Half-year Report

RNS Number : 3274J

YOLO Leisure & Technology PLC

27 June 2017

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

YOLO Leisure and Technology plc

("YOLO" or the "Company")

 Unaudited Interim Results for the period ended 31 March 2017

Introduction and Key highlights

The Board is pleased to report that the Company's unaudited results for the six month period ending 31 March 2017. The key highlights during the period were:

·      On 5 November 2016 the Company completed its investment in Magic Media Works limited ("Magic ") by investing £1.4m through convertible loan notes in Magic ("Loan Notes").

·      On 7 November the Company placed 254,000,000 shares at 1.0p each raising total gross funds of £2,540,000.  A further 8,400,000 fee shares were also issued at a price of 1.0p.

·      On 28 February 2017 TVPlayer Limited ("TVPlayer") completed an investment round led by A&E Networks LLC ("A&E"). As part of this investment round, Yolo invested £85,424 to maintain its holding of 4.57%.

Post period end

·      An independent valuation of YOLO's investment portfolio dated 26 June 2017 supports the Board's estimate that the Company's current Net Asset Value per share equates to at least 1.5p. This is 186% above the midmarket closing price on 26 June 2017.

·      On 2 of June 2017 the Company announced the conversion of its Loan Notes of £1.415m in Magic Media Works Ltd to 2,673,661 ordinary shares taking a 41.43% holding in Magic. 

·      Magic completed a pre-IPO funding round through the issue of £1.2m new Convertible Loan Notes.

·      Yolo has subscribed for £500,000 of the New Loan Notes. 

·      Magic has appointed FinnCap Limited as Corporate Finance Advisor to advise on its corporate finance strategy.

·      Simplestream Limited completes a profitable financial year to 31 May 2017 and is forecast to achieve £5m revenues for year ending 31 May 2018.

For further details please see below

YOLO Leisure and Technology plc
Simon Lee Robinson	[e-mail]
Cairn Financial Advisers LLP
Sandy Jamieson, Emma Earl	Tel: [phone]
Peterhouse Corporate Finance Limited (Sole broker)
Duncan Vasey / Lucy Williams	Tel: +  44 20 7220 9797
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus	Mob: [phone]
Sam Allen	Mob: [phone]

Introduction

I am pleased to report that the Company has had an active six month period ending 31 March 2017.

During the period the Company placed 254,000,000 shares at 1.0p each raising total gross funds of £2,540,000.  A further 8,400,000 fee shares were also issued at a price of 1.0p.

On 5 November 2016 the Company completed its investment in Magic Media Works limited ("Magic ") by investing £1.4m through convertible loan notes in Magic ("Loan Notes"). The Loan Notes were converted into approximately 41.43% of the ordinary share capital of Magic on a fully diluted basis subsequent to the period end.

On 28 February 2017 TVPlayer Limited ("TVPlayer") completed an investment round led by A&E Networks LLC ("A&E"). As part of this investment round, Yolo invested £85,424 to maintain its holding of 4.57%.

The Board has commissioned an independent valuation of YOLO's investment portfolio by Welbeck Associates, Chartered Accountants. The valuation is dated 26 June 2017 and is based on current share prices in respect of the Company's quoted investments and recent investment rounds and indicative third party valuations for the Company's unquoted investments.  Based on this valuation, the Directors estimate that the current Net Asset Value of the Company equates to approximately £7 million, which equates to at least 1.5p per share. This is 186% above the midmarket closing price on 26 June 2017.

The Company continues to actively search for additional investment opportunities in pursuit of its investment strategy.  Our stated aim is to be a successful and profitable investment company by focussing on undervalued technology, travel, leisure and media businesses.  We have and will continue to achieve this by identifying early stage or turnaround opportunities that require investment and / or have potential for a reverse takeover.  We will invest into businesses with content and delivery capability that engage customers, monetise the user experience and have potential to scale. 

Market context and background to investment strategy

The UK leisure sector is a large and diverse sector generating an estimated £117 billion.  Consumers want to spend their free time enjoying themselves and are seeking experiences that enrich or add convenience to their lives. New classifications of leisure activities and ways of consumers engaging with content and experiences have emerged, whether these be occasional, frequent or habitual leisure activities.  New sub-segments within the leisure segment have emerged such as music, video streaming subscriptions, podcasting, eSports and entertainment within the home representing a bigger and growing part of the consumers overall leisure time and expenditure.

How consumers spend their leisure time and disposable income is a key theme for each of Yolo's investee companies and of equal importance how they monetise this engagement time.  Each of them have worked to capitalise on the shift to digital by developing technology platforms and capability that engage consumers with media content to create innovative and entertaining experiences that consumers value.

Consumers are increasingly looking to enrich their lives through entertainment experiences, aiming to make their everyday life more enjoyable and memorable. Improved technology in the form of smart TVs and the emergence of TV and streaming services have encouraged consumers to enjoy leisure in the comfort of their own home.

Summary of investment portfolio:

The Board has been selective in the transactions made and our growing investment portfolio now consists of businesses with strong technology and content themes.  Each of the businesses are pioneers and innovators in their sectors and are disrupting the space that they are in, being consistent with YOLO's investment criteria.

Magic Media Works Ltd ("Magic") investor summary: Magic is a home entertainment technology company, with a mission to connect people together through music and bring joy to the home by building remarkably simple products that anyone, and everyone can use. On 7 November 2016 Yolo invested £1,415,000 in Magic Loan Notes. The Magic Loan Notes were converted into 2,673,661 ordinary shares on 2 June 2017 bringing its holding in Magic to 41.43%. On the same day YOLO also acquired a further £500,000 of new loan notes in Magic. 

Magic has licensing agreements with the world's major record labels, including Universal Music Group, Sony Music Group and Warner Music Group and major independents including Merlin Music and also the major music publishers, allowing users to access millions of albums and over 29 million music tracks ad-free.

During the first quarter of 2017, a third of its existing customers were already using the company's devices for more than 8 hours per week. 

Magic's next generation product is scheduled to launch in Q3 2017, delivering a suite of new features which will significantly differentiate the company's proposition from existing music streaming offerings.

In anticipation of the new product's launch, Magic has appointed Paul Johnson (previously with Nissan, Sony and Virgin) as Chief Marketing Officer and Michael Moszynski, CEO of London Advertising, has joined Magic's Advisory Board.

The new product will be made available through a range of retailers, etailers and TV shopping networks in a range of territories in both North America and Europe with launch dates and further details about the products exciting features to be announced in the near future.

Simplestream Limited ("Simplestream") investor summary: Simplestream is a live & video on demand (VOD) streaming solution broadcast company.  Yolo invested on the 4 of February 2015 and has a 6.71% shareholding in the company with 9,943 shares.  The total cost of our investment is £539,134. 

Simplestream is a leading provider of video services for the media and entertainment industry specialising in end-to-end multi-device streaming including; Live, On-demand (VoD) and Catch-up TV, Cloud and Hybrid TV and Apps.  It generates revenues on a SaaS based model and continues to impressively grow its client base with recent agreements, increasing recurring revenue growth to over 50% up year on year. 

The company is profitable as of its May 2017 year end and benefits from over £3m in annually contracted software licence fees. Revenues for the 2017/2018 financial year are forecast to be in excess of £5m.

Recent high profile signings have contributed to the company's growth with Simplestream being selected by:

-       NWSL Media, a joint venture between the National Women's Soccer League and A+E Networks

-       Modern Times Group owned TracePlay to provide the TRACE App for their urban music and entertainment global media group

-       A+E Networks UK to provide TV Everywhere distribution services for its new UK free-to-air channel Blaze

-       Sony Pictures Television for its Hybrid TV solution and new catch-up service on YouView, the service hosts shows from Sony's popular kids channels Tiny Pop, POP and KIX

-       Three new Subscriber Video on Demand (SVod) accounts have also been signed to provide customised and bespoke genre TV platforms for; the Arts and Culture content, Music and Sports.

Simplestream has built the service with features that include HD live channels and Video on Demand (VoD) with high quality adaptive streaming, the flexibility to create multiple thematic content packs based on deep metadata to enhance content discovery across multiple screens, region-based content controls to customise how content is presented in real-time, and localisation of all content in English and other languages.

TVPlayer Limited ("TVPlayer") investor summary:  TVPlayer is a licensed TV aggregating broadcast platform that is focussed directly on the customer.  Yolo invested on the 4 February 2015 and has a 4.57% shareholding in the company with 11,067 shares at a cost of £372,964.  

TVPlayer was founded in 2014 and is the UK's de facto online TV aggregator.  The company demerged from Simplestream Ltd in September 2016 to assist its growth.   The company is well positioned with new and large strategic content partners taking an active interest to assist the business in its expansion.

The company has already attracted 3m downloads with 1m monthly active users and is the UK's only fully licensed online channel aggregator, having signed contracts with all of the commercial PSBs in September 2016.  TVPlayer offers 75+ free live channels and the TVPlayer Plus offering a further 29 premium live and on demand channels for a monthly £5.99 (€7). 

A+E (a joint venture between Disney and Hearst Media) is an award-winning, global media content company and a minority shareholder of TVPlayer following a £5m cash investment in August 2016.  A+E are actively assisting management to accelerate growth in the UK and internationally.  Opportunities exist for further strategic partnerships and the company is well positioned to capitalise on these opportunities.

TVPlayer continues to roll out its service onto new platforms, most recently adding Xbox and Roku. The company is now available on ten platforms: desktop, iOS, Android, Windows, Amazon Fire TV, Apple TV, EE TV, selected connected TVs, Xbox and Roku, with plans later this year for Chromecast, Playstation and Freesat. 

The ten different technology platforms, generate over 6 million streams per month with an average of 34 minutes per stream, TVPlayer is a data rich source that provides valuable analytics and a valuable functionality to personalise the user experience such as recommendations and interactive engagement. 

YOLO initially invested into Simplestream in February 2015 and the TVPlayer subsequently demerged in September 2016.  Both are private businesses that have not disclosed their valuations to the market, although their combined value had quadrupled by year end 2016 since Yolo's investment.  Both the TVPlayer and Simplestream businesses are well positioned to capitalise on the growth and user opportunities within the UK and International markets.

GFinity plc ("Gfinity") investor summary:  Gfinity is one of the world's leading eSports companies and a premium eSports operator in the UK, offering a uniquely integrated suite of branded assets that give clients supreme opportunities to reach and engage with eSports fans through both viewing and participation.  Yolo invested into Gfinity at the time of its listing on 23 December 2014.  Yolo has acquired 2,143,023 shares in the company at cost of £364,650.

In May 2017 Gfinity successfully completed an oversubscribed placing with new and existing institutional and other investors to raise proceeds of £6.25 million, with 31,250,000 Placing Shares at 20 pence per share.  Net proceeds of the placing will be deployed for additional working capital purposes and to launch the Gfinity Elite Series in the UK in summer 2017 and further establish its position as a leader in the eSports industry, as well as develop proprietary software, invest in personnel and invest in broadcast technology.

eSports is a global term for organised multi-player video game competitions particularly between professional players, that are streamed on the internet and watched by hundreds of millions of fans around the world.  The global esports market is expected to grow 41% to $696 million in 2017, according to a new report by market researcher Newzoo and by 2020, esports revenues are expected to grow to $1.49 billion, with the audience for esports forecast to rise to 385 million during 2017 (up 19% on 2016).

The average eSports viewer watches content 19 times a month, with a session length of 2.2 hours, this gives a total of 41.8 hours per month, compared to the average 23 hours per month watched by football fans. eSports is unique in having a primary online broadcast platform, offering brands a progressive way of interacting with consumers. eSports is inherently social and ideally placed to drive conversations and marketing across Facebook, Twitter and Instagram.

Interim Results for Gfinity for the 6 months to 31 December 2016 show revenues up by 45% and operating losses down by 10% on the same period in the prior year and cash equivalents of £2.7m (30 June 2016: £0.8m and 31 December 2015: £1.6m).

Audioboom Group plc ("Audioboom") investor summary:  Audioboom is a leading global podcasting platform that consolidates the business of on-demand audio, making content accessible, wide-reaching and profitable for podcasters, advertisers and brands. Yolo originally invested on 24 February 2015 and as at the balance sheet date held 3,500,000 shares at a cost of £275,654. This was increased on 4 April 2017 to 5,340,000 shares of the company's issued share capital taking the  total cost of the investment in Audioboom to £321,914.

Audioboom completed a raise of £4.5m of new money in April 2017 to provide the company with working capital, technical development and creative initiatives.  Over 75 million people listened to a "Boom" in the month of April from its global digital media platform.  The Podcasting industry is growing rapidly and Audioboom is well positioned to take advantage of this development by matching targeted advertising to engaged audiences.  The engagement metric KPIs during the period broke all year-on-year records and revenue generation has turned, exceeding expectations for the year. 

A recent research survey carried out on more than 8,000 listeners in the UK and USA by Edison for Audioboom found that the average listener aged between 25 and 44 is listening to Podcasts for an average of two hours per day.

Revenues for the FY ending 30 November 2016 increased by £1.1m to £1.3m (2015: £0.2m) and adjusted EBITDA improved by £1.1m to a loss of £4.6m (2015: loss of £5.7m).  According to the company's 2017 second quarter update, revenues for the six months ended 31 May 2017 of at least £1.8m for H1 from £329k in H1 2016, demonstrating good momentum.

The company KPI's for the year end November 2016 were all significantly up on prior year with; unique users: 58.6m +101%, total available advertising impressions: 242m +450%, total unique file requests: 430m +145%. 

The momentum has continued into the 2017 financial year, For the H1 2017 interim update unique users have continued to grow to 81m and the company reported that over £3 million of advertising campaigns have been booked to occur in the financial year. 

Issue of new Equity and Warrants

On 7 November 2016 the Company completed a placing 254,000,000 shares at 1.0p each raising total gross funds of £2,540,000 and issued warrants for 50,800,000 shares at an exercise price of 1.3p. A further 8,400,000 ordinary 1.0p shares were issued as fee shares.  Simon Robinson was awarded 9,000,000 warrants at an exercise price of 1.3p.

Post balance sheet events

On the 2 of June 2017 the Company announced the conversion of its Loan Notes of £1.415m in Magic Media Works Ltd to 2,673,661 ordinary shares taking a 41.43% holding in Magic.  Furthermore Magic completed a pre-IPO funding round through the issue of £1.2m new Convertible Loan Notes (the "New Loan Notes").  £1.0m of the raise has been secured through additional funding from new and existing investors, with the balance consisting of the capitalisation of part of a loan account due to Rob Lewis, founder and CEO of Magic.  Yolo has subscribed for £500,000 of the New Loan Notes. 

On conversion, the New Loan Notes will convert into ordinary shares in Magic at a 33% discount to the share price on an Initial Public Offering ("IPO") of Magic shares to the Stock Market. In the event that such an IPO does not occur by 1 December 2017, the New Loan Notes will thereafter accrue interest at 10% per annum. The New Loan Notes are repayable on 1 December 2019.

Magic has appointed FinnCap Limited as Corporate Finance Advisor to advise on its corporate finance strategy.

The Board continues to evaluate and consider investment opportunities in the technology, travel, leisure and media sectors and will only make investments in those projects which the Board believes will create value for shareholders.

I would also like to thank our shareholders and advisors for continuing to support the board and our vision.

Simon Robinson

Chairman                               

27 June 2017

INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 MARCH 2017

		Unaudited	Unaudited
		six months ended	six months ended
		31 March 2017	31 March 2016
	Notes	£	£
Other income		17,096	7,000
Unrealised gain/(loss) on remeasurement to fair value	3	178,121	(318,506)
Administrative expenses		(143,794)	(127,917)
PROFIT / (LOSS) FROM OPERATIONS BEFORE FINANCING ACTIVITIES		51,423	(439,423)
Finance income		10,630	5
PROFIT / (LOSS) BEFORE TAX		62,053	(439,418)
Tax		-	-
PROFIT / (LOSS) FOR THE PERIOD		62,053	(439,418)
TOTAL COMPREHENSIVE INCOME / (EXPENSE) FOR THE PERIOD		62,053	(439,418)

Profit / (Loss) before tax and total comprehensive income / (expense) for the period are all attributable to the equity shareholders of the parent.

Profit / (Loss)  per share
Basic		0.016p	(0.29)p
Diluted		0.014p	(0.29)p

Income and profit from operations for the current period all derive from continuing operations.

INTERIM STATEMENT OF FINANCIAL POSITION

FOR THE SIX MONTHS ENDED 31 MARCH 2017

		Unaudited	Audited
		31 March	30 September
		2017	2016
	Notes	£	£
ASSETS
Non-current assets
Investments	3	3,014,338	1,127,262
		3,014,338	1,127,262
Current assets
Trade and other receivables		33,757	17,214
Cash and cash equivalents	4	940,692	139,412
		974,449	156,626
TOTAL ASSETS		3,988,787	1,283,888
EQUITY AND LIABILITIES
Equity
Share capital	5	5,206,954	2,582,954
Share premium account		7,574,273	7,617,273
Retained earnings		(8,931,302)	(8,993,355)
Total equity attributable to equity holders of the parent
		3,849,925	1,206,872
Current liabilities
Trade and other payables		138,862	77,016
Total liabilities		138,862	77,016
TOTAL EQUITY AND LIABILITIES		3,988,787	1,283,888

INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 MARCH 2017

		Share
	Share	Premium	Retained
	capital	Account	Earnings	Total
	£	£	£	£
Audited as at 1 October 2015	2,182,954	7,439,303	(8,371,825)	1,250,432
Total comprehensive expense for the period	-	-	(439,418)	(439,418)
Share issue	400,000	200,00	-	600,000
Cost of new issue	-	(22,030)	-	(22,030)
Unaudited as at 31 March 2016	2,582,954	7,617,273	(8,811,243)	1,388,984
Audited as at 1 October 2016	2,582,954	7,617,273	(8,993,355)	1,206,872
Total comprehensive income for the period	-	-	62,053	62,053
Share Issue	2,624,000	-	-	2,624,000
Cost of new issue	-	(43,000)	-	(43,000)
Unaudited as at 31 March 2017	5,206,954	7,574,273	(8,931,302)	3,849,925

All equity is attributable to equity shareholders of the parent.

Share premium

Represents amounts subscribed for share capital in excess of its nominal value, net of directly attributable issue costs.

 

INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 MARCH 2017

		Unaudited	Unaudited
		six months ended	six months ended
		31 March 2017	31 March 2016
		£	£
Operating activities
Profit / (Loss)  before tax		62053	(439,418)
(Gain) / Loss  on current fair value adjustment		(178,121)	318,506
Changes in working capital:
(Increase) / Decrease  in trade and other receivables		(16,543)	8,806
Increase / (Decrease) in trade and other payables		61,846	(18,987)
Net finance cost		195
Net cash (used)/generated in operating activities		(70,570)	(131,093)
Investing activities
Interest received		15	-
Investments		(1,708,955)	(257,385)
Net cash used in investing activities		(1,708,940)	(257,385)
Financing activities
Net proceeds from issue of shares		2,581,000	577,970
Interest paid		(210)	-
Net cash used in financing activities		2,580,790	577,970
Taxation		-	-
Net increase / (decrease) in cash and cash equivalents		801,280	189,492
Cash and cash equivalents at the start of the period		139,412	41,901
Cash and cash equivalents at the end of the period		940,692	231,393

NOTES TO THE INTERIM FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 MARCH 2017

1          General information

YOLO Leisure & Technology Plc ('the Company') is an investment company as defined under AIM Rule 15.

The Company is a publicly listed company on AIM, is incorporated and domiciled in England and its registered office is 4 More London Riverside, London, SE1 2AU.

        This interim financial information was approved for issue on 27 June 2017.

2         Accounting policies

2.1       Basis of preparation

The interim financial information comprises the Statements of Financial Position at 31 March 2017 and 30 September 2016 and the Statements of Comprehensive Income, Changes in Equity and Cash Flows for the periods ended 31 March 2017 and 31 March 2016 and the related notes of YOLO Leisure & Technology Plc, (hereinafter referred to as 'the interim financial information).

The interim financial information has been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union.  In preparing this information, management have used the accounting policies set out in the Company's annual financial statements as at 30 September 2016.

This interim financial information does not constitute a set of statutory accounts under the requirements of the Companies Act 2006 and is neither audited nor reviewed.  The comparative figures for the financial year ended 30 September 2016 are an extract from the Company's 2016 financial statements, which have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditors was unqualified.

This document (the Interim Statement 2017) will be published on the company's website and will be publicly available from the London Stock Exchange regulatory publications.  The maintenance and integrity of the YOLO Leisure & Technology Plc website is the responsibility of the directors.  Legislation in the UK governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.

2.2        Going concern

     The company's activities, together with the factors likely to affect its future development and performance, the financial position of the company, its cashflow and liquidity position have been considered by the directors and the Board is of the opinion that there are sufficient funds available to continue as a going concern for the foreseeable future. The Board is also planning to raise additional funds to continue to carry out its investment strategy as opportunities arise. Accordingly the Board consider it appropriate to adopt the going concern basis in preparing these condensed financial statements.

2.3        Investments

     Financial assets and liabilities are fair valued using a hierarchy that reflects the significance of the inputs used in making the fair value assessment. The fair value hierarchy has the following levels:

     Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

     Level 2: inputs other than quoted prices for identical assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

     Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

3              Investments

			Level 1	Level 3	UnauditedTotal
			£	£	£
Audited fair value at 30 September 2016			300,588	826,674	1,127,262
Cost of acquisitions during the period			-	1,708,955	1,708,955
Unrealised loss on remeasurement to fair value			178,121	-	178,121
Unaudited fair value at 31 March 2017			478,709	2,535,629	3,014,338

4	Cash and cash equivalents

For the purpose of the interim cash flow statement, cash and cash equivalents are comprised of the following:

							Unaudited	Unaudited
							31 March	31 March
							2017	2016
							£	£
Cash at bank and in hand							940,692	231,393

5	Share capital				Unaudited	Unaudited
					six months ended	six months ended
					31 March 2017	31 March 2016
					£	£
	Issued and fully paid
	As at 31 March 2016 Ordinary shares (178,922,758 shares of 1p each)				1,789,228	1,375,526
	Deferred shares (8,819,181 shares of 9p each)				793,726	793,726
	Warrant exercised (1,370,211 shares of 1p each)				-	13,702
	20 January 2016 share placement (40,000,000 shares of 1p each)				-	400,000
	7 November 2016 share placement (262,400,000 shares of 1p each)				2,624,000	-
					5,206,954	2,582,954

6	Dividends paid and proposed
	Equity dividends on ordinary shares:
	No interim dividend was paid or is proposed for the half year ended 31 March 2017.

7	Profit/(loss) per share

The calculations of profit/(loss) per share are based on the following results and number of shares:

						Unaudited	Unaudited
						six months ended	six months ended
						31 March 2017	31 March 2016
						£	£
Profit / (Loss) for the financial period						62,053	(439,418)
Weighted average number of shares for diluted loss per share						396,796,884	181,075,272
Weighted average number of shares for basic loss per share
						387,977,703	153,531,137

At 31 March 2017, the number of ordinary shares in issue was 441,322,758.

In accordance with the provisions of IAS 33 for the periods ended 31 March 2017, 30 September 2016 and 31 March 2016, shares under option were not regarded as dilutive in calculating earnings per share.

8	Seasonality of interim operations

YOLO Leisure & Technology Plc does not operate in a seasonal or cyclical business environment.

 

END

 

 

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