governance consultant to assist and advise it in respect of its responsibilities
and best practice. The consultant attends all Board and committee meetings (which are held in the UK) in which he effectively
carries out a number of the duties and responsibilities of a company secretary.
Conflict of interest
Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the
Company. Where the Board believes that a significant conflict exists, the Director concerned is either not present or does not
take part in discussions and voting at the meeting whilst the item is considered.
Independent professional advice and access to Company information
Each Director has the right of access to all relevant Company information and to the Company’s management and, subject to
prior consultation with the Chairman, may seek independent professional advice at the Company’s expense. A copy of any
advice received by the Director is to be made available to all other members of the Board. No such advice was sought during
the year.
Committees
Audit Committee
The report of the Audit Committee is set out on pages 27 to 28.
Remuneration Committee
The report of the Remuneration Committee is set out on pages 23 to 26.
Nominations Committee
Where required, the Remuneration Committee may also sit as the Nominations Committee. However the role of the
Nominations Committee may also be fulfilled by the full Board. The objectives of such Committee are:
• to ensure that the Company has a formal and transparent procedure for the appointment of new executive and non-
executive Directors to the Board;
• to ensure that the Company reviews the balance and effectiveness of the Board and the senior executive management
team, identifying the skills and experience needed for the next stage in the Company’s development and those individuals
who might best provide them, including appropriate succession plans and considering possible internal candidates for future
Board roles.
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Audioboom Group plc
GOVERNANCE
Directors’ attendance record
The following table provides details of attendance by Directors at Board and Committee meetings held during the period.
Board
Number of
meetings
Number Number of
meetings
attended
Audit Committee Remuneration Committee3
Number
Number Number of
attended
meetings
attended
Brad Clarke
Stuart Last
(appointed 20 December 2019)1
Roger Maddock
Rob Proctor
(resigned 30 September 2019)
Steven Smith2
Michael Tobin
16
3
16
12
16
16
14
3
16
11
15
16
3
3
3
3
3
3
6
6
6
6
6
6
(1) reflects attendance whilst interim CEO (non-Board) ahead of appointment as Director
(2) includes attendance via alternate Director appointed for two meetings
(3) during the period the Remuneration Committee also sat as the Nominations Committee at certain meetings as it considered the appointment of the new CEO
Time commitment
The Executive Directors are full time employees of the Group. The non-executive Directors are committed to at least 20 working
days per annum on Company business but in practice this is often exceeded.
Board effectiveness and evaluation
During the period, the Board introduced a self-evaluation of Board effectiveness, pursuant to which each Director anonymously
completed a questionnaire covering various matters of governance, setting out their own key objectives for the Board, scoring
the Board and committees’ effectiveness and providing feedback and recommendations on areas that might benefit from
further review or improvement.
Key themes, and focus items, arising from this process were:
• ensuring the Group is appropriately funded for growth, the implementation of strategy and to capitalise on opportunities
as they arise
• succession planning and breadth of management
• consideration of an additional non-executive Director, with focus on US podcast industry experience
Each of the above has either been addressed or remains under consideration.
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Audioboom Group plc
GOVERNANCE
Corporate Governance Report
(continued)
Corporate culture
The Board aims to lead by example and do what is in the best interests of the Company. A large part of the Group’s activities
is centred upon what needs to be an open and respectful dialogue with the key stakeholders, and so in order to grow our
business it is vital that all our employees act in a way that reflects the values of the business.
The Group has developed a set of Company values. All employees were invited to contribute ideas to the Company values
during a series of off-site brainstorming events. The Board is able to consider whether the Company’s values are being
recognised through feedback received from employees at these events.
The Company also seeks to be an equal opportunities employer, addressing its corporate social responsibility by promoting
equality and diversity in its workforce.
The Group also has a system of performance incentives and a share option scheme to reward staff for performance.
The role of shareholders
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the Company’s
state of affairs. Information is communicated to shareholders as follows:
• the release of announcements, trading updates and interim and annual financial statements through the Regulatory News
Service and on the Company’s website,
• the full annual financial report is sent to all registered shareholders,
• proposed major changes in the Company which may impact on share ownership rights are submitted to a vote of
shareholders, and
• notices of all meetings of shareholders are sent to all registered shareholders.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability
and identification with the Company’s strategy and goals. Important issues are presented to the shareholders as separate
resolutions.
The Company’s auditors are also invited to attend the Annual General Meeting and are available for discussion in relation to
the Company’s financial statements.
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Audioboom Group plc
GOVERNANCE
Remuneration Committee Report
Overview
The role of the Remuneration Committee is documented in its terms of reference which were adopted by the Board of Directors
in April 2014 and reviewed during the period.
The key objectives of the Remuneration Committee are to:
• ensure that the Company’s Directors and senior executives are fairly rewarded for their individual contributions to the
Company’s overall performance by determining their pay and other remuneration; and
• demonstrate to all shareholders that the general policy relating to, and actual remuneration of, individual senior executives
of the Company is set by a committee of the Board who have no personal interest in the outcome of the decisions and
who will give due regard to the interests of shareholders and to the financial and commercial health of the Company.
Composition
The Remuneration Committee is solely comprised of non-executive Directors. During the period the committee comprised
Michael Tobin (Chairman), Roger Maddock and Steven Smith. The Chief Executive Officer may be invited to attend meetings
of the Remuneration Committee at the discretion of the Remuneration Committee.
Remuneration Committee meetings
The Remuneration Committee met (in person or by phone) six times during the period. The attendance of its members at those
meetings is set out in the table on page 21. The agenda for Remuneration Committee meetings is prepared in conjunction
with the committee chairman. Submissions are circulated in advance and may include remuneration benchmark surveys and
guidance on best practice together with papers relating to specific agenda items.
Remuneration policy
The Remuneration Committee intends that its policy and practice should align with, and support the implementation of, the
Group’s strategy, be in line with the Group’s approach to risk management and promote the long-term success of the Group.
The policy is intended to motivate the right behaviours and to ensure that any risk created by the remuneration structure is
acceptable to the Remuneration Committee and within the strategy and risk appetite of the Company.
The remuneration package for the Executive Directors comprise a combination of annual salary, annual performance bonus
and share options with performance criteria. Remuneration for non-executive Directors consists of an annual fee (currently
£30,000 per annum for non-executive Directors and £35,000 per annum for the non-executive Chairman). There is no
additional fee for chairing or serving on Board committees and non-executive Directors are not entitled to bonuses or
participation in the share option scheme. However, as noted further below, on his appointment to the Board on 1 September
2018, Michael Tobin was granted warrants over ordinary shares.
Implementation of the policy
Salary
The Remuneration Committee continues to review the salaries of the Executive Directors against appropriate benchmarks for
executive directors of AIM and FTSE SmallCap companies of a similar scale and nature. The level of salaries, when taken in
conjunction with the overall remuneration packages, are considered by the Remuneration Committee to be appropriate to help
attract, retain and motivate high calibre Executive Directors and reflect the experience of the individuals concerned.
The Executive Directors’ salaries were increased in line with inflation (2.5%) for 2019. The non-executive Director fees were
unchanged during the year.
Annual bonus
During the year, the Executive Directors were eligible for an annual bonus pursuant to which they could earn up to 100 per
cent of their base annual salary, with 50 per cent linked to meeting internal and market expectations in respect of revenue and
adjusted EBITDA and a potential further 50 per cent linked to outperformance.
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Audioboom Group plc
GOVERNANCE
Remuneration Committee Report
(continued)
Share options
The Company established an EMI option scheme and an ‘unapproved’ share option scheme on 19 May 2014 pursuant to
which the CEO, CFO and other members of staff have been or may be granted share options. Options granted under this
scheme may have a vesting schedule and/or performance conditions attached.
460,000 options were granted to Directors during the year (including to Rob Proctor who later resigned as CEO prior to the
year-end) and no options granted to Directors were exercised or forfeited whilst in office during the year under review.
The number, exercise price, grant date and latest dates of exercise of options over ordinary shares in the Company held by
Directors at the end of the year were as follows:
Share Exercise Grant
options price date
Latest
exercise
date
1 September 2028
Brad Clarke 65,000 £2.40 1 September 2018
120,000 £1.30 20 March 2019
20 March 2029
Stuart Last 10,660 £4.125 24 September 20151 24 September 2025
7,000 £3.125 9 March 20161
9 March 2026
52,340 £2.185 8 May 20171
8 May 2027
90,000 £1.30 20 March 20191
20 March 2029
90,000 £2.075 20 December 2019 20 December 2029
1 options granted prior to being appointed as a Director
These options typically vest and become exercisable over a three-year period from their grant, subject (in respect of certain
options) to the satisfaction of performance conditions relating to how the Company performs by reference to its internal
budgets and external market expectations in each of the relevant financial periods. They may also vest in certain other prescribed
circumstances as provided for in the terms of the scheme.
Note - the number and exercise prices of the options have been adjusted to reflect the share consolidation effected in June 2019
Warrants
On his appointment to the Board on 1 September 2018, Michael Tobin was granted 300,000 warrants (‘Warrants’) over ordinary
shares. Following a subsequent amendment to their terms, a first tranche of 100,000 Warrants will be exercisable at a price of
£1.30 per share after six months from the date of grant and for five years thereafter. A second tranche of 100,000 Warrants
will vest if the Company’s share price exceeds £3.30 for 60 days within any rolling six month period. The second tranche
Warrants will be exercisable at a price of £3.30 per share from six months after vesting and for five years from that date. A third
tranche of 100,000 Warrants will vest if the Company’s share price exceeds £5.30 for 60 days within any rolling six month
period. The third tranche Warrants will be exercisable at a price of £5.30 per share from six months after vesting and for five
years from that date. The Warrants can only vest if Michael Tobin is Chairman at the relevant time, however once vested they
remain exercisable throughout the relevant exercise window irrespective of whether he is Chairman at the time of exercise.
In addition, Michael Tobin and Steven Smith are taken to be interested in further warrants over ordinary shares in relation to
the Company’s agreement with SPV Investments Limited (“SPV”) pursuant to which SPV provides guarantees to certain of the
Company’s podcast partners, as described further in note 17 to the financial statements. However, these warrants were not
awarded in relation to their position as directors of Audioboom.
Note - the number and exercise prices of the warrants have been adjusted to reflect the share consolidation effected in June 2019
24 Annual Report & Financial Statements 2019
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Audioboom Group plc
GOVERNANCE
Directors’ remuneration (audited)
The following table shows emoluments paid (or payable) to Directors during the year, applying the average exchange rates
(GBP to US$) used in the financial statements and reflecting that certain Directors were appointed or resigned during the
relevant period and that the period under review was 12 months compared to the 13 month prior period. There were inflation
based increases in the salaries of the executive Directors and no increase in non-executive Director fees in the year. Any
remuneration arising when individuals were not a Director of the Company is not disclosed in this note:
Salary/fees
US$’000
Current Directors:
Brad Clarke (appointed 1 September 2018) 148
Stuart Last (appointed 20 December 2019)1 n/a
Roger Maddock (non-executive) 38
Steven Smith (non-executive) 38
Michael Tobin (non-executive Chairman)
(appointed 1 September 2018) 45
Past Directors:
Rob Proctor (resigned 30 September 2019) 2622
Malcolm Wall (non-executive Chairman)
(resigned 1 September 2018) –
12 months to
31 December 2019
Total
Bonus emoluments
US$’000 US$’000
13 months to
30 November 2018
Total
emoluments
US$’000
88 236
n/a n/a
– 38
– 38
– 45
98 3602
– –
59
n/a
43
43
13
280
47
485
532
186 718
1 Given the date of appointment, 2019 figures are considered immaterial
2 Figures include termination payment
Service contracts
The Chief Executive Officer and Chief Financial Officer have entered into service contracts with the Group that are terminable
by either party on not less than six months’ prior notice. The non-executive Directors have entered into letters of appointment
with the Group that are terminable by either party on not less than three months’ prior notice.
Pensions and private healthcare
There were pension arrangements in place for Rob Proctor with pension contributions of US$7,605 during the year (2018:
US$6,509), and for Brad Clarke with contributions of US$4,302 (2018 (for the period serving as a Director): US$1,469). There
are no private healthcare arrangements in place.
Directors’ share interests
The Directors’ shareholdings in the Company are set out in the Directors’ Report on page 14.
Annual Report & Financial Statements 2019
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Audioboom Group plc
GOVERNANCE
Remuneration Committee Report
(continued)
Committee performance evaluation
During the period, the operation and performance of the Remuneration Committee were considered by the Board as a
component of its self-evaluation process. No material areas of concern were raised and there were no specific actions or
recommendations resulting from the exercise. There will be an annual review going forward, from which actions and
recommendations may arise which will be reported in next year’s Annual Report.
Michael Tobin
Chairman of the Remuneration Committee
27 March 2020
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Audioboom Group plc
GOVERNANCE
Audit Committee Report
Overview
The purpose of the Audit Committee is to assist the Board in the effective discharge of its responsibilities for financial reporting,
corporate control and risk management. Its objectives are:
• to increase shareholder confidence and to ensure the credibility and objectivity of published financial information;
• to assist the Board in meeting its financial reporting responsibilities;
• to assist the Board in ensuring the effectiveness of the Company’s internal accounting and financial controls;
• to strengthen the independent position of the Company’s external auditors by providing channels of communication
between them and the non-executive Directors; and
• to review the performance of the Company’s external auditing functions.
The role of the Audit Committee is documented in its terms of reference which were adopted by the Board in April 2014 and
reviewed during the year. Its role of is one of oversight. The Audit Committee has no executive powers with regard to its
recommendations and does not relieve the Executive Directors of their responsibilities for these matters.
Composition
During the period, the Audit Committee was solely comprised of non-executive Directors: Roger Maddock (Chairman), Michael
Tobin and Steven Smith.
Audit Committee meetings
The Audit Committee met three times during the period. The attendance of its members at those meetings is set out in the
table on page 21. Representatives from the external auditors, Haysmacintyre LLP, and the Executive Directors were invited to
attend meetings as required, although the Audit Committee reserves time for discussion without invitees present.
The agenda for Audit Committee meetings is prepared in conjunction with the committee chairman. Submissions are circulated
in advance and may include drafts of interim and annual financial statements, related papers from management, audit planning
and key issues memoranda prepared by the external auditors and other papers relating to specific agenda items.
Activities of the Audit Committee
Key financial reporting activities
During the year and post year end, the Audit Committee considered specifically those matters with the potential likelihood to
have the greatest significant impact on the financial statements. As in previous periods, these included the projections forming
the basis of the Directors’ assessment of going concern, including the facilities and funding available to the Group for the
projection period, and the support for and/or treatment of the value of certain intangible assets.
Attention is drawn to note 1 of the financial statements (page 38) in respect of going concern considerations.
Other activities
In addition, during the year and post year end, the Audit Committee also undertook the following key activities:
• monitoring the Group’s working capital and cash position and adequacy of available facilities and funding;
• monitoring and updating the identified principal risks and uncertainties facing the business and the measures to mitigate
these (see pages 9 to 11);
• review and approval of the 2018 audited financial statements;
• review and approval of the 2019 unaudited interim financial statements;
• review and approval of the 2019 audit plan;
• review and approval of the 2019 audited financial statements;
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Audioboom Group plc
GOVERNANCE
Audit Committee Report
(continued)
• considering the impact of new accounting standards on the Group, including the adoption of IFRS 16 (Leases); and
• considering the impact that the Covid-19 pandemic may have on the Group’s cash flows and ability to continue as a going
concern, and corresponding reporting of this.
Committee performance evaluation
During the year the operation and performance of the Audit Committee were considered by the Board as a component of its
self-evaluation process. No areas of concern were raised and there were no specific actions or recommendations resulting
from the exercise. There will be an annual review going forward, from which actions and recommendations may arise which
will be reported in next year’s Annual Report.
External auditor
Haysmacintyre LLP were first appointed as the Group’s external auditor following the Company’s re-admission to AIM in 2014.
They were last re-appointed at the AGM on 20 June 2019. The Haysmacintyre LLP Senior Statutory Auditor is Christopher
Cork following a rotation due to the previous incumbent’s longevity of tenure.
The Audit Committee reviews the performance of the external auditor on an annual basis and plans to meet with them during
the year as required to discuss audit planning, any potential changes in accounting policies or related accounting issues, any
issues arising from the half year review or full year audit and any other special matters or investigations deemed necessary by
the Board.
Auditor independence and provision of non-audit services
The Audit Committee reviews with management the engagement of the external auditor for non-audit services and the level
of associated non-audit fees. For the year to 31 December 2019, the auditor earned c. £6,400 in respect of non-audit fees
(relating to certain tax matters). The Audit Committee is satisfied as to the independence of the auditor.
Risk management and internal control
The Group’s approach to risk management, identified principal risks and the steps taken to manage those risks are outlined on
pages 9 to 11.
Roger Maddock
Chair of the Audit Committee
27 March 2020
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Audioboom Group plc
FINANCIAL STATEMENTS
Independent Auditor’s Report to the
Shareholders of Audioboom Group plc
For the year ended 31 December 2019
Opinion
We have audited the financial statements of Audioboom Group plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2019 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity,
and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s affairs as at 31 December 2019 and of the Group’s loss for the year
then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Company and Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate;
or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
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Audioboom Group plc
FINANCIAL STATEMENTS
Independent Auditor’s Report to the
Shareholders of Audioboom Group plc (continued)
Response
In response to this risk we performed the following
procedures:
• Reviewed management’s
the
appropriateness of the going concern basis of
preparation to consider its reasonableness.
assessment of
• Reviewed and assessed management forecasts, used in
support of their going concern assessment, including an
assessment of key assumptions together with an
assessment of sensitivity testing performed by
management.
• Confirmed the integrity and arithmetical accuracy of
management forecasts.
• Assessed the historical accuracy of previous forecasts
prepared by management.
• Obtained and reviewed the financing agreements put
in place after the reporting date.
• Considered the Directors’ assessment of the impact that
the COVID-19 outbreak may have on the Group’s
trading and cash flow prospects and its corresponding
impact on the appropriateness of the going concern
basis of preparation of these financial statements.
• Reviewed the appropriateness of the disclosures made
in the financial statements in respect of going concern.
In response to this risk we performed the following
procedures:
• Assessed the Group’s accounting policy for each
material revenue stream and performed walkthrough
procedures to assess the design and implementation of
controls.
• Tested management review controls in respect of
revenue recognition.
• Performed substantive procedures on a sample of
revenue generating transactions.
• Performed detailed cut-off procedures to assess the
accuracy of revenue recognised around the reporting
date.
Risk
Going concern
The Group has reported a total comprehensive loss for
the year of US$7.1m (2018: US$8.5m) and cash outflows
from operating activities of US$5.2m (2018: US$7.3m).
These factors indicate that a risk that use of the going
concern basis of preparation of the financial statements
may not be appropriate.
Revenue recognition
The Group recognises revenue in respect of the provision
of advertising and sponsorship services on its distributed
content. There is a risk that reported revenue has been
materially misstated either as a result of fraud or error.
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Audioboom Group plc
FINANCIAL STATEMENTS
Risk
Response
Implementation of IFRS 16: Leases
IFRS 16: Leases became effective for accounting periods
commencing 1 January 2019 with the result that the Group
has adopted the provisions of this standard for the first time.
The Group has recognised right of use assets at a cost of
US$1.3m and a corresponding lease liability of US$1.3m
as at 31 December 2019.
There is a risk of material misstatement of assets and
liabilities associated with the accounting for this standard’s
transition.
In response to this risk we performed the following
procedures:
• Reviewed the IFRS 16 transition calculations against the
terms of extant lease agreements and assessed whether
management’s accounting for leases was consistent
with the requirements of the standard.
• Assessed the appropriateness of the discount factor
used by management in determining the value of the
lease liability.
• Reviewed the accuracy of the lease disclosures in the
Group’s financial statements.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from
material misstatement we define materiality as the magnitude of misstatement that makes it probable that the economic
decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced.
We determined overall materiality for the Group financial statements as a whole to be US$332,000 being 1.5% of revenue for
the year. We considered it appropriate to determine our materiality based on revenue as we consider this to be the key metric
in assessing the financial performance and position of the Company.
We apply a different level of materiality, performance materiality, to determine the extent of our testing and this was set at
75% of the overall financial statements’ materiality.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of US$16,600 as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our audit scope included all components and was performed to component materiality. Our audit work therefore covered
100% of Group revenue, Group loss and total Group assets and liabilities. It was performed to the materiality levels set out
above.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Annual Report & Financial Statements 2019
31
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Audioboom Group plc
FINANCIAL STATEMENTS
Independent Auditor’s Report to the
Shareholders of Audioboom Group plc (continued)
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course
of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991 requires
us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Group financial statements are not in agreement with the accounting records and returns; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement set out on page 16, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of this report
This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jersey)
Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Christopher Cork (Senior Statutory Auditor)
for and on behalf of Haysmacintyre LLP
Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
27 March 2020
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Audioboom Group plc
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Adjusted operating loss
– Amortisation and impairment of intangible assets
– Share based payments
– Depreciation
– Corporate transaction costs
– Depreciation – leases / Rent - leases
– Restructuring costs
Operating loss
Finance costs
Loss before tax
Income tax credit
Loss for the financial period attributable to equity holders of the parent
Other comprehensive loss
Foreign currency translation difference
Total comprehensive loss for the period
Loss per share
from continuing operations
Basic and diluted
All results for both periods are derived from continuing operations.
Notes
2
10
18
8
16
3
6
7
12 months to
31 December
2019
US$’000
13 months to
31 December
2018
US$’000
22,310
(17,414)
4,896
(12,339)
(2,860)
(2,420)
(1,429)
(60)
–
(331)
(343)
(7,443)
(97)
(7,540)
221
(7,319)
193
(7,126)
11,656
(8,505)
3,151
(11,381)
(4,685)
(578)
(385)
(77)
(1,708)
(404)
(393)
(8,230)
(130)
(8,360)
272
(8,088)
(450)
(8,538)
9
(55) cents
(77) cents
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Audioboom Group plc
FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
As at 31 December 2019
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Right of use asset
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
Current liabilities
Trade and other payables
Deferred taxation
NET CURRENT ASSETS
Non-current liabilities
Lease liability
NET ASSETS
EQUITY
Share capital
Share premium
Issue cost reserve
Foreign exchange translation reserve
Reverse acquisition reserve
Retained earnings
TOTAL EQUITY
As at
31 December 2019
US$'000
US$'000
As at
31 December 2018
US$'000
US$'000
Notes
10
11
16
13
14
7
14
15
15
–
140
1,300
7,120
1,992
2,420
152
-
1,440
2,572
4,169
1,581
9,112
10,552
(5,861)
–
3,251
(1,029)
3,662
–
56,210
(2,048)
(337)
(3,380)
(46,783)
3,662
5,750
8,322
(4,087)
(203)
1,460
–
4,032
–
50,883
(2,048)
(530)
(3,380)
(40,893)
4,032
The accompanying accounting policies and notes form an integral part of these financial statements.
These financial statements for Audioboom Group plc (Jersey company registration number 85292), which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement
of Cash Flow, the Consolidated Statement of Changes in Equity and related Notes 1 to 20 were approved and authorised for
issue by the Board of Directors on 27 March 2020 and were signed on its behalf by:
Brad Clarke
Chief Financial Officer
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Audioboom Group plc
FINANCIAL STATEMENTS
Consolidated Cash Flow Statement
For the year ended 31 December 2019
Loss from continuing operations
Loss for the period
Adjustments for:
Taxation credit
Amortisation and impairment of intangible assets
Effect of retranslation of intangible assets
Depreciation of fixed assets
Effect of retranslation of fixed assets
Share based payments
Increase in trade and other receivables
Increase in trade and other payables
Foreign exchange loss
Cash flows from operating activities
Taxation received
Net cash used in operating activities
Investing activities
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Convertible loan interest and fees
Proceeds from convertible loan notes
Proceeds from issue of ordinary share capital (net of issue costs)
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
12 months to
31 December
2019
US$’000
13 months to
31 December
2018
US$’000
(7,319)
(7,319)
(221)
2,420
–
60
(11)
1,429
(2,952)
1,413
(17)
(5,198)
106
(5,092)
(36)
(36)
–
–
5,539
5,539
411
1,581
–
1,992
(8,088)
(8,088)
(272)
578
183
77
25
385
(856)
1,413
(715)
(7,270)
214
(7,056)
(82)
(82)
(130)
1,995
5,794
7,659
521
968
92
1,581
The Group had no borrowings in either financial period and therefore no reconciliation of net debt has been provided.
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Audioboom Group plc
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Foreign
Issue Reverse exchange
Share Share cost acquisition translation Retained Total
capital premium reserve reserve reserve earnings equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 30 November 2017 – 43,224 (2,048) (3,380) (80) (33,190) 4,526
Loss for the period – – – – – (8,088) (8,088)
Issue of shares – 7,659 – – – – 7,659
Equity-settled share-based payments – – – – – 385 385
Foreign exchange loss on translation
of overseas subsidiaries – – – – (450) – (450)
At 31 December 2018 – 50,883 (2,048) (3,380) (530) (40,893) 4,032
Loss for the period – – – – – (7,319) (7,319)
Issue of shares – 5,327 – – – – 5,327
Equity-settled share-based payments – – – – – 1,429 1,429
Foreign exchange gain on translation
of overseas subsidiaries – – – – 193 – 193
At 31 December 2019 – 56,210 (2,048) (3,380) (337) (46,783) 3,662
Share premium
Share premium represents the consideration paid for shares in excess of par value (nil), less directly attributable costs.
Issue cost reserve
The issue cost reserve arose from expenses incurred on share issues.
Reverse acquisition reserve
The reverse acquisition reserve relates to the reverse acquisition of Audioboom Limited by Audioboom Group plc on 20 May
2014.
Foreign exchange translation reserve
The foreign exchange translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign operations.
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
Accounting policies
1.
General information and basis of preparation
Audioboom Group plc is incorporated in Jersey under the Companies (Jersey) Law 1991. The Company’s shares are traded on
AIM, the market of that name, operated by the London Stock Exchange. The address of the registered office is given on page
1. The Company is required under AIM rule 19 to provide shareholders with audited consolidated financial statements.
The Group prepares its consolidated financial statements in accordance with International Accounting Standards (‘IAS’) and
International Financial Reporting Standards (‘IFRS’) as adopted by the EU. The financial statements have been prepared on the
historical cost basis. The consolidated financial statements have been prepared in accordance with and in compliance with the
Companies (Jersey) Law 1991, an amendment to which (Amendment No. 4 s. 105(11) – 2009) means separate parent company
financial statements are not required.
The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are
based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.
New standards adopted by the Group
The Group has applied the following standards and amendments for the first time for the annual reporting period commencing
1 January 2019:
• IFRS 16: Leases
During the year the Group adopted IFRS 16: Leases which is effective from 1 January 2019. The Group has elected to adopt
the modified retrospective approach, meaning that it has not restated its comparative financial information. Details of assets
recognised as a result of the existence of right of use leases are outlined in note 16.
Standards, amendments and interpretations of published standards not yet effective
Certain standards, amendments to, and interpretations of, published standards have been published that are mandatory for
the Group’s accounting years beginning on or after 1 January 2020 or later years and which the Group has decided not to
adopt early:
• Amendments to references to the conceptual framework in IFRS standards (effective for periods commencing on or after
1 January 2020)
• Definition of a business (amendments to IFRS 3) (effective for periods commencing on or after 1 January 2020)
• Definition of material (amendments to IAS 1 and IAS 8) (effective for periods commencing on or after 1 January 2020)
• Classification of liabilities as current and non-current (amendments to IAS 1) (effective for periods commencing on or after
1 January 2020)
None of the above listed changes are anticipated to have a material impact on the Group’s financial statements.
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
Key accounting policies
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient
funds to continue in operational existence for the foreseeable future. Following the recently announced US$4 million loan
facility arrangement with SPV Investments Limited (see note 20), the Board’s forecasts for the Group, including due
consideration of the continued operating losses, projected increase in revenues and decreasing cash-burn of the Group (and
taking account of reasonably possible changes in trading performance and also changes outside of expected trading
performance), indicate that the Group will have sufficient cash available to continue in operational existence for the next
12 months from the date of approval of the financial statements and beyond. No additional funding is considered to be required
and, based on the Board’s forecasts, the Group considers that it will not require additional funding for the foreseeable future
for the purposes of meeting its liabilities as and when they fall due. The Board believes that the Group is well placed to manage
its business risks, and longer term strategic objectives, successfully.
In forming this assessment the Directors have considered the possible impact that the global outbreak of COVID-19 may have
on the Group. The Directors acknowledge that it is challenging to predict the full impact this may have on the Group.
Notwithstanding, management has carried out sensitivity analyses of the Group’s cash flow models to quantify the impact of
a range of possible outcomes, including lower than anticipated revenues, and the mitigations that the Group has available to
it, including a reduction in overhead costs, active working capital management and the availability of finance from SPV
Investments Limited. Accordingly, the Directors are satisfied that the Group will continue to be able to meet its ongoing liabilities
as and when they fall due in reasonably foreseeable circumstances.
Therefore the Directors consider the going concern basis of preparation of these financial statements appropriate.
Revenue
Revenue represents amounts receivable for services provided in the normal course of business, and excludes intra-group sales,
Value Added Tax and trade discounts.
Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits
associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when
the criteria for each of the Group’s different activities has been met. Revenue comprises:
• Sale of advertising: the value of goods and services is recognised on broadcast of the podcast
• Sponsorship income: the value of goods and services is recognised over the time to which it relates
• Sale of subscriptions: the value of goods and services is recognised across the period of subscription
Foreign currency
For the purpose of the consolidated financial statements, the results and financial position of each Group company are
expressed in US Dollars, which is the presentational currency of the consolidated financial statements. The majority of trade
in the Company is in the USA and therefore the Company’s functional currency is US Dollars.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on
the balance sheet date. Non-monetary items that are measured in terms of historical cost in a 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.
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Audioboom Group plc
FINANCIAL STATEMENTS
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 balance sheet date. Income and expense items are translated at the average
monthly rate of exchange ruling at the date of the transaction, unless exchange rates fluctuate significantly during that month,
in which case the exchange rates at the date of the transactions are used.
Intangible assets
Intangible fixed assets are stated at cost less amortisation. Internally developed software is recognised only if all of the following
conditions are met:
• an asset is created that can be separately identified;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Amortisation is calculated to write down the cost of all intangible fixed assets by equal annual instalments over their expected
useful lives.
All intangible assets are considered to have a finite useful life and, once ready for use, software development is amortised over
a period of five years on a straight line basis.
The carrying values of assets, other than those to which IAS 36: Impairment of Assets does not apply, are reviewed at the end
of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured
by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the
higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future
cash flow.
An impairment loss is recognised in the income statement immediately. When there is a change in the estimates used to
determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the
previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined
(net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss
immediately.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated
useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset
is fully depreciated. The principal annual rates used for this purpose are between three and five years.
The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting
period to ensure that the amounts, method and years of depreciation are consistent with previous estimates and the expected
pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the
cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the
cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the
day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Costs also comprise the
initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group are
obligated to incur when the asset is acquired, if applicable.
Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
Leases
Leases of property for periods longer than one year are capitalised at the fair value of the leased property (disclosed as a right of
use asset on the face of the statement of financial position) with the corresponding rental obligations, net of finance charges,
included in current and non-current liabilities. The fair value of the lease asset and corresponding liability is calculated as the present
value of the minimum value of lease payments for which the Group will become liable, discounted at a rate considered appropriate.
Lease rental payments are split between a reduction in the lease liability and finance cost, with depreciation charges of the
right of use asset over its useful economic life recognised as an expense in the Group’s income statement.
Payments made under operating leases, where the risks and rewards are not transferred to the Group, are recognised as an
expense in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term, highly liquid investments that
are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Business combinations
The Group comprises a holding company and a number of individual 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.
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.
Goodwill is not amortised but is subject to an annual impairment review. Impairment tests on goodwill are undertaken at the
balance sheet date. 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.
Intangible assets that have been separately identified and initially measured at fair value as a result of business combinations
have been ascribed a useful economic life. The ascribed value of these intangible assets is being amortised on a straight-line
basis over their estimated useful economic life, which is considered to be five years.
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.
Warrants
Warrants issued to Directors, employees and third-party suppliers are measured at the fair value of the service provided with
reference to comparable cash settled transactions or, where the value of the services provided is uncertain, with reference to
an appropriate valuation methodology. Warrants are ascribed a value at the date of grant, with this value recognised as an
expense in the statement of comprehensive income over the relevant vesting period.
Current and deferred taxation
Current tax is the expected tax payable on taxable income for the period, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustments to tax payable in respect of previous periods.
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Audioboom Group plc
FINANCIAL STATEMENTS
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits (‘temporary
differences’) and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Where there are deductible temporary differences arising in subsidiaries,
deferred tax assets are recognised only where it is probable that they will reverse in the foreseeable future and taxable profits
will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient tax profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited to the statement of income.
Financial Instruments
Financial assets
Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as loans and receivable financial assets, using the effective interest method less impairment. Interest is recognised by
applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.
Financial liabilities
All financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured
at amortised cost using the effective interest method, other than those categorised as fair value through profit or loss. Financial
liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
Equity instruments
Instruments classified as equity are measured at cost and are not remeasured subsequently.
Critical accounting judgements and key areas of estimation uncertainty
Share based compensation
The Group issues equity settled share based payments to certain Directors and employees, which have included grants of
options in the current period. Equity settled share based payments are measured at fair value at the date of grant, with the
charge being recognised within the statement of comprehensive income over the period of service to which the grant relates.
The fair value of share options is measured using a Black-Scholes framework. The Directors have used judgement in the
calculation of the fair values of the share based compensation which has been granted during the period, and different
assumptions in the model would change the financial result of the business.
Warrants
The Group issues warrants to certain Directors and third parties, which have included grants of warrants in the current period.
Warrants are measured at the fair value of the service provided with reference to comparable cash settled transactions or
appropriate valuation methodologies at the date of grant, with the charge being recognised within the statement of
comprehensive income over the period of service to which the grant relates.
Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
Valuation of intangible assets
In ascribing a fair value to intangible assets acquired as part of a business combination, the Directors make significant estimates
as to the future economic benefit expected to arise from such assets, as well as the fair value of costs a market participator
would incur to re-develop them.
Impairment of goodwill and intangible assets
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. Other intangible assets are
tested whenever circumstances indicate that their carrying value may not be recoverable. The recoverable amount is determined
based on value in use calculations. The Group has fully impaired the goodwill and intangible assets during the period (2018:
US$nil impairment).
IFRS 16: Leases
The Group recognises lease liabilities at the present value of future cash flows. The determination of present value involves
judgements and estimates, in particular in relation to the discount factor to be applied to those cash flows. In determining an
appropriate discount factor the Directors considered a range of factors including the Group’s cost of capital together with the
interest rate charged on the Group’s external debt facilities. Having considered these factors the Directors have assessed that
8% is an appropriate discount factor to determine the value of the Group’s lease liabilities.
2.
Revenue
Subscription
Advertising
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
327
21,983
22,310
199
11,457
11,656
The Directors consider the Group to operate within one operating segment, content related revenue, and consequently
expenditure and balance sheet analysis is not presented between subscription and advertising services.
Geographical information
The Group’s operations are principally located in the UK and the USA. The main assets of the Group, cash and cash equivalents,
are held in Jersey.
The Group’s revenue from external customers by geographical location is detailed below:
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
United Kingdom
Rest of the World
USA
2,137
57
20,116
22,310
1,901
42
9,713
11,656
The Group invoiced 44% of its income to three customers who each represented more than 10% of the reported revenues.
The Group currently has three geographic revenue regions, however, as the Group’s controlling operations are primarily based in
the UK, there is no separation of income, expenditure and sections of the balance sheet for the purposes of segmental reporting.
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Audioboom Group plc
FINANCIAL STATEMENTS
3. Operating loss
Operating loss for the period has been arrived at after charging/(crediting) the following:
Depreciation of property, plant & equipment
Amortisation and impairment of intangible assets
Staff costs (refer to note 5 for detail)
60
2,420
6,142
77
578
5,302
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
4.
Auditor’s remuneration
Audit services
Fees payable to the Company auditor for the audit of the
consolidated annual financial statements
The audit of the Company's subsidiaries pursuant to legislation
Non-audit services
Tax compliance and advisory services
Other services
5.
Staff costs
Average number of production, editorial and sales staff
Average number of management and administrative staff
Wages and salaries
Social security costs
Pension costs (defined contribution scheme)
Share based payments
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
24
49
9
–
82
24
25
8
13
70
12 months to
13 months to
31 December 2019 31 December 2018
Number
Number
32
8
40
36
11
47
US$’000
US$’000
4,597
348
221
976
6,142
4,490
556
81
175
5,302
Details of Directors’ remuneration are set out in the Remuneration Committee Report on pages 23 to 26.
Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
6.
Finance costs
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
Depreciation – lease interest (see note 16)
Convertible loan interest and arrangement fee
(97)
–
(97)
–
(130)
(130)
In the prior period, in April and May 2018, the Group issued convertible loan notes for up to £1.5 million to Candy Ventures
sarl, an investment vehicle owned 90% by Nick Candy, the Group’s largest shareholder, and a former non-executive Director.
Steven Smith, a Director of the Company, is a 10% shareholder and director of Candy Ventures sarl. The terms of the loan note
provided for interest at a rate of 10% per annum and an arrangement fee. The Group drew down the full balance of the loan
note before converting the loan (and accrued interest) into shares, in accordance with its terms, at 2p per share (pre the 100:1
share consolidation), at the time of the Group’s £4.5 million fund raise which concluded in June 2018.
Taxation
7.
Current tax
No liability to UK corporation tax arose on ordinary activities for the 12 months ended 31 December 2019 nor for the
13 months ended 31 December 2018. The tax credit for both 2019 and 2018 arose in respect of research and development.
Tax reconciliation
The taxation credit on the loss for the period differs from the amount computed by applying the corporation tax rate to the
loss before tax for the following reasons:
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
Loss on ordinary activities before tax
Tax at UK corporation tax rate of 19.00% (2018: 19.00%)
Expenses not deductible for tax purposes
Additional deductions for R&D expenditure
Surrender of tax losses for R&D tax credit refund
Adjustment in respect of prior periods (current & inter-company)
Deferred tax not recognised
Effect of share based payments
Tax credit and effective tax rate for the period
(7,540)
(1,433)
534
(28)
9
–
425
272
(221)
(8,360)
(1,588)
393
(83)
35
(1)
899
73
(272)
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
Current tax
UK corporation tax on losses in the current year
Deferred tax credit
Tax credit recognised in the consolidated statement of income
(18)
(203)
(221)
(92)
(180)
(272)
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Audioboom Group plc
FINANCIAL STATEMENTS
The Group has carried forward UK losses amounting to US$34.8 million as of 31 December 2019 (2018: US$28.2 million).
During the year, the Company has impaired its intangible assets in full, and therefore the deferred tax asset associated with
this asset has been impaired in full (2018: US$4.5 million).
There was a deferred tax liability of US$nil (2018: US$203,000 relating entirely to timing differences on intangible assets arising
from the acquisition of SONR News Limited by the Group).
8.
Corporate transaction costs
In the prior year, on 13 February 2018, the Group announced its intention to acquire the entire issued share capital of Triton
Digital Canada Inc for a cash consideration of US$185 million. On 15 May 2018, the Group announced that the proposed
acquisition would not be proceeding as it was not possible to complete the placing required to raise the required funds. The
Group did however incur US$1.7 million of costs in relation to corporate fees incurred during the aborted acquisition process.
No costs were incurred in the current year in relation to this transaction.
9.
Loss per share
Basic earnings per share is calculated by dividing the loss attributable to shareholders by the weighted average number of
ordinary shares in issue during the period.
IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings
per share, or increase the loss per share. For a loss-making company with outstanding share options, the net loss per share
would be decreased by the exercise of options. Therefore, as per IAS33:36, the anti-dilutive potential ordinary shares are
disregarded in the calculation of diluted EPS.
The Company completed a 100:1 share consolidation on 21 June 2019 and the calculations set out below reflect this.
Reconciliation of the loss and weighted average number of shares used in the calculation are set out below:
Weighted average
number of shares
Loss
Per share amount
12 months ended
31 December 2019
US$’000
Thousand
Cents
Basic and diluted EPS
Loss attributable to shareholders:
– Continuing and discontinued operations
(7,319)
13,385
(55)
13 months ended
31 December 2018
US$’000
Thousand
Cents
Basic and diluted EPS
Loss attributable to shareholders:
– Continuing and discontinued operations
(8,088)
10,474
(77)
Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
10.
Intangible assets
Cost
At 31 December 2018 and
31 December 2019
Amortisation
At 31 December 2018
Impairment charge
At 31 December 2019
Net book value
At 31 December 2018
At 31 December 2019
Software
development
US$’000
Intellectual
property
US$’000
Goodwill arising
on consolidation
US$’000
Total
US$’000
576
123
453
576
453
–
2,164
1,080
1,084
2,164
1,084
–
883
–
883
883
833
–
3,623
1,203
2,420
3,623
2,420
–
The Group has fully impaired the goodwill and intangible assets during the period (2018: US$nil impairment).
The Group purchased SONR News Limited (‘SONR’), a natural language processing (NLP) and artificial intelligence (AI)
development company, in March 2017 for £1.42 million. The intangible asset previously carried by the Group related in its
entirety to that acquisition and subsequent development costs capitalised in relation to SONR and its associated intellectual
property.
The Group tests goodwill annually for impairment, or more frequently if there are indications that it might be impaired. Other
intangibles are subject to tests for impairment where there are considered to be indicators that such tests are required. As at
31 December 2019, all the Group’s intangible assets were subject to an impairment review performed by the Directors.
The recoverable value of goodwill arising on consolidation and other intangible assets was measured with reference to expected
discounted future cash flows arising and commercial valuations associated with opportunities and partnerships that SONR is
or was in the process of securing. In making this assessment, the Directors have considered the probability of potential
opportunities and partnerships being formally agreed and the sensitivity of recoverable values to changes in their associated
valuations.
The Directors reassessed the SONR business plan and associated projected cash flows and the assets held are now deemed
to be obsolete and so have no value in use nor any fair value (less cost of sale). This has resulted in an overall impairment
charge of US$2.4 million.
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Audioboom Group plc
FINANCIAL STATEMENTS
11. Property, plant and equipment
Furniture &
equipment Computers Technical Studio
US$’000 US$’000 US$’000 US$’000
Total
US$’000
Cost
At 31 December 2018 54 188 3 124
Additions – 36 – –
Disposals (1) – – –
At 31 December 2019 53 224 3 124
Depreciation
At 31 December 2018 33 108 3 73
Charge for the period 9 33 – 18
Disposals – – – –
Foreign exchange effect – (13) – –
At 31 December 2019 42 128 3 91
Net book value
At 31 December 2018 21 80 – 51
At 31 December 2019 11 96 – 33
369
36
(1)
404
217
60
–
(13)
264
152
140
12. Subsidiaries
As at 31 December 2019, Audioboom Group plc held more than 20% of the share capital of the following companies:
Registered office
Class of shares
% held by parent
Audioboom Limited
The Morocco Store, 1a-1b Leathermarket Street,
London SE1 3HN, England
Ordinary
Audioboom Inc.
251 Little Falls Drive, Wilmington, Delaware 1980, USA Ordinary
Audioboom India
PVT Limited
Office # 5, Silver Fern Commercial, 3rd Floor,
Near Karve Statue, Karve Road, Kothrud,
Pune 411038, Maharashtra, India
SONR News Limited
The Morocco Store, 1a-1b Leathermarket Street,
London SE1 3HN, England
Austin Advertising Inc.
1013 Centre Road, Suite 403S, Wilmington,
Delaware 19805, USA
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
Audioboom Inc and Audioboom India PVT Limited are held through Audioboom Limited. Austin Advertising Inc is held through
Audioboom Inc.
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
13. Trade and other receivables
As at
As at
31 December 2019 31 December 2018
US$’000
US$’000
Amounts receivable for the sale of goods and services
Allowance for doubtful debts
Net receivables
Other receivables
Prepayments and accrued income
Taxes recoverable
5,263
(28)
5,235
288
1,535
62
7,120
3,063
(70)
2,993
590
521
65
4,169
The average credit period taken on sales of goods and services is 86 days (2018: 94 days). No interest is charged on receivables.
Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods and services, determined
by reference to past default experience and likelihood of recovery as assessed by the Directors.
Included in the Group’s trade receivable balance are debtors with a carrying amount of US$584,000 (2018: US$269,000)
which are past due at the reporting date.
14. Trade and other payables
Current liabilities
Trade payables
Other taxes and social security
Accruals and deferred income
Other payables
Lease liability
Trade and other creditors due within less than one year
Non-current liabilities
Lease liability due within more than one year
Total trade and other payables
As at
As at
31 December 2019 31 December 2018
US$’000
US$’000
3,918
55
1,492
56
340
5,861
1,029
6,890
3,058
65
793
171
–
4,087
–
4,087
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 72 days (2018: 98 days). The Group has financial risk management policies in place
to ensure that all payables are paid within the credit time frame.
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Audioboom Group plc
FINANCIAL STATEMENTS
15. Stated capital account
On 21 June 2019, the Company consolidated every 100 existing ordinary shares of no par value into one new ordinary share
of no par value and the numbers below are adjusted to reflect this.
At 30 November 2017
Shares issued in the period
Shares issued at 200p each
Shares issued at 300p each
At 31 December 2018
Shares issued in the year
Shares issued at 130p each
Shares issued at 250p each
At 31 December 2019
No. of
shares
9,306,499
760,411
1,666,000
11,732,910
1,153,847
1,120,000
14,006,757
Share
capital
US$’000
–
–
–
–
–
–
–
Share
premium
US$’000
43,224
2,023
5,636
50,883
1,931
3,396
56,210
There is no authorised share capital and all shares rank pari passu. All issued share capital is fully paid up. All ordinary shares
have no par value.
16. Right of use asset leases
Amounts recognised on the balance sheet
Right of use assets
Buildings
Lease liabilities
Current
Non-current
As at
As at
31 December 2019 31 December 2018
US$’000
US$’000
1,300
340
1,029
1,369
–
–
–
–
The Company has adopted the modified retrospective approach to the implementation of IFRS 16: Leases. As a result, no
adjustment has been made to comparative financial information.
As at
As at
31 December 2019 31 December 2018
US$’000
US$’000
Amounts recognised on the consolidated statement of comprehensive income
Depreciation charge of right of use assets
Buildings
Interest expense
Total cash outflow for leases
(331)
(97)
(428)
–
–
–
Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
17. Related party transactions
The following share subscription, issue of warrants and special purpose vehicle notes are quoted before (and after) the
100:1 share consolidation, which was completed on 21 June 2019.
Share subscriptions
Candy Ventures sarl subscribed for 46,153,850 (461,539) new ordinary shares at 1.3p (£1.30) in February 2019 and a further
42,400,000 (424,000) new ordinary shares at 2.5p (£2.50) in May 2019. Candy Ventures sarl is the Company’s largest
shareholder and an investment vehicle 90% owned by Nick Candy. Steven Smith, a non-executive Director of the Company, is
a 10% shareholder and director of Candy Ventures sarl.
Michael Tobin, non-executive Chairman of the Company, subscribed for 3,846,160 (38,462) ordinary shares at 1.3p (£1.30) in
February 2019 and a further 3,600,000 (36,000) ordinary shares at 2.5p (£2.50) in May 2019.
Roger Maddock, a non-executive Director of the Company, subscribed for 3,846,160 (38,462) ordinary shares at 1.5p (£1.50)
in February 2019 and a further 2,000,000 (20,000) ordinary shares at 2.5p (£2.50) in May 2019. The Preston Trust (being a
trust for the benefit of the family of Roger Maddock) subscribed for 4,000,000 (40,000) ordinary shares at 2.5p (£2.50) in May
2019.
Warrants
In order to allow the subscription shares in February 2019 to be issued on a timely basis and within the Company’s existing
share allotment authorities and without the need to convene an extraordinary general meeting of the Company, Michael Tobin
agreed that the exercise of his 30,000,000 (300,000) warrants (split into three tranches of 10,000,000 (100,000) warrants)
over new ordinary shares, awarded to him on 3 September 2018, be made conditional upon the Company obtaining shareholder
authorities to allot and issue the new ordinary shares arising on exercise of the warrants free of pre-emption rights. Such
authority was granted at a general meeting held on 21 May 2019. In return, and in recognition that such warrants should be
an incentive, the Company agreed to (a) lower the exercise prices of the warrants from 2.4p (£2.40), 4.4p (£4.40) and 6.4p
(£6.40) to 1.3p (£1.30), 3.3p (£3.30) and 5.3p (£5.30) respectively and (b) lower the share price hurdle for exercise of the
second and third tranche of the warrants from 4.4p (£4.40) and 6.4p (£6.40) to 3.3p (£3.30) and 5.3p (£5.30) respectively.
In addition, and in order to obtain a substantial participation in the subscription, the Company agreed with Nick Candy to
extend the exercise period of 12,000,000 (120,000) warrants over new ordinary shares held by him, granted pursuant to an
agreement dated 2 April 2016, from 2 April 2019 to 31 March 2024. These warrants have an exercise price of 2.5p (£2.50)
per ordinary share.
Special Purpose Vehicle
On 17 June 2019, the Company agreed a new content funding facility with SPV Investments Ltd, a special purpose vehicle
('SPV') which has been established and is owned equally by Michael Tobin, the Company's Chairman, and Candy Ventures sarl,
the Company's largest shareholder. The SPV will provide minimum revenue guarantees to certain leading new content partners
of the Company. Audioboom will pay the SPV 8% of the net advertising revenue (after paying the content partner its share)
received by Audioboom, in relation to those podcasts. The underlying providers of the guarantees will be granted 2,500,000
(25,000) warrants to subscribe for ordinary shares in the Company for every US$1 million of guarantee provided, subject to a
maximum of 10,000,000 (100,000) warrants. The exercise price of these warrants will be 3.3p (£3.30) per ordinary share each,
with such warrants being exercisable for five years from grant. The first guarantee provided by the SPV in June 2019 led to an
initial grant of an aggregate of 2,500,000 (25,000) warrants split equally between Michael Tobin and Candy Ventures sarl.
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FINANCIAL STATEMENTS
Remuneration of key management personnel
The remuneration of key management personnel of the Group, excluding Directors, is set out below in aggregate for each of
the categories specified in IAS 24 Related Party Disclosures.
12 months to
13 months to
31 December 2019 31 December 2018
US$’000
US$’000
Short-term employment benefits
Post-employment benefits
77
–
77
68
2
70
Details of Directors’ remuneration are set out in the Remuneration Committee Report on pages 23 to 26.
18. Share-based payments
On 21 June 2019, the Company consolidated every 100 existing ordinary shares of no par value into one new ordinary share
of no par value and the numbers below are adjusted to reflect this.
The Company has share option schemes for employees of the Group. Options are exercisable at the price agreed at the time
of the issue of the share option. The vesting period and/or any performance conditions vary between employees. If the options
remain unexercised after a period of 10 years from date of grant the options expire. Options are typically forfeited if the
employee leaves the Group before the options vest. Details of the share options granted during the period are as follows:
2019
2018
Outstanding at beginning of period
Granted during the period
Forfeited/lapsed during the period
Exercised during the period
Outstanding at end of period
Exercisable at end of period
Number of
share options
563,644
809,600
(160,601)
–
1,212,643
631,960
Weighted
average
exercise
price (£)
1.937
1.613
1.610
–
1.759
1.837
Number of
share options
621,745
75,000
(133,101)
–
563,644
399,700
Weighted
average
exercise
price (£)
2.000
2.400
3.192
–
1.937
2.655
The options outstanding at 31 December 2019 had a weighted average exercise price of £1.76, and a weighted average
remaining contractual life of 5 years. The inputs into the Black-Scholes model are as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield
2019
2.906
1.717
85%
10 years
0.5%
0%
2018
2.400
2.400
85%
10 years
0.5%
0%
Annual Report & Financial Statements 2019
51
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
Expected volatility was determined by assessing the movements of the share price since the readmission to AIM in May 2014.
The Group recognised total expenses of US$977,000 related to equity-settled share-based payment transactions for the
12 month period ended 31 December 2019 (13 months to 31 December 2018: US$4,000).
Share option charge
Warrant charge
2019
US$’000
976
453
1,429
2018
US$’000
4
381
385
During the period, the Company revised the terms associated with the warrants to subscribe for ordinary shares held by
Michael Tobin, the non-executive Chairman of the Company, which were issued in 2018, details of which are disclosed in
note 17.
In addition, in December 2019, 45,000 warrants to subscribe for ordinary shares in the Company previously issued to one of
its largest US podcast partners were cancelled in line with the terms of the agreement.
At the year end, the Company had in issue outstanding warrants for a total of 445,000 shares (2018: 705,715 shares) with a
weighted average exercise price of £3.08 (2018: £6.00). 245,000 (2018: 275,715) of the warrants were exercisable at the
year end, and the balance may become exercisable subject to performance conditions.
19. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to meet their financial obligations as they arise
while maximising the return to stakeholders. The capital structure of the Group consists of cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the
consolidated statement of changes in equity. As at the year end, the Group did not have any external borrowings, did not have
access to committed borrowing facilities, and was not subject to externally imposed capital requirements. Post year end, in
February 2020, the Company secured a US$4 million debt facility with two related parties (see note 20).
Categories of financial instruments
Loans & receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Trade and other payables
As at
As at
31 December 2019 31 December 2018
US$’000
US$’000
5,523
1,992
3,975
3,583
1,581
3,230
The carrying amounts of financial assets and financial liabilities recorded at amortised cost approximates to their fair values.
Financial and market risk management objectives
It is, and has been throughout the period under review, the Group’s policy not to use or trade in derivative financial instruments.
The Group’s financial instruments comprise its cash and cash equivalents and various items such as trade debtors and trade
creditors that arise directly from its operations. The main purpose of the financial assets and liabilities is to provide finance for
the Group’s operations in the period.
52 Annual Report & Financial Statements 2019
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Audioboom Group plc
FINANCIAL STATEMENTS
Currency risk management
The Group has limited exposure to foreign currency risk as a result of matching local currency costs to local currency receipts;
thus the main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The Board reviews and
agrees policies for managing these risks and they are summarised below. These policies have remained unchanged throughout
the period under review.
Interest rate risk management
The Group’s policy is to ensure that it maximises the interest income on surplus cash. This involves placing cash in a mix of
fixed rate and floating rate short-term deposits. There is no prescribed ratio of fixed to floating rate.
The Group holds the majority of its cash and cash equivalents in corporate current accounts. These accounts offer a competitive
interest rate with the advantage of quick access to the funds.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial
loss from defaults. The Group only transacts with entities after assessing credit quality using independent rating agencies and,
if not available, the Group uses other publicly available financial information and its own trading records to rate its major
customers. The Group’s exposure is continuously monitored and the aggregate value of transactions concluded is spread
amongst approved counterparties. Credit exposure is controlled by counterparty limits.
Ongoing credit evaluation is performed on the financial condition of accounts receivable. The credit risk on liquid funds is
limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The
carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the
Group’s maximum exposure to credit risk. Please refer to note 13 for more detail on trade receivables collection period.
The ageing of trade receivables (US$’000s) as at 31 December 2019 was:
Current
Over 30 days
Over 60 days
90 days +
US$2,468
53%
US$1,500
31%
US$711
7%
US$584
9%
Total
US$5,263
Liquidity risk management
The Group’s policy throughout the period has been to ensure continuity of funds. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities. Please refer to note 14 for more detail on trade payables payment period.
Fair value of financial instruments
The fair value of other non-derivative financial assets and financial liabilities are determined in accordance with generally
accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions.
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Annual Report & Financial Statements 2019
53
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Audioboom Group plc
FINANCIAL STATEMENTS
Notes
(continued)
20. Post balance sheet events
As referenced in note 17, in June 2019 the Company agreed a new content funding facility with SPV Investments Ltd, a special
purpose vehicle ('SPV') which has been established and is owned equally by Michael Tobin, the Company's Chairman, and
Candy Ventures sarl, the Company's largest shareholder. In January 2020, the second guarantee provided by the SPV led to a
grant of an aggregate of 43,750 warrants split equally between Michael Tobin and Candy Ventures sarl.
In February 2020, the Company announced a US$4 million secured loan facility arrangement (the “Facility”) with SPV. The
Facility will be drawn down in accordance with an agreed cash flow forecast schedule and has a minimum draw down amount
of US$200,000. The Facility will attract interest at a rate of 8 per cent. per annum on drawn down funds, together with a
US$80,000 arrangement fee payable on the first draw down, equivalent to 2 per cent. of the full US$4 million available under
the Facility. The accrued interest is payable at the date of repayment of the principal amount outstanding. The latest date for
repayment is 24 months from the commencement of the Facility, however it may be repaid earlier at the Company's election.
Any amounts repaid will not be available for subsequent drawdown. The SPV may require early repayment of some or all of the
amounts outstanding if the Company undertakes a future equity fundraising (provided that a minimum of US$3 million of any
such fundraise must remain available for other uses by the Company) or if there is a change of control of the Company. The
Facility will be secured against the assets of Audioboom Limited and will contain events of default which are customary in
nature for this type of loan facility. The interest rate payable will increase to 12 per cent. per annum in the case of default on
repayment by the Company. To date, no funds have been drawn down.
On 13 March 2020, the Company issued a further 13,325 ordinary shares of no par value to satisfy the exercise of share
options under the Company's share option scheme.
The Directors have considered the potential impact of the Covid-19 pandemic on the Group’s trading prospects and future
cash flows. They have concluded both that the going concern basis of preparation of these financial statements is appropriate
(details of this consideration can be found in note 1) and that no adjustment is required to the statement of financial position
as at 31 December 2019.
54 Annual Report & Financial Statements 2019
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Audioboom Group plc
Overview
Audioboom Group plc (“Audioboom”) is a global leader in podcasting – producing, distributing and
monetising premium audio content to millions of listeners around the world. Audioboom operates
internationally, with operations and global partnerships across North America, Europe, Asia and
Australia.
Audioboom provides technology and advertising services for a premium network of 250 top tier
podcasts, with key partners including ‘Casefile True Crime’ (US), ‘The Morning Toast’ (US), ‘And That’s
Why We Drink’ (US), ‘No Such Thing As A Fish’ (UK), ‘Starburns Audio’ (US), ‘The Cycling Podcast’ (UK)
and ‘The Totally Football Show’ (UK).
The Audioboom Originals Network is a slate of content produced by Audioboom including ‘The 45th’,
‘Covert’, ’It’s Happening with Snooki & Joey’, ‘Mafia’, ‘Dead Man Talking’ and ‘Blank Check’.
The platform allows content to be distributed via Apple Podcasts, Spotify, BookMyShow, Deezer,
Google Podcasts, iHeartRadio, RadioPublic, Saavn, Stitcher, Facebook and Twitter as well as a partner’s
own websites and mobile apps.
For more information, visit audioboom.com.
Contents
Strategic Report
Chairman’s Statement
Chief Executive Officer’s Review
Principal Risks and Uncertainties
Governance
Board of Directors
Directors’ Report
Corporate Governance Report
Remuneration Committee Report
Audit Committee Report
03
04
09
12
14
18
23
27
Financial Statements
Independent Auditor’s Report
Consolidated Statement of Comprehensive
Income
33
Consolidated Statement of Financial Position 34
Consolidated Cash Flow Statement
35
Consolidated Statement of Changes in Equity 36
37
Notes
29
2019
Audioboom Group plc
Annual Report & Financial Statements